Solanco School District 2016-17 Audit January 22, 2018

Audit Overview Audit in Accordance with: US Generally Accepted Auditing Standards Government (Yellow Book) Auditing Standards Uniform Guidance Audit of period 7/1/16 - 6/30/17 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) 49,556,827,000 SSD’s Proportionate Share (%) 0.1667% SSD’s Proportionate Share ($) 82,579,000 Governmental Activities (98%) Business-type Activities (2%) Total Net Pension Liability 80,927,420 1,651,580 82,579,000 2016-17 Additional Pension Expense (in addition to contributions paid) 2,317,925 47,305 2,365,230

PSERS Results of Operations Fiscal Year June 30, 2017 June 30, 2016 Member Contributions 1,013,847,000 989,266,000 Employer Contributions 3,832,773,000 3,189,510,000 Total Contributions 4,846,620,000 4,178,776,000 Total Deductions (6,518,706,000) (6,405,443,000) Gap (1,672,086,000) (2,226,667,000) Investment Income (10.14% and 1.11%) 4,995,362,000 473,206,000 Change in Net Position 3,323,276,000 (1,753,461,000)

Governmental Activities Historical Analysis June 30, 2015 June 30, 2016 June 30, 2017 Current Assets 21,992,309 25,672,295 28,395,516 Noncurrent Assets and Def. Outflows 38,991,241 38,439,441 53,018,245 Total Assets 60,983,550 64,111,736 81,413,761 Current Liabilities 5,949,405 7,378,210 7,759,925 Noncurrent Liabilities and Def. Inflows 66,911,938 72,640,278 85,163,125 Total Liabilities 72,861,343 80,018,488 92,923,050 Net Position (11,426,206) (10,854,579) (11,509,289)

General Fund Results For Fiscal Year Ended 2015 2016 2017 - Actual 2017 – Original Budget Local Revenues 29,814,012 30,968,739 32,280,588 31,985,848 State Revenues 17,781,054 18,311,720 19,527,031 19,174,309 Federal Revenues 2,202,989 2,062,082 2,039,305 2,113,000 Total Revenues 49,798,055 51,342,541 53,846,924 53,273,157 Instructional Services 29,082,969 31,099,335 33,066,257 34,351,609 Support Services 14,568,451 15,179,515 15,664,747 16,040,697 Operation of Noninstructional Services 925,695 992,917 1,014,167 1,059,629 Total Expenditures 44,577,115 47,271,767 49,745,171 51,451,935 Fund Transfers & Other Financing Uses (4,854,745) (4,355,077) (3,596,823) (3,895,000) Change in Fund Balance 366,195 (284,303) 504,930 (2,073,778) Change in Reserve for Inventory 12,052 (27,196) (8,803) -0- Ending Fund Balance 6,058,310 5,746,811 6,242,938 3,673,033

GASB No. 54 – Fund Balance Reporting and Government Type Definitions General Fund Capital Project Fund Nonspendable (Not in spendable form) 300,061 -0- Restricted (External) Committed (Board) 325,000 Assigned (Board or Delegate) 2,377,452 11,103,697 Unassigned (Residual GF balance) 3,240,425 Total 6,242,938

General Fund Expense Comparison

2016-17 General Fund Expenses

Special Education Analysis 2014-15 2015-16 2016-17 Total Expense 7,089,596 8,420,491 9,157,820 Total Enrolled Students 486 553 592 Total Expense Per Enrolled Student 14,588 15,227 15,469 % Increase in Expense 2.01% 18.77% 8.76% % Increase in Enrolled Students 0.00% 13.79% 7.05%

Capital Project Fund Fund Balance June 30, 2015 June 30, 2016 Revenues: Investment Income 7,430 17,021 54,826 Other 360 310 185 Expenditures: Capital Outlay (2,517,386) (1,600,107) (1,674,430) Transfer In: 1,847,038 4,362,962 3,600,000 Net Change (662,558) 2,780,186 1,980,581 Beginning Fund Balance 7,005,488 6,342,930 9,123,116 Ending Fund Balance 11,103,697

Capital Project Fund – Building Committee Projects Fund Balance June 30, 2017 Ending Fund Balance 11,103,697 Total Smith Middle School Projects (12,075,000) Total Swift Middle School Projects (6,500,000) Total Clermont Elementary Projects (4,916,782) Total Other Building Committee Projects (400,000) Additional Future Capital Project Funding Needs (12,788,085)

Cafeteria Fund Analysis 2014-15 2015-16 2016-17 Operating Revenues 659,796 660,234 614,563 Non-operating Revenues 984,637 1,037,614 1,072,621 Revenues 1,644,433 1,697,848 1,687,184 Salaries and Benefits 691,567 681,037 686,871 Supplies 837,643 791,340 778,314 Other Expenses 73,583 111,693 99,039 Total Expenses 1,602,793 1,584,070 1,564,224 Transfers In (Out) -0- Change in Net Position 41,640 113,778 122,960

Internal Service Funds Changes in Net Position 2014-15 2015-16 2016-17 Additions and Transfers In 4,797,090 4,552,441 5,091,562 Expenses and Transfers Out 4,625,134 4,644,959 5,079,355 Change in Net Position 171,956 (92,518) 12,207 Composition of Net Position June 30, 2015 June 30, 2016 June 30, 2017 Hospitalization 3,143,296 3,063,313 3,081,184 Unemployment Compensation 163,734 151,199 145,535 Net Position - Total 3,307,030 3,214,512 3,226,719

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 2015-16 2016-17 School Lunch/ Breakfast Program 913,070 942,500 Title I 1,748,450 1,702,608 Improving Teacher Quality 249,204 241,890 Special Education (via IU 13) 580,306 672,011 Other 7,170 13,794 Total Federal Grant Expenditures 3,498,200 3,572,803

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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