HomeMy WebLinkAbout06-0570
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SHIPPENSBURG AREA SCHOOL DISTRICT
FINANCIAL REPORT
JUNE 30, 2005
(h- !:70 ~
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CONTENTS
1 - 2
INDEPENDENT AUDITOR'S REPORT
3 -10
Management's Discussion & 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
Combined Statement of Revenues, Expenditures and
Changes in Fund Balances - Governmental Funds
Reconciliation of the Governmental Funds Statement
of Revenues, Expenditures and Changes in Fund
Balances to the Statement of Activities
Statement of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual - General Fund
Statement of Net Assets - Proprietary Fund-
Food Service
Statement of Revenues, Expenses and Change in Net
Assets - Proprietary Fund - Food Service
Statement of Cash Flows - Proprietary Fund -
Food Service
Statement of Fiduciary Net Assets
Notes to Financial Statements
11 - 12
13
14
15
16
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20
21 -22
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24 -40
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CONTENTS (Continued)
SUPPLEMENTARY INFORMATION
General Fund - Schedule of Revenues
General Fund - Schedule of Expenditures
Combining Balance Sheet - Non-Major Governmental
Funds
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances - Non-Major
Govemmental Funds
Combining Statement of Fiduciary Net Assets -
Activity Funds
Independent Auditor's Report on Internal Control
Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of
Financial Statements Performed in Accordance
with Government Auditing Standards
Independent Auditor's Report on Compliance with
Requirements Applicable to Each Major Program
and Internal Control over Compliance in
Accordance with OMB Circular A-133
Schedule of Findings and Questioned Costs
Schedule of Expenditures of Federal Awards
Notes to Schedule of Expenditures of Federal Awards
Summary Schedule of Prior Year's Audit Findings
64
41-42
43 -48
49
50
51 - 52
53 - 54
55 - 56
57 - 58
59 - 62
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(SSR) BoYER & RITTER
CERTIFIED PUBLIC ACCOUNTANTS ,,"'<D CONSULTANTS
\V('tJ Sill' \y\V\\,q)(lhrCOlll
INDEPENDENT AUDITOR'S REPORT
Board of School Directors
Shippensburg Area School District
Shippensburg, Pennsylvania
We have audited the accompanying financial statements of the governmental activities, the business-type
activity, each major fund, and the aggregate remaining fund information of Shippensburg Area School
District, as of and for the year ended June 30, 2005, which collectively comprise Shippensburg Area
School District's basic financial statements as listed in the table of contents. These financial statements
are the responsibility of Shippensburg Area School District's management. Our responsibility is to
express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinions.
As explained in Note 2 to the Financial Statements, during the year ended June 30, 2005, the District
adopted Governmental Accounting Standards Board (GASB) Statement No. 40, Deposit and Investment
Risk Disclosures.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activity, each major fund,
and the aggregate remaining fund information of Shippensburg Area School District, as of June 30, 2005,
and the respective changes in financial position and cash flows, where applicable, thereof and the
respective budgetary comparison for the General Fund for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated August 12,
2005, on our consideration of Shippensburg Area School District's internal control over financial
reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide an
opinion on the internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be considered in
assessing the results of our audit.
CAMP HILL
C:AHlJSIJ:'
CIIA1\IBEH,SI-H;[-{(;
LI~\VlST()\VN
STATE (:OLLEGE
All IrlllcfJClllk'lllly (hVI1(~d !\\(~Illl)('r ()j tlK' r~Si\l Mc(;I<Hjr(~y' ~(~t\V()rk
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Management's Discussion & Analysis on pages 3 through 10 is not a required part of the basic financial
statements but is supplementary information required by the Governmental Accounting Standards Board.
We have applied certain limited procedures, which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the required supplementary information.
However, we did not audit the information and express no opinion on it
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise Shippensburg Area School District's basic financial statements. The combining and individual
non-major fund financial statements and other schedules, listed in the table of contents as supplementary
information are presented for purposes of additional analysis and are not a required part of the basic
financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for
purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133,
Audits oIStates, Local Governments, and Non-Profit Organizations, and is not a required part of the basic
financial statements. Such information has been subjected to the auditing procedures applied in the audit
of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to
the basic financial statements taken as a whole.
)V~Av
Chambersburg, Pennsylvania
August 12,2005
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MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
SHIPPENSBURG AREA SCHOOL DISTRICT
JUNE 30, 2005
The discussion and analysis of Shippensburg Area School District's (District) financial performance
provides an overall review of the District's financial activities for the fiscal year ended June 30, 2005.
The intent of this discussion and analysis is to look at the District's financial performance as a whole;
readers should also review the financial statements and the notes to the basic financial statements to
enhance their understanding of the District's financial performance.
The Management's Discussion & Analysis (MD&A) is an element of the new reporting model adopted
by the Governmental Accounting Standards Board (GASB) in their Statement No. 34 Basic Financial
Statements and Management's Discussion and Analysis for State and Local Governments issued in June
1999. Certain comparative information between the current year and the prior year is required to be
presented in the MD&A.
Financial Highlights
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Special Education
The trends of prior years indicated that during the fiscal year 2004-2005, the Shippensburg Area School
District would experience another year of significant increases in costs for Special Education
Instruction.
Alternative Education
Alternative Education costs increased significantly during the 2004-2005 fiscal year. The District
transferred increased financial resources to fund Alternative Education Placements for at-risk students
during the fiscal year.
Building Program
Due to increased enrollment, the District is planning to build a Grade 4-5 building and to complete
limited renovations on the James Burd and Nancy Grayson Elementary Schools. The District applied
for and received a variance of Pennsylvania Department of Education's (PDE) 20-year rule for
reimbursable projects. The District will receive state reimbursement on the renovations of the existing
elementary schools and the new Grade 4-5 building.
The District borrowed an additional $15,420,000 for construction of a new Grade 4-5 building and
renovations and construction at the existing Nancy Grayson and James Burd elementary schools.
Borrowing
The Board of School Directors borrowed an additional $15,420,000 for construction of a new Grade 4-5
building and renovations and construction at the existing Nancy Grayson and James Burd elementary
schools. The source of the borrowing is new General Obligation Bonds.
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Table A-I summarizes the major features of the District's financial statements, including the portion of
the District they cover and the types of information they contain. The remainder to this overview section
ofMD&A explains the structure and contents of the statements.
Table A-I
Major Features of Shippensburg Area School District's
Government-Wide and Fund Financial Statements
Government.Wide Fund Statements
Statements Governmental Funds Proonetarv Funds Fiduciarv Funds
Scope Entire District (except Activities of the District Activities the District Activities in which the
fiduciary funds) that are not operates similar to District is the trustee or
proprietary or private business - agent to someone else's
fiduciary, such as Food Service resources
education, Activity Funds
administration and
community services
Required Financial Statement of Net Assets Balance Sheet Statement of Net Assets Statement of Fiduciary
Information Net Assets
Statement of Revenues, Statement of Revenues,
Statement of Activities Expenditures and Expenses and Changes Statement of Changes
Changes in Fund in Net Assets in Fiduciary Net Assets
Balances
Statement of Cash
Flows
Accounting Basis and Accrual accounting and Modified-accrual Accrual accounting and Accrual accounting and
Measurement Focus economic-resources accounting and current economic-resources economic.resources
focus financial-resources focus focus
focus
Type of asset//iability All assets and Only assets expected to All assets and All assets and
information liabilities, both be used up and liabilities, both liabilities, both short-
financial and capital, liabilities that come due financial and capital, term and long-term
and short-tenn and during the year or soon and short-term and
long-term thereafter; no capital long-term
assets included
Type of inflow/outflow All revenues and Revenues for which All revenues and All revenues and
information expenses during the cash is received during expenses during the expenses during the
year, regardless of or soon after the end of year, regardless of year, regardless of
when cash is received the year; expenditures when cash is recei ved when cash is received
or paid when goods or services or paid or paid
have been received and
payment is due during
the year or soon
thereafter
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Overview of Financial Statements
Government-Wide Statements
The government-wide statements report information about the District as a whole using accounting
methods similar to those used by private-sector companies. The Statement of Net Assets includes all of
the government's assets and liabilities. All of the current year's revenues and expenses are accounted for
in the Statement of Activities regardless of when cash is received or paid.
The two government-wide statements report the District's net assets and how they have changed. Net
assets, the difference between the District's assets and liabilities, are one way to measure the District's
financial health or position.
Over time, increases or decreases in the District's net assets are an indication of whether its financial
health is improving or deteriorating, respectively.
To assess the overall health of the District, additional non-financial factors, such as changes in the
District's property-tax base and the performance of students, must be considered.
The government-wide financial statements of the District are divided into two categories:
. Governmental activities - All of the District's basic services are included here, such as instruction,
administration and community services. Property taxes and state and Federal subsidies and grants
finance most of these activities.
. Business-type activities - The District conducts a food-service operation and charges fees to
students, staff and visitors to cover the costs of their operation.
Fund Financial Statements
The District's fund financial statements provide detailed information about the most significant funds -
not the District as a whole. Some funds are required by state law and by bond requirements.
Governmental funds - Most of the District's activities are reported in governmental funds,
which focus on the determination of financial position and changes in financial position, not on
income determination. They are reported using an accounting method called modified-accrual
accounting, which measures cash and all other financial assets that can readily be converted to
cash. The governmental-fund statements provide a detailed, short-term view of the District's
operations and the services it provides. Governmental-fund information helps the reader
determine whether there are more or fewer financial resources that can be spent in the near future
to finance the District's programs. The relationship (or differences) between governmental
activities (reported in the Statement of Net Assets and the Statement of Activities) and
governmental funds is reconciled in the financial statements.
Proprietary funds - These funds are used to account for the District's activities that are similar
to business operations in the private sector; or where the reporting focuses on determining net
income, financial position, changes in financial position, and where a significant portion of
funding comes through user charges. When the District charges customers for services it
provides - whether outside customers or to other units in the District - these services are generally
reported in proprietary funds. The Food Service Fund is the District's proprietary fund and is the
same as the business-type activities reported in the government-wide statements, but provides
more detail and additional information such as cash flows.
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Fiduciary fuuds - The District is the trustee, or fiduciary, for several activity funds. All
fiduciary activities are reported in a separate Statement of Net Assets. We exclude these
activities from the District's other financial statements because the District cannot use these
assets to finance operations.
Financial Analysis of the District as a Whole
The District's total net assets were $10,802,264 at June 30, 2005.
Table A-2
As of Juue 30, 2005 aud 2004
Net Assets
Total
Percentage
Governmental Activities Business-Type Activities Total Chan~e
6/30/04 6/30/05 6/30/04 6/30/05 6/30/04 6/30/05 2004-2005
Current and other assets $ 13,704,577 $ 29,915,604 $ 60,845 $ 53,916 $ 13,765,422 $ 29,969,520 117.72%
Capital assets 20,261,510 20,879,558 224,124 199.106 20,485,6]4 21,078,664 2.89%
Total assets $ 33,966,087 $ 50,795,162 $ 284,969 $ 253,022 $ 34,251,056 $ 51,048,184 49.04%
Current and other liabilities $ 3,778,521 $ 4,204,252 $ 88,059 $ 25,683 $ 3,866,580 $ 4,229,935 -9.40%
Long-tenn liabilities 21,824,183 36,015,985 13,249 21,837,432 36,015,985 -64.93%
Total liabilities $ 25,602,704 $ 40,220,23 7 $ 101,308 $ 25,683 $ 25,704,012 $ 40,245,920 -56.57%
Net Assets
Invested in capita] assets,
net of related debt $ (2,607,901) $ (15,848,848) $ 197,626 $ 185,857 $ (2,410,275) $ (15,662,99]) -549.84%
Restricted 74,]54 24,080,436 74,154 24,080,436 -32373.55%
Unrestricted 10,897,130 2,343,337 (13,965) 41,482 10,883,165 2,384,8]9 78.09%
Total oet assets $ 8,363,383 $ 10,574,925 $ 183,661 $ 227,339 $ 8,547,044 $ 10,802,264 -26.39%
Most of the District's net assets are invested in capital assets (land, site improvements, buildings and
equipment). The remaining unrestricted net assets consist of designated and undesignated amounts. The
designated balances are amounts set aside to fund future purchases or capital projects as planned by the
District
The results of this year's operations as a whole are reported in the Statement of Activities. All expenses
are reported in the first column. Specific charges, grants, revenues and subsidies that directly relate to
specific expense categories are presented to determine the final amount of the District's activities which
are supported by other general revenues. The two largest general revenues are the Basic Education
Subsidy provided by the Commonwealth of Pennsylvania, and the local taxes assessed to community
taxpayers.
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Table A-3 restates information from the Statement of Activities in a different format.
Table A-3
Fiscal Years Ended June 30, 2005 and 2004
Changes in Net Assets
Tota]
Percentage
Governmental Activities Business-Type Activities Total Change
6/30/04 6/30/05 6/30/04 6/30/05 6/30/04 6/30/05 2004-2005
Revenues
Program revenues
Charges for services $ 88,888 $ 137,368 $ 652,394 $ 713,801 $ 741,282 $ 851,]69 14.82%
Operating grants and contributions 4,911,891 5,725,135 327,782 367,986 5,239,673 6,093,121 16.29%
General revenues
Property taxes 10,787,383 12,630,054 10,787,383 12,630,054 17.08%
Other taxes 3,098,326 3,859,857 3,098,326 3,859,857 24.58%
Grants, subsidies and
contnbutions, unrestricted 6,644,236 6,776,245 6,644,236 6,776,245 1.99%
Other 205,192 701,880 554 1,344 205,746 703,224 241.79%
Total revenues 25,735,916 29,830,539 980,730 1,083,131 26,716,646 30,913,670 15.71%
Expenses
Instructional 17,052,868 18,510,902 17,052,868 18,510,902 -8.55%
Illstructional student support 1,898,073 2,120,572 1,898,073 2,]20,572 -11.72%
Administrative and financial support 1,993,747 2,225,324 1,993,747 2,225,324 -11.62%
Operation and maint. of plant seTVices 1,773,716 1,852,974 ],773,716 1,852,974 -4.47%
Pupil transportation 1,577,244 1,233,961 1,577,244 1,233,961 21.76%
Student activities 441,211 497,646 441,211 497,646 -12.79%
Connnunity seTVices 17,744 19,076 17,744 19,076 -7.51%
Interest on long-term debt 358,990 1,158,542 358,990 1,158,542 -222.72%
FoodseTVice 1,011,923 1,039,453 1,011,923 1,039,453 -2.72%
Total expenses 25,113,593 27,618,997 1,011,923 1,039,453 26,]25,516 28,658,450 -9.70%
Changes in net assets $ 622,323 $ 2,21l,542 $ (31,193) $ 43,678 $ 591,130 $ 2,255,220 -281.5]%
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The tables below present the expenses of both the Governmental and Business-Type Activities of the
District
Table A-4 presents the District's seven (7) largest functions - instructional programs, instructional
student support, administration, operation and maintenance of plant services, pupil transportation, student
activities and community services and each program's net cost (total cost less revenues generated by the
activities). This table also shows the net costs offset by the other unrestricted grants, subsidies and
contributions to show the remaining financial needs supported by local taxes and other miscellaneous
revenues.
Table A-4
Fiscal Years Ended June 30, 2005 and 2004
Governmental Activities
FunctionslPrograms
Instructional
Instructional student support
Administration
Operation and maintenance
Pupil transportation
Student activities
Community services
Interest on long-term debt
Total governmental activities
Less unrestricted grants, subsidies
Total needs for grants, taxes
and other revenues
Total Cost
of Services
6/30/2004 6/30/2005
$ 17,052,868 $ 18,510,902
1,898,073 2,120,572
1,993,747 2,225,324
1,773,716 1,852,974
1,577,244 1,233,961
441,211 497,646
17,744 19,076
358,990 1,158,542
$ 25,113,593 $ 27,618,997
Net Cost
of Services
6/30/2004 6/30/2005
$ 13,449,658 $ 14,732,998
1,634,208 1,871,590
1,881,340 2,148,726
1,718,100 1,112,107
681,412 289,802
371,966 424,057
17,140 18,672
358,990 1,158,542
20,112,814 21,756,494
6,644,236 6,776,245
$ 13,468,578 $ 14,980,249
Table A-5 reflects the activities of the Food Service Program, the only business-type activity of the
District
Table A-5
Fiscal Years Ended June 30, 2005 and 2004
Business-type Activities
Functions/Programs
Food services
Add: investment earnings
Total business-type activities
Total Cost
of Services
6/30/2004 6/30/2005
$ 1,011,923 $ 1,039,453
Net Cost
of Services
6/30/2004 6/30/2005
$ (31,747) $ 42,334
554 1,344
$ (31,193) $ 43,678
The Statement of Revenues, Expenses and Changes in Net Assets for this proprietary fund will further
detail the actual results of operations.
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The District Funds
At June 30, 2005, the District's governmental funds reported a combined fund balance of $26,653,837,
which reflects an increase of $16,062,075 from June 30, 2004. The primary reason for this increase is
the issuance of new General Obligation Debt in the amount of$15,420,000.
General Fund Budget
During the fiscal year, the Board of School Directors (Board) authorizes revisions to the original budget
to accommodate differences from the original budget to the actual expenditures of the District. All
adjustments are again confirmed at the time the annual audit is accepted, which is after the end of the
fiscal year and not prohibited by state law. A schedule showing the District's original and final budget
amounts compared with amounts actually paid and received is provided in the financial statements.
The District applied for Federal, state and local grants. These grants cannot always be anticipated in the
budgeting process. Budgeted Revenues increased by $284,788 as a result of additional approved grants.
Budgeted expenditures and other financing uses also increased by the same amount to compensate for the
additional approved grants. Transfers between specific categories of expenditures/financing uses occur
during the year. The most significant transfers are from the budget reserve to specific expenditures.
Capital Asset and Debt Administration
Capital Assets
At June 30, 2005, the District had $20,879,558 invested in a broad range of capital assets, including land,
buildings, furniture and equipment.
Table A-6
Fiscal Years Ended June 30, 2005 and 2004
Capital Assets - Net of Depreciation
Land and site improvements
Buildings and improvements
Furniture and equipment
Construction-in-progress
Govenunental Activities
6/30/04 6/30/05
$ 587,929 $ 784,455
15,709,121 15,154,722
3,350,049 3,701,364
614,411 1,239,017
$ 20,261,510 $ 20,879,558
Total
Percentage
Business-Type Activities Total Change
6/30/04 6/30/05 6/30/04 6/30/05 2004-2005
$ $ $ 587,929 $ 784,455 33.43%
15,709,121 15,154,722 -3.53%
224,124 199,106 3,574,173 3,900,470 9.13%
614,411 1,239,017 100.00%
$ 224,124 $ 199,106 $ 20,485,634 $ 21,078,664 2.89%
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Debt Administration
As of July I, 2004, the District had total outstanding bond principal of$22,255,000.
During the year, the District borrowed an additional $15,420,000 and made payments against principal of
$1,285,000 resulting in ending outstanding debt as of June 30, 2005, of $36,390,000.
Table A-7
Fiscal Years Ended Jnne 30, 2005 and 2004
Outstanding Debt
Total
Percentage
Governmental Activities Business-Type Activities Total ChanJ<:e
6/30/04 6/30/05 6/30/04 6/30/05 6/30/04 6/30105 2004-2005
General Obligation Bonds
Series of 1997 $ 130,000 $ $ $ $ 130,000 $ -100.00%
Series of2001 2,405,000 1,630,000 2,405,000 1,630,000 -32.22%
Series of200lA 9,775,000 9,395,000 9,775,000 9,395,000 -3.89%
Series oflO04 15,420,000 15,420,000 ] 00.00%
General Obligation Note
Series of2003 9,945,000 9,945,000 9,945,000 9,945,000 0.00%
General Obligation Note
Seriesof2003 26,498 13,249 26,498 13,249 -50.00%
$ 22,255,000 $ 36,390,000 $ 26,498 $ 13,249 $ 22,281,498 $ 36,403,249 63.38%
Other obligations include accrued vacation-pay and sick-leave for specific employees of the District.
More detailed information about our long-term liabilities is included in Notes to the Financial Statements.
Table A-8 reflects the comparison of revenue and expenditure categories by percentages.
Local revenues
State revenues
Federal revenues
Table A-8
Revenues and Expenditures
2002-2003 2003-2004 2002-2003 2001-2002
59.4% 55.9% 53.9% 54.0%
38.2% 41.3% 43.6% 43.8%
2.4% 2.8% 2.5% 2.2%
60.9% 61.7% 63.0% 64.3%
26.3% 27.6% 28.4% 28.0%
1.7% 1.8% 1.7% 1.4%
2.9% 2.3% 0.2% 0.0%
8.2% 6.6% 6.7% 6.3%
Instruction
Support services
Non-instructional/community
Facilities acquisition, construction
and improvement services
Debt service
Contacting the District's Financial Management
Our financial report is designed to provide our citizens, taxpayers, parents, students, investors and
creditors with a general overview of the District's finances and to show the Board's accountability for the
money it receives. If you have questions about this report or wish to request additional financial
information, please contact Deborah Westover, Business AdministratorlBoard Secretary, at the
Shippensburg Area School District, 317 North Morris Street, Shippensburg, P A 17257, (717) 530-2702.
10
SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF NET ASSETS
June 30, 2005
Governmental Business-Type
ASSETS Activities Activity Total
Current Assets
Cash $ 9,118,063 $ 21,147 $ 9,139,210
Investments 17 ,865,209 17 ,865,209
Receivables
Taxes - net of allowance
for uncollectibles 1,294,236 1,294,236
Federal subsidies 592,200 7,467 599,667
State subsidies 174,311 859 175,170
Other 113,010 1,519 114,529
Internal balances 414,839 414,839
Prepaid expenses 5,988 5,988
Inventories 22,924 22,924
Total current assets 29,577,856 53,916 29,631,772
Noncurrent Assets
Bond issuance costs - net
Land and improvements - net
Building and improvements - net
Furniture and equipment - net
Construction- in-progress
Total noncurrent assets
337,748
784,455
15,154,722
3,701,364
1,239,017
21,217,306
199,106
337,748
784,455
15,154,722
3,900,470
1,239,017
21,416,412
199,106
Total assets
$ 50,795,162 $
253,022 $ 51,048,184
See Notes to Financial Statements.
11
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. Governmental Business-Type
. LIABILITIES AND NET ASSETS Activities Activity Total
Current Liabilities
. Accounts payable $ 827,149 $ 631 $ 827,780
. Current portion oflong-term debt
General obligation debt 1,565,000 13,249 1,578,249
. Leases payable 67,680 67,680
Accrued expenses
. Salaries and benefits 1,605,829 1,605,829
Accrued interest payable 130,855 130,855
. Deferred revenues 5,475 11,803 17 ,278
. Uneamed revenues 2,264 2,264
.
Total current liabilities 4,204,252 25,683 4,229,935
.
. Noncurrent Liabilities
Long-term debt - net of current portion
. General obligation debt 34,825,000 34,825,000
. Leases payable 270,726 270,726
Compensated absences 920,259 920,259
. Total noncurrent liabilities 36,015,985 36,015,985
. Total liabilities 40,220,237 25,683 40,245,920
Net Assets (Deficit)
Invested in capital assets - net of
related debt (15,848,848) 185,857 (15,662,991)
Restricted for:
Capital projects 23,972,869 23,972,869
Capital reserve 80,527 80,527
Athletic 27,040 27,040
Unrestricted 2,343,337 41,482 2,384,819
Total net assets 10,574,925 227,339 10,802,264
.
. Total liabilities and net assets $ 50,795,162 $ 253,022 $ 51,048,184
.
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12
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SHIPPENSBURG AREA SCHOOL DISTRICT
.
. BALANCE SHEET. GOVERNMENTAL FUNDS
. June 30, 2005
. Capital Non-Major Total
Projects Governmental Governmental
. General Construction Funds Funds
ASSETS
. Cash $ 2,148,304 $ 6,855,414 $ 114,345 $ 9,118,063
Investments 644,952 17,220,257 17,865,209
. Receivables
Taxes - net of allowance
. for uncollectibles 1,294,236 1,294,236
Federal subsidies 592,200 592,200
. State subsidies 174,311 174,311
Other 107,033 5,800 177 113,010
. Due from other funds 414,839 414,839
. Prepaid expenses 5,988 5,988
Total assets $ 5,381,863 $ 24,081,471 $ 114,522 $ 29,577,856
. LIABILITIES AND FUND BALANCES
. Accounts payable $ 711,592 $ 108,602 $ 6,955 $ 827,149
Accrued expenses
. Salaries and benefits 1,605,829 1,605,829
Deferred revenues 488,777 488,777
. Unearned revenue 2,264 2,264
Total liabilities 2,808,462 108,602 6,955 2,924,019
. Fund Balances
. Reserved for
Capital projects 23,972,869 23,972,869
. Capital reserve 80,527 80,527
Athletic 27,040 27,040
. Unreserved 2,573,401 2,573,401
Total fund balances 2,573,401 23,972,869 107,567 26,653,837
.
Total liabilities and fund balances $ 5,381,863 $ 24,081,471 $ 114,522 $ 29,577,856
.
. See Notes to Financial Statements.
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14
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SffiPPENSBURG AREA SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
June 30, 2005
Total Fund Balances. Governmental Funds
26,653,837
Amounts reported for governmental activities in the Statement
of Net Assets are different because:
Capital Assets used in governmental activities are not financial resources,
and therefore, they are not reported as assets in governmental funds. The
cost of assets is $35,766,331, including construction-in-progress in the
amount of$I,239,017, and the accumulated depreciation is $14,886,773.
Property taxes receivable will be collected this year, but are not
available soon enough to pay for the current period's expenditures,
and therefore, they are deferred revenues in the funds.
Governmental funds report bond issuance costs as expenditures.
However, in the Statement of Activities, the costs of issuance are
allocated over the lives of the debt issues. This is the amount by
which bond issuance costs exceed accumulated amortization.
Long-term liabilities, including bonds payable and compensated absences,
are not due and payable in the current period, and therefore, they are not
reported as liabilities in the funds. Long-term liabilities at year-end consist of:
Bonds payable (36,390,000)
Leases payable (338,406)
Accrued interest (130,855)
Compensated absences (920,259)
Total net assets - governmental activities
See Notes to Financial Statements.
15
$
20,879,558
483,302
337,748
(37,779,520)
$
10,574,925
.
.
. SIDPPENSBURG AREA SCHOOL DISTRICT
.
. COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
. FUND BALANCES - GOVERNMENTAL FUNDS
Year Ended June 30, 2005
. Capital Non-Major Total
. Projects Governmental Governmental
General Construction Funds Funds
. Revenues
Local sources $ 17,236,01l $ 377,990 $ 61,579 $ 17,675,580
. State appropriations 11,373,664 1l,373,664
Federal appropriations 705,140 705,140
. Total revenues 29,314,815 377,990 6t,579 29,754,384
. Expenditures
Instructional 17,604,784 17,604,784
. Support services 7,379,441 198,598 38,552 7,616,591
Operation of non-instructional services 342,310 148,260 490,570
. Construction/improvement services 846,710 846,710
Debt service
. Principal 1,285,000 1,285,000
Interest 1,084,576 1,084,576
. Total expenditures 27,696,111 1,045,308 186,812 28,928,231
. Excess (deficiency) of revenues
. over expenditures 1,618,704 (667,318) (125,233) 826,153
. Other Financing Sources (Uses)
Bond proceeds 15,420,000 15,420,000
. Refund of prior years' receipts (184,078) ( 184,078)
Operating transfers in 158,646 158,646
. Operating transfers out (158,646) (158,646)
Total other financing sources (uses) (342,724) 15,420,000 158,646 15,235,922
. Net changes in fund balances 1,275,980
14,752,682 33,413 16,062,075
.
Fund Balances - July I, 2004 1,297,421 9,220,187 74,154 10,591,762
. Fund Balances - June 30, 2005 $ 2,573,401 $ 23,972,869 $ 107,567 $ 26,653,837
.
See Notes to Financial Statements.
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. 16
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SHIPPENSBURG AREA SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE
STATEMENT OF ACTIVITIES
Year Ended Jnne 30,2005
Net change in fund balances - total governmental funds
$ 16,062,075
Amounts reported for governmental activities in the Statement of
Activities are different because:
Capital outlays are reported in governmental funds as expenditures.
However, in the Statement of Activities, the costs of those assets are
allocated over their useful lives as depreciation expense. This
is the amount by which capital outlays exceed depreciation
in the period.
1,127,664
(811,689)
Capital outlays
Less depreciation expense
The net effect of various miscellaneous transactions involving capital
assets (ie. sales, trade-ins, and donations) is to decrease net assets.
Because some property taxes will not be collected for several
months after the District's fiscal year ends, they are not considered
as "available" revenues in the governmental funds. Deferred tax
revenues increased by this amount this year.
Interest on long~term debt in the Statement of Activities differs from the
amount reported in the governmental funds because interest is
recognized as an expenditure in the funds when it is due, and thus
requires the use of current financial resources. In the Statement of
Activities, interest expense is recognized as the interest accrues,
regardless of when it is due. The additional interest accrued in the
Statement of Activities over the amount due is shown here.
Some expenses reported in the Statement of Activities do not require
the use of current financial resources, and therefore, they are not
reported as expenditures in governmental funds.
The issuance oflong~term debt provides current financial resources
to governmental funds, while the repayment of the principal of long-
term debt consumes the current financial resources of governmental funds.
Neither transaction, however, has any effect on net assets. Also,
governmental funds report the effect of issuance costs, premiums,
discounts, and similar items when debt is first issued, whereas these
amounts are deferred and amortized in the Statement of Activities. This
amount is the net effect of these differences in the treatment of long-term
debt and related items.
Issuance of1ong~termdebt
Repayment of long-term debt
Bond issuance costs
Amortization of bond issuance costs
(15,420,000)
1,285,000
189,262
(92,476)
Change in net assets of governmental activities
See Notes to Financial Statements.
17
315,975
(36,333)
48.081
(73,966)
(66,076)
(14,038,214)
$ 2.211,542
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SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-
BUDGET AND ACTUAL - GENERAL FUND
Year Ended Jnne 30, 2005
Variance with Final
Budgeted Amouuts Budget Favorable
Original Final Actual (Unfavorable )
Revenues
Local sources $ 16,159,125 $ 16,349,125 $ 17,236,01l $ 886,886
State appropriations 11,154,602 II ,222,249 1l,373,664 151,415
Federal appropriations 689,143 716,280 705,140 (11,140)
Total revenues 28,002,870 28,287,654 29,314,815 1,027,161
Expenditures
Instructional 17,693,618 17,666,022 17,604,784 61,238
Support services 7,375,561 7,465,623 7,379,441 86,182
Operation of non-instructional services 333,166 343,485 342,310 1,175
Debt service 2,341,879 2,553,878 2,369,576 184,302
Total expenditures 27,744,224 28,029,008 27,696,1l1 332,897
Excess of revenues
over expenditures 258,646 258,646 1,618,704 1,360,058
Other Financing Sources (Uses)
Refund of prior years' receipts (184,078) (184,078)
Operating transfers out (158,646) (158,646) (158,646)
Budgetary reserve (100,000) (100,000) 100,000
Total other financing uses (258,646) (258,646) (342,724) (84,078)
Net changes in fnnd halance $ $ 1,275,980 $ 1,275,980
Fund Balance - July I, 2004 1,297,421
Fund Batance - June 30, 2005 $ 2,573,401
See Notes to Financial Statements.
18
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. SHIPPENSBURG AREA SCHOOL DISTRICT
.
. STATEMENT OF NET ASSETS-
. PROPRIETARY FUND - FOOD SERVICE
June 30, 2005
.
. ASSETS
Current Assets
. Cash $ 21,147
. Receivables
Federal subsidies 7,467
. State subsidies 859
Other 1,519
. Inventories 22,924
Total current assets 53,916
.
Noncurrent Assets
. Furniture and equipment - net 199,106
. Total assets $ 253,022
. LIABILITIES AND NET ASSETS
Liabilities
. Accounts payable $ 631
Note payable 13,249
. Deferred revenues 11,803
. Total liabilities - all current 25,683
. Net Assets
Invested in capital assets - net of related debt 185,857
. Unrestricted 41,482
Total net assets 227,339
.
Total liabilities and net assets $ 253,022
.
. See Notes to Financial Statements.
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. 19
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SIDPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENSES AND CHANGE IN NET ASSETS-
PROPRIETARY FUND - FOOD SERVICE
Year Ended Jnne 30, 2005
Operating Revenues
Food service revenue
$
713,801
Operating Expenses
Labor, taxes and benefits
Professional and technical services
Disposal services
Electricity
Equipment repairs and maintenance
Extermination services
Advertising
Printing and binding
Travel
Supplies
Food and milk
Donated commodities used
Depreciation
Dues and fees
Total operating expenses
516,981
6,537
2,223
20,000
7,360
1,130
416
1,321
959
23,416
373,643
57,124
27,261
249
1,038,620
(324,819)
1,344
259,379
51,483
57,124
(833)
368,497
43,678
183,661
$ 227,339
Operating loss
Nonoperating Revenues (Expense)
Investment income
Federal subsidies
State subsidies
Value of donated commodities
Interest expense
Total nonoperating revenues
Change in net assets
Net Assets - July I, 2004
Net Assets - June 30, 2005
See Notes to Financial Statements.
20
SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF CASH FLOWS-
PROPRIETARY FUND. FOOD SERVICE
Year Ended June 30, 2005
Cash Flows From Operating Activities
Cash received from meal sales $ 713,801
Cash payments for goods and services (488,965)
Cash payments to employees for services (516,981)
Net cash used in operating activities (292,145)
Cash Flows From Non-capital Financing Activities
Federal subsidies 259,379
State subsidies 51,483
Net cash provided by non-capital
financing activities 310,862
Cash Flows From Capital and Related Financing Activities
Acquisition of equipment (2,243)
Principal paid on financing agreements (13,249)
Interest paid on financing agreements (833)
Cash used in capital and related
financing activities (16,325)
Cash Flows From Investing Activities
Investment income 1,344
Net increase in cash 3,736
Cash:
July 1,2004 17,411
June 30, 2005 $ 21,147
(Continued)
21
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SHlPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF CASH FLOWS.
PROPRIETARY FUND - FOOD SERVICE (Continued)
Year Ended June 30, 2005
Reconciliation of Operating Loss to Net Cash Used
in Operating Activities
Operating loss
Adjustments to reconcile operating loss to net
cash used in operating activities
Depreciation
Value of donated commodities
Changes in assets and liabilities:
(Increase) decrease in:
Receivables
Inventories
(Decrease) increase in:
Accounts payable
Due to other funds
Deferred revenues
Net cash used in operating activities
$
(324,819)
27,261
57,124
4,688
5,977
(140)
(61,272)
(964)
(292,145)
$
See Notes to Financial Statements.
22
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SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF FIDUCIARY NET ASSETS
June 30, 2005
ASSETS
Cash
Receivables
Total assets
Combined
Payroll Activity
Fund Funds
$ 621,482 $ 90,103
29
$ 621,482 $ 90,132
LIABILITIES
Due to other funds
Due to student groups
Accounts payable
Payroll withholdings and deductions
Total liabilities
$
414,839 $
89,939
193
$
206,643
621,482 $
90,132
See Notes to Financial Statements.
23
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1.
Summary of Siguificaut Accouuting Policies
Shippensburg Area School District operates two elementary schools, one middle school and one high
school in Shippensburg, Pennsylvania. The District operates under current standards prescribed by the
Pennsylvania Department of Education in accordance with the provisions of the School Laws of
Pennsylvania. The District operates under a locally-elected, nine-member Board.
The financial statements of Shippensburg Area School District (the District) have been prepared in
accordance with accounting principles generally accepted in the United States of America (GAAP) as
applied to governmental units. The Governmental Accounting Standards Board (GASB) 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:
A. Reporting Entity
Shippensburg Area School District's financial statements include the operations of all entities for which
the School Board exercises oversight responsibility. Oversight responsibility is demonstrated by financial
interdependency, selection of governing authority, designation of management, ability to significantly
influence operations, and accountability for fiscal matters.
Shippensburg Area School District is the lowest level of government which has oversight responsibility
and control over all activities related to public school education in the Commonwealth of Pennsylvania.
The District receives funding from local, state and Federal government sources and must comply with the
requirements of these funding-source entities. However, the District is not included in any other
governmental "reporting entity" since the School Board Members are elected by the public and have
decision-making authority, the power to designate management, the ability to significantly influence
operations and primary accountability for fiscal matters. Additionally, the District does not exercise
oversight responsibility over any other entities, and consequently, no other entities have been included in
the accompanying financial statements.
B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of
Activities) report information on all of the non-fiduciary activities of the primary government and its
component units. For the most part, the effect of interfund activity has been removed from these
statements. Governmental activities, which normally are supported by taxes and intergovernmental
revenues, are reported separately from business-type activities, which rely to a significant extent on fees
and charges for support. Likewise, the primary government is reported separately from certain legally-
separate component units for which the primary government is financially responsible.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or
segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Program revenues include I) charges to customers or applicants who
purchase, use or directly benefit from goods, services, or privileges provided by a given function or
segment and 2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function or segment. Taxes and other items not included among program
revenues are reported as general revenues.
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note I.
Summary of Siguificant Accounting Policies (Continued)
B. Government-wide and Fund Financial Statements (Continued)
Separate-fund financial statements are provided in the report for all of the governmental, proprietary, and
fiduciary funds of the District, even though the latter are excluded from the government-wide financial
statements. Major individual governmental funds and major individual enterprise funds are reported as
separate columns in the fund financial statements. Non-major funds are aggregated and presented in a
single column. Fiduciary funds are reported by fund type.
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The District complies with accounting principles generally accepted in the United States of America
(GAAP) and applies all relevant Governmental Accounting Standards Board (GASB) Pronouncements.
The government -wide financial statements are reported using the economic-resources measurement focus
and the accrual basis of accounting, as are the proprietary and 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. Property taxes are recognized as revenues in the year for which they are
levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements
imposed by the provider have been met. Net assets (total assets less total liabilities) are used as a practical
measure of economic resources and the operating statement includes all transactions and events that
increased or decreased net assets. Depreciation is charged as expense against current operations and
accumulated depreciation is reported on the Statement of Net Assets.
Governmental-fund financial statements are reported using the current financial-resources measurement
focus and the modified-accrual basis of accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered to be available when they are collectible within the
current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the
government considers revenues to be available if they are collected within 60 days of the end of the
current fiscal period. Revenues from Federal, state and other grants designated for payment of specific
School District 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 liabilities are incurred, as under accrual accounting. However, debt-service expenditures,
as well as expenditures related to compensated absences and claims and judgments, are recorded only
when payment is due.
When both restricted and unrestricted resources are available for use, it is the District's policy to use
restricted resources first, then umestricted resources as they are needed.
Governmental Funds are those through which most governmental functions of the District are
financed. The acquisition, use and balances of the District's expendable financial resources and related
liabilities (except those accounted for in proprietary funds) are accounted for through Governmental
Funds.
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SIDPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note I.
Summary of Significant Accouuting Policies (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
The District reports the following major governmental funds:
The General Fund is the District's primary operating fund. It accounts for all financial resources
except those required to be in another fund. Revenues are primarily derived from local property,
earned income, per capita and occupational taxes, and state and Federal distributions. Many of the
more important activities of the District, including instruction, administration of the District and
certain non-instructional services are accounted for in this fund.
The Capital Projects Fund is used to account for financial resources available for the acquisition or
construction of major capital facilities (other than those financed by proprietary funds).
The District operates one enterprise fund, the Food Service Fund. This fund accounts for the activities of
the District's food service program.
Additionally, the District reports the following non-major governmental funds:
The Athletic Funds are authorized by Section 511 of the Public School Code of 1949 to account for
the revenues and expenditures of athletic activities. The funds account for gate receipts and other
revenues from athletic events and certain budgeted costs ofthe District's athletic programs.
The Capital Reserve Fund (Section 2932 is authorized by P.L. 145, Act of April 30, 1943, known as
Section 2932 School Laws of Pennsylvania) accounts for (1) monies transferred during any fiscal
year from appropriations made for any particular purpose which may not be needed, and (2) surplus
monies in the General Fund of the District at the end of any fiscal year. This fund is included in the
financial statements as a Special Revenue Fund.
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 proprietary fund's principal on-going operations. The principal operating revenues of
the District's enterprise fund are food service charges. Operating expenses for the District's enterprise
fund include food production costs, supplies, administrative costs, and depreciation on capital assets. All
revenues or expenses not meeting this definition are reported as nonoperating revenues and expenses.
The District does not attempt to allocate "building-wide costs" to the Food Service Fund. Thus, General
Fund expenditures which partially benefit the Food Service Fund (utilities, janitorial services, insurance,
etc.) are not proportionately recognized within the Food Service Fund; similarly, the Food Service Fund
does not recognize a cost for the building space it occupies (no rental-of-facilities expense).
The Activity Funds account for the monies authorized by Section 511 of the Public School Code of 1949
for school publications and organizations. A portion of the Activity Funds is an Agency Fund which is
separate from other Agency Funds because of legal requirements. Agency Funds are custodial in nature
(assets equal liabilities) and do not involve measurement of results of operations. Agency Funds are also
accounted for using the modified-accrual basis of accounting.
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SIDPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note I.
Summary of Significant Accounting Policies (Continued)
D. Budgets and Budgetary Accounting
An operating budget is adopted prior to the beginning of each year for the General Fund on a modified-
accrual basis of accounting. The General Fund is the only fund for which a budget is legally required.
The Pennsylvania School Code dictates specific procedures relative to adoption of the District's budget
and reporting of its financial statements:
The District, before levying annual school taxes, is required to prepare an operating budget for
the succeeding fiscal year.
The District is required to publish notice by advertisement, at least once in two newspapers of
general circulation in the municipality in which it is located, and within fifteen days of final
action, that the proposed budget has been prepared and is available for public inspection at the
administrative office ofthe District
Notice that public hearings will be held on the proposed operating budget must be included in the
advertisement; such hearings are required to be scheduled at least ten days prior to when final
action on adoption is taken by the Board.
Legal budgetary control is maintained at the sub-function/major-object leveL The Board of School
Directors may make transfers of funds appropriated to any particular item of expenditure by legislative
action in accordance with the Pennsylvania School Code. Management may amend the budget at the sub.
function/sub-object level without Board approvaL Appropriations lapse at the end of the fiscal period.
Budgetary information reflected in the financial statements is presented at or below the level of budgetary
control and includes the effect of approved budget amendments.
E. Assets, Liabilities and Net Assets or Equity
Cash and Cash Equivalents: For purposes of the Statement of Cash Flows presented for the proprietary
fund, the District considers all highly-liquid investments with maturities of three months or less when
purchased to be cash equivalents.
Investments: Investments are stated at market value.
Allowance for Estimated Uncollectible Taxes and Deferred Revenues: The allowance for estimated
uncollectible taxes is based upon an historical estimate of delinquent taxes that will not be received within
one year of the fiscal year-end. Deferred revenues are based upon an historical estimate of delinquent
taxes expected to be received within one year ofthe fiscal year-end.
The portion of taxes receivable which is expected to be received within sixty days of June 30 is recorded
as revenue in the current year. The remaining amount of taxes receivable which is expected to be
received within one year from June 30 is recorded as deferred revenues. All other amounts in taxes
receivable are written off as estimated uncollectible taxes.
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities and Net Assets or Equity (Continued)
Inventories: On government -wide financial statements, inventories are presented at the lower of cost or
market on a first-in, first-out basis, and are expensed when used.
A physical inventory of the Food Service Fund's food and supplies was taken as of June 30, 2005. The
inventory consisted of government-donated commodities which were valued at estimated fair market
value, and purchased commodities and supplies, valued at cost using the first-in, first-out (FIFO) method.
The District has adopted an inventory recordkeeping system which does distinguish between donated and
purchased commodities. Accordingly, deferred revenues for donated commodities has been recorded.
Capital Assets and Depreciation: Capital assets, which include property, plant and equipment, and
infrastructure assets, are reported in the applicable governmental or business-type activities column in the
government-wide financial statements. Capital assets are capitalized at the discretion of management,
unless the assets are acquired by debt proceeds, in which case the assets must be capitalized.
Management considers various factors in the capitalization of assets, including the assets' estimated
useful lives, costs, and the extent to which the assets are part of a larger capital project. The District's
capital assets include library books, classroom texts, computer equipment, classroom furniture, and other
instructional equipment, subject to the on-going discretion of management. The costs of normal
maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not
capitalized.
Depreciation is provided for fixed assets on the straight-line basis over the estimated useful lives of the
assets or groups of assets as determined by management.
Long-Term Obligations: In the government-wide financial statements, and in the proprietary fund type in
the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in
the applicable governmental or business-type activity columns in the Statement of Net Assets. Bond
premiums and discounts, as well as issuance costs, are deferred and amortized over the lives of the issues
using the effective interest method. Bonds payable are reported net of applicable bond premiums or
discounts. Bond issuance costs are reported as deferred charges and amortized over the terms of thc
related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as
well as bond issuance costs, during the current period. The face amount of the debt issued is reported as
other financing sources while discounts on debt issuances are reported as other financing uses. Issuance
costs, whether or not withheld from the actual debt proceeds received, are reported as debt service
expenditures.
Comoensated Absences: Under the system of financial accounting and reporting for Pennsylvania School
Systems, the District accrues certain accumulated employee benefits, such as unpaid vacation and sick
pay. Calculation of this amount is determined by the appropriate vacation, sick and retirement lump-sum
payments which would be available to employees if they would leave or retire from the District and is
adjusted for expected turnover rates of employees. Accrued benefit days, multiplied by appropriate salary
amounts, are reflected as a long-term liability unless retirements are likely within the upcoming fiscal
year. Those costs, determined to be current-year costs, are reflected as a liability of the General Fund.
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note I. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities and Net Assets or Equity (Continued)
Transfers: Advances between funds that are not expected to be repaid are accounted for as transfers. In
those cases when repayment is expected, the advances are accounted for through the various "due from"
and "due to" accounts.
Fund Balance:
The District classifies fund balances as follows:
Reserved
Reserved is used to denote that portion of the fund balance, which is not available for expenditure
appropriation or is legally segregated for a specific purpose.
. Reserved for athletics represents that portion of fund balance legally restricted to athletic
programs.
. Reserved for capital reserve represents that portion of fund balance legally restricted to capital
projects.
Unreserved
. Designated is used to indicate intentions for financial-resource utilization.
. Undesignated is used to denote that portion of fund balance which IS available for
appropriations.
Use of Estimates: Management uses estimates and assumptions in preparing financial statements. These
estimates and assumptions affect the reported amounts of assets and liabilities and the reported revenue,
expenditures and disclosures.
Total Columns on Combining Governmental.Fund Statements: Total columns on the combining
governmental-fund financial statements are captioned "Memorandum Only" to indicate that they are
presented only to facilitate financial analysis. Data in these columns does not present financial position,
results of operations or cash flows, in conformity with accounting principles generally accepted in the
United States of America. Neither is such data comparable to a consolidation. Interfund eliminations
have not been made in the aggregation of this data.
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 2.
Change in Acconnting Principle
During the year ended June 30, 2005, the District adopted Statement of Governmental Accounting
Standards (SGAS) No. 40, Deposit and investment Risk Disclosures. an amendment to SGAS No.3,
Deposits with Financial Institutions, Investments (Including Repurchase Agreements), and Reverse
Repurchase Agreements. SGAS No. 40 establishes and modifies disclosure requirements related to
investment risks, including credit risk, interest-rate risk and foreign-currency risk. It also establishes and
modifies disclosure requirements for deposit risks, including custodial-credit risk and foreign-currency
risk.
Note 3.
Deposits and Investments
Under Section 440.1 of the Public School Code of 1949, as amended, the District is permitted to invest
funds consistent with sound business practices in the following types of investments:
. U.S. Treasury Bills
. Short-term obligations of the U.S. Government or its agencies or its instrumentalities
. Deposits in savings accounts or time deposits or share accounts of institutions insured by either:
I. The Federal Deposit Insurance Corporation (FDIC), or
2. The Federal Savings and Loan Insurance Corporation (FSLIC), or
3. The National Credit Union Share Insurance Fund (NCUSIF)
to the extent that such accounts are so insured, and for any amounts above maximum insurable
limits, provided that approved collateral as provided by law shall be pledged by the depository
. Obligations of (a) the United States of America or its agencies or instrumentalities backed by the
fuJI-faith and credit of the United States of America, and (b) the Commonwealth of Pennsylvania
or instrumentalities thereof backed by the fuJI-faith and credit of these political subdivisions
. Shares of investment companies whose investments are restricted to the above categories
The deposit and investment policies of the District adhere to state statutes and prudent business practices.
There were no deposit or investment transactions during the year that violated either state statutes or
District policies.
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 3.
Deposits and Investments (Continued)
Deposits: Custodial-Credit Risk
Custodial-credit risk is the risk that in the event of a bank failure, the District's investments may not be
returned to it. As of June 30, 2005, $10,520,075 of the District's total bank balances of $10,620,075 were
exposed to custodial.credit risk as follows:
Uninsured and collateralized by assets maintained in conformity with Act 72
Amount
$ 10,520,075
Act 72 is an act standardizing the procedures for pledges of assets to secure deposits of public funds with
banking institutions pursuant to other laws; establishing a standard rule for the types, amounts and
valuations of assets eligible to be used as collateral for deposits of public funds; permitting assets to be
pledged against deposits on a pooled basis and authorizing the appointment of custodians to act as the
pledgees of assets.
Investments
As of June 30, 2005, the District had the following investments:
Investment
Pennsylvania Local Government Investment Trust (pLGITI ARM)
Maturities Fair Values
42-days weighted avg $ 17,220,257
Portfolio Assets
PLGIT/ARM - This fund invests in U.S. Treasury and agency securities and repurchase agreements
secured by such obligations, as well as certain municipal obligations and collateralized or insured
certificates of deposit. Weighted-average portfolio maturity for the fund is expected to be kept at or
below 60 days.
Weighted-Average Maturity
The weighted-average maturity (W AM) method expresses investment time horizons-the time when
investments become due and payable-in years or months, weighted to reflect the dollar size of individual
investments within an investment type. In this iIIustration, W AMs are computed for each investment
type. The portfolio's W AM is derived by dollar-weighting the W AM for each investment type.
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 3.
Deposits and Investments (Continned)
Interest-Rate Risk
The District does not have a formal investment policy that limits investment maturities as a means of
managing its exposure to fair-value losses arising from increasing interest rates.
Credit Risk
As indicated above, Section 440.1 of the Public School Code of 1949, as amended, limits the composition
of the District's investments, and the District has no investment policy that would further limit its
investment choices. As of December 31, 2004, the District's investments in PLGIT were rated AMm
by Standard & Poor's.
Concentrations of Credit Risk
The District places no limit on the amounts invested in anyone issuer. The District's investments in
PLGIT represent 100% of the District's total investments.
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 4.
Taxes Receivable, Deferred Revenues and Estimated Uucollectible Taxes
A summary of the taxes receivable and related accounts at June 30, 2005, follows:
Uncollected taxes - real estate
Uncollected taxes - personal
Interest and commissions - net
Earned income taxes
Realty transfer taxes
Amount
$ 663,817
18,742
9,824
556,179
45,674
$ 1,294,236
$ 816,996
483,302
(6,062)
$ 1,294,236
Taxes Receivable - Net
Taxes to be collected within 60 days
Deferred revenues - delinquent taxes
Allowance for uncollectible taxes
Taxes Receivable - Net
Deferred Revenue - General Fund
Delinquent taxes
Grant revenues
$
483,302
5,475
488,777
$
Deferred Revenue - Food Service Fund
Student deposits
Donated commodities
$
8,543
3,260
11,803
$
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 5.
Interfund Accounts
Individual fund receivable and payable balances at June 30, 2005, are as follows:
Interfund Interfund
Receivables Payables
General $ 414,839 $
Payroll 414,839
$ 414,839 $ 414,839
Individual fund transfer activity at June 30, 2005, is as follows:
Transfers In Transfers Out
General $ $ 158,646
Capital Reserve 50,500
Senior High Athletic 80,224
Middle School Athletic 27,922
$ 158,646 $ 158,646
Note 6.
Food Service Fund Inventory
The composition of Food Service Fund inventory at June 30, 2005, is as follows:
Materials and supplies
Purchased food
Donated food
$
Amount
6,825
12,839
3,260
22,924
$
Note 7.
Property Taxes
Property taxes are levied on July 1 st. Taxes are collected at a discount until August 31 st, at their face
amount from September 1 st until October 31 st, and include a penalty thereafter. The taxes are billed and
collected by elected tax collectors. The County Tax Bureaus collect delinquent real estate taxes for the
District.
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 8. General Fixed Assets
Capital asset activity for the year ended June 30, 2005, was as follows:
July I, 2004 Increases Decreases June 30, 2005
Governmental Actlvities
Land and site improvements $ 929,939 $ 222,808 $ $ 1,152,747
Buildings and improvements 25,485,158 25,485,158
Furniture and equipment 7,498,686 646,730 256,007 7,889,409
Construction-in-progress 614,411 624,606 1,239,017
Total Governmental Activities Assets 34,528,194 1,494,144 256,007 35,766,331
Less accumulated depreciation
Land and site improvements 342,010 26,282 368,292
Buildings and improvements 9,776,037 554,399 10,330,436
Furniture and equipment 4,1 48,63 7 231,008 t9t,600 4,188,045
Total accumulated depreciation 14,266.684 811,689 191,600 14,886,773
Governmental Activities, Capital
Assets - Net $ 20,261,510 $ 682,455 $ 64,407 $ 20,879,558
Business-Type Activity
Machinery and equipment $ 681,917 $ 2,243 $ $ 684,160
Accumulated depreciation (457,793) (27,261) (485,054)
Business-Type Activity, Capital
Assets - Net $ 224.124 $ (25,018) $ $ 199,106
Depreciation expense was charged to the functions/programs of the District as follows:
Amount
Governmental Activities
Instructional
Instructional student support
Administration and financial support
Operation and maintenance of plant services
Student activities
Community services
Total governmental activities
Business-Type Activity
Food Service
Total School District
$ 619,252
64,080
67,933
34,272
25,794
358
811,689
27,261
$ 838,950
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 9.
Accrued Salaries aud Benefits
Accrued salaries and benefits at June 30, 2005, consist of the following:
Accrued salaries
Retirement
Social security
Workers' compensation
Amount
$ 1,250,672
249,839
95,333
9,985
$ 1,605,829
Accrued salaries represent teachers' salaries earned during the 2004-05 school year which will be paid
subsequent to June 30, 2005. Accrued retirement represents the public school employees' retirement
board-contribution for the second quarter of calendar year 2005, including the portion pertaining to
accrued salaries at June 30, 2005. Accrued social security represents the District's liability arising from
accrued salaries at June 30, 2005.
Note 10. Loug- Term Debt
During the fiscal year ended June 30, 2005, general long-term debt changed as follows:
Balances Balances
July I, 2004 Increase Decrease June 30, 2005
Governmental Activities
General Long-Term Obligations:
General Obligation Bonds -
Series of 1997 $ 130,000 $ $ 130,000 $
General Obligation Bonds -
Series of 200 I 2,405,000 775,000 1,630,000
General Obligation Bonds -
Series A of 2001 9,775,000 380,000 9,395,000
General Obligation Note -
Series of 2003 9,945,000 9,945,000
General Obligation Bonds -
Series of 2004 15,420,000 15,420,000
Compensated absences payable 854,183 66,076 920,259
$ 23,109,183 $ 15,486,076 $ 1,285,000 $ 37,310,259
Business-Type Activity
General Obligation Note -
Series of 2003 $ 26,498 $ $ 13,249 $ 13,249
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 10. Long-Term Debt (Continned)
General Obligation Bonds - Series of 1997 - On December 3, 1997, the District issued General Obligation
Bonds in the principal amount of $11,080,000. The bonds bear annual interest rates ranging from 4.00%
to 5.10%. Interest is payable semi-annually on November IS and May IS, and the bonds mature serially
in amounts ranging from $130,000 to $410,000 through November 15, 2004. These bonds were partially
refinanced with General Obligation Bonds - Series A of 200 I. During fiscal year 2004-2005, these bonds
were completely satisfied.
General Obligation Bonds - Series of 200 I - On September I, 2001, the District issued General
Obligation Bonds in the principal amount of $4,500,000. The bonds bear annual interest rates ranging
from 2.60% to 3.65%. Interest is payable semi-annually on November 15 and May 15, and the bonds
mature serially in amounts ranging from $615,000 to $830,000 through November 15, 2006.
General Obligation Bonds - Series A of 2001 - On October 15, 2001, the District issued General
Obligation Bonds in the principal amount of $9,805,000. The bonds bear annual interest rates ranging
from 2.40% to 4.20%. Interest is payable semi-annually on November 15 and May 15, and the bonds
mature serially in amounts ranging from $5,000 to $1,660,000 through November 15, 2012.
General Obligation Note - Series of 2003 - On December 30, 2003, the District obtained secured
financing from the New Garden General Authority in the principal amount of $9,945,000. Principal
payments, commencing on November 1, 2005, are due annually, and interest is payable monthly,
commencing on May I, 2005, at a variable rate not to exceed 12.00%.
General Obligation Note - Series of 2003 - On January 23, 2003, the District obtained financing from
Orrstown Bank in the principal amount of $52,995. The note bears interest at a tax-free fixed rate of
3.125%. Interest is payable quarterly on September I, December I, March 1 and June 1, and requires an
annual principal payment of $13,249 through June 1,2006.
General Obligation Bonds - Series of 2004 - On October 1, 2004, the District issued General Obligation
Bonds in the principal amount of $15,420,000. The bonds bear annual interest rates ranging from 2.05%
to 4.45%. Interest is payable semi-annually on November 15 and May 15, and the bonds mature serially
in amounts ranging from $5,000 to $2,035,000 through November IS, 2020.
The District is in compliance with all debt covenants of the outstanding bond issues. Those covenants
include the following: the District shall include the annual debt service in its budget for the fiscal year,
shall appropriate these amounts from its general revenues, and shall punctually cause the payment of the
principal and interest of each of the bonds.
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SIDPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 10. Long-Term Debt (Continued)
Maturities of the long-term debt issues are as follows:
Year Ending Governmental Activities Business-Type Activities
June 30, Principal Interest Total Principal Interest Total
2006 $ 1,565,000 $ 2,201,303 $ 3,766,303 $ 13,249 $ 414 $ 13.663
2007 1.630,000 2,125,447 3,755,447
2008 1,690,000 2,045,513 3,735,513
2009 1,750,000 1.961,232 3,711,232
2010 1.820,000 1,871,523 3,691,523
2011-2015 9,625.000 7,887.783 17,512,783
2016-2020 11,275.000 5,151,550 16,426,550
2021-2025 4,200,000 2,442,744 6,642,744
2026-2030 2,835,000 847.950 3,682,950
$ 36.390,000 $ 26,535,045 $ 62,925.045 $ 13,249 $ 414 $ 13,663
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Compensated Absences - Under the terms of the District's employment policies, employees are
reimbursed for accrued vacation upon retirement or other termination of employment. The
reimbursement rate is established by the employment contract and varies by employee classification. In
addition, employees are granted sick days per school year and any unused sick days are permitted to be
carried over to future years. Upon retirement from the District, employees are reimbursed for
accumulated sick days equal to the number of unused days multiplied by an amount per the employment
contract. The employees are also offered options regarding retirement payouts as prescribed in the
contract if certain conditions are met For the year ended June 30, 2005, benefits attributed to employees
retiring during the 2004-05 year amounted to $33,630 for 6 participants. The total liability for accrued
vacation, sick leave and retirement bonuses at June 30, 2005, has been reflected in the Statement of Net
Assets and totals $920,259.
Note 11. Leases Payable
The District has entered into lease agrcements as lessee for financing the acquisition of copier equipment.
These lease agreements qualify as capital leases for accounting purposes and therefore, have been
recorded as such. The annual requirements for leases payable as of June 30, 2005, are as follows:
Year Amount
2006 $ 67,680
2007 67,680
2008 67,680
2009 67,681
2010 67,685
$ 338,406
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 11. Leases Payable (Continued)
The assets acquired through the capital leases are as follows:
Furniture and equipment
Less accumulated depreciation
$
Amount
338,406
(33,841)
304,565
$
Note 12. Post-Employment Benefits
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the District provides healthcare
benefits to eligible former employees and their dependents. Requirements are outlined by the Federal
Government for this coverage. The premium plus a 2% administrative fee is paid in full by the eligible
participant. This program is offered for a duration of up to 18 months or 36 months after an employee's
termination date. At June 30, 2005, there were 10 participants covered under COBRA
Note 13. Defined-Benefit Pension Plan
Plan Description:
The District contributes to the statewide Public School Employees' Retirement System (the System), a
governmental, cost-sharing, multiple-employer, defined-benefit plan administered by the System. In
addition to regular retirement benefits, the System also provides for disability, legislatively-mandated ad
hoc cost-of-Iiving adjustments, and healthcare insurance-premium assistance to qualifying annuitants.
Membership in the System is mandatory for substantially all full-time public school employees in the
Commonwealth of Pennsylvania (Commonwealth). State statutes assign the authority to establish and
amend benefit provisions of the Pennsylvania Public School Employees' Retirement Code (the Code) to
the Pennsylvania General Assembly (Act No. 96 of October 2,1975, as amended), (24 Pa. C.S. 8101-
8535). The Public School Employees' Retirement System issues a publicly-available comprehensive
annual financial report that includes financial statements and required supplementary information for the
plan. This report may be obtained by writing to Barbara D. Flurie, Office of Financial Management,
Public School Employees' Retirement System of Pennsylvania, P.O. Box 125, Harrisburg,
Pennsylvania, 17108-0125. This report is also available in the Publications Section of the PSERS
web site at www.psers.state.pa.us.
Funding Policv:
The contribution policy is established by the Public School Employees' Retirement Code and requires
contributions by the active members, the District and the Commonwealth.
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 13. Defined-Benefit Pension Plan (Continued)
Contribution Rates:
The current contribution rate for active members joining the System before July 22, 1983, is set by law
at 5.25% or at 6.50% of the member's qualifYing compensation. For active members joining the
System on or after July 22, 1983, and who were active or inactive as of July I, 2001, the rate of
contribution is 6.25% or 7.50% of the member's qualifYing compensation. Members who joined the
System after June 30, 2001, contribute at 7.50%. For all new hires, the higher contribution rates began
with service rendered on or after January I, 2002.
District Contributions:
The District's required contributions are based upon an actuarial valuation. For the fiscal year ended
June 30, 2005, the District's rate of contribution was 4.23% of covered payrolL The 4.23% rate is
composed of a pension contribution rate of 4.00% for pension benefits and 0.23% for healthcare
insurance-premium assistance. The District is required to pay the entire contribution and will be
reimbursed by the Commonwealth in an amount equal to the Commonwealth's share as determined by
the income-aid ratio (as defined in Act 29 of 1994), which is at least one-half of the total District's
rate. The District's contributions to the Plan for the years ended June 30, 2005, 2004 and 2003, were
$626,952, $530,915 and $156,031, respectively, and are equal to the required contributions for each
year.
Note 14. Participation in Risk-Sharing Pool
The District is a participant in a risk-sharing pool to provide workers' compensation coverage. The
expense for this coverage for the 2004-05 year was $170,256, comprised of a self-insured retention of
$4,988 and a contribution to the Central Fund of $165,268. Actual claims during the year are first
paid out of the self-insured retention. Claims that exceed the self-insured retention are satisfied by the
Central Fund. The Central Fund maintains excess insurance to cover any claims that exceed $400,000
per accident There are approximately 79 districts participating in the pooL If there is a deficiency in
the pooled funds, each member is assessed a proportionate share of the deficiency. Upon withdrawal
by a member from the pool, the terminating member has no rights to funds in the pooL
Note 15. Risk Management
The District is exposed to various risks of loss related to torts; theft of, damage to, or destruction of
assets and errors or omissions. Significant losses are covered by commercial insurance for all major
programs. For insured programs, there have been no significant reductions in settlement coverage.
Settlement amounts have not exceeded insurance coverage for the current year or the three prior years.
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SUPPLEMENTARY INFORMA nON
SHlPPENSBURG AREA SCHOOL DISTRICT
GENERAL FUND - SCHEDULE OF REVENUES
Year Ended Jnne 30, 2005
Revenues
Local sources
Real estate taxes
Current
Interim
Public utility tax
Payments in lieu of taxes
Current per capita taxes
679
511
Occupational privilege tax
Earned income tax
Real estate transfer taxes
Delinquent real estate taxes
Delinquent per capita taxes
679
511
Delinquent occupation tax
Interest
IDEA
Rentals
Tuition
Refunds and other miscellaneous revenue
Total revenues from local sources
State appropriations
Basic instructional subsidy
Charter schools
Section 1305 and 1306
Homebound instruction
Vocational education
Alternative education
Special education
Transportation
$
11.878,336
35,180
16,867
6,176
49,611
49,611
57,483
3,242,922
433,796
662,281
3,228
3,228
3,111
117,867
422,OtO
2.093
77,365
174,846
17,236,011
6,776,245
12,931
32,848
886
20,984
7,474
1,531,058
944,159
(Continued)
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SHIPPENSBURG AREA SCHOOL DISTRICT
GENERAL FUND - SCHEDULE OF REVENUES (Continued)
Year Ended June 30,2005
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Revenues (Continued)
State appropriations (Continued)
Rentals and sinking fund payments
Health services
Social security reimbursement
Retirement reimbursement
Accountability block grant
Extra grants
Total state appropriations
700,130
64,722
572,990
325,376
363,975
19,886
11,373,664
484,171
12,128
158,274
12,234
25,858
12,475
705,140
$ 29,314,815
Federal appropriations
Title I - Grants to Local Educational Agencies
Title II - Education Technology
Title II - Improving Teacher Quality
Title V - Innovative Education
Safe and Drug-free Schools and Communities
Medical Assistance Program
Total Federal appropriations
Total revenues
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SHIPPENSBURG AREA SCHOOL DISTRICT
GENERAL FUND - SCHEDULE OF EXPENDITURES
Year Ended June 30, 2005
Expenditures
Instructional
Regular programs
Salaries
Employee benefits
Purchased services
Professional and technical
Property
Other
Supplies
Property
Other objects
Vocational education programs
Salaries
Employee benefits
Purchased services
Property
Other
Supplies
Property
Other objects
$ 8,389,433
2,130,474
759
118,107
540,002
409,824
39,499
2,507
11,630,605
2,027,615
629,548
1,209,810
66,977
31,371
3,996
459
3,969,776
363,394
85,342
402
602,700
15,417
3,607
325
1,071,187
Total regular programs
Special programs
Salaries
Employee benefits
Purchased services
Professional and technical
Other
Supplies
Property
Otber objects
Total special programs
Total vocational education programs
(Continued)
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SHIPPENSBURG AREA SCHOOL DISTRICT
GENERAL FUND - SCHEDULE OF EXPENDITURES (Continued)
Year Ended June 30, 2005
Expenditures (Continued)
Instructionat (Continued)
Other instructional programs
Salaries
Employee benefits
Purchased services
Professional and technical
Property
Other
Supplies
609,662
170,435
43,372
254
5,628
31,241
Total other instructional programs
860,592
Adult education programs
Salaries
Employee benefits
Purchased services
Other
Supplies
51,629
14,774
812
1,669
Total adult education programs
68,884
Community college education program
3,740
Total instructional
17,604,784
Support Services
Pupil personnel
Salaries
Employee benefits
Purchased services
Professional and technical
Property
Other
Supplies
Property
Other objects
552,787
146,344
255,022
75
4,761
10,821
11,623
924
Total pupil personnel
982,357
(Continued)
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SHIPPENSBURG AREA SCHOOL DISTRICT
GENERAL FUND - SCHEDULE OF EXPENDITURES (Continued)
Year Ended June 30, 2005
Expenditures (Continued)
Support Services (Continued)
Instructional staff
Salaries
Employee benefits
Purchased services
Professional and teclmical
Property
Other
Supplies
Property
Other objects
472,229
136,081
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7,829
31,086
10,948
134,770
240,748
2,263
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Total instructional staff
1,035,954
Administration
Salaries
Employee benefits
Purchased services
Professional and technical
Property
Other
Supplies
Property
Other objects
1,069,447
288,421
197,564
2,176
69,001
13,466
13,371
15,238
Total administration
1,668,684
Pupil health
Salaries
Employee benefits
Purchased services
Professional and technical
Property
Supplies
164,843
49,891
16,749
85
7,206
Total pupil health
238,774
( Continued)
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SHIPPENSBURG AREA SCHOOL DISTRICT
GENERAL FUND - SCHEDULE OF EXPENDITURES (Continued)
Year Ended June 30, 2005
Expenditures (Continued)
Support Services (Continued)
Business
Salaries
Employee benefits
Purchased services
Professional and technical
Property
Other
Supplies
Other objects
191,965
76,496
2,560
155
24,552
7,435
560
Total business
303,723
Operation and maintenance of plant services
Salaries
Employee benefits
Purchased services
Property
Other
Supplies
Property
Other objects
636,382
225,925
615,458
103,892
229,771
9,288
200
Total operation and maintenance of plant services
1,820,916
Student transportation services
Purchased services
Professional and technical
Other
Supplies
Other objects
3,990
1,228,461
1,490
20
Total student transportation services
1,233,96t
(Continued)
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SHIPPENSBURG AREA SCHOOL DISTRICT
GENERAL FUND - SCHEDULE OF EXPENDITURES (Continued)
Year Ended June 30, 2005
Expenditures (Continued)
Support Services (Continued)
Central service
Purchased services
Professional and technical
Properly
Supplies
Properly
Other objects
26,154
19,799
12,477
11 ,329
250
Total central service
70,009
Other support services
25,063
Total support services
7,379,441
Operation of Non-Instructional Services
Student activities
Salaries
Employee benefits
Purchased services
Properly
Other
Supplies
258,208
37,366
12,000
11,504
4,514
Total student activities
323,592
(Continued)
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SHIPPENSBURG AREA SCHOOL DISTRICT
GENERAL FUND - SCHEDULE OF EXPENDITURES (Continued)
Year Ended June 30, 2005
Expenditures (Continued)
Operation of Non-Instructionat Services (Continued)
Community services
Salaries
Employee benefits
Supplies
Other objects
6,656
841
6,521
4,700
18,718
342,310
2,369,576
184,078
158,646
342,724
$ 28,038,835
Total community services
Total operation of non-instructional services
Debt service
Other
Refund of prior years' receipts
Operating transfers out
Total other
Total expenditures
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SHIPPENSBURG AREA SCHOOL DISTRICT
COMBINING BALANCE SHEET - NON-MAJOR GOVERNMENTAL FUNDS
June 30, 2005
Special Revenue Totals
Middle School Senior High Capital (Memorandum
Athletic Athletic Reserve Only)
ASSETS
Cash $ 5,200 $ 22,018 $ 87,127 $ 114,345
Receivables
Other
Other receivables 7 170 177
Total assets $ 5,207 $ 22,188 $ 87,127 $ 114,522
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ $ 355 $ 6,600 $ 6,955
Fund Balances
Reserved for
Capital reserve 80,527 80,527
Athletic 5,207 21,833 27,040
Total fund balances 5,207 21,833 80,527 107,567
Total liabilities and fund balances $ 5,207 $ 22,188 $ 87,127 $ 114,522
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SIDPPENSBURG AREA SCHOOL DISTRICT
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS
Year Ended June 30, 2005
Special Revenue Totals
Middle School Senior High Capital (Memorandum
Athletic Athletic Reserve Only)
Revenues
Local sources $ 14,496 $ 46,983 $ 100 $ 61,579
Expenditures
Support services 38,552 38,552
Operation of non-instructional services 40,012 108,248 148,260
Total expenditures 40,012 108,248 38,552 186,812
Deficiency of revenues
over expenditures (25,516) (61,265) (38,452) (125,233)
Other Financing Sources
Operating transfers in 27,922 80,224 50,500 158,646
Net change in fund balances 2,406 18,959 12,048 33,413
Fund Balances - July I, 2004 2,801 2,874 68,4 79 74,154
Fund Balances - June 30, 2005 $ 5,207 $ 21,833 $ 80,527 $ 107,567
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SHIPPENSBURG AREA SCHOOL DISTRICT
COMBINING STATEMENT OF FIDUCIARY NET ASSETS-
ACTIVITY FUNDS
June 30,2005
LIABILITIES
Due to student groups
Accounts payable
Total liabilities
$
8,270 $
2,473 $
11,362
$
8,270 $
2,473 $
11,362
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Totals
Senior High (Memorandum
Activity Fund Only)
$ 68,027 $ 90,103
29
$ 68,027 $ 90,132
$
67,834 $
193
68,027 $
89,939
193
90,132
$
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(SSR) BOYER & RITTER
CEHTIFIEIJ P\!HUC ACCOUN'IANTS ANIl CONSLU;\NTS
\\'('1> Sill': w\\\v r'p,djf ('(Jlfl
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Board of School Directors
Shippensburg Area School District
Shippensburg, Pennsylvania
We have audited the financial statements of Shippensburg Area School District as of and for the year
ended June 30, 2005, and have issued our report thereon dated August 12,2005. We conducted our audit
in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Shippensburg Area School District's internal control
over financial reporting in order to determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and not to provide assurance on the internal control over financial
reporting. Our consideration of the internal control over financial reporting would not necessarily
disclose all matters in the internal control over financial reporting that might be material weaknesses. A
material weakness is a reportable condition in which the design or operation of one or more of the internal
control components does not reduce to a relatively low level the risk that misstatements caused by error or
fraud in amounts that would be material in relation to the financial statements being audited may occur
and not be detected within a timely period by employees in the normal course of performing their
assigned functions. We noted no matters involving the internal control over financial reporting and its
operation that we consider to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Shippensburg Area School District's financial
statements are free of material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts and grant agreements, nopcompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
C,,,,II' HILI
(--=/\.HI_ISLE
CHAMBERSL3l :ru;
LI-':WIST()\VN
S'L.\TE COLl.I'''E
All Jrl(iqlCrl(j(~nlly {)\Vf1l~{I1\l('rnl)(~r ()f tlle Ks;'vl J\..ICC;lwiw;-. N('I\\/( lrk
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This report is intended solely for the information and use of the Board of School Directors, management,
Federal-awarding agencies and pass-through entities, and is not intended to be and should not be used by
anyone other than these specified parties.
Chambersburg, Pennsylvania
August 12,2005
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[J38R) BOYER & RITTER
CEHTIFIElJ PUBLIC ACCOUNTANTS ANn CONSl!ITN''TS
\Vc!J Sitc: W\\'\vc!l,llH.ul1ll
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH
REQillREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND
INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE
WITH OMB CIRCULAR A-133
Board of School Directors
Shippensburg Area School District
Shippensburg, Pennsylvania
Compliance
We have audited the compliance of Shippensburg Area School District with the types of compliance
requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133,
Compliance Supplement that are applicable to each of its major Federal programs for the year ended
June 30, 2005. Shippensburg Area School District's major Federal programs are identified in the
summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs.
Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its
major Federal programs is the responsibility of the District's management. Our responsibility is to
express an opinion on the District's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-J33, Audits of
States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-J33
require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance
with the types of compliance requirements referred to above that could have a direct and material effect
on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the
District's compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Our audit does not provide a legal determination on the District's compliance with those requirements.
In our opinion, Shippensburg Area School District complied, in all material respects, with the
requirements referred to above that are applicable to each of its major Federal prog-ams for the year
ended June 30, 2005.
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Internal Control Over Compliance
The management of Shippensburg Area School District is responsible for establishing and maintaining
effective internal control over compliance with requirements of laws, regulations, contracts and grants
applicable to Federal programs. In planning and performing our audit, we considered the District's
intemal control over compliance with requirements that could have a direct and material effect on a
major Federal program in order to determine our auditing procedures for the purpose of expressing our
opinion on compliance and to test and report on internal control over compliance in accordance with
OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily disclose all matters in
the internal control that might be material weaImesses. A material weakness is a reportable condition in
which the design or operation of one or more of the internal control components does not reduce to a
relatively low level the risk that noncompliance with applicable requirements of laws, regulations,
contracts and grants caused by error or fraud that would be material in relation to a major Federal
program being audited may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. We noted no matters involving the internal
control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the Board of School Directors,
management, Federal-awarding agencies and pass-through entities, and is not intended to be and should
not be used by anyone other than these specified parties.
)'- ~~/w
Chambersburg, Pennsylvania
August 12, 2005
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SHIPPENSBURG AREA SCHOOL DISTRICT
Schedule of Findings and Questioned Costs
Year Ended June 30, 2005
Section I -- Snmmary of Independent Anditor's Resnlts
Financial Statements
Type of auditor's report issued: Unqualified
Internal control over financial reporting:
. Material weaknesses identified?
. Reportable conditions identified that are
not considered to be material weaknesses?
Yes X No
Yes l None Reported
Noncompliance material to financial statements
noted?
Yes X No
Federal Awards
Internal control over major programs:
. Material weaknesses identified?
. Reportable conditions identified that are
not considered to be material weaknesses?
Yes X No
Yes l None Reported
Type of auditor's report issued on compliance for major programs: Unqualified
. Any audit findings disclosed that are
required to be reported in accordance
with Section .510(a) ofOMB Circular A-133?
Yes X No
Identification of major programs:
CFDA Numbers
84.010
84.367
Name of Federal Program or Cluster
Title I - Grants to Local Educational Agencies
Title II - Improving Teacher Quality
Dollar threshold used to distinguish between
type A and type B programs
$300,000
Auditee qualified as low-risk auditee?
X Yes
No
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SHIPPENSBURG AREA SCHOOL DISTRICT
Schedule of Findings and Questioned Costs
Year Ended June 30, 2005
Section n .- Financial Statement Findings
A. Reportable Conditions in Internal Control
There were no findings relating to the financial-statement audit required to be reported.
B. Compliance Findings
There were no findings relating to the financial-statement audit required to be reported.
Section III- Findings and Questioned Costs for Federal Awards
A. Reportable Conditions in Internal Control
There were no findings relating to the Federal awards required to be reported in accordance
with Section .510(a) ofOMB Circular A-l33.
B. Compliance Findings
There were no findings relating to the Federal awards required to be reported in accordance
with Section .510(a) ofOMB Circular A-l33.
58
SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30, 2005
Pass-
P ederal Through
Source C.P.D.A. Grantor's Grant
Code Number Number Period
U. S. Department of Education
Passed through the Pe1Ulsylvania
Department of Education
Title I - Grants to Local Educational Agencies I 84.010 013-050387 04-05
Title I - Grants to Local Educational Agencies I 84.010 013-040387 03-04
Title V - I1Ulovative Education I 84.298 o I 1-050387 04-05
Title V - Innovative Education I 84.298 011-040387 03-04
Title II - Improving Teacher Quality I 84.367 020-050387 04-05
Title II - Improving Teacher Quality I 84.367 020-040387 03-04
Title II - Education Technology I 84.3t8 055-050387 04-05
Title II - Education Technology I 84318 055-040387 03-04
Title II - Education Technology I 84.318 055-030387 02-03
Medical Assistance - Access I 93.778 044-007387 04-05
Medical Assistance - Access t 93.778 044-007387 03-04
Safe and Drug-free Schools and Communities t 84.186 100-050388 04-05
Safe and Drug-free Schools and Communities I 84.186 100-040388 03-04
Passed through the Capital Area
Intermediate Unit Consortium
Special Education - Grants to States I 84.027 N/A 04-05
Special Education - Grants to States I 84.027 N/A 03-04
Total U. S. Department of Education
(Continued)
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. Total Accrued Accrued
Program Received (Deferred) (Deferred)
. or Annual (Refunded) in Revenue at Revenue Revenue at
Award Fiscal Year 7/1/2004 Recognized Expenditures 6/30/2005
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. $ 513,696 $ 342,464 $ $ 447,808 $ 447,808 $ 105,344
. $ 520,942 138,231 101,868 36,363 36,363
. $ 9,296 7,437 8,232 8,232 795
$ 12,626 4,209 205 4,004 4,004
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$ 163,386 98,032 132,679 132,679 34,647
. $ 165,215 55,072 29,477 25,595 25,595
. $ 12,128 8,085 12,128 12,128 4,043
$ 12,308 6,564 6,564
. $ 11,036 715 715
. $ 12,475 12,475 12,475 12,475
I. $ 18,611 10,808 17,768 6,960
. $ 17,778 11,852 17,778 17,778 5,926
$ 16,712 9,284 1,204 8,080 8,080
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. $ 422,010 422,010 422,010 422,010
. $ 277,473 94,549 94,549
. 787,302 252.350 1,127,152 1,127,152 592,200
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SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Year Ended Juue 30, 2005
Pass-
F ederol Through
Source CF.D.A. Grantor's Grant
Code Number Number Period
U. S. Department of Agriculture
Passed through the Pennsylvania
Department of Education:
National School Lunch Program I (F) 10.555 N/A 04-05
National School Lunch Program I (F) 10.555 N/A 03-04
National School Lunch Program I (S) N/A N/A 04-05
National School Lunch Program I(S) N/A N/A 03-04
Special Milk Program for Children I (F) 10.556 N/A 04-05
Special Milk Program for Children I (F) 10.556 N/A 03-04
Passed through the Pennsylvania
Department of Agriculture:
Food Donation (a) I (F) 10.550 N/A 04-05
Total U. S. Department of Agriculture
Total Expenditures of Federal Awards
Source Codes:
Legends:
D - Direct Funding
I - Indirect Funding
(F) - Federal Share
(S) - State Share
(a) Donated commodities valued at local market values
(b) Total amount of commodities received from
Department of Agriculture
(c) Inventories at July I, 2004
(d) Total amount of commodities used
(e) Inventories at June 30, 2005
See Notes to Schedule of Expenditures of Federal Awards.
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Program
or Annual
Award
Total
Received
(Refunded)
Fiscal Year
Accrued
(Deferred)
Revenue at
7/1/2004
Accrued
(Deferred)
Revenue at
6/30/2005
Revenue
Recognized
Expenditures
N/A 246,265 253,527 253,527 7,262
N/A 7,812 7,812
NIA 29,446 30,305 30,305 859
N/A 1,001 1,001
N/A 5,647 5,852 5,852 205
N/A 146 146
N/A (b) 53,699 (c) (6,684) 57,124 (d) 57,124 (e) (3,259)
344,Ot6 2,275 346.808 346,808 5,067
$ 1,131,318 $ 254,625 $ 1,473,960 $ 1,473,960 $ 597,267
Test of25% Rule: Total Expenditures $ 1,473,960
Less State Expenditures 30,305
T ota\ Federal Expenditures $ 1,443,655
Programs selected for testing as major programs:
Title I - Grants to Local Educational Agencies $ 484,171
Title II - Improving Teacher Quality 158,274
$ 642,445 1 1,443,655 44.50%
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SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Note 1. Significant Accounting Policies
The accompanying Schedule of Expenditures of Federal Awards is a summary of the activity of the
District's Federal award programs and presents transactions that would be included in the financial
statements of the District presented on the accrual basis of accounting, as contemplated by accounting
principles generally accepted in the United States of America.
Note 2. Title I - Grants to Local Educatioual Agencies
The Title I - Grants to Local Educational Agencies have been audited in accordance with OMB Circular
A-133.
Note 3. Title 11- Improving Teacher Quality
Title II - Improving Teacher Quality has been audited in accordance with OMB Circular A-133.
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I.
SHIPPENSBURG AREA SCHOOL DISTRICT
SUMMARY SCHEDULE OF PRIOR YEAR'S AUDIT FINDINGS
Year Ended June 30, 2005
There were no audit findings for the year ended June 30,2004.
64
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