cary community consolidated school district no....

CARY COMMUNITY CONSOLIDATED

SCHOOL DISTRICT NO. 26

CARY, ILLINOIS

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE FISCAL YEAR ENDED

JUNE 30, 2012

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26

CARY, ILLINOIS

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE FISCAL YEAR ENDED

JUNE 30, 2012

Official Issuing Report

T Ferrier, Business Manager

Department Issuing Report

Business Office


TABLE OF CONTENTS

FOR THE FISCAL YEAR ENDED JUNE 30, 2012

PAGE INTRODUCTORY SECTION Transmittal Letter i-xix Organizational Chart xx Principal and Elected Officials xxi-xxvi FINANCIAL SECTION Independent Auditor’s Report 1 Required Supplementary Information Management’s Discussion and Analysis 3 Basic Financial Statements Government-Wide Financial Statements Statement of Net Assets 11 Statement of Activities 12 Fund Financial Statements Balance Sheet – Governmental Funds 13 Reconciliation of the Balance Sheet to the Statement of Net Assets 14 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 15 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 16 Statement of Fiduciary Assets and Liabilities 17 Notes to Basic Financial Statements 18 Required Supplementary Information Illinois Municipal Retirement Fund – Schedule of Employer’s Contributions and Analysis of Funding Progress 35


TABLE OF CONTENTS

FOR THE FISCAL YEAR ENDED JUNE 30, 2012

FINANCIAL SECTION (Continued) PAGE Required Supplementary Information (Continued) Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – General Fund 36 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Special Revenue Fund – Operations and Maintenance Fund 41 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Special Revenue Fund – Transportation Fund 42 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Special Revenue Fund – Illinois Municipal Retirement/Social Security Fund 43 Notes to Required Supplementary Information 45 Supplementary Information Combining Balance Sheet – General Fund 46 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - General Fund 47 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – General Fund – Educational Fund 48 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual – General Fund – Working Cash Fund 53 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Debt Services Fund 54 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Capital Projects Fund 55 Schedule of Changes in Fiduciary Assets and Liabilities – Activity Funds 56 Computation of Operating Expense Per Pupil and Per Capita Tuition Charge 57


TABLE OF CONTENTS

FOR THE FISCAL YEAR ENDED JUNE 30, 2012 FINANCIAL SECTION (Continued) PAGE Supplementary Information (Continued) Schedule of Bonds Outstanding, Series 2003 Bonds, Issue Dated December 1, 2003 58 Schedule of Bonds Outstanding, General Obligation School Refunding Bonds, Series 2004, Issue Dated February 15, 2004 59 Schedule of Bonds Outstanding, General Obligation School Alternative Revenue Bonds, Series 2004A, Issue Dated July 1, 2004 60 Schedule of Bonds Outstanding, General Obligation School Refunding Bonds, Series 2005, Issue Dated May 3, 2005 61 Schedule of Bonds Outstanding, General Obligation School Bonds, Series 2011A, Issue Dated January 31, 2011 62 Schedule of Bonds Outstanding, General Obligation School Bonds, Series 2011B, Issue Dated January 31, 2011 63 Schedule of Bonds Outstanding, General Obligation School Bonds, Series 2011C, Issue Dated January 31, 2011 64 STATISTICAL SECTION Changes in Net Assets 65 Changes in Fund Balances, Governmental Funds 67 Fund Balances, Governmental Fund 68 Property Tax Levies and Collections 69 Assessed Value and Estimated Actual Value of Taxable Property 70 Property Tax Rates – Direct and Overlapping Governments 71 Principal Taxpayers in the District 72 Legal Debt Margins 73 Computation of Legal Debt Margin 74 Outstanding Debt by Type 75


TABLE OF CONTENTS

FOR THE FISCAL YEAR ENDED JUNE 30, 2012 PAGE STATISTICAL SECTION (Continued) Net Bonded Debt 76 Computation of Direct and Overlapping Debt 77 Pledged Revenue Coverage 78 Demographic and Economic Statistics 79 Principal Employers 80 Staffing Information by Function 81 Illinois State Board of Education School District Financial Profile 82 Operating Indicators by Function 83 Capital Asset Statistics by Function 84

- i -

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT

ADMINISTRATION CENTER

2115 Crystal Lake Road Cary, Illinois 60013 (847) 639-7788 Fax (847) 639-3898

Briargate Deer Path Three Oaks Cary Junior High

Brian Coleman Superintendent

Valerie McCall

Director of Curriculum and Instruction

Jennifer Thomas

Director of Special Services

T. Ferrier Director of Finance and

Operations

September 5, 2012

President, Members of the Board of Education and Citizens of Cary Community Consolidated School District No. 26, Community Members of Cary Community Consolidated School District No. 26 Cary, Illinois

The Comprehensive Annual Financial Report (CAFR) of Cary Community Consolidated School District No. 26 (the District), Cary, Illinois, as of and for the year ended June 30, 2012, is submitted herewith. Responsibility for the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the District.

We believe the data, as presented, is accurate in all material aspects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the District as shown by the disclosure of all financial activity of its various funds; and that all disclosures, necessary for public understanding of the District's financial status, have been incorporated within this report.

Independent Audit

The School Code of Illinois and the District's adopted policy require an annual audit by independent certified public accountants. The accounting firm of Eder Casella & Co. was selected through a comprehensive quote process in 2011. In addition to meeting the requirements set forth in state statues, the District is required to undergo an annual single audit in conformity with the provisions of the U.S. Office of Management and Budget's (OMB) Circular A-133, "Audits of States, Local Governments, and Non-profit Organizations." Information related to this single audit, including a schedule of federal financial assistance and the independent auditor's reports on the internal control structure and on compliance with applicable laws and regulations, is included under a separate cover.

Basis of Accounting and Reporting

The District reports the government-wide financial statements on the accrual basis of accounting, the fund financial statements are prepared on the modified accrual basis. The notes to the financial statements expand upon the basis of accounting used by the District as well as all District accounting policies and procedures. All District funds are included in this report and have been audited by Eder Casella & Co., Certified Public Accountants. Eder Casella & Co. has issued an unqualified ("clean") opinion on the District's financial statements for the fiscal year ended June 30, 2012. The independent auditor's report is located at the front of the financial section of this report.

The financial statements have been prepared in accordance with the standard set forth by the Governmental Accounting Standards Board. The Association of School Business Officials has also adopted these standards. The presentation allows the reader to obtain an overview of the District's financial operations by viewing the basic financial statements in the front section of the report.

- ii -

In order to obtain a more detailed financial overview of the District, the reader can refer to the individual fund financial statements included within the required supplementary information and supplementary information sections.

Financial Statements

The Comprehensive Annual Financial Report (CAFR) includes all funds of the District and is presented in three sections: Introductory, Financial, and Statistical. The introductory section includes this transmittal letter, the District's organization chart, and a list of Principal and Elected Officials. The financial section includes the independent auditor's report on financial statements and schedules, Management Discussion and Analysis (MD&A), basic financial statements and required supplementary information such as the combining and individual fund financial schedules. The statistical section includes selected financial and demographic information, which are generally presented on a multi-year basis.

Generally accepted accounting principles (GAAP) requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The MD&A immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements.

Profile of the Government

Cary Community Consolidated School District No. 26 is primarily located within Cary, Illinois. Cary is a beautiful community nestled on the Fox River, located in McHenry County, Illinois, approximately 45 miles northwest of Chicago.

Cary’s founder, William Dennison Cary, purchased 82 acres of land in 1841, for $1.25 an acre. In 1859, the railroad purchased a strip of his property and built a single track railroad. The railroad quickly accepted the site as “Cary Station” and a post office was established.

In 1855, one-third of an acre of land (located on the northeast corner of Three Oaks and Rawson Bridge Road) was donated, with the stipulation that the land was to be used for school purposes only. The land was deeded for school use, and McManaman School was established. As the population grew, additional schools/facilities were added:

Silver Lake Schoolhouse (located along Crystal Lake Avenue and Silver Lake Road) was built in 1859. A log school house (located on the southeast side of West Main) served children until High Road

School (located on High Road) was built in 1861. This served as the main school, until 1889 when the school was moved to West Main Street.

A gymnasium (located on Krenz Street) was built in 1929.

In 1947, all rural schools in the Cary area were consolidated into one district, and all the children in the rural areas were redistributed to complete their education in their town schools. Following the consolidation, in 1948, eight classrooms were added to the gymnasium on Krenz Street, to create Maplewood School. The District continued to grow, as did the facilities within:

In 1959, OakKnoll School was built on First Street. In 1965, Briargate School was built on Wulff Street. In 1969, the Junior High was built on Oriole Street. In 1992, Three Oaks School was built. In 1998, Deer Path School was built. In 2002, a new Cary Junior High was completed, and the old Junior High was renamed as Prairie Hill

School.

The District's enrollment began declining and, in 2004, OakKnoll School was closed, along with Maplewood School in 2010, and Prairie Hill School in 2011. Although OakKnoll and Maplewood are currently unoccupied at the time, Prairie Hill is being leased and is therefore providing rental income for the District.

Projections indicate that although there has been significant decline in enrollment over the past seven years, in the coming years, enrollment is likely to stabilize and the District may experience growth.

- iii -

Government Entity and Its Services

The District is an elementary district that comprises an area of approximately 13 square miles in northern Illinois. The District currently operates three elementary schools and one junior high school (Briargate School, Three Oaks School, Deer Path School, and Cary Junior High School).

According to the United States Census Bureau, the District has 12.23 square miles of land area and 0.71 square miles of water area.

The District's 347 employees (146 teachers, 189 non-certified staff and 12 certified administrators) served approximately 2,783 students for the 2011-2012 school year, with expenditures totaling approximately $32.5 million. Of those expenditures, capital projects and bond and interest payments totaled approximately $4.7 million.

All of the District’s student population feeds into Cary-Grove High School (serving grades 9-12), which shares its student body with Fox River Grove, Trout Valley and Oakwood Hills. Some Cary residents also attend Prairie Ridge High School.

The governing body consists of a seven-member Board of Education, elected from within the District's boundaries for four year overlapping terms. The Superintendent and staff administer day-to-day operations of the District.

Vision Mission and Goals

Vision: Excellence in Education

Mission: In collaboration with the community and parents, to empower our students to become lifelong learners.

Goals: 1. Enable District students to be competitive in a global economy of ideas. 2. Develop and implement a District strategic plan based upon systematic needs assessment. 3. Continually improve the District’s positive learning and teaching environment to enhance stakeholder

satisfaction. 4. Promote two-way communications and involvement among all District stakeholders. 5. Establish operational consistency and efficiently throughout the District.

Financial Position Improvements

In fiscal year 2002, the District's Operating Funds (Educational, Operations and Maintenance, Transportation, Illinois Municipal Retirement Fund(IMRF)/Social Security(SS) and Working Cash Funds) balance was $12.4 million, or a healthy 32.5% of operating expenditures. Eight years of deficit spending, caused by District not living within its means, resulted in negative fund balances, a total depletion of District’s cash reserves, and a delegation of “Watch” on Illinois State Board of Education’s (ISBE) Financial Profile Score Report for years. In fiscal year 2010 the District’s General Fund hit a low of negative $6.7 million, or an extremely weak negative 21.3% of expenditures. It was evident that maintaining the level of programming (at that time) was resulting in the insolvency of the District, whereby risking State takeover.

The budget for fiscal year 2011 represented a turning point for the District. A point at which a new Board of Education and new administrative staff worked to balance the budget and developed a five-year plan toward financial recovery. The fiscal year 2011 budget was the District's first balanced (and achieved) budget in many years, and was only achieved through drastic programmatic reductions. A successful referendum ($15M of cash to eliminate the District's reliance on Tax Anticipation Warrants (TAWs)) in conjunction with implemented budget reductions brought the District out of negative fund balance levels and put the District on the path toward financial recovery.

That being said, between fiscal year 2010 and fiscal year 2012, the District made $9.9M of reductions. In a District with a $30M operating budget, this represented significant reductions. These reductions (among other things) resulted in:

- iv -

• The closing of two schools. • The reduction/elimination of non-mandated specials programs (including: art, music, physical

education, etc.). • The reduction of instructional minutes to the minimum required by law. • The limitation to one educational field trip per class, per year. • The increase of class size to (in some cases) 35 for an elementary district. • The outsourcing of all custodial staff. • The elimination of 1/3 of the teaching and administrative staff. • The implementation of pay freezes for three years for the administrative staff. • The implementation of pay freezes for two years for the educational support Staff. • The implementation of 5% of pay reductions for the transportation staff. • The implementation of a newly negotiated contract with the Cary Education Association (CEA) which

incorporated a 3% pay reduction.

The $9.9M of reductions is evidence of the District’s commitment to financial recovery. It required difficult recommendations made by Administration and adopted by the Board of Education; however, the Board of Education and Administration have resolved to do what is best for the District within the limited resources available. In three years, the District has gone from the brink of State takeover, negative $10M of fund balances, and $11M of TAW’s to:

• Its first year OFF ISBE’s “Financial Watch List”. • Positive fund balance levels. • Its first year without short-term loans. • Two years of balanced budgets, with a third tentative balanced budget on display for fiscal year 2013. • A successfully negotiated union contract that yielded reductions in salaries, benefits, and the

elimination of retirement incentives. This included the elimination of the 6% pay increases in the final four years of employment.

As part of the successful bond referendum, during FY11, Moody's Investors Service gathered a committee to review and assess/re-assess the District’s bond rating. Moody's Investors Service rated the District A2 (with negative outlook). Moody's negative outlook reflected their expectation that the District’s narrow fund balances and financial challenges may result in a credit profile no longer consistent with the A2 rating. They further stated that the District’s ability to successfully implement expenditure adjustments and/or revenue enhancements, sufficient to rebuild operating reserves, would be a key factor in the District's overall financial wellbeing and future credit reviews. They recommended the following:

What could change the rating UP (revision of outlook to stable from negative):

• Implementation of revenue and expenditure adjustments leading the improvement in the District’s financial profile.

• Substantial improvement in financial performance evidenced by operating surpluses that yield adequate reserve levels.

What could change the rating DOWN:

• Failure to introduce revenue enhancements or implement the outlined expenditure reductions leading to projections of structural imbalance and narrowing reserve balances.

• Failure to meet FY11 and FY12 budgetary projections leading to further deterioration of financial flexibility.

The work is not yet done! The District is listed as “Early Warning” on ISBEs Financial Profile Score Report. Moreover, “Early Warning” is far from the financial recovery desired by the Board of Education, Administration, and the State of Illinois; however, it is a step in the right direction. The Administration and the Board of Education continue to review, assess, and monitor the District's financial health on a monthly basis.

Having a clear financial plan is only as good as its implementation. The District's financial crisis did not occur overnight. It took eight years. The District's ability to successfully implement/maintain expenditure adjustments and revenue enhancements will be a key factor in its ability to rebuild community trust, financial stability, and a consistent learning environment for the students of today and tomorrow.

- v -

Facing crippling declining revenues, proposed legislation limiting tax levy income, and exponentially increasing expenditures (such as health insurance and pension costs) that are out of the District's ability to control, the District is persistently being challenged to maintain its financial resolve. The Board of Education continues to support this resolve by unanimously passing its third consecutive balanced budget resolution for the fiscal year 2013 budget. Adopting the Balanced Budget Resolution (while not required by State law) has been done with the intent to yearly focus and reaffirm the Board of Education and Administration’s commitment and a resolve to do what is best for the District within the limited resources available.

Financial Planning Initiative

In 2009, the District presented a five-year Financial Plan designed to be a tool to guide the District in its decision-making over a multi-year period. The District's Financial Plan model is very comprehensive, taking into account critical tax levy variables, enrollment projections, the State’s revenue formulas, and several other key variables. These essential considerations are melded into a projection model for both the current budget year, as well as for subsequent years. The inclusion of historical data is also useful particularly for recognizing important trends in such areas as revenue, expenditure and both operating and overall fund balances. As with any financial model, the quality of its outcomes is only as good as the accuracy of the input data and the underlying assumptions.

The Financial Plan is subject to many complex economic, social, and political risks and uncertainties, many of which are outside the ability for the District to control. These include, but are not limited to:

• The State’s economic situation and subsequent ability to provide funding. • Changes in legislation governing the structure of tax levies. • Future CPI trends that affect the current structure of tax levies. • Unknown cost of collective bargaining agreements in years fiscal year 2015 and beyond. • Liability of pension rates. • Potential expense of a national health-care system. • Outstanding capital needs of the District.

The Financial Plan must project over a period of time that’s brief enough to feel tangible but long enough to allow for preparation and/or corrective action to be implemented. Without foresight and planning, the District may find its financial situation deteriorating and its educational programs impacted. That is also why creating, rereading, and occasionally revising the Financial Plan is completed at least once a year.

Strategic Planning Initiative

In 2010, a three year Strategic Plan was implemented, to identify the work plans necessary to accomplish the District's academic and financial goals. To continue as an exceptional District, Cary Community Consolidated School District No. 26 must have a Strategic Plan that provides a clear sense of its vision for the future. The District is accountable to this vision through commitments made by the Board of Education, employees, students, parents and community, and its objective to transform goals into reality.

Recognizing the collective effectiveness in achieving this vision will have significant impact on the learning of students, the climate of the schools, the sense of professional fulfillment of staff, and the support of the community. Many stakeholders are responsible for (and committed to) working together to create a District that exemplifies these elements. That being said, the District is gathering representatives from these groups and is undergoing a comprehensive update to its Strategic Plan. The process is geared toward engaging a variety of stakeholders and in shaping the goals and decisions that will be made in the coming years.

Short-Term Borrowing/Referendum Initiative

Long-term historical budget deficits and negative fund balances required the District to issue TAW’s on a short-term basis, whereby reducing interest income and increasing expenses for borrowing. On November 2, 2010 voters approved the issuance of $15 million in Working Cash Bonds for the District. This influx of cash was used to pay off the District’s outstanding TAW’s and also restore fund balances, which had reached negative levels. The successful referendum was NOT a solution for the District's underlying and projected budgetary deficits. Rather, it was an avenue used only to address the immediate concerns facing the District which included:

- vi -

• Cash flow • Negative fund balances • Increasing cost of short-term borrowing (TAWs) • Potential 2nd year short-term borrowing (TAWs) • State Board of Education intervention/takeover

Currently the District does not have any referendum questions on the ballot.

Community Involvement Initiatives

Over the years, the District has received overwhelming support from its community members and citizens. They have volunteered their time, donated funds, and championed initiative to help support the District and its students. A few of these include:

Community Engagement Committee is a panel of seven community members, along with Board of Education members, dedicated to the transparency of the District and to educating/gaining the support and trust from the community.

Cary Cares Referendum Committee mobilized over thirty volunteers district-wide to educate voters and secure a successful referendum for Working Cash bonds in 2010.

Each school has an active PTO. Altogether, the PTOs donated over $75,000 to the District’s schools in fiscal year 2012.

The Cary Education Foundation was started in December, 2004. The foundation has raised and awarded over $60,000 in grants. Foundation funds are primarily distributed as individual teacher-requested grants that enrich math, reading and writing curriculum; however, they also are used to support art and music enrichment programs, specialized summer school, school gardens, and recently awarded start-up funds for new teachers. Additional funds have gone to support larger district-wide initiatives such as technology improvements (in the form of new media carts and upgraded software) and endowments (Instant Alert System).

In fiscal year 2011, the District made significant budget reductions in the areas of art, music, and physical education. Although these reductions were a tough recommendation made by Administration and implemented by the Board of Education, from those reductions: 1. The Cary Band Association was formed. 2. Get Smart with Art was established.

Student Achievement Initiatives

The District continues to develop, monitor, and evaluate both student academic and behavioral goals that address the diversity of the student population. Like most diverse school districts, the District continues to address the achievement gap that appears when one compares academic performance of identified subgroups. While overall performance indicates largely sustained academic achievement, students of poverty and special education students continue to lag behind. School Improvement Plans utilize test result data to provide leaders with information to drive goals and strategies to address the gaps.

Comparing the District with other McHenry County Benchmark Districts, the District's 2011 Illinois Standardized Assessment Tests (ISAT) scores showed the District to be ranked:

2nd in Math overall 2nd in Reading overall 4th overall ISAT

- vii -

Overall the District's students sustained a strong performance on ISAT despite significant changes last year. Math continues to be an area of strength for the students, as evidenced by the District’s ranking 2nd overall against the McHenry County Benchmarks. Reading continues to be an area of focus for improvement, despite the District's rank of 2nd against the McHenry County Benchmarks.

Negotiated Agreement Initiative

The Cary Education Association (CEA) is the only bargaining group employed by the District, representing the certified non-administrative staff of the District. During fiscal year 2012, the 2008-2011 contract expired on August 19, 2011. Coming into the negotiations process, the Board of Education was committed to learn from the past spending patterns of the District, in order to protect its teachers, students and community from the negativity associated with a District under financial distress.

Maintaining that the District has highly valued and qualified teachers that have earned the District high scholastic rankings, the Board of Education’s goal throughout the negotiations process was to begin the process early and to work collaboratively with the CEA to rebuild a sustainable salary and benefit structure for the District.

On December 2, 2011, the Board of Education and CEA signed a newly negotiated contract for 2011-2014, which amended compensation and other benefits for the employees covered under the agreement. The new agreement took effect August, 2011 and expires the day before school starts in August, 2014.

The new three-year agreement provided for:

• Reduction in teacher compensation by 3% in FY12 and a pay freeze in the FY13 and FY14 school years. Teachers will be permitted to change lanes and “move horizontally” on the salary schedule by taking additional course work during the contract but will not receive automatic “step” or longevity increases.

• A change in the employee insurance program. Previously, the Board paid 100% of single coverage and between 20% and 50% of family coverage depending on a teacher’s years of service in the district. Under the new agreement, the Board will pay 50% of single coverage, and between 10% and 40% of family coverage depending upon a teacher’s experience in the district.

• The school day for students has been lengthened from 5 hours and 45 minutes to 6 hours and 15 minutes, and student instructional time was increased by 30 minutes per day.

• The tuition reimbursement program under the previous collective bargaining agreement has been eliminated from the new contract.

• The retirement program under previous contract has been eliminated. Under previous agreements, eligible employees could receive up to four years of 6% increases in their last years of employment; up to $20,000 in lump sum payments following retirement; and up to $10 per day for unused sick leave.

- viii -

At the start of this school year the Board had imposed contract terms for the FY12 school year which provided for reductions in pay and in the insurance program greater than those agreed to as outlined above. Through a series of meetings with a federal mediator after the start of the school year, however, the parties were able to reach agreement on all economic and language issues for a three-year contract. It was not an easy process, but with cooperation, dedication, and a positive vision, the Board of Education and CEA agreed on a compensation structure that designated best use of existing resources.

Enrollment Trends

Enrollment in Cary Community Consolidated School District No. 26 has been declining since 2006. Prior to that time, enrollment was steadily increasing. This was especially true in the late 1990’s and early 2000’s when sales of new and existing homes were strong in the District and the county. New and existing home sales have since slowed in the District leading to a net loss of students. This is a reflection of not only low homeowner turnover but also fewer births and a slower population growth throughout Cary. Population and housing growth in the next decade is expected to level off.

The District had a demographic study conducted by University of North Carolina demographer Dr. John Kasarda that explains the reasons for enrollment trends and provides projections for three scenarios: The lowest enrollment that could possibly be anticipated (Series A), the most likely enrollment (Series B), and the highest enrollment that could possibly be anticipated (Series C). The study provides a reader-friendly explanation of the forces and history that impact enrollment trends. It also states that the projections are based on the best information available at this time, and should be monitored and regularly updated.

The Kasarda Study for the District suggests that enrollment will range between 2,250 (low) and 3,029 (high) students by 2021. The medium range forecast predicts that there will be 2,629 students by 2021. The medium range forecast indicates that enrollment at grades K-4 will remain essentially flat with a net loss of students at the 5-8 grades.

It is recommended that the Kasarda Study be updated periodically to take advantage of new demographic and enrollment information. Please reference Operating Indicators by Function on page 83 of the Statistical Section for further detail.

2,000

2,200

2,400

2,600

2,800

3,000

3,200

3,400

3,600

3,800

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Enrollm

ent

Historical and Projected Enrollment

Local Economy

The District is located in a substantially residential area with limited commercial and industrial development. Until five years ago, the District had experienced substantial residential growth due both to its location in an affordable suburb of Chicago, with a commuter rail station, and its proximity to commercial growth, outside of Cary but within McHenry County. However, the District is currently experiencing some of the same housing conditions affecting other areas of the country. Residential and commercial/industrial development construction has nearly stopped and real estate values are slipping.

- ix -

Several large employers are located within, and in, the surrounding boundaries of the District. The largest employer, located just outside of the District's boundaries, is Sage Products, Inc. Currently employing about 600 staff members, Sage is an innovative disposable healthcare product manufacturing company, occupying a 560,000 square foot facility in Cary. The District's second largest employer is Seaquist Perfect Dispensing, LLC (otherwise known as Aptar). Aptar, a manufacturer of innovative spray pumps, dispensing closures, nasal pumps, aerosol valves and lotion pumps, employs approximately 400 staff members and occupies a 255,000 square foot facility in Cary. Although it does not employ the largest number of individuals within the District's boundaries, True Value Manufacturing Company (TruServ Corp.) is the District's largest taxpayer. A manufacturer of paints, varnishes, and enamels, True Value employs approximately 160 people. Please reference the Principal Employers Section on page 80 of the Statistical Section for further detail.

According to the United States Census Bureau, the three year average Cary Community Consolidated School District No. 26 population was 22,480. The District's per capita income was $35,329, which is higher than the state average of $28,782 and is higher than the national average of $27,334. The District's median household income was $97,051, and on average, the District’s residents spend 34.4 minutes per day commuting to work, which is higher than the state average of 28.5 minutes and is higher than the national average of 25.3 minutes. This is mainly due to most of the workforce that resides in the District commuting to the surrounding communities and the City of Chicago.

According to the United States Census Bureau, the District's unemployment rate is 7.2%, which is lower than the 9.0% for McHenry County, and is traditionally lower than the unemployment rates at the national level and the State of Illinois level.

Residential real estate taxes continue to account for approximately 75% of the District's total revenue (excluding On-Behalf Payments) received. As such, taxes continue to represent the largest source of revenue for the District. Tax revenues are a combination of local property taxes and Illinois Commercial Personal Property Replacement Taxes. The three factors that affect property tax revenues include assessed valuation, tax multiplier, and the tax rate. The tax multiplier is determined by a state agency which attempts to equalize the assessment on real property in order to determine the property value for taxing purposes. This value is referred to as the Equalized Assessed Valuation (EAV).

Equalized Assessed Valuation

As stated before, residential and commercial/industrial development construction has nearly stopped within the District and real estate values are slipping.

During levy year 2011, the District's EAV dropped 12% (from $760,388,050 to $672,283,937), in spite of the addition of $904,283 in new property. Any real estate foreclosures within the area have not had a financial impact on the District, as the District's tax collections remain high at 99.9% of taxes extended.

The decline in EAV from 2010 to 2011 has been a reoccurring trend since 2009, when the District experienced its first overall decline in EAV.

$500

$550

$600

$650

$700

$750

$800

$850

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Millions

Equalized Assessed Valuation (EAV)

- x -

Please see Assessed Value and Estimated Actual Value of Taxable Property on page 70 of the Statistical Section for further detail.

Property Tax Rate

The District's tax rate has been increasing since 2008 as the assessed value has been decreasing. Under the property tax cap limitation law (PTELL), the District is limited to increases in total extensions by consumer price index (CPI) or 5%, whichever is lower. Taking into account the limitations set forth by PTELL, the District’s rate has increased from $2.665 in 2008 to $3.38 in 2011. Please see Property Tax Rates - Direct and Overlapping Governments on pages 71 of the Statistical Section for further detail.

$2.00

$2.20

$2.40

$2.60

$2.80

$3.00

$3.20

$3.40

$3.60

$3.80

$4.00

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Tax Rate

Property Tax Revenue Recognition

Tax collections in the District generally occur in May and September, causing the District to receive the tax revenue from the tax levy in two separate fiscal years. Therefore, the District must determine and incorporate a revenue recognition method for the revenue that allocates the resources with the appropriate fiscal year.

In fiscal year 2011, with the passing of the Working Cash bond referendum, the District was in a unique position to modify its accounting policy related to property tax revenue recognition in order to help prevent the need for Tax Anticipation Warrants in the future, and more accurately align levy revenues with associated expenditures.

Since July 1, 2004, the District began recognizing ½ of the current year levy and ½ of the following year’s levy as tax levy revenue. For FY11, this was to represent ½ of the 2009 levy and ½ of the 2010 levy. The problem with this method of revenue recognition is that the District’s expenditures are paid throughout the entire year and the 2010 levy revenue is only available to the District in the last 45 days of the fiscal year (May & June), when property tax bills are paid by taxpayers. In other words, the District was paying expenditures in advance of receipt of tax levy revenue. This scenario is one of the contributing factors related to the District's historical reliance on Tax Anticipation Warrants. In order to prevent the reliance of Tax Anticipation Warrants, the Administration proposed, and the Board of Education adopted, a change in levy revenue recognition. This change resulted in a prior period adjustment whereby eliminating an inflated fund balance, due to the timing of the receipt of tax levy revenue. As a result, fund balance levels more appropriately reflect the financial status of the District at year end and more clearly align the timing of receipts with associated expenditures.

Beginning in FY11, the change in levy revenue recognition recognizes 88% of the levy preceding the adoption of the budget and 12% of the levy following adoption of the fiscal year budget. Had the District utilized this type of accounting earlier, the Board, Administration, the community, and/or the State would have intervened long before the cash flow situation became a crisis. The levy revenue recognition is yet another step toward the District's goal of financial recovery and stability.

- xi -

The increase from the 2010 levy to the 2011 levy was 2.4%; of that 1.5% was from the Consumer price index (CPI), a small portion was associated with new growth, and the remainder correlates with the District’s levied bond payment schedule.

General State Aid Revenue

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 Est2013

Millions

General State Aid

Although the foundation level was frozen, General State Aid (GSA) was pro-rated in FY12, meaning that the State paid only a portion of the revenue due to the District. It could be frozen or even decline in future years; however, it is not likely that the State will consider future increases, not even to the foundation level. With the current level of State indebtedness and the weak economy, foundation and categorical funding levels will likely continue to be pro-rated. In the unlikely event that federal aid will be increased; it would most likely come in the form of support for special education, food provision or poverty grants. Moreover, the State has already set the unpleasant precedent of cutting back its own aid in any areas where federal dollars have been awarded.

It should be noted that a freeze or nominal increase in the State’s foundation level does not automatically yield a steady or increased level of GSA received by the District. District enrollment has been declining in recent years and this trend is expected to continue. Therefore, even if the District receives a modest increase in the foundation level, that increase could be negated by erosion in the size of the student population. If no foundation level increase is approved, GSA will definitely continue to decline.

State Mandated Categorical (MCAT) Revenue

Mandated Categorical (MCAT) funding provides partial reimbursement for nine programs required by the State such as Special Education and Transportation Costs. Even MCATs that are fully funded leave a significant portion of programs under funded, forcing districts to assume responsibility for the shortfall, taking money away from other programs and services. Due to pro-rations, inconsistencies, and delinquencies, MCAT revenue has proven to be one of the most challenging budgetary line items.

With the exception of FY11, the District has consistently budgeted for and received four MCAT payments from the State. In FY12, the District recognized four payments from the State for its MCAT obligations: one payment due to the District from FY11 (but received in excess of sixty days after the end of the fiscal year) and three payments due to the District from FY12.

The following provides a history of MCAT payments made to the District over the past year:

FY11 4th Quarter $609,119 PAID 3 Months Late FY12 1st Quarter $537,634 PAID 4 Months Late FY12 2nd Quarter $557,741 PAID 4 Months Late FY12 3rd Quarter $550,274 PAID 3 Months Late FY12 4th Quarter $550,274 Due June, 2012 – Still Outstanding

- xii -

Other State and Federal Revenue

State grants provide funds for vocational education, school lunch and breakfast, bilingual education, adult education, school construction, and gifted and remedial student programs. Federal grants provide funds for special education, school lunch and breakfast, bilingual education, and title initiatives.

These payments fluctuate each year depending on District costs, state and federal funding levels and continuation of grant funding for specific programs. Cary Community Consolidated School District No. 26 has seen an inconsistent level of funding for these restricted grants, while expenditures for these programs have consistently increased each year.

State and Federal grant funds are in most cases offsetting revenue and expenses. Grant funds anticipated by the State or Federal government will equal the expenses for the appropriate grant. Only when the State of Illinois has informed the District of the exact grant level will the District start to expend those funds.

Major Sources of Expenditures

Salaries and Benefits

$15

$17

$19

$21

$23

$25

$27

2005 2006 2007 2008 2009 2010 2011 2012

Millions

Salary and Benefit Expenditures

Salaries & Benefits

Education is a people-intensive business. As should be expected, the majority of its expenditures are for salaries and benefits. As such, 65% of the District’s total operating expenditures are related to salary and benefit costs.

Capital Projects

As part of the District's Ten Year Life Safety Update and in order to better plan for near term and long term maintenance, repair, and betterment of our buildings and the effective operation of the mechanical, plumbing and electrical systems, the District worked with the architects to update the Capital Needs Assessment Update. It was an extensive review that included the following: site, including parking lots and drives, sidewalks and curbs, and athletic track surface; building envelope (except roof); window/curtain walls; floor finishes; wall finishes; ceilings; writing boards such as marker boards, chalkboards, and tack boards; fixed equipment/casework; doors and hardware; mechanical, plumbing, and electrical systems.

Bond Payments

State law authorizes districts to issue bonds for a variety of purposes. Bonds are most commonly issued to purchase land and to construct and renovate school facilities. Laws and regulations govern how a district may issue bonds. Additionally, bonds are reviewed by public and private entities before they are issued to ensure that a district is not issuing debt in a manner contrary to the public interest.

- xiii -

A bond is an agreement (between the district and those who hold the bonds) that in exchange for money today, the district will pay bondholders interest over the term of the bond, and the principal once the bond matures. Most school district bonds are “general obligation,” meaning that they are backed by the full faith and credit of the district as a taxing entity. Some district bonds are “revenue bonds,” as might be issued on an athletic facility with gate receipts guaranteeing repayment.

The District makes semi-annual bond payments on August 1st and February 1st each year.

Special Education

It is well-established that Special Education enrollment and aggregate costs have increased markedly in recent years. At the same time, there have not been proportionate increases in Federal Special Education (IDEA Part B) appropriations or state funding. Regardless of federal and state funding, the District under IDEA must provide a free appropriate public education in the least restrictive environment to children with disabilities, no matter how high or low those costs are in the case of an individual child or how high they are for a group of children with disabilities. As a result, Special Education spending by Districts has consumed a large portion of the District’s budget.

While the student population served by IDEA in the District has decreased over the years (in proportion to decreasing enrollment), expenditures have increased due to more specialized needs required for the population. IDEA developed 14 Special Education eligibility categories:

1. Autism 2. Cognitive Disability 3. Deaf-Blindness 4. Deafness 5. Developmental Delay 6. Emotional Disability 7. Hearing Impairment 8. Multiple Disabilities 9. Orthopedic Impairment 10. Other Health Impaired 11. Specific Learning 12. Speech/Language Impairment 13. Traumatic Brain Injury 14. Visual Impairment

Another reason for the increase is the implementation of the Federal No Child Left Behind Act for Private School/Home School Proportionate Share and the implementation of the Americans with Disabilities Act (ADA). In general, Special Education funding has not kept pace with escalating expenditures.

Currently, the District offers the following programs in-house:

• Early Childhood Education Program (Deer Path) • Blended Preschool Program (Deer Path) • Full Day Kindergarten (Three Oaks) • Inclusion Support (all schools) • Resource Support (all schools) • Specialized Resource (all schools) • TLC (Deer Path/CJH)

For students whose needs cannot be met within district programs, services are provided through a variety of other means:

• Private Approved Special Education Programs • Regional Programs • Collaborative Programs (SEDOM)

- xiv -

These services are often the most costly for the District and represented $764K of expenses in fiscal year 2012. Based upon current Individualized Education Programs (IEP), these services are estimated to increase by $200K+ in fiscal year 2013.

Although overall services/programs for this population may be costly, the District receives approximately $2M each year in federal and state funding, in an effort to help the District offset these expenses.

Internal Control Structure

Management of the District is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the District are protected from loss, theft, or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles.

In developing and evaluating the District's accounting system, consideration is given to the adequacy of the internal accounting controls. Such controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. We believe that the District's internal accounting controls adequately safeguard assets and provide reasonable assurance of the proper recording of financial data.

Budgetary Controls

Budgetary control is maintained at line item levels within each program and/or cost centers before being combined to form totals by fund. All actual activity compared to budget is reported to the District's budget officers on a monthly basis. This monthly report compares each line item account balance to the annual budget with accumulation to the cost center and fund levels.

The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the Board of Education. Activities of the General Fund, Special Revenue Funds, Debt Service Fund, Capital Projects Fund and Working Cash Fund are included in the annual appropriated budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established by function and activity within an individual fund. The District also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. All outstanding encumbered amounts are cancelled at year-end.

A description of the budget development cycle is discussed in detail in the Notes to Required Supplementary Information. As demonstrated by the statements and schedules included in the financial section of this report, the District continues to meet its responsibility for sound financial management.

Cash Management

Cash and investments of the District are maintained by the Superintendent and the District Treasurer. The Board of Education appointed the Director of Finance and Operations to serve as District Treasurer. The Treasurer is responsible for investing the funds temporarily idle during the year in demand deposits, certificates of deposit, obligations of the U.S. Treasury, repurchase agreements and commercial paper. The Treasurer maintains investment relationships with commercial banks and brokerage firms. Investment strategies are structured to obtain the best yield for all invested funds, which may require rapid turnover of investments among several depositories. Except for cash in certain restricted and special funds, the District consolidates cash balances from all funds to maximize investment earnings. Investment income is allocated to the various funds based on their respective participation. The Treasurer complies with the requirements of the Illinois School Code in making investments.

- xv -

Risk Management

The District is a member of the Collective liability Insurance Cooperative (CLIC). This is a coop of over 145 school districts in the State of Illinois. The goal of the pool is to provide more comprehensive insurance coverage at a lower cost than the school districts can obtain individually. A board of directors made up of representatives from various member districts governs the pool.

CLIC has maintained a comprehensive program that provides insurance coverage for property and liability claims. Each member district is responsible for paying an initial $1,000 deductible for its own property claims. CLIC loss-fund reserves are used to pay claims within the self-insured retention for property or liability claims. CLIC has a $600,000 self-insured retention stop loss per occurrence for property and $1 million for auto and liability. CLIC provides $35 million in excess liability coverage to each member district.

The pool contracts with Arthur J. Gallagher for insurance brokerage services and Gallagher Basset Services for loss control services and for claims administration and risk management.

CLIC uses an actuarial formula to determine the annual contribution allocation of each member school district for insurance coverage, administration, and loss funding. Member costs are based on risk exposure elements such as property values, number of vehicles, number of employees, student enrollment, and past claims experience. The CLIC program was designed to accumulate surplus funds over time to give the pool flexibility when the insurance market experiences cost increase by applying a surplus credit to premium allocations. CLIC continues to provide the District with comprehensive insurance coverage and quality services in cost effective manner. Premiums for this coverage are included in the expenditures of the District in the appropriate funds.

The District is a member of the Educational Benefit Cooperative (EBC). EBC is a school district cooperative designed for both elementary and secondary school districts in the Chicago metropolitan area. EBC began operations July 1, 1984. Basic life, AD&D, Medical, and Dental coverage are available through EBC to 87 member school districts in Illinois. A board of directors made up of representatives from various member districts governs the pool and contracts with Gallagher Benefit Services for administrative and consulting services.

Initial funding rates for each district are based upon plan design and prior experience, if available. Risk is spread among the membership by first determining the average percentage funding adjustment necessary to meet the Cooperative’s maximum cash liabilities.

Once the average cooperative-wide funding adjustment has been determined, the Board employs a banding formula on the PPO, HMO, and Dental plans based on the 12-month paid loss ratios of the individual districts. All of the PPO plans of each district are combined for experience rating. The claim component of the loss ratio consists of: all individual claims under $75,000, a per employee per month allocation of claims between $75,000 and $1,000,000, effective July 1, 2012.

PPO specific stop loss insurance is purchased to protect the Cooperative from claims in excess of $1,000,000 per person, per plan year. Aggregate insurance of 125% of expected claims is also purchased. The stop loss vendor is Symetra. HMO specific stop loss insurance is purchased from Blue Cross Blue Shield of Illinois for claims in excess of $200,000 per person, per plan year.

The Incurred but not Reported (IBNR) claim liability is set at 15% of the prior 12-months claims for the Cooperative. In the event of member termination, the Cooperative will pay up to 15% of the immediate 12-months paid claims figure for terminal liability for claims incurred prior to termination. Any excess monies are held in the Working Cash Fund and can be allocated at the discretion of the Board of Directors.

Fiscal Management

The District has implemented numerous safeguards to avoid future deficit spending, including a change in revenue receipt accounting (that provides a more accurate statement of financial condition), and a yearly resolution of the Board of Education whereby reaffirming its commitment to a balanced budget. Additionally, Administration and the Board of Education continue to review, assess, and monitor the District's financial health on a monthly basis.

- xvi -

The District has experienced significant declining enrollment over the past several years. That enrollment trend continues on an annual basis, though noticeably slowing in future years. More concerning than student population trends is the trend of the State of Illinois’ funding. The level of state funding is extremely uncertain as the State continues to tackle its own budgetary issues.

The Board has resolved to reducing budgets, as needed, over the next few years in order to ensure that revenues and expenses are even and the District does not repeat the historical deficit spending patterns that directly contributed to the District's near insolvency. The District’s historical, current, and projected budget reductions are based on the belief that the most important interactions that take place are between the teacher and the student. The reductions implemented will help the District continue to advance its commitment of maintaining a balanced budget while supporting student learning, in order that all students have the opportunity to achieve at their highest level.

ISBE Financial Profile Status

Pursuant to Section 1A-8 of the School Code, Illinois State Board of Education (ISBE) is required to monitor the finances and identify districts that are in or moving towards financial difficulty. One of the monitoring methods used by ISBE is each district's financial profile score. A financial profile score is annually calculated based upon the Annual Financial Report (AFR) data provided by each District in the State of Illinois.

The profile score is generated from five indicators:

1. Fund Balance to Revenue Ratio 2. Expenditure to Revenue Ratio 3. Days Cash on Hand 4. Percent of Short-Term Borrowing Ability Remaining 5. Percent of Long-Term Debt Margin Remaining

Fund Balance to Revenue Ratio – This indicator reflects the overall financial strength of the District. It is the result of dividing the ending fund balances by the revenues for the four operating and negative IMRF/SS funds. Operating Funds are the Educational, Operations and Maintenance, Transportation and Working Cash Funds.

FY12 Estimated: For FY12, the score of 2 is estimated to be maintained from a score of 2 in FY11, and improved from a score of 1 in FY10.

Analysis: It will be difficult to make improvement to the Fund Balance to Revenue Ratio without the District experiencing surpluses. The sale of property (for example) would NOT improve the District's score, as it would increase Capital Fund balances and not Operating Fund balances. With the significant program reductions made throughout the District, it is unlikely that surpluses would not be used to restore programs and/or reduce class size.

Path to Improvement: An addition of $1.1M of fund balance to the Operating Funds would increase the District's score to 3 and an addition of $4.6M of fund balance to the Operating Funds to increase the District's score to the maximum ranking of 4.

Expenditure to Revenue Ratio – This indicator identifies how much is expended for each dollar received. It is computed by dividing total expenditures for the Educational, Operations and Maintenance, and Transportation Funds by the revenues for those same funds plus Working Cash. The calculation also takes into account remaining balances of these funds at the end of the year if a district is scoring low for their Expenditure to Revenue Ratio. This is especially beneficial to districts that have saved for projects and are now incurring the expenditures for them or who have healthy fund balances even after spending a portion of their savings.


Analysis: The District has reached the maximum score allowable.

Maintenance Strategy: Maintaining the maximum score is dependent upon the District's continued resolve to adopt and achieve balanced budgets.

- xvii -

Days Cash on Hand – This indicator provides a projected estimate of the number of days a district could meet operating expenditures provided no additional revenues were received. It is computed by dividing the total expenditures of the Educational, Operations and Maintenance, and Transportation Funds by 360 days to obtain an average expenditure per day. Then the total cash on hand and investments for the same funds plus Working Cash are divided by the average expenditures per day. As with the Fund Balance to Revenue Ratio and the Expenditure to Revenue Ratio, the Working Cash Fund has now been incorporated into the calculation.

FY12 Estimated: For FY12, the score of 4 is estimated to improve from a score of 3 in FY11, and improved from a score of 2 in FY10.

Analysis: The District is estimated to reach the maximum score allowable for FY12. The improvements made in this area from FY10 to FY12 are significant. The score in FY10 was based upon cash available which included $11M in cash of loans. Had the District not issued the loans, there would have been a negative ($6M) cash balance. For FY11 and in FY12, the District's cash balance (and subsequent score) is based upon cash available that is free from loans (due to the successful November, 2010 referendum).

Path to Improvement: Maintaining the maximum score is dependent upon the District's continued resolve to adopt and achieve balanced budgets.

Percent of Short-Term Borrowing Ability Remaining – Districts often incur short-term debt due to several factors (i.e., delays in receipt of local revenues, etc.). For this indicator, the sum of unpaid Tax Anticipation Warrants is divided by 85% of the Equalized Assessed Valuation (EAV) multiplied by the sum of the tax rates for the Educational, Operations and Maintenance, and Transportation Funds.


Analysis: The District has reached the maximum score allowable.

Maintenance Strategy: Cash reserves coupled with maintaining a balanced budget should ensure that the District maintains is score of 4.

Percent of Long-Term Debt Margin Remaining – A district often incurs long-term debt for major expenditures such as buildings and equipment. This total is derived by the product of the district’s EAV multiplied by its maximum general obligation debt limitation, reduced by any outstanding long-term debt.

FY12 Estimated: For FY12, the score of 1 is estimated to be maintained from a score of 1 in FY11, and decreased from 3 in FY10.

Analysis: This score is the only one that has decreased since FY10; however, with the issuance of bonds, it was to be expected. Like many districts in Illinois, Cary has reduced expenditures, forgone supplies, delayed facility repairs/maintenance, and outsourced operations. At the same time, Cary (like many districts) was forced to increase cash balances by issuing long-term debt.

Path to Improvement: Payment of principal payments, along with increasing Equalized Assessed Valuation (EAV) is the key to improving this score. It was estimated that the District's score would improve by the end of FY12; however, due to a reduction in EAV of 11%, the District's score was maintained for FY12, rather than improved. Should EAV be maintained in FY13 and FY14, the District’s score should increase to 2 by the end of FY14. Continued degradation of EAV, however, will delay the District's improvement of this score.

- xviii -

1.5

2

2.5

3

3.5

4

FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12Est

Adjusted Profile Score

The District's Adjusted Profile Score is estimated to improve from 2.9 in FY11 to 3.0 for FY12. This would be the second consecutive year of improvement for the District, as last year the District improved from an Adjusted Profile Score of 2.1 in FY10 to 2.9 in FY11. The District's designation is estimated to be maintained at “Early Warning” in FY12. Again, this is much improved from its designation as “Watch” in FY10. The District has reached the maximum score in all but two of the five review categories. Should either category improve from FY12 to FY13, the District would move from “Early Warning” to “Financial Review.”

The District's significant improvement to its Profile Score is a direct result of the referendum (which eliminated the need for Tax Anticipation Warrants, increased cash balances, and restored fund balance levels) and the balanced budget efforts made by the Board of Education and Administration. The estimated increase to 3.0 and “Early Warning” status represents the highest rating the District has received in six years.

Regression from the District's current financial resolve would only erode the District's profile score, financial status, and potentially put the District back on the “Watch” list. Continuing to monitor the District's Financial Profile Score will provide the Board, Administration, and community a clear indication as to the District's financial wellbeing. Having a good understanding of the District’s financial position will allow the District to identify available resources and allocate those resources towards priority items on the Target 26 plan (the District's strategic plan).

Future Financial Outlook

The District’s financial outlook for the future continues to be positive, albeit with some caution. The District’s student enrollment has declined over the past several years, and that trend is expected to continue with no significant impact on the budget. The State of Illinois funding continues to lack consistency and creates concerns for budgeting and forecasting.

The District has four school buildings, one of which accommodates the administrative facilities. The buildings range in age from forty-seven years to six years old and are in predominately good condition due to the District’s proactive maintenance program.

The District’s capital improvement budget for FY13 is approximately $650K, designated mainly for life safety renovations and scheduled building replacements of roofing and paving. Funding for these projects will be from accumulated fund balances and local sources.

Closing Statement and Acknowledgements

It is our intention that this Comprehensive Annual Financial Report will provide the District's Board of Education, Administration, outside investors, and interested local citizens with a most meaningful financial presentation. We hope that all readers of this report will obtain a clear and concise understanding of the District's financial condition as of June 30, 2012.

- xix -

We wish to thank the entire staff of the Finance Department for their dedicated service in the preparation of the Comprehensive Annual Financial Report on a timely basis. The staff of the Finance Department: Jill Scarpino, Cherie Scott, Anne Robinson, Debora Kreston, and Marguerite Collelo have our gratitude for their daily contributions to the District, its residents, and the Finance Department.

We would also like to extend our appreciation to the staff of Eder Casella & Co., the District's auditors. Their professionalism and cooperation are greatly appreciated. The dedication of the District's staff, in cooperation with the staff of Eder Casella & Co., provided the cooperative working relationship necessary for the completion of this document.

Finally, credit also must be given to the Board of Education for their unfailing support for maintaining the highest standards of professionalism in the management of the District's finances.

Respectfully submitted,

Brian Coleman T. Ferrier Superintendent Director of Finance & Operations

- xx -

‐ xxi ‐

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 PRINCIPAL AND ELECTED OFFICIALS

JUNE 30, 2012

BOARD OF EDUCATION

The seven members of the Board of Education are elected to four-year terms. They are volunteers and serve as at-large members.

Christopher Spoerl Board President Committee of the Whole Chair Term Expires: April, 2013 Chris Jenner Board Secretary Policy Committee Chair Term Expires: April, 2013 Floyd Myers Board Member Community Engagement Committee Chair Term Expires: April, 2013

Jason Larry Board Vice-President Term Expires: April, 2015 Scott Coffey Board Member Finance Committee Chair Term Expires: April, 2015 Julie Jette Board Member Curriculum Committee Chair Term Expires: April, 2013 Kevin Carrick Board Member Term Expires: April, 2015

Based on the legislative authority codified in Illinois School Code, the Board of Education has the following power:

The corporate power to sue and be sued in all courts. The power to levy and collect taxes and to issue bonds. The power to contract for appointed administrators, teachers, and other personnel as

well as for goods and services.

‐ xxii ‐

Board Meetings

The Board of Education holds business meetings at 7:00 p.m. on the last Monday of the month, rotating the meeting location among the four school buildings. Residents of the community are invited and encouraged to attend Board of Education meetings and observe the members’ deliberations. Community interest and feedback provide an important advantage to the Board Members as they set general school policy and establish guidelines to ensure that District programs are properly administered.

For meeting details, please visit www.cary26.org.

‐ xxiii ‐

ADMINISTRATION

Brian Coleman, Superintendent Mr. Coleman has served as Superintendent of the District since 2008, as an employee of the District for the past twenty-two years, and been a member of the community since 1990. Prior to his Superintendency, Mr. Coleman served as Associate Superintendent for one year, as a Principal for eleven years, and as a teacher in the District for six years. Mr. Coleman holds a Master’s degree in Educational Leadership from Northern Illinois University and is currently pursuing a Doctorate in Education.

Directors

Valerie McCall, Director of Curriculum & Instruction

Ms. McCall has served as the Director of Curriculum & Instruction since 2011. Prior to that, she was the Director of Reading in Elmwood Park CUSD #401 for four years. Ms. McCall has experience working with gifted populations, as she served as the Director of the Saturday Enrichment and Distance Learning Program for the Center for Talent Development at Northwestern University. Ms. McCall holds a Master’s degree in Educational Leadership from Bradley University and is a National Board Certified Teacher.

Jennifer Thomas, Director of Special Services

Ms. Thomas has served as the Director of Special Services since 2006. Prior to that, she was the Director of Special Services in the Brookline Public Schools, in Brookline, Massachusetts. She started her career as a school psychologist, then worked as an Educational Specialist for the Massachusetts Department of Education. Ms. Thomas has a Bachelor’s degree in Psychology and a Master’s degree in School Psychology from Northern Illinois University. She is a Doctoral Candidate in Educational Psychology at Indiana University.

T. Ferrier, Director of Finance & Operations/Treasurer

Ms. Ferrier has served as the Director of Finance & Operations/Treasurer since 2009. Prior to that, she served as Director of Fiscal Services for Consolidated School District #158 for three years and worked in Personnel for Glenbard Township High School District #87 for four years. Ms. Ferrier holds a Master’s degree in School Business Management from Northern Illinois University and a Bachelor’s degree in Business Administration with a major in accounting from Northwood University.

‐ xxiv ‐

Coordinators

Barb Cummins, Human Resources Coordinator

Ms. Cummins has served as the Human Resources Coordinator since 2007 and has worked for the District for the past twenty-three years. She holds a PHR from the Human Resources Certification Institute and is a member of the Society for Human Resources Management.

Mariel Doty, English Learning Coordinator

Mrs. Doty has served as the English Learning Coordinator since 2007. Mrs. Doty holds two Master's degrees, this first from Northern Illinois University in Curriculum and Instruction with a focus in Literacy and the second from Aurora University in Educational Leadership.

Steve Fields, Operations Coordinator

Mr. Fields has served as the Operations Coordinator since 2008. Prior to that he served as Director of Facilities at Barrington School District 220 and Community High School District 155. He also worked for ServiceMaster Corporation and taught Industrial Arts at Lake Zurich High School. Mr. Fields graduated from Western Illinois University with a Bachelor’s degree in Industrial Education.

Andrew Fitzsimons, Technology Coordinator

Mr. Fitzsimmons has served as the Technology Coordinator since 2008. Prior to that, he served as the Director of Technology and in various other technology roles for West Aurora School District 129 for ten years. Mr. Fitzsimmons holds a Bachelor’s degree from DeVry Institute of Technology.

‐ xxv ‐

Jenny Aherne, Special Education Program Coordinator

Ms. Aherne has served as the Special Education Program Coordinator since 2011. Prior to that, she was a School Psychologist within the District for thirteen years. Ms. Aherne has a Bachelor’s degree in Psychology from St. Joseph’s University, Philadelphia and has a Master’s degree in Educational Psychology and an Educational Specialist degree from National-Louis University, Chicago. Ms. Aherne received her Administrative Certificate from Concordia University, Chicago.

Jill Scarpino, Finance Coordinator

Ms. Scarpino has served as the Finance Coordinator since 2009. Prior to that, she was employed as the Billing Coordinator at Words of Wisdom, the textbook distribution division of Career Education Inc. Ms. Scarpino came to the District with over 20 years of accounting experience and holds a Bachelor’s degree in Business Administration from Western Illinois University.

Building Administration

Chad Nass, Principal, Briargate Elementary School

Mr. Nass has served as the Building Principal of Briargate Elementary School since 2007. Prior to being a Principal, he was a physical education teacher within the District. Mr. Nass has an Undergrad degree from University of Wisconsin-Steven Point, a Master's degree in Teacher Leadership from North Park University, and an Administrative Certificate from Concordia.

Natalie Wishne, Principal, Three Oaks Elementary School

Mrs. Wishne has served as the Building Principal of Three Oaks School since 2002. Prior to that, Ms. Wishne was employed by Palatine School District 15 for five years as an Assistant Principal and fifteen years as an elementary teacher. Ms. Wishne holds a Master's degree in Administration from Northern Illinois University and a Bachelor’s degree in Education from Western Illinois University.

‐ xxvi ‐

Thom Gippert, Principal, Deer Path Elementary School

Mr. Gippert has been Building Principal at Deer Path Elementary School since 2010. He is entering his sixteenth year with the District and has served in many roles, including a PE teacher at multiple buildings, Dean of Students at Cary Junior High School and Building Principal at Maplewood Elementary School. Mr. Gippert has a Bachelor’s degree in Communications Studies from Northern Illinois University, Bachelor of Education from St. Ambrose University and Master’s degree in Educational Administration from Northern Illinois University.

Linda Goeglein, Principal, Cary Junior High

Mrs. Goeglein has served as Building Principal of Cary Junior High School since 2005. Prior to that, Mrs. Goeglein was the Assistant Principal at Cary Junior High School for five years. Mrs. Goeglein holds an Educational Specialist degree from Argosy University, a Master’s in Education Administration degree from Northern Illinois University, and a Bachelor’s degree in Physical Education from University of Wisconsin-Whitewater.

Sara Elfering, Assistant Principal, Cary Junior High

Mrs. Elfering has served as Assistant Principal of Cary Junior High School since 2011. Prior to that, she served as a Middle School Language Arts and Social Studies teacher in Hawthorn District 73 for seven years. Mrs. Elfering holds a Bachelor’s degree in Education from Loyola University, a Master’s degree in Teaching and Leadership from University of Illinois. Mrs. Elfering and is currently completing her Ed.D. in Curriculum and Instruction in Literacy Education from Northern Illinois University.

Eric Larson, Assistant Principal, Cary Junior High

Mr. Larson has served as Assistant Principal of Cary Junior High School since 2011. Prior to that, he taught Algebra 1 and 2 in District 102 at Aptakisic Junior High School. Mr. Larson holds a Master's degree in Educational Leadership and Administration from Northern Illinois University.

- 1 -

EDER, CASELLA & CO. A PROFESSIONAL CORPORATION

CERTIFIED PUBLIC ACCOUNTANTS ———

[email protected] www.edercasella.com

5400 West Elm Street, Suite 203 800 South Northwest Highway, Suite 100 McHenry, Illinois 60050 Barrington, Illinois 60010 Telephone: (815) 344-1300 Telephone: (847) 382-3366 Fax: (815) 344-1320 Fax: (847) 382-0608

INDEPENDENT AUDITOR’S REPORT

To the Board of Education Cary Community Consolidated School District No. 26 Cary, Illinois We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 as of and for the year ended June 30, 2012, which collectively comprise the District’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of Cary Community Consolidated School District No. 26’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Cary Community Consolidated School District No. 26 as of June 30, 2012, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated October 10, 2012, on our consideration of Cary Community Consolidated School District No. 26’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the Illinois Municipal Retirement Fund historical data

- 2 -

and budgetary comparison information on pages 3 through 10 and 35 through 45 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Cary Community Consolidated School District No. 26’s basic financial statements. The supplemental financial information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. The information, except for the average daily attendance figure included in the computation of operating expense per pupil and per capita tuition charges, has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The accompanying introductory and statistical sections, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. This information has not been subjected to the auditing procedures applies in the audit of the basic financial statements and, accordingly, we express no opinion on them.

EDER, CASELLA & CO. Certified Public Accountants McHenry, Illinois October 10, 2012

REQUIRED SUPPLEMENTARY INFORMATION

- 3 -

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 MANAGEMENT’S DISCUSSION AND ANALYSIS

JUNE 30, 2012

As Management of Cary Community Consolidated School District No. 26 (District), we offer readers of the District’s statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2012.

FINANCIAL HIGHLIGHTS

The assets of the District exceeded its liabilities at June 30, 2012 by $1,823,037 (net assets).

The District’s total net assets increased by $2,266,678.

At June 30, 2012, the District reported combined ending fund balances of $5,531,032, an increase of $535,676 in comparison with the prior year. 3% of this fund balance is available for spending at the District’s discretion (unassigned fund balance - $151,511).

At June 30, 2012, the unassigned fund balance for the General Fund was $151,511, or less than 1% of total General Fund expenditures.

The District’s total long-term debt decreased by $2,628,171 (6%) during the year ended June 30, 2012. The key factor in this decrease was the scheduled principal payments on the bonds and the pay off of the lease/purchase agreement of $102,597.

OVERVIEW OF FINANCIAL STATEMENTS

This discussion and analysis are intended to serve as an introduction to the District’s basic financial statements. The basic financial statements comprise three components:

Government-wide financial statements, Fund financial statements, and Notes to the financial statements

This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements - The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business. The Statement of Net Assets presents information on all of the District’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The Statement of Activities presents information showing how the District’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes). Both of the government-wide financial statements distinguish functions of the District that are principally supported by taxes and intergovernmental revenues (governmental activities). Governmental activities include instruction, support services, operations and maintenance, transportation, food services, and certain other activities and expenses such as payments to other districts and governmental units, and interest and fees. The government-wide financial statements can be found on pages 11 and 12 of this report. Fund financial statements - A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other

- 4 -

state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into two categories: governmental funds and fiduciary funds. Governmental Funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the District’s near-term financing decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains six individual governmental funds. Information is presented separately in the governmental fund Balance Sheet and in the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the General, Operations and Maintenance, Debt Services, Transportation, Illinois Municipal Retirement/Social Security, and Capital Projects Funds, all of which the District considers to be major funds. The District adopts an annual budget for each of the funds listed above. A budgetary comparison statement, which is required supplementary information, has been provided for the General Fund and each major special revenue fund to demonstrate compliance with this budget. The basic fund financial statements can be found on pages 13 through 16 and the required supplementary information can be found on pages 35 through 45 of this report. Fiduciary Funds - Fiduciary funds are used to account for assets held for others, such as student activity funds. Fiduciary funds are not reflected in the government-wide financial statements because the assets of these funds are not available to support the District’s operations. The basic fiduciary fund financial statement can be found on page 17 of this report. Notes to the Financial Statements - The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 18 through 34 of this report. Other Information - In addition to the basic financial statements, accompanying notes, and required supplementary information, this report also presents certain supplementary information concerning the District’s progress in meeting its obligation to provide fully adequate educational services and extracurricular activities to all of its resident’s students. Supplemental financial information can be found on pages 46 through 64 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the District, assets exceeded liabilities by $1,823,037 at June 30, 2012. The following table presents a summary of the District’s net assets for the years ended June 30, 2012 and 2011:

- 5 -

2012 2011

Current and Other Assets 32,848,163$ 30,741,259$ Capital Assets 34,857,638 35,700,398 Total Assets 67,705,801$ 66,441,657$

Long-Term Liabilities Outstanding 38,572,690$ 41,226,857$ Other Liabilities 27,310,074 25,658,441

Total Liabilities 65,882,764$ 66,885,298$

Net AssetsInvested in Capital Assets, Net of Related Debt 14,219,672$ 12,398,118$ Restricted 2,460,563 3,774,526 Unrestricted (14,857,198) (16,616,285)

Total Net Assets 1,823,037$ (443,641)$

Cary Community Consolidated School District No. 26's Net Assets

Governmental Activities

By far the largest portion of the District’s net assets reflects its investment in capital assets (e.g., land, buildings, equipment, etc.); less any related debt used to acquire those assets that is still outstanding. The District uses these assets to provide educational services and extracurricular activities for the students of the local community; consequently, these assets are not available for future spending. Although the District’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The following table presents a summary of changes in net assets for the years ended June 30, 2012 and 2011:

2012 2011Revenues

Program RevenuesCharges for Services 1,338,305$ 1,538,205$ Operating Grants and Contributions 6,842,516 7,000,392 Capital Grants and Contributions 43,484 10,330

General RevenuesProperty Taxes 22,221,041 21,686,584 Other Taxes 288,806 313,944 Grants and Contributions not Restricted to Specific Activities 2,081,635 3,389,801 Unrestricted Investment Earnings 32,233 20,220 Gain/(Loss) on Sale of Capital Assets 40,746 (129,859)

Total Revenues 32,888,766$ 33,829,617$ Expenses

InstructionRegular Programs 9,942,902$ 10,878,782$ Special Education Programs 3,819,612 3,737,447 Other Instructional Programs 1,482,148 1,343,697

Support ServicesPupils 2,333,953 2,402,329 Instructional Staff 522,627 567,128 General Administration 869,462 947,917 School Administration 852,593 934,816 Business 448,804 425,451 Facilities Acquisition and Construction 13,168 4,174 Operations and Maintenance 1,587,871 2,157,869 Transportation 1,587,045 1,608,663 Food Services 508,614 556,402 Central 510,041 548,641 Other Support Services 137,951 134,482

Community Services 27,269 9,059 Payments to Other Districts and Governmental Units 709,999 770,935 Interest and Fees on Long-Term Debt 2,099,276 1,697,862 On-Behalf Retirement Contributions 3,168,753 3,178,028

Total Expenses 30,622,088$ 31,903,682$

Change in Net Assets 2,266,678$ 1,925,935$ Net Assets - Beginning of Fiscal Year (443,641) 7,429,939 Net Assets Adjustment - (9,799,515) Net Assets - End of Fiscal Year 1,823,037$ (443,641)$

Cary Community Consolidated School District No. 26's Change in Net AssetsGovernmental Activities

- 6 -

The District’s total revenues decreased $940,851 (3%) compared to the prior year. The most significant factor of this decrease was a decrease in Grants and Contributions not Restricted to Specific Activities due to lower General State Aid. Overall expenditures decreased $1,281,594 (4%) compared to the prior year. This decrease is primarily attributable to a decrease in Regular Educational Programs of $935,880. FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the District’s net resources available for spending at the end of the fiscal year. At June 30, 2012, the District reported combined ending fund balances of $5,531,032, an increase of $535,676 in comparison with the prior year. The increase is primarily due to continued cutting of costs and proceeds of $204,800 from the sale of assets. The General Fund is the chief operating fund of the District. At June 30, 2012, unassigned fund balance was $151,511. As a measure of the General Fund’s liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. Unassigned fund balance represents less than 1% of total General Fund expenditures. The Debt Service Fund’s fund balance decreased $245,461 in comparison to prior year. This decrease is due to the scheduled debt payments including the final payment of the Building Bonds, Series 1992. Finally, the Capital Projects Fund’s fund balance increased $440,832 in comparison to prior year. This increase was the result of the District allocating $446,000 of General State Aid to the fund, which will be used for future capital projects. The remaining funds did not have activity during the year that resulted in a significant change in the respective fund balances. GENERAL FUND BUDGETARY HIGHLIGHTS Budgeted revenues exceeded actual revenues by $1,917,600. This was primarily attributable to lower than expected General State Aid. Budgeted expenditures exceeded actual expenditures by $1,520,501. This was primarily attributable to lower than expected Board of Education Services and On-Behalf Payments expenses. CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets – The District’s investment in capital assets as of June 30, 2012 amounts to $34,857,638 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements other than buildings, and equipment other than transportation. The following are significant capital asset events during the year ended June 30, 2012: Purchase of Smartboards - $153,092 Purchase of copiers - $95,188 Purchase of laptops - $62,755 Disposal of copiers - $319,493 The following table presents a summary of capital assets for the years ended June 30, 2012 and 2011:

- 7 -

2012 2011

Land 3,473,938$ 3,473,938$ Buildings 29,602,777 30,363,706 Improvements Other than Buildings 573,211 581,098 Equipment Other than Transportation 1,207,712 1,281,656

Total 34,857,638$ 35,700,398$

Cary Community Consolidated School District No. 26's Capital Assets(net of depreciation)


Further detail of the District’s capital assets can be found in note 3 on pages 25 and 26 of this report. Long-term debt – At June 30, 2012, the District had total debt outstanding of $38,374,794. The following table presents a summary of outstanding debt for the years ended June 30, 2012 and 2011:

2012 2011

General Obligation Bonds 37,650,000$ 39,991,358$ Alternative Revenue Source Bonds 700,000 880,000 Lease/Purchase Agreements - 102,597 SEDOM Bonds 24,794 29,010

Total 38,374,794$ 41,002,965$

Cary Community Consolidated School District No. 26's Outstanding DebtGovernmental Activities

Further detail of the District’s debt obligations can be found in note 4 on pages 26 and 27 of this report. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES During fiscal year 2012, operating fund balances (Fund 10, Fund 20, Fund 40, Fund 50, and Fund 70) increased to $1.5 million from $1.2 million in the prior year. This increase was primarily driven by the newly negotiated union contract that yielded reductions in salaries, benefits, and the elimination of retirement incentives.

Fiscal year 2012 represents year three of the District's five-year financial recovery plan. As the five-year financial plan continues to identify budget reductions required to maintain a balanced budget, the District must continue to provide the resources necessary to meet the students’ needs while diligently exploring new revenue sources, controlling expenses, and staying within the five-year plan parameters.

The Board has resolved to reducing budgets, as needed, in order to ensure that revenues and expenses are even and the District does not repeat the historical deficit spending patterns that directly contributed to the District’s near insolvency. The following graph depicts the District’s expenditures, revenues, and fund balance trends for the Operating Funds (Fund 10, Fund 20, Fund 40, Fund 50, and Fund 70):

$(10)

$(5)

$‐

$5

$10

$15

$20

$25

$30

$35

2008 2009 2010 2011 2012

Millions

Operating Expenditures, Revenues, & Fund Balance by Fiscal Year

Expenditures Revenues Fund Balance

- 8 -

The following is a graphic illustration comparing fiscal years’ operating revenues by source exclusive of levy receipts. This graph helps to visually identify the District's loss of General State Aid, which has plummeted from fiscal year 2008 when the District received $5.4 million in State Aid to the $2.1 million received in fiscal year 2012. This represents a loss of revenue of $3.3 million. Furthermore, this revenue stream is projected to continue to decline as enrollment declines.

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

$5.5

$6.0

2008 2009 2010 2011 2012

Millions

Revenues by Source Exclusive of Levy Receipts

General State Aid State & Federal Grants Fees for Services/Other

Additionally, state and federal grants appear as though they significantly increased and fluctuated between fiscal year 2008 and 2012; however, this is primarily due to the ARRA grants which were finalized in fiscal year 2012 and eliminated from the fiscal year 2013 budget. That being said, this revenue stream is not expected to increase and/or decrease from FY12 levels in future year.

The following is a graphic illustration comparing fiscal years’ operating revenues (exclusive of On-Behalf Payments):

$28

$29

$30

$31

$32

$33

$34

2008 2009 2010 2011 2012

Millions

Revenues

As a whole, revenues have decreased since fiscal year 2008 by 5% or ($1.5M). At the same time, the District's expenditures have also decreased. They have decreased by 15% or ($5.2M), the majority of which correlates directly to a reduction in salaries and benefits.

The following is a graphic illustration comparing fiscal years’ expenses (exclusive of On-Behalf Payments):

- 9 -

$0

$5

$10

$15

$20

$25

$30

2008 2009 2010 2011 2012

Millions

Expenditures

Salaries & Benefits All Other Expenses

Future Outlook

The District's fiscal year 2013 Budget and Financial Plan for outlaying future years are subject to many complex economic, social, and political risks and uncertainties, many of which are outside the ability for the District to control. These include, but are not limited to:

• State’s economic situation and subsequent ability to provide funding. Historically when the State (already billions in debt) lacks adequate funds, it considers/implements pro-rations funding. Moreover, the State’s acknowledgement versus payment of obligations continues to be a significant factor, as they become more delinquent in their payments to the District.

• Changes in legislation governing the structure of tax levies. This year, a legislative bill was proposed that could have had a significant reduction on the District's major source of revenue, property taxes. This legislation limits the District's ability to fully access its Property Tax Extension, should the District's overall EAV decline. This could have a drastic negative impact on the District in coming years.

• Future CPI trends that affect the current structure of tax levies. The magnitude of Consumer Price Indices (CPI) affecting subsequent tax years is always a factor. Even subtle differences in the CPI driven limiting rate and in the collection rate could have a substantial impact on the amount of tax extension received by the District.

• Declining enrollment trends. The District continues to experience declining enrollment. In a recent enrollment projection study, it was projected that this trend is likely to continue before stabilizing, over the next several years.

• Unknown cost of collective bargaining agreements in years fiscal year 2015 and beyond. The Financial Plan includes the costs of step for fiscal year 2015 and beyond; however, there can be no assurance that actual settlements will not exceed the amounts included in the Financial Plan.

• Liability of pension rates. Currently the District’s IMRF contribution rate is in excess of 12% and likely to stay high for the next few years; however, the total amount paid is also dependent upon the total number of Illinois Municipal Retirement eligible employees retained.

• Liability of a potential shift in TRS pension obligation from the State to the District. TRS employer contribution rates are an outstanding liability over which the District has no control. Currently it is the responsibility of the State of Illinois government to contribute “on behalf of the employer payments” to the TRS system. Therefore, the District does not have a levy nor does it have an employer payment of TRS that is levied (similar to non-certified staff under the IMRF system). Legislation has been proposed that would shift this burden to the District (potentially over a period

- 10 -

of time); however, the shift in expenditures is not accompanied by a revenue source. Therefore, it would be up to the District to find budget reductions to cover these additional expenses.

• Potential expense of a national health-care system. At this time, the Financial Plan does not include estimates of the costs (or savings, if any) that may result if the federal government were to approve comprehensive changes to the nation’s health-care financing system. There is a risk that federal changes could have a materially adverse impact on the Financial Plan projections in future years; however, at this time, much of the factors related to the nation’s health-care system are unknown and therefore cannot be comprehensively evaluated/included in the Financial Plan.

• Outstanding capital needs of the District. At this time, the significant technological and structural capital needs of the District have not been factored into the Financial Plan; however, Administration’s plan is to utilize conservative budgeting as a method to “save-up” for these needs. Surpluses recognized from conservative budgeting and/or unexpected revenues would be reserved for future capital needs. This may not protect the District in the event of a sudden/unplanned capital replacement need; however, it may provide the District with a means for planning for future capital expenditures.

CONCLUSION

The fiscal year 2012 budget was the District's second consecutive balanced (and achieved) budget in many years. This did not come easily, especially given moving state revenue targets. It also did not come without a cost. The District’s commitment to balancing the budget has required difficult recommendations made by Administration and adopted by the Board of Education; however, these decisions have laid a solid foundation for the District's significant financial improvement. This foundation will be the cornerstone on which the District will be able to build (in the coming years) an affordable educational system that is geared towards maximizing the educational opportunities for the students of today and tomorrow.

REQUESTS FOR INFORMATION This financial report is designed to provide citizens, taxpayers, parents, students, investors, and creditors with a general overview of the District’s finances and to demonstrate its accountability for the money it receives. If there are questions about this report or additional information is needed please contact the District at the following address:

Cary Community Consolidated School District No. 26 Business Office

2115 Crystal Lake Road Cary, IL 60013

BASIC FINANCIAL STATEMENTS

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 GOVERNMENT-WIDE FINANCIAL STATEMENTS

STATEMENT OF NET ASSETS JUNE 30, 2012

ASSETS Cash and Cash Equivalents Investments, at Fair Value Property Taxes Receivable, net of allowance of $0 Due from Other Governments, net of allowance of $0 Other Accounts Receivable, net of allowance of $0 Prepaid Expenses Debt Issuance Costs, net of amortization Defeasance Asset, net of amortization Capital Assets (Note 3):

Land Depreciable Buildings, Property, and Equipment,

net of depreciation

Total Assets

LIABILITIES Accounts Payable and Accrued Expenses Payroll Liabilities Deferred Revenue Long-Term Liabilities

Due Within One Year Due in More Than One Year

Total Liabilities

NET ASSETS Invested in Capital Assets, net of related debt Restricted for:

Debt Service Transportation Retirement Capital Projects

Un restricted/( Deficit)

Total Net Assets


$ 13,789,224 5,564,010

11,617,439 556,208

85,965 433,009 400,200 402,108

3,473,938

31,383,700

$ 67,705,801

$ 1,636,896 5,422,544

20,250,634

2,680,435 35,892,255

$ 65,882,764

$ 14,219,672

1,301,441 413,593 123,988 621,541

(14,857,198)

$ 1,823,037

The Notes to Basic Financial Statements are an integral part of this statement.

- 11 -

Functions/Programs Governmental Activities

Instruction Regular Programs Special Education Programs Other Instructional Programs

Support Services Pupils Instructional Staff General Administration School Administration Business Facilities Acquisition and Construction Operations and Maintenance Transportation Food Services Central Other Support Services

Community Services Payments to Other Districts and

Governmental Units Interest and Fees on Long-Term Debt On-Behalf Retirement Contributions Total Governmental Activities

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 GOVERNMENT-WIDE FINANCIAL STATEMENTS

STATEMENT OF ACTIVITIES

$

$

YEAR ENDED JUNE 30, 2012

Expenses

9,942,902 3,819,612 1,482,148

2,333,953 522,627 869,462 852,593 448,804

13,168 1,587,871 1,587,045

508,614 510,041 137,951 27,269

709,999 2,099,276 3,168,753

30,622,088

Program Revenues

$

Charges for Services

539,562 102,102 64,943

262,640 10,746

358,312

$ 1,338,305

General Revenues Taxes

Operating Grants and

Contributions

$ 139,617 1,994,884

149,727

85,350

874,829 241,148

188,208

3,168,753 $ 6,842,516

Capital Grants and

Contributions

$ 35,582

7,902

$ 43,484

Property Taxes, Levied for General Purposes Property Taxes, Levied for Debt Service Personal Property Replacement Taxes

Grants and Contributions not Restricted to Specific Activities Unrestricted Investment Earnings Gain/(Loss) on Sale of Capital Assets

Total General Revenues

Change in Net Assets

Net Assets - July 1, 2011

Net Assets - June 30, 2012


- 12 -

Net (Expense) Revenue and Changes

in Net Assets


$ (9,228,141) (1,722,626) (1,267,478)

(2,248,603) (522,627) (869,462) (852,593) (448,804)

(13,168) (1,317,329)

(701,470) 90,846

(510,041) (137,951)

(27,269)

(521,791) (2,099,276)

$ (22,397,783)

$ 18,909,356 3,311,685

288,806 2,081,635

32,233 40,746

$ 24,664,461

$ 2,266,678

(443,641)

$ 1,823,037

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 FUND FINANCIAL STATEMENTS

BALANCE SHEET GOVERNMENTAL FUNDS

JUNE 30,2012

Operations and General Maintenance Debt

Fund Fund Services Fund

ASSETS

Cash and Cash Equivalents $ 6,326,798 $ 896,146 $ 4,249,569 Investments, at Fair Value 5,564,010 Property Taxes Receivable, net of allowance of $0 8,160,853 867,478 1,789,325 Due from Other Governments, net of allowance of $0 347,796 Other Accounts Receivable, net of allowance of $0 55,838 30,127 Prepaid Expenses 433,009

Total Assets $ 20,888,304 $ 1,793,751 $ 6,038,894

LIABILITIES AND FUND BALANCE

LIABILITIES Accounts Payable and Accrued Expenses $ 585,532 $ 216,780 $ 31,293 Payroll Liabilities 5,353,367 9,950 Deferred Revenue 14,364,885 1,421,001 3,082,729 Total Liabilities $ 20,303,784 $ 1,647,731 $ 3,114,022

FUND BALANCE Nonspendable

Prepaid Expenses $ 433,009 $ $ Restricted

Debt Services 2,096,692 Illinois Municipal Retirement Fund Social Security Transportation Capital Projects

Assigned Operations and Maintenance 146,020 Debt Services 828,180 Transportation Illinois Municipal Retirement Fund/Social Security Capital Projects

Unassigned 151,511 Total Fund Balance $ 584,520 $ 146,020 $ 2,924,872

Total Liabilities and Fund Balance $ 20,888,304 $ 1,793,751 $ 6,038,894


- 13-

Transportation Fund

$ 704,225

290,535 208,412

$ 1,203,172

$ 8,040 22,618

502,014 $ 532,672

$

413,593

256,907

$ 670,500

$ 1,203,172

Illinois Municipal RetiremenU

Social Security Fund

$

$

$

$

$

$

$

541,614

509,248

1,050,862

36,609 880,005 916,614

78,450 45,538

10,260

134,248

1,050,862

$

$

$

$

$

$

$

Capital Projects

Fund

1,070,872

1,070,872

621,541

449,331

1,070,872

1,070,872

$

Total Governmental

Funds

13,789,224 5,564,010

11,617,439 556,208

85,965 433,009

$ 32,045,855

$ 841,645 5,422,544

20,250,634 $ 26,514,823

$ 433,009

2,096,692 78,450 45,538

413,593 621,541

146,020 828,180 256,907

10,260 449,331 151,511

$ 5,531,032

$ 32,045,855


RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS

JUNE 30, 2012

Total Fund Balances - Governmental Funds

Amounts reported for governmental activities in the Statement of Net Assets are different because:

Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.

Capital Assets $ 56,620,439 Accumulated Depreciation on Capital Assets (21,762,801~

Deferred charges and credits for debt issue discounts or premiums and other debt issue costs are not financial resources and therefore are not reported in the funds.

Debt Issuance Costs, net of related amortization $ 400,200 Defeasance Costs, net of related amortization 402,108 Bond Discounts, net of related amortization 246,298 Bond Premiums, net of related amortization (444,194~

Some liabilities are not due and payable in the current period and therefore are not reported in the funds.

Bonds and Notes Payable $ (38,374,794 ) Accrued Interest on Long-Term Debt (795,251)

Net Assets of Governmental Activities


- 14-

$ 5,531,032

34,857,638

604,412

(39,170,045~

$ 1,823,037


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS


Operations and General Maintenance Debt Transportation

Fund Fund Services Fund Fund REVENUES

Property Taxes $ 16,227,297 $ 1,350,524 $ 3,311,685 $ 508,103 Payments in Lieu of Taxes 135,369 93,437 Tuition 123,179 Transportation Fees 10,746 Earnings on Investments 24,331 1,384 2,367 1,564 Food Service 358,312 District/School Activity Income 83,915 Textbooks 437,288 Other Local Sources 84,004 309,479 State Aid 2,153,020 90,198 820,802 874,829 Federal Aid 1,289,153 13,257 On-Behalf Payments 3,168,753

$ 24,084,621 $ 1,858,279 $ 4,134,854 $ 1,395,242

EXPENDITURES Current

Instruction Regular Programs $ 8,712,229 $ $ $ Special Education Programs 3,631,901 Other Instructional Programs 1,461,541

Support Services Pupils 2,204,819 6,492 Instructional Staff 503,316 General Administration 841,578 School Administration 808,499 Business 388,518 Facilities Acquisition and Construction 13,168 Operations and Maintenance 1,489,958 Transportation 1,444,048 Food Services 485,723 Central 351,712 Other Support Services 137,951

Community Services 23,839 Payments to Other Districts and Governmental Units 709,999

Debt Service Principal 2,701,813 Interest and Fees 1,971,225

Capital Outlay 475,164 184,864 On-Behalf Payments 3,168,753

$ 23,905,542 $ 1,687,990 $ 4,673,038 $ 1,450,540

EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES $ 179,079 $ 170,289 $ (538,184) $ (55,298)

OTHER FINANCING SOURCES (USES) Interfund Transfers $ $ (292,723) $ 292,723 $ Sale or Compensation for Fixed Assets 204,800

$ $ (292,723) $ 292,723 $ 204,800

NET CHANGE IN FUND BALANCES $ 179,079 $ (122,434) $ (245,461) $ 149,502

FUND BALANCES - JULY 1, 2011 405,441 268,454 3,170,333 520,998

FUND BALANCES - JUNE 30, 2012 $ 584,520 $ 146,020 $ 2,924,872 $ 670,500


- 15-

Illinois Municipal Retirement! Capital Total

Social Security Projects Governmental Fund Fund Funds

$ 823,432 $ $ 22,221,041 60,000 288,806

123,179 10,746

882 1,705 32,233 358,312

83,915 437,288

7,423 400,906 446,000 4,384,849

1,302,410 3,168,753

$ 884,314 $ 455,128 $ 32,812,438

$ 98,423 $ $ 8,810,652 187,711 3,819,612 20,607 1,482,148

122,642 2,333,953 19,311 522,627 19,770 861,348 44,094 852,593 34,607 14,296 437,421

13,168 19,566 1,509,524

139,517 1,583,565 485,723

40,478 392,190 137,951

3,430 27,269 709,999

2,701,813 1,971,225

660,028 3,168,753

$ 750,156 $ 14,296 $ 32,481,562

$ 134,158 $ 440,832 $ 330,876

$ $ $ 204,800

$ $ $ 204,800

$ 134,158 $ 440,832 $ 535,676

90 630,040 4,995,356

$ 134,248 $ 1,070,872 $ 5,531,032


RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE

STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2012

Net Change in Fund Balances - Total Governmental Funds

Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeds depreciation expense in the current period.

Depreciation Expense Capital Outlays

In the Statement of Activities, only the gain or loss on the sale of capital assets is reported, whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balance by the undepreciated balance of the capital assets sold.

Gain/(Loss) on Sale of Capital Assets

Donated capital assets used in governmental activities are not current financial resources and therefore are not reported as revenue in the governmental funds.

Assets Contributed to the District

Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.

Amortization of Debt Issuance Costs Amortization of Bond Discounts Amortization of Bond Premiums Amortization of Bond Defeasance Asset Accrued Interest Accreted Interest

Repayment of long-term debt requires the use of current financial resources of governmental funds and is therefore shown as an expenditure in the Statement of Revenues, Expenditures, and Changes in Fund Balances, but the repayment reduces long-term liabilities in the Statement of Net Assets and is therefore not reported in the Statement of Activities.

Repayment of Long-Term Debt

Change in Net Assets of Governmental Activities

$ (1,374,316) 660,028

$ (47,659) (25,533) 51,529

(52,884) 20,138

(73,642)


- 16-

$ 535,676

(714,288)

(164,054)

35,582

(128,051 )

2,701,813

$ 2,266,678


STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUNDS

JUNE 30,2012

Agency Fund -Student Activity

Fund

ASSETS Cash and Cash Equivalents $ 5,104

Total Assets $ 5,104

LIABILITIES Due to Activity Fund Organizations $ 5,104

Total Liabilities $ 5,104


- 17 -

- 18 -

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cary Community Consolidated School District No. 26’s (District) accounting policies conform to generally accepted accounting principles as applicable to local education agencies. The District’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). Governments are also required to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued through November 30, 1989 (when applicable) that do not conflict with or contradict GASB pronouncements. The more significant accounting policies established in GAAP and used by the District are discussed below.

A. Reporting Entity

The accompanying financial statements comply with the provisions of GASB Statement No. 14, The Financial Reporting Entity, in that the financial statements include all organizations, activities, and functions that comprise the District. Component units are legally separate entities for which the District (the primary entity) is financially accountable. Financial accountability is defined as the ability to appoint a voting majority of the organization’s governing body and either (1) the District’s ability to impose its will over the organization or (2) the potential that the organization will provide a financial benefit to, or impose a financial burden on, the District. Using these criteria, the District has no component units. In addition, the District is not included as a component unit in any other governmental reporting entity as defined by GASB pronouncements.

B. Basic Financial Statements – Government-Wide Statements

The District’s basic financial statements include both government-wide (reporting the District as a whole) and fund (reporting the District’s major funds) financial statements. Both the government-wide and fund financial statements categorize all of the primary activities of the District as governmental activities. The District does not have any business-type activities. In the government-wide Statement of Net Assets, the governmental activities column (a) is presented on a consolidated basis, and (b) is reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The District’s net assets are reported in three parts – invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets. The District first utilizes restricted resources to finance qualifying activities. The government-wide Statement of Activities reports both the gross and net cost of each of the District’s functions. The functions are also supported by general government revenues (property taxes, personal property replacement taxes, grants and contributions not restricted to specific activities, unrestricted investment earnings, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. Program revenues must be directly associated with the function (regular programs, special education programs,

NOTES TO FINANCIAL STATEMENTS (Continued)

- 19 -

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

B. Basic Financial Statements – Government-Wide Statements (Continued) payments to other districts and governmental units, etc.). Program revenues include charges to those who purchase, use, or directly benefit from goods, services, or privileges provided by a given function. Program revenues also include grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. The net costs (by function) are normally covered by general revenues (property taxes, personal property replacement taxes, grants and contributions not restricted to specific activities, unrestricted investment earnings, etc.). The District does not allocate indirect costs. This government-wide focus is more on the sustainability of the District as an entity and the change in the District’s net assets resulting from the current year’s activities.

C. Basic Financial Statements – Fund Financial Statements

The financial transactions of the District are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. The emphasis in fund financial statements is on the major funds. Nonmajor funds are summarized into a single column. GASB Statement No. 34 sets forth the minimum criteria (percentage of the assets, liabilities, revenues or expenditures of all governmental funds) for the determination of major funds. The District electively made all governmental funds major funds. 1. Governmental Funds

The focus of the governmental funds’ measurement (in the fund statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. The District reports these major governmental funds:

General Fund – The General Fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund. Educational, Working Cash, and Special Education levies are included in this fund.

Special Revenue Funds – The Special Revenue Funds (Operations and Maintenance Fund, Transportation Fund, and Illinois Municipal Retirement/Social Security Fund) are used to account for the proceeds of specific revenue sources that are restricted, committed, or assigned to expenditures for specified purposes other than debt service and capital projects.

Debt Services Fund – The Debt Services Fund is used to account for financial resources that are restricted, committed, or assigned to expenditures for the periodic payment of principal, interest and related fees on general long-term debt.


- 20 -

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basic Financial Statements – Fund Financial Statements (Continued)

1. Governmental Funds (Continued) Capital Projects Fund – The Capital Projects Fund is used to account for financial resources that are restricted, committed, or assigned to expenditures for the acquisition or construction of major capital facilities.

2. Fiduciary Funds

Fiduciary funds are used to report assets held in a trustee or agency capacity for others and therefore are not available to support District programs. The reporting focus is on net assets and is reported using the accrual basis of accounting. The District’s fiduciary funds are presented in the fiduciary fund financial statements by type (agency). Since by definition these assets are being held for the benefit of a third party (student organizations) and cannot be used to address activities or obligations of the District, these funds are not incorporated into the government-wide statements. The following is a description of the fiduciary fund of the District:

Agency Fund – The Agency Fund (Student Activity Fund) accounts for assets held by the District as an agent for the student organizations. These funds are custodial in nature and do not involve the measurement of the results of operations. The amounts due to student organizations are equal to the assets.

D. Basis of Accounting

Basis of accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurements made regardless of the measurement focus applied. 1. Accrual

The governmental activities in the government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Property taxes are reported in the period for which levied. Other nonexchange revenues, including intergovernmental revenues and grants, are reported when all eligibility requirements have been met. Fees and charges and other exchange revenues are recognized when earned and expenses are recognized when incurred.

2. Modified Accrual

The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. “Available” means collectible within the current period or within 60 days after year-end. Property tax revenues are recognized in the period for which levied


- 21 -

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Basis of Accounting (Continued)

2. Modified Accrual (Continued) provided they are also available. Intergovernmental revenues and grants are recognized when all eligibility requirements are met and the revenues are available. Expenditures are recognized when the related liability is incurred. Exceptions to this general rule include principal and interest on general obligation long-term debt and employee vacation and sick leave, which are recognized when due and payable.

E. Cash and Cash Equivalents and Investments

Separate bank accounts are not maintained for all District funds. Instead, the funds maintain their cash balances in common accounts, with accounting records being maintained to show the portion of the common bank account balance attributable to each participating fund.

Occasionally certain of the funds participating in the common bank account will incur overdrafts (deficits) in the account. Such overdrafts in effect constitute cash borrowed from other District funds and are, therefore, interfund loans that have not been authorized by District Board action. No District fund had a cash overdraft at June 30, 2012. The District has defined cash and cash equivalents to include cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Cash equivalents are accounted for at cost, which approximates market. Investments are stated at fair value. Fair value is determined by quoted market prices. Gains or losses on the sale of investments are recognized as they are incurred. The District has adopted a formal written investment and cash management policy.

F. Receivables

All receivables are reported net of estimated uncollectible amounts.

G. Prepaid Expenses Prepaid expenses are for payments made by the District in the current year for goods and services received in the subsequent fiscal year.

H. Inventories

No inventory accounts are maintained to reflect the values of resale or supply items on hand. Instead, the costs of such items are charged to expense when purchased. The value of the District’s inventories is not deemed to be material.

I. Interfund Activity Interfund activity is reported either as loans, services provided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate


- 22 -

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I. Interfund Activity (Continued)

and are subject to elimination upon consolidation. All other interfund transactions are

treated as transfers. Transfers between governmental funds are netted as part of the reconciliation to the government-wide financial statements.

J. Capital Assets Capital assets purchased or acquired with an original cost of $5,000 or more are reported at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date of donation. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation on all assets is provided on the straight-line half-year basis over the following estimated useful lives:

Buildings 10 - 50 yearsImprovements Other than Buildings 15 - 30 yearsEquipment Other than Transportation 5 - 40 yearsTransportation Equipment 12 years

K. Compensated Absences

The District accrues accumulated unpaid vacation when earned (or estimated to be earned) by the employee. Vacation benefits are granted to employees in varying amounts depending on tenure with the District and the employee’s contract. The accrual for governmental funds is reported in the fund financial statements as the liability is expected to be paid with current financial resources.

L. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the Statement of Net Assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds on a straight-line basis. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

M. Government-Wide Net Assets

Government-wide net assets are divided into three components: Invested in capital assets, net of related debt – consist of the historical cost of

capital assets less accumulated depreciation and less any debt that remains outstanding that was used to finance those assets.


- 23 -

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. Government-Wide Net Assets (Continued)

Restricted net assets – consist of net assets that are restricted by the District’s creditors (for example, through debt covenants), by the state enabling legislation (through restrictions on shared revenues), by grantors (both federal and state), and by other contributors.

Unrestricted – all other net assets are reported in this category.

N. Governmental Fund Balances

Governmental fund balances are divided between nonspendable and spendable. Nonspendable fund balances are balances that cannot be spent because they are not expected to be converted to cash or they are legally or contractually required to remain intact. The spendable fund balances are arranged in a hierarchy based on spending constraints. Restricted – Restricted fund balances are restricted when constraints are placed

on the use by either (a) external creditors, grantors, contributors, or laws or regulations of other governments or (b) law through constitutional provisions or enabling legislation.

Committed – Committed fund balances are amounts that can only be used for specific purposes as a result of a resolution of the Board of Education. Committed amounts cannot be used for any other purpose unless the Board of Education removes those constraints by way of resolution. Committed fund balances differ from restricted balances because the constraints on their use do not come from outside parties, constitutional provisions, or enabling legislation.

Assigned – Assigned fund balances are amounts that are constrained by the District’s intent to be used for specific purposes, but are neither restricted nor committed. Intent is expressed by an appointed body (e.g. a budget or finance committee) or official to which the Board of Education has delegated the authority to assign, modify or rescind amounts to be used for specific purposes. The District has not delegated this authority to an appointed body or official.

Assigned fund balances also include (a) all remaining amounts that are reported in governmental funds (other than the General Fund) that are not classified as nonspendable, restricted or committed, and (b) amounts in the General Fund that are intended to be used for a specific purpose. Specific amounts that are not restricted or committed in a special revenue, capital projects or debt service fund, are assigned for purposes in accordance with the nature of their fund type. Assignment within the General Fund conveys that the intended use of those amounts is for a specific purpose that is narrower than the general purpose of the District itself. All assigned fund balances are the residual amounts of the fund.

Unassigned – Unassigned fund balance is the residual classification for the General Fund. This classification represents the General Fund balance that has not been assigned to other funds, and that has not been restricted, committed, or assigned to specific purposes within the General Fund. Unassigned fund


- 24 -

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

N. Governmental Fund Balances (Continued)

Unassigned (Continued) balance in the General Fund also includes amounts levied and/or borrowed for working cash. This classification is also used to represent negative fund balances in special revenue funds, debt services fund, and capital projects funds.

The District permits funds to be expended in the following order: Restricted, Committed, Assigned and Unassigned.

O. Property Tax Calendar and Revenues

Property taxes are levied each calendar year on all taxable real property located in the District on or before the last Tuesday in December. The 2011 tax levy was passed by the Board on December 12, 2011. The 2010 tax levy was passed by the Board on September 27, 2010. Property taxes attach as an enforceable lien on property as of January 1 of the calendar year they are for and are payable in two installments early in June and early in September of the following calendar year. The District receives significant distributions of tax receipts approximately one month after these dates.

P. Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

NOTE 2 - DEPOSITS AND INVESTMENTS

Deposits with financial institutions are fully insured or collateralized by securities held in the District's name.

The District is allowed to invest in securities as authorized by the School Code of Illinois, Chapter 30, Section 235/2 and 6; and Chapter 105, Section 5/8-7.

Investments As of June 30, 2012, the District had the following investments and maturities:

Investment Fair Value Less than 1 1 - 5 5 - 10 More Than 10

State Investment Pools 87,436$ 87,436$ -$ -$ -$

City of NYC GO bonds 782,786 - 782,786 - -

State of New Jersey

Revenue Bonds 2,939,944 2,939,944 - - -

State of New York

Revenue Bonds 785,160 - 785,160 - -

State of Ohio GO bonds 1,056,120 - 1,056,120 - -

Total 5,651,446$ 3,027,380$ 2,624,066$ -$ -$

Investment Maturities (in Years)


- 25 -

NOTE 2 - DEPOSITS AND INVESTMENTS (Continued) Investments (Continued)

The fair value of investments in the State Investment Pool is the same as the value of pool shares. The State Investment Pool is not SEC-registered, but does have regulatory oversight through the State of Illinois. Interest Rate Risk. The District’s investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

Credit Risk. State law limits investments based on credit risk. The District’s investment policy further limits its investment choices to ensure that capital loss, whether from credit or market risk, is avoided. As of June 30, 2012, the District’s investments were rated as follows:

Investment Credit Rating Rating Source

State Investment Pools AAAm Standard and Poor's

City of NYC GO bonds AA Standard and Poor's

State of New Jersey Revenue Bonds AA- Standard and Poor's

State of New York Revenue Bonds AA- Standard and Poor's

State of Ohio GO Bonds AA+ Standard and Poor's

Concentration of Credit Risk. The District places no limit on the amount the District may invest in any one issuer. More than 5% of the District’s investments are in State of New Jersey Revenue Bonds (52%), State of New York Revenue Bonds (14%), City of New York City GO Bonds (14%) and State of Ohio GO Bonds (19%).

NOTE 3 - CAPITAL ASSETS Capital asset activity for the year ended June 30, 2012 was as follows:

Balance BalanceJuly 1, 2011 Increases Decreases June 30, 2012


Capital Assets not being depreciated

Land 3,473,938$ -$ -$ 3,473,938$

Total Capital Assets not being depreciated 3,473,938$ -$ -$ 3,473,938$

Other Capital Assets

Buildings 45,985,098$ 104,400$ -$ 46,089,498$

Improvements Other than Buildings 2,050,255 74,060 - 2,124,315

Equipment Other than Transportation 4,767,236 517,150 351,698 4,932,688

Total Other Capital Assets at

Historical Cost 52,802,589$ 695,610$ 351,698$ 53,146,501$

Less Accumulated Depreciation

Buildings 15,621,392$ 1,052,973$ 187,644$ 16,486,721$

Improvements Other than Buildings 1,469,157 81,947 - 1,551,104

Equipment Other than Transportation 3,485,580 239,396 - 3,724,976

Total Accumulated Depreciation 20,576,129$ 1,374,316$ 187,644$ 21,762,801$

Other Capital Assets, Net 32,226,460$ (678,706)$ 164,054$ 31,383,700$

Governmental Activities Capital Assets, Net 35,700,398$ (678,706)$ 164,054$ 34,857,638$

Depreciation expense was charged to functions as follows:


- 26 -

NOTE 3 - CAPITAL ASSETS (Continued)


Regular Programs 1,132,250$

General Administration 8,114

Business 11,383

Operations and Maintenance 78,347

Transportation 3,480

Food Services 22,891

Central 117,851

Total Governmental Activities Depreciation Expense 1,374,316$

NOTE 4 - LONG-TERM LIABILITY ACTIVITY Long-term liability activity for the year ended June 30, 2012 was as follows:

Amounts

Balance Interest Balance Due Within

June 30, 2011 Accretion Additions Retirement June 30, 2012 One Year

Governmental Activities:

Bonds and Notes Payable

Building Bonds, 1992 1,206,358$ 73,642$ -$ 1,280,000$ -$ -$

Series 2003 Bonds 3,370,000 - - 750,000 2,620,000 2,055,000

General Obligation School Refunding

Bonds, Series 2004 7,480,000 - - 315,000 7,165,000 330,000

General Obligation School Alternative

Revenue Bonds, Series 2004A 880,000 - - 180,000 700,000 190,000

General Obligation School Refunding

Bonds, Series 2005 9,940,000 - - 70,000 9,870,000 75,000

General Obligation School Bonds,

Series 2011A 13,400,000 - - - 13,400,000 -


Series 2011B 2,995,000 - - - 2,995,000 -


Series 2011C 1,600,000 - - - 1,600,000 -

SEDOM Bonds 29,010 - - 4,216 24,794 4,440

Lease/Purchase Agreement 102,597 - - 102,597 - -

Total Bonds and Notes Payable 41,002,965$ 73,642$ -$ 2,701,813$ 38,374,794$ 2,654,440$


Long-Term Liabilities 41,002,965$ 73,642$ -$ 2,701,813$ 38,374,794$ 2,654,440$

Bonds and notes payable consisted of the following at June 30, 2012:

Maturity Interest Face CarryingDates Rates Amount Amount

Building Bonds, 1992 02/01/12 6.85% - 7.00% 4,999,866$ -$ Series 2003 Bonds 02/01/14 3.00% - 3.65% 5,220,000 2,620,000 General Obligation School Refunding Bonds, Series 2004 02/01/19 2.00% - 3.95% 8,005,000 7,165,000 General Obligation School Alternative Revenue Bonds, Series 2004A 02/01/16 4.00% - 4.25% 1,995,000 700,000 General Obligation School Refunding Bonds, Series 2005 02/01/20 3.00% - 5.00% 10,310,000 9,870,000 General Obligation School Bonds, Series 2011A 02/01/25 5.00% - 6.25% 13,400,000 13,400,000 General Obligation School Bonds, Series 2011B 02/01/22 5.00% - 6.25% 2,995,000 2,995,000 General Obligation School Bonds, Series 2011C 02/01/25 6.875% 1,600,000 1,600,000 SEDOM Bonds 11/01/17 5.25% 43,704 24,794 Lease/Purchase Agreement 11/19/12 4.975% 331,846 -

Total 48,900,416$ 38,374,794$


- 27 -

NOTE 4 - LONG-TERM LIABILITY ACTIVITY (Continued)

In prior years, the District defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments of the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the District’s financial statements. At June 30, 2012, $19,220,000 of bonds is considered defeased.

At June 30, 2012 the annual debt service requirements to service long-term debt are:

Year Ending June 30 Principal Interest Total

2013 2,654,440$ 1,909,917$ 4,564,357$

2014 2,729,676 1,813,163 4,542,839

2015 2,849,925 1,710,679 4,560,604

2016 2,870,187 1,587,254 4,457,441

2017 2,880,566 1,460,889 4,341,455

2018 3,000,000 1,332,610 4,332,610

2019 3,360,000 1,197,618 4,557,618

2020 3,550,000 1,031,488 4,581,488

2021 3,370,000 856,725 4,226,725

2022 3,450,000 646,100 4,096,100

2023 2,405,000 473,600 2,878,600

2024 2,695,000 326,238 3,021,238

2025 2,560,000 157,975 2,717,975

38,374,794$ 14,504,256$ 52,879,050$

Reconciliation to the Statement of Net Assets The following summarizes non-current liabilities as shown on the Statement of Net Assets:

Due Within Due in MoreOne Year Than One Year Total

Bonds and Notes Payable 2,654,440$ 35,720,354$ 38,374,794$ Bond Premiums, net of amortization 51,529 392,665 444,194 Bond Discounts, net of amortization (25,534) (220,764) (246,298)

2,680,435$ 35,892,255$ 38,572,690$

NOTE 5 - DEFICIT FUND BALANCE No District fund had a deficit fund balance at June 30, 2012.

NOTE 6 - PROPERTY TAXES

Property taxes recorded in these financial statements as property taxes receivable and deferred revenue are from the 2011 tax levy. The deferred revenue is 88% of the 2011 tax levy. These taxes are deferred as only a portion of the taxes (approximately 12%) are spent before the end of the fiscal year and the District does not consider the remaining amounts to be available and does not budget for their use until the following fiscal year. The District has determined that 12% of the 2011 tax levy ($2,541,995) and 88% of the 2010 tax levy, plus back taxes, less uncollectible amounts ($19,679,046) are allocable for use in fiscal year 2012. Therefore, the percentage of each of these levies listed above are recorded in these financial statements as property taxes revenue. A summary of tax rates, assessed valuations, and extensions for tax years 2011, 2010, and 2009 is as follows:


- 28 -

NOTE 6 - PROPERTY TAXES (Continued)

McHENRY COUNTY

TAX YEAR

ASSESSED VALUATION

RATE EXTENSION RATE EXTENSION RATE EXTENSION

Educational 2.3480 14,732,987$ 2.1079 14,992,471$ 1.7467 13,095,941$

Special Education 0.0357 223,872 0.0315 224,276 0.0309 231,678

Operations and Maintenance 0.2380 1,492,918 0.1734 1,233,062 0.3712 2,783,326

Debt Service 0.5206 3,267,430 0.4321 3,073,558 0.4085 3,062,959

Transportation 0.0850 533,283 0.0657 467,578 0.0571 428,035

Municipal Retirement 0.0743 466,399 0.0526 373,961 0.0419 314,078

Social Security 0.0743 466,399 0.0526 373,961 0.0419 314,078

3.3759 21,183,288$ 2.9158 20,738,867$ 2.6982 20,230,095$

LAKE COUNTY

TAX YEAR

ASSESSED VALUATION

RATE EXTENSION RATE EXTENSION RATE EXTENSION

Educational 2.3480 1,052,008$ 2.1080 1,035,527$ 1.7470 904,235$

Special Education 0.0360 16,130 0.0320 15,720 0.0310 16,045

Operations and Maintenance 0.2390 107,083 0.1720 84,493 0.3710 192,027

Debt Service 0.5260 235,671 0.4370 214,671 0.4130 213,766

Transportation 0.0830 37,188 0.0660 32,422 0.0570 29,503

Municipal Retirement 0.0750 33,603 0.0530 26,036 0.0420 21,739

Social Security 0.0750 33,603 0.0530 26,036 0.0420 21,739

3.3820 1,515,286$ 2.9210 1,434,905$ 2.7030 1,399,054$

2011 2010 2009

$44,804,431 $49,123,691 $51,759,284

2011 2010 2009

$627,479,506 $711,264,359 $749,767,899

NOTE 7 - EXCESS OF EXPENDITURES OVER BUDGET

For the year ended June 30, 2012, the expenditures of the following fund exceeded the budget:

Fund Budget Actual

Debt Services 4,644,054$ 4,673,038$ 28,984$

Excess of ActualOver Budget

NOTE 8 - OPERATING LEASES, AS LESSEE

The District, as lessee, leases buses, copiers, and a postage machine. Estimated minimum annual rentals are as follows:

Year Ending June 30 Amount

2013 444,016$ 2014 412,723

856,739$

Total rental expense for all operating leases for the year ended June 30, 2012 was $469,325.

NOTE 9 - RETIREMENT FUND COMMITMENTS

A. Teachers’ Retirement System of the State of Illinois

The District participates in the Teachers’ Retirement System of the State of Illinois (TRS). TRS is a cost-sharing multiple-employer defined benefit pension plan that was created by the Illinois legislature for the benefit of Illinois public school teachers employed outside the city of Chicago.


- 29 -

NOTE 9 - RETIREMENT FUND COMMITMENTS

A. Teachers’ Retirement System of the State of Illinois (Continued)

The Illinois Pension Code outlines the benefit provisions of TRS, and amendments to the Plan can be made only by legislative action with the Governor’s approval. The State of Illinois maintains the primary responsibility for funding the Plan, but contributions from participating employers and members are also required. The TRS Board of Trustees is responsible for the System’s administration. TRS members include all active nonannuitants who are employed by a TRS-covered employer to provide services for which teacher certification is required. The active member contribution rate for the year ended June 30, 2012 was 9.4% of creditable earnings. The same contribution rate applies to members whose first contributing service is on or after January 1, 2011, the effective date of the benefit changes contained in Public Act 96-0889. These contributions, which may be paid on behalf of employees by the employer, are submitted to TRS by the employer. The active member contribution rate was also 9.4% for the years ended June 30, 2011 and 2010. The State of Illinois makes contributions directly to TRS on behalf of the District’s TRS-covered employees.

On-behalf contributions to TRS

The State of Illinois makes employer pension contributions on behalf of the District. For the year ended June 30, 2012, State of Illinois contributions were based on 24.91% of creditable earnings not paid from federal funds, and the District recognized revenue and expenditures of $3,058,832 in pension contributions that the State of Illinois paid directly to TRS. For the years ended June 30, 2011 and June 30, 2010, the State of Illinois contribution rates as percentages of creditable earnings not paid from federal funds were 23.10% ($3,060,196) and 23.38% ($4,014,301), respectively.

The District makes other types of employer contributions directly to TRS:

2.2 formula contributions Employers contribute 0.58% of total creditable earnings for the 2.2 formula change. This rate is specified by statute. Contributions for the year ended June 30, 2012 were $72,448. Contributions for the years ended June 30, 2011 and June 30, 2010 were $77,662 and $100,248, respectively.

Federal and special trust fund contributions When TRS members are paid from federal and special trust funds administered by the District, there is a statutory requirement for the District to pay an employer pension contribution from those funds. Under a policy adopted by the TRS Board of Trustees that was first effective for the fiscal year ended June 30, 2006, employer contributions for employees paid from federal and special trust funds will be the same as the State contribution rate to TRS.

For the year ended June 30, 2012, the employer pension contribution was 24.91% of salaries paid from federal and special trust funds. For the years ended June 30, 2011 and June 30, 2010, the employer contribution was 23.10% and 23.38% of salaries paid from federal and special trust funds, respectively. For the year ended June 30, 2012, salaries totaling $211,468 were paid from federal and special trust funds that required employer contributions of $52,677. For the years ended June 30, 2011 and June 30, 2010, required District contributions were $32,894 and $26,716, respectively.


- 30 -

NOTE 9 - RETIREMENT FUND COMMITMENTS (Continued)

A. Teachers’ Retirement System of the State of Illinois (Continued)

Early Retirement Option (ERO) The District is also required to make one-time employer contributions to TRS for members retiring under the Early Retirement Option (ERO). The payments vary depending on the age and salary of the member. The maximum employer ERO contribution is 117.5% and applies when the member is age 55 at retirement. For the year ended June 30, 2012, the District paid $180,131 to TRS for employer contributions under the ERO program. For the years ended June 30, 2011 and June 30, 2010, the District paid $0 and $77,265 in employer ERO contributions, respectively.

Salary increases over 6% and excess sick leave If an employer grants salary increases over 6% and those salaries are used

to calculate a retiree’s final average salary, the employer makes a contribution to TRS. The contribution will cover the difference in actuarial cost of the benefit based on actual salary increases and the benefit based on salary increases of up to 6%.

For the year ended June 30, 2012, the District paid $11,477 to TRS for employer contributions due on salary increases in excess of 6%. For the years ended June 30, 2011 and June 30, 2010, the District paid $2,962 and $15,390 to TRS for employer contributions due on salary increases in excess of 6%, respectively.

If an employer grants sick leave days in excess of the normal annual

allotment and those days are used as TRS service credit, the employer makes a contribution to TRS. The contribution is based on the number of excess sick leave days used as service credit, the highest salary used to calculate final average salary, and the TRS total normal cost rate (18.03% of salary during the year ended June 30, 2012, as recertified pursuant to Public Act 96-1511).

For the year ended June 30, 2012, the District paid $0 to TRS for sick leave days granted in the excess of the normal annual allotment. For the years ended June 30, 2011 and June 30, 2010, the District paid $2,061 and $0 in employer contributions granted for sick leave days, respectively.

TRS financial information, an explanation of TRS benefits, and descriptions of member, employer and state funding requirements can be found in the TRS Comprehensive Annual Financial Report for the year ended June 30, 2011. The report for the year ended June 30, 2012 is expected to be available in late 2012.

The reports may be obtained by writing to the Teachers’ Retirement System of the State of Illinois, 2815 West Washington Street, P.O. Box 19253, Springfield, IL 62794-9253. The most current report is also available on the TRS Web site at http://trs.illinois.gov.


- 31 -

NOTE 9 - RETIREMENT FUND COMMITMENTS (Continued) B. Illinois Municipal Retirement Fund

Plan Description The District’s defined benefit pension plan for Regular employees provides retirement and disability benefits, post retirement increases, and death benefits to plan members and beneficiaries. The District’s plan is affiliated with the Illinois Municipal Retirement Fund (IMRF), an agent multiple-employer plan. Benefit provisions are established by statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained on-line at www.imrf.org.

Funding Policy

As set by statute, the District’s Regular plan members are required to contribute 4.50% of their annual covered salary. The statute requires employers to contribute the amount necessary, in addition to member contributions, to finance the retirement coverage of its own employees. The District’s annual required contribution rate for calendar year 2011 was 12.19%. The District also contributes for disability benefits, death benefits and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by the IMRF Board of Trustees, while the supplemental retirement benefits rate is set by statute.

Annual Pension Cost

The required contribution for calendar year 2011 was $335,122.

Calendar Annual Percentage NetYear Pension of APC Pension

Ending Cost (APC) Contributed Obligation

12/31/2011 335,122$ 100% -$ 12/31/2010 378,197 100% - 12/31/2009 378,075 100% -

Three Year Trend Information for the Regular Plan

The required contribution for 2011 was determined as part of the December 31, 2009 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions at December 31, 2009 included (a) 7.50% investment rate of return (net of administrative and direct investment expenses), (b) projected salary increases of 4% a year, attributable to inflation, (c) additional projected salary increases ranging from 0.4% to 10% per year depending on age and service, attributable to seniority/merit, and (d) post-retirement benefit increases of 3% annually. The actuarial value of the District’s Regular plan assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period with a 20% corridor between the actuarial and market value of assets. The District’s Regular plan’s unfunded actuarial accrued liability at December 31, 2009 is being amortized as a level percentage of projected payroll on an open 30 year basis.

Funded Status and Funding Progress As of December 31, 2011, the most recent actuarial valuation date, the Regular plan was 66.86% funded. The actuarial accrued liability for benefits was $7,120,081 and the actuarial value of assets was $4,760,617, resulting in an


- 32 -

NOTE 9 - RETIREMENT FUND COMMITMENTS (Continued) B. Illinois Municipal Retirement Fund (Continued)

Funded Status and Funding Progress (Continued) underfunded actuarial accrued liability (UAAL) of $2,359,464. The covered payroll for calendar year 2011 (annual payroll of active employees covered by the plan) was $2,749,151 and the ratio of the UAAL to the covered payroll was 86%. The schedule of funding progress, presented as Required Supplementary Information following the notes to the basic financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.

C. Social Security

Employees not qualifying for coverage under the Teachers’ Retirement System of the State of Illinois or the Illinois Municipal Retirement Fund are considered “non-participating employees”. These employees and those qualifying for coverage under the Illinois Municipal Retirement Fund are covered under Social Security. The District paid the total required contribution for the current fiscal year.

NOTE 10 - POST EMPLOYMENT BENEFIT COMMITMENTS Teacher Health Insurance Security Fund (THIS)

The District participates in the Teacher Health Insurance Security (THIS) Fund (Plan), a cost-sharing, multiple-employer defined benefit postemployment healthcare plan that was established by the Illinois legislature for the benefit of Illinois public school teachers employed outside the City of Chicago. The THIS Fund provides medical, prescription, and behavioral health benefits, but it does not provide vision, dental, or life insurance benefits to annuitants of the Teachers’ Retirement System (TRS). Annuitants may participate in the state administered participating provider option plan or choose from several managed care options. The State Employees Group Insurance Act of 1971 (5 ILCS 375) outlines the benefit provisions of THIS Fund and amendments to the Plan can be made only by legislative action with the Governor’s approval. The Illinois Department of Healthcare and Family Services (HFS) and the Illinois Department of Central Management Services (CMS) administer the Plan with the cooperation of TRS. The director of HFS determines the rates and premiums for annuitants and dependent beneficiaries and establishes the cost-sharing parameters. Section 6.6 of the State Employees Group Insurance Act of 1971 requires all active contributors to the TRS who are not employees of the State make a contribution to THIS Fund. The percentage of employer required contributions in the future will be determined by the director of HFS and will not exceed 105% of the percentage of salary actually required to be paid in the previous fiscal year.

On behalf contributions to THIS Fund

The State of Illinois makes employer retiree health insurance contributions on behalf of the District. State contributions are intended to match contributions to THIS Fund


- 33 -

NOTE 10 - POST EMPLOYMENT BENEFIT COMMITMENTS (Continued) Teacher Health Insurance Security Fund (THIS) (Continued)

On behalf contributions to THIS Fund (Continued)

from active members which were 0.88% of pay during the year ended June 30, 2012. State of Illinois contributions were $109,921, and the District recognized revenue and expenditures of this amount during the year. State contributions intended to match active member contributions during the years ended June 30, 2011 and June 30, 2010 were 0.88% of pay. State contributions on behalf of District employees were $117,832 and $145,186, respectively.

Employer contributions to THIS Fund

The District also makes contributions to THIS Fund. The employer THIS Fund contribution was 0.66% during the year ended June 30, 2012, and 0.63% during the years ended June 30, 2011 and June 30, 2010. For the year ended June 30, 2012, the District paid $82,441 to the THIS Fund. For the years ended June 30, 2011 and June 30, 2010, the District paid $88,374 and $108,890 to the THIS Fund, respectively, which was 100% of the required contribution.

The publicly available financial report of the THIS Fund may be obtained by writing to the Department of Healthcare and Family Services, 201 S. Grand Ave., Springfield, IL 62763-3838.

NOTE 11 - INTERFUND TRANSFERS The following funds were transferred for the year ended June 30, 2012:

Transfer from Transfer to Amount

Operations and Maintenance Fund Debt Services Fund 292,723$

The transfer was made to fund capital lease and alternative revenue bond payments made from the Debt Services Fund.

NOTE 12 - JOINT VENTURE – SPECIAL EDUCATION DISTRICT OF McHENRY COUNTY

(SEDOM)

The District and seventeen other districts within McHenry County have entered into a joint agreement to provide special education programs and services to the students enrolled. Each member district has a financial responsibility for annual and special assessments as established by the management council. A summary of financial condition (cash basis) of SEDOM at June 30, 2011 (most recent information available) is as follows:

Assets 10,116,230$

Liabilities 564,719$ Fund Equity 9,551,511

10,116,230$

Revenues Received 35,753,338$ Expenditures Disbursed 37,737,365

Net Increase/(Decrease) in Fund Balance (1,984,027)$


- 34 -

NOTE 12 - JOINT VENTURE – SPECIAL EDUCATION DISTRICT OF McHENRY COUNTY

(SEDOM) (Continued)

Complete financial statements for SEDOM can be obtained from the Administrative Offices at 1200 Claussen Drive, Woodstock, Illinois 60098.

NOTE 13 - RISK MANAGEMENT

The District is a member of the Collective Liability Insurance Cooperative (CLIC), a joint risk management pool of school districts through which property, general liability, automobile liability, crime, excess property, excess liability, and boiler and machinery coverage is provided in excess of specified limits for the members, acting as a single insurable unit. The relationship between the District and CLIC is governed by a contract and by-laws that have been adopted by resolution of each unit’s governing body. The District is contractually obligated to make all annual and supplementary contributions for CLIC, to report claims on a timely basis, cooperate with CLIC, its claims administrator and attorneys in claims investigation and settlement, and to follow risk management procedures as outlined by CLIC. Members have a contractual obligation to fund any deficit of CLIC attributable to a membership year during which they were members.

CLIC is responsible for administering the self-insurance program and purchasing excess insurance according to the direction of the Board of Directors. CLIC also provides its members with risk management services, including the defense and settlement of claims, and establishes reasonable and necessary loss of reduction and prevention procedures to be followed by the members.

During the year ended June 30, 2012, there were no significant reductions in insurance coverage. Also, there have been no settlement amounts that have exceeded insurance coverage for each of the past three fiscal years. The District is insured under a retrospectively-rated policy for workers’ compensation coverage. Whereas, the initial premium may be adjusted based on actual experience. Adjustments in premiums are recorded when paid or received. During the year ended June 30, 2012, there were no significant adjustments in premiums based on actual experience.

NOTE 14 - CONTINGENCIES

The District is not aware of any pending litigation or potential non-disclosed liabilities that management believes would have a material effect on financial statements.

NOTE 15 - SUBSEQUENT EVENTS

The District has evaluated subsequent events through October 10, 2012, the date on which the financial statements were available to be issued.

REQUIRED SUPPLEMENTARY INFORMATION

- 35 -

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 ILLINOIS MUNICIPAL RETIREMENT FUND

SCHEDULE OF FUNDING PROGRESS JUNE 30, 2012

Actuarial UAAL as aActuarial Accrued Unfunded Percentage

Actuarial Value of Liability (AAL) AAL Funded Covered of CoveredValuation Assets -Entry Age (UAAL) Ratio Payroll Payroll

Date (a) (b) (b-a) (a/b) (c) ((b-a)/c)

12/31/2011 4,760,617$ 7,120,081$ 2,359,464$ 66.86% 2,749,151$ 85.83%12/31/2010 4,313,933 6,767,399 2,453,466 63.75% 3,175,460 77.26%12/31/2009 4,926,162 7,562,220 2,636,058 65.14% 3,543,344 74.39%

On a market value basis, the actuarial value of assets as of December 31, 2011 is $4,472,471. On a market basis, the funded ratio would be 62.81%.

See Accompanying Independent Auditor’s Report

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND


Budgeted Amounts Actual Variance from

Original and Final Amounts Final Budget REVENUES

Property Taxes $ 16,047,890 $ 16,227,297 $ 179,407 Payments in Lieu of Taxes 150,000 135,369 (14,631) Tuition 60,000 123,179 63,179 Earnings on Investments 17,955 24,331 6,376 Food Service 384,000 358,312 (25,688) District/School Activity Income 95,000 83,915 (11,085) Textbooks 447,000 437,288 (9,712) Other Local Sources 40,000 84,004 44,004 State Aid

General State Aid 2,073,660 720,386 (1,353,274) Special Education 1,370,000 1,379,938 9,938 Bilingual 41,569 41,569 State Free Lunch and Breakfast 25,000 8,966 (16,034) Technology - Learning Technology Centers 2,161 2,161

Federal Aid Food Service 198,000 232,182 34,182 Title I 86,000 83,216 (2,784) Federal Special Education 931,402 803,153 (128,249) Other ARRA Funds 4,252 4,252 Emergency Immigrant Assistance 7,876 (7,876) Title III - English Language Acquisition 30,471 40,018 9,547 Title II - Teacher Quality 37,773 40,983 3,210 Medicaid Matching Funds - Administrative Outreach 71,170 48,368 (22,802) Medicaid Matching Funds - Fee-for-Service Program 27,710 36,981 9,271

On-Behalf Payments 3,901,314 3,168,753 (732,561) Total Revenues $ 26,002,221 $ 24,084,621 $ (1,917,600)

EXPENDITURES Instruction

Regular Programs Salaries $ 6,860,042 $ 7,478,694 $ (618,652) Employee Benefits 1,395,442 1,013,606 381,836 Purchased Services 22,054 4,696 17,358 Supplies and Materials 474,076 214,338 259,738 Other Objects 335 (335) Non-Capitalized Equipment 560 (560)

$ 8,751,614 $ 8,712,229 $ 39,385 Special Education Programs

Salaries $ 2,719,653 $ 2,711,602 $ 8,051 Employee Benefits 558,916 445,244 113,672 Purchased Services 51,170 282 50,888 Supplies and Materials 12,418 3,272 9,146

$ 3,342,157 $ 3,160,400 $ 181,757 Special Education Programs Pre-K

Salaries $ 698,191 $ 403,826 $ 294,365 Employee Benefits 190,661 67,675 122,986

$ 888,852 $ 471,501 $ 417,351 Interscholastic Programs Salaries $ 49,870 $ 37,682 $ 12,188 Employee Benefits 3,108 1,554 1,554 Purchased Services 17,535 31,987 (14,452) Supplies and Materials 400 2,432 (2,032) Other Objects 750 950 (200)

$ 71,663 $ 74,605 $ (2,942) Summer School Programs

Salaries $ 77,000 $ 66,594 $ 10,406 Employee Benefits 4,932 9,970 (5,038) Purchased Services 1,634 (1,634) Supplies and Materials 7,718 1,797 5,921

$ 89,650 $ 79,995 $ 9,655 Gifted Programs

Salaries $ 100 $ $ 100 Employee Benefits 6 6

$ 106 $ $ 106

See Accompanying Independent Auditor's Report

- 36-





Original and Final Amounts Final Budllet EXPENDITURES (Continued)

Instruction (Continued) Bilingual Programs

Salaries $ 732,992 $ 822,704 $ (89,712) Employee Benefits 141,415 114,582 26,833 Purchased Services 20 (20) Supplies and Materials 24,000 16,976 7,024

$ 898,407 $ 954,282 $ (55,875) Private Tuition - Other Objects Special Education Programs K-12 $ 500,000 $ 352,659 $ 147,341

$ 500,000 $ 352,659 $ 147,341

Total Instruction $ 14,542,449 $ 13,805,671 $ 736,778

Support Services Pupils

Attendance and Social Work Services Salaries $ 487,441 $ 476,420 $ 11,021 Employee Benefits 77,482 52,695 24,787 Purchased Services 150 26 124 Supplies and Materials 425 10 415

$ 565,498 $ 529,151 $ 36,347 Health Services

Salaries $ 212,208 $ 484,861 $ (272,653) Employee Benefits 28,023 59,435 (31,412) Purchased Services 7,863 3,474 4,389 Supplies and Materials 5,100 3,794 1,306

$ 253,194 $ 551,564 $ (298,370) Psychological Services

Salaries $ 354,580 $ 331,119 $ 23,461 Employee Benefits 70,594 38,737 31,857 Purchased Services 10,400 85 10,315 Supplies and Materials 425 425

$ 435,999 $ 369,941 $ 66,058 Speech Pathology and Audiology Services

Salaries $ 599,307 $ 559,583 $ 39,724 Employee Benefits 79,216 44,440 34,776 Purchased Services 125 4,160 (4,035) Supplies and Materials 850 1,289 (439)

$ 679,498 $ 609,472 $ 70,026 Other Support Services - Pupils

Salaries $ 151,774 $ 134,581 $ 17,193 Employee Benefits 22,758 8,002 14,756 Supplies and Materials 2,125 2,108 17

$ 176,657 $ 144,691 $ 31,966

Total Support Services - Pupils $ 2,110,846 $ 2,204,819 $ (93,973)

Instructional Staff Improvement of Instruction Services

Salaries $ 181,644 $ 159,217 $ 22,427 Employee Benefits 36,912 28,533 8,379 Purchased Services 72,085 87,665 (15,580) Supplies and Materials 6,208 7,849 (1,641)

$ 296,849 $ 283,264 $ 13,585 Educational Media Services

Salaries $ 126,388 $ 123,849 $ 2,539 Employee Benefits 22,984 17,888 5,096 Purchased Services 48,625 8,192 40,433 Supplies and Materials 28,331 31,692 (3,361) Other Objects 1,788 1,788

$ 228,116 $ 181,621 $ 46,495


- 37-





Ori\linal and Final Amounts Final Bud\let EXPENDITURES (Continued)

Support Services (Continued) Instructional Staff (Continued) Assessment and Testing

Salaries $ $ 500 $ (500) Employee Benefits 31 (31) Purchased Services 99,000 29,034 69,966 Supplies and Materials 17,975 8,866 9,109

$ 116,975 $ 38,431 $ 78,544

Total Support Services - Instructional Staff $ 641,940 $ 503,316 $ 138,624

General Administration Board of Education Services

Employee Benefits $ 5,000 $ $ 5,000 Purchased Services 467,693 2,855 464,838 Supplies and Materials 9,775 785 8,990 Other Objects 2,200 4,007 (1,807)

$ 484,668 $ 7,647 $ 477,021 Executive Administration Services

Salaries $ 188,251 $ 190,696 $ (2,445) Employee Benefits 46,726 52,028 (5,302) Purchased Services 14,700 872 13,828 Supplies and Materials 3,612 1,413 2,199 Other Objects 2,000 2,925 (925)

$ 255,289 $ 247,934 $ 7,355 Special Area Administration Services

Salaries $ 136,206 $ 135,908 $ 298 Employee Benefits 33,225 35,563 (2,338) Purchased Services 10,000 10,000 Supplies and Materials 850 842 8

$ 180,281 $ 172,313 $ 7,968 Tort Immunity Services

Purchased Services $ $ 413,684 $ (413,684) $ $ 413,684 $ (413,684)

Total Support Services - General Administration $ 920,238 $ 841,578 $ 78,660

School Administration Office of the Principal Services

Salaries $ 705,853 $ 655,105 $ 50,748 Employee Benefits 159,173 142,070 17,103 Purchased Services 1,000 1,987 (987) Supplies and Materials 9,337 (9,337)

Total Support Services - School Administration $ 866,026 $ 808,499 $ 57,527

Business Direction of Business Support Services

Salaries $ 34,667 $ 98,000 $ (63,333) Employee Benefits 20,321 27,368 (7,047) Supplies and Materials 1,500 1,500

$ 56,488 $ 125,368 $ (68,880) Fiscal Services

Salaries $ 169,082 $ 165,386 $ 3,696 Employee Benefits 34,969 25,324 9,645 Purchased Services 116,575 70,818 45,757 Supplies and Materials 9,217 436 8,781 Other Objects 1,186 (1,186)

$ 329,843 $ 263,150 $ 66,693

Total Support Services - Business $ 386,331 $ 388,518 $ (2,187)

Operations and Maintenance Salaries $ 2,000 $ $ 2,000

Total Support Services - Operation and Maintenance $ 2,000 $ $ 2,000


- 38-

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO, 26 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES




Original and Final Amounts Final Budget EXPENDITURES (Continued)

Support Services (Continued) Food Services

Purchased Services $ 566,800 $ 483,708 $ 83,092 Supplies and Materials 14,466 2,015 12,451

Total Support Services - Food Services $ 581,266 $ 485,723 $ 95,543

Central Information Services

Supplies and Materials $ 425 $ 235 $ 190 $ 425 $ 235 $ 190

Staff Services Salaries $ 57,650 $ 57,354 $ 296 Employee Benefits 7,834 7,264 570 Purchased Services 9,532 12,483 (2,951)

$ 75,016 $ 77,101 $ (2,085) Data Processing Services

Salaries $ 146,154 $ 140,993 $ 5,161 Employee Benefits 16,139 14,945 1,194 Purchased Services 105,700 105,003 697 Supplies and Materials 55,201 13,435 41,766

$ 323,194 $ 274,376 $ 48,818

Total Support Services - Central $ 398,635 $ 351,712 $ 46,923

Other Support Services Purchased Services $ 40,000 $ 64,258 $ (24,258) Supplies and Materials 13,185 73,693 (60,508)

Total Other Support Services $ 53,185 $ 137,951 $ (84,766)

Total Support Services $ 5,960,467 $ 5,722,116 $ 238,351

Community Services Salaries $ 2,100 $ 17,065 $ (14,965) Purchased Services 9,906 5,577 4,329 Supplies and Materials 196 1,197 (1,001)

Total Community Services $ 12,202 $ 23,839 $ (11,637)

Payments to Other Districts and Governmental Units Payments to Other Districts and Governmental Units (In-State)

Payments for Special Education Programs Purchased Services $ 366,100 $ 304,862 $ 61,238 Other Objects 199,011 165,776 33,235

$ 565,111 $ 470,638 $ 94,473 Other Payments to In-State Governmental Units

Other Objects $ 345,000 $ 11,505 $ 333,495 $ 345,000 $ 11,505 $ 333,495

Total Payments to Other Districts and Governmental Units (In-State) $ 910,111 $ 482,143 $ 427,968

Payments to Other Districts and Governmental Units-Tuition (In-State) Payments for Special Education Programs

Other Objects $ $ 227,856 $ (227,856) Total Payments to Other Districts and Governmental Units-Tuition (In-State) $ $ 227,856 $ (227,856)

Total Payments to Other Districts and Governmental Units $ 910,111 $ 709,999 $ 200,112

Capital Outlay Instruction

Regular Programs $ 7,500 $ 29,304 $ (21,804) Other Instructional Programs 26,769 (26,769)

Support Services Pupils 9,000 9,000 Food Services 5,000 5,000 Central 78,000 419,091 (341,091 )

Total Capital Outlay $ 99,500 $ 475,164 $ (375,664)


- 39-

EXPENDITURES (Continued)

On-Behalf Payments

Total Expenditures




Budgeted Amounts

Original and Final

$ 3,901,314

$ 25,426,043

EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES $ 576,178

OTHER FINANCING SOURCES (USES)

NET CHANGE IN FUND BALANCE $ 576,178

FUND BALANCE - JULY 1, 2011 405,441

FUND BALANCE - JUNE 30, 2012 $ 981,619


- 40-

Actual Amounts

$ 3,168,753

$ 23,905,542

$ 179,079

$ 179,079

405,441

$ 584,520

$

$

$

$

$

Variance from Final Budget

732,561

1,520,501

(397,099)

(397,099)

(397,099)


IN FUND BALANCES - BUDGET AND ACTUAL SPECIAL REVENUE FUND - OPERATIONS AND MAINTENANCE FUND



Original and Final Amounts Final Budget

REVENUES Property Taxes $ 1,496,491 $ 1,350,524 $ (145,967) Payments in Lieu of Taxes 80,000 93,437 13,437 Earnings on Investments 5,608 1,384 (4,224) Other Local Sources 266,500 309,479 42,979 State Aid

General State Aid 90,198 90,198 Federal Aid Title IV 13,257 13,257

Total Revenues $ 1,848,599 $ 1,858,279 $ 9,680

EXPENDITURES Support Services


Salaries $ 32,667 $ $ 32,667 Employee Benefits 2,036 2,036

Total Support Services - Business $ 34,703 $ $ 34,703

Facilities Acquisition and Construction Purchased Services $ 25,000 $ 13,168 $ 11,832

Total Support Services - Facilities Acquisition and Construction $ 25,000 $ 13,168 $ 11,832

Operations and Maintenance Salaries $ 84,100 $ 99,390 $ (15,290) Employee Benefits 10,485 26,900 (16,415) Purchased Services 1,137,742 895,146 242,596 Supplies and Materials 473,920 466,414 7,506 Non-Capitalized Equipment 2,108 (2,108)

Total Support Services - Operations and Maintenance $ 1,706,247 $ 1,489,958 $ 216,289


Capital Outlay Support Services

Operations and Maintenance $ 71,000 $ 184,864 $ (113,864) Food Services 10,000 10,000


Total Expenditures $ 1,846,950 $ 1,687,990 $ 158,960

EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES $ 1,649 $ 170,289 $ 168,640

OTHER FINANCING SOURCES (USES) Interfund Transfers (266,500) (292,723) (26,223)

NET CHANGE IN FUND BALANCE $ (264,851) $ (122,434) $ 142,417

FUND BALANCE - JULY 1,2011 268,454 268,454

FUND BALANCE - JUNE 30, 2012 $ 3,603 $ 146,020 $ 142,417


- 41 -


IN FUND BALANCES - BUDGET AND ACTUAL SPECIAL REVENUE FUND - TRANSPORTATION FUND




Property Taxes $ 531,785 $ 508,103 $ (23,682) Transportation Fees 10,746 10,746 Earnings on Investments 1,261 1,564 303 State Aid Transportation 745,472 874,829 129,357

Total Revenues $ 1,278,518 $ 1,395,242 $ 116,724


Pupils Other Support Services - Pupils

Salaries $ $ 6,487 $ (6,487) Employee Benefits 5 ~5)

Total Support Services - Pupils $ $ 6,492 $ (6,492~

Transportation Salaries $ 795,336 $ 699,319 $ 96,017 Employee Benefits 100,432 76,907 23,525 Purchased Services 560,244 510,950 49,294 Supplies and Materials 235,850 150,556 85,294 Other Objects 10,000 6,316 3,684

Total Support Services - Transportation $ 1,701,862 $ 1,444,048 $ 257,814


Total Expenditures $ 1,701,862 $ 1,450,540 $ 251,322

EXCESS OR (DEFICIENCy) OF REVENUES OVER EXPENDITURES $ (423,344) $ (55,298) $ 368,046

OTHER FINANCING SOURCES (USES) Sale or Compensation for Fixed Assets 150,000 204,800 54,800

NET CHANGE IN FUND BALANCE $ (273,344) $ 149,502 $ 422,846

FUND BALANCE - JULY 1, 2011 520,999 520,998 (1 ~

FUND BALANCE - JUNE 30, 2012 $ 247,655 $ 670,500 $ 422,845


- 42-


IN FUND BALANCES - BUDGET AND ACTUAL SPECIAL REVENUE FUND - ILLINOIS MUNICIPAL RETIREMENT/SOCIAL SECURITY FUND

YEAR ENDED JUNE 30,2012

REVENUES Property Taxes FICA/Medicare Only Purposes Levies Payments in Lieu of Taxes Earnings on Investments

Total Revenues


Regular Programs Employee Benefits

Special Education Programs Employee Benefits

Special Education Programs - Pre-K Employee Benefits

Interscholastic Programs Employee Benefits

Summer School Programs Employee Benefits

Gifted Programs Employee Benefits

Bilingual Programs Employee Benefits

Total Instruction

Support Services Pupils Attendance and Social Work Services

Employee Benefits Health Services

Employee Benefits Psychological Services

Employee Benefits Speech Pathology and Audiology Services Employee Benefits

Other Support Services ~ Pupils Employee Benefits

Total Supports Services - Pupils


Employee Benefits Educational Media Services

Employee Benefits Assessment and Testing

Employee Benefits Total Support Services - Instructional Staff

General Administration Executive Administration Services

Employee Benefits Special Area Administrative Services

Employee Benefits Total Support Services - General Administration

Budgeted Amounts

Original and Final

$

$

$

$

$

$

$

$

$

$

399,473 399,473

60,000 614

859,560

195,851

161,917

76,514

723

1,117

15,606 451,729

7,068

23,809

5,140

7,455

27,365 70,837

12,205

9,135

21,340

11,905

9,896 21,801


- 43-

$

$

$

$

$

$

$

$

$

$

Actual Amounts

411,716 411,716

60,000 882

884,314

98,423

167,123

20,588

502

5,695

14,410 306,741

6,566

85,466

4,444

7,935

18,231 122,642

10,100

9,196

15 19,311

11,236

8,534 19,770

$

$

$

$

$

$

$

$

Variance from Final Budget

12,243 12,243

268 24,754

97,428

(5,206)

55,926

221

(4,578)

1,196 144,988

502

(61,657)

696

(480)

9,134 (51,805)

2,105

(61)

(15) 2,029

$ 669

1,362 $ 2,031


IN FUND BALANCES - BUDGET AND ACTUAL SPECIAL REVENUE FUND - ILLINOIS MUNICIPAL RETIREMENT/SOCIAL SECURITY FUND



Original and Final Amounts Final Budget EXPENDITURES DISBURSED (Continued)

Support Services (Continued) School Administration

Office of the Principal Services Employee Benefits $ 46,733 $ 44,094 $ 2,639

Total Support Services - School Administration $ 46,733 $ 44,094 $ 2,639


Employee Benefits $ 880 $ 1,421 $ (541 ) Fiscal Services

Employee Benefits 31,849 33,186 (1,337) Total Support Services - Business $ 32,729 $ 34,607 $ (1,878)

Operations and Maintenance Employee Benefits $ 17,935 $ 19,566 $ (1,631)

Total Support Services - Operations and Maintenance $ 17,935 $ 19,566 $ (1,631)

Transportation Employee Benefits $ 154,261 $ 139,517 $ 14,744

Total Support Services - Transportation $ 154,261 $ 139,517 $ 14,744

Central Staff Services

Employee Benefits $ 11,691 $ 11,427 $ 264 Data Processing Services Employee Benefits 29,641 29,051 590

Total Support Services - Central $ 41,332 $ 40,478 $ 854

Total Support Services $ 406,968 $ 439,985 $ (33,017)

Community Services Employee Benefits $ 425 $ 3,430 $ (3,005)

Total Community Services $ 425 $ 3,430 $ (3,005)

Total Expenditures $ 859,122 $ 750,156 $ 108,966

EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES $ 438 $ 134,158 $ 133,720


NET CHANGE IN FUND BALANCE $ 438 $ 134,158 $ 133,720

FUND BALANCE - JULY 1, 2011 91 90 (1 )

FUND BALANCE - JUNE 30, 2012 $ 529 $ 134,248 $ 133,719


- 44-

- 45 -


NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2012

NOTE 1 - BUDGETARY PROCESS

The District follows procedures mandated by Illinois State law and District Board policy to establish the budgetary data reflected in its financial statements. The budget was passed on September 26, 2011. The modified accrual basis budgeted amounts in this report are the result of full compliance with the following procedures: For each fund, total fund expenditures may not legally exceed the budgeted amounts. The budget lapses at the end of each fiscal year. The District follows these procedures in establishing the budgetary data reflected in the financial statements:

1. Prior to July 1, the Superintendent submits to the Board of Education a proposed

operating budget for the fiscal year commencing on that date. The operating budget includes proposed expenditures and the means of financing them.

2. A public hearing is conducted to obtain taxpayer comments.

3. Prior to October 1, the budget is legally adopted through passage of a resolution.

4. Formal budgetary integration is employed as a management control device during the year.

5. The Board of Education may make transfers between the various items in any fund not

exceeding in the aggregate 10% of the total of such fund as set forth in the budget.

6. The Board of Education may amend the budget (in other ways) by the same procedures required of its original adoption.

NOTE 2 - EXCESS OF EXPENDITURES OVER BUDGET

For the year ended June 30, 2012 no funds presented as Required Supplementary Information had expenditures that exceeded the budget.

SUPPLEMENTARY INFORMATION

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO, 26 FUND FINANCIAL STATEMENTS COMBINING BALANCE SHEET

GENERAL FUND JUNE 30, 2012

Educational Working Cash Fund Fund

ASSETS

Cash and Cash Equivalents $ 5,932,399 $ 394,399 Investments, at Fair Value 5,556,038 7,972 Property Taxes Receivable, net of allowance of $0 8,160,853 Due from Other Governments, net of allowance of $0 347,796 Other Accounts Receivable, net of allowance of $0 55,838 Prepaid Expenses 433,009

Total Assets $ 20,485,933 $ 402,371

LIABILITIES AND FUND BALANCE

LIABILITIES Accounts Payable and Accrued Expenses $ 585,532 $ Payroll Liabilities 5,353,367 Deferred Revenue 14,364,885 Total Liabilities $ 20,303,784 $

FUND BALANCE Nonspendable

Prepaid Expenses $ 433,009 $ Unassigned (250,860) 402,371 Total Fund Balance $ 182,149 $ 402,371

Total Liabilities and Fund Balance $ 20,485,933 $ 402,371


- 46-

Total General

Fund

$ 6,326,798 5,564,010 8,160,853

347,796 55,838

433,009

$ 20,888,304

$ 585,532 5,353,367

14,364,885 $ 20,303,784

$ 433,009 151,511

$ 584,520

$ 20,888,304

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES GENERAL FUND


Total Educational Working Cash General

Fund Fund Fund REVENUES

Property Taxes $ 16,227,297 $ $ 16,227,297 Payments in Lieu of Taxes 135,369 135,369 Tuition 123,179 123,179 Earnings on Investments 23,243 1,088 24,331 Food Service 358,312 358,312 District/School Activity Income 83,915 83,915 Textbooks 437,288 437,288 Other Local Sources 84,004 84,004 State Aid 2,153,020 2,153,020 Federal Aid 1,289,153 1,289,153 On-Behalf Payments 3,168,753 3,168,753

$ 24,083,533 $ 1,088 $ 24,084,621

EXPENDITURES Current

Instruction Regular Programs $ 8,712,229 $ $ 8,712,229 Special Education Programs 3,631,901 3,631,901 Other Instructional Programs 1,461,541 1,461,541

Support Services Pupils 2,204,819 2,204,819 Instructional Staff 503,316 503,316 General Administration 841,578 841,578 School Administration 808,499 808,499 Business 388,518 388,518 Food Services 485,723 485,723 Central 351,712 351,712 Other Support Services 137,951 137,951

Community Services 23,839 23,839 Payments to Other Districts and Governmental Units 709,999 709,999

Capital Outlay 475,164 475,164 On-Behalf Payments 3,168,753 3,168,753

$ 23,905,542 $ $ 23,905,542

EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES $ 177,991 $ 1,088 $ 179,079


NET CHANGE IN FUND BALANCES $ 177,991 $ 1,088 $ 179,079

FUND BALANCES - JULY 1, 2011 4,158 401,283 405,441

FUND BALANCES - JUNE 30, 2012 $ 182,149 $ 402,371 $ 584,520


- 47-


IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND - EDUCATIONAL FUND

YEAR ENDED JUNE 3D, 2012



Property Taxes $ 16,047,890 $ 16,227,297 $ 179,407 Payments in Lieu of Taxes 150,000 135,369 (14,631 ) Tuition 60,000 123,179 63,179 Earnings on Investments 16,655 23,243 6,588 Food Service 384,000 358,312 (25,688) District/School Activity Income 95,000 83,915 (11,085) Textbooks 447,000 437,288 (9,712) Other Local Sources 40,000 84,004 44,004 State Aid General State Aid 2,073,660 720,386 (1,353,274) Special Education 1,370,000 1,379,938 9,938 Bilingual 41,569 41,569 State Free Lunch and Breakfast 25,000 8,966 (16,034) Technology - Learning Technology Centers 2,161 2,161

Federal Aid Food Service 198,000 232,182 34,182 Title I 86,000 83,216 (2,784) Federal Special Education 931,402 803,153 (128,249) Other ARRA Funds 4,252 4,252 Emergency Immigrant Assistance 7,876 (7,876) Title III - English Language Acquisition 30,471 40,018 9,547 Title II - Teacher Quality 37,773 40,983 3,210 Medicaid Matching Funds - Administrative Outreach 71,170 48,368 (22,802) Medicaid Matching Funds - Fee-for-Service Program 27,710 36,981 9,271

On-Behalf Payments 3,901,314 3,168,753 (732,561) Total Revenues $ 26,000,921 $ 24,083,533 $ (1,917,388)


Regular Programs Salaries $ 6,860,042 $ 7,478,694 $ (618,652) Employee Benefits 1,395,442 1,013,606 381,836 Purchased Services 22,054 4,696 17,358 Supplies and Materials 474,076 214,338 259,738 Other Objects 335 (335) Non-Capitalized Equipment 560 (560)

$ 8,751,614 $ 8,712,229 $ 39,385 Special Education Programs

Salaries $ 2,719,653 $ 2,711,602 $ 8,051 Employee Benefits 558,916 445,244 113,672 Purchased Services 51,170 282 50,888 Supplies and Materials 12,418 3,272 9,146

$ 3,342,157 $ 3,160,400 $ 181,757 Special Education Programs Pre-K

Salaries $ 698,191 $ 403,826 $ 294,365 Employee Benefits 190,661 67,675 122,986

$ 888,852 $ 471,501 $ 417,351 Interscholastic Programs Salaries $ 49,870 $ 37,682 $ 12,188 Employee Benefits 3,108 1,554 1,554 Purchased Services 17,535 31,987 (14,452) Supplies and Materials 400 2,432 (2,032) Other Objects 750 950 (200)

$ 71,663 $ 74,605 $ (2,942) Summer School Programs

Salaries $ 77,000 $ 66,594 $ 10,406 Employee Benefits 4,932 9,970 (5,038) Purchased Services 1,634 (1,634) Supplies and Materials 7,718 1,797 5,921

$ 89,650 $ 79,995 $ 9,655 Gifted Programs

Salaries $ 100 $ $ 100 Employee Benefits 6 6

$ 106 $ $ 106


- 48-





Original and Final Amounts Final Bud\let EXPENDITURES (Continued)

Instruction (Continued) Bilingual Programs

Salaries $ 732,992 $ 822,704 $ (89,712) Employee Benefits 141,415 114,582 26,833 Purchased Services 20 (20) Supplies and Materials 24,000 16,976 7,024

$ 898,407 $ 954,282 $ (55,875) Private Tuition - Other Objects

Special Education Programs K-12 $ 500,000 $ 352,659 $ 147,341 $ 500,000 $ 352,659 $ 147,341

Total Instruction $ 14,542,449 $ 13,805,671 $ 736,778

Support Services Pupils

Attendance and Social Work Services Salaries $ 487,441 $ 476,420 $ 11,021 Employee Benefits 77,482 52,695 24,787 Purchased Services 150 26 124 Supplies and Materials 425 10 415

$ 565,498 $ 529,151 $ 36,347 Health Services

Salaries $ 212,208 $ 484,861 $ (272,653) Employee Benefits 28,023 59,435 (31,412) Purchased Services 7,863 3,474 4,389 Supplies and Materials 5,100 3,794 1,306

$ 253,194 $ 551,564 $ (298,370) Psychological Services

Salaries $ 354,580 $ 331,119 $ 23,461 Employee Benefits 70,594 38,737 31,857 Purchased Services 10,400 85 10,315 Supplies and Materials 425 425

$ 435,999 $ 369,941 $ 66,058 Speech Pathology and Audiology Services

Salaries $ 599,307 $ 559,583 $ 39,724 Employee Benefits 79,216 44,440 34,776 Purchased Services 125 4,160 (4,035) Supplies and Materials 850 1,289 (439)

$ 679,498 $ 609,472 $ 70,026 Other Support Services - Pupils

Salaries $ 151,774 $ 134,581 $ 17,193 Employee Benefits 22,758 8,002 14,756 Supplies and Materials 2,125 2,108 17

$ 176,657 $ 144,691 $ 31,966

Total Support Services - Pupils $ 2,110,846 $ 2,204,819 $ (93,973)


Salaries $ 181,644 $ 159,217 $ 22,427 Employee Benefits 36,912 28,533 8,379 Purchased Services 72,085 87,665 (15,580) Supplies and Materials 6,208 7,849 (1,641)

$ 296,849 $ 283,264 $ 13,585 Educational Media Services

Salaries $ 126,388 $ 123,849 $ 2,539 Employee Benefits 22,984 17,888 5,096 Purchased Services 48,625 8,192 40,433 Supplies and Materials 28,331 31,692 (3,361) Other Objects 1,788 1,788

$ 228,116 $ 181,621 $ 46,495


- 49-





Orillinal and Final Amounts Final Budllet EXPENDITURES (Continued)

Support Services (Continued) Instructional Staff (Continued) Assessment and Testing

Salaries $ $ 500 $ (500) Employee Benefits 31 (31) Purchased Services 99,000 29,034 69,966 Supplies and Materials 17,975 8,866 9,109

$ 116,975 $ 38,431 $ 78,544

Total Support Services - Instructional Staff $ 641,940 $ 503,316 $ 138,624

General Administration Board of Education Services

Employee Benefits $ 5,000 $ $ 5,000 Purchased Services 467,693 2,855 464,838 Supplies and Materials 9,775 785 8,990 Other Objects 2,200 4,007 (1,807)

$ 484,668 $ 7,647 $ 477,021 Executive Administration Services

Salaries $ 188,251 $ 190,696 $ (2,445) Employee Benefits 46,726 52,028 (5,302) Purchased Services 14,700 872 13,828 Supplies and Materials 3,612 1,413 2,199 Other Objects 2,000 2,925 (925)

$ 255,289 $ 247,934 $ 7,355 Special Area Administration Services

Salaries $ 136,206 $ 135,908 $ 298 Employee Benefits 33,225 35,563 (2,338) Purchased Services 10,000 10,000 Supplies and Materials 850 842 8

$ 180,281 $ 172,313 $ 7,968 Tort Immunity Services

Purchased Services $ $ 413,684 $ (413,684) $ $ 413,684 $ (413,684)

Total Support Services - General Administration $ 920,238 $ 841,578 $ 78,660

School Administration Office of the Principal Services

Salaries $ 705,853 $ 655,105 $ 50,748 Employee Benefits 159,173 142,070 17,103 Purchased Services 1,000 1,987 (987) Supplies and Materials 9,337 (9,337)

Total Support Services - School Administration $ 866,026 $ 808,499 57,527


Salaries $ 34,667 $ 98,000 $ (63,333) Employee Benefits 20,321 27,368 (7,047) Supplies and Materials 1,500 1,500

$ 56,488 $ 125,368 $ (68,880) Fiscal Services

Salaries $ 169,082 $ 165,386 $ 3,696 Employee Benefits 34,969 25,324 9,645 Purchased Services 116,575 70,818 45,757 Supplies and Materials 9,217 436 8,781 Other Objects 1,186 (1,186)

$ 329,843 $ 263,150 $ 66,693

Total Support Services - Business $ 386,331 $ 388,518 $ (2,187)

Operations and Maintenance Salaries $ 2,000 $ $ 2,000

Total Support Services - Operation and Maintenance $ 2,000 $ $ 2,000


- 50-





Original and Final Amounts Final Budget EXPENDITURES (Continued)

Support Services (Continued) Food Services

Purchased Services $ 566,800 $ 483,708 $ 83,092 Supplies and Materials 14,466 2,015 12,451

Total Support Services - Food Services $ 581,266 $ 485,723 $ 95,543

Central Information Services

Supplies and Materials $ 425 $ 235 $ 190 $ 425 $ 235 $ 190

Staff Services Salaries $ 57,650 $ 57,354 $ 296 Employee Benefits 7,834 7,264 570 Purchased Services 9,532 12,483 (2,951)

$ 75,016 $ 77,101 $ (2,085) Data Processing Services

Salaries $ 146,154 $ 140,993 $ 5,161 Employee Benefits 16,139 14,945 1,194 Purchased Services 105,700 105,003 697 Supplies and Materials 55,201 13,435 41,766

$ 323,194 $ 274,376 $ 48,818

Total Support Services - Central $ • 398,635 $ 351,712 $ 46,923

Other Support Services Purchased Services $ 40,000 $ 64,258 $ (24,258) Supplies and Materials 13,185 73,693 (60,508)

Total Other Support Services $ 53,185 $ 137,951 $ (84,766)


Community Services Salaries $ 2,100 $ 17,065 $ (14,965) Purchased Services 9,906 5,577 4,329 Supplies and Materials 196 1,197 11 ,001)

Total Community Services $ 12,202 $ 23,839 $ 11 1,637)

Payments to Other Districts and Governmental Units Payments to Other Districts and Governmental Units (In-State)

Payments for Special Education Programs Purchased Services $ 366,100 $ 304,862 $ 61.238 Other Objects 199,011 165,776 33,235

$ 565,111 $ 470,638 $ 94,473 Other Payments to In-State Governmental Units

Other Objects $ 345,000 $ 11,505 $ 333,495 $ 345,000 $ 11,505 $ 333,495

Total Payments to Other Districts and Governmental Units (In-State) $ 910,111 $ 482,143 $ 427,968

Payments to Other Districts and Governmental Units-Tuition (In-State) Payments for Special Education Programs

Other Objects $ $ 227,856 $ (227,856) Total Payments to Other Districts and Governmental Units-Tuition (In-State) $ $ 227,856 $ (227,856)

Total Payments to Other Districts and Governmental Units $ 910,111 $ 709,999 $ 200,112

Capital Outlay Instruction

Regular Programs $ 7,500 $ 29,304 $ (21,804) Other Instructional Programs 26,769 (26,769)

Support Services Pupils 9,000 9,000 Food Services 5,000 5,000 Central 78,000 419,091 (341,091)



- 51 -

EXPENDITURES (Continued)

On-Behalf Payments

Total Expenditures




Budgeted Amounts

Original and Final

$ 3,901,314 $

$ 25,426,043 $

EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES $ 574,878 $


NET CHANGE IN FUND BALANCE $ 574,878 $

FUND BALANCE - JULY 1, 2011 4,158

FUND BALANCE - JUNE 30, 2012 $ 579,036 $


- 52-

Actual Variance from Amounts Final Budget

3,168,753 $ 732,561

23,905,542 $ 1,520,501

177,991 $ (396,887)

177,991 $ (396,887)

4,158

182,149 $ (396,887)


IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND - WORKING CASH FUND




Earnings on Investments $ 1,300 $ 1,088 $ (212~ Total Revenues $ 1,300 $ 1,088 $ (212)

EXPENDITURES $ $ $

EXCESS OR (DEFICIENCy) OF REVENUES OVER EXPENDITURES $ 1,300 $ 1,088 $ (212)


NET CHANGE IN FUND BALANCE $ 1,300 $ 1,088 $ (212)

FUND BALANCE - JULY 1, 2011 401,283 401,283

FUND BALANCE - JUNE 30, 2012 $ 402,583 $ 402,371 $ (212)


- 53-


IN FUND BALANCES - BUDGET AND ACTUAL DEBT SERVICES FUND



Original and Final Amounts Final Budeet

REVENUES Property Taxes $ 3,308,279 $ 3,311,685 $ 3,406 Payments in Lieu of Taxes 14,713 (14,713) Earnings on Investments 2,012 2,367 355 State Aid General State Aid 820,802 820,802

Total Revenues $ 3,325,004 $ 4,134,854 $ 809,850

EXPENDITURES Debt Services

Interest Other Interest on Long-Term Debt

Other Objects $ 2,912,839 $ 1,963,495 $ 949,344 Total Debt Services - Interest $ 2,912,839 $ 1,963,495 $ 949,344

Debt Services - Payment of Principal on Long-Term Debt Other Objects $ 1,715,715 $ 2,701,813 $ {986,098)

Total Debt Services - Payment of Principal on Long-Term Debt $ 1,715,715 $ 2,701,813 $ {986,098)

Debt Services - Other Other Objects $ 15,500 $ 7,730 $ 7,770

Total Debt Services - Other $ 15,500 $ 7,730 $ 7,770

Total Debt Services $ 4,644,054 $ 4,673,038 $ (28,984)

Total Expenditures $ 4,644,054 $ 4,673,038 $ (28,984)

EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES $ (1,319,050) $ (538,184) $ 780,866

OTHER FINANCING SOURCES (USES) Interfund Transfers 266,500 292,723 26,223

NET CHANGE IN FUND BALANCE $ (1,052,550) $ (245,461 ) $ 807,089

FUND BALANCE - JULY 1, 2011 3,170,333 3,170,333

FUND BALANCE - JUNE 30, 2012 $ 2,117,783 $ 2,924,872 $ 807,089


- 54-


IN FUND BALANCES - BUDGET AND ACTUAL CAPITAL PROJECTS FUND




Earnings on Investments $ $ 1,705 $ 1,705 Other Local Sources 2,202,550 7,423 (2,195,127) State Aid

General State Aid 446,000 446,000 Total Revenues $ 2,202,550 $ 455,128 $ (1 ,747,422~


Business Facilities Acquisition and Construction Services Purchased Services $ $ 14,296 $ {14,296~

Total Support Services - Business $ $ 14,296 $ (14,296)

Capital Outlay Support Services

Facilities Acquisition and Construction $ 2,200,000 $ $ 2,200,000 Total Capital Outlay $ 2,200,000 $ $ 2,200,000

Total Expenditures $ 2,200,000 $ 14,296 $ 2,185,704

EXCESS OR (DEFICIENCy) OF REVENUES OVER EXPENDITURES $ 2,550 $ 440,832 $ 438,282


NET CHANGE IN FUND BALANCE $ 2,550 $ 440,832 $ 438,282

FUND BALANCE - JULY 1, 2011 630,040 630,040

FUND BALANCE - JUNE 30, 2012 $ 632,590 $ 1,070,872 $ 438,282


- 55-

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 SCHEDULE OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES

ACTIVITY FUNDS FOR YEAR ENDED JUNE 30, 2012

BALANCE BALANCE JULY 1, 2011 ADDITIONS DEDUCTIONS JUNE 30,2012

ASSETS

Cash and Cash Equivalents $ 7,207 $ 12,266 $ 14,369 $ 5,104

LIABILITIES

Amount Due to Activity Fund Organizations Adm inistration Center

Pop Fund $ 590 $ 2,476 $ 749 $ 2,317 Social Committee 471 70 70 471 Sunshine Fund 780 175 388 567 Worksh/Chalienger F.T. 1,094 8,370 8,370 1,094

Briargate Back to Basics 219 218 Learning Center 30 93 123

Cary Junior High Back to Basics 822 730 1,552

Deer Path Back to Basics 519 501 18 Field Trips 189 189 Grade Level Fund 12 12 Learning Center 26 183 204 5

Prairie Hill Com m Service 203 203 Ecology Club 241 241 Learning Center 179 179 Student Council Fund 1,209 112 1,321 Trips 193 193

Three Oaks Back to Basics 430 430 Learning Center 57 57

$ 7,207 $ 12,266 $ 14,369 $ 5,104


- 56-

EXPENDITURES:

ED

O&M

DS

TR

MRISS

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 COMPUTATION OF OPERATING EXPENSE PER PUPIL

AND PER CAPITA TUITION CHARGE FOR YEAR ENDED JUNE 30,2012

Total Expenditures

Total Expenditures

Total Expenditures

Total Expenditures

Total Expenditures

Total Expenditures

$

$

LESS RECEIPTS/REVENUES OR DISBURSEMENTS/EXPENDITURES NOT APPLICABLE TO THE REGULAR K-12 PROGRAM:

TR

ED

ED

ED

ED

ED

ED

ED

O&M

O&M DS

MRISS

MRISS

MRISS

Regular - Transp Fees from Other Districts (In State)

Special Education Programs Pre-K

Summer School Programs

Special Education Programs K-12 - Private Tuition

Community Services

Total Payments to Other District & Govt Units

Capital Outlay

Non-Capitalized Equipment

Capital Outlay

Non-Capitalized Equipment Debt Service - Payments of Principal on Long-Term Debt

Special Education Programs - Pre-K

Summer School Programs

Community Services

20,736,789

1,687,990

4,673,038

1,450,540

29,298,513

23,839

709,999

Total Deductions $ =====~~~~ Total Operating Expenses (Regular K-12)

9 Mo ADA (See the General State Aid Claim for 2011-2012 (ISBE 54-33, L 12)

Estimated OEPP • $

LESS OFFSETTING RECEIPTS/REVENUES:

TR

TR

ED

ED-O&M

ED

ED-O&M

Regular -Transp Fees from Pupils or Parents (In State)

Regular - Transp Fees from Co-curricular Activities (In State)

Total Food Service

Total District/School Activity Income

Rentals - Regular Textbooks

Rentals

ED-O&M-TR Total Special Education

ED-MRISS Total Bilingual Ed

ED State Free Lunch & Breakfast

ED-O&M-TR-MRISS Total Transportation ED-O&M-DS-TR-MRISS Technology - Learning Technology Centers

ED-MR/SS Total Food Service

ED-O&M-TR-MRISS Total Title I

ED-O&M-TR-MRISS Total Title IV

ED-O&M-TR-MRISS Fed - Spec Education - IDEA - Flow Through/Low Incidence

ED-O&M-TR-MRISS Fed - Spec Education - IDEA - Room & Board

ED-O&M-DS-TR-MRISS-Tort Total ARRA Program Adjustments

ED-TR-MRISS

ED-O&M-TR-MRISS

ED-O&M-TR-MRISS

ED-O&M-TR-MRISS

Title III - English Language Acquisition

Title II - Teacher Quality

Medicaid Matching Funds - Administrative Outreach

Medicaid Matching Funds - Fee-for-Service Program

Total Allowance for PCTC Computation $ ~~~~_--c4,,,,7-,"16,,",:.:3.::.97,,-

Net Operating Expense for PCTC Computation $ ~ ____ ...;1.::.9:.;;,5...;4""9,:.:0.::.0,,,-8

Total Depreciation Allowance (from page 27, Coil) $ _____ --c=.=~

Total Allowance for PCTC Computation $

9 MoADA

Total Estimated PCTC· $ ========== Unaudited

- 57-

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 SCHEDULE OF BONDS OUTSTANDING

Year Ended June 30,

Total

Paying Agent:

2013 2014

Principal Payment Date:

Interest Payment Dates:

Interest Rates:

JUNE 30,2012

SERIES 2003 BONDS ISSUE DATED DECEMBER 1,2003

ORIGINAL INTEREST PRINCIPAL PAYABLE

$ 2,055,000 $ 95,116 565,000 20,623

$ 2,620,000 $ 115,739

Bank of New York Mellon

February 1

February 1 and August 1

3.00% - 3.65%


- 58-

$

$

TOTAL DEBT SERVICE

2,150,116 585,623

2,735,739


JUNE 30, 2012

GENERAL OBLIGATION SCHOOL REFUNDING BONDS, SERIES 2004 ISSUE DATED FEBRUARY 15, 2004

ORIGINAL INTEREST TOTAL DEBT Year Ended June 30, PRINCIPAL PAYABLE SERVICE

2013 $ 330,000 $ 263,663 $ 593,663 2014 1,055,000 252,525 1,307,525 2015 1,170,000 215,600 1,385,600 2016 1,210,000 174,650 1,384,650 2017 1,255,000 130,485 1,385,485 2018 1,305,000 83,422 1,388,422 2019 840,000 33,180 873,180

Total $ 7,165,000 $ 1,153,525 $ 8,318,525

Paying Agent: Bank of New York Mellon

Principal Payment Date: February 1

Interest Payment Dates: February 1 and August 1

Interest Rates: 2.00% - 3.95%


- 59-


JUNE 30, 2012

GENERAL OBLIGATION SCHOOL ALTERNATIVE REVENUE BONDS, SERIES 2004A ISSUE DATED JULY 1, 2004

Year Ended June 30,

Total

Paying Agent:

2013 2014 2015 2016

Principal Payment Date:

Interest Payment Dates:

Interest Rates:

ORIGINAL INTEREST PRINCIPAL PAYABLE

$ 190,000 $ 29,750 195,000 21,675 205,000 13,387 110,000 4,675

$ 700,000 $ 69,487

Bank of New York Mellon

February 1

February 1 and August 1

4.00% - 4.25%


- 60-

TOTAL DEBT SERVICE

$ 219,750 216,675 218,387 114,675

$ 769,487


JUNE 30,2012

GENERAL OBLIGATION SCHOOL REFUNDING BONDS, SERIES 2005 ISSUE DATED MAY 3,2005

ORIGINAL INTEREST TOTAL DEBT Year Ended June 30, PRINCIPAL PAYABLE SERVICE

2013 $ 75,000 $ 477,075 $ 552,075 2014 910,000 474,262 1,384,262 2015 1,470,000 437,862 1,907,862 2016 1,545,000 364,362 1,909,362 2017 1,620,000 287,112 1,907,112 2018 1,695,000 206,112 1,901,112 2019 1,460,000 121,362 1,581,362 2020 1,095,000 52,013 1,147,013

Total $ 9,870,000 $ 2,420,160 $ 12,290,160






- 61 -


JUNE 30,2012

GENERAL OBLIGATION SCHOOL BONDS, SERIES 2011A ISSUE DATED JANUARY 31,2011

ORIGINAL INTEREST Year Ended June 30, PRINCIPAL PAYABLE

2013 $ $ 764,637 $ 2014 764,638 2015 764,637 2016 764,638 2017 764,638 2018 764,637 2019 1,060,000 764,638 2020 2.455,000 701,037 2021 1,875,000 578,287 2022 1,950,000 461,100 2023 2,055,000 363,600 2024 1,945,000 240,300 2025 2,060,000 123,600

Total $ 13.400,000 $ 7,820.387 $






- 62-

TOTAL DEBT SERVICE

764,637 764,638 764,637 764,638 764,638 764,637

1,824,638 3,156,037 2.453,287 2.411,100 2.418,600 2,185,300 2,183,600

21,220,387


JUNE 30,2012

GENERAL OBLIGATION SCHOOL BONDS, SERIES 2011 B ISSUE DATED JANUARY 31,2011


2013 $ $ 168,438 2014 168,437 2015 168,438 2016 168,437 2017 168,438 2018 168,437 2019 168,438 2020 168,437 2021 1,495,000 168,437 2022 1,500,000 75,000

Total $ 2,995,000 $ 1,590,937






- 63-

$

$

TOTAL DEBT SERVICE

168,438 168,437 168,438 168,437 168,438 168,437 168,438 168,437

1,663,437 1,575,000

4,585,937

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NOo 26 SCHEDULE OF BONDS OUTSTANDING

JUNE 30, 2012

GENERAL OBLIGATION SCHOOL BONDS, SERIES 2011C ISSUE DATED JANUARY 31,2011


2013 $ $ 110,000 $ 2014 110,000 2015 110,000 2016 110,000 2017 110,000 2018 110,000 2019 110,000 2020 110,000 2021 110,000 2022 110,000 2023 350,000 110,000 2024 750,000 85,938 2025 500,000 34,375

Total $ 1,600,000 $ 1,330,313 $




Interest Rates: 60875%


- 64-

TOTAL DEBT SERVICE

110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 460,000 835,938 534,375

2,930,313

STATISTICAL SECTION This part of the District’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District’s overall financial health. Contents Page Financial Trends 65

These schedules contain trend information to help the reader understand how the District’s financial performance and well-being have changed over time.

Revenue Capacity 69

These schedules contain information to help the reader assess the District’s most significant local revenue source, the property tax.

Debt Capacity 73

These schedules present information to help the reader assess the affordability of the District’s current level of outstanding debt and the District’s ability to issue additional debt in the future

Demographic and Economic Information 79

These schedules offer demographic and economic indicators to help the reader understand the environment within which the District’s financial activities take place.

Operating Information 81

These schedules contain information about the District’s service and resources to help the reader understand how the District’s financial information relates to the services the District provides and the activities it performs.

Sources: Unless otherwise noted, the information in these schedules is derived from the annual financial reports for the relevant year.

Expenses

Government Activities

Instruction

Regular Programs

Special Education Programs

Other Instructional Programs

Supporting Services

Pupils

Instructional Staff

General Administration

School Administration

Business

Facilities Acquisition and Construction

Operations and Maintenance

Transportation

Food Services

Central

Other Support Services

Community Services

Payments to Other Governments

Interest and Fees on Long-Term Debt

On-Behalf Retirement Contributions

Depreciation - Unallocated

Total Governmental Activities Expenses

Program Revenues


Charges for Service

Regular Programs

Other Instructional Programs

Pupils


Transportation

Food Services

Operating Grants and Contributions

Capital Grants and Contributions

Total Governmental Activities Program

Revenues

Net (Expense) Revenue

2012


CHANGES IN NET ASSETS

LAST TEN FISCAL YEARS

2011 2010 2009 2008 2007 2006 2005 2004 2003

$ 9,942,902 $ 10,878,782 $ 13,612,767 $ 13,741,071 $ 14,153,582 $ 13,658,814 $ 12,960,667 $ 12,632,713 $ 11,329,305 $ 10,618,216

3,819,612 3,737,447 4,624,709 4,201,799 3,561,288 3,216,987 4,911,916 4,740,304 2,577,549 2,311,049

1,482,148

2,333,953

522,627

869,462

852,593

448,804

13,168

1,587,871

1,587,045

508,614

510,041

137,951

27,269

709,999

2,099,276

3,168,753

1,343,697

2,402,329

567,128

947,917

934,816

425,451

4,174

2,157,869

1,608,663

556,402

548,641

134,482

9,059

770,935

1,697,862

3,178,028

1,413,340

2,272,885

1,090,095

1,227,918

1,354,264

526,047

19,519

2,479,069

1,727,500

577,988

734,807

48,491

34,784

956,807

1,520,369

4,159,487

1,246,866

2,236,173

1,094,233

969,060

1,350,160

463,312

2,857,344

1,895,358

552,946

619,945

22,288

24,522

1,011,920

1,527,137

3,122,769

1,113,550

2,142,953

957,506

1,281,088

1,242,797

343,369

2,928,756

1,980,203

818,720

516,513

30,108

20,431

1,349,176

1,635,193

2,261,179

1,060,347

1,846,324

1,008,694

1,041,750

1,271,029

361,923

2,684,299

1,762,096

721,320

571,110

31,564

23,996

1,484,617

1,854,496

1,612,425

230,508

1,757,092

706,934

1,380,999

1,241,094

419,549

2,533,199

1,435,206

766,562

264,299

20,443

1,511,316

1,082,606

92,136

826,480

654,368

1,269,866

1,311,416

367,026

2,876,739

1,393,186

699,866

220,050

11,347

1,522,664

1,629,123

1,039,498

573,144

819,622

1,521,698

1,459,965

383,396

351,325

2,701,346

1,196,878

590,723

243,625

2,877

1,480,768

3,258,645

2,078,375

1,290,682

987,329

300,545

879,534

1,388,944

1,471,997

357,741

554,189

2,717,926

1,187,173

637,548

275,267

2,878

1,369,121

2,171,948

1,823,903

1,586,140

$ 30,622,088 $ 31,903,682 $ 38,380,846 $ 36,936,903 $ 36,336,412 $ 34,211,791 $ 31,222,390 $ 30,247,284 $ 32,899,421 $ 30,641,448

$ 539,562 $ 167,045

262,640

10,746

358,312

6,842,516

43,484

651,422 $ 116,405

348,628

421,750

7,000,392

10,330

704,375 $ 104,283

268,504

418,020

8,910,113

13,845

480,747 $ 98,369

284,925

129,509

549,513

7,514,648

16,418

437,403 $ 21,621

327,482

15,979

517,510

6,164,292

42,212

445,681 $ 7,780

308,872

20,978

510,501

5,162,865

57,009

422,985 $ 157,967

4,534

23,861

554,649

4,688,632

144,638

449,982 $ 17,388

552,491

4,496,937

823,659

854,637 $ 29,915

127,412

32,257

521,545

4,954,410

369,222

35,970

64,781

488,085

5,386,112

$ 8,224,305 $ 8,548,927 $ 10,419,140 $ 9,074,129 $ 7,526,499 $ 6,513,686 $ 5,997,266 $ 6,340,457 $ 6,520,176 $ 6,344,170

$ (22,397,783) $ (23,354,755) $ (27,961,706) $ (27,862,774) $ (28,809,913) $ (27,698,105) $ (25,225,124) $ (23,906,827) $ (26,379,245) $ (24,297,278)

(continued)

- 65-

General Revenues


Taxes

Property Taxes, Levied for General Purposes

Property Taxes, Levied for Debt Service

Personal Property Replacement Taxes

Grants and Contributions not Restricted

to Specific Activities

Unrestricted Investment Earnings

Bond Premium Amortization

Miscellaneous

Gain/(Loss) on Sale of Capital Assets

Total Governmental Activities General

Revenues

Change in Net Assets

Net Assets - Beginning

Net Assets Adjustment

Net Assets - Ending

Net Assets by Component


Invested in Capital Assets, net of related debt

Restricted for:


Debt Service

Transportation

Retirement

Capital Projects

Working Cash

Unrestricted (Deficit)

Total Govemmental Activities Net Assets

Source: 2003-2012 Annual Financial Reports

2012


CHANGES IN NET ASSETS


2011 2010 2009 2008 2007 2006 2005 2004 2003

$ 18,909,356 $ 18,409,683 $ 18,278,461 $ 17,768,114 $ 17,043,907 $ 16,267,497 $ 15,083,589 $ 14,540,962 $ 10,661,678 $ 12,760,460

3,311,685 3,276,901 3,281,921 3,254,684 3,151,438 2,989,748 2,809,657 2,766,281 2,071,637 2,534,303

288,806

2,081,635

32,233

40,746

313,944

3,389,801

20,220

(129,859)

242,088

4,408,720

2,710

36,141

299,246

4,941,118

37,962

36,142

342,085

5,231,996

151,999

36,142

549,973

319,894

5,037,279

351,042

36,142

50,591

293,208

5,372,740

289,711

74,666

231,335

5,440,768

101,879

1,136,012

188,294

5,559,684

124,400

167,451

5,002,996

269,100

$ 24,664,461 $ 25,280,690 $ 26,250,041 $ 26,337,266 $ 26,507,540 $ 25,052,193 $ 23,923,571 $ 24,217,237 $ 18,605,693 $ 20,734,310

$ 2,266,678 $ 1,925,935 $ (1,711,665) $ (1,525,508) $ (2,302,373) $ (2,645,912) $ (1,301,553) $ 310,410 $ (7,773,552) $ (3,562,968)

(443,641) 7,429,939 9,141,604 10,707,433 13,225,070 16,675,802 17,977,355 23,283,186 31,056,738 34,619,706

(9,799,515) (40,321) (215,264) (804,820) (5,616,241)

$ 1,823,037 $ (443,641) $ 7,429,939 $ 9,141,604 $ 10,707,433 $ 13,225,070 $ 16,675,802 $ 17,977,355 $ 23,283,186 $ 31,056,738

$ 14,219,672 $ 12,398,118 $ 11,441,993 $ 10,480,341 $ 9,739,268 $ 10,553,896 $ 9,699,262 $ 8,962,891 $ 18,156,491 $ 19,261,147

1,301,440

413,593

123,988

621,541

(14,857,197)

$ 1,823,037 $

268,454

2,354,944

520,998

90

1,020,208

1,813,448

901,303

4,233

577,142

1,824,565

566,285

11,389

630,040 628,414 614,569

1,366,218

1,777,894

439,124

4,358

284,169

2,006,212

836,647

147,049

1,381,830 1,381,809 1,380,943 1,377,026

(16,616,285) (9,761,490) (6,314,496) (4,000,372) (1,979,929)

(443,641) $ 7,429,939 $ 9,141,604 $ 10,707,433 $ 13,225,070 $

1,743,005 1,735,190 1,130,838 1,679,622

512,325 418,827

4,721,210 6,860,447 3,995,857 10,115,969

16,675,802 $ 17,977,355 $ 23,283,186 $ 31,056,738

Note: The District reported on the cash basis of accounting for 2003 through 2004. From 2005 to present, the District reports on the accrual basis of accounting.

- 66-

REVENUES

Local Sources

State Sources

Federal Sources

On-Behalf Payments

EXPENDITURES

Instruction

Support Services

Community Services

Payments to Other Governments

Debt Service

Principal

Interest and Fees

Capital Outlay

On-Behalf Payments

Excess or (Deficiency) of Revenues over Expenditures

Other Financing Sources (Uses)

Principal on Bonds Sold

Prernium on Bonds Sold

Accrued Interest on Bond Sales

Payments to Refunding Bond Escrow Agent

Proceeds from Sale of Capital Assets

Other Uses

Net Change in Fund Balance

Debt Service as a Percentage

of Noncapital Expenditures


2012 2011


CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS


2010 2009 2008 2007 2006 2005 2004 2003

$ 23,956,426 $ 23,675,286 $ 23,390,328 $ 22,949,172 $ 22,085,853 $ 21,325,974 $ 20,148,139 $ 19,954,065 $ 14,195,536 $ 16,689,372

4,384,849

1,302,410

3,168,753

5,203,120

1,903,042

3,178,028

6,594,238

2,488,987

4,159,487

6,842,804

2,460,508

3,122,769

7,947,866

1,153,025

2,261,179

7,557,390

975,582

1,612,425

7,651,145

1,038,947

1,082,606

7,729,192

579,390

1,629,123

8,148,986

631,688

2,078,375

8,055,672

509,533

1,823,903

$ 32,812,438 $ 33,959,476 $ 36,633,040 $ 35,375,253 $ 33,447,923 $ 31,471,371 $ 29,920,837 $ 29,891,770 $ 25,054,585 $ 27,078,480

$ 14,112,412 $ 14,696,874 $ 18,519,589 $ 18,064,784 $ 17,673,617 $ 16,735,484 $ 15,469,924 $ 14,572,409 $ 14,946,352 $ 13,883,677

9,130,063 10,089,874 11,667,977 11,751,303 11,717,189 10,788,292 10,248,547 9,386,538 9,811,399 10,391,582

27,269 9,059 34,784 24,522 20,431 23,996 20,443 11,347 2,877 2,878

709,999 770,935 956,807 1,011,920 1,349,176 1,484,617 1,289,973 1,580,395 1,480,768 1,369,121

2,701,813

1,971,225

660,028

2,601,432

1,502,899

60,630

2,579,202

1,243,582

91,760

2,445,831

1,178,292

24,631

1,897,001

1,539,477

292,092

1,693,127

1,642,610

229,266

1,995,988

1,402,314

362,106

1,693,782

1,788,571

444,774

1,575,830

1,587,925

511,240

5,579,330

2,052,706

8,058,579 3,168,753 3,178,028 4,159,487 3,122,769 2,261,179 1,612,425 1,082,606 1,629,123 2,078,375 1,823,903

$ 32,481,562 $ 32,909,731 $ 39,253,188 $ 37,624,052 $ 36,750,162 $ 34,209,817 $ 31,871,901 $ 31,106,939 $ 31,994,766 $ 43,161,776

$

$

$

$

330,876 $ 1,049,745 $ (2,620,148) $ (2,248,799) $ (3,302,239) $ (2,738,446) $ (1,951,064) $ (1,215,169) $ (6,940,181) $ (16,083,296)

204,800

$ 17,995,000 $

207,819

(179,967)

204,800 $ 18,022,852 $

$

$

$ $

1,354,786

$ 1,354,786 $

$

65,700

65,700 $

$ 12,305,000 $

520,367

2,728

(11,774,451)

850,522

$ 1,904,166 $

$ 4,560,000

71,284

71,284 $ 4,560,000

535,676 $ 19,072,597 $ (2,620,148) $ (2,248,799) $ (1,947,453) $ (2,672,746) $ (1,951,064) $ 688,997 $ (6,868,897) $ (11,523,296)

14.69% 12.49% 9.76% 9.64% 9.43% 9.82% 10.78% 11.36% 10.05% 21.74%

Note: The District reported on the modified cash basis of accounting for 2003 through 2004. From 2005 to present, the District reports on the modified accrual basis of accounting.

- 67-


FUND BALANCES, GOVERNMENTAL FUNDS


GASB 54 Pre-GASB 54

2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

General Fund

Nonspendable $ 433,009 $ 129,174 $ $ $ $ $ $ $ $

Unassigned 151,511 276,267

Reserved 512,325

Unreserved (10,027,162) (6,633,337) (4,377,316) (1,897,165) 1,532,565 3,346,503 1,317,489 6,825,178

Total General Fund $ 584,520 $ 405,441 $ (10,027,162) $ (6,633,337) $ (4,377,316) $ (1,897,165) $ 2,044,890 $ 3,346,503 $ 1,317,489 $ 6,825,178

All Other Governmental Funds

Nonspendable $ $ 68,604 $ $ $ $ $ $ $ $ Restricted 3,255,814 4,401,215

Assigned 1,690,698 120,096

Reserved 603,771 561,559

Unreserved, reported in:

Operations and Maintenance Fund 1,020,208 577,142 762,447 (277,390)

Debt Services Fund 1,813,448 1,824,565 1,777,894 2,006,212 1,907,249 1,898,753 1,130,838 1,679,622

Transportation Fund 901,303 566,285 439,124 836,647 1,685,071 1,875,871 788,259 572,170

Illinois Municipal Retirement/Social

Security Fund 4,233 11,389 4,358 147,049 263,054 313,902 57,732 193,440

Capital Projects Fund 628,414 614,569 418,827 309,883 903,908

Working Cash Fund 1,381,830 1,381,809 1,380,943 1,377,026 1,326,699 1,324,171 1,322,494 1,621,273

Total All Other Govemmental Funds $ 4,946,512 $ 4,589,915 $ 5,749,436 $ 4,975,759 $ 4,968,537 $ 4,651,103 $ 5,182,073 $ 5,831,524 $ 3,609,206 $ 4,970,413

Total All Governmental Funds $ 5,531,032 $ 4,995,356 $ (4,277,726) $ (1,657,578) $ 591,221 $ 2,753,938 $ 7,226,963 $ 9,178,027 $ 4,926,695 $ 11,795,591



Note: The Working Cash Fund is included in the General Fund in 2011 and 2012. The Operations and Maintenance Fund is included in the General Fund for 2003 through 2006.

- 68-


PROPERTY TAX LEVIES AND COLLECTIONS

LAST TEN LEVY YEARS

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Taxes Extended for Levy Year $ 22,698,574 $ 22,173,772 $ 21,629,149 $ 21,548,831 $ 20,607,600 $ 19,819,353 $ 18,727,571 $ 17,816,303 $ 16,705,906 $ 15,810,780 Amount of Levy Collected within the

Fiscal Year of the Levy 11,133,811 10,675,481 10,376,391 10,558,845 10,016,283 8,607,183 9,203,480 7,991,382 4,689,314 7,757,098 Percentage of Levy Collected within

the Fiscal Year of the Levy 49.05% 48.14% 47.97% 49.00% 48.60% 43.43% 49.14% 44.85% 28.07% 49.06% Amount of Collections in Subsequent Years N/A 11,482,582 11,244,838 10,961,379 10,533,383 11,186,153 9,507,909 9,800,288 11,993,456 8,044,007 Amount of Levy Collected to Date 11,133,811 22,158,063 21,621,229 21,520,224 20,549,666 19,793,336 18,711,389 17,791,670 16,682,770 15,801,105 Percentage of Levy Collected to Date 49.05% 99.93% 99.96% 99.87% 99.72% 99.87% 99.91% 99.86% 99.86% 99.94%

Source: Lake and McHenry County Clerk Offices, Lake and McHenry County Treasurer Offices

Note: Amounts collected in subsequent years for the 2011 levy is not yet available.

- 69-


ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY

LAST TEN LEVY YEARS

Total Taxable Total Residential Farm Commercial Industrial Railroad Minerals Equalized Direct Tax Estimated Actual

Levy Year Property Property Property Property Property Property Assessed Value Rate Taxable Value

2011 $ 597,420,454 $ 1,320,159 $ 38,274,933 $ 34,833,496 $ 434,895 $ $ 672,283,937 3.3763 $ 2,016,851,811

2010 675,310,463 1,464,171 43,395,448 39,808,611 409,357 760,388,050 2.9161 2,281,164,150

2009 715,294,551 1,394,569 43,950,758 40,559,608 327,697 801,527,183 2.6985 2,404,581,549

2008 722,076,263 1,395,816 44,636,944 40,020,959 272,323 808,402,305 2.6656 2,425,206,915

2007 705,981,642 1,359,090 40,937,545 39,549,633 249,211 788,077,121 2.6149 2,364,231,363

2006 662,016,015 1,310,790 36,312,717 37,602,826 227,115 1,693 737,471,156 2.6875 2,212,413,468

2005 611,986,305 1,334,883 33,846,787 35,619,221 227,814 1,614 683,016,624 2.7419 2,049,049,872

2004 551,959,807 1,422,667 30,893,133 33,782,181 241,719 1,509 618,301,016 2.8815 1,854,903,048

2003 500,734,425 1,338,824 28,729,914 31,759,423 214,597 309,282 563,086,465 2.9668 1,689,259,395

2002 445,794,186 1,578,986 26,117,200 29,540,184 198,434 289,049 503,518,039 3.1401 1,510,554,117

Source: Lake and McHenry County Clerks' Offices

Note: The total direct tax rate is the total property tax extension divided by the total taxable equalized assessed value.

- 70-


PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS

LAST TEN LEVY YEARS

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

McHenry County 0.8879 0.7927 0.7157 0.7014 0.6871 0.7060 0.7278 0.7346 0.7153 0.6725

McHenry County Conservation District 0.2191 0.1956 0.1775 0.1732 0.1738 0.4133 0.1490 0.1580 0.1663 0.1734

McHenry Community College District 528 0.3395 0.3039 0.2739 0.2686 0.2634 0.2741 0.2922 0.3033 0.3130 0.3253

Community High School District 155 2.2979 2.0347 1.9054 1.8647 1.8213 1.8697 1.9023 1.9780 2.0433 2.0895

Cary Fire Protection District 0.4712 0.4101 0.3789 0.3735 0.3615 0.3724 0.2784 0.2772 0.2762 0.2898

Cary Area Public Library District 0.2118 0.1849 0.1708 0.1681 0.1611 0.1655 0.1690 0.1750 0.1810 0.1893

Cary Park District 0.6591 0.5752 0.5352 0.5282 0.5080 0.5240 0.5344 0.5534 0.5771 0.5922

Algonquin Township 0.2109 0.1847 0.1704 0.1674 0.1634 0.1677 0.0531 0.1768 0.1833 0.1914

Village of Cary 0.4672 0.4088 0.3797 0.3742 0.3588 0.3704 0.3760 0.3901 0.4049 0.4265

Total Overlapping Rate 5.7646 5.0906 4.7075 4.6193 4.4984 4.8631 4.4822 4.7464 4.8604 4.9499

Cary Community Consolidated School

District No. 26 3.3759 2.9158 2.6982 2.6650 2.6142 2.6871 2.7516 2.8664 2.9695 3.1401

Total Rate 9.1405 8.0064 7.4057 7.2843 7.1126 7.5502 7.2338 7.6128 7.8299 8.0900

Source: McHenry County Clerk's Office

Note: The total rate is the property tax rate paid by a typical resident living in the Village of Cary, McHenry County, in the District. The direct rate used for the District is the rate for McHenry County, so it will not match the total direct tax rate on the Assessed Value and Estimated Actual Value of Taxable Property schedule.

Note: The District is subject to the property tax extension limitation law, which limits the District's ability to raise its direct rates.

- 71 -


PRINCIPAL TAXPAYERS IN THE DISTRICT

CURRENT LEVY YEAR AND NINE YEARS AGO

2011 2002

Percentage of Total District

Equalized Equalized Assessed Equalized

Taxpayer Assessed Value Valuation Assessed Value

TruServ Corp. $ 4,711,462 0.70% N/A Thomas M/John F Smrt 3,151,915 0.47% N/A

HB Properties 2,845,562 0.42% 982,397

Seaquist Perfect Dispensing LLC 2,416,746 0.36% 2,096,307

Harris Trust and Savings Bank 1,833,660 0.27% N/A Greenspire Oak Knoll LLC 1,356,765 0.20% N/A

Cary Point LLC 1,219,739 0.18% N/A Golf Fore Life LLC 1,119,613 0.17% N/A Wolf Investments Inc 1,098,497 0.16% N/A Westlake Commons LLC 1,013,563 0.15% N/A

Cotter Co. N/A N/A 3,762,089

Town Country Homes N/A N/A 3,383,981

Oak Knoll Ltd. Partnership N/A N/A 1,764,143

Cary Square Shopping Center N/A N/A 1,630,216

DRH Cambridge Homes Inc N/A N/A 1,345,090

Capitol Bk TR 1212 N/A N/A 1,093,548

Fox Valley Systems Inc N/A N/A 1,085,184

Soltis Family LLC N/A N/A 1,066,686

$ 20,767,522 3.09% $ 18,209,641

Source: McHenry County Assessor's Office

Percentage of Total District

Equalized Assessed Valuation

N/A N/A

0.20%

0.42%

N/A N/A N/A

N/A N/A N/A

0.75%

0.67%

0.35%

0.32%

0.27%

0.22%

0.22%

0.21%

3.62%

Note: Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed contain multiple parcels and it is possible that some parcels and their valuations have been overlooked.

- 72-


LEGAL DEBT MARGINS


2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

Debt Limit $ 46,387,592 $ 52,466,775 $ 55,305,376 $ 55,779,759 $ 54,377,321 $ 50,885,510 $ 47,128,147 $ 42,662,770 $ 84,462,970 $ 75,527,706

Total Net Debt Applicable to Limit 38,350,000 40,973,955 25,425,316 27,759,973 29,911,453 31,497,881 33,138,707 34,984,355 35,247,540 32,466,681

Legal Debt Margin $ 8,037,592 $ 11,492,820 $ 29,880,060 $ 28,019,786 $ 24,465,868 $ 19,387,629 $ 13,989,440 $ 7,678,415 $ 49,215,430 $ 43,061,025

Total Net Debt Applicable to the Limit as a percentage of Debt Limit 82.67% 78.10% 45.97% 49.77% 55.01% 61.90% 70.32% 82.00% 41.73% 42.99%


Note: Debt limits for 2003-2004 are calculated using 15% of the District's equalized assessed value due to a referendum passed on March 21, 2001, which temporarily increased the statutory debt limit for the District in order to issue bonds that were passed under the same referendum.

- 73-

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 COMPUTATION OF LEGAL DEBT MARGIN

JUNE 30,2012

Equalized Assessed Value 2011 Tax Year $ 672,283,937

Statutory Debt Limit Percentage 6.9%

Statutory Debt Limit $

Total Debt Outstanding $ 38,374,794

Exempted Debt 24,794

Net Debt Subjected to the Limit

Legal Debt Margin $

Source: 2012 Annual Financial Report

- 74-

46,387,592

38,350,000

8,037,592


OUTSTANDING DEBT BY TYPE


Percentage of Ratio of Estimated Outstanding

General Alternative Leasel Certificates Tax Actual Debt per Outstanding Obligation Revenue Purchase SEDOM of Anticipation Property Personal Personal Estimated Debt Per

June 30, Bonds Bonds Agreements Bonds Participation Warrants Total Debt Value Income Income Population Capita

2012 $ 37,650,000 $ 700,000 $ $ 24,794 $ $ 38,374,794 2% $ 794,206,900 5% 22,480 1,707 2011 39,991,358 880,000 102,597 29,010 41,002,965 2% 794,206,900 5% 22,480 1,824 2010 24,205,188 1,055,000 165,128 32,911 11,000,000 36,458,227 2% 794,206,900 5% 22,480 1,622 2009 26,321,569 1,220,000 218,404 36,712 5,000,000 32,796,685 1% 861,894,700 4% 23,743 1,381

2008 28,255,827 1,380,000 275,626 4,000,000 33,911,453 1% 845,121,400 4% 23,168 1,464 2007 29,962,881 1,535,000 5,500,000 36,997,881 2% 818,007,100 5% 23,969 1,544 2006 31,453,707 1,685,000 4,500,000 37,638,707 2% 818,007,100 5% 23,969 1,570 2005 32,854,355 1,825,000 305,000 4,500,000 39,484,355 2% 818,007,100 5% 23,969 1,647 2004 33,537,540 1,115,000 595,000 200,000 35,447,540 2% 417,830,493 8% 15,531 2,282 2003 30,321,681 1,270,000 875,000 32,466,681 2% 417,830,493 8% 15,531 2,090

Sources: Debt information was obtained from the District's Annual Financial Reports for 2003-2011. Personal income and estimated population were obtained from the Village of Cary's 2000 census for 2003 and 2004 and from American Community Survey 3-Year Estimates for 2005 to present.

-75 -

June 30,

2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 NET BONDED DEBT


Ratio of Net Less: Amounts Bonded Debt to Net General

General Bonded Available to Net General Estimated Actual Bonded Debt Per Debt Repay Principal Bonded Debt Taxable Value Capita

$ 37,650,000 $ 2,924,872 $ 34,725,128 1.72% 1,545 39,991,358 3,170,333 36,821,025 1.61% 1,638 24,205,188 1,813,448 22,391,740 0.93% 996 26,321,569 1,824,565 24,497,004 1.01% 1,032 28,255,827 1,777,894 26,477,933 1.12% 1,143 29,962,881 2,006,212 27,956,669 1.26% 1,166 31,453,707 1,907,249 29,546,458 1.44% 1,233 32,854,355 1,898,753 30,955,602 1.67% 1,291 33,537,540 1,130,838 32,406,702 1.92% 2,087 30,321,681 1,679,622 28,642,059 1.90% 1,844

Sources: Debt information was obtained from the District's Annual Financial Reports for 2003-2012.

- 76-

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 COMPUTATION OF DIRECT AND OVERLAPPING DEBT

JUNE 30,2012

Taxing Authority

Lake County Forest Preserve Lake County McHenry County McHenry County Conservation District McHenry Community College District 528 Community High School District 155 Algonquin Library Cary Park District Village of Cary

Total Overlapping Bonded Debt

Cary Community Consolidated School District No. 26

Total Direct and Overlapping General Obligation Bonded Debt

Source: McHenry and Lake County Clerk

$

Percentage of Outstanding Debt Applicable to Bonded Debt District

303,755,000 0.1677% 82,955,000 0.1677% 57,470,298 7.1115%

143,290,000 7.1115% 5,360,000 8.4333% 5,247,699 22.3973% 4,875,000 0.6836% 9,404,678 88.4083% 4,465,000 86.0212%

38,374,794 100.00%

District's Share of Debt

$ 509,486 139,140

4,086,981 10,190,019

452,025 1,175,344

33,325 8,314,515 3,840,847

$ 28,741,682

38,374,794

$ 67,116,476

Note: Percentage of debt applicable to the District is determined by taking the overlapping EAV divided by the other governments total EAV.

Note: Overlapping governments with no outstanding debt are not reflected.

-77 -

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 PLEDGED REVENUE COVERAGE


General State Utilities Available Aid Rental Income Expenses Income Principal Interest

2012 $ 680,331 $ 262,640 $ 24,652 $ 918,319 $ 180,000 $ 37,400 2011 325,800 24,971 300,829 175,000 44",838 2010 268,504 34,035 234,469 165,000 51,850 2009 284,925 32,660 252,265 160,000 58,650 2008 327,482 36,069 291,413 155,000 65,238 2007 308,871 44,047 264,824 150,000 71,613 2006 344,473 48,519 295,954 140,000 77,565 2005 280,737 33,439 247,298 170,000 84,788 2004 127,412 127,412 155,000 65,208 2003 64,781 64,781 150,000 73,233

Note: The District issued alternative revenue bonds on August 1, 1999 and July 1, 2004

Source: District's accounting records.

- 78-

Covera~e

4.22 1.37 1.08 1.15 1.32 1.19 1.36 0.97 0.58 0.29

Year

2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 DEMOGRAPHIC AND ECONOMIC STATISTICS


Per Capita Personal School

Population Personal Income Income Enrollment

22,480 $ 794,206,900 $ 35,329 2,783 22,480 794,206,900 35,329 3,002 22,480 794,206,900 35,329 3,238 23,743 861,894,700 36,301 3,355 23,168 845,121,400 36,478 3,465 23,969 818,007,100 34,128 3,546 23,969 818,007,100 34,128 3,632 23,969 818,007,100 34,128 3,649 15,531 417,830,493 26,903 3,663 15,531 417,830,493 26,903 3,577

Unemployment Rate

7.2% 7.2% 7.2% 6.5% 4.8% 5.8% 5.8% 5.8% 2.4% 2.4%

Source: Population, Personal Income, Per Capita Personal Income and Unemployment Rate were taken from the Village of Cary's 2000 Census for 2003 and 2004 and from the American Community Survey 3-Year Estimates for 2005 through present. Enrollment data is from the School Report Card.

- 79-

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 PRINCIPAL EMPLOYERS

CURRENT YEAR AND NINE YEARS AGO

2012 Percentage of Total District

Employer Employees Rank Employment Employees

Sage Products, Inc 600 1 4.97% 300 Seaquist Perfect Dispensing, LLC 400 2 3.31% 400

Cary Community Consolidated School District No. 26 347 3 2.87% 493 Coilcraft Inc. 250 4 2.07% 250 Durex Industries 220 5 1.82% 180 Cary Grove High School 160 6 1.33% 134 True Value Mfg. Co. 160 7 1.33% 200 Jewel/Osco 133 8 1.10% N/A Sherman Mechanical, Inc. 120 9 0.99% N/A Fox Valley Systems, Inc. 100 10 0.83% N/A McHenry Molding and Machinery N/A N/A 400 Martinez Manufacturing Inc. N/A N/A 350 Bartlett Manufacturing N/A N/A 144

2003 Percentage of Total District

Rank Employment

5 3.83% 3 5.11%

1 6.30% 6 3.19% 8 2.30%

10 1.71% 7 2.55%

N/A N/A N/A

2 5.11% 4 4.47% 9 1.84%

Source: Village of Cary's Community Development Department Records, 2003 Illinois Manufacturers Directory, 2008-2010 American Community 3-Year Estimates, and 2000 Census for the Village of Cary.

- 80 -

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 STAFFING INFORMATION BY FUNCTION


2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

Administration: Superintendent 1.00 1.00 1.00 1.00 2.00 2.00 1.00 1.00 1.00 1.00 Assistant Superintendents 1.00 Directors-Certified 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 Coordinators-Certified 2.00 2.00 2.50 3.50 2.00 1.00 1.00 1.00 3.00 2.00 Directors-Non-Certified Coordinators-Non-Certified 4.00 4.00 4.00 3.00 2.30 2.00 3.00 3.00 4.00 4.00 Principals 4.00 5.00 6.00 6.00 6.00 6.00 6.00 6.00 7.00 7.00 Assistant Principals 2.00 1.00 2.00 2.00 2.00 2.00 2.00 2.00 3.50 4.00 Dean 1.00 1.00 1.00 1.00 1.00

16.00 16.00 18.50 19.50 19.30 17.00 17.00 17.00 21.50 21.00

Teachers: Elementary, Resource, Gifted 64.50 82.50 108.00 111.00 114.50 118.00 112.60 112.00 130.00 126.50 Junior High 29.00 18.00 30.00 35.00 35.00 35.00 32.00 32.00 36.50 37.50 Art, Music, P.E., Health, Band 4.00 4.00 36.40 29.10 30.40 30.80 26.90 29.20 31.20 30.40 Special Education 26.00 27.00 27.00 28.50 28.50 23.50 22.20 21.50 22.40 22.00 Psychologists 4.60 4.60 5.00 5.00 5.00 4.00 4.00 4.20 5.20 4.60 Social Workers 6.00 5.00 7.00 7.00 7.00 7.00 7.00 6.00 8.00 7.60 Learning Center Teachers 6.00 6.00 6.00 6.00 6.00 6.00 7.00 7.00 School Nurses 2.00 3.00 3.60 3.50 2.30 2.40 3.20 3.20 3.20 3.20 Speech Pathologists 10.00 10.20 9.20 11.20 12.00 10.00 9.60 9.40 9.20 9.40

146.10 154.30 232.20 236.30 240.70 236.70 223.50 223.50 252.70 248.20

Other Supporting Staff: Library Paraprofessionals 4.00 5.00 6.00 6.00 6.00 6.00 7.00 7.00 Clerical 15.00 19.00 21.00 24.00 23.00 23.00 22.00 22.00 25.00 25.00 Paraprofessionals 82.00 75.00 80.50 74.00 60.00 58.00 43.00 31.00 41.00 38.00 Tutors 11.00 16.00 16.00 17.00 18.00 18.00 18.00 18.00 22.00 21.00 Registered Nurse/Health Clerk 3.50 3.25 4.00 4.50 4.50 4.50 5.00 5.00 6.00 6.00 Transportation 39.00 40.00 42.00 45.00 44.00 44.00 40.00 41.00 41.00 41.00 Science Material Mgr 1.00 1.00 1.00 1.00 5.00 Sub Caller 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Technology Specialists 2.00 2.00 3.00 3.00 3.00 3.00 3.00 3.00 4.00 4.00 Parent Coordinator 1.00 1.00 1.00 1.00 1.00 1.00 1.00 OT/PT's 5.00 5.00 Lunchroom SupeNisors 21.50 21.00 36.00 28.00 42.00 34.00 39.00 43.00 46.00 49.00 Custodial 22.00 23.00 22.00 24.00 22.00 21.00 30.00 32.00

184.50 187.75 233.00 227.00 224.00 216.00 193.50 185.50 228.50 223.50

Grand Total 346.60 358.05 483.70 482.80 484.00 469.70 434.00 426.00 502.70 492.70 --Source: District's human resource records.

- 81 -

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO, 26 ILLINOIS STATE BOARD OF EDUCATION SCHOOL DISTRICT FINANCIAL PROFILE


2012 Est 2011 2010 2009 2008 2007 2006 2005 2004 2003 Fund Balance to Revenue Ratio 0,06 0,05 -0,24 -0,15 -0,04 0,02 0.20 0,26 0,17 0.41 Expenditures to Revenue Ratio 1,00 0,95 1,09 1,11 1,12 1,11 1,08 1,02 1.28 1,14 Days Cash on Hand 203,12 165,75 57,00 31,00 63,00 84,00 118,00 151,00 50,00 130,00 Short-Term Borrowing Remaining 100,00 100,00 25,76 65,31 72,23 59,65 65,05 62,24 98,22 100,00 Long-Term Debt Margin Remaining 17,33 21,90 53,96 50,16 44,99 43,74 35,67 24.43 61.43 57,01

Financial Profile Score Fund Balance to Revenue Score 2 2 1 2 3 4 3 4 Expenditures to Revenue Score 4 4 3 2 2 2 3 3 1 3 Days Cash on Hand Score 4 3 2 'I 2 2 3 3 2 3 Short-Term Borrowing Score 4 4 2 3 3 3 3 3 4 4 Long-Term Debt Margin Score 1 1 3 3 2 2 2 1 3 3

Weighted Scores Fund Balance to Revenue Weighted 0.70 0,70 0,35 0,35 0,35 0.70 1,05 1.40 1,05 1.40 Expenditure to Revenue Weighted 1.40 1.40 1.05 0,70 0,70 0,70 1.05 1,05 0,35 1.05 Days Cash on Hand Weighted OAO 0,30 0,20 0.20 0.20 0,20 0,30 0,30 0,20 0,30 Short-Term Borrowing Weighted 0.40 0.40 0,20 0,30 0,30 0,30 0,30 0,30 0.40 0.40 Long-Term Debt Margin Weighted 010 0,10 0,30 0,30 0.20 0,20 0.20 0,10 0,30 0,30

Total Profile Score 3.00 2.90 2.10 1.85 1.75 2.10 2.90 3.15 2.30 3.45

Early Early Early Designation Warning Warning Watch Watch Watch Watch Warning Review Watch Review

Sources: Obtained from Illinois State Board of Education,

- 82 -

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 OPERATING INDICATORS BY FUNCTION


% of Students Receiving

Direct Pupil- Free and Direct Operating Operating Total Direct Direct Cost Teaching Teacher Reduced

Year Enrollment Expenditures * Cost Per Pupil Expenditures Per Pupil Staff FTE Ratio Price Meals

2012 2,783 $ 24,625,4 75 8,849 $ 29,312,809 $ 10,533 146.1 19.0 18.9% 2011 3,002 25,733,820 8,572 29,731,703 9,904 154.3 19.5 13.3% 2010 3,238 31,495,109 9,727 35,093,701 10,838 232.2 13.9 12.1% 2009 3,355 30,980,076 9,234 34,501,283 10,284 236.3 14.2 10.6% 2008 3,465 31,413,286 9,066 34,488,983 9,954 240.7 14.4 7.4% 2007 3,546 29,683,255 8,371 32,597,392 9,193 236.7 15.0 6.4% 2006 3,632 27,959,895 7,698 30,789,295 8,477 223.5 16.3 9.1% 2005 3,649 25,723,926 7,050 29,477,816 8,078 223.5 16.3 6.5% 2004 3,663 26,470,681 7,227 29,916,391 8,167 252.7 14.5 5.8% 2003 3,577 25,660,737 7,174 41,337,873 11,557 248.2 14.4 4.2%

* - Operating Funds include Educational (excluding On-behalf payments), Operations and Maintenance, Transportation, IMRF/SS and Working Cash Funds.

Source: 2003-2012 Annual Financial Reports filed with the Illinois State Board of Education, School Report Card/Fall Housing


- 83-

CARY COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 26 CAPITAL ASSET STATISTICS BY FUNCTION


2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

Educational: Elementary School Buildings

Briagate (1965) Square Feet 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 Capacity (Students) 660 660 660 660 660 660 660 660 660 660 Enrollment 437 454 456 394 411 390 388 434 345 349

Deer Path (1998) Square Feet 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 Capacity (Students) 960 960 960 960 960 960 960 960 960 960 Enrollment 579 625 534 553 612 597 596 546 491 422

Maplewood (1930) Square Feet 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 Capacity (Students) 600 600 600 600 600 600 600 600 600 600 Enrollment Vacant Vacant 308 322 365 366 379 387 340 312

Oak Knoll (1959) Square Feet 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 Capacity (Students) 630 630 630 630 630 630 630 630 630 630 Enrollment Leased Leased Leased Leased Leased Leased Leased Leased 314 338

Three Oaks (1992) Square Feet 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 Capacity (Students) 960 960 960 960 960 960 960 960 960 960 Enrollment 715 485 412 452 473 536 555 609 500 520

Junior High Buildings Prairie Hill (1969) Square Feet 118,000 118,000 118,000 118,000 118,000 118,000 118,000 118,000 118,000 118,000 Capacity (Students) 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,320 Enrollment Vacant 674 771 760 762 824 842 821 836 832

Cary Junior High (2002) Square Feet 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 Capacity (Students) 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 1,350 Enrollment 1,052 764 757 874 842 833 872 852 837 804

Administration: Administration Building (1997) (Disposed of in 2009) Square Feet N/A N/A N/A N/A 12,500 12,500 12,500 12,500 12,500 12,500

Transportation: Transportation Building (1990) Square Feet 3,400 3,400 3,400 3,400 3,400 3,400 3,400 3,400 3,400 3,400

Source: The District's capital asset records

- 84-

cary community consolidated school district no....

Documents