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SAN MARINO UNIFIED SCHOOL DISTRICT
AUDIT REPORT
For the Fiscal Year Ended
June 30, 2010
SAN MARINO UNIFIED SCHOOL DISTRICT
AUDIT REPORT
For the Fiscal Year Ended June 30, 2010
Table of Contents
FINANCIAL SECTION
Page
Independent Auditor’s Report .......................................................................................................................... 1
Management’s Discussion and Analysis .......................................................................................................... 3
Financial Statements:
Government‐wide Financial Statements:
Statement of Net Assets ....................................................................................................................... 16
Statement of Activities ......................................................................................................................... 17
Governmental Fund Financial Statements:
Balance Sheet ......................................................................................................................................... 18
Reconciliation of the Governmental Funds Balance Sheet to the
Statement of Net Assets ................................................................................................................ 19
Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................ 20
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances to the Statement of Activities ....................... 21
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Assets ...................................................................................................... 22
Notes to Financial Statements .......................................................................................................................... 23
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule – General Fund ........................................................................................ 52
Budgetary Comparison Schedule – Special Revenue Fund for Other than Capital Outlay .................... 53
Schedule of Funding Progress ......................................................................................................................... 54
SAN MARINO UNIFIED SCHOOL DISTRICT
AUDIT REPORT
For the Fiscal Year Ended June 30, 2010
Table of Contents
SUPPLEMENTARY INFORMATION
Page
Local Educational Agency Organization Structure ...................................................................................... 55
Schedule of Average Daily Attendance ......................................................................................................... 56
Schedule of Instructional Time ........................................................................................................................ 57
Schedule of Financial Trends and Analysis ................................................................................................... 58
Schedule of Expenditures of Federal Awards ............................................................................................... 59
Reconciliation of Annual Financial and Budget Report with Audited Financial Statements ................. 60
Note to Supplementary Information .............................................................................................................. 61
OTHER INDEPENDENT AUDITOR’S REPORTS
Report on Internal Control over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards ................................................................................................................... 62
Report on Compliance with Requirements that could have a Direct and Material Effect on
Each Major Program and on Internal Control over Compliance in Accordance with
OMB Circular A‐133 .................................................................................................................................... 64
Independent Auditor’s Report on State Compliance ................................................................................... 66
FINDINGS AND QUESTIONED COSTS SECTION
Schedule of Audit Findings and Questioned Costs ...................................................................................... 68
Summary Schedule of Prior Audit Findings ................................................................................................. 74
2727 Camino Del Rio South ● Suite 219 ● San Diego, CA 92108 tel. 619.270.8222 ● fax. 619.260.9085
www.cwacpa.com
Licensed by the California Board of Accountancy
1
Board of Education
San Marino Unified School District
San Marino, California
INDEPENDENT AUDITOR’S REPORT
We have audited the accompanying financial statements of the governmental activities, each major fund,
and the aggregate remaining fund information of the San Marino Unified School District, as of and for the
fiscal year ended June 30, 2010, which collectively comprise the District’s basic financial statements as
listed in the table of contents. These financial statements are the responsibility of the San Marino Unified
School Districtʹs 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 the San Marino Unified School District, as of June 30, 2010, and the respective
changes in financial position thereof for the fiscal 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 on our
consideration of the San Marino Unified School Districtʹs internal control over financial reporting and 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 considered in assessing the
results of our audit.
2
The management’s discussion and analysis on pages 3 through 15, the budgetary comparison schedules
on pages 52 and 53, and the schedule of funding progress on page 54 are not a required part of the basic
financial statements but are supplementary information required by accounting principles generally
accepted in the United States of America. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation of the
required supplementary information. However, we did not audit the information and express no opinion
on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise San Marino Unified School District’s basic financial statements. The combining and individual
non‐major fund financial statements, the schedule of financial trends and analysis, and the schedule of
expenditures of federal awards, which is required by U.S. Office of Management and Budget Circular A‐
133, Audits of States, Local Governments, and Non‐Profit Organizations, are presented for purposes of
additional analysis and are not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a
whole.
San Diego, California November 21, 2010
Management’s Discussion and Analysis
3
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
This discussion and analysis of San Marino Unified School District’s financial performance provides an
overview of the District’s financial activities for the fiscal year ended June 30, 2010. Please read it in
conjunction with the District’s financial statements, which immediately follow this section.
FINANCIAL HIGHLIGHTS
The Districtʹs financial condition was once again challenged in 2009‐10, as a result of the Stateʹs current
financial crisis. State revenues continued to decline and the demand for health and social services
increased. The State budget reduced K‐12 Education apportionment funding by $2.1 billion. Schools were
provided flexibility to reduce the academic year, reduced facility maintenance and categorical program
funding, and suspend the requirement for the adoption of instructional materials through June 30, 2013
but these options did not offset the need for budget reductions. Although the State adopted a balanced
budget, the Legislative Analyst’s Office projected that the State would face additional deficits for several
years to come.
The District’s Budget was based on the Adopted State’s Budget for K‐12 Education. It included a 4.25%
COLA, or $262 per student for 2009‐10, however, the COLA was offset by a deficit of 18.355% plus
additional cuts to state revenues, which in total far exceeded the COLA funds. As a result of the revenue
limit reduction and cuts to other State and Federal funding sources, the District faced a $5 million deficit
for 2009‐10. The District’s deficit was offset by passage of Measure E parcel tax, providing $3.5 million in
revenues through June 30, 2015. The remaining gap of $1.5 million was bridged based on adjustment of
class sizes, one‐time budget savings, and budget reductions. The District had previously negotiated a
three‐year salary and benefits agreement (2008‐2011) with the certificated and classified bargaining units.
Based on the agreement, there were no salary schedule increases and the employees’ share of benefit costs
increased. Employees pay 10% of the benefit costs for employee only coverage, and 30% of the costs for
two‐party and family coverage. The District has a Health and Benefits Savings fund whereby savings in
any given year is reserved to offset future year premium increases.
The District’s Revenue Limit average daily attendance (ADA) in 2009‐10 totaled 3,162 ADA. This was a
slight increase over the prior year with an additional 14 ADA. Student enrollment is projected to decline
in future years based on larger graduating classes and fewer students entering kindergarten.
During the fiscal year, the District Budget and cash flow expenditures were closely monitored and
expenditures were limited and/or withheld where possible, given the uncertainty of State. The District
established the Cash Flow Fund as a means of helping to bridge the State’s multiple deferrals of State
apportionment funding. According to State resources, it is anticipated that the Stateʹs fiscal condition will
continue to weaken over the next three to five years based on key economic indicators.
Beyond routine repairs, there was no major capital or building projects in 2009‐10. The District reduced its
outstanding General Obligation Bond long‐term debt by $853,059.
4
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts – management discussion and analysis (this section), the basic
financial statements, and required supplementary information. The basic financial statements include
two kinds of statements that present different views of the District:
The first two statements are District‐wide financial statements that provide both short‐term and long‐term
information about the District’s overall financial status. The remaining statements are fund financial
statements that focus on individual parts of the District, reporting the District’s operations in more detail
than the District‐wide statements.
The governmental funds statements tell how basic services like regular and special education were financed
in the short term as well as what remains for future spending.
Fiduciary funds statements provide information about the financial relationships in which the District acts
solely as a trustee or agent for the benefit of others to whom the resources belong.
5
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
The financial statements also include notes that explain some of the information in the statements and
provide more detailed data. Figure A‐1 shows how the various parts of this annual report are arranged
and related to one another.
Management’s
Discussion and
Analysis
Figure A‐1. Organization of San Marino Unified School District’s
Annual Financial Report
Basic
Financial
Information
Required
Supplementary
Information
Fund
Financial
Statements
District‐Wide
Financial
Statements
Notes to the
Financial
Statements
SUMMARY DETAIL
6
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
Figure A‐2 summarizes the major features of the District’s financial statements, including the portion of
the District’s activities they cover and the types of information they contain.
Figure A‐2. Major Features of the District‐wide and Fund Financial Statements
Type of Statements District‐wide Governmental Funds Fiduciary Funds
Scope Entire District, except
fiduciary activities
The activities of the
District that are not
proprietary or
fiduciary, such as
special education and
building maintenance
Instances in which the
District administers
resources on behalf of
someone else, such as
scholarship programs
and student activities
monies
Required financial
statements
Statement of Net
Assets
Statement of
Activities
Balance Sheet
Statement of
Revenues,
Expenditures &
Changes in Fund
Balances
Statement of
Fiduciary Net
Assets
Statement of
Changes in
Fiduciary Net
Assets
Accounting basis and
measurement focus
Accrual accounting and
economic resources
focus
Modified accrual
accounting and current
financial resources
focus
Accrual accounting and
economic resources
focus
Type of asset/liability
information
All assets and liabilities,
both financial and
capital, short‐term and
long‐term
Only assets expected to
be used up and
liabilities that come due
during the year or soon
thereafter; no capital
assets included
All assets and liabilities,
both short‐term and
long‐term; The
District’s funds do not
currently contain non‐
financial assets, though
they can
Type of
inflow/outflow
information
All revenues and
expenses during year,
regardless of when cash
is received or paid
Revenues for which
cash is received during
or soon after the end of
the year; expenditures
when goods or services
have been received and
payment is due during
the year or soon
thereafter
All revenues and
expenses during the
year, regardless of
when cash is received
or paid
7
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
The remainder of this overview section of management’s discussion and analysis highlights the structure
and contents of each of the statements.
District‐wide Statements
The District‐wide statements report information about the District as a whole using accounting methods
similar to those used by private‐sector companies. The statement of net assets includes all of the District’s
assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of
activities regardless of when cash is received or paid.
The two District‐wide statements report the District’s net assets and how they have changed. Net
assets – the difference between the District’s assets and liabilities – is one way to measure the
District’s financial health or position. In the District‐wide financial statements, the District’s
activities are categorized as Governmental Activities. Most of the District’s basic services are included
here, such as regular education, special education, maintenance, construction, custodial and
administration. Property taxes and state formula aid finance most of these activities.
Fund Financial Statements
The fund financial statements provide more detailed information about the District’s most significant
funds – not the District as a whole. Funds are accounting devices the District uses to keep track of specific
sources of funding and spending on particular programs:
Some funds are required by State law and by bond covenants.
The District establishes other funds to control and manage money for particular purposes (such as
repaying its long‐term debt) or to show that it is properly using certain revenues (such as Federal
grants).
8
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
The District has two kinds of funds:
Governmental funds – Most of the District’s basic services are included in governmental funds, which
generally focus on (1) how cash and other financial assets that can readily be converted to cash flow
in and out and (2) the balances left at year‐end that are available for spending. Consequently, the
governmental funds statements provide a detailed short‐term view that helps you determine
whether there are more or less financial resources that can be spent in the near future to finance the
District’s programs. Because this information does not encompass the additional long‐term focus of
the District‐wide statements, we provide additional information at the bottom of the governmental
funds statements that explain the relationship (or differences) between them.
Fiduciary funds – The District is the trustee, or fiduciary, for assets that belong to others, namely, the
student body activities funds. The District is responsible for ensuring that the assets reported in
these funds are used only for their intended purposes and by those to whom the assets belong. All
of the District’s fiduciary activities are reported in a separate statement of fiduciary net assets. We
exclude these activities from the District‐wide financial statements because the District cannot use
these assets to finance its operations.
FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE
Net Assets. The District’s combined net assets as of June 30, 2010 remained nearly the same at
$22,469,439. (See Table A‐1).
Total
Percentage
Change
2009 2010 2009‐10
Current assets $ 9,966,445 $ 18,744,778 88%
Noncurrent assets 63,670,782 61,684,121 ‐3%
Total assets 73,637,227 80,428,899 9%
Current liabilities 3,156,435 10,421,607 230%
Noncurrent liabilities 48,649,033 47,537,853 ‐2%
Total liabilities 51,805,468 57,959,460 12%
Total net assets $ 21,831,759 $ 22,469,439 3%
Table A‐1
San Marino Unified School District’s Net Assets
Governmental Activities
9
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE (continued)
Changes in net assets, governmental activities. The District’s total revenues were $35,975,477 (See Table
A‐2). This is a decrease of $164,173 due to the State deficit.
The total cost of all programs and services was $35,337,797. Approximately 59% of the District’s expenses
are related to educating and caring for students.
2009 2010 2009‐10
Revenues:
Program revenues
Charges for services $ 1,559,250 $ 1,109,538 ‐29% Operating grants and contributions 6,510,953 4,824,923 ‐26%
General revenues
Property taxes 13,018,449 17,379,657 34%
Other revenues 15,050,998 12,661,359 ‐16%
Total revenues 36,139,650 35,975,477 0%
Expenses:
Instruction‐related 20,362,552 18,380,753 ‐10%
Student support services 2,385,446 2,337,429 ‐2%
Maintenance and operations 3,689,573 3,773,788 2%
Administration 2,569,984 2,876,595 12%
Other expenses 6,524,671 7,969,232 22%
Total expenses 35,532,226 35,337,797 ‐1%
Change in net assets 607,424$ 637,680$ 5%
Table A‐2
Changes in San Marino Unified School District’s Net Assets
Total Percentage
ChangeGovernmental Activities
10
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE (continued)
Governmental Activities
The sound financial condition of the District can be credited to the following management actions:
Conservative District philosophy, fiscal management and cash flow management. Position control procedures require budget allocation and approval prior to creation of new positions. Budget control through monthly budget adjustments, reconciliation of actual personnel costs to
budgeted costs, detailed line‐item budget, and frequent updates of multi‐year budget projections based on the most recent information received from the State.
Class sizes in all grade levels are monitored and adjusted as needed.
Table A‐3 presents the cost of five major District activities: instruction and instruction related; student support services; general administration; maintenance and operations; and other purposes. The table also shows each activity’s net cost (total cost less fees generated by the activities and inter‐governmental aid provided for specific programs). The cost of all governmental activities this year was $35,337,797. Some of the cost was paid by the users of the District’s programs ($1,109,538). The federal and state governments subsidized programs with grants and contributions ($4,824,923).
Total Cost Net Cost of
of Services Services
Instructional services $ 18,380,753 $ 14,604,259
Pupil support services 2,337,429 1,062,152
Maintenance and operations 3,773,788 3,428,418
Administration 2,876,595 2,625,480
Other expenses 7,969,232 7,683,027
Total expenses 35,337,797$ 29,403,336$
Table A‐3
Net Costs of San Marino Unified School District’s
Governmental Activities
11
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS
The financial performance of the District as a whole is reflected in its governmental funds as well. As the
District completed this year, its governmental funds reported a combined fund balance of $11.7 million,
which is greater than last year’s ending fund balance of $8.3 million. The District’s General Fund had $1.4
million more in expenditures than operating revenues in the fiscal year 2009‐10.
General Fund Budgetary Highlights
During the fiscal year, budget revisions and appropriation transfers are presented to the Board for their
approval on a monthly basis to reflect changes to both revenues and expenditures that become known
during the year. In addition, the Board of Education approves financial projections included with the
Adopted Budget, First Interim, and Second Interim financial reports. The Unaudited Actuals reflect the
District’s financial projections and current budget based on State and local financial information.
Budget adjustments to revenues and expenditures for the year include:
Adjustments for additional revenues received from the San Marino Schools Foundation,
PTA/PTSA’s and parents for restricted purposes
Adjustments for certificated column movements
Adjustments for restricted categorical carryovers
Adjustments for changes in state and other local income
12
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
By the end of 2009‐10 the District had invested in new capital assets due to HVAC repairs, Adobe project
environmental impact report, portable buildings, and intercom system repairs. The majority of costs were
paid for with JPA funds.
Total
Percentage
Change
2009 2010 2009‐10
Land 422,500$ 422,500$ 0%
Site improvements 7,922,065 8,273,022 4%
Buildings 74,899,077 74,993,740 0%
Furniture and equipment 1,884,252 1,932,252 3%
Construction in progress 251,605 759,448 202%
Total capital assets 85,379,499$ 86,380,962$ 1%
Table A‐4
San Marino Unified School District’s Capital Assets
Governmental Activities
13
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
Long‐Term Debt
At year‐end the District had $49.3 million in general obligation bonds, a decrease of 2% from last year – as
shown in Table A‐5. (More detailed information about the District’s long‐term liabilities is presented in
footnotes to the financial statements.)
Total
Percentage
Change
2009 2010 2009‐10
Compensated absences 213,530$ 232,198$ 9%
General obligation bonds 50,040,503 49,187,444 ‐2%
Postemployment benefits (94,817) (136,480) 44%
Total long‐term debt 50,159,216$ 49,283,162$ ‐2%
Governmental Activities
Table A‐5
San Marino Unified School District’s Long‐Term Debt
14
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
FACTORS BEARING ON THE DISTRICT’S FUTURE
The state’s budget situation continues to reflect challenging economic conditions. The 2010 State Budget
was balanced on overly optimistic state and federal revenue projections, the sale of state properties,
additional borrowings, and the suspension of the Proposition 98 minimum guarantee. A relatively slow
pace of job growth in California has presented a headwind for a more rapid rate of economic recovery.
The state’s budget challenges have adversely impacted the K‐12 education budget. As a result, unified
school districts in the state of California in 2010‐11 were reduced $25 per unit of average daily attendance
over 2009‐10 in revenue limit state funding, to an average funded revenue limit of approximately $6,386
per unit of average daily attendance. A corresponding decrease in the deficit factor offsets the loss
keeping funding levels in 2010‐11 the same as 2009‐10, however, it is anticipated that the State will either
implement mid‐year cuts, or cut school funding more in the 2011‐12 fiscal year.
Federal funding for categorical programs was given another one‐time funding boost in 2010‐11 with the
Education Jobs Act funding. In addition, the final 10% of the State Fiscal Stabilization funds, part of the
American Recovery and Reinvestment Act (ARRA), are to be paid in 2010‐11. ARRA funds must be spent
prior to the September 30, 2011. However, the State implemented additional cost deferrals greater than
the amounts received from the federal government which offset any net increase in revenues and cash
flows.
State categorical program flexibility continues for 2009‐10 and 2010‐11 with no anticipated changes.
School districts continue to be authorized to use funding from 42 Tier III categorical programs for any
purpose. K‐3 class size reduction penalties have been relaxed for two more years and school agencies
maintain the flexibility to shorten the school year until 2012‐13. Reserve requirements for economic
uncertainties, if reduced by school agencies, must be fully restored by 2011‐12.
Other Factors
Enrollment
Enrollment can fluctuate due to factors such as population growth, competition from private, parochial,
inter‐district transfers in or out, economic conditions and housing values. Losses in enrollment will cause
a school district to lose operating revenues without necessarily permitting the district to make
adjustments in fixed operating costs.
All of these factors were considered in preparing the San Marino Unified School District budget for the
2010‐11 fiscal year.
15
SAN MARINO UNIFIED SCHOOL DISTRICT
Management’s Discussion and Analysis (Unaudited)
For Fiscal Year Ended June 30, 2010
CONTACTING THE DISTRICTʹS FINANCIAL MANAGEMENT
This financial report is designed to provide our parents and students, community, investors and creditors
with a general overview of the Districtʹs finances and the Districtʹs management of the funds it receives.
For questions about this report or additional financial information, please contact Mrs. Julie Boucher,
Assistant Superintendent, Business Services, San Marino Unified School District, 1665 West Drive;
San Marino, California 91108, (626) 299‐7000, ext. 390, or email: [email protected]. General
information about the District and its financial reports can be accessed at its website at:
www.san‐marino.k12.ca.us.
Financial Section
The notes to financial statements are an integral part of this statement.
16
SAN MARINO UNIFIED SCHOOL DISTRICT
Statement of Net Assets
June 30, 2010
Discretely
Presented
Governmental
Activities
Component Unit
(Audited)
ASSETS
Current assets:
Cash and cash equivalents 15,367,110$ 5,253,965$
Accounts receivable 3,358,968 ‐
Inventories 18,700 ‐
Other current assets ‐ 875,465
Total current assets 18,744,778 6,129,430
Noncurrent assets:
Net OPEB asset 136,480 ‐
Capital assets:
Land 422,500 ‐
Site improvements 8,273,022 ‐
Buildings 74,993,740 ‐
Furniture and equipment 1,932,252 9,027
Construction in progress 759,448 ‐
Less accumulated depreciation (24,833,321) (9,027)
Total capital assets, net of depreciation 61,547,641 ‐
Total noncurrent assets 61,684,121 ‐
Total assets 80,428,899 6,129,430
LIABILITIES
Current liabilities:
Accounts payable 3,336,778 3,269,611
Deferred revenue 517,646 ‐
Other current liabilities 4,685,394 ‐
Compensated absences, current 31,789 ‐
General obligation bonds payable, current 1,850,000 ‐
Total current liabilities 10,421,607 3,269,611
Noncurrent liabilities:
Compensated absences payable, noncurrent 200,409 ‐
General obligation bonds payable, noncurrent 47,337,444 ‐
Total noncurrent liabilities 47,537,853 ‐
Total liabilities 57,959,460 3,269,611
NET ASSETS
Invested in capital assets, net of related debt 17,284,962 ‐
Restricted for:
Capital projects 738,861 ‐
Debt service 2,840,684 ‐
Educational programs 246,109 1,381,307
Unrestricted 1,358,823 1,478,512
Total net assets 22,469,439$ 2,859,819$
The notes to financial statements are an integral part of this statement.
17
SAN MARINO UNIFIED SCHOOL DISTRICT
Statement of Activities
For the Fiscal Year Ended June 30, 2010
Discretely
Operating Presented
Charges for Grants and Governmental Component Unit
Expenses Services Contributions Activities (Audited)
Governmental activities:
Instructional services:
Instruction 15,905,437$ 287,030$ 3,170,051$ (12,448,356)$ ‐$
Instruction‐related services:
Supervision of instruction 481,573 ‐ 207,612 (273,961) ‐
Instructional library, media
and technology 305,694 ‐ 86,132 (219,562) ‐
School site administration 1,688,049 ‐ 25,669 (1,662,380) ‐
Pupil support services:
Home‐to‐school transportation 85,326 38,800 65,821 19,295 ‐
Food services 834,382 712,025 113,232 (9,125) ‐
All other pupil services 1,417,721 ‐ 345,399 (1,072,322) ‐
General administration services:
Data processing services 360,533 ‐ 10,000 (350,533) ‐
Other general administration 2,516,062 32,183 208,932 (2,274,947) ‐
Plant services 3,773,788 39,500 305,870 (3,428,418) ‐
Ancillary services 395,437 ‐ 94,682 (300,755) ‐
Community services 155,479 ‐ ‐ (155,479) ‐
Enterprise activities 162,890 ‐ 162,890 ‐ ‐
Interest on long‐term debt 4,072,016 ‐ ‐ (4,072,016) ‐
Other outgo 58,806 ‐ 28,633 (30,173) ‐
Depreciation (unallocated) 3,124,604 ‐ ‐ (3,124,604) ‐
Total governmental activities 35,337,797 1,109,538 4,824,923 (29,403,336) ‐
Discretely Presented
Component Unit (Audited)
San Marino Schools Foundation 4,578,801$ ‐$ 4,589,835$ ‐ 11,034
General revenues:
Taxes:
Property taxes, levied for general purposes 8,704,610 ‐
Property taxes, levied for debt service 3,592,222 ‐
Property taxes, levied for other specific purposes 5,082,825 ‐
Federal and state aid not restricted
to specific purpose 9,107,434 ‐
Interest and investment earnings 159,634 ‐
Interagency revenues 305,244 2,620
Miscellaneous 3,089,047 86,345
Total general revenues 30,041,016 88,965
Change in net assets 637,680 99,999
Net assets ‐ July 1, 2009 21,831,759 2,759,820
Net assets ‐ June 30, 2010 22,469,439$ 2,859,819$
Changes in Net Assets
Net (Expense) Revenues and
Functions/Programs
Program Revenues
The notes to financial statements are an integral part of this statement.
18
SAN MARINO UNIFIED SCHOOL DISTRICT
Balance Sheet – Governmental Funds
June 30, 2010
General Fund
Special Reserve
Fund for Other
Than Capital
Outlay Fund
Bond Interest and
Redemption Fund
Non‐Major
Governmental
Funds
Total Governmental
Funds
ASSETS
Cash and cash equivalents 1,714,569$ 8,851,235$ 2,840,684$ 1,960,622$ 15,367,110$
Accounts receivable 3,296,353 22,701 ‐ 39,914 3,358,968
Due from other funds 4,728,720 ‐ ‐ ‐ 4,728,720
Inventories 2,092 ‐ ‐ 16,608 18,700
Total assets 9,741,734$ 8,873,936$ 2,840,684$ 2,017,144$ 23,473,498$
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable 1,759,569$ ‐$ ‐$ 84,137$ 1,843,706$
Due to other funds ‐ 4,728,720 ‐ ‐ 4,728,720
Deferred revenue 443,396 ‐ ‐ 74,250 517,646
Current loans 4,685,394 ‐ ‐ ‐ 4,685,394
Total liabilities 6,888,359 4,728,720 ‐ 158,387 11,775,466
FUND BALANCES
Reserved for:
Inventories 2,092 ‐ ‐ 16,608 18,700
Revolving cash 35,000 ‐ ‐ 612 35,612
Debt service ‐ ‐ 2,840,684 ‐ 2,840,684
Categorical programs 246,109 ‐ ‐ ‐ 246,109
Unreserved; reported in:
General fund 2,570,174 ‐ ‐ ‐ 2,570,174
Special revenue funds ‐ 4,145,216 ‐ 1,053,606 5,198,822
Capital project funds ‐ ‐ ‐ 787,931 787,931
Total fund balances 2,853,375 4,145,216 2,840,684 1,858,757 11,698,032
Total liabilities and fund balances 9,741,734$ 8,873,936$ 2,840,684$ 2,017,144$ 23,473,498$
The notes to financial statements are an integral part of this statement.
19
SAN MARINO UNIFIED SCHOOL DISTRICT
Reconciliation of the Governmental Funds Balance Sheet to the Statement of
Net Assets
June 30, 2010
Total fund balances ‐ governmental funds 11,698,032$
Amounts reported for governmental activities in the statement of net assets are
different because capital assets used for governmental activities are not financial resources
and therefore are not reported as assets in governmental funds. The cost of the
capital assets is $86,380,962 and the accumulated depreciation is ($24,833,321). 61,547,641
In governmental funds, postretirement benefits costs are recognized as expenditures in the
period they are paid. In the government‐wide statements, postretirement benefits costs
are recognized in the period that they are incurred. The net OPEB asset at the end of
the period was: 136,480
In governmental funds, interest on long‐term debt is not recognized until the period in which it
matures and is paid. In the government‐wide statement of activities, it is recognized in the
period that it is incurred. The additional liability for unmatured interest owing at the end of
the period was: (1,493,072)
In governmental funds, only current liabilities are reported. In the statement of net assets, all
liabilities, including long‐term liabilities, are reported. Long‐term liabilities relating to
governmental activities consist of:
Compensated absences payable 232,198$
General obligation bonds payable 49,187,444 (49,419,642)
Total net assets ‐ governmental activities 22,469,439$
The notes to financial statements are an integral part of this statement.
20
SAN MARINO UNIFIED SCHOOL DISTRICT
Statement of Revenues, Expenditures, and Changes in Fund Balances –
Governmental Funds
For the Fiscal Year Ended June 30, 2010
General Fund
Special Reserve
Fund for Other
Than Capital
Outlay Fund
Bond Interest and
Redemption Fund
Non‐Major
Governmental
Funds
Total Governmental
Funds
REVENUES
General revenues:
Property taxes 13,776,299$ ‐$ 3,603,358$ ‐$ 17,379,657$
Federal and state aid not restricted
to specific purpose 9,107,434 ‐ ‐ ‐ 9,107,434
Interest and investment earnings 79,504 45,249 17,670 17,212 159,635
Interagency revenues 305,244 ‐ ‐ ‐ 305,244
Miscellaneous 2,314,137 ‐ ‐ 774,911 3,089,048
Program revenues:
Charges for services 325,830 ‐ ‐ 783,708 1,109,538
Operating grants and contributions 4,446,028 ‐ ‐ 378,894 4,824,922
Total revenues 30,354,476 45,249 3,621,028 1,954,725 35,975,478
EXPENDITURES
Instructional services:
Instruction 15,947,100 ‐ ‐ ‐ 15,947,100
Instruction‐related services:
Supervision of instruction 481,573 ‐ ‐ ‐ 481,573
Instructional library, media and technology 305,694 ‐ ‐ ‐ 305,694
School site administration 1,688,049 ‐ ‐ ‐ 1,688,049
Pupil support services:
Home‐to‐school transportation 85,326 ‐ ‐ ‐ 85,326
Food services 15,218 ‐ ‐ 819,164 834,382
All other pupil services 1,417,721 ‐ ‐ ‐ 1,417,721
General administration services:
Data processing services 360,533 ‐ ‐ ‐ 360,533
Other general administration 2,335,092 ‐ ‐ 37,026 2,372,118
Plant services 3,498,273 ‐ ‐ 222,913 3,721,186
Facility acquisition and construction 248,919 ‐ ‐ 930,422 1,179,341
Ancillary services 395,437 ‐ ‐ ‐ 395,437
Community services 155,479 ‐ ‐ ‐ 155,479
Enterprise activities 162,890 ‐ ‐ ‐ 162,890
Other outgo:
Transfers between agencies 58,806 ‐ ‐ ‐ 58,806
Debt service ‐ principal ‐ ‐ 1,605,000 ‐ 1,605,000
Debt service ‐ interest ‐ ‐ 1,827,004 ‐ 1,827,004
Total expenditures 27,156,110 ‐ 3,432,004 2,009,525 32,597,639
Excess (deficiency) of revenues
over (under) expenditures 3,198,366 45,249 189,024 (54,800) 3,377,839
OTHER FINANCING SOURCES (USES)
Interfund transfers in 55,540 4,144,204 ‐ 490,625 4,690,369
Interfund transfers out (4,634,829) (55,540) ‐ ‐ (4,690,369)
Total other financing sources and uses (4,579,289) 4,088,664 ‐ 490,625 ‐
Net change in fund balances (1,380,923) 4,133,913 189,024 435,825 3,377,839
4,234,298 11,303 2,651,660 1,422,932 8,320,193
Fund balances, June 30, 2010 2,853,375$ 4,145,216$ 2,840,684$ 1,858,757$ 11,698,032$
Fund balances, July 1, 2009
The notes to financial statements are an integral part of this statement.
21
SAN MARINO UNIFIED SCHOOL DISTRICT
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and
Changes in Fund Balances to the Statement of Activities
For the Fiscal Year Ended June 30, 2010
Total net change in fund balances ‐ governmental funds 3,377,839$
Amounts reported for governmental activities in the statement of activities are different because:
Capital outlays are reported in governmental funds as expenditures. However, in the statement
of activities, the cost of those assets is allocated over their estimated useful lives as depreciation
expense. The difference between capital outlay expenditures and depreciation expense for the period is:
Expenditures for capital outlay 1,124,413
Depreciation expense (3,124,604) (2,000,191)
Debt service: In governmental funds, repayments of long‐term debt are reported as expenditures.
In the government‐wide statements, repayments of long‐term debt are reported as a reduction of
liabilities. Expenditures for repayment of the principal portion of long‐term debt were: 1,605,000
In governmental funds, postretirement benefits costs are recognized as expenditures in the
period they are paid. In the government‐wide statements, postretirement benefits costs
are recognized in the period that they are incurred. This year, the difference between OPEB costs
and actual employer contributions was: 41,663
In governmental funds, interest on long‐term debt is recognized in the period that it becomes due.
In the government‐wide statement of activities, it is recognized in the period that it is incurred.
Unmatured interest owing at the end of the period, less matured interest paid during the period but
owing from the prior period, was: (2,245,013)
In the statement of activities, compensated absences are measured by the amounts earned
during the year. In the governmental funds, however, expenditures for these items are measured
by the amount of financial resources used (essentially, the amounts actually paid ). (18,668)
Cost write‐off for canceled capital projects: If a planned capital project is canceled and will not be
completed, costs previously capitalized as work in progress must be written off to expense. Costs
written off for canceled projects were: (122,950)
Change in net assets of governmental activities 637,680$
The notes to financial statements are an integral part of this statement.
22
SAN MARINO UNIFIED SCHOOL DISTRICT
Statement of Fiduciary Net Assets – Fiduciary Funds
June 30, 2010
Student Body
Funds
Payroll
Clearing Fund
Total Agency
Funds
ASSETS
Cash 1,352,058$ 188,714$ 1,540,772$
Total Assets 1,352,058$ 188,714$ 1,540,772$
LIABILITIES
Due to student groups 1,352,058$ ‐$ 1,352,058$
Due to regulatory agencies ‐ 188,714 188,714
Total Liabilities 1,352,058$ 188,714$ 1,540,772$
23
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
A. Accounting Policies
San Marino Unified School District (the District) accounts for its financial transactions in accordance
with the policies and procedures of the Department of Educationʹs California School Accounting
Manual. The accounting policies of the District conform to generally accepted accounting principles
as prescribed by the Governmental Accounting Standards Board (GASB) and the American Institute
of Certified Public Accountants (AICPA).
B. Reporting Entity
The District operates under a locally elected five‐member Board form of government and provides
educational services to grades K‐12 as mandated by the State. A reporting entity is comprised of the
primary government, component units, and other organizations that are included to ensure the
financial statements are not misleading. The primary government of the District consists of all fund,
departments and agencies that are not legally separate from the District. For the District, this includes
general operations, food service, and student related activities.
Component units are legally separate organizations for which the District is financially accountable.
Component units may also include organizations that are fiscally dependent on the District in that the
District approves their budget, the issuance of their debt or the levying of their taxes. In addition,
component units are other legally separate organizations for which the District is not financially
accountable but the nature and significance of the organization’s relationship with the District is such
that exclusion would cause the District’s financial statements to be misleading or incomplete. In
addition, component units are other legally separate organizations for which the District is not
financially accountable, but the nature and significance of the organization’s relationship with the
District is such that exclusion would cause the District’s financial statements to be misleading or
incomplete. The District has one such component unit, the San Marino Schools’ Foundation.
The San Marino Schools’ Foundation (the “component unit”), although a legally separate tax‐exempt
entity, is reported in the financial statements using the discrete presentation method as the economic
resources received or held by the separate organization are entirely or almost entirely for the direct
benefit of the District, the District is entitled to, or has the ability to otherwise access, a majority of the
economic resources received or held by the separate organization, and the economic resources
received or held by an individual organization that the District is entitled to, or has the ability to
otherwise access, are significant to the District.
24
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
C. Basis of Presentation
Government‐wide Financial Statements:
The government‐wide financial statements (i.e., the statement of net assets and the statement of activities)
report information on all of the non‐fiduciary activities of the District.
The government‐wide statements are prepared using the economic resources measurement focus.
This is the same approach used in the preparation of the fiduciary fund financial statements but
differs from the manner in which governmental fund financial statements are prepared.
Governmental fund financial statements, therefore, include a reconciliation with brief explanations to
better identify the relationship between the government‐wide statements and the statements for the
governmental funds.
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund
activities, payables, and receivables. All internal balances in the Statement of Net Assets and
Statement of Activities have been eliminated, including due to/from other funds and transfers in/out.
The government‐wide statement of activities presents a comparison between direct expenses and
program revenues for each function or program of the District’s governmental activities. Direct
expenses are those that are specifically associated with a service, program, or department and are
therefore clearly identifiable to a particular function. The District does not allocate indirect expenses
to functions in the statement of activities. Program revenues include charges paid by the recipients of
goods or services offered by a program, as well as grants and contributions that are restricted to meet
the operational or capital requirements of a particular program. Revenues which are not classified as
program revenues are presented as general revenues of the District, with certain exceptions. The
comparison of direct expenses with program revenues identifies the extent to which each
governmental function is self‐financing or draws from the general revenues of the District.
Fund Financial Statements:
Fund financial statements report detailed information about the District. The focus of governmental
fund financial statements is on major funds rather than reporting funds by type. Each major
governmental fund is presented in a separate column, and all non‐major funds are aggregated into
one column. Fiduciary funds are reported by fund type.
25
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
C. Basis of Presentation (continued)
The accounting and financial treatment applied to a fund is determined by its measurement focus.
All governmental funds are accounted for using a flow of current financial resources measurement
focus. With this measurement focus, only current assets and current liabilities are generally included
on the balance sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balances for
these funds present increases (i.e., revenues and other financing sources) and decreases (i.e.
expenditures and other financing uses) in net current assets.
The District applies all GASB pronouncements, as well as the Financial Accounting Standards Board
(FASB) pronouncements issued on or before November 30, 1989, unless those pronouncements
conflict with or contradict GASB pronouncements.
Fiduciary funds are reported using the economic resources measurement focus. Fiduciary funds are
excluded from the government‐wide financial statements because they do not represent resources of
the District.
26
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
D. Basis of Accounting
Basis of accounting refers to when revenues and expenditures are recognized in the accounts and
reported in the financial statements. Government‐wide financial statements are prepared using the
accrual basis of accounting. Governmental funds use the modified accrual basis of accounting.
Fiduciary funds use the accrual basis of accounting.
Revenues – exchange and non‐exchange transactions:
Revenue resulting from exchange transactions, in which each party gives and receives essentially
equal value, is recorded under the accrual basis when the exchange takes place. On a modified
accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and
become available. “Available” means the resources will be collected within the current fiscal year
and are expected to be collected soon enough thereafter to be used to pay liabilities of the current
fiscal year. For the District, “available” means collectible within the current period or within 60 days
after year‐end.
Non‐exchange transactions, in which the District receives value without directly giving equal value in
return, include property taxes, grants, and entitlements. Under the accrual basis, revenue from
property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from the grants
and entitlements is recognized in the fiscal year in which all eligibility requirements have been
satisfied. Eligibility requirements include timing requirements, which specify the year when the
resources are to be used or the fiscal year when use is first permitted; matching requirements, in
which the District must provide local resources to be used for a specific purpose; and expenditure
requirements, in which the resources are provided to the District on a reimbursement basis. Under
the modified accrual basis, revenue from non‐exchange transactions must also be available before it
can be recognized.
27
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
D. Basis of Accounting (continued)
Deferred revenue:
Deferred revenue arises when assets are received before revenue recognition criteria have been
satisfied. Grants and entitlements received before eligibility requirements are met are recorded as
deferred revenue.
Expenses/expenditures:
On the accrual basis of accounting, expenses are recognized at the time a liability is incurred. On the
modified accrual basis of accounting, expenditures are generally recognized in the accounting period
in which the related fund liability is incurred, as under the accrual basis of accounting. However,
under the modified accrual basis of accounting, debt services expenditures, as well as expenditures
related to compensated absences and claims and judgments, are recorded only when payment is due.
Allocations of cost, such as depreciation and amortization, are not recognized in the governmental
funds.
E. Fund Accounting
The accounts of the District are organized on the basis of funds or account groups, each of which is
considered to be a separate accounting entity. The operations of each fund are accounted for with a
separate set of self‐balancing accounts that comprise its assets, liabilities, fund equity, revenues, and
expenditures. District resources are allocated to and accounted for in individual funds based upon
the purpose for which they are to be spent and the means by which spending activities are controlled.
The District’s accounts are organized into major, non‐major, and fiduciary funds, as follows:
Major Governmental Funds:
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.
The Bond Interest and Redemption Fund is used to account for the accumulation of resources for,
and the repayment of, District bonds, interest, and related costs.
The Special Reserve Fund for Other than Capital Outlay Projects is primarily to provide for the
accumulation of general fund moneys for general operating purposes other than capital outlay.
28
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
E. Fund Accounting (continued)
Non‐major Governmental Funds:
Special Revenue Funds are used to account for the proceeds of specific revenue sources that are
legally restricted to expenditures for specific purposes. The District maintains two non‐major
special revenue funds:
1. The Cafeteria Fund is used to account for revenues and expenditures associated with the
District’s food service operations.
2. The Deferred Maintenance Fund is used for the purpose of major repair or replacement of the
District’s school facilities.
Capital Projects Funds are used to account for the purchase and/or construction of major
governmental general fixed assets. The District maintains three non‐major capital project funds:
1. The Building Fund is used to account for new construction and modernization of school
facilities and represents proceeds from the sale of general obligation bonds.
2. The Capital Facilities Fund is used to account for resources received from developer impact fees
assessed under provisions of the California Environmental Quality Act.
3. The Special Reserve for Capital Projects Fund is used to account for funds set aside for capital improvement projects.
Fiduciary Funds:
Agency Funds are used to account for assets of others for which the District acts as an agent. The
cash account within the payroll clearing fund is used to record dedicated funds for payroll and
related expenses due to regulatory agencies, such as the I.R.S. and financial institutions. The
District maintains an agency fund for the student body accounts. The District also maintains one
student body fund, which is used to account for the raising and the expending of money to
promote the general welfare, morale, and the educational experience of the student body. The
amounts reported for the student body fund represent the combined totals of all schools within
the District.
29
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
F. Budgets and Budgetary Accounting
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for
all government funds. By state law, the Board of Education must adopt a budget no later than
July 1. A public hearing must be conducted to receive comments prior to adoption. The Board of
Education satisfied these requirements.
These budgets are revised by the Board of Education during the year to give consideration to
unanticipated income and expenditures. The original and the final revised budgets are presented for
the General Fund in the supplementary information.
Formal budgetary integration was used as a management control device during the year for all
budgeted funds. The District uses budget control by minor object and by individual appropriation
accounts.
G. Encumbrances
Encumbrance accounting is used in all budgeted funds to reserve portions of applicable
appropriations for which commitments have been made. Encumbrances are recorded for purchase
orders, contracts, and other commitments when they are written. Encumbrances are liquidated when
the commitments are paid. All encumbrances are liquidated as of June 30.
H. Assets, Liabilities, and Equity
1. Cash and Cash Equivalents
The District’s cash and cash equivalents are considered to be cash on hand and cash held in the Los
Angeles County Treasury. Cash held in the Los Angeles County Treasury is recorded at cost, which
approximates fair value. .
2. Inventory
Inventory is recorded using the purchases method in that the cost is recorded as an expenditure at the
time the individual inventory items are requisitioned. Inventories are valued at historical cost and
consist of expendable supplies held for consumption. Reported inventories are equally offset by a fund
balance reserve, which indicates that these amounts are not “available for appropriation and
expenditure.”
30
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
H. Assets, Liabilities, and Equity (continued)
3. Capital Assets
The accounting and reporting treatment applied to the capital assets associated with a fund is
determined by its measurement focus. Capital assets are reported in the governmental activities
column of the government‐wide statement of net assets, but are not reported in the fund financial
statements.
Capital assets are capitalized at cost (or estimated historical cost) and updated for additions and
disposals during the year. Donated fixed assets are recorded at their fair market values as of the
date received. The District maintains a capitalization threshold of $5,000. The District does not
own any infrastructure as defined in GASB No. 34. Improvements are capitalized; the costs of
normal maintenance and repairs that do not add to the value of the asset or materially extend an
asset’s life are not capitalized.
All reported capital assets, except for land and construction in progress, are depreciated.
Improvements are depreciated over the remaining useful lives of the related capital assets.
Depreciation is computed using the straight‐line method over the following estimated useful
lives:
Description Estimated Lives
Buildings and Improvements 25‐50 years
Furniture and Equipment 15‐20 years
Vehicles 8 years
4. Deferred Revenue
Cash received for federal and state special projects and programs is recognized as revenue to the
extent that qualified expenditures have been incurred. Deferred revenue is recorded to the extent
cash received on specific projects and programs exceed qualified expenditures.
5. Compensated Absences
Accumulated unpaid vacation benefits are accrued as a liability on the government‐wide
statement of net assets as the benefits are earned. For governmental funds, unpaid compensated
absences are recognized as a fund liability only upon the occurrence of relevant events such as
employee resignations and retirements that occur prior to year end that have not yet been paid
with expendable available financial resources. These amounts are recorded as accounts payable
in the fund from which the employees who have accumulated leave are paid.
31
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
H. Assets, Liabilities, and Equity (continued)
5. Compensated Absences (continued)
Accumulated sick leave benefits are not recognized as liabilities of the District. The Districtʹs
policy is to record sick leave as an operating expense in the period taken because such benefits do
not vest, nor is payment probable; however, unused sick leave is added to the creditable service
period for calculation of retirement benefits when the employee retires.
6. 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. Bonds payable are reported net
of applicable bond premium or discount. Bond issuance costs are reported as prepaid expenditures
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 the debt issued and
any premiums or discounts are reported as other financing sources and uses.
7. Fund Balance Reserves and Designations
Reservations of the ending fund balance indicate the portions of the fund balance not
appropriable for expenditure or amounts legally segregated for a specific future use.
Designations of the ending fund balance indicate tentative plans for financial resource utilization
in a future period.
8. Net Assets
Net assets represent the difference between assets and liabilities. Net assets invested in capital
assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by
the outstanding balances of any borrowings used for the acquisition, construction or
improvements of those assets. Net assets are reported as restricted when there are limitations
imposed on their use through external restrictions imposed by donors, grantors, or laws or
regulations of other governments.
32
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
I. Revenue Limit/Property Tax
The District’s revenue limit is received from a combination of local property taxes, state
apportionments, and other local sources. The Los Angeles County Auditor Controller’s Office is
responsible for assessing, collecting, and apportioning property taxes. Taxes are levied for each fiscal
year on taxable real and personal property in the county. The levy is based on the assessed values as
of the preceding January 1, which is also the lien date. Property taxes on the secured roll are due on
November 1 and February 1, and taxes become delinquent after December 10 and April 10,
respectively. Property taxes on the unsecured roll are due on the lien date (January 1), and become
delinquent if unpaid by August 31.
Secured property taxes are recorded as revenue when apportioned, in the fiscal year of the levy. The
county apportions secured property tax revenue in accordance with the alternative method of
distribution prescribed by Section 4706 of the California Revenue and Taxation Code. This alternate
method provides for crediting each applicable fund with its total secured taxes upon completion of
the secured tax roll – approximately October 1 of each year.
The County Auditor Controller reports the amount of the District’s allocated property tax revenue to
the California Department of Education. Property taxes are recorded as local revenue limit sources
by the District.
The California Department of Education reduces the District’s entitlement by the District’s local
property tax revenue. The balance is paid from the state General Fund, and is known as the State
Apportionment.
The District’s Base Revenue Limit is the amount of general purpose tax revenue, per average daily
attendance (ADA), that the District is entitled to by law. This amount is multiplied by the second
period ADA to derive the District’s total entitlement.
J. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenditures during the reporting period. Actual results
could differ from those estimates.
33
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
K. New GASB Pronouncement
GASB Statement No. 54 – Fund Balance Reporting and Governmental Fund Type Definitions was issued in
February 2009. This statement establishes fund balance classifications that comprise a hierarchy
based primarily on the extent to which a government is bound to observe constraints imposed upon
the use of the resources reported in governmental funds. This statement is required to be
implemented in the 2010‐11 fiscal year.
NOTE 2 – CASH AND INVESTMENTS
Summary of Cash and Investments
Cash and investments as of June 30, 2010 are classified in the accompanying financial statements as
follows:
Governmental
Funds
Fiduciary
Funds
Cash in county treasury 15,235,998$ ‐$ ‐$
Cash on hand and in banks 95,500 1,352,058 5,253,965
Cash in revolving fund 35,612 ‐ ‐
Total cash and cash equivalents 15,367,110$ 1,352,058$ 5,253,965$
Discretely
Presented
Component
Unit
34
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 2 – CASH AND INVESTMENTS (continued)
Policies and Practices
Governmental agencies in the state of California are authorized under California Government Code to
make direct investments in local agency bonds, notes, or warrants within the state; U.S. Treasury
instruments; registered state warrants or treasury notes; securities of the U.S. Government, or its agencies;
bankers acceptances; commercial paper; certificates of deposit placed with commercial banks or savings
and loan companies; repurchase or reverse repurchase agreements; medium term corporate notes; shares
of beneficial interest issued by diversified management companies; certificates of participation;
obligations with first priority security; and collateralized mortgage obligations. Investments of debt
proceeds held by trustees are governed by the provisions of the applicable agreements rather than the
general provisions of the California Government Code.
Cash in County Treasury – The District is considered to be an involuntary participant in an external
investment pool, as the District is required to deposit all receipts and collections of monies with its
County Treasurer (Education Code Section 41001). The fair value of the District’s investment in the pool
is disclosed in the notes to the financial statements at amounts based upon the District’s pro‐rata share of
the fair value provided by the County Treasurer for the entire portfolio in relation to the amortized cost of
that portfolio. The balance available for withdrawal is recorded on the amortized cost basis and is based
on the accounting records maintained by the County Treasurer.
35
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 2 – CASH AND INVESTMENTS (continued)
General Authorizations
Except for investments by trustees of debt proceeds, the authority to invest District funds deposited with
the county treasury is delegated to the County Treasurer and Tax Collector. Additional information
about the investment policy of the County Treasurer and Tax Collector may be obtained from its website.
The table below identifies examples of the investment types permitted in the investment policy:
Authorized
Investment Type
Maximum
Remaining
Maturity
Maximum
Percentage
of Portfolio
Maximum
Investment
in One Issuer
Local Agency Bonds, Notes, Warrants 5 years None None
Registered State Bonds, Notes, Warrants 5 years None None
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Banker’s Acceptance 180 days 40% 30%
Commercial Paper 270 days 25% 10%
Negotiable Certificates of Deposit 5 years 30% None
Repurchase Agreements 1 year None None
Reverse Repurchase Agreements 92 days 20% of base None
Medium‐Term Corporate Notes 5 years 30% None
Mutual Funds N/A 20% 10%
Money Market Mutual Funds N/A 20% 10%
Mortgage Pass‐Through Securities 5 years 20% None
County Pooled Investment Funds N/A None None
Local Agency Investment Fund (LAIF) N/A None None
Joint Powers Authority Pools N/A None None
Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are described
below:
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair
value to changes in market interest rates.
The District manages its exposure to interest rate risk by investing in the County Treasury. The District
maintains an investment with the Los Angeles County Investment Pool with a fair value of approximately
$15,324,695, and an amortized book value of $15,235,998. The average weighted maturity for this pool is
536.34 days.
36
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 2 – CASH AND INVESTMENTS (continued)
Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the
investment. This is measured by the assignment of a rating by a nationally recognized statistical rating
organization. The investments within the Los Angeles County Investment Pool are rated at least A by
Moody’s Investors Service.
Custodial Credit Risk – Deposits
Custodial credit risk is the risk that in the event of a bank failure, the District’s deposits may not be
returned to it. The District does not have a policy for custodial credit risk for deposits. However, the
California Government Code requires that a financial institution secure deposits made by state or local
governmental units by pledging securities in an undivided collateral pool held by a depository regulated
under state law (unless so waived by the governmental unit). The market value of the pledged securities
in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies.
California law also allows financial institutions to secure public deposits by pledging first trust deed
mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by
the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. As
of June 30, 2010, the District’s bank balance of $131,112 (not including the foundation) was not exposed to
custodial credit risk because it did not exceed the $250,000 threshold was covered under the FDIC
insurance limit.
Concentration of Credit Risk
The investment policy of the District contains no limitations on the amount that can be invested in any
one issuer beyond the amount stipulated by the California Government Code. District investments that
are greater than 5 percent of total investments are in either an external investment pool or mutual funds
and are therefore exempt.
NOTE 3 – ACCOUNTS RECEIVABLE
Accounts receivable as of June 30, 2010 consist of the following:
Governmental
Funds
Federal 922,313$
State categorical 568,567
Other 1,868,088
Total accounts receivable 3,358,968$
37
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 4 – INTERFUND ACTIVITIES
Interfund activity is reported as loans, services provided reimbursements, or transfers. Loans are reported
as interfund receivables and payables as appropriate and are subject to elimination upon consolidation.
Services provided, deemed to be at market or near market rates, are treated as revenues, expenditures
and expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund,
and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers.
Transfers among governmental funds are netted as part of the reconciliation to the government‐wide
financial statements.
Due From/Due To Other Funds
Individual interfund receivables and payable balances as of June 30, 2010 are as follows:
Due from Other Funds
General
Fund
Special Reserve for Other than Capital Outlay Fund 4,726,720$
Due from the General Fund to the Special Reserve for Other Than
Capital Outlay Fund for TRAN pledges paid in July 2010 $ 4,726,720
38
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 4 – INTERFUND ACTIVITIES (continued)
Interfund Transfers
Interfund transfers consist of operating transfers from funds receiving resources to funds through which
the resources are to be expended. Interfund transfers for the 2009‐10 fiscal year are as follows:
Special Reserve for
General for Other Than
Fund Capital Outlay Fund Total
General Fund ‐$ 55,540$ 55,540$
Special Reserve for Other than Capital Outlay Fund 4,144,204 ‐ 4,144,204
Other Governmental Funds 490,625 ‐ 490,625
Total 4,634,829$ 55,540$ 4,690,369$
$ 456,125
4,144,204
34,500
55,540
4,690,369$
Transfers to Other Funds
Transfer from the General Fund to the Deferred Maintenance Fund for deferred maintance projects
Transfer from the General Fund to the Special Reserve for Other Than Capital Outlay Fund for cash
flow reserves
Transfer from the General Fund to the Special Reserve for Capital Outlay Fund for major maitenance
on school athletic field
Transfer from the Special Reserve for Other Than Capital Outlay Fund to the General Fund for health
and welfare increases
39
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 5 – FUND BALANCES
The following amounts were designated by the Board of Education for the purposes listed below:
General Fund:
Economic Uncertainties 1,546,633$
Cafeteria Fund:
Food Services Operations 69,285$
Deferred Maintenance Fund
Maintenance Projects 1,001,540$
Special Reserve for Other Than Capital Outlay Fund
Cash Flow Reserves 4,145,216$
Building Fund
Bond Projects 49,070$
Capital Facilities Fund:
Capital Facilities Projects 73,010$
Special Reserve Fund for Capital Outlay Projects:
Capital Projects 665,852$
Bond Interest and Redemption Fund
Debt Service ‐ Principal and Interest Payments 2,840,684$
40
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 6 – CAPITAL ASSETS AND DEPRECIATION
Capital asset activity for the year ended June 30, 2010 is shown below:
Beginning Ending
Balance Balance
July 1, 2009 Additions Deletions June 30, 2009
Land 422,500$ ‐$ ‐$ 422,500$
Site improvements 7,922,065 350,957 ‐ 8,273,022
Buildings and improvements 74,899,077 94,663 ‐ 74,993,740
Furniture and equipment 1,884,252 48,000 1,932,252
Work in progress 251,605 759,448 251,605 759,448
Total at historical cost 85,379,499 1,253,068 251,605 86,380,962
Less accumulated depreciation
Site improvements 1,933,701 404,704 ‐ 2,338,405
Buildings and improvements 18,790,811 2,504,205 ‐ 21,295,016
Furniture and equipment 984,205 215,695 ‐ 1,199,900
Total accumulated depreciation 21,708,717 3,124,604 ‐ 24,833,321
Governmental activiites capital assets, net 63,670,782$ (1,871,536)$ 251,605$ 61,547,641$
NOTE 7 – GENERAL LONG‐TERM DEBT
A schedule of changes in long‐term debt for the year ended June 30, 2010 is shown below:
Balance
July 1, 2009 Additions Deductions
Balance
June 30, 2010
Due in
One Year
General obligations bonds 50,040,503$ 751,941$ 1,605,000$ 49,187,444$ 1,850,000$
Other post employment benefits (94,817) ‐ (41,663) (136,480) ‐
Compensated absences 213,530 18,668 ‐ 232,198 31,789
50,159,216$ 770,609$ 1,563,337$ 49,283,162$ 1,881,789$
A summary of the general obligation bonds issued and outstanding as of June 30, 2010 is shown below:
Bond Maturity Date Interest Rate Original Issue
Bonds
Outstanding
July 1, 2009
Accreted
Interest
Addition Redeemed
Bonds
Outstanding
June 30, 2010
Due in One
Year
Series 1998B Various 3.95% ‐ 5.25% 27,715,000$ 24,015,000$ ‐$ 815,000$ 23,200,000$ 915,000$
Series 2000A Various 4.50% ‐ 5.71% 17,999,808 21,330,503 751,941 525,000 21,557,444 655,000
Series 2001 Various 3.00% ‐ 5.00% 6,535,000 4,695,000 ‐ 265,000 4,430,000 280,000
50,040,503$ 751,941$ 1,605,000$ 49,187,444$ 1,850,000$
41
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 7 – GENERAL LONG‐TERM DEBT (continued)
General Obligation Bonds
On May 28, 1998, the District issued Series B of the Election of 1998 General Obligation Bonds in
the amount of $27,715,000. The bonds were authorized at a regularly scheduled election of the
registered voters of the District held on June 4, 1996, whereby the voters authorized the issuance
and sale of $34.3 million of general obligation bonds to finance the construction of new school
facilities and the renovation and improvements of school buildings and classrooms. The bonds
consist of: a) serial bonds of $20,106,000 with interest rates ranging from 3.95% to 5.25% and fully
maturing on July 1, 2020, and b) term bonds of $7,610,000 with a stated interest rate of 5% due on
July 1, 2023. At June 30, 2010 the principal balance outstanding was $23,200,000.
On August 17, 2000, the District issued Series 2000A of the Election of 2000 General Obligation
Bonds in the amount of $17,999,808. The bonds were authorized at a regularly scheduled election
of the registered voters of the District. The bonds were authorized to finance the construction of
new school facilities and the renovation and improvements of existing schools. The bonds consist
of: a) current interest bonds of $9,750,000 with interest rates ranging from 4.5% to 5.5% and fully
maturing on July 1, 2016; and b) capital appreciation bonds of $8,249,808 due on July 1, 2025. At
June 30, 2010 the principal balance outstanding was $21,557,444, including $5,627,636 in accreted
interest on the capital appreciation bonds.
On April 12, 2001, the District refunded Series A of the Election of 1996 General Obligation Bonds
in the amount of $6,535,000. The bonds consist of Serial Bonds of $6,535,000 with interest rates
ranging from 3.0% to 5.0% and fully maturing on August 1, 2021. At June 30, 2010 the principal
balance outstanding was $4,430,000.
The annual requirements to amortize general obligation bonds payable are as follows:
Fiscal Year Principal*
Interest to
Maturity Total
2010‐11 1,850,000$ 1,791,685$ 3,641,685$
2011‐12 2,075,000 1,707,283 3,782,283
2012‐13 2,320,000 1,611,117 3,931,117
2013‐14 2,585,000 1,497,711 4,082,711
2014‐15 2,880,000 1,365,197 4,245,197
2015‐2020 15,249,366 8,181,747 23,431,113
2021‐2025 15,098,317 12,625,670 27,723,987
2026‐2029 1,502,125 4,577,875 6,080,000
43,559,808$ 33,358,285$ 76,918,093$
* Does not include accreted interest of $5,627,636
42
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 8 – JOINT POWERS AUTHORITIES
The San Marino Unified School District participates in agreements with three joint powers authorities
(JPA) entities: the West San Gabriel Valley Schools’ Liability and Property Joint Powers Authority
(WSGLP), the West San Gabriel Valley Schools’ Workers’ Compensation Joint Powers Authority
(WSGWC), the Southern California Schools Employee Benefit Association Authority (SCSEBA) joint
powers authorities. The San Marino Unified School District pays an annual premium commensurate with
the level of coverage requested.
Each JPA is governed by a board consisting of a representative from each member district. Each
governing board controls the operations of its JPA independent of any influence by the San Marino
Unified School District beyond the District’s representation on the governing boards.
Each JPA is independently accountable for its fiscal matters. Budgets are not subject to any approval
other than that of the respective governing boards. Member districts share surpluses and deficits
proportionately to their participation in the JPA.
The relationship between the San Marino Unified School District and the JPAs are such that neither JPA is
a component unit of the District for financial reporting purposes. Condensed most readily available
financial information of the WSGLP, SCSEBA, and WSGWC JPAs are shown below.
WSGLP SCSEBA WSGWC
Audited Audited Audited
June 30, 2010 June 30, 2007 June 30, 2010
Assets 14,158,444$ 34,644,505$ 14,337,284$
Liabilities 999,891$ 6,162,783$ 424,790$
Net assets 13,158,553$ 28,481,722$ 13,912,494$
Revenues 2,970,540$ 63,574,383$ 4,589,119$
Expenses 3,692,410 56,137,218 3,136,015
Operating income (721,870) 7,437,165 1,453,104
Non‐operating income 421,193 ‐ 407,230
Change in net assets (300,677)$ 7,437,165$ 1,860,334$
43
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 9 – COMMITMENTS AND CONTINGENCIES
A. State and Federal Allowances, Awards, and Grants
The District has received state and federal funds for specific purposes that are subject to review and
audit by the grantor agencies. Although such audits could generate expenditure disallowances under
terms of the grants, it is believed that any required reimbursement would not be material.
B. Construction Commitments
As of June 30, 2010, the District had no significant outstanding construction commitments.
NOTE 10 – RISK MANAGEMENT
Property and Liability
The District is exposed to various risks of loss related to torts, thefts, damage to District assets, errors and
omissions, employee injuries and natural disasters. The District participates in a public entity risk pool, as
described in Note 9, for claims in excess of insured amounts for workers’ compensation and liability
protection. The District purchases commercial insurance coverage for other types of risk. There have
been no significant reductions in insurance coverage from the prior year.
Workers’ Compensation
For fiscal year 2010, the District participated in the West San Gabriel Valley Schools’ Workers
Compensation Joint Powers Authority, and insurance purchasing pool.
Employee Health Benefits
The District has contracted with Southern California Schools Employee Benefit Association Authority
(SCSEBA) to provide employee medical, vision, dental, behavioral health and life insurance benefits.
44
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 11 – EMPLOYEE RETIREMENT PLANS
Qualified employees are covered under multiple‐employer defined benefit pension plans maintained by
agencies of the State of California. Certificated employees are members of the California State Teachers’
Retirement System (CalSTRS), and classified employees are members of the California Public Employees’
Retirement System (CalPERS).
California Public Employees’ Retirement System (CalPERS)
Plan Description
The District contributes to the School Employer Pool under the California Public Employees’ Retirement
System (CalPERS), a cost‐sharing multiple‐employer public employee retirement system defined benefit
pension plan administered by CalPERS. The plan provides retirement and disability benefits, annual
cost‐of‐living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are
established by state statutes, as legislatively amended within the Public Employees’ Retirement Law.
CalPERS issues a separate comprehensive annual financial report that includes financial statements and
required supplementary information. Copies of the CalPERS annual financial report may be obtained
from the CalPERS Executive Office, 400 P Street; Sacramento, California 95814.
Funding Policy
Active plan members are required to contribute 7.0% of their salary and the District is required to
contribute an actuarially determined rate. The actuarial methods and assumptions used for determining
the rate are those adopted by the CalPERS Board of Administration. The required employer contribution
for fiscal year 2009‐10 was 9.709%. The contribution requirements of the plan members are established by
state statute. The District’s contributions to CalPERS for the last three fiscal years were as follows:
Contribution
Percent of Required
Contribution
2009‐10 $ 449,121 100%
2008‐09 $ 460,857 100%
2007‐08 $ 449,260 100%
45
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 11 – EMPLOYEE RETIREMENT PLANS (continued)
California State Teachers’ Retirement System (CalSTRS)
Plan Description
The District contributes to the California State Teachers’ Retirement System (CalSTRS), a cost‐sharing
multiple‐employer public employee retirement system defined benefit pension plan administered by
CalSTRS. The plan provides retirement, disability and survivor benefits to beneficiaries. Benefit
provisions are established by state statutes, as legislatively amended, within the State Teachers’
Retirement Law. CalSTRS issues a separate comprehensive annual financial report that includes financial
statements and required supplementary information. Copies of the CalSTRS annual financial report may
be obtained from CalSTRS, 7667 Folsom Boulevard; Sacramento, California 95826.
Funding Policy
Active plan members are required to contribute 8.0% of their salary. The required employer contribution
rate for fiscal year 2009‐10 was 8.25% of annual payroll. The contribution requirements of the plan
members are established by state statute. The District’s contributions to CalSTRS for the last three fiscal
years were as follows:
Contribution
Percent of Required
Contribution
2009‐10 $ 1,029,821 100%
2008‐09 $ 1,120,350 100%
2007‐08 $ 1,167,821 100%
On‐Behalf Payments
The District was the recipient of on‐behalf payments made by the State of California to CalSTRS for K‐12
education. These payments consist of state general fund contributions of approximately $532,636 to
CalSTRS (4.267% of salaries subject to CalSTRS in 2009‐10).
46
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 12 – OTHER POSTEMPLOYMENT BENEFITS
San Marino Unified School District administers a single‐employer defined benefit other postemployment
benefit (OPEB) plan that provides medical, dental and vision insurance benefits to eligible retirees and
their spouses. The District implemented Governmental Accounting Standards Board Statement #45,
Accounting and Financial Reporting by Employers for Postemployment Benefit Plans Other Than Pension Plans, in
2009‐10.
Plan Descriptions and Contribution Information
Membership in the plan consisted of the following:
Retirees and beneficiaries receiving benefits 33
Active plan members 275
Total 308
Number of participating employers 1
The District offers medical, dental, vision and life insurance benefits to its employees, retirees, and their
dependents. The District does not pay for the cost of these benefits for retirees, except for one current
retiree covered under a special agreement until age 65, and six certificated retirees receiving 2 years of
retiree‐only medical, dental and vision premiums under a 2009 Early Retirement Incentive.
Both certificated and classified employees who have completed 10 years of service with the District are
eligible to retire and participate in the Districtʹs healthcare plan by paying premiums similar to those
charged for the Districtʹs active employees. For classified employees, coverage is limited to only those
retirees under age 65 at the time of retirement and only until such time as the retiree reaches age 65.
Participation is limited to classified employees who have held medical coverage during the last five (5)
years immediately preceding their retirement. Spouses, domestic partners, and eligible dependent
children of retirees may also be covered at the retireeʹs expense.
While the District does not directly contribute towards the cost of premiums for retirees (with certain
limited exceptions), the ability to obtain coverage at an active employee rate constitutes a significant
economic benefit to the retirees, called an ʺimplicit subsidyʺ under GASB 45. Covering retirees increases
the Districtʹs overall health insurance rates; it is, in part, the purpose of this valuation to determine the
amount of the subsidy.
47
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 12 – OTHER POSTEMPLOYMENT BENEFITS (continued)
Plan Descriptions and Contribution Information (continued)
The ability to participate in the Districtʹs health plans by self‐paying the premiums extends for the lifetime
of the retiree; however, upon attaining the age of Medicare eligibility (65), the retiree must enter a plan
coordinated with Medicare. Standard actuarial practice assumes that Medicare supplement plans do not
generally give rise to an implicit subsidy, and while the actuary has included Medicare eligible retirees in
this valuation, their liability under GASB 45 and their annual implicit subsidy are both $0.
The District’s funding policy is to contribute financing requirements to a multi‐employer irrevocable
trust, the California School Boards Association’s GASB 45 Solutions Program. For fiscal year 2009‐10, the
District contributed $78,951 to the trust. The actuarial value of the implicit rate subsidy in 2009‐10 was
$122,031.
Annual OPEB Cost and Net OPEB Obligation/Asset
The District’s annual OPEB cost (expense) is calculated based on the annual required contribution of the
employer (ARC), an amount actuarially determined in accordance with the parameters of GASB
Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to
cover normal cost each year and amortize any unfunded actuarial accrued liabilities (UAAL) (or funding
excess) over a period not to exceed thirty years. The following table shows the components of the
District’s annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the
District’s net OPEB obligation/asset:
Annual required contribution 78,941$
Interest on net OPEB obligation (4,741)
Adjustment to annual required contribution 6,168
Annual OPEB cost 80,368
Contributions made 122,031
Increase in net OPEB asset 41,663
Net OPEB asset ‐ July 1, 2009 94,817
Net OPEB asset ‐ June 30, 2009 136,480$
48
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 12 – OTHER POSTEMPLOYMENT BENEFITS (continued)
The annual OPEB cost and the percentage of annual OPEB cost contributed to the Plan in 2009 and 2010
were as follows:
Annual
Year Ended Required Percentage
June 30, Contribution Contributed
2009 78,941$ 100%
2010 78,941$ 100%
Funded Status and Funding Progress – OPEB Plans
As of July 1, 2008, the most recent actuarial valuation date, the District did not have a fully funded plan.
The actuarial accrued liability (AAL) for benefits was $645,181 and the unfunded actuarial accrued
liability (UAAL) was $645,181.
Actuarial
Actuarial Accrued Unfunded
Valuation Value of Liability AAL Funded
Date Assets (AAL) (UAAL) Ratio
7/1/2008 ‐$ 645,181$ 645,181$ 0%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Actuarially determined
amounts are subject to continual revision as actual results are compared with past expectations and new
estimates are made about the future. The schedules of funding progress present multiyear trend
information about whether the actuarial values of plan assets are increasing or decreasing over time
relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and plan members) and include the types of benefits provided at the time of
each valuation and the historical pattern of sharing of benefit costs between the employer and plan
members to that point. The actuarial methods and assumptions used include techniques that are
designated to reduce the effects of short‐term volatility in actuarial accrued liabilities and the actuarial
value of assets, consistent with the long‐term perspective of the calculations.
49
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 12 – OTHER POSTEMPLOYMENT BENEFITS (continued)
Actuarial Methods and Assumptions (continued)
Additional information as of the latest actuarial valuation follows:
Valuation Date 7/1/2008
Actuarial Cost Method Projected Unit Credit
Amortization Method Level‐Dollar Basis
Remaining Amortization Period 28 years
Asset Valuation Market Value Basis
Actuarial Assumptions:
Discount rate 5.0%
Long‐term healthcare cost trend rates:
Medical/Rx 7.0%
Dental & Vision 4.0%
NOTE 13 – EARLY RETIREMENT INCENTIVE
During the 2009‐10 fiscal year, the District offered an early retirement incentive to classified and
certificated staff who were of age 55 or older on or before January 1, 2011, who were currently eligible for
health and welfare benefits, and were 100% vested in CalPERS or CalSTRS. A total of 11 certificated and
10 classifed employees took the retirement incentive, with a total cost to the District of $415,482. This
amount was paid in full in July 2010 and accrued as a current liability as of June 30, 2010.
50
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 14 – PARCEL TAX
Measure E
On May 5, 2009, the District voters passed the “Preserve San Marino Schools”, (Measure “R”). This
Measure is a qualified special parcel tax of $795 per parcel (plus nominal CPI increase) to be levied by the
District each year for six years with exemptions for parcels owned and occupied by persons age 65 or
older and contiguous parcels. The revenues raised by this Measure shall be used to prevent deterioration
in the quality of public education in San Marino in the face of State cuts in funding for public schools, and
to promote continued student achievement in the core curriculum.
Measure R
On March 6, 2007, the District voters approved a $295 per parcel (plus nominal CPI increase) yearly tax to
“retain and attract the qualified teachers and counselors, support academic programs, prevent
elimination of specialist and maintain reduced class size.” The tax was collectible beginning July 1, 2007
with an exemption for eligible seniors and contiguous parcels.
NOTE 15 – EXPENDITURES IN EXCESS OF APPROPRIATIONS
Expenditures in excess of appropriation in the governmental funds for the fiscal year ended June 30, 2010
were as follows:
General Fund:
Capital outlay 173,596$
Other outgo 89,991$
51
SAN MARINO UNIFIED SCHOOL DISTRICT
Notes to Financial Statements
June 30, 2010
NOTE 16 – TAX REVENUE ANTICIPATION NOTE
The District issued $4,685,000 of Tax Revenue Anticipation Notes dated July 1, 2009 through a multiple
agency agreement with the California Education Notes Program Note Participations, Series 2010A. The
notes mature on July 30, 2010 and funds will be held with the Los Angeles County Treasurer until the
District needs to draw funds out. The Tax Revenue Anticipation Notes were recorded as a current loan as
of June 30, 2010 and paid in full on July 30, 2010.
NOTE 17 – SUBSEQUENT EVENTS
Refuse to Lose Campaign
In response to budget reductions and loss of revenue to the District, the community organized the Refuse
to‐Lose campaign, which generated $4,063,586 in donations to the District. The funds were received on in
September 2010. Funds are to be spent solely on salaries for positions put on the budget reduction list.
Tax Revenue Anticipation Note New Issuance
The District issued $3,000,000 of Tax Revenue Anticipation Notes dated July 1, 2010 through a multiple
agency agreement with the California Education Notes Program Note Participations, Series 2010A. The
notes mature on July 1, 2011 and funds will be held with the Los Angeles County Treasurer until the
District needs to draw funds out. Repayment requirements are that principal amounts be pledged in a
special fund on January 31, 2011 and April 30, 2011.
Required Supplementary Information
52
SAN MARINO UNIFIED SCHOOL DISTRICT
Budgetary Comparison Schedule – General Fund
For The Fiscal Year Ended June 30, 2010
Actual
Variance with
Final Budget ‐
Original Final (Budgetary Basis) Pos (Neg)
REVENUES
Revenue limit sources 16,482,768$ 15,730,234$ 15,823,814$ 93,580$
Federal 910,095 1,746,458 1,660,400 (86,058)
Other state 1,844,188 2,025,332 2,190,966 165,634
Other local 8,642,476 9,892,822 10,679,296 786,474
Total revenues 27,879,527 29,394,846 30,354,476 959,630
EXPENDITURES
Certificated salaries 13,105,194 13,297,987 13,012,237 285,750
Classified salaries 5,164,062 5,415,192 5,304,258 110,934
Employee benefits 4,864,596 4,975,115 4,784,494 190,621
Books and supplies 679,395 1,334,861 829,283 505,578
Services and other operating expenditures 3,563,271 3,826,495 2,931,682 894,813
Capital outlay 20,000 98,780 272,376 (173,596)
Transfers of indirect costs 75,000 75,000 (37,026) 112,026
Other outgo (39,729) (31,185) 58,806 (89,991)
Total expenditures 27,431,789 28,992,245 27,156,110 1,836,135
Excess (deficiency) of revenues
over (under) expenditures 447,738 402,601 3,198,366 2,795,765
OTHER FINANCING SOURCES AND USES
Interfund transfers in ‐ ‐ 55,540 55,540
Interfund transfers out (375,540) (3,529,525) (4,634,829) (1,105,304)
Total other financing sources and uses (375,540) (3,529,525) (4,579,289) (1,049,764)
Excess (deficiency) of revenues and other
financing sources over (under)
expenditures and other financing uses 72,198 (3,126,924) (1,380,923) 1,746,001
Fund balances, July 1, 2009 4,234,298 4,234,298 4,234,298 ‐
Fund balances, June 30, 2010 4,306,496$ 1,107,374$ 2,853,375$ 1,746,001$
Budgeted Amounts
53
SAN MARINO UNIFIED SCHOOL DISTRICT
Budgetary Comparison Schedule – Special Reserve Fund for Other than Capital Outlay
For The Fiscal Year Ended June 30, 2010
Actual
Variance with
Final Budget ‐
Original Final (Budgetary Basis) Pos (Neg)
REVENUES
Other local ‐$ 203$ 45,249$ 45,046$
Total revenues ‐ 203 45,249 45,046
Excess (deficiency) of revenues
over (under) expenditures ‐ 203 45,249 45,046
OTHER FINANCING SOURCES AND USES
Interfund transfers in ‐ 3,153,985 4,144,204 990,219
Interfund transfers out ‐ ‐ (55,540) (55,540)
Total other financing sources and uses ‐ 3,153,985 4,088,664 934,679
Excess (deficiency) of revenues and other
financing sources over (under)
expenditures and other financing uses ‐ 3,154,188 4,133,913 979,725
Fund balances, July 1, 2009 11,303 11,303 11,303 ‐
Fund balances, June 30, 2010 11,303$ 3,165,491$ 4,145,216$ 979,725$
Budgeted Amounts
54
SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Funding Progress
For The Fiscal Year Ended June 30, 2010
The following schedule shows the District’s actuarially determined funding progress for other
postemployment benefits.
Actuarial UAAL as a
Actuarial Accrued Unfunded Percentage of
Valuation Value of Liability AAL Funded Covered Covered
Date Assets (AAL) (UAAL) Ratio Payroll Payroll
7/1/2008 ‐$ 645,181$ 645,181$ 0% N/A N/A
Supplementary Information Section
55
SAN MARINO UNIFIED SCHOOL DISTRICT
Local Educational Agency Organizational Structure
June 30, 2010
The San Marino Unified School District was established in 1917. The District’s boundaries include the
City of San Marino and unincorporated areas of San Gabriel and Pasadena. The District operates two
elementary schools, one middle school, and one comprehensive high school.
GOVERNING BOARD 2008‐09
Member Office Term Expires
Dr. Jeng Yen President November 2013
Chris Norgaard Vice President November 2011
Karen Preston Clerk November 2011
C. Joseph Chang Member November 2013
Nam Jack Member November 2013
DISTRICT ADMINISTRATORS
Dr. Gary W. Woods
Superintendent
Julie Boucher,
Assistant Superintendent, Business Services
Linda de la Torre,
Assistant Superintendent, Human Resources
Billie Jean Knight,
Assistant Superintendent, Instructional Services
See accompanying note to supplementary information.
56
SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Average Daily Attendance
For the Fiscal Year Ended June 30, 2010
Second Period Annual
Report Report
Elementary:
Kindergarten 154 155
Grades 1 through 3, regular classes 618 620
Grades 4 through 6, regular classes 725 723
Grades 7 and 8, regular classes 486 488
Special education 47 47
Special ed ‐ nonpublic, nonsectaria schools 5 4
Extended year special education ‐ special day class 4 4
Extended year prog ‐ nonpublic, nonsectarian schools 1 1
Total Elementary 2,040 2,042
Secondary:
Grades 9 through 12, regular classes 1,099 1,098
Special education 19 19
Total Secondary 1,118 1,117
Total Average Daily Attendance 3,158 3,159
See accompanying note to supplementary information.
57
SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Instructional Time
For the Fiscal Year Ended June 30, 2010
1982‐83 1986‐87 1986‐87 Number of Days
1982‐83 Reduced Minutes Reduced 2009‐10 Traditional
Grade Level Actual Minutes Minutes Requirement Minutes Actual Minutes Calendar Status
Kindergarten 32,434 31,533 36,000 35,000 36,270 180 Complied
Grade 1 49,266 47,898 50,400 49,000 51,840 180 Complied
Grade 2 49,266 47,898 50,400 49,000 52,260 180 Complied
Grade 3 49,266 47,898 50,400 49,000 52,260 180 Complied
Grade 4 54,681 53,162 54,000 52,500 56,040 180 Complied
Grade 5 54,681 53,162 54,000 52,500 56,040 180 Complied
Grade 6 54,500 52,986 54,000 52,500 61,680 180 Complied
Grade 7 54,500 52,986 54,000 52,500 61,680 180 Complied
Grade 8 54,500 52,986 54,000 52,500 61,680 180 Complied
Grade 9 58,924 57,287 64,800 63,000 66,114 180 Complied
Grade 10 58,924 57,287 64,800 63,000 66,114 180 Complied
Grade 11 58,924 57,287 64,800 63,000 66,114 180 Complied
Grade 12 58,924 57,287 64,800 63,000 66,114 180 Complied
See accompanying note to supplementary information.
58
SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Financial Trends and Analysis
For the Fiscal Year Ended June 30, 2010
(Budget)
General Fund 2011** 2010 2009 2008
Revenues and other financing sources 28,586,243$ 30,410,016$ 31,111,601$ 29,690,651$
Expenditures 27,462,475 27,156,110 29,082,555 29,924,517
Other uses and transfers out 904,369 4,634,829 6,578 151,139
Total outgo 28,366,844 31,790,939 29,089,133 30,075,656
Change in fund balance (deficit) 219,399 (1,380,923) 2,022,468 (385,005)
Ending fund balance 3,072,774$ 2,853,375$ 4,234,298$ 2,211,830$
Available reserves* 1,768,740$ 1,549,231$ 875,714$ 938,742$
Available reserves as a percentage
of total outgo 6% 5% 3.0% 3.1%
Total long‐term debt 47,401,373$ 49,283,162$ 50,159,216$ 50,972,927$
Average daily attendance at P‐2 3,162 3,158 3,143 3,135
The General Fund balance has decreased by $641,545 over the past two years. The fiscal year 2010‐11 adopted
budget projects a increase of $219,399. For a district of this size, the state recommends available reserves of at
least 3% of total general fund expenditures, transfers out, and other uses (total outgo). ABX4 2 reduced
the 3% reserve requirement by one‐third for the 2009‐10 year. Long‐term debt has decreased $1,752,830
over the past two years.
* Available reserves consist of all undesignated fund balances and all funds designated for economic
uncertainty in the General Fund or Special Reserve Fund (Other than Capital Outlay).
** Revised Final Budget, September 2010.
See accompanying note to supplementary information.
59
SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30, 2010
Federal Pass‐Through
Federal Grantor/Pass‐Through CFDA Entity Identifying 2009‐10
Grantor/Program or Cluster Title Number Number Expenditures
Federal Programs:
U.S. Department of Agriculture:
Passed through California Dept. of Education (CDE):
National School Lunch 10.555 13523 96,369$
Fair Market Value of Commodities 10.565 13389 26,057
Total U.S. Department of Agriculture 122,426
U.S. Department of Education:
Passed through California Dept. of Education (CDE):
Individuals with Disabilities Education Act (IDEA):
IDEA Basic Local Assistance Entitlement, Part B 84.027 13379 515,213
IDEA Local Assistance, Part B, Private School ISPs 84.027 10115 1,853
IDEA Preschool Grants, Part B 84.173 13430 13,930
IDEA Preschool Local Entitlement, Part B 84.027A 13682 27,721
IDEA Preschool Staff Development, Part B 84.173A 13431 191
ARRA‐IDEA Part B, Preschool Grants 84.392 15000 22,031
ARRA‐IDEA Part B, Basic Local Assistance 84.391 15003 249,530
ARRA‐IDEA Part B, Private School ISPs 84.391 10123 1,494
ARRA‐IDEA Part B, Preschool Local Entitlement 84.391 15002 27,059
ARRA‐State Fiscal Stabilization Fund 84.394 25008 1,202,861
No Child Left Behind Act of 2001 (PL 107‐110):
Title II, Part A, Improving Teacher Quality Local Grants 84.367 14341 61,447
Title III‐ Limited English Proficiency (LEP) 84.365 10084 14,600
Title IV, Part A, Drug‐Free Schools 84.186 14347 5,951
Federal Language Assitance Program (FLAP): 84.293B N/A 221,306
Total U.S.Department of Education 2,365,187
Total Expenditures of Federal Awards 2,487,613$
See accompanying note to supplementary information.
60
SAN MARINO UNIFIED SCHOOL DISTRICT
Reconciliation of Annual Financial and Budget Report with Audited Financial Statements
For the Fiscal Year Ended June 30, 2010
There were no adjustments between the Annual Financial and Budget Report and the Audited Financial
Statements in 2009‐10.
61
SAN MARINO UNIFIED SCHOOL DISTRICT
Note to Supplementary Information
June 30, 2010
NOTE 1 – PURPOSE OF SCHEDULES
Schedule of Average Daily Attendance (ADA)
Average daily attendance (ADA) is a measurement of the number of pupils attending classes of the
District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which
apportionments of State funds are made to school districts. This schedule provides information regarding
the attendance of students at various grade levels and in different programs.
Schedule of Instructional Time
The District has received incentive funding for increasing instructional time as provided by the Incentives
for Longer Instructional Day. This schedule presents information on the amount of instructional time
offered by the District and whether the District complied with the provisions of Education Code Sections
46200 through 46206.
Districts must maintain their instructional minutes at either the 1982‐83 actual minutes or the 1986‐87
requirement, whichever is greater, as required by Education Code section 46201. For 2009‐10 through
2012‐13, the instructional day and minute requirements have been reduced pursuant to ode Section
46201.2.
Schedule of Financial Trends and Analysis
This schedule discloses the District’s financial trends by displaying past years’ data along with current
year budget information. These financial trend disclosures are used to evaluate the District’s ability to
continue as a going concern for a reasonable period of time.
Schedule of Expenditures of Federal Awards
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the
District and is presented on the modified accrual basis of accounting. The information in this schedule is
presented in accordance with the requirements of the United States Office of Management and Budget
Circular A‐133, Audits of States, Local Governments, and Non‐Profit Organizations. Therefore, some amounts
presented in this schedule may differ from amounts presented in, or used in the preparation of the
financial statements.
Sub‐recipients
Of the Federal expenditures presented in the schedule, the District provided no Federal awards to sub‐
recipients.
Reconciliation of Annual Financial and Budget Report with Audited Financial Statements
This schedule provides the information necessary to reconcile the fund balance of all funds reported on
the Unaudited Actual Financial Report to the audited financial statements.
Other Independent Auditor’s Reports
2727 Camino Del Rio South ● Suite 219 ● San Diego, CA 92108 tel. 619.270.8222 ● fax. 619.260.9085
www.cwacpa.com
Licensed by the California Board of Accountancy
62
Board of Trustees
San Marino Unified School District
San Marino, California
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditor’s Report
We have audited the basic financial statements of San Marino Unified School District as of and for the
fiscal year ended June 30, 2010, and have issued our report thereon dated November 21, 2010. We
conducted our audit in accordance with generally accepted auditing standards and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered San Marino Unified School Districtʹs internal
control over financial reporting as a basis for designing our auditing procedures for the purpose of
expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on
the effectiveness of San Marino Unified School Districtʹs internal control over financial reporting.
Accordingly, we do not express an opinion on the effectiveness of San Marino Unified School Districtʹs
internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and
correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of
deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of
the entityʹs financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not
identify any deficiencies in internal control over financial reporting that we consider to be material
weaknesses, as defined above. However, we identified a certain deficiency in internal control over
financial reporting, described in the accompanying Schedule of Audit Findings and Questioned Costs as
Finding #2010‐2 that we consider to be a significant deficiency in internal control over financial reporting.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe
than a material weakness, yet important enough to merit attention by those charged with governance.
63
Compliance and Other Matters
As part of obtaining reasonable assurance about whether San Marino Unified School Districtʹs financial
statements are free of material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.
San Marino Unified School District’s responses to the findings identified in our audit are described in the
accompanying Schedule of Audit Findings and Questioned Costs. We did not audit San Marino Unified
School District’s response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the Board, management, others within the
entity, the California Department of Education, the California State Controller’s Office, and federal
awarding agencies and pass‐through entities and is not intended to be and should not be used by anyone
other than these specified parties.
San Diego, California
November 21, 2010
2727 Camino Del Rio South ● Suite 219 ● San Diego, CA 92108 tel. 619.270.8222 ● fax. 619.260.9085
www.cwacpa.com
Licensed by the California Board of Accountancy
64
Board of Trustees
San Marino Unified School District
San Marino, California
REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND
MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A‐133
Independent Auditor’s Report
Compliance
We have audited San Marino Unified School District’s compliance with the types of compliance
requirements described in the OMB Circular A‐133 Compliance Supplement that could have a direct and
material effect on each of San Marino Unified School District’s major federal programs for the year ended
June 30, 2010. San Marino Unified School District’s major federal programs are identified in the summary
of auditorʹs results section of the accompanying schedule of findings and questioned costs. Compliance
with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal
programs is the responsibility of San Marino Unified School District’s management. Our responsibility is
to express an opinion on San Marino Unified School District’s compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A‐133. Those
standards and OMB Circular A‐133 require that we plan and perform the audit to obtain reasonable
assurance about whether noncompliance with the types of compliance requirements referred to above
that could have a direct and material effect on a major federal program occurred. An audit includes
examining, on a test basis, evidence about San Marino Unified School District’s compliance with those
requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal
determination of San Marino Unified School District’s compliance with those requirements.
In our opinion, San Marino Unified School District’s complied, in all material respects, with the
compliance requirements referred to above that could have a direct and material effect on each of its
major federal programs for the year ended June 30, 2010.
65
Internal Control Over Compliance
Management of San Marino Unified School District’s is responsible for establishing and maintaining
effective internal control over compliance with the requirements of laws, regulations, contracts, and
grants applicable to federal programs. In planning and performing our audit, we considered San Marino
Unified School District’s internal control over compliance with the requirements that could have a direct
and material effect on a major federal program to determine the auditing procedures for the purpose of
expressing our opinion on compliance and to test and report on internal control over compliance in
accordance with OMB Circular A‐133, but not for the purpose of expressing an opinion on the
effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the
effectiveness of San Marino Unified School District’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or
combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility
that material noncompliance with a type of compliance requirement of a federal program will not be
prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as
defined above.
This report is intended solely for the information and use of the Board, management, others within the
entity, the California Department of Education, the California State Controller’s Office, federal awarding
agencies, and pass‐through entities and is not intended to be and should not be used by anyone other
than these specified parties.
San Diego, California
November 21, 2010
2727 Camino Del Rio South ● Suite 219 ● San Diego, CA 92108 tel. 619.270.8222 ● fax. 619.260.9085
www.cwacpa.com
Licensed by the California Board of Accountancy
66
Board of Education
San Marino Unified School District
San Marino, California
INDEPENDENT AUDITOR’S REPORT ON STATE COMPLIANCE
We have audited the basic financial statements of the San Marino Unified School District (the District), as
of and for the year ended June 30, 2010, and have issued our report thereon dated November 21, 2010.
Our audit was made in accordance with auditing standards generally accepted in the United States of
America; the standards applicable to financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States; and Standards and Procedures for Audits of California K‐12
Local Educational Agencies 2009‐10, published by the Education Audit Appeals Panel. 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.
The Districtʹs management is responsible for the Districtʹs compliance with laws and regulations. In
connection with the audit referred to above, we selected and tested transactions and records to determine
the Districtʹs compliance with the state laws and regulations applicable to the following items:
Description
Procedures in
Audit Guide
Procedures
Performed
Attendance Accounting:
Attendance Reporting 8 Yes
Kindergarten Continuance 3 Yes
Independent Study 23 No (see below)
Continuation Education 10 Not applicable
Instructional Time:
School Districts 6 Yes
County Offices of Education 3 Not applicable
67
Description
Procedures in
Audit Guide
Procedures
Performed
Instructional Materials:
General Requirements 8 Yes
Ratios of Administrative Employees to Teachers 1 Yes
Classroom Teacher Salaries 1 Yes
Early Retirement Incentive 4 Not applicable
Gann Limit Calculation 1 Yes
School Accountability Report Card 3 Yes
Public Hearing Requirement – Receipt of Funds 1 Yes
Class Size Reduction Program:
General Requirements 7 Yes
Option One 3 Yes
Option Two 4 Not applicable
Districts with only one school serving K‐3 4 Not applicable
After School Education and Safety Program:
General Requirements 4 Not applicable
After School 4 Not applicable
Before School 5 Not applicable
Charter Schools:
Contemporaneous Records of Attendance 1 Not applicable
Mode of Instruction 1 Not applicable
Nonclassroom‐Based Instruction/Independent Study 15 Not applicable
Determination of Funding for Nonclassroom‐Based Instruction 3 Not applicable
Annual Instructional Minutes – Classroom Based 3 Not applicable
We did not perform testing for independent study because the ADA was under the level that requires
testing.
Based on our audit, we found that, for the items tested, the San Marino Unified School District complied
with the state laws and regulations referred to above, except as listed in the Schedule of Audit Findings
and Questioned Costs as Finding #2010‐3. Further, based on our audit, for items not tested, nothing came
to our attention to indicate that the San Marino Unified School District had not complied with the state
laws and regulations.
This report is intended solely for the information and use of the Board, management, others within the
entity, the California Department of Education, the California Department of Finance, the California State
Controller’s Office, and federal awarding agencies and pass‐through entities and is not intended to be and
should not be used by anyone other than these specified parties.
San Diego, California
November 21, 2010
Findings and Questioned Costs Section
68
SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Audit Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2010
Section I ‐ Summary of Auditorʹs Results
Financial Statements
Type of auditorʹs report issued Unqualified
Internal control over financial reporting:
Material weakness(es) identified? No
Significant deficiency(ies) identified not considered
to be material weaknesses? Yes
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major programs:
Material weakness(es) identified? No
Significant deficiency(ies) identified not considered
to be material weaknesses? No
Type of auditorʹs report issued on compliance for
major programs: Unqualified
Any audit findings disclosed that are required to be reported
in accordance with Circular A‐133, Section .510(a) No
Identification of major programs:
CFDA Numbers Name of Federal Program or Cluster
84.394 ARRA ‐ State Fiscal Stabilization Fund
84.027, 84.173, 84.027A,
84.173A, 84.391, 84.392 Special Education Cluster ‐ IDEA
Dollar threshold used to distinguish between Type A and
Type B programs: 300,000$
Auditee qualified as low‐risk auditee? Yes
State Awards
Internal control over state programs:
Material weakness(es) identified? No
Significant deficiency(ies) identified not considered
to be material weaknesses? Yes
Type of auditorʹs report issued on compliance for
state programs: Qualified
69
SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Audit Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2010
Section II – Financial Statement Findings
This section identifies the deficiencies, significant deficiencies, material weaknesses, and instances of
noncompliance related to the financial statements that are required to be reported in accordance with
Government Auditing Standards. Pursuant to Assembly Bill (AB) 3627, all audit findings must be identified
as one or more of the following categories:
Five Digit Code AB 3627 Finding Types
10000 Attendance
20000 Inventory of Equipment
30000 Internal Control
40000 State Compliance
41000 CalSTRS
50000 Federal Compliance
60000 Miscellaneous
61000 Classroom Teacher Salaries
70000 Instructional Materials
71000 Teacher Misassignments
72000 School Accountability Report Card
Finding#2010‐1: Use of One Time Funds and Cash Reserves (60000)
Condition: The District should be mindful of utilizing one time funds for ongoing expenditures. The
District has worked diligently in restoring its reserves, and maintaining adequate staffing levels, however,
the use of one time funds for these items could leave the District vulnerable to cash shortfalls in
subsequent years.
Recommendation: The District should continue to monitor its use of one time funding such as ARRA
SFSF, ARRA, and local donation programs as the continued receipt of these funds is unlikely or not
known. The District should continue to work towards restoring its reserve. The available reserve should
not only meet or exceed the required state minimum, but also allow the District the flexibility during cash
flow shortages. The District should continue to increase the fund balance of the Cash Flow Fund 17, and
move away from annual reliance on the issuance of Tax Revenue Anticipation Notes.
District Response: The Board of Education is committed t the financial stability of the District. The
District’s reserve is currently $1.5 million or 4.88% of total expenditures and transfers out. The District
also has established the Cash Flow Fund 17 and we have budgeted approximately $1.323 million in
transfers out in 2010‐11. The District is cognizant of its use of one‐time funds and the Board of Education
understands and acknowledges that budget reductions will be needed and necessary in future years in
order to balance the District’s budget.
70
SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Audit Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2010
Section II – Financial Statement Findings (continued)
Finding#2010‐2: Associated Student Body Internal Controls (30000)
We audited all of the District’s Associated Student Body funds. The findings by school are:
Huntington Middle School
1 out of 7 expenditures tested had no evidence of receipt including a receipt, invoice or proof
of payment in the amount of $24.95.
1 out of 5 cash receipts tested did not have adequate supporting documentation including sales
summaries or tally sheets totaling $218.15
San Marino High School
5 out of 10 cash receipts did not have adequate supporting documentation including sales
summaries, ticket logs, or tally sheets to support funds received totaling $11,916
2 out of 10 cash disbursements totaling $6,107.56 were for unallowable textbook expenditures
The student store does not perform sales analysis or use cash registers to record daily sales
activity, nor do they reconcile items sold to cash received.
The ASB bookkeeper is not submitting monthly reconciliations, bank statement, or financial
information to the District in a timely manner.
Final bank statements and reconciliations performed on the checking account for San Marino
High School ASB did not reconcile to the June 30, 2010 balance sheet. The reconciled bank
balance as of June 30, 2010 was $344,229, while the June 30, 2010 balance sheet ending balance
was $202,496, a variance of $141,733.
Recommendation: The District should have the ability to oversee all activity at decentralized locations,
including ASB funds. Bank reconciliations should be provided to the District each month, on a timely
basis, and the District should have the ability to perform “internal” audits on the ABS activity throughout
the year. Given the high volume of transactions and dollar amount that goes through the ASB, and the
inherently high risk of such activity, the District should increase efforts to oversee and monitor this
activity. This appears to be related to staffing cuts in the business office. A position normally charged
with this assignment has been eliminated, and it does not appear to be feasible to transfer this workload
onto another desk given current staffing limitations. The District should work towards filling an
additional accounting position, whose primary responsibility should be oversight of the ASBs.
71
SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Audit Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2010
Section II – Financial Statement Findings (continued)
Finding#2010‐2: Associated Student Body Internal Controls (30000) (continued)
District Response: Improvements have been made and are continuing in the area of ASB accounting and
oversight. Updated Board Policy and Administrative Regulations will be made and submitted to the
Board on January 11, 2011 for approval on January 25, 2011. An ASB Accounting Procedure Manual is
being prepared and will be made available on or before April 1, 2011. The Superintendent and Board of
Education are reviewing and considering filling the Accounting Specialist position in order to provide the
District with fiscal oversight over the ASBs and to conduct regular audits and internal reviews.
72
SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Audit Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2010
Section III – Federal Award Findings and Questioned Costs
This section identifies the audit findings required to be reported by Circular A‐133, Section .510(a) (e.g.,
deficiencies, significant deficiencies, material weaknesses, and instances of noncompliance, including
questioned costs).
There were no federal award findings or questioned costs in 2009‐10.
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SAN MARINO UNIFIED SCHOOL DISTRICT
Schedule of Audit Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2010
Section IV – State Award Findings and Questioned Costs
This section identifies the audit findings pertaining to noncompliance with state program rules and
regulations.
Finding #2010‐3: School Accountability Report Card (72000)
Condition: The School Accountability Report Cards (SARCs) did not contain specific reference to teacher
misassignments or vacancies, or a reference that none were noted in the William Quarterly Complaint
reports of summarized complaint data.
Context: 3 out of 3 SARCs tested for the following sites:
San Marino High School
Huntington Middle School
Carver Elementary School
Criteria: California Education Code Section 33126 subdivision (b)(5) requires information on teacher
misassignments or vacancies to be stated in the SARC.
Questioned Costs: Not applicable
Effect: Noncompliance with Education Code Section 33126 subdivision (b)(5)
Cause: Unknown
Recommendation: In order to comply with proper education code requirements, the District should
amend its standard School Accountability Report Card form to include reference to teacher
misassignments or vacancies.
District Response: The School Accountability Report Card will be amended to include reference to
teacher misassignments or vacancies on or before April 1, 2011.
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SAN MARINO UNIFIED SCHOOL DISTRICT
Summary Schedule of Prior Audit Findings
For the Fiscal Year Ended June 30, 2010
There were no prior audit findings or questioned costs in 2008‐09.