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HomeMy WebLinkAbout05-0580 CAMP HILL SCHOOL DISTRICT FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2004 liB 0':/- S 2{) CwJ Tu_ CJ? ~i'.. } 9' 7 !r>>-- . " ~.." \ r-:\ v:J \ t"'..) r(, TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT MANAGEMENT'S DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS Government-wide financial statements Statement of net assets Statement of activities Fund financial statements Balance sheet - governmental funds Reconciliation of the governmental funds balance sheet to the statement of net assets Statement of revenues, expenditures, and changes in fund balances - governmental funds Reconciliation of the governmental funds statement of revenues, expenditures, and changes in fund balance to the statement of activities Statement of net assets - proprietary funds Statement of revenues, expenses, and changes in net assets - proprietary funds Statement of cash fiows - proprietary funds Statement of net assets - fiduciary funds Statement of changes in net assets - fiduciary funds NOTES TO FINANCIAL STATEMENTS BUDGETARY COMPARISON INFORMATION - GENERAL FUND Page Number IAR - 1 to IAR - 2 MDA - 1 to MDA - 7 FS -1 FS -2 FS-3 FS -4 FS -5 FS-6 FS -7 FS -8 FS -9 FS -10 FS -11 FS - 12 to FS - 28 BCI-1 GREENA WALT & COMPANY, P.c. CERTIFIED PUBLIC ACCOUNTANTS JAMES E. LYONS HOWARD R. GREENAWALT CREEDOl\' R. HOFFMAN JOHN H. KLINGLER DEBORAH J, KELLY R. A. GREEN.'\WALT(l9S6-1983) A. A. REIDINGER (RETIRED) C EDWARD ROGERS, JR. 400 WEST MAIN STREEi MECHANICSBURG, PeNNSYlVANIA 17055 (717)766-4763 FAX (717) 766.2731 62 \ii'EST l'OMFRET STREET CARLISLE, PA 17~13 (717) 24'1.4822 FAX(?I?) 2S11.'rl72 INDEPENDENT AUDITORS' REPORT Board of School Directors Camp Hill School District Camp Hill, Pennsylvania We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Camp Hill School District as of and for the year ended June 30, 2004, 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 an opinion 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 nnancial statements are free of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation, We believe that our audit provides a reasonable basis for our opinion, In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Camp Hill School District, as of June 30, 2004, and the respective changes in financial position and cash flows, where applicable, thereof and for the year then ended in conformity with accounting principles generally accepted in the United States of America, As described in the notes to the financial statements, the District has implemented a new financial reporting model, as required by the provisions of Governmental Accounting Standards Board Statement No, 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of and for the year ended June 30, 2004, IAR-1 MEMBERS - AMERlCAN INsmUTE OF CERTIFIED PUBLIC ACCOUNTANTS -, PENNSYLV ANlA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Board of School Directors Camp Hill School District Management's discussion and analysis on pages MDA - 1 through MDA - 7 and budgetary comparison information on page BCI - 1 are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. ~Kf~/PC. GREENAW~Lk & COMPtNyl>C October 11, 2004 Mechanicsburg, Pennsylvania IAR-2 CAMP HILL SCHOOL DISTRICT Camp Hill, Pennsylvania Management's Discussion and Analysis Our discussion and analysis provides an overview of the financial performance for the District for the fiscal year ended .June 30, 2004. This is the first year we have reported District activities in accordance with new governmental reporting requirements. In future years, our discussion and analysis will compare current year financial activities to those of the previous year. Please read our discussion and analysis in conjunction with the District's financial statements. FINANCIAL HIGHLIGHTS )> In 2003-04, the District expenditures increased approximately 5% ($570,671) from the prior year. Contributing factors were major increases in healthcare and retirement contribution costs. Healthcare premium charges increased 20%, and retirement contribution costs tripled from the previous year. Salaries increased by just over 1 %, due to staff transitions. )> The District experienced a significant increase in outside tuition costs for students attending approved private schools (APS), placements in facilities (PRill), and charter schools during the 2003-04 school year. Approximately $ 60,000 was paid for charter and District placements (non- special education) and $89,000 in APS/PRRI. There were no payments made for APS/PRRl in the prior year, and $23,000 in charter school payments. )> The final governmental audited expenditures exceeded budgeted expenditures by $125,703. Of this, $119,496 was due to accounting treatment of a capital lease entered into for the purposes of purchasing technology equipment. The total capital lease purchase is reported in expenditures, as well as the annual cash payment for the lease. The original budget contained only the annual lease payment portion. Final audited revenues also contained the $119,496 capital lease as "proceeds from extended term financing". )> Revenues for 2003-04 increased approximately 5% from the prior year. Although the real estate tax rate increased 7%, real estate collections only increased 5%. The District experienced reduced property reassessments, most notably, the Camp Hill Mall, resulting in over $\00,000 reduction in tax revenue. )> The July 1, 2003 fund balance was $1,389,754. The original budget gap between revenues and expenditures was $148,398 (i.e. utilization of fund balance). As the 2003-04 year progressed, revised estimated ending fund balance for June 30, 2004 was estimated to be $1,199,322. Due to issues highlighted above as well as revenue accrual changes for 2003-04, ending fund balance utilized was $194,134, resulting in the ending fund balance of $1,195,619. 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-I and FS-2) are presented for the first time this year, to comply with new governmental reporting requirements. These statements 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 MDA-I CAMP HILL SCHOOL DISTRICT Camp Hill, Pennsylvania Management's Discussion and Analysis financial statements are on pages FS-3, FS-5 and FS-7 through FS-Il. For governmental activities, these statements tell how District services have been financed in the short term, as well as identify the amount remaining for future spending. Proprietary fund statements provide information about non-governmental operations, in our case, food services. Fiduciary funds statements report funds held in trust by the District for such things as scholarship grants. The Reconciliation of The Governmental Funds Balance Sheet on page FS-4 reconciles governmental funds balance to 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 new statements present financial acliVllies and the results of those actlvllies in two categories, Governmental and Business-type. Capital assets (i.e. 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 funds statements in which assets and liabilities are separated into various funds such as, but not limited to, General and Capital Projects. The approach to the measurement focus of revenue and expense is similar to that used in the private sector and is referred to as 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 financial statements that measure revenues on the accrual basis of accounting, the funds statements report revenues only to the extent cash has been received or expected to be received in the near future. Reporting the District as a Trustee The District acts as fiduciary for two funds, a Private Purpose Trust for scholarship monies and a Students' Activities fund. In comparison to the Governmental Funds, the amounts held in the fiduciary funds are small. Fund balances and activity for the year are presented on pages F8-1 0 & F8-11. THE DISTRICT AS A WHOLE The District's total net assets were $ 1,839,377 as of June 30, 2004. Table A-I summarizes the Statement of Net Assets from page F8-1 of the financial statements. MDA - 2 CAMP HILL SCHOOL DISTRICT Camp Hill, Pennsylvania Management's Discussion and Analysis Table A-1 Net Assets June 30, 2004 Current and other assets Capital assets Total assets Curent and other Iiabilites Long-term liabilities Total liabilities Invested in capital assests (net of related debt) Restricted for capital projects Unrestricted Total Net Assets T otalliabilitles and net assets Governmental Activities 3,179,952 9,902,569 13,082,521 1,090,062 10,300,891 11,390,953 (130,581) 284,405 1,537,744 1,691,568 13,082,521 Business- type Activities Total 56,660 3,236,612 99,050 10,001,619 155,710 13,238,231 3,383 1,093,445 4,518 10,305,409 7,901 11,398,854 99,050 (31,531) o 284,405 48,759 1,586,503 147,809 1,839,377 155,710 13,238,231 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. Most of the District's net assets are unrestricted. The restricted amount represents cash and investments that can only be used for buildings and improvements. Any excess restricted funds are used to repay debt. Table A-2 summarizes activity presented in the Statement of Activities (page FS-2). It shows how total net assets decreased by $ 446,732 during the year. Table A-2 Changes in Net Assets Year ended June 30, 2004 Governmental Activities Revenues Program Revenues Charges for service Operating grants and contributions Capital grants and contributions General Revenues Taxes State general subsidies Other Total Revenues Direct Expenses Transfers Change in net assets Business- type Activities Total 278,438 208,668 487,106 1,022,900 22,545 1,045,445 104,933 104,933 9,217,923 9,217,923 928,156 928,156 91,931 439 92,370 11,644,281 231,652 11,875,933 (12,032,079) (290,586) (12,322,665) (115,788) 115,788 0 (503,586) 56,854 (446,732) MDA-3 CAMP HILL SCHOOL DISTRICT Camp Hill, Pennsylvania Management's Discussion and Analysis This decrease represents a change in reported value measuring revenue and expenses on an accrual basis. It does not represent an increase in cash or other readily available funds. Page FS-6 of the financial statements reconciles those two different concepts. Governmental Activities Table A-3, 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 $ 10,625,808 must be recovered through general revenue, primarily taxes and state subsidies. Amounts not recovered will reduce funds available for future years. Table A-3 Governmental Activities Year ended June 30, 2004 Classroom instruction Instructional student support Administrative and financial support Operation and maintenance of buildings Pupil transportation Student-activities Community services Interest on long-term debt Total governmental activities Less state general subsidies Total needs from taxes and other local sources Business-Type Activities Total Cost of Services 6,924,477 1,419,028 1,077,976 1,594,717 90,677 402,452 9,865 512,887 12,032,079 Less: Program Revenues 937,493 128,435 37,066 194,754 3,802 40,994 o 63,727 1,406,271 Net Cost of Services 5,986,984 1,290,593 1,040,910 1,399,963 86,875 361,458 9,865 449,160 10,625,808 928,156 9,697,652 Table A-4 is similar to the previous table, except it presents business -type service costs. Table A-4 Business-Type Activities Year ended June 30, 2004 Food services Less: Investment earnings Total business Type activities MDA-4 Total Cost of Services 290,586 Less: Program Revenues 231,213 Net Cost of Services 59,373 439 58,934 CAMP HILL SCHOOL DISTRICT Camp Hill, Pennsylvania Management's Discussion and Analysis DISTRICT'S FUNDS The information in Table A-5 summarizes the Governmental Funds' Balance Sheet for June 30, 2003 & 2004. It compares fund balances for the current year to the prior year for the same grouping that is used in the Statement of Net Assets. Capital Projects Fund Restricted Unrestricted Total Capital Projects Fund Table A-5 Comparative Fund Balances June 30 2003 2004 Change % Change 1,389,755 1,195,620 (194,135) (13.97) 1,389,755 1,195,620 (194,135) (13.97) 719,300 308,815 (410,485) (57.07) 719,300 308,815 (410,485) (57.07) General Fund Restricted Unrestricted Total General Fund Special Revenue Fund Restricted Unrestricted Total Special Revenue Fund 48,842 49,338 496 1.02 48,842 49,338 496 1.02 719,300 308,815 (410,485) (57.07) 1,438,597 1,244,958 (193,639) (1346) 2,157,897 1,553,773 (604,124) (28.00) All Governmental Funds Restricted Unrestricted Total All Governmental Funds 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 general fund balance of $ 1,553,773 and the total net assets of $ 1,691,568 are itemized in the reconciliation presented within the financial statements of 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 decreased by $ 604,124 because expenditures were greater than the total revenues. This was primarily due to current spending on capital projects (specifically the Middle School/High School renovation project) paid for from bond financing. MDA - 5 CAMP HILL SCHOOL DISTRICT Camp Hill, Pennsylvania Management's Discussion and Analysis General Fund Budgetary Highlights Table A-6 has been summarized from the comparative budget information presented on page BCI-l of the financial statements. Table A-6 Comparison of Budget to Actual For the Year Ended June 30, 2004 Total Revenue Total Expenditures Revenues over (under) expenditures Other financing sources (uses) Net change in fund balances Final Budget 11,501,602 11,490,462 11,140 (159,538) (148,398) Actual 11,462,072 11,616,165 (154,093) (40,042) (194,135) Variance (39,530) 125,703 (165,233) 119,496 (45,737) Capital Assets Table A-7 summarizes the Changes in Capital Assets note to the financial statements on page FS-21. The original cost of the capital assets on the books at June 30, 2004 was $ 17,660,571. Each year, for capital assets other than land, this amount is depreciated to reflect usage. The net balance of $ 9,902,569 is the amount remaining after the reduction. Table A-7 Governmental Activities Capital Assets Comparison (net of accumulated depreciation) June 30 Land Buildings and improvements Funiture & Equipment Total Capial Assets, net of accumulated depreciation 2003 384,041 9,034,944 868,551 10,287,536 2004 384,041 8,732,031 786,497 9,902,569 Debt Administration Table A-8 summarizes the long-term liabilities note to the financial statements on page FS-23. Most of the debt relates to general obligation bonds sold by the District to pay for capital improvements. Most significantly, the Series 2000 bonds were used to fund addition/renovation project at the Middle School/High School. Each year, the District pays interest to bond holders and pays down a portion of the outstanding debt, referred to as redemption. MDA-6 CAMP HILL SCHOOL DISTRICT Camp Hill, Pennsylvania Management's Discussion and Analysis Table A-8 Governmental Activities Long-Term Liablility Comparison June 30 General obligation debt Capital leases Compensated absences Total Governmental long-term liabilities 2003 10,370,000 35,816 306,323 10,712,139 ECONOMIC FACTORS AND NEXT YEAR'S BUDGET 2004 9,955,000 78,150 322,791 10,355,941 The District's largest source of revenue is real estate taxes. As a result ofa referendum passed in 2003, we repealed the occupational assessment tax, and replaced it with an additional earned income tax of 1 %. The previous earned income tax rate was .5%. The occupation assessment tax bills were issued on July 1 st of the fiscal year, and were substantially collected within the first 60 days. The earned income tax is based on calendar year earnings, creating a significant lag in collection. It is estimated that in the first year of transition, the District may experience a cash shortfall in collection of approximately 20% ($563,640) of the 2004-05 ElT amount. The shortfall will be paid from the existing fund balance. Table A-9 Comparison of Budgets For the Years Ended June 30th, 2003 and 2004 Total Revenues Total Expenditures Revenues over (under) expenditures Other financing sources (uses) Net change in fund balances 2003 11,027,261 10,852,430 174,831 (174,831) o 2004 11,501,602 11,432,120 69,482 (217,880) (148,398) MDA - 7 Change 474,341 579,690 (105,349) (43,049) (148,398) I- o jj2(J) I-Iii l/)(J) -(J) 0..: ...Jf-~ Owo oz'" :J: ~ ~;f of-w l/)zz ...IW::> ...J~"'" -w :J:f- a.~ :E(J) <( o 19 o f- Q)l.DlO'lit"ltlOQT""CO T"""...... CO NT""" OT""" V...... co (0(") CX>M V VOl.{) N"cOa:i<oN"ot:icr)v-r-: acetOl!) COMCOT""" C>>NNv N MID ~ 0) .,. Q) a. -'='''' , Q) tJJ;.E ~ .~ C:o .w": :J <Xl 0...... 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CAMP HILL SCHOOL DISTRICT BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2004 Capital Special General Projects Revenue Total Assets Cash and cash equivalents $ 1,800,988 $ 64,352 $ 51,049 $ 1,916,389 Investments 220,053 220,053 Taxes receivable (net) 288,675 288,675 Due from other funds 24,410 24,410 Due from other governments 266,325 266,325 Other receivables 85,837 85,837 Total assets $ 2,441,825 $ 308,815 $ 51,049 $ 2,801,689 Liabilities and fund balances Due to other funds $ 24,410 $ $ $ 24,410 Accounts payable 211,968 1,711 213,679 Payroll and benefits payable 769,860 769,860 Deferred revenues 227,961 227,961 Other liabilities 12,006 12,006 Total liabilities 1,246,205 1,711 1,247,916 Restricted for capital projects 308,815 308,815 Unrestricted - undesignated 1,195,620 49,338 1,244,958 Total fund balances 1,195,620 308,815 49,338 1,553,773 Total liabilities and fund balances $ 2,441,825 $ 308,815 $ 51,049 $ 2,801,689 The accompanying notes are an integral part of these financial statements. 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E o u U 1\I (/) f: '" ;; '" '" '" ;; " .S " 0) " '" .c (J CAMP HILL SCHOOL DISTRICT STATEMENT OF NET ASSETS - PROPRIETARY FUNDS JUNE 30, 2004 Food Service Assets Cash and cash equivalents Due from other governments Other receivables Inventories $ 50,582 2,040 1,724 2,314 Total current assets 56,660 Furniture and equipment (net of accumulated depreciation) 99,050 Total assets $ 155,710 Liabilities Accounts payable Deferred reven ue Current portion of compensated absences $ 42 3,341 1,000 4,383 3,518 7,901 99,050 48,759 147,809 $ 155,710 Total current liabilities Long term portion of compensated absences Net assets Invested in capital assets (net of related debt) Unrestricted Total net assets Total liabilities and net assets The accompanying notes are an integral part of these financial statements. FS-7 CAMP HILL SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2004 Food Service Operating revenues - Food service revenue $ 208,668 Operating expenses Salaries 98,617 Employee benefits 50,336 Purchased property service 1,554 Other purchased services 737 Food and milk 124,956 Other supplies 3,725 Depreciation 9,635 Other operating expenses 1,026 Total operating expenses 290,586 Operating loss (81,918) Nonoperating revenues Earnings on investments 439 State sources - social security and retirement subsidies 5,277 State sources - meal subsidies 3,845 Federal sources - meal subsidies 13,423 Total nonoperating revenues 22,984 Income (loss) before contributions and transfers (58,934) Contributions and transfers Capital contributions from capital projects 64,160 Transfers from General Fund 51,628 Total contributions and transfers 115,788 Change in net assets 56,854 Net assets - beginning (deficit) 90,955 Net assets - ending (deficit) $ 147,809 The accompanying notes are an integral part of these financial statements. FS-8 CAMP HILL SCHOOL DISTRICT STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2004 Net decrease in cash and cash equivalents Food Service $ 209,069 (94,099) (124,580) (57,377) (66,987) 8,855 12,243 51,628 72,726 439 439 6,178 44,404 $ 50,582 Operating activities Cash received from users Cash payments to employees for services Cash payments to suppliers for goods and services Cash payments for other operating expenses Net cash used for operating activities Non-capital financing activities State sources Federal sources General Fund contributed services Net cash provided by non-capital financing activities Investing activities Earnings on investments Net cash provided by investing activities Cash and cash equivaients - beginning Cash and cash equivalents - ending Reconciliation of operating loss to net cash used for operating activities Operating loss Adjustments to reconcile operating loss to net cash used for operating activities Depreciation Net change in other assets and other liabilities Accounts receivable Deferred revenue Inventories Accounts payabie Compensated absences Totai adjustments $ (81,918) 9,635 (1,724) 2,126 654 (278) 4,518 14,931 Net cash used for operating activities $ (66,987) The accompanying notes are an integrai part of these financial statements. FS-9 CAMP HILL SCHOOL DISTRICT STATEMENT OF NET ASSETS - FIDUCIARY FUNDS JUNE 30, 2004 Private Purpose Student Trust Activities Total Assets Cash and cash equivaients $ 143,638 $ 96,106 $ 239,744 Accounts receivable 495 495 Total assets $ 143,638 $ 96,601 $ 240,239 Liabilities Accounts payable $ $ 4,382 $ 4,382 Due to student groups 92,219 92,219 Total liabilities 96,601 96,601 Net assets - restricted 143,638 143,638 Total liabilities and net assets $ 143,638 $ 96,601 $ 240,239 The accompanying notes are an integral part of these financial statements. FS-10 Additions Gifts and contributions Interest income Total additions CAMP HILL SCHOOL DISTRICT STATEMENT OF CHANGES IN NET ASSETS - FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2004 Deductions Scholarships, awards and other expenditures Change in net assets Net assets - beginning Net assets - ending The accompanying notes are an integral part of these financial statements. FS -11 Private Purpose Trust $ 514 1,513 2,027 7,109 (5,082) 148,720 $ 143,638 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Camp Hill 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 Borough of Camp Hill, Cumberland County, Pennsylvania. 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 Camp Hill School District have been prepared in accordance with generally accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Board is the authoritative standard-setting body for the establishment of governmental accounting and financial reporting principles. The more significant of these accounting policies are as follows: Reporting entity Governmental Accounting Standards Board Statement No. 39 "Determining Whether Certain Organizations are Component Units" (an amendment of Statement No. 14), established the 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 school's financial accountability. The criteria used to evaluate component units for possible inclusion as part of the District's reporting entity are: . 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 meets the above criteria for inclusion in this reporting entity. FS -12 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.) Jointly-governed organizations The District is a participant in four jointly-governed organizations, each of which is a separate legal entity that offers educational 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. West Shore Tax Bureau provides earned income tax collection services. 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. 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 simiiar to private business enterprises. Fiduciary Funds - These funds account for the assets held by the District as a trustee or agent for individuals, private organizations and/or governmental units and are therefore not available to support the District's own programs. FS-13 CAMP Hill SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.) Basis of presentation Government-wide financial statements (Le., 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 reported separately from business-type activities which rely, to a significant extent, on fees and charges for support. The statement of activities demonstrates the degree to which the 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 reported as generai revenues. Fund financial statements are also provided for all governmental funds, proprietary funds, and fiduciary funds of the District. Major individual governmental funds and major individual proprietary funds are reported as separate columns in the fund financial statements. Nonmajor funds, if any, are aggregated and presented in a single column. Fiduciary funds are reported by fund. 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. The District reports 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. The Capital Project Fund accounts for bonds proceeds and the expenditure of those funds. The Special Revenue Fund accounts for the proceeds of specific revenue sources that are restricted to expenditures for specified purposes. This fund includes the Athletic Fund and the Band Uniform Fund. FS-14 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.) Basis of presentation (Cont'd.) The District reports the following Proprietary Fund: The Food Service Fund accounts for the operations of the cafeteria. The District reports the following fiduciary funds: The Private Purpose Trust Fund accounts for assets held by the District in a trustee capacity which are used for various scholarship and award programs for students. The Student Activities Fund accounts for programs operated and sponsored by various clubs and organizations within the schools. Measurement focus and basis of accounting The government-wide financial statements are reported 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 recorded when earned and expenses are recorded 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. Accumulated depreciation and unamortized costs are reported in the statement of net assets. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government generally considers tax revenue to be available if collected within 60 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 recorded as deferred revenues until earned. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. FS -15 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.) Budgets and budgetary accounting An operating budget is adopted prior to the beginning of each year for the Generai Fund on a modified accrual basis of accounting. The General Fund is the only fund for which a budget is legally required. The Pennsylvania School Code dictates specific procedures relative to adoption of the District's budget and reporting of its financial statements. The District, before levying annual school taxes, is required to prepare an operating budget for the succeeding fiscal year. 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-functionlmajor object level. The Board may approve transfers of funds appropriated to any particular item of expenditure in accordance with the Pennsylvania School Code. It is the District's policy that all budget transfers are presented to and approved by the Board. 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 recorded. Unused encumbrances expire at the end of each year. Included in the General Fund 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. Taxes and taxes receivable Real estate and personal 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 agencieslentities for collection actions. Receivables and payables between funds Activity between funds that represent lendinglborrowing arrangements outstanding at the end of the fiscal year are referred to as "due tolfrom other funds". Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances". Balances between funds are considered to be short-term items pending periodic repayments. FS -16 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Conl'd.) JUNE 30, 2004 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.) Inventories Inventories are presented at the lower of cost or market on a first-in, first-out basis, and are expended when used. Donated commodities are recognized as revenue and are inventoried at an estimated cost vaiue. Capital assets Capital assets, which include property, plant, equipment, and infrastructure assets: e.g., roads, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government- wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of more than $ 2,000 and an estimated useful life in excess of one year. Management has elected to include certain homogeneous groups with individual costs of less than $ 2,000 as capital assets for financial reporting purposes. In addition, capital assets purchased with long-term debt may be capitalized regardless of the thresholds established. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. All reported capital assets are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings Building improvements Site improvements Technology equipment Furniture, fixtures and equipment Library books 40 20 to 40 15 to 20 5 7 to 15 7 Proprietary fund equipment purchases are capitalized at cost and depreciated on a straight-line basis over useful lives of 5 to 20 years. FS -17 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.) Long.term liabilities In the government-wide financial statement, and in the proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities or proprietary fund statement of net assets. Refunding costs and bond discounts are amortized over the life of the bonds using the effective interest method. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance and refunding costs, as current period expenditures. The face amount of debt issued is reported as other financing sources while discounts and refunding costs on debt issuances are reported as debt service. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as support service expenditures. Estimates The preparation of financial statements in conformity with generally accepted accounting principies requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Financial accounting standards for proprietary funds Standards for accounting and financial reporting for private business enterprises generally are followed for proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Changes in accounting principles For the year ended June 30, 2004 the District has implemented GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments. GASB 34 creates new basic financial statements for reporting on the Districfs financial activities. The financial statements now include government-wide financial statements prepared on an accrual basis of accounting and fund financial statements which present information for individual major funds rather than by fund type. Nonmajor funds, if any, are presented in total in one column. The government-wide financial statements split the District's programs between governmental and business-type activities. The beginning net asset amounts reflect the changes in fund balance at June 30, 2003, caused by the conversion to the accrual basis of accounting. FS -18 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.) Restatement of fund balances The transition from fund balances of governmental funds to net assets of governmental activities is as foliows: Total fund balances of governmental funds - June 30, 2003 $ 2,157,897 GASB 34 adjustments: Capital assets, net of accumulated depreciation Long-term liabilities Bond discount and issuance costs Accrued interest on bonds payable Taxes receivable, net of aliowance for uncoliectibles 10,287,536 (10,712,139) 97,155 (101,528) 466.233 Total net assets of governmental activities - June 30, 2003 $ 2195154 CASH AND CASH EQUIVALENTS AND INVESTMENTS The District's cash and cash equivalents and investments have been categorized to indicate the level of risk assumed by the District. Category 1 includes cash and cash equivalents and investments that are insured or registered, or securities held by the District or by its agent in the District's name. Category 2 includes uninsured or unregistered, with securities held by the counterpart's trust department or agent in the District's name. Category 3 includes uninsured and unregistered, with securities held by the counterparty or by its trust department or agent but not in the District's name, including public funds coliateralized as permitted by Act 72 of the Commonwealth of Pennsylvania. Cateoorv 2 3 Total Carrying Amount! Bank Market Value Balance $ 110,021 $ 186,686 $ 243.700 243.700 353,721 430,386 $ 220,053 220,053 1,852,452 1,852,303 251 251 $ 2426477 $ 2 502 993 1 Demand deposits Repurchase agreements 100,000 $ $ 86,686 243.700 100000 $ $ 330 386 Pooled investments PLGIT PA Treasurer's INVEST PSDLAF FS -19 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 CASH AND CASH EQUIVALENTS AND INVESTMENTS (Cont'd.) Cash and cash equivalents, in the proprietary funds statement of cash flows, consists of demand deposit accounts and a pooled account with PA Treasurer's INVEST. The types of authorized investments are limited by State regulations. Investment policies followed during the year did not significantly alter the categorizations shown above. The pooled investments funds are required to be operated in accordance with state iaws and regulations. TAXES RECEIVABLE Taxes receivable are as follows: FS-20 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 OTHER RECEIVABLES Other receivables are as follows: Governmental Business-type Activities Activities Total Earned income taxes receivable $ 54,737 $ $ 54,737 Other revenues receivable 31.100 1.724 32.824 Total- fund statements 85,837 1,724 87,561 Full accrual adjustment - earned income taxes 369.263 369.263 Total- entity wide statements $ 455 1 00 $ 1724 $ 456 824 CHANGES IN CAPITAL ASSETS Capital asset activity for the year was as follows: Beginning Ending Balance Increases Decreases Balance Governmental activities Capital assets not being depreciated Land $ 384.041 $ - $ $ 384.041 Capital assets being depreciated Site improvements 597,150 597,150 Buildings and improvements 12,969,267 12,969,267 Furniture, fixtures and equipment 1,287,714 1,287,714 Library books 873,727 16,682 890,409 Technology equipment 1.905.763 10.268 1.916.031 17 .633.621 26.950 17.660.571 Less accumulated depreciation for: Site improvements 220,409 28,117 248,526 Buildings and improvements 4,311,064 274,796 4,585,860 Furniture, fixtures and equipment 543,158 77,345 620,503 Library books 786,354 2,383 788,737 Technology equipment 1.869.141 29.276 1.898.417 7.730.126 411.917 8,142.043 Total capital assets being depreciated, net 9.903.495 384.967 9,518,528 Governmental activities capital assets, net $ 10287536 $ 384 967 $ $ 9 902 569 FS - 21 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 CHANGES IN CAPITAL ASSETS (Cont'd.) Beginning Balance Decreases Ending Balance Increases Business-type activities Capital assets being depreciated Equipment $ 62,465 $ 64,160 $ - $ 126,625 Less accumulated depreciation for: Equipment 17.940 9.635 27.575 Total capital assets being depreciated, net 44.525 54.525 99.050 Business-type activities capital assets, net $ 44 525 $ 54 525 $ $ 99 050 Depreciation expense was charged to functions/programs as follows: Governmental activities Instruction Instructional student support Administrative and financial support Operation and maintenance of plant Student activities $ 269,867 59,968 28,259 34,692 19.131 Total depreciation expenses - Governmental activities $ 411917 Business-type activities Food service $ 9635 FS -22 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 LONG-TERM LIABILITIES A summary of the changes in all long-term liabilities for the year ended June 30, 2004 is as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental Activities General obligation debt $ 10,370,000 $ $ (415,000) $ 9,955,000 $ 435,000 Capital leases 35,816 119,496 (77,162) 78,150 38,337 Compensated absences 306.323 16.468 322,791 64,558 Governmental activity long-term liabilities $ 10712139 $ 135964 $ (492162) $ 10355941 $ 537 895 A. General obligation notes and bonds payable Changes in general obligation notes and bonds payable were as follows: Beginning Balance Scheduled New Issue Redemptions Ending Balance General Obligation Notes Series A of 1998 Series M of 1998 $ 955,000 $ 2,355,000 - $ 375,000 $ 35,000 580,000 2,320,000 General Obligation Bonds Series of 2000 7.060,000 5.000 7,055,000 $ 10 370 000 $ - $ 415000 $ 9955000 I nterest Rates Maturity Date Callable Date Amounts Due Within One Year Series A of 1998 Series M of 1998 Series of 2000 4.45% 4.60% 4,30% to 5.35% March 2006 February 2010 November 2018 Not callable February 2004 November 2005 $ 395,000 35,000 5,000 $ 435 000 FS-23 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 LONG-TERM LIABILITIES (Cont'd.) Scheduled debt service requirements, payabie by the General Fund, are as follows: Year Endina June 30 Principal Interest Total 2005 $ 435,000 $ 496,215 $ 931,215 2006 455,000 476,805 931,805 2007 475,000 456,157 931,157 2008 500,000 434,312 934,312 2009 520,000 411,317 931,317 2010-2014 3,440,000 1,635,850 5,075,850 2014-2019 4.130.000 636 .454 4.766 .454 $ 9 955 000 $ 4547110 $ 14502110 B. Capital lease obligations Changes in capital lease obligations were as follows: Beginning Ending Balance Additions Pavments Balance PA State Bank Leasing $ 35,816 $ - $ 35,816 $ PA State Bank Leasing 119.496 41.346 78.150 $ 35816 $ 119496 $ 77162 $ 78150 The future minimum lease obligations and the net present value of these lease payments at June 30, 2004 were as follows (all governmental activities): 2004-05 2005-06 Total minimum lease payment Less: amounts representing interest $ 41,346 41.346 82,692 (4.542) Present value of minimum lease payments $ 78150 FS -24 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 LONG-TERM LIABILITIES (Cont'd.) C. Compensated absences Changes in compensated absences were as follows: Business-type activities Sick leave Beginning Ending Balance Net Chanoe Balance $ 258,323 $ 12,468 $ 270,791 48.000 4,000 52,000 $ 306 323 $ 16468 $ 322 791 $ 3661 $ 857 $ 4518 Governmental activities Sick ieave Early retirement 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: Sickness - a retiring employee receives payment for unused accumulated sick days determined as a percent of substitute teachers' per diem rate for professional staff and a percent of per diem saiary rate for support staff, both based on the number of years of service to the District up to a maximum of 270 days and 55% of the per diem amount. Retirement with 15 or more years of service - retiring professional employees between 30 years and 35 years of experience, including at least 15 years of continuous full-time employment with the District, are entitled to a retirement incentive payment of between $ 5,000 and $ 10,000 depending on total years of experience. FS - 25 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 OPERATING LEASES The District has entered into several operating lease agreements in which it has agreed to lease certain pieces of equipment (predominantly copy machines) over various time periods. The agreements contain termination and "lease-up" trade-in provisions which could allow the District to effectively change the terms of the agreements. Total operating lease payments included in General Fund expenditures for the year ended June 30, 2004 amounted to $ 48,382. Minimum lease rental payments for future years, assuming no voluntary terminations, are expected to be as follows: 2004-05 2005-06 2006-07 $ 40,865 23,802 8.662 Total $ 73 329 PENSION PLAN Substantially all full-time and part-time employees of the District participate in the pension plan. The District recognizes expenditures or expenses equal to its contractually-required contributions, subject to the modified accnual basis of accounting in governmental funds. The District contributes to The Public School Employees' Retirement System (the System), a governmental cost sharing multiple-employer defined benefit plan. The plan is under the authority of the Public School Employees' Retirement Code (the Code), as amended. The plan provides retirement and disability, legislatively mandated ad hoc cost-of-living adjustments, and healthcare insurance premium assistance to qualifying annuitants. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. A copy of the report may be obtained by writing to the System at PO Box 125, Harrisburg. PA 17108-0125. or by accessing the System's website atwww.osers.state.oa.us. The contribution policy is established in the Code and requires contributions by active members, employers and the Commonwealth. Active members are required to contribute as follows: Active members who joined the System prior to July 22, 1983. contribute at 5.25 percent (Ciass TC) or at 6.50 percent (Class TO) of the member's qualifying compensation. Members who joined the System on or before July 22, 1983, and who were active or inactive as of July 1, 2001, contribute at 6.25 percent (Class TC) or at 7.50 percent (Class TO) of the member's qualifying compensation. FS - 26 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 PENSION PLAN (Cont'd.) Members who joined the System after June 30, 2001, contribute at 7.50 percent (automatic Class TD). For all new hires and for members who elected Class TD membership, the higher contribution rates began with service rendered on or after January 1, 2002. Contributions required of employers are based upon an actuarial valuation. For the fiscal year ended June 30, 2004, the employer contribution rate was 3.77 percent of covered payroll, composed of 2.98 percent for pension benefits and 0.79 percent for healthcare insurance premium assistance. The District's contributions to PSERS for the years ending June 30, 2004, 2003 and 2002 were $ 244,318, $ 72,804 and $ 70,027, respectively. Those amounts are equal to the required contributions for each year. POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS The District's contract with the Camp Hill Education Association and its compensation plan for administrators provide for postemployment health and hospitalization benefits for full-time teachers and administrators who have 25 or more years of service with the District. The benefit is paid by the District toward the retirees' health insurance premium ranging from $ 750 to $ 1,000 per year per retiree for a period of 2 to 7 years. Both the contribution amount and the number of years of payment depend on the retirees' years of service. The benefit is paid only until the year in which the retiree is eligible for full social security benefits. The District finances this benefit on a pay-as-you-go basis. For the year ended June 30, 2004, there were five retirees receiving this benefit at a total cost to the District of $ 4,890. RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The District maintains commercial insurance coverage covering each of those risks of loss. Management believes such coverage is sufficient to preclude any significant uninsured losses to the District. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. For State unemployment compensation laws, the District is self-insured, which is a common practice for local governmental units. Any unemployment claims are paid by the District on a quarterly basis as incurred. The District is a member of a group of School Districts who have joined together to self-insure their workers' compensation exposure. The District pays annual contributions to the group based on a formula utilizing the District's own claim experience and annual payroll. Claims in excess of the District's retention experience are paid by a Central Fund within the group and, if necessary, by an insurance company carrying excess liability coverage. FS -27 CAMP HILL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 2004 COMMITMENTS AND CONTINGENCIES The District's contract with its teaching staff is scheduled to expire on June 30, 2008. In the normal course of preparing for the subsequent school year, the District has awarded bids for various supplies, fuei contracts, etc. No major commitments in excess of routine requirements have been made by the District. The District participates in numerous state and federal grant programs which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and review by the grantor agencies: therefore, any findings or adjustments by the grantor agencies could have an effect on the recorded grants receivable and/or deferred grant revenues, and on the related grant revenues and expenditures. The District is named as a defendant in various lawsuits, all in the ordinary course of business. The District intends to vigorously defend itself against these actions. Legal counsel for the District has advised that they cannot offer an opinion as to the probable outcome of all such actions. In the opinion of management, the ultimate liabilities, if any, resulting from these claims will not have a material adverse effect on the financial position of the District. SUBSEQUENT EVENTS Subsequent to the balance sheet date, the District issued General Obligation Bonds, Series of 2004 in the amount of $ 9,910,000 dated September 15, 2004. Interest on the bonds is payable on November 15, 2004 and thereafter semiannually on May 15 and November 15 of each year until the maturity date, or the redemption date. Interest rates range from 1.30% to 4.00%. The bonds have various callable dates beginning May 15, 2009 or on any date thereafter. Proceeds of the bonds will be used towards: (1) the current refunding of the outstanding General Obligation Note, Series AA of 1998; (2) the advance refunding of General Obligation Bonds, Series of 2000; and (3) paying the costs of issuing and insuring the Bonds. 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'" o "'. ~ '" "'. (3 m '" Ol C '" C '0, QJ .0 Ol c 'C c QJ QJ (j C III ro .0 "0 C :J u.. QJ (j C III ro .0 "0 C :J u.. AUDITOR'S REPORT CAMP HILL SCHOOL DISTRICT FOR THE SCHOOL YEAR ENDED JUNE 30, 2004 The complete report of the audit of the School District's accounts is on file in the administrative office of the District. The auditors have compieted their audit of the District's funds for the school year ended June 30, 2004 and in accordance with the provisions of Act 237 of December 1980 give notice that said report was filed in the office of the Prothonotary of the Court of Common Pleas of Cumberland County and that said report will be confirmed absolutely unless an appeai is taken therefrom within thirty days after filing thereof.