Solanco School District 2015-16 Audit January 23, 2017

Audit Overview Audit in Accordance with: US Generally Accepted Auditing Standards Government (Yellow Book) Auditing Standards Uniform Guidance Audit of period 7/1/15 - 6/30/16 Overview of Audit Process Audit Findings: No significant deficiencies or material weaknesses are reported

Governmental Activities (98%) Business-type Activities (2%) GASBS No. 68, Pensions PSERS Net Pension Liability (NPL) 43,315,309,000 SSD’s Proportionate Share (%) 0.1638% SSD’s Proportionate Share ($) 70,915,029 Governmental Activities (98%) Business-type Activities (2%) Total Net Pension Liability 64,496,728 1,418,301 70,915,029 2015-16 Additional Pension Expense (in addition to contributions paid) 738,966 15,081 754,047

PSERS Results of Operations Fiscal Year – June 30, 2015 Member Contributions 984,634,000 Employer Contributions 2,596,731,000 Total Contributions 3,581,365,000 Total Deductions (6,262,932,000) Gap (2,681,567,000) Investment Income (3.04%) 1,328,516,000 Decrease in Net Position (1,353,051,000)

PSERS - Future Contributions PSERS Rate PSERS Wages (3% annual increase) PSERS Contribution Net Contribution Net Contribution Increase 2015-16 25.84 21,074,629.00 5,445,684.13 2,722,842.07 2016-17 30.03 21,706,867.87 6,518,572.42 3,259,286.21 536,444.14 2017-18 32.04 22,358,073.91 7,163,526.88 3,581,736.44 322,477.23 2018-19 33.27 23,028,816.12 7,661,687.12 3,830,843.56 249,080.12 2019-20 34.20 23,719,680.61 8,112,130.77 4,056,065.38 225,221.82 2020-21 33.51 24,431,271.03 8,186,918.92 4,093,459.46 37,394.08

Governmental Activities Historical Analysis June 30, 2014 June 30, 2015 June 30, 2016 Current Assets 22,842,063 21,992,309 25,672,295 Noncurrent Assets 38,761,504 38,991,241 38,439,441 Total Assets 61,603,567 60,983,550 64,111,736 Current Liabilities 9,483,742 5,949,405 7,378,210 Noncurrent Liabilities 2,583,932 66,911,938 72,640,278 Total Liabilities 12,067,674 72,861,343 80,018,488 Net Position 49,535,893 (11,426,206) (10,854,579)

General Fund Results For Fiscal Year Ended 2014 2015 2016 - Actual 2016 – Original Budget Local Revenues 28,630,344 29,814,012 30,968,739 30,367,487 State Revenues 17,136,128 17,781,054 18,311,720 18,337,539 Federal Revenues 2,625,710 2,202,989 2,062,082 2,187,381 Total Revenues 48,392,182 49,798,055 51,342,541 50,892,407 Instructional Services 28,469,246 29,082,969 31,099,335 32,481,231 Support Services 13,661,206 14,568,451 15,179,515 14,972,976 Operation of Noninstructional Services 894,272 925,695 992,917 1,025,863 Total Expenditures 43,024,724 44,577,115 47,271,767 48,480,070 Fund Transfers & Other Financing Uses (4,961,602) (4,854,745) (4,355,077) (4,067,600) Change in Fund Balance 405,856 366,195 (284,303) (1,655,263) Change in Reserve for Inventory (59,138) 12,052 (27,196) -0- Ending Fund Balance 5,680,063 6,058,310 5,746,811 4,403,047

GASB No. 54 – Fund Balance Reporting and Government Type Definitions General Fund Capital Project Fund Debt Service Fund Nonspendable (Not in spendable form) 257,825 -0- Restricted (External) Committed (Board) 2,098,778 Assigned (Board or Delegate) 9,123,116 Unassigned (Residual GF balance) 3,390,208 Total 5,746,811

General Fund Expense Comparison

2015-16 General Fund Expenses

Special Education Analysis 2013-14 2014-15 2015-16 Total Expense 6,949,027 7,089,596 8,420,491 Total Enrolled Students 486 553 Total Expense Per Enrolled Student 14,298 14,588 15,227 % Increase in Expense 10.47% 2.01% 18.77% % Increase in Enrolled Students 6.11% 0.00% 13.79%

Capital Project Fund Fund Balance June 30, 2014 June 30, 2015 Revenues: Investment Income 4,995 7,430 17,021 Other 185 360 310 Expenditures: Capital Outlay (1,197,505) (2,517,386) (1,600,107) Transfer In: 1,538,574 1,847,038 4,362,962 Net Change 346,249 (662,558) 2,780,186 Beginning Fund Balance 6,659,239 7,005,488 6,342,930 Ending Fund Balance 9,123,116

Capital Project Fund – Building Committee Projects Fund Balance June 30, 2016 Ending Fund Balance 9,123,116 Total Smith Middle School Projects (13,769,419) Total Swift Middle School Projects (19,066,013) Total Clermont Elementary Projects (5,016,000) Total High School Projects (414,800) Total Other Building Committee Project Listing (508,420) Additional Future Capital Project Funding Needs (29,651,536)

Debt Service Requirements

Interest Expense History June 30, 2007 1,081,600 June 30, 2008 787,200 June 30, 2009 688,900 June 30, 2010 596,695 June 30, 2011 446,400 June 30, 2012 353,400 June 30, 2013 267,900 June 30, 2014 136,000 June 30, 2015 37,000 June 30, 2016 -0-

Cafeteria Fund Analysis 2013-14 2014-15 2015-16 Operating Revenues 718,317 659,796 660,234 Non-operating Revenues 953,631 984,637 1,037,614 Revenues 1,671,948 1,644,433 1,697,848 Salaries and Benefits 697,306 691,567 681,037 Supplies 762,505 837,643 791,340 Other Expenses 81,430 73,583 111,693 Total Expenses 1,541,241 1,602,793 1,584,070 Transfers In (Out) -0- Change in Net Position 130,707 41,640 113,778

Internal Service Funds Changes in Net Position 2013-14 2014-15 2015-16 Additions and Transfers In 4,473,849 4,797,090 4,552,441 Expenses and Transfers Out 4,199,093 4,625,134 4,644,959 Change in Net Position 274,756 171,956 (92,518) Composition of Net Position June 30, 2014 June 30, 2015 June 30, 2016 Hospitalization 2,962,951 3,143,296 3,063,313 Unemployment Compensation 172,123 163,734 151,199 Net Position - Total 3,135,074 3,307,030 3,214,512

Funding Sources for Health Insurance

Other CAFR Components Management’s Discussion and Analysis Notes to Financial Statements Note 1- Summary of Significant Accounting Policies Note 11- Long-term Liabilities Note 15- Operating Lease Note 17- Fund Balances Note 19- Defined Benefit Pension Plan Note 20- Contingencies and Commitments Supplemental Schedules for additional analysis Single Audit (compliance audit of the School District’s federal grants) and related reports Introductory Section and Statistical Section are Unaudited

Schedule of Expenditures of Federal Awards Expenditures = Grant Revenue 2014-15 2015-16 School Lunch/ Breakfast Program 869,137 913,070 Title I 1,905,362 1,748,450 Improving Teacher Quality 249,817 249,204 Special Education (via IU 13) 580,942 580,306 Other 12,229 7,170 Total Federal Grant Expenditures 3,617,487 3,498,200

Schedule of Expenditures of Federal Awards Report on Internal Control over Financial Reporting No Material Weaknesses or Significant Deficiencies Identified Report on Compliance with Requirements No Compliance Findings

GASB 75 – Pending Change GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions were issued June 2015. The provisions of this statement are effective for the School’s 2018 financial statements and will require changes in the School’s accounting for other postemployment benefits (OPEB). The more significant of these changes are: An OPEB liability will be recorded for the portion of the present value of projected benefit payments that is attributed to past service. Projected benefit payments will be discounted to their actuarial present value using a tax-exempt, high quality municipal bond rate which is likely lower than the current rate, resulting in an increase in the OPEB liability. Most changes in the net OPEB liability will be recorded as expense in the period of change. The School will be required to report its proportionate share of the premium assistance plan provided through PSERS. Additional footnote disclosures and required supplementary information will be included in the School’s financial statements as a result of GASB Statement No. 75.

This presentation is intended solely for the information and use of the management of Solanco School District and the School Board and is not intended to be and should not be used by anyone other than these specified parties.

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