Independent School District No. 720 Shakopee, Minnesota Independent School District No. 720 Shakopee, Minnesota Audited Financial Statements June 30, 2017

Components of the Audit 1 Independent Auditor’s Report Unmodified Opinion on the District’s Financial Statements for the year ended June 30 ,2017 Report on the result of an audit performed with Government Auditing Standards One Internal Control Finding : Lack of Segregation of Accounting Duties Report on results of a Single Audit performed in accordance with OMB Circular A-133 Unmodified Opinion on Compliance over Federal Programs in accordance with OMB Circular A-133 Report on results of testing on Minnesota Legal Compliance Old outstanding checks Public Purpose – adequate documentation for purchases $3.6 million federal exp. Child Nutrition, Title I

General Fund Budget to Actual 2 Original Budget: General Fund Revenue budgeted at $90.3 million General Fund Expenditures budgeted at $90.3 million Net Other Financing Sources of $10 thousand $15 thousand increase in fund balance Final Budget: General Fund Revenue budgeted at $91.1 million General Fund Expenditures budgeted at $94.1 million Net Other Financing Sources of $2.3 million $710 thousand decline in fund balance

General Fund Budget to Actual 3 Actual: General Fund Revenues actually $92.3 million; $1.3 million over final budget or 1.4% variance – State Aids General Fund Expenditures actually $97.2 million; $1.7 million over final budget after factoring out lease activity or 1.8% variance – District Support, Regular Instruction, Vocational Instruction – Employee Benefits Fund Balance declined $1.5 million to $1.1 million

General Fund Operations 4 General Fund Operations Expenditures have exceeded revenues in 4 of last 5 years

Average Daily Membership and Pupil Units (Continued) 5 While it is important to consider resident numbers, it is also important to review the weighted counts since that is what funding is based on. There are weighting factors applied to arrive at Pupil Units Served Comparing 2014 and 2015, total Pupil Units served decreased 238.72 (2.7%), even though Resident ADM increased 293.8 and the loss on open enrollment only increased 60.91 Resident pupil units decreased 177.81 or 1.8% (compare to Resident ADM increase of 3.5%), while the net loss from open enrollment increased 6.7% as a result of more residents open enrolling and fewer residents coming into Shakopee Net loss in open enrollment totaled 968.57 in 2015, an increase from 907.66 in 2014 For comparison purposes, if there were no change in weighting, Resident PUN would have been 10,042.89, which would have been an increase of 353.24 or 3.6%; would have resulted in an increase of approx. 292.33 WADM/Pupil Units Served instead of the decrease of 238.72 (**$424 increase in Gen Ed Aid done in an effort to hold districts harmless with the implementation of the new weighting system)

Resident Average Daily Membership and Pupil Units (Continued) 6 Overall, revenue increased $7,782,041 or 10.8% Local property taxes increased $3,819,160 or 69.9% primarily due to tax shift that was paid back in 2014 (resulted in a decrease in property tax revenue, increase in state aids in 2014); General Fund’s share of the levy also decreased approx. $254,000 State revenue increased $3,852,594 or 6.1% due to an increase in resident ADM, an increase of $105 per pupil unit in Gen Ed Aid, first year of fully-funded all-day kindergarten, an increase in special education aid as a result of a change in the formula and new teacher development and evaluation aid Other revenue (federal, other local, county) remained relatively consistent, increased $110k or 3.3%

General Fund Sources of Revenue 7 In comparing District expenditures from 2014 to 2015, overall, expenditures increased $8,410,798 Administration increased $941k as a result of adding assistant principals to each of the elementary schools as well as a principal & secretary to the Central Family Center building District Support Services increased $428k as a result of adding 3 new positions, election preparation expenditures related to building bond & lease expenditures related to new District Office location Elementary & Secondary increased $3.1 million as a result of personnel wage & benefit increases, additional staff related to an increase in students & additional teachers related to the implementation of fully funded all-day kindergarten Special Education Instruction increased $494k as a result of adding additional special education teachers & paras Instructional Support services increased $1.3 million due to adding new staff, including two new coordinators to teaching & learning, new HR manager position, technology staff to cover technology initiatives & elementary sub positions to cover for employees attending staff development & curriculum development sessions Pupil Support Services increased $724k as a result of adding a counseling position to the high school, adding a part-time nurse & an increase in transportation costs related to an increase in the rate charged & increase in students Debt Service exp. increased $1.2 million from zero – first year of COP bond payments Allocation of exp. by program was very consistent – 67% of General Fund exp. were spent on instruction compared to 69% last year

Revenues Per Student (ADM) Served 8 Revenues Per Student (ADM) Served  

Expenditures Per Student (ADM) Served 9 Expenditures Per Student (ADM) Served  

General Fund Expenditures By Program 10 General Fund Expenditures By Program This chart signifies the importance of fund balance in relation to cash flow needs Many districts ended up in a negative position for cash net of borrowing while you were positive each year The District’s financial position allowed you to weather the storm & not have to incur interest costs for short term borrowing Unassigned fund balance as a percentage of total expenditures decreased from 12.5% in 2014 to 7.7% in 2015 (District’s fund balance goal is 12% of exp.)

General Fund Expenditures 11 Revenues have exceeded exp. in 4 of the last five year

General Fund Expenditures 12 General Fund Expenditures Expenditures have exceeded revenues in 4 of last 5 years

General Fund Expenditures Budget and Actual 13 Expenditures have exceeded revenues in 4 of last 5 years

14 Food Service Fund Expenditures have exceeded revenues in 4 of last 5 years

Community Service Fund 15 Community Service Fund Expenditures have exceeded revenues in 4 of last 5 years

16 Questions Matt Mayer 952.563.6873 Thank you!