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NORTHEAST ACADEMY CHARTER SCHOOLDenver, ColoradoFINANCIAL STATEMENTSJune 30, 2009NORTHEAST ACADEMY CHARTER SCHOOLBoard of DirectorsJune 30, 2009Chris Martinez, PresidentKenneth Johnson, Vice PresidentKen Anderson, TreasurerNarcy Jackson, Assistant TreasurerRilla Ervin, SecretaryPahmela Hines, Assistant SecretaryRosalind “Bee” HarrisBishop Phillip PorterDr. Vanessa Davis-WarnerJames SykesTABLE OF CONTENTSPAGEIndependent Auditors’ ReportManagement’s Discussion and Analysis i - viBasic Financial StatementsStatement of Net Assets 1Statement of Activities 2Balance Sheet - Governmental Funds 3Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds 4Statement of Net Assets - Proprietary Fund 5Statement of Revenues, Expenses and Changes in Net Assets - Proprietary Fund 6Statement of Cash Flows - Proprietary Fund 7Notes to Financial Statements 8 - 16Required Supplementary InformationBudgetary Comparison Schedule - General Fund 17Budgetary Comparison Schedule - Capital Reserve Fund 18Notes to Required Supplementary Information 19Supplementary InformationBudgetary Comparison Schedule - Grants Fund 20Certified Public AccountantsBoard of DirectorsNortheast Academy Charter SchoolDenver, ColoradoINDEPENDENT AUDITORS' REPORTWe have audited the accompanying financial statements ofthe governmental activities, the business-type activities, eachmajor fund, and the aggregate remaining fund information of the Northeast ...
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NORTHEAST ACADEMY CHARTER SCHOOL Denver, Colorado
FINANCIAL STATEMENTS
June 30, 2009
NORTHEAST ACADEMY CHARTER SCHOOL
Board of Directors June 30, 2009
Chris Martinez, President
Kenneth Johnson, Vice President
Ken Anderson, Treasurer
Narcy Jackson, Assistant Treasurer
Rilla Ervin, Secretary
Pahmela Hines, Assistant Secretary
Rosalind “Bee” Harris
Bishop Phillip Porter
Dr. Vanessa Davis-Warner
James Sykes
TABLE OF CONTENTS
Independent Auditors’ Report Management’s Discussion and Analysis Basic Financial Statements Statement of Net Assets Statement of Activities Balance Sheet - Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds Statement of Net Assets - Proprietary Fund Statement of Revenues, Expenses and Changes in Net Assets - Proprietary Fund Statement of Cash Flows - Proprietary Fund Notes to Financial Statements Required Supplementary Information Budgetary Comparison Schedule General Fund -Budgetary Comparison Schedule - Capital Reserve Fund Notes to Required Supplementary Information Supplementary Information Budgetary Comparison Schedule - Grants Fund
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1 2 3 4 5 6 7 8 - 16
17 18 19
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Management’s Discussion and Analysis As management of the Northeast Academy Charter School, we offer readers of the Northeast Academy Charter School financial statements this narrative overview and analysis of the financial activities of the Northeast Academy Charter School for the fiscal year ended June 30, 2009. Financial Highlights The assets of the Northeast Academy Charter School exceeded its liabilities at the close of the most recent fiscal year by $405,254 (net assets). The Building Corporation’s liabilities exceeded its assets by $39,621 for a combined Net Asset balance of $365,633. At the close of the fiscal year 2008-2009, its fifth year of operation, the Northeast Academy Charter School’s governmental funds reported a combined ending fund balance of $345,031, an increase of $224,634. The General Fund ending fund balance was $345,031. Overview of Financial Statements This discussion and analysis are intended to serve as an introduction to the Northeast Academy Charter School’s basic financial statements. The Northeast Academy Charter School’s basic financial statements are comprised of three components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the financial statements. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the Northeast Academy Charter School’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the Northeast Academy Charter School’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Northeast Academy Charter School is improving or deteriorating. The statement of activities presents information showing how the School’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected grant expenses and earned but unpaid salary and benefits).
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The government-wide statement of activities distinguishes functions/programs of the Northeast Academy Charter School supported primarily by per pupil operating revenue (PPOR) or property taxes received through the District (Denver Public Schools). The governmental activities of the Northeast Academy Charter School include instruction and supporting services expense. The government-wide financial statements can be found on pages 1-2 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Northeast Academy Charter School, like other governmental units or charter schools, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Three of the funds of the Northeast Academy Charter School are governmental funds, with the fourth being a proprietary fund. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the School’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the School’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Northeast Academy Charter School (NEACS) maintains three individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the general and capital reserve funds, because they are considered to be major funds. NEACS also maintains a proprietary fund for the Building Corporation. Information is presented in the statement of net assets, statement of revenues, expenses and changes in net assets, and the statement of cash flows.
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Northeast Academy Charter School adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with the budget. A governmental fund budget is also adopted for the capital reserve fund and grants fund. Budgetary to actual comparisons are provided for these funds. Notes to the financial statements. notes provide additional information that is The essential to a full understanding of the data provided in the government-wide and fund financial statements. This information is provided in pages 8-16. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the Northeast Academy Charter School, assets exceeded liabilities, when combining both Governmental Activities and Business Type activities, by $365,633 at the close of the most recent fiscal year. Northeast Academy Charter School’s and Building Corporation’s Net Assets For the Year Ended June 30, 2009 & 2008 Governmental Governmental Business Type Business Type Activities Activities Activities Activities June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008 Cash and investments $ 339,638 $ 118,679 $ 482,848 $ 531,678 Grants Receivables & other 30,842 23,200 1,027 1,018 Emergency Res. Held by DPS 92,234 71,546 0 0 Prepaid Expenses 12,305 0 0 0 Internal Balances 0 74,666 0 (74,666) Debt Issue Costs, Net 0 0 145,713 150,902 Capital Assets, Net 60,223 77,180 4,447,304 4,535,723 Total Assets 535,242 365,271 5,076,892 5,144,655 Current liabilities 129,988 167,694 111,513 112,052 Noncurrent liabilities 0 0 5,005,000 5,080,000 Total Liabilities 129,988 167,694 5,116,513 5,192,052 Net assets Invested in Capital Assets Restr. for Emergencies Restr. for Debt Service & Repairs Unrestricted Total Net Assets
60,223 107,000 0 238,031 $ 405,254
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77,180 82,000 0 38,397 $ 197,577
(486,983) 0 447,362 0 $ (39,621)
(468,375) 0 420,978 0 $ (47,397)
3,154,948 184,662 46,426 6,224 44,360 3,436,620 3,750,593
2,417,757 179,981 39,362 31,608 16,149 2,684,857 2,907,572
0 0 0 32,539 0 32,539 32,539
0 0 0 13,411 0 13,411 13,411
The largest portion of the Northeast Academy Charter School’s Governmental Activities assets (63.5%) is cash/investments. 17.2 % reflects emergency reserves held by Denver Public Schools. The School’s net assets increased to $405,254 primarily due to a 27% increase in the funded pupil count (FPC). The increase in revenue contributed to growing Fund Balance. Northeast Academy Charter School’s Change in Net Assets For the Year Ended June 30, 2009 & 2008 Governmental Governmental Bus. Type Bus. Type Activities Activities Activities Activities June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008 Program Revenue: Charges for Services $ 66,686 $ 54,910 $ 0 $ 0 Operating Grants and Contr. 247,287 167,805 0 0 Total Program Revenue 313,973 222,715 0 0 General Revenue: Per Pupil Operating Revenue Mill Levy Revenue Capital Construction Investment Earnings Miscellaneous & Grants Total General Revenue Total Revenue Expenses: Current: Instruction 1,990,312 1,609,286 0 0 Supporting Services 1,165,243 1,339,474 412,124 363,502 Total Expenses 3,155,555 2,948,760 412,124 363,502 Transfers (387,361) (302,694) 387,361 302,694 Inc. (Dec.) in Net Assets 207,677 (343,882) 7,776 (47,397) Beginning Net Assets, July 1 197,577 541,459 (47,397) 0 Ending Net Assets, June 30 $ 405,254 $ 197,577 $ (39,621) $ (47,397) Financial Analysis of the Government’s Funds As noted earlier, the Northeast Academy Charter School uses fund accounting to ensure and demonstrate compliance with finance related legal requirements.
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Governmental funds.The focus of the Northeast Academy Charter School’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the Northeast Academy Charter School’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of the School’s net resources available for spending at the end of the fiscal year. Total revenues increased 29% because of student growth during this fifth year of operation. In addition to Title I funding, the School received a first year counselor grant. As of the end of the current fiscal year, the School’s governmental funds reported a combined ending fund balance of $345,031, an increase of $224,634. The capital reserve fund and grants fund had no ending fund balance. General Fund Budgetary Highlights The School approves a budget in June based on enrollment projections for the following school year. In October after enrollment stabilizes, adjustments are made to the budget. For the 2008/2009 fiscal year, the state requirement for instructional supplies and materials spending in the general fund was $184 per funded pupil count (FPC). Also, $298 per FPC was the required transfer for capital reserve and insurance reserve spending (with a maximum of $800/FPC). During the School year the budget was adjusted to reflect unanticipated revenues and expenditures. There were variances as shown in the budget to actual comparison on page 17. We had projected 425 FTE and had an October count of 432. The positive variance in the miscellaneous category was due to an escrow refund from the debt service accounts. Capital Assets and Long-Term Debt During the 2007/2008 year, the School’s management created a Building Corporation and issued debt to purchase the facility the Charter School had been leasing. The total amount of debt issued to purchase the facility and land was $5,210,000. The land and building purchased was $1,080,000 and $3,536,774 respectively. Total depreciation for equipment and buildings of $105,376 was recorded for FY 2008/2009. Economic Factors and Next Year’s Budget/Student Count In November of 2000 voters in Colorado approved a provision to the Colorado constitution providing that K-12 funding would increase at pupil growth, plus inflation, plus 1% for 10 years and thereafter, growth plus inflation. This provision stabilizes and removes funding from the political process. As a result of this provision the single most important factor in projecting School revenue is estimating future inflation. The FY 2009/2010 budget projects the Northeast Academy Charter School’s general fund ending fund balance should increase to approximately $469,359. The FY 2008/2009 FPC (funded pupil count) was 432, an increase of 27% over the prior year. Management is projecting a 418 FPC for FY 2009/2010, a decrease of 3.2% over the prior year.
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Requests for Information This financial report is designed to provide a general overview of the Northeast Academy Charter School’s finances for all those with an interest in the School’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Jim Holmes, 4895 Peoria Street, Denver, CO 80239.
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INANCIAL STATEMENTS
