Audit Report 2005
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INDEPENDENT SCHOOL DISTRICT NO. 518 FINANCIAL STATEMENTS AS OF JUNE 30, 2005 INDEPENDENT SCHOOL DISTRICT NO. 518 CONTENTS Page I. INTRODUCTORY SECTION School District Officials i II. FINANCIAL SECTION Independent Auditor's Report 1-2 Management’s Discussion and Analysis 3-18 Basic Financial Statements District – Wide Financial Statements: Statement of Net Assets 19-20 Statement of Activities 21 Fund Financial Statements: Balance Sheet 22-23 Reconciliation of the Balance Sheet to the Statement of Net Assets 24 Statement of Revenues, Expenditures, and Changes in Fund Balances 25 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 26 Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual General and Special Revenue Funds 27 Statement of Fiduciary Net Assets 28 ent of Changes in Fiduciary Net Assets 29 Notes to Financial Statements 30-54 Combining and Individual Fund Schedules General Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual 55-61 Food Service Special Revenue Fund: Schedule of Revenues, Expenditures and Changes in Fund ...
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INDEPENDENT SCHOOL DISTRICT NO. 518 FINANCIAL STATEMENTS AS OF JUNE 30, 2005
INDEPENDENT SCHOOL DISTRICT NO. 518 CONTENTS I. INTRODUCTORY SECTION School District Officials II. FINANCIAL SECTION Independent Auditor's Report Management’s Discussion and Analysis Basic Financial Statements District Wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Balance Sheet Reconciliation of the Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General and Special Revenue Funds Statement of Fiduciary Net Assets Statement of Changes in Fiduciary Net Assets Notes to Financial Statements Combining and Individual Fund Schedules General Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual Food Service Special Revenue Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual Community Services Special Revenue Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual Debt Service Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual Trust and Agency Funds: Balance Sheets
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II. FINANCIAL SECTION (Continued) Combining and Individual Fund Statements and Schedules (continued) Trust Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual Trust Fund-Residential Program: Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual Agency Fund: Schedule of Changes in Assets and Liabilities Schedule of Changes in Capital Assets III. ADDITIONAL REPORTS Independent Auditor's Report on Compliance and Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor’s Report on Compliance with Requirements Applicable to each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings Independent Auditor's Report on Minnesota Legal Compliance IV. SUPPLEMENTARY INFORMATION Uniform Financial Accounting and Reporting Standards Compliance Table
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Mr. Robert Jirele Ms. Lori Dudley Mr. Joel Wiltrout Mr. Lowell Nystrom Mr. Joel Lorenz Mr. Linden Olson Mr. Stephen Schneider Mr. John Landgaard Mr. David Skog
-i- INDEPENDENT SCHOOL DISTRICT NO. 518 SCHOOL DISTRICT OFFICIALS JUNE 30, 2005 December 31, 2006 Chairman December 31, 2006 Vice-Chairman December 31, 2006 Clerk December 31, 2008 Treasurer December 31, 2008 Director December 31, 2008 Director December 31, 2008 Director Superintendent Director of Management Services
-3- INDEPENDENT SCHOOL DISTRICT NO. 518 Management’s Discussion and Analysis Year Ended June 30, 2005
This section of Worthington Schools - Independent School District 518's annual financial report presents our discussion and analysis of the District's financial performance during the fiscal year that ended on June 30, 2004. Please read it in conjunction with the District's financial statements, which immediately follow this section.
The Management's Discussion and Analysis (MD&A) is Required Supplementary Information specified in the Governmental Accounting Standard Board's (GASB) Statement No. 34 - Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments issued in June 1999. Certain comparative information between the current year (2004-2005) and the prior year (2003-2004) is presented in the MD&A.
FINANCIAL HIGHLIGHTS
Key financial highlights for the 2004-2005 fiscal year include the following:
• Net assets increased 4.1 percent over the prior year.
• Overall actual revenues in the Statement of Activities were more than $23,815,000 and over $275,000 more than expenses.
• The District’s General Fund balance (under the governmental fund presentation) increased $47,057 from the prior year compared to a projected increase of $48,284. Lower than anticipated utility costs due to another mild winter helped to reduce expenditures, while non-budgeted costs were incurred related to the partial demolition of the former Central Elementary.
• In November 2002, the District was successful in passing a 4-year, $394 per pupil unit excess levy referendum beginning with the 2003-2004 school year. Because of the economic downturn at both the state and national level, the School Board directed the administration to continue to look for ways to enhance District revenue and monitor its spending. This report confirms the administration’s pledge to its constituents.
• The District received a donation of a land parcel adjacent to the Prairie Elementary site in the current year and completed construction of a new athletic field spectator restroom that was funded in part with donations from Worthington businesses. • The District issued advance crossover refunding bonds in anticipation of refunding the 1999 Building bond issue that will result in reduced debt service interest cost for fiscal years 2009-2025.
OVERVIEW OF THE FINANCIAL STATEMENTS
The financial section of the annual report consists of four parts - Independent Auditor's Report, required supplementary information which includes the Management’s Discussion and Analysis (this section), the basic financial statements, and supplemental 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.
4-- INDEPENDENT SCHOOL DISTRICT NO. 518 Management’s Discussion and Analysis (continued) Year Ended June 30, 2005
• 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 such as 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.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. Figure A-l shows how the various parts of this annual report are arranged and relate to one another.
Figure A-l Organization of Independent School District No. 518’s Annual Financial Report District-Wide Statements Financial MDanisacguesmsieonnt ' s Fi nBaansciic a l Fund Financial
and Analysis
Statements
Statements
Notes to the Financial Statements
Summary
Detail
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. The remainder of this overview section of Management’s Discussion and Analysis highlights the structure and contents of each of the statements.
Scope
Required financial statements
Accounting basis and measurement focus
Type of asset/liability information
-5- INDEPENDENT SCHOOL DISTRICT NO. 518 Management’s Discussion and Analysis (continued) Year Ended June 30, 2005
Figure A-2
Major Features of the District-Wide and Fund Financial Statements
District-wide Statements
Entire district (except fiduciary funds)
• Statements of net assets • Statement of activities
Accrual accounting and economic resources focus
All assets and liabilities, both financial and capital, short-term and long-term
Fund Financial Statements Governmental Funds Fiduciary Funds The activities of the district that are Instances in which the district not proprietary or fiduciary, such as administers resources on behalf of special education and building someone else, such as residential maintenance, food service, and program, integration collaborative, community education and Americorps program
• Balance sheet • Statement of revenue, expenditures and changes in fund balances
Modified accrual accounting and current financial focus
• Statements of fiduciary net assets • Statement of changes in fiduciary net assets
Accrual accounting and economic resources focus
Generally assets expected to be All assets and liabilities, both short-used up and liabilities that come term and long-term; funds do not due during the year or soon there currently contain capital assets, after; no capital assets or long-term although they can liabilities included
Type of inflow/out All revenues and Revenues for which cash is All additions and deductions during flow information expenses during year, received during or soon after the the year, regardless of when cash is regardless of when end of the year; expenditures when received or paid. cash is received or paid goods or services have been received and the related liability is due and payable.
District-Wide Statements
The district-wide statements, (Statement of Net Assets and Statement of Activities) 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.
-6- INDEPENDENT SCHOOL DISTRICT NO. 518 Management’s Discussion and Analysis (continued)
Year Ended June 30, 2005
District-Wide Statements (continued)
• Over time, increases or decreases in the District's net assets are indicators of whether its financial position is improving or deteriorating, respectively.
• To assess the overall health of the District you need to consider additional non-financial factors such as changes in the District's property tax base and the condition of school buildings and other facilities.
In the district-wide financial statements the District's activities are shown in one category titled “governmental activities:
• Governmental activities - Most of the District's basic services are included here, such as regular and special education, transportation, administration, food services, and community education. Property taxes and state aids finance most of these activities.
Fund Financial Statements
The fund financial statements provide more detailed information about the District's funds -focusing on its most significant or "major" 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 (e.g., repaying its long-term debts) or to show that it is properly using certain revenues (e.g., federal grants).
The District maintains 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 to 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 on separate statements that explains the relationship (or differences) between them.
-7-
INDEPENDENT SCHOOL DISTRICT NO. 518
Management’s Discussion and Analysis (continued)
Year Ended June 30, 2005
Fund Financial Statements (continued)
• Fiduciary funds - The District is the trustee, or fiduciary, for assets that belong to others, such as the Youthworks Americorps Consortium, Nobles County Integration Collaborative, and the District 518 Residential Program. 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 and a Statement of Changes in 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 were $6,642,583 on June 30, 2005. This was an improvement of 4.1 percent from the prior year. (See Table A-1.)
Current and other assets Capital assets
Total assets Long-term liabilities Other liabilities
Total liabilities Net Assets Invested in capital assets, net of related debt Restricted Unrestricted Total net assets
Table A-1 Independent School District No. 518 Net Assets- Governmental Activities As of June 30 2005 $ 23,498,897 23,204,453 $ 46,703,350 $ 36,004,006 4,056,761
2004 $ 8,612,663 23,722,514 $ 32,335,177 $ 20,356,048 5,596,028
$ 40,060,767 $ 25,952,076 $ 3,669,453 $ 3,537,514 1,011,680 947,908 1,961,450 1,897,679 $ 6,642,583 $ 6,383,101
The District's improved financial position is the product of many factors. However, several events of last year stand out:
• The District benefited from another mild winter season resulting in lower utility costs, and all buildings did not spend their total allotment of discretionary budget.
• The voter approved operating referendum continues to provide increased revenues to maintain an adequate fund balance and increase educational opportunities.
