audited june 30, financial 2017 statements...the financial statements also include notes that...
TRANSCRIPT
CONTENTS PAGEINDEPENDENTAUDITOR'SREPORT 1‐3
MANAGEMENT'SDISCUSSIONANDANALYSIS(UNAUDITED) 4‐12
BASICFINANCIALSTATEMENTSGovernment‐wideFinancialStatements
StatementofNetPosition 13StatementofActivities 14
FundFinancialStatementsBalanceSheet‐GovernmentalFunds 15ReconciliationoftheGovernmentalFundsBalanceSheettotheStatementof
NetPosition 16StatementofRevenues,Expenditures,andChangesinFundBalances‐
GovernmentalFunds 17ReconciliationoftheGovernmentalFundsStatementofRevenues,
Expenditures,andChangesinFundBalancetotheStatementofActivities 18StatementofNetPosition‐ProprietaryFund 19StatementofRevenues,Expenses,andChangesinFundNetPosition‐
ProprietaryFund 20StatementofCashFlows‐ProprietaryFund 21StatementofFiduciaryNetPosition 22StatementofChangesinFiduciaryNetPosition 23
NotestotheFinancialStatements 24‐54
REQUIREDSUPPLEMENTARYINFORMATION(UNAUDITED)BudgetaryComparisonSchedule–GeneralFund 55ScheduleofSchoolDistrict’sProportionateShareofNetPensionLiability–Public
SchoolEmployee’sRetirementSystem 56ScheduleofSchoolDistrict’sContributions–PublicSchoolEmployee’sRetirement
System 57OPEBScheduleofFundingProgress 58
OTHERSUPPLEMENTARYINFORMATIONScheduleofExpendituresofFederalAwards 59‐60NotestoScheduleofExpendituresofFederalAwards 61
INDEPENDENTAUDITOR'SREPORTONINTERNALCONTROLOVERFINANCIALREPORTINGANDONCOMPLIANCEANDOTHERMATTERSBASEDONANAUDITOFFINANCIALSTATEMENTSPERFORMEDINACCORDANCEWITHGOVERNMENTAUDITINGSTANDARDS 62‐63
INDEPENDENTAUDITOR'SREPORTONCOMPLIANCEFOREACHMAJORPROGRAMANDONINTERNALCONTROLOVERCOMPLIANCEREQUIREDBYTHEUNIFORMGUIDANCE 64‐65
SCHEDULEOFFINDINGSANDQUESTIONEDCOSTS 66‐67
SUMMARYSCHEDULEOFPRIORAUDITFINDINGS 68
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INDEPENDENTAUDITOR’SREPORT
BoardofDirectorsHanoverPublicSchoolDistrictHanover,Pennsylvania
REPORTONTHEFINANCIALSTATEMENTS
Wehaveauditedtheaccompanyingfinancialstatementsofthegovernmentalactivities,thebusiness‐typeactivities,eachmajorfund,andtheaggregateremainingfundinformationofHanoverPublicSchoolDistrict,asofandfortheyearendedJune30,2017,andtherelatednotestothefinancialstatements,whichcollectivelycomprisetheSchoolDistrict'sbasicfinancialstatementsaslistedinthetableofcontents.
Management’sResponsibilityfortheFinancialStatements
ManagementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica;thisincludesthedesign,implementation,andmaintenanceofinternalcontrolrelevanttothepreparationandfairpresentationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Auditor’sResponsibility
Ourresponsibilityistoexpressopinionsonthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmericaandthestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStates.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Accordingly,weexpressnosuchopinion.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofsignificantaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinions.
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Opinions
Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,therespectivefinancialpositionofthegovernmentalactivities,thebusiness‐typeactivities,eachmajorfund,andtheaggregateremainingfundinformationoftheHanoverPublicSchoolDistrict,asofJune30,2017,andtherespectivechangesinfinancialposition,and,whereapplicable,cashflowsthereoffortheyearthenendedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.
OtherMatters
RequiredSupplementaryInformation
AccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequirethatthemanagement'sdiscussionandanalysisonpages4to12,thebudgetarycomparisonschedule–generalfundonpage55,scheduleofSchoolDistrict’sproportionateshareofthenetpensionliability–PSERSonpage56,scheduleofSchoolDistrict’scontributions–PSERSonpage57andtheOPEBscheduleoffundingprogressonpage58bepresentedtosupplementthebasicfinancialstatements.Suchinformation,althoughnotapartofthebasicfinancialstatements,isrequiredbytheGovernmentalAccountingStandardsBoard,whoconsidersittobeanessentialpartoffinancialreportingforplacingthebasicfinancialstatementsinanappropriateoperational,economic,orhistoricalcontext.WehaveappliedcertainlimitedprocedurestotherequiredsupplementaryinformationinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica,whichconsistedofinquiriesofmanagementaboutthemethodsofpreparingtheinformationandcomparingtheinformationforconsistencywithmanagement’sresponsestoourinquiries,thebasicfinancialstatements,andotherknowledgeweobtainedduringourauditofthebasicfinancialstatements.Wedonotexpressanopinionorprovideanyassuranceontheinformationbecausethelimitedproceduresdonotprovideuswithsufficientevidencetoexpressanopinionorprovideanyassurance.
OtherInformation
OurauditwasconductedforthepurposeofformingopinionsonthefinancialstatementsthatcollectivelycompriseHanoverPublicSchoolDistrict'sbasicfinancialstatements.ThescheduleofexpendituresoffederalawardsispresentedforpurposesofadditionalanalysisasrequiredbyTitle2U.S.CodeofFederalRegulations(CFR)Part200,UniformAdministrativeRequirements,CostPrinciples,andAuditRequirementsforFederalAwards,andisnotarequiredpartofthebasicfinancialstatements.
Thescheduleofexpendituresoffederalawardsistheresponsibilityofmanagementandwasderivedfromandrelatesdirectlytotheunderlyingaccountingandotherrecordsusedtopreparethebasicfinancialstatements.Suchinformationhasbeensubjectedtotheauditingproceduresappliedintheauditofthefinancialstatementsandcertainadditionalprocedures,includingcomparingandreconcilingsuchinformationdirectlytotheunderlyingaccountingandotherrecordsusedtopreparethebasicfinancialstatementsortothebasicfinancialstatementsthemselves,andotheradditionalproceduresinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.Inouropinion,thescheduleofexpendituresoffederalawardsisfairlystated,inallmaterialrespects,inrelationtothebasicfinancialstatementsasawhole.
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OtherReportingRequiredbyGovernmentAuditingStandards
InaccordancewithGovernmentAuditingStandards,wehavealsoissuedourreportdatedJanuary3,2018,onourconsiderationoftheHanoverPublicSchoolDistrict’sinternalcontroloverfinancialreportingandonourtestsofitscompliancewithcertainprovisionsoflaws,regulations,contracts,andgrantagreementsandothermatters.Thepurposeofthatreportistodescribethescopeofourtestingofinternalcontroloverfinancialreportingandcomplianceandtheresultsofthattesting,andnottoprovideanopiniononinternalcontroloverfinancialreportingoroncompliance.ThatreportisanintegralpartofanauditperformedinaccordancewithGovernmentAuditingStandardsinconsideringHanoverPublicSchoolDistrict’sinternalcontroloverfinancialreportingandcompliance.
Hanover,PennsylvaniaJanuary3,2018
HANOVERPUBLICSCHOOLDISTRICTManagement'sDiscussionandAnalysis(MD&A)RequiredSupplementaryInformationJune30,2017
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ThediscussionandanalysisofHanoverPublicSchoolDistrict’sfinancialperformanceprovidesanoverallreviewoftheSchoolDistrict’sfinancialactivitiesforthefiscalyearendedJune30,2017.TheintentofthisdiscussionandanalysisistolookattheSchoolDistrict’sfinancialperformanceasawhole;readersshouldalsoreviewthefinancialstatementsandthenotestothebasicfinancialstatementstoenhancetheirunderstandingoftheSchoolDistrict’sfinancialperformance.TheManagementDiscussionandAnalysis(MD&A)isanelementofthereportingmodeladoptedbytheGovernmentalAccountingStandardsBoard(GASB)intheirStatementNo.34BasicFinancialStatements–andManagement’sDiscussionandAnalysis–forStateandLocalGovernments.CertaincomparativeinformationbetweenthecurrentyearandtheprioryearisrequiredtobepresentedintheMD&A.FINANCIALHIGHLIGHTS
TheSchoolDistrict’sfinancialstatusdeclinedduringthe2016‐17fiscalyear.Totalnetpositiondecreased5%overthecourseoftheyear.
Overallgeneralrevenuesandnettransferswere$25,854,647,whichrepresents$452,486less
thannetprogramexpenses.
Thenetpositionofbusiness‐typeactivities–foodservices–decreased4%thisyear.Revenuesincreased5%to$965,432(includingtransfers),whileexpensesincreased7%to$993,066.
Attheendofthecurrentfiscalyear,thefundbalanceoftheGeneralFundwas$1,345,780
comparedto$1,049,042intheprioryear.Adecreasewasanticipatedinthebudgetprocessasfundbalancewasexpectedtobeusedtobalancethebudgetbutbecauseofrevenuesexceedingbudgetmorethanexpenses,thegeneralfundhadapositivechangeinfundbalanceduringtheyear.
OVERVIEWOFTHEFINANCIALSTATEMENTS
Thisannualreportconsistsofthreeparts:management’sdiscussionandanalysis(thissection),thebasicfinancialstatements,andrequiredsupplementaryinformation.Thebasicfinancialstatementsincludetwokindsofstatements,whichpresentdifferentviewsoftheSchoolDistrict.ThefirsttwostatementsareGovernment‐widefinancialstatementsthatprovidebothshort‐termandlong‐terminformationabouttheSchoolDistrict’soverallfinancialstatus.TheremainingstatementsarefundfinancialstatementsthatfocusonindividualpartsoftheSchoolDistrict,reportingtheSchoolDistrict’soperationsinmoredetailthanthegovernment‐widestatements.Thegovernmentalfundsstatementsindicatehowbasicservicessuchasregularandspecialeducationwerefinancedintheshorttermaswellasindicatefuturespendingplans.Proprietaryfundsstatementsoffershort‐termandlong‐termfinancialinformationabouttheactivitiestheSchoolDistrictoperateslikeabusiness,suchasfoodservices.FiduciaryfundsstatementsprovideinformationaboutthefinancialrelationshipsinwhichtheSchoolDistrictactssolelyasatrusteeoragentforthebenefitofothers,suchasstudentactivityfundsandscholarshipfunds.Thefundfinancialstatementsalsoincludethebudget/actualcomparisonofthegeneralfund,whichisreportedaspartofthebasicfinancialstatementsratherthanasrequiredsupplementaryinformationinaccordancewithrequirementsofthePennsylvaniaDepartmentofEducation.
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Thefinancialstatementsalsoincludenotesthatexplainsomeoftheinformationinthestatements,aswellasprovidemoredetaileddata.ThestatementsarefollowedbyasectionofrequiredsupplementaryinformationthatfurtherexplainsandsupportsthefinancialstatementswithacomparisonoftheSchoolDistrict’sbudgetfortheyear.FigureA‐1showshowthevariouspartsofthisannualreportarearrangedandrelatetooneanother.
FigureA‐1RequiredComponentsof
HanoverPublicSchoolDistrict’sFinancialReport
BasicFinancialStatements
RequiredSupplementaryInformation
District‐wideFinancialStatements
FundFinancialStatements
NotestotheFinancialStatements
Management’sDiscussion&Analysis
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FigureA‐2summarizesthemajorfeaturesoftheSchoolDistrict’sfinancialstatements,includingtheportionoftheSchoolDistricttheycoverandthetypesofinformationtheycontain.Theremainderofthisoverviewsectionofthemanagementdiscussionandanalysisexplainsthestructureandcontentsofeachofthestatements.
FigureA‐2MajorFeaturesofHanoverPublicSchoolDistrict’sGovernment‐wideandFundFinancialStatements
Government‐wide
StatementsFundFinancialStatements
GovernmentalFunds ProprietaryFunds FiduciaryFundsScope EntireSchoolDistrict
(exceptfiduciaryfunds)
ActivitiesoftheSchoolDistrictthatisnotproprietaryorfiduciary,suchasgeneraloperatingandcapitalprojects.
ActivitiestheSchoolDistrictoperatessimilartoprivatebusinesses,suchasfoodservice.
InstancesinwhichtheSchoolDistrictadministersresourcesonbehalfofsomeoneelse,suchasscholarshipandstudentactivitiesprograms.
RequiredFinancialStatements
StatementofNetPosition
StatementofActivities
BalanceSheet StatementofRevenues,Expenditures,andChangesinFundBalances
StatementofNetPosition
StatementofRevenues,Expenditures,andChangesinNetPosition
StatementofCashFlows
StatementofFiduciaryNetPosition
StatementofChangesinFiduciaryNetPosition
AccountingBasis&MeasurementFocus
Accrualaccountingandeconomicresourcesfocus
Modifiedaccrualaccountingandcurrentfinancialfocus
Accrualaccountingandeconomicresourcesfocus
Accrualaccountingandeconomicresourcesfocus
Typesofassets/liabilityinformation
Allassetsandliabilities,bothfinancialandcapital,andshort‐termandlong‐term.
Generally,assetsexpectedtobeusedupandliabilitiesthatcomedueduringtheyearorsoonthereafter;nocapitalassetsorlong‐termliabilitiesincluded.
Allassetsandliabilities,bothfinancialandcapital,andshort‐termandlong‐term.
Allassetsandliabilities,bothshort‐termandlong‐term;fundsdonotcurrentlycontaincapitalassets,althoughtheycan.
Typesofinflow/outflowinformation
Allrevenuesandexpensesduringyear,regardlessofwhencashisreceivedorpaid.
Revenueforwhichcashisreceivedduringorsoonaftertheendoftheyear;expenditureswhengoodsorserviceshavebeenreceivedandtherelatedliabilityisdueandpayable.
Allrevenuesandexpensesduringyear,regardlessofwhencashisreceivedorpaid.
Alladditionsanddeductionsduringyear,regardlessofwhencashisreceivedorpaid.
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GOVERNMENT‐WIDESTATEMENTS
Thegovernment‐widestatementsreportinformationabouttheSchoolDistrictasawholeusingaccountingmethodssimilartothoseusedbyprivate‐sectorcompanies.TheStatementofNetPositionincludesalloftheSchoolDistrict’sassets,deferredoutflowsofresources,liabilitiesanddeferredinflowsofresources.Allofthecurrentyear’srevenuesandexpensesareaccountedforintheStatementofActivitiesregardlessofwhencashisreceivedorpaid.
Thetwogovernment‐widestatementsreporttheSchoolDistrict'snetpositionandhowtheyhavechanged.Netposition,thedifferencebetweentheSchoolDistrict’sassets,deferredoutflowsofresources,liabilitiesanddeferredinflowsofresources,areonewaytomeasuretheSchoolDistrict’sfinancialhealthorposition.
Overtime,increasesordecreasesintheSchoolDistrict’snetpositionareanindicationofwhetheritsfinancialhealthisimprovingordeteriorating,respectively.
ToassesstheoverallhealthoftheSchoolDistrict,youneedtoconsideradditionalnon‐financialfactors,suchaschangesintheSchoolDistrict’spropertytaxbaseandtheconditionorneedforimprovementsorexpansionoftheexistingschoolfacilities.
Thegovernment‐widefinancialstatementsoftheSchoolDistrictaredividedintotwocategories:
Governmentalactivities–MostoftheSchoolDistrict’sbasicservicesareincludedhere,suchasinstruction,administration,andcommunityservices.Propertytaxes,stateandfederalsubsidies,andgrantsfinancemostoftheseactivities.
Business‐typeactivities–TheSchoolDistrictoperatesafoodserviceoperationandchargesfeestostudents,staff,andvisitorstohelpitcoverthecostsofthefoodserviceoperation.
FUNDFINANCIALSTATEMENTS
ThefundfinancialstatementsprovidemoredetailedinformationabouttheSchoolDistrict’sfunds.ThesestatementsfocusontheSchoolDistrict’smostsignificantor“major”funds–notontheSchoolDistrictasawhole.FundsareaccountingcomponentsthattheSchoolDistrictusestokeeptrackofspecificsourcesoffundingandspendingonparticularprograms.Somefundsarerequiredbystatelawandbybondrequirements.TheSchoolDistrictmayestablishotherfundstocontrolandmanagemoneyforparticularpurposes,suchasrepayingitslong‐termdebts.
TheSchoolDistricthasthreetypesoffundsasfollows:
Governmentalfunds–MostoftheSchoolDistrict’sactivitiesarereportedingovernmentalfunds,whichfocusonthedeterminationoffinancialpositionandchangeinfinancialposition,notonincomedetermination.Theyarereportedusinganaccountingmethodcalledmodifiedaccrualaccounting,whichmeasurescashandallotherfinancialassetsthatcanreadilybeconvertedtocash.Thegovernmentalfundstatementsprovideadetailedshort‐termviewoftheSchoolDistrict’soperationsandtheservicesitprovides.GovernmentalfundinformationhelpsthereaderdeterminewhethertherearemoreorfewerfinancialresourcesthatcanbespentinthenearfuturetofinancetheSchoolDistrict’sprograms.Therelationship(ordifferences)betweengovernmentalactivities(reportedintheStatementofNetPositionandtheStatementofActivities)andgovernmentalfundsisreconciledinthefinancialstatements.
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Proprietaryfunds–ThesefundsareusedtoaccountfortheSchoolDistrict'sactivitiesthataresimilartobusinessoperationsintheprivatesector;orwherethereportingisondeterminingnetincome,financialposition,changesinfinancialposition,andasignificantportionoffundingthroughusercharges.WhentheSchoolDistrictchargescustomersforservicesitprovides–whethertooutsidecustomersortootherunitsintheSchoolDistrict–theseservicesaregenerallyreportedinproprietaryfunds.TheFoodServiceFundistheSchoolDistrict’sproprietaryfundandisthesameasthebusiness‐typeactivitieswereportinthegovernment‐widestatements,butprovidesmoredetailandadditionalinformation,suchascashflows.Fiduciaryfunds‐TheSchoolDistrictisthetrustee,orfiduciary,forassetsthatbelongtoothers,suchasscholarshipfundsorstudentactivityfunds.TheSchoolDistrictisresponsibleforensuringthattheassetsreportedinthesefundsareusedonlyfortheirintendedpurposesandbythosetowhomtheassetsbelong.TheSchoolDistrictexcludestheseactivitiesfromtheSchoolDistrict'sgovernment‐widefinancialstatementsbecausetheSchoolDistrictcannotusetheseassetstofinanceitsoperations.
FINANCIALANALYSISOFTHESCHOOLDISTRICTASAWHOLE
TheSchoolDistrict’scombinednetpositionwassmalleronJune30,2017whencomparedtothepriorfiscalyear.Totalnetpositiondecreased5%duringtheyear.(SeeFigureA‐1)ThedownturnintheSchoolDistrict’sfinancialpositioncamefromitsgovernmentalandbusiness‐typeactivities.Governmentalnetpositiondecreased2%fromprioryear.ThenetpositionoftheSchoolDistrict’sbusiness‐typeactivitiesdecreased4%fromprioryear.
TableA‐1June30,2017and2016
NetPosition
2016 2017 2016 2017 2016 2017Currentandotherassets 6,160,476$ 6,342,831$ 37,842$ 74,026$ 6,198,318$ 6,416,857$Capitalassets 29,862,840 28,728,096 64,060 49,874 29,926,900 28,777,970
TotalAssets 36,023,316 35,070,927 101,902 123,900 36,125,218 35,194,827
Deferredoutflowsofresources 4,370,443 9,339,115 105,888 216,794 4,476,331 9,555,909Totaldeferredoutflowsofresources 4,370,443 9,339,115 105,888 216,794 4,476,331 9,555,909
Currentandotherliabilities 5,232,899 6,091,741 20,625 17,473 5,253,524 6,109,214Long‐termliabilities 60,037,428 64,178,619 842,240 968,858 60,879,668 65,147,477
Totalliabilities 65,270,327 70,270,360 862,865 986,331 66,133,192 71,256,691
Deferredinflowsofresources 301,613 462,054 5,153 42,225 306,766 504,279Totaldeferredinflowsofresources 301,613 462,054 5,153 42,225 306,766 504,279
NetPositionNetinvestmentincapitalassets 12,517,007 13,535,403 64,060 49,874 12,581,067 13,585,277
Restricted 1,946,690 1,674,840 ‐ ‐ 1,946,690 1,674,840Unrestricted (39,641,878) (41,532,615) (724,288) (737,736) (40,366,166) (42,270,351)
Totalnetposition (25,178,181)$ (26,322,372)$ (660,228)$ (687,862)$ (25,838,409)$ (27,010,234)$
Governmental Business‐typeActivities Activities Total
MostoftheSchoolDistrict'snetpositionareinvestedincapitalassets(buildings,land,andequipment).Theremainingnetpositionconsistofrestrictedandunrestrictedamounts.
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Theresultsofthisyear'soperationsasawholearereportedintheStatementofActivities.Allexpensesarereportedinthefirstcolumn.Specificcharges,grants,revenues,andsubsidiesthatdirectlyrelatetospecificexpensecategoriesarerepresentedtodeterminethefinalamountoftheSchoolDistrict'sactivitiesthataresupportedbyothergeneralrevenues.ThetwolargestgeneralrevenuesarethelocaltaxesassessedtocommunitytaxpayersandtheBasicEducationSubsidyprovidedbytheStateofPennsylvania.TableA‐2takestheinformationfromthatStatement,rearrangesitslightly,soyoucanseeourtotalrevenuesfortheyear.ThetablealsopresentstheexpensesofboththeGovernmentalActivitiesandtheBusiness‐typeActivitiesoftheSchoolDistrict.
TableA‐2
FiscalYearsendedJune30,2017and2016ChangesinNetposition
2016 2017 2016 2017 2016 2017RevenuesProgramrevenuesChargesforservices 209,695$ 119,164$ 167,650$ 148,141$ 377,345$ 267,305$Operatinggrantsandcontributions 4,799,721 4,920,103 702,843 744,687 5,502,564 5,664,790Capitalgrantsandcontributions 481,582 345,457 ‐ ‐ 481,582 345,457Generalrevenues ‐ ‐Propertyandwagetaxes 21,540,499 22,268,547 ‐ ‐ 21,540,499 22,268,547Unrestrictedgrants,subsidiesandcontributions 3,268,399 3,555,339 ‐ 7,599 3,268,399 3,562,938Other 96,971 98,557 3,066 16,241 100,037 114,798TotalRevenues 30,396,867$ 31,307,167$ 873,559$ 916,668$ 31,270,426$ 32,223,835$
ExpensesInstruction 20,665,070$ 22,170,361$ ‐$ ‐$ 20,665,070$ 22,170,361$Instructionalstudentsupport 2,538,449 2,572,814 ‐ ‐ 2,538,449 2,572,814Administrativeandfinancialsupport 2,861,479 3,082,531 ‐ ‐ 2,861,479 3,082,531Operationandmaintenanceofplant 2,316,281 2,232,019 ‐ ‐ 2,316,281 2,232,019Pupiltransportation 1,703,570 1,225,360 ‐ ‐ 1,703,570 1,225,360Studentactivities 548,047 615,183 ‐ ‐ 548,047 615,183Communityservices 22,746 21,518 ‐ ‐ 22,746 21,518Interestonlong‐termdebt 543,607 482,808 ‐ ‐ 543,607 482,808Foodservices ‐ ‐ 924,878 993,066 924,878 993,066TotalExpenses 31,199,249$ 32,402,594$ 924,878$ 993,066$ 32,124,127$ 33,395,660$
Transfers(out)in (23,980) (48,764) 23,980 48,764 ‐ ‐
Increase(Decrease)inNetPosition (826,362)$ (1,144,191)$ (27,339)$ (27,634)$ (853,701)$ (1,171,825)$
Governmental Business‐typeActivities Activities Total
TableA‐3showstheSchoolDistrict'slargestfunctions‐instructionalprograms,instructionalstudentsupport,administrative,operationandmaintenanceofplant,pupiltransportation,studentactivities,communityservices,facilitiesacquisition,andinterestonlong‐termdebt.Thistablealsoshowseachactivity’snetcost(totalcostlessfeesgeneratedbytheactivitiesandgovernmentalaidprovidedforspecificprograms).ThenetcostshowsthefinancialburdenplacedontheSchoolDistrict’staxpayersbyeachofthesefunctions.
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TableA‐3FiscalYearsendedJune30,2017and2016
GovernmentalActivities
Percentage PercentageChange Change
2016 2017 2016‐2017 2016 2017 2016‐2017
Instruction 20,665,070$ 22,170,361$ 7.28% 16,857,700$ 18,142,940$ 7.62%Instructionalstudentsupport 2,538,449 2,572,814 1.35% 2,220,470 2,215,966 (0.20% )Administrativeandfinancialsupport 2,861,479 3,082,531 7.73% 2,606,801 2,784,106 6.80%Operationandmaintenanceofplant 2,316,281 2,232,019 (3.64% ) 2,162,846 2,078,765 (3.89% )Pupiltransportation 1,703,570 1,225,360 (28.07% ) 1,325,600 1,106,964 (16.49% )Studentactivities 548,047 615,183 12.25% 464,158 543,848 17.17%Facilitiesacquisition 22,746 21,518 (5.40%) 8,651 7,930 (8.33%)Interestonlong‐termdebt 543,607 482,808 (11.18%) 62,025 137,351 121.44%Totalgovernmentalactivities 31,199,249$ 32,402,594$ 3.86% 25,708,251$ 27,017,870$ 5.09%
OfServices OfServicesTotalCost NetCost
TableA‐4reflectstheactivitiesoftheFoodServiceprogram,theonlyBusiness‐typeactivityoftheSchoolDistrict.
TableA‐4
FiscalYearsendedJune30,2017and2016
Business‐typeActivitiesPercentage Percentage
Functions/Programs Change Change
2016 2017 2015‐2016 2016 2017 2015‐2016
Foodservices 924,878$ 993,066$ 7.37% 54,385$ 100,238$ 84.31%
TotalCost NetCost
OfServices OfServices
TheStatementofRevenues,Expenses,andChangesinFundNetPositionforthisproprietaryfundwillfurtherdetailtheactualresultsofoperation.FINANCIALANALYSISOFTHESCHOOLDISTRICT’SFUNDS
AtJune30,2017,theSchoolDistrict'sgovernmentalfundsreportedacombinedfundbalanceof$3,020,620,whichisanincreaseof$50,400.Themajorchangesinfundbalanceoccurredintwofunds:
GeneralFund
TheGeneralFundhadanincreaseinfundbalanceof$296,738,despitetheanticipatedbudgeteduseoffundbalanceof$212,390.Thiswastheresultoftaxrevenuebeinghigherthanbudgeted,anincreaseinthestatebasiceducationformulathatbenefitedtheDistrictandadditionalfederalrevenues.
CapitalReserveFund
The$246,338decreaseinfundbalancewasduetotheutilizationofcapitalreservemoniestomakepaymentsonmaintenanceprojectsthroughouttheSchoolDistrict.
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GENERALFUNDBUDGETARYHIGHLIGHTS
Duringthefiscalyear,theBoardofSchoolDirectors(TheBoard),throughtheBudgetandFinanceCommittee,authorizesrevisionstotheoriginalbudgettoaccommodatedifferencesfromtheoriginalbudgettotheactualexpendituresoftheSchoolDistrict.Alladjustmentsareagainconfirmedatthetimetheannualauditisaccepted,whichisaftertheendofthefiscalyear,whichisnotprohibitedbystatelaw.AscheduleshowingtheSchoolDistrict'soriginalandfinalbudgetamountscomparedwithamountsactuallypaidandreceivedisshowninthefinancialstatements.
TheSchoolDistrict’s2016‐2017budgetforthegeneralfundprojectedthatexpenditureswouldexceedrevenuesbyapproximately$212,390.Theactualresultsfortheyearshowedrevenuesexceedingexpendituresbyapproximately$296,738.
Actualrevenueswere$732,262higherthanexpected,duetoadditionaltaxcollectionsof$203,175,additionalbasiceducationfundingstaterevenueof$337,500duetoachangeinthestatebasiceducationfundingformula,andadditionalfederalrevenueof$137,000.
Actualexpenditureswerehigherthanbudgetby$212,856,orlessthan1percentoftotalexpenditures.
CAPITALASSETANDDEBTADMINISTRATION
CapitalAssets
AtJune30,2017,theSchoolDistricthad$28,777,970investedinabroadrangeofcapitalassets,includingland,buildings,andfurnitureandequipment.Thisamountrepresentsanetdecrease(includingadditions,deletions,anddepreciation)of$1,148,930,or4%fromlastyear.Totaldepreciationexpensefortheyearwas$1,671,865,whilebuildingandsiteimprovementsandadditionstoequipmentandfurnituretotaled$567,767.
DEBTADMINISTRATION
AsofJuly1,2016,theSchoolDistricthadtotaloutstandingbondprincipalof$16,905,000.TheSchoolDistrictmadepaymentsagainstprincipalof$2,085,000resultinginendingoutstandingbondprincipalasofJune30,2017of$14,820,000:
TableA‐5OutstandingDebt
2016 2017
GeneralObligationBonds
Series2012 6,795,000$ 6,105,000$
Series2013 10,110,000 8,715,000
Bond(discounts)/premium‐net 1,092,751 929,946
Total 17,997,751$ 15,749,946$
Otherlong‐termobligationsincludeaccruedvacationpayandsickleaveforspecificemployeesoftheSchoolDistrict,aswellascertainotherpostemploymentbenefits(OPEB)andpensionliabilities.Moredetailedinformationaboutourlong‐termliabilitiesisincludedinthenotestothefinancialstatements.
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CURRENTLYKNOWNFACTS,DECISIONS,ORCONDITIONS
Atthetimethesefinancialstatementswerepreparedandaudited,theSchoolDistrictwasawareofthefollowingexistingcircumstancesthatcouldsignificantlyaffectitsfinancialhealthinthefuture:
Theretirementsystem(PSERS)istohaverateincreasesto33.43%ofwagesin2018‐2019,andprojectedfutureyearlyrateincreasesatslightlyhigherlevels,howeveratamorelevelamount.The2017‐2018enactedrateis32.57%.TheSchoolDistrictatthecompletionoftheretirementspikehasbeenabletomaintain3%to6%oftotalexpensesinfundbalanceaspreviouslyprojected.
ThecurrentstateAct1IndexallowanceontheamountofmillagethatcanbeincreasedinanyoneyearimpactstheSchoolDistrict’sabilitytogeneraterevenue.
TheSchoolDistrictisreducingtheuseoffundbalancetobalancethebudget.For2017‐2018thebudgeteduseoffundbalanceiszero.
TheSchoolDistrictisconsideringanewbondissue,whilemaintainingannualdebtpaymentsatthecurrentlevels,through2026‐2027andreducedandeliminatedin2027‐2028.
CONTACTINGTHESCHOOLDISTRICTFINANCIALMANAGEMENT
Ourfinancialreportisdesignedtoprovideourcitizens,taxpayers,parents,students,investors,andcreditorswithageneraloverviewoftheSchoolDistrict'sfinancesandtoshowtheBoard'saccountabilityforthemoneyitreceives.Ifyouhavequestionsaboutthisreportorwishtorequestadditionalfinancialinformation,pleasecontactTroyS.Wentz,BusinessManager/BoardSecretary,atHanoverPublicSchoolDistrict,403MoulAvenue,Hanover,PA17331,(717)637‐9000.
HANOVERPUBLICSCHOOLDISTRICTStatementofNetPositionJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 13
GovernmentalActivities
Business‐TypeActivities Total
ASSETSCurrentAssetsCashandcashequivalents 1,075,269$ 326,252$ 1,401,521$Investments 2,538,502 ‐ 2,538,502Receivables:Taxes‐net 1,127,900 ‐ 1,127,900Intergovernmental 1,063,325 ‐ 1,063,325Other 266,703 253 266,956
Internalbalances 263,406 (263,406) ‐Inventories ‐ 10,927 10,927Prepaidexpenses 7,726 ‐ 7,726Totalcurrentassets 6,342,831 74,026 6,416,857
NoncurrentAssetsCapitalassetsnotbeingdepreciated:Land 410,600 ‐ 410,600
Capitalassets,net:Siteimprovements 3,444,855 ‐ 3,444,855Buildingsandimprovements 23,846,697 ‐ 23,846,697Furniture,fixturesandequipment 1,025,944 49,874 1,075,818Totalnoncurrentassets 28,728,096 49,874 28,777,970TotalAssets 35,070,927 123,900 35,194,827
DEFERREDOUTFLOWSOFRESOURCESDeferredoutflowsrelatedtopensionliability 8,781,862 216,794 8,998,656Deferredchargeonbondrefunding 557,253 ‐ 557,253Totaldeferredoutflowsofresources 9,339,115 216,794 9,555,909
TotalAssetsandDeferredOutflowsofResources 44,410,042$ 340,694$ 44,750,736$
LIABILITIESCurrentLiabilitiesAccountspayable 1,190,406$ 13,278$ 1,203,684$Accruedsalariesandbenefits/withholdings 2,256,054 220 2,256,274Accruedinterest 130,476 ‐ 130,476Portiondueorpayablewithinoneyear:Generalobligationbondspayable 2,292,805 ‐ 2,292,805Compensatedabsences 222,000 3,975 225,975Totalcurrentliabilities 6,091,741 17,473 6,109,214
NoncurrentLiabilitiesPortiondueorpayableafteroneyear:Generalobligationbondsandnotespayable 13,457,141 ‐ 13,457,141Compensatedabsences 268,200 7,794 275,994Netpensionobligation 49,735,570 961,064 50,696,634OPEBLiability 717,708 ‐ 717,708
Totalnoncurrentliabilities 64,178,619 968,858 65,147,477
TotalLiabilities 70,270,360 986,331 71,256,691
DEFERREDINFLOWSOFRESOURCESDeferredinflowsrelatedtopensionliability 462,054 42,225 504,279
NETPOSITIONNetinvestmentincapitalassets 13,535,403 49,874 13,585,277Restricted 1,674,840 ‐ 1,674,840Unrestricted (41,532,615) (737,736) (42,270,351)
TotalNetPosition (26,322,372) (687,862) (27,010,234)
TotalLiabilities,DeferredInflowsofResourcesandNetPosition 44,410,042$ 340,694$ 44,750,736$
HANOVERPUBLICSCHOOLDISTRICTStatementofActivitiesYearEndedJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 14
ProgramRevenues Net(Expense)RevenueandChangesinNetPosition
Functions/Programs ExpensesChargesforServices
OperatingGrantsandContributions
CapitalGrantsandContributions
GovernmentalActivities
Business‐typeActivities Total
Governmentalactivities:Instruction 22,170,361$ 42,675$ 3,984,746$ ‐$ (18,142,940)$ ‐$ (18,142,940)$Instructionalstudentsupport 2,572,814 ‐ 356,848 ‐ (2,215,966) ‐ (2,215,966)Administrationandfinancialsupportservices 3,082,531 ‐ 298,425 ‐ (2,784,106) ‐ (2,784,106)Operationandmaintenanceofplantservices 2,232,019 21,508 131,746 ‐ (2,078,765) ‐ (2,078,765)Pupiltransportation 1,225,360 ‐ 118,396 ‐ (1,106,964) ‐ (1,106,964)Studentactivities 615,183 44,886 26,449 ‐ (543,848) ‐ (543,848)Communityservices 21,518 10,095 3,493 ‐ (7,930) ‐ (7,930)Interestandamortization 482,808 ‐ ‐ 345,457 (137,351) ‐ (137,351)
Totalgovernmentalactivities 32,402,594 119,164 4,920,103 345,457 (27,017,870) ‐ (27,017,870)
Business‐typeactivities:Foodservices 993,066 148,141 744,687 ‐ ‐ (100,238) (100,238)
Totalprimarygovernment 33,395,660$ 267,305$ 5,664,790$ 345,457$ (27,017,870)$ (100,238)$ (27,118,108)$
Generalrevenuesandtransfers:Propertytaxes,leviedforgeneralpurposes,publicutilityrealtytax,earnedincometax 22,268,547$ ‐$ 22,268,547$
Grants,subsidiesandcontributionsnotrestricted 3,555,339 7,599 3,562,938Investmentearnings 41,217 28 41,245Miscellaneousincome 57,340 16,213 73,553Transfers (48,764) 48,764 ‐Totalgeneralrevenuesandtransfers 25,873,679 72,604 25,946,283
Changeinnetposition (1,144,191) (27,634) (1,171,825)
Netposition‐beginning (25,178,181) (660,228) (25,838,409)
Netposition‐ending (26,322,372)$ (687,862)$ (27,010,234)$
HANOVERPUBLICSCHOOLDISTRICTBalanceSheet‐GovernmentalFundsJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 15
GeneralFundCapitalReserve
Fund
TotalGovernmental
FundsASSETSCashandcashequivalents 909,975$ 165,294$ 1,075,269$Investments 1,000,000 1,538,502 2,538,502Receivables:Taxes‐net 1,127,900 ‐ 1,127,900Intergovernmental 1,063,325 ‐ 1,063,325Otherreceivables 266,703 ‐ 266,703
Duefromotherfunds 263,406 ‐ 263,406Prepaidexpenditures 7,726 ‐ 7,726
Totalassets 4,639,035$ 1,703,796$ 6,342,831$
LIABILITIESAccountspayable 444,233$ 28,956$ 473,189$Accruedsalariesandbenefits 2,256,054 ‐ 2,256,054
Totalliabilities 2,700,287 28,956 2,729,243
DEFERREDINFLOWSOFRESOURCES
Unavailabletaxrevenue 592,968 ‐ 592,968
Totaldeferredinflowsofresources 592,968 ‐ 592,968
FUNDBALANCESNonspendable 7,726 ‐ 7,726Restricted ‐ 1,674,840 1,674,840Unassigned 1,338,054 ‐ 1,338,054
Totalfundbalances 1,345,780 1,674,840 3,020,620
Totalliabilities,deferredinflowsofresourcesandfundbalances
4,639,035$ 1,703,796$ 6,342,831$
HANOVERPUBLICSCHOOLDISTRICTReconciliationoftheGovernmentalFundsBalanceSheettothe
StatementofNetPositionJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 16
Totalfundbalances‐governmentalfunds 3,020,620$
AmountsreportedforgovernmentalactivitiesintheStatementofNetPositionaredifferentbecause:
Capitalassetsusedingovernmentalactivitiesarenotcurrentfinancialresourcesandthereforearenotreportedinthefundfinancialstatements,butarereportedinthegovernmentalactivitiesoftheStatementofNetPosition.
Costofassets 57,523,785Accumulateddepreciation (28,795,689) 28,728,096
Taxesreceivablewillbecollectedthisyear,butarenotavailablesoonenoughtopayforthecurrentperiod'sexpenditures,andthereforeareunavailableinthefundfinancialstatements. 592,968
Deferredchargesonbondrefundingsarereportedasdeferredoutflowsofresourcesinthestatementofnetposition. 557,253
Claimsandjudgmentsthatarenotdueandpayableinthecurrentperiodarenotincludedinthefundfinancialstatements,butareincludedinthegovernmentalactivitiesoftheStatementofNetPosition (717,217)
Long‐termliabilitiesarenotdueandpayableinthecurrentperiodandarethereforenotincludedinthefundfinancialstatements,butareincludedinthegovernmentalactivitiesoftheStatementofNetPosition.Long‐termliabilitiesconsistof:
Bondsandnotespayable,netofdiscountandpremium (15,749,946)Accruedinterestonbonds (130,476)OPEBliability (717,708)Netpensionliability (49,735,570)Deferredoutflowsrelatedtopensionliability 8,781,862Deferredinflowsrelatedtopensionliability (462,054)Compensatedabsences (490,200) (58,504,092)
NetpositionofgovernmentalactivitiesintheStatementofNetPosition (26,322,372)$
HANOVERPUBLICSCHOOLDISTRICTStatementofRevenues,ExpendituresandChangesinFundBalance‐
GovernmentalFundsYearEndedJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 17
GeneralFundCapitalReserve
Fund
TotalGovernmental
FundsREVENUESLocalrevenuesTaxes 22,232,805$ ‐$ 22,232,805$Investmentincome 27,366 13,851 41,217Federalrevenuefromintermediatesources 355,559 ‐ 355,559Other 275,949 ‐ 275,949
Statesources 7,643,353 ‐ 7,643,353Federalsources 722,542 ‐ 722,542
Totalrevenues 31,257,574 13,851 31,271,425
EXPENDITURESInstruction 19,182,341 ‐ 19,182,341Supportservices 8,517,585 ‐ 8,517,585Operationofnoninstructionalservices 599,576 ‐ 599,576Facilitiesacquisition,constructionandimprovements ‐ 278,911 278,911
Debtservice:Principal 2,085,000 ‐ 2,085,000Interest 566,056 ‐ 566,056
Totalexpenditures 30,950,558 278,911 31,229,469
OTHERFINANCINGSOURCES(USES)Refundofprioryearrevenue 57,208 ‐ 57,208Interfundtransfers,net (67,486) 18,722 (48,764)
Totalotherfinancingsourcesanduses (10,278) 18,722 8,444
Netchangeinfundbalances 296,738 (246,338) 50,400
Fundbalances‐beginning 1,049,042 1,921,178 2,970,220
Fundbalances‐ending 1,345,780$ 1,674,840$ 3,020,620$
HANOVERPUBLICSCHOOLDISTRICTReconciliationoftheStatementofRevenues,ExpendituresandChangesinFundBalance
ofGovernmentalFundstotheStatementofActivitiesYearEndedJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 18
NETCHANGEINFUNDBALANCES‐TOTALGOVERNMENTALFUNDS 50,400$
Amountsreportedforgovernmentalactivitiesinthestatementofactivitiesaredifferentbecause:
Depreciationexpense (1,671,865)Capitaloutlays 537,121 (1,134,744)
16,710
2,085,000
68,140
15,108
(179,674)
(1,359,012)
Inthestatementofactivities,claimsandjudgmentsarerecordedasexpense.However,sincethisdoesnotrequiretheuseofcurrentfinancialresources,theyarenotreportedasexpendituresinthegovernmentalfunds. (691,705)
(14,414)
CHANGEINNETPOSITIONOFGOVERNMENTALACTIVITIES (1,144,191)$
Inthestatementofactivities,compensatedabsencesrepresentcontractuallyrequiredobligationsthatdonotrequiretheuseofcurrentfinancialresourcesandthereforearenotreportedasexpendituresingovernmentalfunds.
Governmentalfundsreportcapitaloutlaysasexpenditures.However,inthestatementofactivities,thecostoftheseassetsisallocatedovertheirestimatedusefullivesasdepreciationexpense.Thisistheamountbywhichdepreciationexpensediffersfromcapitaloutlaysintheperiod.
BecausesomepropertytaxesandstaterevenueswillnotbecollectedforseveralmonthsaftertheSchoolDistrict'sfiscalyearends,theyarenotconsidered"available"revenuesinthegovernmentalfunds.Unavailabletaxrevenuesincreasedbythisamountthisyear.
Governmentalfundsreportprepaidbondinsurance,deferredchargeonbondrefundinganddiscountsandpremiumsasexpenditures.However,inthestatementofactivities,thesecostsareamortizedoverthelifeoftherelatedbond.Thisistheamountofamortizationinthecurrentperiod.
Interestonlong‐termdebtinthestatementofactivitiesdiffersfromtheamountreportedinthegovernmentalfundsbecauseinterestisrecognizedasanexpenditureinthefundswhenitisdue,andthusrequirestheuseofcurrentfinancialresources.Inthestatementofactivities,interestexpenseisrecognizedastheinterestaccrues,regardlessofwhenitisdue.Thisistheadditionalinterestaccruedinthestatementofactivitiesovertheamountdue.
Inthestatementofactivities,netpensionactivityrepresentsfutureestimatedobligationsthatdonotrequiretheuseofcurrentfinancialresourcesandthereforearenotreportedasexpendituresingovernmentalfunds.
Inthestatementofactivities,thechangeinOPEBliabilityisrecordedasanexpense.However,sincethisdoesnotrequiretheuseofcurrentfinancialresources,thisisnotreportedasanexpenditureinthegovernmentalfunds.
Repaymentofbondprincipalisanexpenditureinthegovernmentalfunds,buttherepaymentreduceslong‐termliabilitiesinthestatementofnetposition.
HANOVERPUBLICSCHOOLDISTRICTStatementofNetPosition‐ProprietaryFundJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 19
FoodServiceASSETSCurrentAssetsCashandcashequivalents 326,252$Accountsreceivable 253Inventory 10,927
Totalcurrentassets 337,432
NoncurrentAssetsMachineryandequipment‐net 49,874Totalnoncurrentassets 49,874
DEFERREDOUTFLOWSOFRESOURCESDeferredoutflowsrelatedtopensionliability 216,794
Totalassetsanddeferredoutflowsofresources 604,100$
LIABILITIESCurrentLiabilitiesUnearnedrevenue 13,278$Accruedwages 220Duetootherfunds 263,406Currentportionofcompensatedabsences 3,975Totalcurrentliabilities 280,879
NoncurrentLiabilitiesCompensatedabsencespayable 7,794Netpensionobligation 961,064Totalnoncurrentliabilities 968,858
Totalliabilities 1,249,737
DEFERREDINFLOWSOFRESOURCESDeferredinflowsrelatedtopensionliability 42,225
NETPOSITIONNetinvestmentincapitalassets 49,874Unrestricted (737,736)Totalnetposition (687,862)
Totalliabilities,deferredinflowsofresourcesandnetposition 604,100$
HANOVERPUBLICSCHOOLDISTRICTStatementofRevenues,Expenses,andChangesinFundNetPosition‐ProprietaryFundYearEndedJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 20
FoodServiceOPERATINGREVENUEFoodservicerevenues 162,651$Totaloperatingrevenues 162,651
OPERATINGEXPENSESFoodandmilkpurchases 518,596Salaries 259,253Employeebenefits 149,486Supplies 30,350Depreciation 27,634Professionalservices 5,922Repairsandmaintenance 871Travel 954Totaloperatingexpenses 993,066
Operating(loss) (830,415)
NON‐OPERATINGREVENUES(EXPENSES)Statesubsidies 77,123Federalsubsidies 667,564Capitalcontribution 9,302Investmentearnings 28Totalnon‐operatingrevenue(expenses) 754,017
TRANSFERSTransfersin(out) 48,764
Changeinnetposition (27,634)
Totalnetposition‐beginning (660,228)
Totalnetposition‐ending (687,862)$
HANOVERPUBLICSCHOOLDISTRICTStatementofCashFlows‐ProprietaryFundYearEndedJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 21
FoodServiceCashflowsfromoperatingactivities:Cashreceivedfromfoodsales 163,837$Cashpaymentstosuppliersforgoods (491,995)Cashpaymentstoandonbehalfofemployees (331,178)
Netcash(used)byoperatingactivities (659,336)
Cashflowsfromcapitalfinancingactivities:Purchaseofcapitalassets (4,146)
Netcash(used)bycapitalfinancingactivities (4,146)
Cashflowsfromnoncapitalfinancingactivities:Federalsubsidies 608,427Statesubsidies 77,123
Netcashprovidedbynoncapitalfinancingactivities 685,550
Cashflowsfrominvestingactivities:Earningsoninvestments 28
Netincreaseincashandcashequivalents 22,096
Cashandcashequivalents‐beginning 304,156
Cashandcashequivalents‐ending 326,252$
Reconciliationofincome(loss)fromoperationstonetcashprovided(used)byoperatingactivities
Cashflowsfromoperatingactivities:Operatingloss (830,415)$Adjustmentstoreconcileoperatingincome(loss)tonetcashprovided(used)byoperatingactivities:Depreciation 27,634Donatedfoodused 62,469
(Increase)decreasein:Accountsreceivable (253)Prepaidexpense 200Inventory 2,816
Increase(decrease)in:Duetootherfunds 28,581Accruedwages (1,140)Compensatedabsencespayable 2,228Accountspayable/unearnedrevenue (787)Netpensionliabilityandrelateddeferredinflows/outflows 49,331
Totaladjustments 171,079
Netcash(used)byoperatingactivities (659,336)$
HANOVERPUBLICSCHOOLDISTRICTStatementofFiduciaryNetPositionJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 22
PrivatePurposeTrustFund AgencyFund
ASSETSCashandcashequivalents 552,433$ 60,408$Accountsreceivable 9,000 2,515Totalassets 561,433$ 62,923$
LIABILITIESAccountspayableandotherliabilities 30,384$ 1,057$Duetostudentgroups ‐ 61,866Totalliabilities 30,384 62,923
NETPOSITIONNetpositionheldintrustforothers 531,049 ‐Totalnetposition 531,049 ‐
Totalliabilitiesandnetposition 561,433$ 62,923$
HANOVERPUBLICSCHOOLDISTRICTStatementofChangesinFiduciaryNetPositionYearEndedJune30,2017
TheNotestoFinancialStatementsareanintegralpartofthisstatement. 23
PrivatePurposeTrustFund
ADDITIONSInterestincome 2,937$Contributions 113,028Totaladditions 115,965
DEDUCTIONSScholarshipsandawards/grants 53,119Otheroperatingexpenses 250Totaldeductions 53,369
Changeinnetposition 62,596
Netposition‐beginning 468,453
Netposition‐ending 531,049$
HANOVERPUBLICSCHOOLDISTRICTNotestoFinancialStatementsJune30,2017
24
NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES
NatureofOperations
HanoverPublicSchoolDistrict(SchoolDistrict)operatesapublicschoolsystemwhichisgeographicallycomprisedoftheBoroughofHanoverinYorkCounty,Pennsylvania.
TheSchoolDistrictconsistsofHanoverHighSchool,HanoverMiddleSchool,Clearview,HanoverStreet,andWashingtonElementarySchools.
ThefinancialstatementsoftheSchoolDistricthavebeenpreparedinconformitywithgenerallyacceptedaccountingprinciples(GAAP)asappliedtogovernmentalunits.TheGovernmentalAccountingStandardsBoard(GASB)istheacceptedstandard‐settingbodyforestablishinggovernmentalaccountingandfinancialreportingprinciples.ThemostsignificantoftheSchoolDistrict'saccountingpoliciesaredescribedbelow.
ReportingEntity
TheGovernmentalAccountingStandardsBoard(GASB)Statementsdefinethecriteriausedtodeterminethecompositionofthereportingentity.Thesestandardsrequirethatthereportingentityinclude(1)theprimarygovernment,(2)organizationsforwhichtheprimarygovernmentisfinanciallyaccountable;and(3)organizationsthatarefiscallydependentontheprimarygovernmentandafinancialbenefitorburdenexists,and(4)otherorganizationsforwhichthenatureandsignificanceoftheirrelationshipwiththeprimarygovernmentaresuchthattheexclusionwouldcausethereportingentity'sfinancialstatementstobemisleadingorincomplete.TheSchoolDistrictisnotacomponentunitofanyotherentities.Basedontheabovecriteria,theSchoolDistricthasnocomponentunits.
JointVentures
ThefollowingjointventuresarenotcomponentunitsofHanoverPublicSchoolDistrict,andarenotincludedinthisreport.
YorkCountySchoolofTechnology–TheSchoolDistrictisoneoffourteenmemberschooldistrictsparticipatingintheoperationoftheYorkCountySchoolofTechnology.TheSchoolisoperated,administered,andmanagedbyajointoperatingcommitteeconsistingofboardmembersfromthefourteenmemberschooldistricts.Thesemembersareelectedbytheirindividualschooldistrictboardofdirectors.TheSchoolDistrict’sshareofannualoperatingandcapitalcostsforYorkCountySchoolofTechnologyarereflectedasintergovernmentalexpendituresoftheGeneralFund.
LincolnIntermediateUnit#12–ThisisaseparatelegalentityorganizedbyconstituentschooldistrictsinYork,AdamsandFranklincountiestoprovideservicestotheschooldistricts.EachofthememberschooldistrictsappointsonemembertoserveontheBoardofDirectorsoftheIntermediateUnit.TheSchoolDistrictcontractswiththeIntermediateUnitprimarilyforspecialeducationservicesandtraining.
SeeNote12foradditionalinformationonjointventures.
HANOVERPUBLICSCHOOLDISTRICTNotestoFinancialStatementsJune30,2017
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
FundAccounting
TheSchoolDistrictusesfundstomaintainitsfinancialrecordsduringthefiscalyear.FundaccountingisdesignedtodemonstratelegalcomplianceandtoaidmanagementbysegregatingtransactionsrelatedtocertainSchoolDistrictfunctionsoractivities.Afundisdefinedasafiscalandaccountingentitywithaself‐balancingsetofaccounts.ThevariousfundsoftheSchoolDistrictaregroupedintothecategoriesofgovernmental,proprietary,andfiduciary.
1. GovernmentalFunds
GovernmentalFundsarethosethroughwhichmostgovernmentalfunctionsoftheSchoolDistrictarefinanced.Themeasurementfocusisontheflowofexpendableresources,ratherthanonnetearningsdetermination.
TheSchoolDistrictreportsthefollowingmajorgovernmentalfunds:
GeneralFund
TheGeneralFundisusedtoaccountforallfinancialtransactionsnotaccountedforinanotherfund.Revenuesareprimarilyderivedfromlocalproperty,earnedincome,percapitaandoccupationtaxes,andstateandfederalsubsidies.ManyofthemoreimportantactivitiesoftheSchoolDistrict,includinginstruction,administrationoftheSchoolDistrict,andcertainnon‐instructionalservicesareaccountedforinthisfund.Thisisabudgetedfund,andanyunrestrictedfundbalancesareconsideredasresourcesavailableforuse.
CapitalReserveFund
ThisfundisauthorizedbyP.L.145,ActofApril30,1943,knownas53PS1432,andaccountsformoniestransferredduringanyfiscalyearfromappropriations,orfromsurplusmoniesintheGeneralFund,tobeusedforfuturecapitalimprovements.
2. ProprietaryFunds
ProprietaryFundsareusedtoaccountfortheSchoolDistrict'songoingactivitieswhicharesimilartothoseoftenfoundintheprivatesector.Thefocusofproprietaryfundsisonthedeterminationofnetearningsandcapitalmaintenance.Thefollowingfundisutilized:
FoodServiceFund
ThisfundaccountsforallrevenuesandexpensespertainingtocafeteriaoperationsasauthorizedunderSection504ofthePublicSchoolCodeof1949.Itistheintentofthegoverningbodythatthecostofprovidingfoodorservicestothestudentsonacontinuingbasisbefinancedorrecoveredprimarilythroughuserchargesorcost
HANOVERPUBLICSCHOOLDISTRICTNotestoFinancialStatementsJune30,2017
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
FundAccounting(Continued)
reimbursementplans.Therevenuesfromfoodsalesandexpensestoprovideservicesareclassifiedas"operating".Federalandstategrantsandearningsoninvestmentsareclassifiedas"non‐operating".Significantaccountingpoliciesforthisfundinclude:
Equipmentutilizedbythefoodservicefundisrecordedascapitalassetsofthatfund(atcost),andisdepreciatedonastraight‐linebasisovertheestimatedusefullifeof5‐15years.
Foodandsuppliesinventoriesarevaluedatcostonafirst‐in,first‐outbasis.
TheSchoolDistrictdoesnotattempttoallocate"building‐widecosts"tothefoodservicefund.Thus,generalfundexpenditures,whichpartiallybenefitthefoodservicefund(utilities,janitorialservices,insurance,etc.),arenotproportionatelyrecognizedwithinthefoodservicefund;similarly,thefoodservicefunddoesnotrecognizeacostforthebuildingspaceitoccupies(norental‐of‐facilitiesexpense).
3. FiduciaryFunds
Fiduciaryfundreportingfocusesonnetpositionandchangesinnetposition.Thefiduciaryfundcategoryissplitintofourclassifications:pensiontrustfunds,investmenttrustfunds,private‐purposetrustfunds,andagencyfunds.TrustfundsareusedtoaccountforassetsheldbytheSchoolDistrictunderatrustagreementforindividuals,privateorganizations,orothergovernmentsandarethereforenotavailabletosupporttheSchoolDistrict’sownprograms.Agencyfundsarecustodialinnature(assetsequalliabilities)anddonotinvolvemeasurementofresultsofoperations.
AgencyFund
Thisfundaccountsforthereceiptsanddisbursementsofmoniesfromstudentactivityorganizations.TheseorganizationsexistwithexplicitapprovalandaresubjecttorevocationoftheSchoolDistrict’sgoverningbody.ThisaccountingreflectstheSchoolDistrict’sagencyrelationshipwithstudentactivityorganizations.
PrivatePurposeTrustFund
ThisfundaccountsforscholarshipmoniesthataremaintainedbytheSchoolDistrict,butareforthebenefitofindividualstudentswithintheSchoolDistrict.
BasisofPresentation
Government‐wideFinancialStatements‐ThestatementofnetpositionandthestatementofactivitiesdisplayinformationabouttheSchoolDistrictasawhole.Thesestatementsincludethefinancialactivitiesoftheprimarygovernment,exceptforfiduciaryfunds.ThestatementsdistinguishbetweenthoseactivitiesoftheSchoolDistrictthataregovernmentalandthosethatareconsideredbusiness‐typeactivities.
HANOVERPUBLICSCHOOLDISTRICTNotestoFinancialStatementsJune30,2017
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
BasisofPresentation(Continued)
Thegovernment‐widestatementsarepreparedusingtheeconomicresourcesmeasurementfocus.Thisisthesameapproachusedinthepreparationoftheproprietaryfundfinancialstatements,butdiffersfromthemannerinwhichgovernmentalfundfinancialstatementsareprepared.Governmentalfundfinancialstatementsthereforeincludeareconciliationwithbriefexplanationstobetteridentifytherelationshipbetweenthegovernment‐widestatementsandthestatementsforgovernmentalfunds.
Thegovernment‐widestatementofactivitiespresentsacomparisonbetweendirectexpensesandprogramrevenuesforeachsegmentofthebusiness‐typeactivitiesoftheSchoolDistrict,andforeachfunctionorprogramoftheSchoolDistrict'sgovernmentalactivities.Directexpensesarethosethatarespecificallyassociatedwithaservice,program,ordepartmentandthereforeclearlyidentifiabletoaparticularfunction.Programrevenuesincludechargespaidbytherecipientofthegoodsorservicesofferedbytheprogramandgrantsandcontributionsthatarerestrictedtomeetingtheoperationalorcapitalrequirementsofaparticularprogram.RevenueswhicharenotclassifiedasprogramrevenuesarepresentedasgeneralrevenuesoftheSchoolDistrict,withcertainlimitedexceptions.Thecomparisonofdirectexpenseswithprogramrevenuesidentifiestheextenttowhicheachbusinesssegmentorgovernmentalfunctionisself‐financingordrawsfromthegeneralrevenuesoftheSchoolDistrict.
FundFinancialStatements‐FundfinancialstatementsreportdetailedinformationabouttheSchoolDistrict.Thefocusofgovernmentalandproprietaryfundfinancialstatementsisonmajorfundsratherthanreportingfundsbytype.Eachmajorfundispresentedinaseparatecolumn.Non‐majorfundsareaggregatedandpresentedinasinglecolumn.Fiduciaryfundsarereportedbyfundtype.
Theaccountingandfinancialreportingtreatmentappliedtoafundisdeterminedbyitsmeasurementfocus.Allgovernmentalfundtypesareaccountedforusingaflowofcurrentfinancialresourcesmeasurementfocus.Thefinancialstatementsforgovernmentalfundsareabalancesheet,whichgenerallyincludesonlycurrentassetsandcurrentliabilities,andastatementofrevenues,expenditures,andchangesinfundbalances,whichreportsonthesources(i.e.,revenuesandotherfinancingsources)anduses(i.e.,expendituresandotherfinancinguses)ofcurrentfinancialresources.
Allproprietaryfundsareaccountedforonaflowofeconomicresourcesmeasurementfocus.Withthismeasurementfocus,allassetsandliabilitiesassociatedwiththeoperationofthesefundsareincludedonthestatementofnetposition.Thestatementofchangesinfundnetpositionpresentsincreases(i.e.,revenues)anddecreases(i.e.,expenses)innetposition.ThestatementofcashflowsprovidesinformationabouthowtheSchoolDistrictfinancesandmeetsthecashflowneedsofitsproprietaryactivities.
Fiduciaryfundsarereportedusingtheeconomicresourcesmeasurementfocus.
HANOVERPUBLICSCHOOLDISTRICTNotestoFinancialStatementsJune30,2017
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
BasisofAccounting
Thegovernment‐wide,proprietaryandfiduciaryfundfinancialstatementsarereportedusingtheeconomicresourcesmeasurementfocusandtheaccrualbasisofaccounting.Revenuesarerecordedwhenearnedandexpensesarerecordedwhenaliabilityisincurred,regardlessofthetimingofrelatedcashflows.Propertytaxesarerecognizedasrevenuesintheyearforwhichtheyarelevied.Grantsandsimilaritemsarerecognizedasrevenueassoonasalleligibilityrequirementsimposedbytheproviderhavebeenmet.Netposition(totalassetsplustotaldeferredoutflowsofresourceslesstotalliabilitiesplusdeferredinflowsofresources)isusedasapracticalmeasureofeconomicresourcesandtheoperatingstatementincludesalltransactionsandeventsthatincreasedordecreasednetposition.Depreciationischargedasexpenseagainstcurrentoperationsandaccumulateddepreciationisreportedonthestatementofnetposition.
Thegovernmentalfundfinancialstatementsarereportedusingthecurrentfinancialresourcesmeasurementfocusandthemodifiedaccrualbasisofaccounting.Revenuesarerecognizedassoonastheyarebothmeasurableandavailable.Revenuesareconsideredtobeavailablewhentheyarecollectiblewithinthecurrentperiodorsoonenoughthereaftertopayliabilitiesofthecurrentperiod.Forthispurpose,thegovernmentconsiderstaxrevenuetobeavailableifcollectedwithin60daysoftheendofthefiscalperiod.Revenuefromfederal,state,andotherrelatedgrantsdesignatedforpaymentofspecificSchoolDistrictexpendituresisrecognizedwhentherelatedexpendituresareincurredandareavailable,whichisgenerally60days;accordingly,whensuchfundsarereceived,theyarerecordedasliabilitiesuntilearned.Iftimeeligibilityrequirementsarenotmet,adeferredinflowofresourceswouldberecorded.Expendituresgenerallyarerecordedwhenaliabilityisincurred,asunderaccrualaccounting.However,debtserviceexpenditures,aswellasexpendituresrelatedtocompensatedabsencesandclaimsandjudgments,arerecordedonlywhenpaymentisdue.
Proprietaryfundsdistinguishoperatingrevenuesandexpensesfromnon‐operatingitems.Operatingrevenuesandexpensesgenerallyresultfromprovidingfoodservices,includingchargesformeals,andthecostsoffood,salariesandbenefits,depreciationandotherexpenses.Federalandstatesubsidiesareconsiderednon‐operatingrevenueasnoexchangetransactionoccurs.
BudgetsandBudgetaryAccounting
AnoperatingbudgetisadoptedeachyearfortheGeneralFundonamodifiedaccrualbasisofaccounting.
1. ThePennsylvaniaSchoolCodedictatesspecificproceduresrelativetoadoptionoftheSchoolDistrict’sbudgetandreportingofitsfinancialstatements,specifically:
2. TheSchoolDistrict,beforelevyingannualschooltaxes,isrequiredtoprepareanoperatingbudgetforthesucceedingfiscalyear.
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
BudgetsandBudgetaryAccounting(Continued)
3. TheBoardofSchoolDirectorsmaymaketransfersoffundsappropriatedtoanyparticularitemofexpenditurebylegislativeaction.Anaffirmativevoteoftwo‐thirdsofallmembersoftheBoardisrequired.Thefinalbudgetamountsshowninthefinancialstatementsarethefinalauthorizedamountsasrevisedduringtheyear.
4. FundbalancesinbudgetaryfundsmaybeappropriatedbasedonresolutionspassedbytheBoardofEducation,whichauthorizetheSchoolDistricttomakeexpenditures.Appropriationslapseattheendofthefiscalperiod.
5. IncludedintheGeneralFundbudgetareprogrambudgetsasprescribedbythestateandfederalagenciesfundingtheprograms.Thesebudgetsareapprovedonaprogram‐by‐programbasisbythestateorfederalfundingagency.Theseprogramsfrequentlyresultinsupplementarybudgetappropriations.
CapitalbudgetsarenotimplementedforcapitalimprovementsintheCapitalReserveFund.AlltransactionsoftheCapitalReserveFundareapprovedbytheBoardpriortocommitment,therebyconstructivelyachievingbudgetarycontrol.
During2016‐2017,theSchoolDistrictoverspentthebudgetedexpendituresofthegeneralfund,whichisaviolationofthePennsylvaniaSchoolCode,butisnotexpectedtoresultinanynegativeimplicationsfortheSchoolDistrict.
CashandCashEquivalents
Cashconsistsofcashonhandandchecking,savings,andmoneymarketaccountbalances.
Cashandcashequivalentsaredefinedasshort‐term,highlyliquidinvestments(certificatesofdeposit)thatarereadilyconvertibletoknownamountsofcashandincludeinvestmentswithoriginalmaturitiesofthreemonthsorless.
Investments
TheSchoolDistricthaslimitedauthorityastothetypesofallowableinvestments.TheSchoolDistrictinvestsfundswithanexternalinvestmentpool,ThePennsylvaniaSchoolDistrictLiquidAssetFund(PSDLAF).PSDLAFoperatesandisauthorizedundertheIntergovernmentalCooperationActof1972.Investmentsinthesefundsarevaluedatamortizedcostwhichapproximatesmarketvalue.
ThesefundsinvestinfederalsecuritiesbackedbythefullfaithandcreditoftheUnitedStatesGovernment,inagencies,instrumentalitiesandsubdivisionsoftheCommonwealthofPennsylvaniaandbackedbythefullfaithandcreditoftheCommonwealth,andcertificatesofdepositwhichareinsuredbytheFederalDepositInsuranceCorporationorwhicharecollateralizedasprovidedbylawofAct72of1971.
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
StatementofCashFlows
Forpurposesofthestatementofcashflows,theproprietaryfundconsidersallhighlyliquidinvestmentswithamaturityofthreemonthsorlesswhenpurchasedtobecashequivalents.
Inventories
TheFoodServiceFundfoodinventoryconsistsofexpendablesuppliesheldforconsumptionandfederalgovernmentdonatedcommoditiesthatarevaluedatestimatedfairmarketvalue.Theexpendablesuppliesarerecordedasanexpensewhenused.Thecostofgovernmentalfundinventoriesarerecordedasexpenditureswhenpurchasedratherthanwhenconsumed.ThevalueofgovernmentalfundinventoriesisnotsignificantatJune30,2017.
CapitalAssets
Generalcapitalassetsarethoseassetsnotspecificallyrelatedtoactivitiesreportedintheproprietaryfunds.Theseassetsgenerallyresultfromexpendituresinthegovernmentalfunds.Theseassetsarereportedinthegovernmentalactivitiescolumnofthegovernment‐widestatementofnetpositionbutarenotreportedinthefundfinancialstatements.Capitalassetsutilizedbytheproprietaryfundarereportedbothinthebusiness‐typeactivitiescolumnofthegovernment‐widestatementofnetpositionandintherespectivefundfinancialstatements.
Allcapitalassetsarecapitalizedatcost(orestimatedhistoricalcost)andupdatedforadditionsandretirementsduringtheyear.Donatedcapitalassetsarerecordedattheiraquisitionvaluesasofthedatereceived.TheSchoolDistrictmaintainsacapitalizationthresholdof$1,000.TheSchoolDistrictdoesnotpossessanyinfrastructure.Improvementsarecapitalized;thecostsofnormalmaintenanceandrepairsthatdonotaddtothevalueoftheassetormateriallyextendanasset'slifeareexpensed.Interestincurredduringtheconstructionofcapitalassetsisnotcapitalized.
Allreportedcapitalassetsexceptlandaredepreciated.Improvementsaredepreciatedovertheremainingusefullivesoftherelatedcapitalassets.Depreciationiscomputedusingthestraight‐linemethodoverthefollowingusefullives:
GovernmentalActivities
EstimatedLives
Business‐TypeActivities
EstimatedLives Landimprovements 20years N/ABuildingsandimprovements 20‐50years N/AFurnitureandequipment 5‐20years 5‐15yearsVehicles 10years N/A
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
InterfundActivity
Advancesbetweenfundsareaccountedforintheappropriateinterfundreceivableandpayableaccounts.Advancesbetweenfundswhicharenotexpectedtoberepaidareaccountedforastransfers.Interfundbalancesandtransactionsareeliminatedinthegovernment‐widefinancialstatements.
Exchangetransactions,ifany,betweenfundsarereportedasrevenuesinthesellerfundsandasexpenditures/expensesinthepurchaserfunds.Flowsofcashorgoodsfromonefundtoanotherwithoutarequirementforrepaymentarereportedasinterfundtransfers.Interfundtransfersarereportedasotherfinancingsources/usesingovernmentalfundsandasnon‐operatingrevenues/expensesinproprietaryfunds.
UseofEstimates
Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciplesrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassets,deferredoutflowsofresources,liabilities,anddeferredinflowsofresourcesanddisclosureofcontingentassetsandliabilities,ifany,atthedateofthefinancialstatements,andthereportedamountsofrevenuesandexpensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates.
Long‐TermObligations
Inthegovernment‐widefinancialstatements,long‐termdebtandotherlong‐termobligationsarereportedasliabilitiesintheapplicablegovernmentalorbusinesstype‐activitycolumnsinthestatementofnetposition.Thissametreatmentalsoappliestoproprietaryfundfinancialstatements.Bondpremiumsanddiscounts,deferredchargeonbondrefunding,aswellasprepaidbondinsurancecosts,aredeferredandamortizedoverthelifeofthebondsusingthestraight‐linemethod,whichapproximatestheeffectiveinterestmethod.Bondspayablearereportednetoftheapplicablebondpremiumordiscount.Thedeferredchargeonbondrefundingisreportedasdeferredoutflowsofresourcesandamortizedoverthelifeoftheremainingdebt.Prepaidbondinsuranceisreportedasanassetandamortizedoverthetermoftherelateddebt.Otherbondissuancecostsareexpensedatthetimedebtisissued.
Inthefundfinancialstatements,governmentalfundtypesrecognizebondpremiumsanddiscounts,aswellasbondissuancecosts,duringthecurrentperiod.Thefaceamountofdebtissuedandoriginalissuediscountsorpremiumsarereportedasotherfinancingusesorsources.Issuancecostsandunderwriter'sdiscount,whetherornotwithheldfromtheactualdebtproceedsreceived,arereportedasdebtserviceexpenditures.
RetirementPlans
TheSchoolDistrictcontributestothePublicSchoolEmployeesRetirementSystem(PSERS),acost‐sharingmultiple‐employerdefinedbenefitpensionplan.TheSchoolDistrictaccountsfortheplanundertheprovisionsofGASBStatements,whichestablishstandardsforthemeasurement,recognition,anddisplayofpensionexpenseandrelatedliabilities,assets,andnotedisclosures.
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
RetirementPlans(Continued)
Forpurposesofmeasuringthenetpensionliability,deferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensions,andpensionexpense,informationaboutthefiduciarynetpositionofthePublicSchoolEmployees’RetirementSystem(PSERS)andadditionsto/deductionsfromPSERS’sfiduciarynetpositionhavebeendeterminedonthesamebasisastheyarereportedbyPSERS.Forthispurpose,benefitpayments(includingrefundsofemployeecontributions)arerecognizedwhendueandpayableinaccordancewiththebenefitterms.Investmentsarereportedatfairvalue.
CompensatedAbsences
LiabilityforcompensatedabsencesisaccountedforinaccordancewiththeprovisionsofGASB,whichrequiresentitiestoaccrueforemployees'rightstoreceivecompensationforvacationleave,orpaymentsinlieuofaccruedvacationorsickleave,assuchbenefitsareearnedandpaymentbecomesprobable.
Theestimateoftheliabilityfortheaccumulatedunpaidsickleavehasbeencalculatedusingthevestingmethod.Underthatmethod,theSchoolDistricthasidentifiedtheaccruedsickleavebenefitearnedtodatebyeachemployee,determinedthecostofthatbenefitbyreferencetothebenefitprovisionsandthecurrentratespaidbytheSchoolDistrict,andestimatedtheprobabilityofthepaymentofthatbenefittoemployeesuponretirementortermination.
Liabilitiesforvested,unusedvacation,sickpay,andpersonalleavearerecordedintheproprietaryfundsandthegovernment‐widefinancialstatements,andareexpensedasincurred.
Paymentsforvacation,sickpay,andpersonalleaveareexpensedaspaidinthegovernmentalfundfinancialstatements.
OtherPostemploymentBenefitsOtherThanPensions
TheSchoolDistrictprovidescontinuationofmedicalbenefits,includingprescriptiondrugcoverage,toeligibleretiredemployeesandqualifiedspouses/beneficiariesuntiltheretiredemployeereachesMedicareage.Retiredemployeeshavetheabilitytoparticipateintheemployeehealthplanatthesamepremiumrate,albeit100%paidbytheretirees,thustheSchoolDistrictisprovidinganimplicitratesubsidytoitsretirees.ThesebenefitsaredetailedinNote11andarefinancedonapay‐as‐you‐gobasis.
Inadditiontotheotherpostemploymentbenefitdetailedabove,thePublicSchoolEmployees’RetirementSystem(PSERS)alsoprovidesahealthinsurancepremiumassistanceprogramforalleligibleemployees,whichisacost‐sharingmultipleemployerdefinedbenefitplan.
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
DeferredOutflowsandInflowsofResources
Inadditiontoassets,thestatementofnetpositionwillsometimesreportaseparatesectionfordeferredoutflowsofresources.Thisseparatefinancialstatementelement,deferredoutflowsofresources,representsaconsumptionofnetpositionthatappliestoafutureperiod(s)andsowillnotberecognizedasanoutflowofresources(expense)untilthen.TheSchoolDistricthasseveralitemsthatqualifyforreportinginthiscategory,includingthedeferredchargeonbondrefundingandvariousitemsrelatedtopensionliabilities.Theseamountswillbeamortizedinfutureperiods.
Adeferredchargeonbondrefundingresultsfromthedifferenceinthecarryingvalueofrefundingdebtanditsreacquisitionprice.Thisamountisdeferredandamortizedovertheshorterofthelifeoftherefundedorrefundingdebt.
Inadditiontoliabilities,thestatementofnetpositionorbalancesheetwillsometimesreportaseparatesectionfordeferredinflowsofresources.Thisseparatefinancialstatementelement,deferredinflowsofresources,representsanacquisitionofnetpositionorfundbalancethatappliestoafutureperiod(s)andsowillnotberecognizedasaninflowofresources(revenue)untilthattime.TheSchoolDistrict’sdeferredinflowsofresourcesonthestatementofnetpositionconsistofvariousitemsrelatedtopensionliabilities(onthestatementofnetposition).TheSchoolDistrictalsoreportsunavailabletaxrevenueonthegovernmentalfundbalancesheetasdeferredinflowsofresources.
NetPosition
Inthegovernment‐widefinancialstatementsandproprietaryfundfinancialstatements,netpositionisclassifiedinthefollowingcategory:
NetInvestmentinCapitalAssets:Thiscomponentconsistsofcapitalassets,netofaccumulateddepreciationandreducedbyanyoutstandingbalancesofanybonds,mortgages,notesorotherborrowingsthatareattributabletotheacquisition,construction,orimprovementofthosecapitalassets.Iftherearesignificantunspentrelateddebtproceedsatyear‐end,theportionofthedebtattributabletotheunspentbondproceedsisnotincludedinthecalculationofnetinvestmentincapitalassets.Rather,thatportionofdebtisincludedinthesamenetpositioncomponentastheunspentproceeds.Deferredoutflowsofresourcesanddeferredinflowsofresourcesattributabletoacquisition,construction,orimprovementofassetsorrelateddebtalsoareincludedinthiscomponentofnetposition.
RestrictedNetPosition:Thiscomponentconsistsofrestrictedassetsanddeferredoutflowsofresourcesreducedbyliabilitiesanddeferredinflowsofresourcesrelatedtothoseassets.Theserestrictionscouldincludeconstraintsimposedbycreditors(suchasthroughdebtcovenants),grantors,contributors,orlawsorregulationsofothergovernmentsorconstraintsimposedbylawthroughconstitutionalprovisionorenablinglegislation.
AsofJune30,2017,restrictednetpositioningovernmentactivitiesconsistofthefollowing:
Restrictedforfuturecapitalprojects 1,674,840$
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
NetPosition(Continued)
UnrestrictedNetPosition:Thiscomponentisthenetamountofassets,deferredoutflowsofresources,liabilities,anddeferredinflowsofresourcesthatarenotincludedinthedeterminationofnetinvestmentincapitalassetsortherestrictedcomponentofnetposition.
NetPositionFlowAssumption:SometimestheSchoolDistrictwillfundoutlaysforaparticularpurposefrombothrestricted(e.g.restrictedbondorgrantproceeds)andunrestrictedresources.Inordertocalculatetheamountstoreportasrestrictednetpositionandunrestrictednetposition,aflowassumptionmustbemadeabouttheorderinwhichtheresourcesareconsideredtobeapplied.ItistheSchoolDistrict’spolicytouserestrictedresourcesfirst,thenunrestrictedresourcesastheyareneeded.
FundBalance–GovernmentalFunds
Governmentalfundsclassifyfundbalancebasedontherelativestrengthofthespendingconstraintsplacedonthepurposeforwhichresourcescanbeused.Theclassificationsareasfollows:
Nonspendable:Thisclassificationincludesamountsthatcannotbespentbecausetheyareeither(1)notinspendableformor(2)legallyorcontractuallyrequiredtobemaintainedintact.Thisclassificationincludesitemssuchasprepaidamounts,inventories,andlong‐termamountofloansandnotesreceivable.Thisalsoincludesthecorpus(orprincipal)ofpermanentfunds.
Restricted:Thisclassificationincludesamountswheretheconstraintsplacedontheuseofresourcesareeither(1)externallyimposedbycreditors(suchasthroughdebtcovenants),grantors,contributors,orlawsorregulationsofothergovernments;or(2)imposedbylawthroughconstitutionalprovisionsorenablinglegislation.Enablinglegislationauthorizesthegovernmenttoassess,levy,changeormandatepaymentandincludesalegallyenforceablerequirementontheuseofthesefunds.
Committed:ThisclassificationincludesamountsthatcanonlybeusedforspecificpurposespursuanttoconstraintsimposedbyformalactionoftheSchoolDistrict’shighestlevelofdecision‐makingauthority.ThisformalactionisintheformofaresolutionwhichismadebytheSchoolBoard.Onceanamountiscommitted,itcannotbeusedforanyotherpurposeunlesschangedbythesametypeofformalactionusedtoinitiallyconstrainthefunds.
Assigned:ThisclassificationincludesspendableamountsthatarereportedingovernmentalfundsotherthanintheGeneralFundthatareneitherrestrictednorcommitted,andamountsintheGeneralFundthatareintendedtobeusedforaspecificpurpose.TheintentofanassignedfundbalanceshouldbeexpressedbyeithertheSchoolBoard,orasubordinatehigh‐levelbody,suchasthefinancecommittee,superintendent,orbusinessmanagerthatisauthorizedtoassignamountstobeusedforspecificpurposes.AsdetailedinitsFundBalancePolicy,thefinancecommitteehastheauthoritytomakeassignmentsoffundbalance.Thus,theseassignmentscanbemadeorchangedwithoutformalactionofthefullBoard.
Theassignmentoffundbalancecannotresultinanegativeunassignedfundbalance.
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NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
FundBalance–GovernmentalFunds(Continued)
Unassigned:Thisclassificationrepresentstheportionofaspendablefundbalancethathasnotbeencategorizedasrestricted,committed,orassigned.Thegeneralfundistheonlyfundwhichwouldincludeapositiveunassignedfundbalanceasallotherfundtypesmustcategorizeamountswithintheotherclassifications.Anegativeunassignedfundbalancemayoccurinanyfundwhenthereisanoverexpenditureofrestrictedorcommittedfundbalance.Inthiscase,anyassignedfundbalance(andassignedfundbalanceinthegeneralfund)wouldbeeliminatedpriortoreportinganegativeunassignedfundbalance.
MinimumFundBalancePolicy
TheSchoolDistrictwillstrivetomaintainanunassignedfundbalancelevelinthegeneralfundofnotlessthanthreepercent(3%)andnotmorethaneightpercent(8%)ofbudgetedexpendituresforthatfiscalyear.
Thetotalfundbalance,consistingofseveralportionsincludingcommitted,assignedandunassigned,mayexceedeightpercent(8%).Iftheassignedandunassignedportionoffundbalanceexceedstwentypercent(20%)ofbudgetedexpenditures,theBoardmayutilizeaportionoffundbalancebyappropriatingexcessfundsfornonrecurringexpendituresonly.
PolicyRegardingOrderofSpending
TheSchoolDistrictcurrentlydoesnothaveaformalpolicyinplaceregardingtheorderofspendingresidualfundbalance.Therefore,thedefaultorderofspendingistouserestrictedresourcesfirstandthenapplyunrestrictedresourcesinthefollowingorder:committed,assigned,andunassigned.
NOTE2 CASHANDINVESTMENTS
Section440.1ofthePennsylvaniaSchoolCodeandAct10of2016definesallowableinvestmentsforschooldistricts,whicharesummarizedasfollows:
U.S.TreasuryBills
ShorttermobligationsoftheU.S.Governmentoritsagencies
DepositsinsavingsaccountsortimedepositsorshareaccountsofinstitutionsinsuredbytheFederalDepositInsuranceCorporation(FDIC)ortheNationalCreditUnionShareInsuranceFundtotheextentthatsuchaccountsaresoinsured,and,foranyamountsabovetheinsuredmaximum,providedthatapprovedcollateralasprovidedbylawthereforeshallbepledgedbythedepository.
ObligationsoftheUnitedStatesofAmericaoranyofitsagenciesorinstrumentalitiesbackedbythefullfaithandcreditoftherespectivegovernmententity.
SharesofaninvestmentcompanyrestrictedundertheInvestmentCompanyActof1940.
Obligations,participationsorotherinstrumentsofanyFederalagency,instrumentality,orUnitedStatesgovernment‐sponsoredenterpriseifthedebtobligationsareratedatleast“A”oritsequivalent.
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NOTE2 CASHANDINVESTMENTS(CONTINUED)
Commercialpaperissuedbycorporationsorotherbusinessentitiesorganizedinaccordancewithfederalorstatelaw,withamaturitynottoexceed270days.
Billsofexchangeortimedraftsdrawnonandacceptedbyacommercialbank,otherwiseknownasbankers’acceptances,ifthebankers’acceptancesdonotexceed180daysmaturity.
Negotiablecertificatesofdepositorotherevidenceofdeposit,witharemainingmaturityofthreeyearsorless.
CustodialCreditRisk–Deposits
Custodialcreditriskistheriskthatintheeventofabankfailure,theSchoolDistrict’sdepositsmaynotbereturnedtoit.TheSchoolDistrictdoesnothaveadepositpolicyforcustodialcreditrisk.
AsofJune30,2017,$2,604,167oftheSchoolDistrict’sbankbalanceof$3,354,167wasexposedtocreditrisk.Allofthe$2,604,167wasuninsuredandcollateralizedwithsecuritiesheldbythepledgingbank’strustdepartment,butnotintheSchoolDistrict’sname.
PennsylvaniaAct72of1971,asamended,isanactstandardizingtheproceduresforpledgesofassetstosecuredepositsofpublicfundswithbankinginstitutionspursuanttootherlaws;establishingastandardruleforthetypes,amountsandvaluationsofassetseligibletobeusedascollateralfordepositsofpublicfunds;permittingassetstobepledgedagainstdepositsonapooledbasisandauthorizingtheappointmentofcustodianstoactasthepledgeroftheassets.BasedonthestandardsoutlinedinAct72,thevariousbanksutilizedbytheDistricthavepledgedcollateralonapooledbasisonbehalfoftheDistrictandallothergovernmentaldepositorsintherespectivefinancialinstitutions.
CustodialCreditRisk–Investments
IncludedincashandcashequivalentsonthestatementofnetpositionarepooledinvestmentsinthePennsylvaniaSchoolDistrictLiquidAssetFund(PSDLAF)of$20,055.Allthesefundsarebasicallymutualfundsthatconsistofshorttermmoneymarketinstrumentsandseektomaintainaconstantnetassetvalueof$1pershare.PSDLAFdepositsareinvestedbyPSDLAFdirectlyinportfoliosofsecuritiesheldbyathird‐partycustodianandarecollateralizedwithsecuritiesheldbythePSDLAFagentinacollateralpool.
Includedininvestmentsonthestatementofnetpositionarecertificatesofdeposits(CDs),allwithmaturitiesgreaterthanthreemonths.Theseareconsidereddepositsforpurposesofthisdisclosureandareincludedinthecustodialcreditriskdisclosureabove.TheSchoolDistricthasinvested$1,000,000inPSDLAF’sfullflexinvestmentpoolwhichhaveweeklyliquidityandarecollateralizedat102%oftheprincipaldeposit.TheSchoolDistrictalsohasoneCDtotaling$1,538,502atanindividualbank.
TheSchoolDistricthasarepurchasesweepaccountinplacethattransfersabalanceinexcessofanagreeduponamountintoasweepaccountattheendofeachday.ThebankusesthefundstopurchaseGovernmentSecuritiesinthenameoftheSchoolDistrict.Thesefundsarethereforenolongercoveredunderthebank’sFDICinsurancelevels.ThebalanceinthisrepurchaseaccountincludedininvestmentsatJune30was$545,457.
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NOTE2 CASHANDINVESTMENTS(CONTINUED)
CreditRisk–Investments
InvestmentsinPSDLAFaresubjecttoincome,marketandcreditriskrelatedtothepotentialfor(1)declineincurrentincome,(2)declineinmarketvalueand(3)thatanissuerofsecuritiesheldintheinvestmentportfoliosofthefundwouldfailtomaketimelypaymentsofprincipalandinterest.
TheSchoolDistrictdoesnothaveaformalwritteninvestmentpolicythatlimitsitsinvestmentchoicestocertaincreditratings.AsofJune30,2017,theSchoolDistrict’sinvestmentswereratedas:
Investment Standard&Poor’sPASchoolDistrictLiquidAssetFund AAAm
PoliciesFollowedatPSDLAF
RegulatoryOversight
TheoperationofPSDLAFisgovernedbyanelevenmemberBoardofTrustees,nineofwhomareelectedandtwoofwhomserveexofficio.TheTrusteeshavefull,exclusive,andabsolutecontrolandauthorityoverthebusinessoftheFundanditsassets,subjecttorightsoftheSettlors,asprovidedintheDeclarationofTrust.
PSDLAFisnotregisteredwiththeSecuritiesandExchangeCommission(SEC);however,PSDLAFfollowsinvestmentproceduressimilartothosefollowedbySECregisteredmoneymarketfunds.
ValuationofInvestments
InaccordancewiththeGovernmentAccountingStandardsBoard,portfoliosecuritiesarevaluedatamortizedcost,whichapproximatesmarketvalue.Theamortizedcostmethodinvolvesvaluingasecurityatitscostonthedateofpurchaseandrecordingaconstantamortizationoraccretiontomaturityofanydiscountorpremium,regardlessoftheimpactoffluctuatinginterestratesonthemarketvalueoftheinvestment.
TheSchoolDistricthasnolimitationsorrestrictionsonwithdrawalsonaccountsheldatPSDLAF.
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NOTE3 TAXES
Realestatetaxesareconsideredfullycollectiblesincelienscanbefiledonproperties.Theuncollectibleportionofpercapitataxeswasestimatedbasedonpreviouscollectionexperience.
PropertytaxesforthefiscalyearareleviedasofJuly1onassessedpropertyvalues.ThetaxbillsaremailedbytheTaxCollectorsinmid‐Julyandarepayableasfollows:
Discount July1–September1Face September2–November1Penalty November2‐December31
Installmentpaymentsareavailable,withone‐thirdofthefacevaluedueatSeptember1,October1andNovember1.AfterDecember31,thebillsareconsidereddelinquentandturnedovertoYorkCountyforrealestatetaxbillcollectionandtheYorkAdamsTaxBureauforpercapitataxescollection.
NOTE4 TAXESRECEIVABLEANDDEFERREDINFLOWSOFRESOURCES
TaxesreceivableanddeferredinflowsofresourcesinthefundfinancialstatementsconsistofthefollowingasofJune30,2017:
Realestate 691,285$Percapita 126,605Earnedincome 355,389Realtytransfer 36,934
1,210,213Reserveforuncollectibleaccounts (82,313)Taxesreceivable,net 1,127,900
Taxescollectedwithinsixtydays,recordedasrevenuesingovernmentalfunds (534,932)
Taxesestimatedtobecollectedaftersixtydays,recordedas
deferredinflowsofresourcesingovernmentalfunds 592,968$
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NOTE5 INTERFUNDRECEIVABLEANDPAYABLESANDTRANSFERS
Duefrom/tootherfundsconsistofthefollowingasJune30,2017:
FundsDuefromOther
FundsDuetoOther
FundsGovernmentalFunds:
GeneralFund 263,406$ ‐$EnterpriseFunds:
FoodServiceFund ‐ 263,406263,406$ 263,406$
Theinterfundreceivable/payableresultsfromthegeneralfundpayingforfoodservicefundexpenses,mainlypayroll,whichthefoodservicefundexpectstoreimburseinthenextfiscalyear.
InterfundtransfersconsistofthefollowingfortheyearendedJune30,2017:
Funds TransfersIn TransfersOutGeneralFund ‐$ 67,486$CapitalReserveFund 18,722 ‐FoodServiceFund 48,764 ‐
67,486$ 67,486$
Thetransfersfromthegeneralfundtothecapitalreservefundwererelatedtodonationsoriginallyrecordedinthegeneralfund.Thetransferfromthegeneralfundtothefoodservicefundwasrelatedtothenetlossinthefoodservicefund.
NOTE6 INTERGOVERNMENTALRECEIVABLES
IntergovernmentalreceivablesatJune30,2017consistofthefollowing:
State: SocialSecuritysubsidy 161,477$Retirementsubsidy 661,685Rentals‐debtservicereimbursement 97,157 (A)Various 100,863
Federal: Various 42,143Total‐GovernmentalFunds 1,063,325$
(A) TheSchoolDistrictrecordsareceivablefromtheCommonwealthofPennsylvaniafor
estimatedreimbursementsrelatedtodebtservicepaymentsmadeinthecurrentandprioryears.
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NOTE7 CAPITALASSETS
CapitalassetactivityfortheSchoolDistrictconsistsofthefollowingasofandfortheyearendedJune30,2017:
Beginning EndingBalance Additions Retirements Balance
GovernmentalActivities
Cost
Land 410,600$ ‐$ ‐$ 410,600$
Constructioninprogress 14,062 ‐ (14,062) ‐
Siteimprovements 5,644,955 134,177 ‐ 5,779,132
Buildingsandimprovements 45,012,671 220,953 ‐ 45,233,624Furniture,fixturesandequipment 5,904,376 196,053 ‐ 6,100,429
Totalcost 56,986,664 551,183 (14,062) 57,523,785
Lessaccumulateddepreciation
Siteimprovements (2,101,267) (233,010) ‐ (2,334,277)
Buildingsandimprovements (20,105,343) (1,281,584) ‐ (21,386,927)
Furniture,fixturesandequipment (4,917,214) (157,271) ‐ (5,074,485)
Totalaccumulateddepreciation (27,123,824) (1,671,865) ‐ (28,795,689)
Capitalassets,net 29,862,840$ (1,120,682)$ (14,062)$ 28,728,096$
Business‐TypeActivitiesCostMachineryandequipment 489,428$ 16,584$ ‐$ 506,012$
LessaccumulateddepreciationMachineryandequipment (425,368) (30,770) ‐ (456,138)
Capitalassets,net 64,060$ (14,186)$ ‐$ 49,874$
DepreciationexpensefortheyearendedJune30,2017waschargedtogovernmentalfunctionsasfollows:
Instruction 1,264,211$Instructionalstudentsupport 61,045Administrationandfinancialsupportservices 13,117Operationandmaintenanceofplantservices 298,627Studentactivities 34,865
1,671,865$
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NOTE8 ACCRUEDSALARIESANDBENEFITS/WITHHOLDINGS
Accruedsalariesandbenefits/withholdingsconsistofthefollowingasofJune30,2017:
GeneralFund
FoodServiceFund
Salaries 818,175$ 18$SocialSecurity 61,753 41Retirement 1,303,433 161Payrollwithholdings 72,693 ‐
2,256,054$ 220$
NOTE9 LONG‐TERMLIABILITIES
Thechangesinlong‐termliabilitiesduringtheyearendedJune30,2017wereasfollows:
Beginning Ending Current Long‐termBalance Additions Reductions Balance Portion Portion
GovernmentalActivities:Generalobligationbonds/notespayable:(A) Seriesof2012 6,795,000$ ‐$ (690,000)$ 6,105,000$ 705,000$ 5,400,000$(B) Seriesof2013 10,110,000 ‐ (1,395,000) 8,715,000 1,425,000 7,290,000
Bond(discounts)/premium‐net 1,092,751 ‐ (162,805) 929,946 162,805 767,141Subtotal‐bonds/notes 17,997,751 ‐ (2,247,805) 15,749,946 2,292,805 13,457,141
Compensatedabsences:Sickleave 257,499 39,100 (31,287) 265,312 125,000 140,312Personalleave 49,149 81,517 (79,922) 50,744 22,000 28,744Vacationpay 169,138 171,653 (166,647) 174,144 75,000 99,144
Subtotal‐compensatedabsences 475,786 292,270 (277,856) 490,200 222,000 268,200
Totallong‐termliabilities 18,473,537$ 292,270$ (2,525,661)$ 16,240,146$ 2,514,805$ 13,725,341$
Business‐TypeActivities:Compensatedabsences:
Sickleave 1,976$ 1,183$ (1,629)$ 1,530$ 475$ 1,055$Vacationpay 5,894 3,696 (2,043) 7,547 2,500 5,047Personalleave 1,671 3,850 (2,829) 2,692 1,000 1,692
Totallong‐termliabilities 9,541$ 8,729$ (6,501)$ 11,769$ 3,975$ 7,794$
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NOTE9 LONG‐TERMLIABILITIES(CONTINUED)
BondsandNotes
Thebondsandnotesaresecuredbyapledgeofthefullfaith,credit,andtaxingpoweroftheSchoolDistrictandincludethefollowing:
(A) TheRefundingSeriesof2012bondswereissuedintheamountof$9,365,000.Interestratesrangefrom1.00%to3.00%.ThosebondswereissuedtoprovidefundstorefundtheSchoolDistrict’sSeries2011bondsandtopayallcostsandexpensesincidenttotheissuanceandsaleoftheRefundingSeriesof2012bonds.
(B) TheRefundingSeriesof2013bondswereissuedintheamountof$14,085,000.Interestratesrangefrom0.35%to4.50%.
ThosebondswereissuedtoprovidefundstorefundtheSchoolDistrict’sSeries2004and2005AbondsandtopayallcostsandexpensesincidenttotheissuanceandsaleoftheRefundingSeriesof2013bonds.TheSchoolDistrictused$750,000ofcashreservestowardsthepayoffoftheSeriesof2004and2005AbondsinordertoreducetheamountoffundsnecessarytoborrowwithSeriesof2013bondsandsubsequentlyreducefutureinterestexpense.
TheannualprincipalandinterestrequirementsforfuturegeneralobligationbondsandnotesasofJune30,2017areasfollows:
Seriesof Seriesof2012 2013 Totals
Principal Interest Principal Interest Principal Interest Total
2018 705,000$ 145,431$ 1,425,000$ 361,775$ 2,130,000$ 507,206$ 2,637,206$2019 725,000 127,481 1,495,000 304,775 2,220,000 432,256 2,652,2562020 735,000 115,156 1,545,000 244,975 2,280,000 360,131 2,640,1312021 750,000 100,456 1,615,000 183,175 2,365,000 283,631 2,648,6312022 770,000 82,831 1,670,000 118,575 2,440,000 201,406 2,641,406
2023‐2025 2,420,000 130,363 965,000 43,425 3,385,000 173,788 3,558,7886,105,000$ 701,719$ 8,715,000$ 1,256,700$ 14,820,000$ 1,958,419$ 16,778,419$
Leases
OperatingLeases:
TheSchoolDistricthasenteredintononcancelableoperatingleasesforcopiersandamailingmachine.Minimumleasepaymentsinfutureyearsareasfollows:
2018 35,623$2019 34,4502020 17,225
Totalminimumleasepayments 87,298$
ThetotalrentforalloperatingleasesfortheyearendedJune30,2017was$84,782.
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NOTE10 PENSIONPLAN
GeneralInformationAboutthePensionPlan
PlanDescription
PSERSisagovernmentalcost‐sharingmulti‐employerdefinedbenefitpensionplanthatprovidesretirementbenefitstopublicschoolemployeesoftheCommonwealthofPennsylvania.ThememberseligibletoparticipateintheSystemincludeallfull‐timepublicschoolemployees,part‐timehourlypublicschoolemployeeswhorenderatleast500hoursofserviceintheschoolyear,andpart‐timeperdiempublicschoolemployeeswhorenderatleast80daysofserviceintheschoolyearinanyofthereportingentitiesinPennsylvania.PSERSissuesapubliclyavailablefinancialreportthatcanbeobtainedatwww.psers.state.pa.us.
BenefitsProvided
PSERSprovidesretirement,disability,anddeathbenefits.Membersareeligibleformonthlyretirementbenefitsuponreaching(a)age62withatleast1yearofcreditedservice;(b)age60with30ormoreyearsofcreditedservice;or(C)35ormoreyearsofserviceregardlessofage.Act120of2010(Act120)preservesthebenefitsofexistingmembersandintroducedbenefitreductionsforindividualswhobecomenewmembersonorafterJuly1,2011.Act120createdtwonewmembershipclasses,MembershipClassT‐E(ClassT‐E)andMembershipClassT‐F(ClassT‐F).Toqualifyfornormalretirement,ClassT‐EandClassT‐Fmembersmustworkuntilage65withaminimumof3yearsofserviceorattainatotalcombinationofageandservicethatisequaltoorgreaterthan92withaminimumof35yearsofservice.
Benefitsaregenerallyequalto2%or2.5%,dependinguponmembershipclass,ofthemember’sfinalaveragesalary(asdefinedbytheCode)multipliedbythenumberofyearsofcreditedservice.FormemberswhosemembershipstartedpriortoJuly1,2011,aftercompletionoffiveyearsofservice,amember’srighttothedefinedbenefitsisvestedandearlyretirementbenefitsmaybeelected.ForClassT‐EandClassT‐Fmembers,therightstobenefitsisvestedaftertenyearsofservice.
Participantsareeligiblefordisabilityretirementbenefitsaftercompletionoffiveyearsofcreditedservice.Suchbenefitsaregenerallyequalto2%or2.5%,dependinguponmembershipclass,ofthemember’sfinalaveragesalary(asdefinedbytheCode)multipliedbythenumberofyearsofcreditedservice,butnotlessthanone‐thirdofsuchsalarynorgreaterthanthebenefitsthememberwouldhavehadatnormalretirementage.Membersovernormalretirementagemayapplyfordisabilitybenefits.
Deathbenefitsarepayableuponthedeathofanactivememberwhohasreachedage62withatleastoneyearofcreditedservice(age65withatleastthreeyearsofcreditedserviceforClassT‐EandClassT‐Fmembers)orwhohasatleastfiveyearsofcreditedservice(tenyearsforClassT‐EandClassT‐Fmembers).Suchbenefitsareactuariallyequivalenttothebenefitthatwouldhavebeeneffectiveifthememberhadretiredonthedaybeforedeath.
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NOTE10 PENSIONPLAN(CONTINUED)
GeneralInformationAboutthePensionPlan(Continued)
Contributions
Membercontributions:
ActivememberswhojoinedtheSystempriortoJuly22,1983contributeat5.25%(MembershipClassT‐C)orat6.50%(MembershipClassT‐D)ofthemember'squalifyingcompensation.
MemberswhojoinedtheSystemonorafterJuly22,1983,andwhowereactiveorinactiveasofJuly1,2001contributeat6.25%(MembershipClassT‐C)orat7.50%(MembershipClassT‐D)ofthemember'squalifyingcompensation.
MemberswhojoinedtheSystemafterJune30,2001andbeforeJuly1,2011,contributeat7.50%(automaticMembershipClassT‐D).ForallnewhiresandformemberswhoelectedClassT‐Dmembership,thehighercontributionratesbeganwithservicerenderedonorafterJanuary1,2002.
MemberswhojoinedtheSystemafterJune30,2011,automaticallycontributeattheMembershipClassT‐Erateof7.5%(baserate)ofthemember’squalifyingcompensation.AllnewhiresafterJune30,2011,whoelectClassT‐Fmembership,contributeat10.3%(baserate)ofthemember’squalifyingcompensation.MembershipClassT‐EandClassT‐Fareaffectedbya“sharedrisk”provisioninAct120of2010thatinfuturefiscalyearscouldcausetheMembershipClassT‐Econtributionratetofluctuatebetween7.5%and9.5%andMembershipClassT‐Fcontributionratetofluctuatebetween10.3%and12.3%.
EmployerContributions:
TheSchoolDistrict’scontractuallyrequiredcontributionrateforfiscalyearendedJune30,2017was29.20%ofcoveredpayroll,actuariallydeterminedasanamountthat,whencombinedwithemployeecontributions,isexpectedtofinancethecostsofbenefitsearnedbyemployeesduringtheyear,withanadditionalamounttofinanceanyunfundedaccruedliability.ContributionsrecognizedasrevenuebythepensionplanfromtheSchoolDistrictwere$3,872,746fortheyearendedJune30,2017.
StateFunding:
TheCommonwealthofPennsylvaniagenerallyreimbursestheSchoolDistrictfor50%ofitsretirementexpense.ThisarrangementdoesnotmeetthecriteriaofaspecialfundingsituationinaccordancewithGASBstandards.Therefore,thenetpensionliabilitiesandrelatedpensionexpenserepresent100%oftheSchoolDistrict’sshareoftheseamounts.DuringtheyearendedJune30,2017,theSchoolDistrictrecognizedrevenueof$2,043,038asreimbursementforitscurrentyearpensionpayments.
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NOTE10 PENSIONPLAN(CONTINUED)
PensionLiabilities,PensionExpense,andDeferredOutflowsofResourcesandDeferredInflowsofResourcesRelatedtoPensions
AtJune30,2017,theSchoolDistrictreportedaliabilityof$50,696,634foritsproportionateshareofthenetpensionliability.ThenetpensionliabilitywasmeasuredasofJune30,2016,andthetotalpensionliabilityusedtocalculatethenetpensionliabilitywasdeterminedbyrollingforwardtheSystem’stotalpensionliabilityasofJune30,2015toJune30,2016.
TheSchoolDistrict’sproportionofthenetpensionliabilitywascalculatedutilizingtheemployer’sone‐yearreportedcoveredpayrollasitrelatestothetotalone‐yearreportedcoveredpayroll.AtJune30,2016,theSchoolDistrict’sproportionwas0.1023percent,whichwasthesamepercentageasitsproportionmeasuredasofJune30,2015.
FortheyearendedJune30,2017,theSchoolDistrictrecognizedpensionexpenseasfollows:
GovernmentalActivities $5,166,187
Business‐TypeActivities $122,899
AtJune30,2017,theSchoolDistrictreporteddeferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensionsfromthefollowingsources:
DeferredOutflowsofResources
DeferredInflowsofResources
Differencebetweenexpectedandactualexperience ‐$ 422,302$Changesinassumptions 1,830,000 ‐Netdifferencebetweenprojectedandactualinvestmentearnings 2,825,637 ‐Changesinproportion‐plan 298,130 ‐Changesinproportion‐fund 81,977 81,977Differencebetweenemployercontributionsandproportionateshareoftotalcontributions 82,169 ‐Contributionssubsequenttothemeasurementdate 3,880,743 ‐
8,998,656$ 504,279$
The$3,880,743reportedasdeferredoutflowsofresourcesrelatedtopensionsresultingfromSchoolDistrictcontributionssubsequenttothemeasurementdatewillberecognizedasareductionofthenetpensionliabilityintheyearendedJune30,2017.Otheramountsreportedasdeferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensionswillberecognizedinpensionexpenseasfollows:
YearendedJune30:2018 962,209$2019 962,2092020 1,615,0102021 1,073,7422022 465
Total 4,613,634$
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NOTE10 PENSIONPLAN(CONTINUED)
PensionLiabilities,PensionExpense,andDeferredOutflowsofResourcesandDeferredInflowsofResourcesRelatedtoPensions(Continued)
ChangesinActuarialAssumptions
ThetotalpensionliabilityasofJune30,2016wasdeterminedbyrollingforwardtheSystem’stotalpensionliabilityasoftheJune30,2015actuarialvaluationtoJune30,2016usingthefollowingactuarialassumptions,appliedtoallperiodsincludedinthemeasurement:
TheInvestmentrateofreturnwasadjustedfrom7.50%to7.25%
Investmentreturn–7.50%,includesinflationat2.75%
Salaryincreases–Effectiveaverageof5.50%,whichreflectsanallowanceforinflationof3.00%,realwagegrowthof2.50%,toaneffectiveaverageof5.00%comprisedofinflationof2.75%and2.25%forrealwagegrowthandformeritandseniorityincreases
MortalityratesweremodifiedfromtheRP‐2000CombinedHealthyAnnuitantTables(maleandfemale)withagesetback3yearsforbothmalesandfemalestotheRP‐2014MortalityTablesforMalesandFemales,adjustedtoreflectPSERS’experienceandprojectedusingamodifiedversionoftheMP‐2015MortalityImprovementScale.FordisabledannuitantstheRP‐2000CombinedDisabledTables(maleandfemale)withagesetback7yearsformalesand3yearsforfemalestotheRP‐2014MortalityTablesforMalesandFemales,adjustedtoreflectPSERS’experienceandprojectedusingamodifiedversionoftheMP‐2015MortalityImprovementScale.
TheactuarialassumptionsusedintheJune30,2016valuationwerebasedontheexperiencestudythatwasperformedforthefive‐yearperiodendingJune30,2015.TherecommendedassumptionchangesbasedonthisexperiencestudywereadoptedbytheBoardatitsJune10,2016Boardmeeting,andwereeffectivebeginningwiththeJune30,2016actuarialvaluation.
Thelong‐termexpectedrateofreturnonpensionplaninvestmentswasdeterminedusingabuilding‐blockmethodinwhichbest‐estimaterangesofexpectedfuturerealratesofreturn(expectedreturns,netofpensionplaninvestmentexpensesandinflation)aredevelopedforeachmajorassetclass.Theserangesarecombinedtoproducethelong‐termexpectedrateofreturnbyweightingtheexpectedfuturerealratesofreturnbythetargetassetallocationpercentageandbyaddingexpectedinflation.
Thepensionplan’spolicyinregardtotheallocationofinvestedplanassetsisestablishedandmaybeamendedbythePSERSBoard.Planassetsaremanagedwithalong‐termobjectiveofachievingandmaintainingafullyfundedstatusforthebenefitsprovidedthroughthepension.
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NOTE10 PENSIONPLAN(CONTINUED)
PensionLiabilities,PensionExpense,andDeferredOutflowsofResourcesandDeferredInflowsofResourcesRelatedtoPensions(Continued)
ActuarialAssumptions(Continued)
AssetClassTarget
Allocation
Long‐TermExpectedRealRateofReturn
Globalpublicequity 22.5% 5.3%Fixedincome 28.5% 2.1%Commodities 8.0% 2.5%Absolutereturn 10.0% 3.3%Riskparity 10.0% 3.9%MLPs/Infrastructure 5.0% 4.8%Realestate 12.0% 4.0%Alternativeinvestments 15.0% 6.6%Cash 3.0% 0.2%Financing(LIBOR) (14.0%) 0.5%
100.0%
TheabovewastheBoard’sadoptedassetallocationpolicyandbestestimatesofgeometricrealratesofreturnforeachmajorassetclassasofJune30,2016.
DiscountRate
Thediscountrateusedtomeasurethetotalpensionliabilitywas7.25%.Theprojectionofcashflowsusedtodeterminethediscountrateassumedthatcontributionsfromplanmemberswillbemadeatthecurrentcontributionrateandthatcontributionsfromemployerswillbemadeatcontractuallyrequiredrates,actuariallydetermined.Basedonthoseassumptions,thepensionplan’sfiduciarynetpositionwasprojectedtobeavailabletomakeallprojectedfuturebenefitpaymentsofcurrentplanmembers.Therefore,thelong‐termexpectedrateofreturnonpensionplaninvestmentswasappliedtoallperiodsofprojectedbenefitpaymentstodeterminethetotalpensionliability.
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NOTE10 PENSIONPLAN(CONTINUED)
PensionLiabilities,PensionExpense,andDeferredOutflowsofResourcesandDeferredInflowsofResourcesRelatedtoPensions(Continued)
SensitivityoftheSchoolDistrict’sProportionateShareoftheNetPensionLiabilitytoChangesintheDiscountRate
Thefollowingpresentsthenetpensionliabilitycalculatedusingthediscountrateof7.25%,aswellaswhatthenetpensionliabilitywouldbeifitwerecalculatedusingadiscountratethatis1‐percentagepointlower(6.25%)or1‐percentagepointhigher(8.25%)thanthecurrentrate:
1%DecreaseCurrent
DiscountRate 1%Increase6.25% 7.25% 8.25%
SchoolDistrict'sproportionateshareofthenetpensionliability 62,016,000$ 50,696,634$ 41,185,000$
PensionPlanFiduciaryNetPosition
DetailedinformationaboutPSERS’fiduciarynetpositionisavailableinPSERSComprehensiveAnnualFinancialReportwhichcanbefoundontheSystem’swebsiteatwww.psers.state.pa.us.
PayablestothePensionPlan
AsofJune30,2017,theSchoolDistricthad$1,303,594includedinaccruedbenefitsliability,ofwhich$1,056,454isforthecontractuallyrequiredcontributionforthesecondquarterof2017and$247,140isrelatedtotheaccruedpayrollliabilityforwagesincurredasofJune30,2017.
NOTE11 POSTEMPLOYMENTHEALTHCAREPLAN
PlanDescription
TheSchoolDistricthasahealthcareplanforretiredemployees,whichisasingleemployerdefinedbenefithealthcareplanadministeredbytheSchoolDistrict.Theplanprovidesmedical,prescriptiondruganddentalcoverageforbothretireeandfamily.ThememberiseligibleuntiltheemployeereachesMedicareage.Tocontinuecoverageuponretirement,theretireemustreimbursetheSchoolDistrict100%oftheSchoolDistrict’scostofcoverage.
RetireesoptingtoparticipatearerequiredtopayapremiumamountthatislessthantheSchoolDistrict'sannualcosttoprovidehealthcarecoveragetoretirees.Thepremiumamountretireespayisablendedrateforcoveringbothactiveandretiredplanmembers.Thefactthattheblendedratethatretireespayislessthanthecostofcoveringretiredmembersandtheirbeneficiariesresultsinwhatisknownasan"implicitratesubsidy"bytheSchoolDistrict,whichgivesrisetothebenefit.
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NOTE11 POSTEMPLOYMENTHEALTHCAREPLAN(CONTINUED)
FundingPolicy
ThecontributionrequirementsofplanmembersandtheSchoolDistrictareestablishedandmaybeamendedbytheSchoolDistrict.Therequiredcontributionisbasedonprojectedpay‐as‐you‐gofinancingrequirements,withanadditionalamounttoprefundbenefitsasdeterminedannuallybytheSchoolDistrict.Forfiscalyear2017,theSchoolDistrictcontributed$110,379intheformofestimatedadditionalpremiumsforactiveemployeesbasedonimplicitratesforretiredemployeesintheplan.Planmembersreceivingbenefitsalsocontributed$143,937,or100%ofthetotalpremiums.
AnnualOPEBCostandNetOPEBObligation
TheSchoolDistrict’sannualotherpostemploymentbenefit(OPEB)cost(expense)iscalculatedbasedontheannualrequiredcontribution(ARC)oftheemployer,anamountactuariallydeterminedinaccordancewiththeparametersofGASBStatement45.TheARCrepresentsaleveloffundingthat,ifpaidonanongoingbasis,isprojectedtocovernormalcosteachyearandamortizeanyunfundedactuarialliabilities(orfundingexcess)overaperiodnottoexceedthirtyyears.ThefollowingtableshowsthecomponentsoftheSchoolDistrict’sannualOPEBcostfortheyear,theamountactuallycontributedtotheplan,andchangesintheSchoolDistrict’snetOPEBobligationtotheplan:
Annualrequiredcontribution(ARC) 298,872$InterestonnetOPEBobligation 24,212AdjustmenttoARC (33,031)AnnualOPEBcost 290,053Employercontributionsmade‐estimated (110,379)IncreaseinnetOPEBobligation 179,674NetOPEBobligation‐beginningoftheyear 538,034NetOPEBobligation‐endoftheyear 717,708$
AnnualOPEBCostandNetOPEBObligation
TheSchoolDistrict’sannualOPEBcost,thepercentageofannualOPEBcostcontributedtotheplan,andthenetOPEBobligationfortheyearendedJune30,2017andtheprecedingtwoyearsareasfollows:
FiscalYear Annual PercentageofAnnual NetOPEBEnded OPEBcost OPEBCostContributed Obligation
2017 290,053$ 38% 717,708$2016 186,698 55% 538,0342015 187,896 61% 453,472
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NOTE11 POSTEMPLOYMENTHEALTHCAREPLAN(CONTINUED)
FundedStatusandFundingProgress
AsofJuly1,2016,themostrecentactuarialvaluationdate,theplanhadthefollowingfundingstatusandprogress:
Actuarial ActuarialAccrued UAALasaValuation Value Liability(AAL)‐ UnfundedAAL Funded Covered PercentageofDate ofAssets EntryAge (UAAL) Ratio Payroll CoveredPayroll
7/1/2016 ‐$ 2,373,151$ 2,373,151 0.00% 12,495,790 18.99%
Actuarialvaluationsofanongoingplaninvolveestimatesofthevalueofreportedamountsandassumptionsabouttheprobabilityofoccurrenceofeventsfarintothefuture.Examplesincludeassumptionsaboutfutureemployment,mortality,andthehealthcarecosttrend.Amountsdeterminedregardingthefundedstatusoftheplanandtheannualrequiredcontributionsoftheemployeraresubjecttocontinualrevisionasactualresultsarecomparedwithpastexpectationsandnewestimatesaremadeaboutthefuture.Thescheduleoffundingprogress,presentedasrequiredsupplementaryinformationfollowingthenotestothefinancialstatements,presentsmultiyeartrendinformationaboutwhethertheactuarialvalueofplanassetsisincreasingordecreasingovertimerelativetotheactuarialaccruedliabilitiesforbenefits.
ActuarialMethodsandAssumptions
Projectionsofbenefitsforfinancialreportingpurposesarebasedonthesubstantiveplan(theplanasunderstoodbytheemployerandtheplanmembers)andincludethetypesofbenefitsprovidedatthetimeofeachvaluationandthehistoricalpatternofsharingofbenefitcostsbetweentheemployerandtheplanmemberstothatpoint.Theactuarialmethodsandassumptionsusedincludetechniquesthataredesignedtoreducetheeffectsofshort‐termvolatilityinactuarialaccruedliabilitiesandtheactuarialvalueofassets,consistentwiththelong‐termperspectiveofthecalculations.
IntheJuly1,2016actuarialvaluation,theentryagenormalcostmethodwasused.Theactuarialassumptionincludeda4.5percentinvestmentrateofreturn(netofadministrativeexpenses),annualsalaryincreasesof2.5%costoflivingadjustment,1%realwagegrowth,andforteachersandadministratorsameritincreasewhichvariesbyagefrom2.75%to0.25percent,andanannualhealthcarecosttrendrateof6.5percentin2016,decreasing0.5percenttoanultimaterateof5.5%in2018.Ratesgraduallydecreasefrom5.4%in2021to3.8%in2075andlater.Theactuarialvaluationofassetswasbasedonthefairvalueofassets,ofwhichtherearenone.TheUAALisbeingamortizedbasedonaleveldollar30yearopenperiod.
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NOTE11 POSTEMPLOYMENTHEALTHCAREPLAN(CONTINUED)
OtherPost‐employmentBenefits–PublicSchoolEmployee’sRetirementSystem(PSERS)
Inadditiontotheotherpost‐employmentbenefitdetailedabove,thePublicSchoolEmployee’sRetirementSystem(PSERS)alsoprovidesahealthinsurancepremiumassistanceprogramforalleligibleemployeeswhoqualifyandelecttoparticipate,whichisacost‐sharingmultipleemployerdefinedbenefitplan.ThePSERSRetirementBoardisestablishedbystatelawasanindependentadministrativeboardoftheCommonwealth.TheplanbenefitsandcontributionsarespecifiedinthePennsylvaniaPublicSchoolEmployee’sCode.Changesinbenefitandcontributionprovisionsmustbemadebylegislation.Pursuanttostatelaw,alllegislativebillsandamendmentsproposingtochangetheplanaretobeaccompaniedwithanactuarialnotepreparedbyanenrolledactuaryfromthePublicEmployeeRetirementCommissionprovidinganestimateofthecostandactuarialeffectoftheproposedchange.Underthisprogram,SchoolDistrictcontributionratesforpremiumassistanceareestablishedtoprovidereservesinthehealthinsuranceaccountthataresufficientforthepaymentofpremiumassistancebenefitsforeachsucceedingyear.
ThePSERSissuesapubliclyavailablefinancialreportthatincludesfinancialstatementsandrequiredsupplementaryinformationthatcanbeobtainedfromtheirwebsiteathttp://www.psers.state.pa.us/.
Participatingeligibleemployeesareentitledtoreceivepremiumassistancepaymentsequaltothelesserof$100permonthortheirout‐of‐pocketmonthlyhealthinsurancepremium.Toreceivepremiumassistance,eligibleemployeesmustobtaintheirhealthinsurancethroughtheSchoolDistrict.Thecontributionrateissetatalevelnecessarytoestablishreservessufficienttoprovidepremiumassistanceforthesubsequentfiscalyear.TheportionofthetotalcontributionratefortheSchoolDistrictwas0.83%fortheyearendedJune30,2017.
Theinformationbelowsummarizestherequiredcontributions,thepercentageofrequiredcontributioncontributedandthecontributionrateforthecurrentyearandtwoprecedingyears:
FiscalYear Required PercentageofRequired ContributionEnded Contribution ContributionContributed Rate2017 110,081$ 100% 0.83%2016 99,364$ 100% 0.84%2015 116,495$ 100% 0.90%
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NOTE12 JOINTVENTURES
ExpenditurespaidtothefollowingjointventuresarereflectedasinstructionexpendituresintheGeneralFundandconsistofthefollowingfortheyearendedJune30,2017:
YorkCountySchoolofTechnology 561,031$
LincolnIntermediateUnitNo.12 1,896,273$
NOTE13 FUNDBALANCE
Thefollowingtableprovidesdetailsofthefundbalanceclassificationswhichareaggregatedonthegovernmentalfundsbalancesheet:
Capital TotalGeneral Reserve GovernmentalFund Fund Funds
FUNDBALANCESNonspendablefor:Prepaidexpenses 7,726$ ‐$ 7,726$
Restrictedfor:Futurecapitalexpenditures ‐ 1,674,840 1,674,840
Unassigned 1,338,054 ‐ 1,338,054
TotalFundBalances 1,345,780$ 1,674,840$ 3,020,620$
NOTE14 COMMITMENTSANDCONTINGENCIES
TheSchoolDistrictissubjecttorealestatetaxassessmentappealsonanongoingbasis.Iftaxappealsaresuccessful,theresultisalossoftaxrevenuetotheSchoolDistrict.ItisanticipatedthatanymateriallossoftaxrevenueonindividualtaxappealswillbeoffsetwithadditionalrevenuesfromotherpropertiesorothersourcesofrevenueandwouldnotcreateafinancialhardshiptotheSchoolDistrict.
AttimestheSchoolDistrictisinvolvedwithvariouslawsuitsinthenormalcourseofoperations.Managementbelievesthatlossesresultingfromthesematters,ifany,wouldbesubstantiallycoveredundertheSchoolDistrict’sprofessionalliabilityinsurancepolicyandwouldnothaveamaterialeffectonthefinancialpositionoftheSchoolDistrict.Accordingly,noprovisionsforanycontingentliabilitiesthatmayresulthavebeenmadeinthefinancialstatements.
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NOTE14 COMMITMENTSANDCONTINGENCIES(CONTINUED)
TheSchoolDistrictparticipatesinnumerousstateandfederalprograms,whicharegovernedbyvariousrulesandregulationsofthegrantoragencies.Costschargedtotherespectivegrantprogramsaresubjecttoauditandadjustmentbythegrantoragencies;therefore,totheextentthattheSchoolDistricthasnotcompliedwithrulesandregulationsgoverningthegrants,refundsofanymoneyreceivedmayberequiredandthecollectabilityofanyrelatedreceivableatJune30,2017maybeimpaired.Intheopinionofmanagement,therearenosignificantcontingentliabilitiesrelatingtocompliancewiththerulesandregulationsgoverningtherespectivegrants;therefore,noprovisionhasbeenrecordedintheaccompanyingfinancialstatementsforsuchcontingencies.
NOTE15 RISKMANAGEMENT
TheSchoolDistrictisexposedtovariousrisksoflossrelatedtotorts;theftof,damageto,anddestructionofassets;errorsandomissions;injuriestoemployees;andnaturaldisasters.TheSchoolDistrictisinsuredagainsttheserisksbythepurchaseofcommercialinsurancetocoveranyreasonableloss.Settlementamountshavenotexceededinsurancecoverageforthecurrentyearorthreeprioryears.AllexpendituresfortheSchoolDistrict’sriskmanagementarerecordedinthegeneralfundorfoodservicefund.
LincolnBenefitTrust
TheSchoolDistrictisamemberofLincolnBenefitTrust.TheTrustisaclaimsservicingpoolwhichpaysclaimsforhospitalbenefits,medicalcoverageforphysicians’services,certaindentalcoverage,majormedicalcoverage,andcertainotherbenefitssubmittedbyemployeesoftheseventeenparticipatingSchoolDistricts.Eachparticipatingemployercontributestothetrustamountsdeterminedbyactuarialprinciplestobeadequatetocoverannualclaimcosts,operatingcosts,andreservessufficienttoprovidestatedbenefits.Sinceeachdistrictisresponsibleforitsownrisk,additionalassessmentswouldbechargedtomakeupanydeficiency;thus,thisfunctionslikearetrospectivelyratedprogram.
BecauseLincolnBenefitTrustactsasaclaim‐servicingpool,theSchoolDistrictremainsresponsiblefortheeconomicriskofprovidingstatedbenefitstoemployees.However,claimsincurredbetween$100,000and$300,000arepaidfromtheTrustminipool.Claimsincurredover$300,000arepaidfromastoplossinsurancepolicypurchasedbytheTrust.
HANOVERPUBLICSCHOOLDISTRICTNotestoFinancialStatementsJune30,2017
54
NOTE15 RISKMANAGEMENT(CONTINUED)
LincolnBenefitTrust(Continued)
ChangesinnetpositionfortheSchoolDistrict’saccountatLincolnBenefitTrust(basedonauditedfinancialstatementsofLincolnBenefitTrust)wereasfollowsfortheyearendedJune30,2017:
Netposition‐July1,2016 2,330,202$
Contributionsandinterestincome 2,355,527Minipoolreimbursement 98,017Claimspaid (2,617,926)Stop‐lossinsurance (230,653)Minipoolpremium (72,613)Administrativefees (135,528)
Netposition‐June30,2017 1,727,026$
Overall,theLincolnBenefitTrusthadnetpositionof$95,706,536asofJune30,2017,andreportedanincreaseinnetpositionof$5,913,422fortheyearthenended.FinancialstatementsoftheTrustareavailableattheSchoolDistrict.
HANOVERPUBLICSCHOOLDISTRICTBudgetaryComparisonSchedule‐GeneralFundYearEndedJune30,2017
55
BUDGETACTUAL
(BUDGETARY/
VARIANCEWITHFINALBUDGETPOSITIVE
ORIGINAL FINAL GAAPBASIS) (NEGATIVE)REVENUESLocalSourcesTaxes 22,029,630$ 22,029,630$ 22,232,805$ 203,175$Investmentearnings 20,000 20,000 27,366 7,366Federalrevenuefromintermediatesources 313,000 313,000 355,559 42,559Other 142,500 142,500 275,949 133,449
Statesources 7,434,682 7,434,682 7,643,353 208,671Federalsources 585,500 585,500 722,542 137,042
Totalrevenues 30,525,312 30,525,312 31,257,574 732,262
EXPENDITURESInstruction 19,057,491 19,057,491 19,182,341 (124,850)Supportservices 8,422,923 8,422,923 8,517,585 (94,662)Operationofnoninstructionalservices 456,232 606,232 599,576 6,656Debtservice:Principal 2,085,000 2,085,000 2,085,000 ‐Interest 566,056 566,056 566,056 ‐Totalexpenditures 30,587,702 30,737,702 30,950,558 (212,856)
OTHERFINANCINGSOURCES(USES)Refundofprioryearrevenue ‐ ‐ 57,208 57,208Interfundtransfers,net (150,000) ‐ (67,486) (67,486)
Totalotherfinancingsourcesand(uses) (150,000) ‐ (10,278) (10,278)
Netchangeinfundbalance (212,390)$ (212,390)$ 296,738 509,128$
Fundbalance‐beginning 1,049,042
Fundbalance‐ending 1,345,780$
HANOVERPUBLICSCHOOLDISTRICTScheduleofSchoolDistrict’sProportionateShareofNetPensionLiability–PublicSchool
Employee’sRetirementSystemYearEndedJune30,2017
56
FortheFiscalYearEndedJune30
SchoolDistrict'sProportionoftheNetPension
Liability(Asset)
SchoolDistrict'sProportionateShareoftheNetPensionLiability
(Asset)
SchoolDistrict'sCoveredPayroll‐
measurementperiod
SchoolDistrict'sProportionateShareof
theNetPensionLiability(Asset)asaPercentageofitsCoveredPayroll
PlanFiduciaryNetPositionasa
PercentageoftheTotalPensionLiability
2017 0.1023% 50,696,634$ 13,253,629$ 382.51% 50.14%2016 0.1023% 44,311,561$ 13,161,320$ 336.68% 54.36%2015 0.1018% 40,293,170$ 12,986,990$ 310.26% 57.24%
NOTES
Theamountspresentedforeachfiscalyearweredeterminedasofthemeasurementperiodyear‐endthatwasusedforthefiscalyear.ForPSERS,themeasurementperiodyear‐endisoneyearpriortothefiscalyear‐end.
Thisschedulewillbeexpandedtoshow10yearsonceinformationbecomesavailableinthefuture.
ChangesinActuarialAssumptions
Thefollowingactuarialassumptionswerechangedduringthe2016/2017fiscalyear:
Theinvestmentrateofreturnwasadjustedfrom7.50%to7.25%
Theinflationassumptionwasdecreasedfrom3.00%to2.75%
Salarygrowthchangedfromaneffectiveaverageof5.50%,whichwascomprisedofinflationof3.00%realwagegrowthandformeritorseniorityincreasesof2.50%,toaneffectiveaverageof5.00%,comprisedofinflationof2.75%and2.25%forrealwagegrowthandformeritandseniorityincreases
MortalityratesweremodifiedfromtheRP‐2000CombinedHealthyAnnuitantTables(maleandfemale)withagesetback3yearsforbothmalesandfemalestotheRP‐2014MortalityTablesforMalesandFemales,adjustedtoreflectPSERS’experienceandprojectedusingamodifiedversionoftheMP‐2015MortalityImprovementScale.FordisabledannuitantstheRP‐2000CombineDisablesTables(maleandfemale)withagesetback7yearsformalesand3yearsforfemalestotheRP‐2014MortalityTablesforMalesandFemales,adjustedtoreflectPSERS’experienceandprojectedusingamodifiedversionoftheMP‐2015MortalityImprovementScale.
HANOVERPUBLICSCHOOLDISTRICTScheduleofSchoolDistrict’sContributions–PublicSchoolEmployee’sRetirement
SystemYearEndedJune30,2017
57
FortheFiscalYearEndedJune30
ContractuallyRequired
Contribution
Contributionsinrelationtothecontractuallyrequired
contribution
ContributionDeficiency(Excess)
CoveredPayroll‐fiscalyear
ContributionsasaPercentageofCoveredPayroll
2017 3,872,746$ 3,872,746$ ‐$ 13,212,578$ 29.31%2016 2,957,274 2,957,274 ‐ 13,253,629 22.31%2015 2,653,496 2,653,496 ‐ 13,161,320 20.16%2014 2,047,324 2,047,324 ‐ 12,986,990 15.76%2013 1,494,635 1,494,635 ‐ 12,930,547 11.56%
NOTES
Thisschedulewillbeexpandedtoshow10yearsonceinformationbecomesavailableinthefuture.
HANOVERPUBLICSCHOOLDISTRICTOPEB(OtherPostEmploymentBenefitPlan)UnauditedRequiredScheduleofFundingProgressYearEndedJune30,2017
58
Actuarial ActuarialAccrued UAALasaValuation Value Liability(AAL)‐ UnfundedAAL Funded Covered PercentageofDate ofAssets EntryAge (UAAL) Ratio Payroll CoveredPayroll
7/1/2016 ‐$ 2,373,151$ 2,373,151$ 0.00% 12,495,790$ 18.99%1/1/2014 ‐$ 1,571,908$ 1,571,908$ 0.00% 12,239,556$ 12.84%1/1/2012 ‐$ 1,167,228$ 1,167,228$ 0.00% 11,487,207$ 10.16%
HANOVERPUBLICSCHOOLDISTRICTScheduleofExpendituresofFederalAwardsYearEndedJune30,2017
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Federal Pass‐Through Program Total Receivable Receivable TotalFederalGrantor/Pass‐ThroughGrantor/ Source CFDA Grantor's Program orAward Received (Payable) Revenue (Payable) Passed‐Through
ProgramorClusterTitle Code Number Number Period Amount fortheYear atJuly1,2016 Recognized Expenditures atJune30,2017 toSubrecipientsDEPARTMENTOFEDUCATION
PassedthroughPennsylvaniaDepartmentofEducationTitleI‐ImprovingBasicPrograms I 84.010 013‐15‐0181 7/1/16‐9/30/17 480,167 480,167$ ‐$ 480,167$ 480,167$ ‐$ ‐$SchoolImprovement I 84.010 042‐16‐0181 7/10/15‐9/30/16 66,653 11,762 11,762 ‐ ‐ ‐ ‐SchoolImprovement I 84.010 042‐17‐0181 7/10/16‐9/30/17 84,832 84,832 ‐ 84,832 84,832 ‐ ‐
TitleI 576,761 11,762 564,999 564,999 ‐ ‐
TitleII‐ImprovingTeacherQuality I 84.367 020‐16‐0181 7/1/15‐9/30/16 69,730 18,525 8,641 9,884 9,884 ‐ ‐TitleII‐ImprovingTeacherQuality I 84.367 020‐17‐0181 7/1/16‐9/30/17 68,058 63,580 ‐ 68,058 68,058 4,478 ‐
TitleII 82,105 8,641 77,942 77,942 4,478 ‐
TitleIII I 84.365 010‐16‐0181 7/1/15‐6/30/16 35,510 2,367 2,367 ‐ ‐ ‐ ‐TitleIII I 84.365 010‐17‐0181 7/1/16‐6/30/17 37,455 37,455 ‐ 37,455 37,455 ‐ ‐
TitleIII 39,822 2,367 37,455 37,455 ‐ ‐
PassedthroughLincolnIntermediateUnitNo12SpecialEducationCluster(IDEA)IDEAPartB‐SpecialEducation I 84.027 N/A 7/1/16‐9/30/17 350,663 350,663 ‐ 350,663 350,663 ‐ ‐IDEA619funds‐SpecialEducation I 84.173 N/A 7/1/16‐9/30/17 4,896 4,896 ‐ 4,896 4,896 ‐ ‐
TotalSpecialEducationCluster 355,559 ‐ 355,559 355,559 ‐ ‐
TotalDepartmentofEducation 1,054,247 22,770 1,035,955 1,035,955 4,478 ‐
DEPARTMENTOFAGRICULTURE
PassedthroughPennsylvaniaDepartmentofEducationChildNutritionClusterSchoolBreakfastProgram I 10.553 365/367 7/1/16‐6/30/17 N/A 118,878 ‐ 118,878 118,878 ‐ ‐
TotalSchoolBreakfastProgram 118,878 ‐ 118,878 118,878 ‐ ‐
NationalSchoolLunchProgram‐cash I 10.555 362 7/1/16‐6/30/17 N/A 483,311 ‐ 483,311 483,311 ‐ ‐PassedthroughPennsylvaniaDepartmentofAgricultureNationalSchoolLunchProgram‐commodities I/B 10.555 N/A 7/1/16‐6/30/17 N/A 62,469 ‐ 62,469 62,469 ‐ ‐
TotalNationalSchoolLunchProgram 545,780 ‐ 545,780 545,780 ‐ ‐PassedthroughPennsylvaniaDepartmentofEducationSummerFoodServiceProgramforChildren I 10.559 364 7/1/15‐6/30/16 N/A 3,332 3,332 ‐ ‐ ‐ ‐SummerFoodServiceProgramforChildren I 10.559 364 7/1/16‐6/30/17 N/A 2,907 ‐ 2,907 2,907 ‐ ‐
TotalSummerFoodServiceProgram 6,239 3,332 2,907 2,907 ‐ ‐TotalChildNutritionCluster 670,897 3,332 667,565 667,565 ‐ ‐
TotalDepartmentofAgriculture 670,897$ 3,332$ 667,565$ 667,565$ ‐$ ‐$
HANOVERPUBLICSCHOOLDISTRICTScheduleofExpendituresofFederalAwards(Continued)YearEndedJune30,2017
60
Federal Pass‐Through Program Total Receivable Receivable TotalFederalGrantor/Pass‐ThroughGrantor/ Source CFDA Grantor's Program orAward Received (Payable) Revenue (Payable) Passed‐Through
ProgramorClusterTitle Code Number Number Period Amount fortheYear atJuly1,2016 Recognized Expenditures atJune30,2017 toSubrecipients
DEPARTMENTOFHEALTHANDHUMANSERVICES
PassedthroughtheCommonwealthofPennsylvania
ACCESS‐Administration I 93.778 N/A 7/1/15‐6/30/16 N/A 8,585$ 8,585$ ‐$ ‐$ ‐$ ‐$ACCESS‐Administration I 93.778 N/A 7/1/16‐6/30/17 N/A 7,565 ‐ 14,514 14,514 6,949 ‐
TotalDepartmentofHealthandHumanServices 16,150 8,585 14,514 14,514 6,949 ‐
DEPARTMENTOFHOMELANDSECURITYPassedthroughthePennsylvaniaEmergencyManagementAgencyDisastergrants‐PublicAssistance I 97.036 N/A N/A 9,625 9,625 9,625 ‐ ‐ ‐ ‐
TotalDepartmentofHomelandSecurity 9,625 9,625 ‐ ‐ ‐ ‐
Totalfederalfinancialassistance 1,750,919$ 44,312$ 1,718,034$ 1,718,034$ 11,427$ ‐$
HANOVERPUBLICSCHOOLDISTRICTNotestoScheduleofExpendituresofFederalAwardsYearEndedJune30,2017
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NOTE1 REFERENCETOSCHEDULEOFEXPENDITURESOFFEDERALAWARDS
(I) Indirectfunding
(B) BasedonUSDAvaluation
NOTE2 SIGNIFICANTACCOUNTINGPOLICIES
BasisofAccounting
ThescheduleofexpendituresoffederalawardsispresentedusingthemodifiedaccrualbasisinaccordancewithaccountingprinciplesprescribedbythePennsylvaniaDepartmentofEducation,whichconformtogenerallyacceptedgovernmentalaccountingprinciples.Expendituresarerecognizedintheaccountingperiodinwhichtheliabilityisincurred,ifmeasurable.RevenuesdesignatedforpaymentofspecificSchoolDistrictexpendituresarerecognizedwhentherelatedexpendituresareincurred.Anyexcessofrevenuesorexpendituresatthefiscalyearendisrecordedasaliabilityorareceivable,respectively.
TheSchoolDistrictelectednottousea10%deminimusrateforchargingindirectcoststoprograms.
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INDEPENDENTAUDITOR’SREPORTONINTERNALCONTROLOVERFINANCIALREPORTINGANDONCOMPLIANCEANDOTHERMATTERSBASEDONANAUDITOFFINANCIALSTATEMENTSPERFORMEDIN
ACCORDANCEWITHGOVERNMENTAUDITINGSTANDARDS
BoardofDirectorsHanoverPublicSchoolDistrictHanover,Pennsylvania
Wehaveaudited,inaccordancewiththeauditingstandardsgenerallyacceptedintheUnitedStatesofAmericaandthestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandardsissuedbytheComptrollerGeneraloftheUnitedStates,thefinancialstatementsofthegovernmentalactivities,thebusiness‐typeactivities,eachmajorfund,andtheaggregateremainingfundinformationofHanoverPublicSchoolDistrict,asofandfortheyearendedJune30,2017,andtherelatednotestothefinancialstatements,whichcollectivelycomprisetheHanoverPublicSchoolDistrict’sbasicfinancialstatements,andhaveissuedourreportthereondatedJanuary3,2018.
INTERNALCONTROLOVERFINANCIALREPORTING
Inplanningandperformingourauditofthefinancialstatements,weconsideredHanoverPublicSchoolDistrict’sinternalcontroloverfinancialreporting(internalcontrol)todeterminetheauditproceduresthatareappropriateinthecircumstancesforthepurposeofexpressingouropinionsonthefinancialstatements,butnotforthepurposeofexpressinganopinionontheeffectivenessofHanoverPublicSchoolDistrict’sinternalcontrol.Accordingly,wedonotexpressanopinionontheeffectivenessofHanoverPublicSchoolDistrict’sinternalcontrol.
Adeficiencyininternalcontrolexistswhenthedesignoroperationofacontroldoesnotallow
managementoremployees,inthenormalcourseofperformingtheirassignedfunctions,toprevent,ordetectandcorrect,misstatementsonatimelybasis.Amaterialweaknessisadeficiency,orcombinationofdeficiencies,ininternalcontrol,suchthatthereisareasonablepossibilitythatamaterialmisstatementoftheentity’sfinancialstatementswillnotbeprevented,ordetectedandcorrectedonatimelybasis.Asignificantdeficiencyisadeficiency,oracombinationofdeficiencies,ininternalcontrolthatislessseverethanamaterialweakness,yetimportantenoughtomeritattentionbythosechargedwithgovernance.
Ourconsiderationofinternalcontrolwasforthelimitedpurposedescribedinthefirst
paragraphofthissectionandwasnotdesignedtoidentifyalldeficienciesininternalcontrolthatmightbematerialweaknessesorsignificantdeficiencies.Giventheselimitations,duringourauditwedidnotidentifyanydeficienciesininternalcontrolthatweconsidertobematerialweaknesses.However,materialweaknessesmayexistthathavenotbeenidentified.
63
COMPLIANCEANDOTHERMATTERS
AspartofobtainingreasonableassuranceaboutwhetherHanoverPublicSchoolDistrict’sfinancialstatementsarefreeofmaterialmisstatement,weperformedtestsofitscompliancewithcertainprovisionsoflaws,regulations,contracts,andgrantagreements,noncompliancewithwhichcouldhaveadirectandmaterialeffectonthedeterminationoffinancialstatementamounts.However,providinganopiniononcompliancewiththoseprovisionswasnotanobjectiveofouraudit,andaccordingly,wedonotexpresssuchanopinion.TheresultsofourtestsdisclosednoinstancesofnoncomplianceorothermattersthatarerequiredtobereportedunderGovernmentAuditingStandards.
PURPOSEOFTHISREPORT
Thepurposeofthisreportissolelytodescribethescopeofourtestingofinternalcontrolandcomplianceandtheresultsofthattesting,andnottoprovideanopinionontheeffectivenessoftheentity’sinternalcontroloroncompliance.ThisreportisanintegralpartofanauditperformedinaccordancewithGovernmentAuditingStandardsinconsideringtheentity’sinternalcontrolandcompliance.Accordingly,thiscommunicationisnotsuitableforanyotherpurpose.
Hanover,PennsylvaniaJanuary3,2018
64
INDEPENDENTAUDITOR’SREPORTONCOMPLIANCEFOREACHMAJORPROGRAMANDONINTERNALCONTROLOVERCOMPLIANCE
REQUIREDBYUNIFORMGUIDANCE
BoardofDirectorsHanoverPublicSchoolDistrictHanover,Pennsylvania
REPORTONCOMPLIANCEFOREACHMAJORFEDERALPROGRAM
WehaveauditedHanoverPublicSchoolDistrict’scompliancewiththetypesofcompliancerequirementsdescribedintheOMBComplianceSupplementthatcouldhaveadirectandmaterialeffectoneachofHanoverPublicSchoolDistrict’smajorfederalprogramsfortheyearendedJune30,2017.HanoverPublicSchoolDistrict’smajorfederalprogramsareidentifiedinthesummaryofauditor’sresultssectionoftheaccompanyingscheduleoffindingsandquestionedcosts.
Management’sResponsibility
Managementisresponsibleforcompliancewithfederalstatutes,regulations,andthetermsandconditionsofitsfederalawardsapplicabletoitsfederalprograms.
Auditor’sResponsibility
OurresponsibilityistoexpressanopiniononcomplianceforeachofHanoverPublicSchoolDistrict’smajorfederalprogramsbasedonourauditofthetypesofcompliancerequirementsreferredtoabove.WeconductedourauditofcomplianceinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica;thestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStates;andtheauditrequirementsofTitle2U.S.CodeofFederalRegulationsPart200,UniformAdministrativeRequirements,CostPrinciples,andAuditRequirementsforFederalAwards(UniformGuidance).ThosestandardsandtheUniformGuidancerequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethernoncompliancewiththetypesofcompliancerequirementsreferredtoabovethatcouldhaveadirectandmaterialeffectonamajorfederalprogramoccurred.Anauditincludesexamining,onatestbasis,evidenceaboutHanoverPublicSchoolDistrict’scompliancewiththoserequirementsandperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.
Webelievethatourauditprovidesareasonablebasisforouropiniononcomplianceforeachmajorfederalprogram.However,ourauditdoesnotprovidealegaldeterminationofHanoverPublicSchoolDistrict’scompliance.
65
OpiniononEachMajorFederalProgram
Inouropinion,HanoverPublicSchoolDistrict,complied,inallmaterialrespects,withthetypesofcompliancerequirementsreferredtoabovethatcouldhaveadirectandmaterialeffectoneachofitsmajorfederalprogramsfortheyearendedJune30,2017.
REPORTONINTERNALCONTROLOVERCOMPLIANCE
ManagementofHanoverPublicSchoolDistrict,isresponsibleforestablishingandmaintainingeffectiveinternalcontrolovercompliancewiththetypesofcompliancerequirementsreferredtoabove.Inplanningandperformingouraudit,weconsideredHanoverPublicSchoolDistrict’sinternalcontrolovercompliancewiththetypesofrequirementsthatcouldhaveadirectandmaterialeffectoneachmajorfederalprogramtodeterminetheauditingproceduresthatareappropriateinthecircumstancesforthepurposeofexpressinganopiniononcomplianceforeachmajorfederalprogramandtotestandreportoninternalcontrolovercomplianceinaccordancewiththeUniformGuidance,butnotforthepurposeofexpressinganopinionontheeffectivenessofinternalcontrolovercompliance.Accordingly,wedonotexpressanopinionontheeffectivenessofHanoverPublicSchoolDistrict’sinternalcontrolovercompliance.
Adeficiencyininternalcontrolovercomplianceexistswhenthedesignoroperationofacontrolovercompliancedoesnotallowmanagementoremployees,inthenormalcourseofperformingtheirassignedfunctions,toprevent,ordetectandcorrect,noncompliancewithatypeofcompliancerequirementofafederalprogramonatimelybasis.Amaterialweaknessininternalcontrolovercomplianceisadeficiency,orcombinationofdeficiencies,ininternalcontrolovercompliance,suchthatthereisareasonablepossibilitythatmaterialnoncompliancewithatypeofcompliancerequirementofafederalprogramwillnotbeprevented,ordetectedandcorrected,onatimelybasis.Asignificantdeficiencyininternalcontrolovercomplianceisadeficiency,oracombinationofdeficiencies,ininternalcontrolovercompliancewithatypeofcompliancerequirementofafederalprogramthatislessseverethanamaterialweaknessininternalcontrolovercompliance,yetimportantenoughtomeritattentionbythosechargedwithgovernance.
Ourconsiderationofinternalcontrolovercompliancewasforthelimitedpurposedescribedintheprecedingparagraphandwasnotdesignedtoidentifyalldeficienciesininternalcontrolovercompliancethatmightbematerialweaknessesorsignificantdeficiencies.Wedidnotidentifyanydeficienciesininternalcontrolovercompliancethatweconsidertobeamaterialweakness.However,materialweaknessesmayexistthathavenotbeenidentified.
Thepurposeofthisreportoninternalcontrolovercomplianceissolelytodescribethescopeof
ourtestingofinternalcontrolovercomplianceandtheresultsofthattestingbasedontherequirementsoftheUniformGuidance.Accordingly,thisreportisnotsuitableforanyotherpurpose.Hanover,PennsylvaniaJanuary3,2018
HANOVERPUBLICSCHOOLDISTRICTScheduleofFindingsandQuestionedCostsYearEndedJune30,2017
66
SectionI‐SummaryofAuditor'sResultsFinancialStatementsTypeofauditor'sreportissued: Unmodified
Internalcontroloverfinancialreporting: Materialweakness(es)identified? Yes ⊠No Significantdeficienciesidentified? Yes ⊠NoneReported
Noncompliancematerialtofinancialstatementsnoted? Yes ⊠NoFederalAwardsInternalcontrolovermajorprograms: Materialweakness(es)identified? Yes ⊠No Significantdeficienciesidentified? Yes ⊠NoneReported
Typeofauditor'sreportissuedoncomplianceforthemajorprograms: Unmodified Anyauditfindingsdisclosedthatare
requiredtobereportedinaccordancewithSection2CFRSection200.516? Yes ⊠No
Identificationofthemajorprograms:
CFDANumber(s) NameofFederalProgram
10.55310.55510.559
84.02784.173
ChildNutritionCluster:SchoolBreakfastProgramNationalSchoolLunchProgramSummerFoodServiceProgramforChildren
SpecialEducationClusterIDEAPartB–SpecialEducationIDEA619funds–SpecialEducation
DollarthresholdusedtodistinguishbetweentypeAandtypeBprograms $750,000 Auditeequalifiedaslow‐riskauditee? Yes No
HANOVERPUBLICSCHOOLDISTRICTScheduleofFindingsandQuestionedCosts(Continued)YearEndedJune30,2017
67
SectionII‐FinancialStatementFindings
A. SignificantDeficienciesorMaterialWeaknessesinInternalControl
Nonenoted
B. ComplianceFindings
Nonenoted
SectionIII–FederalAwardFindingsandQuestionedCosts
A. SignificantDeficienciesorMaterialWeaknessesinInternalControlOverCompliance
Nonenoted
B. ComplianceFindings
Nonenoted