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REPORT NO. 2010-098
                                          FEBRUARY 2010




       LAFAYETTE COUNTY
     DISTRICT SCHO...
BOARD MEMBERS AND SUPERINTENDENTS

Lafayette County District School Board members and the Superintendents who served durin...
FEBRUARY 2010                                                                                                             ...
FEBRUARY 2010                                                                           REPORT NO. 2010-098

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FEBRUARY 2010                                                                       REPORT NO. 2010-098

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FEBRUARY 2010                                                                                     REPORT NO. 2010-098



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FEBRUARY 2010                                                                                       REPORT NO. 2010-098

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FEBRUARY 2010                                                                                      REPORT NO. 2010-098

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FEBRUARY 2010                                                                                    REPORT NO. 2010-098

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FEBRUARY 2010                                                                                                             ...
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FEBRUARY 2010                                                                           REPORT NO. 2010-098


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FEBRUARY 2010                                                                              REPORT NO. 2010-098

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FEBRUARY 2010                                                                               REPORT NO. 2010-098

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FEBRUARY 2010                                                                               REPORT NO. 2010-098

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FEBRUARY 2010                                                                              REPORT NO. 2010-098

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FEBRUARY 2010                                                                                REPORT NO. 2010-098

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FEBRUARY 2010                                                                                 REPORT NO. 2010-098

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FEBRUARY 2010                                                                                                    REPORT NO...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ...
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Transcript of "LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational ..."

  1. 1. REPORT NO. 2010-098 FEBRUARY 2010 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD Financial, Operational, and Federal Single Audit For the Fiscal Year Ended June 30, 2009
  2. 2. BOARD MEMBERS AND SUPERINTENDENTS Lafayette County District School Board members and the Superintendents who served during the 2008-09 fiscal year are listed below: District No. Robert A. Hart to 8-29-08 (1) 1 Glenda B. Hart from 11-18-08 1 Henry J. McCray, Vice Chair to 11-17-08, Chair from 11-18-08 2 Robert D. Koon, Chair to 11-17-08, Vice Chair from 11-18-08 3 Carolyn S. Land to 11-17-08 4 Terry Fillyaw from 11-18-08 4 Jerry Hill 5 Fredric W. Ward, Superintendent to 11-17-08 Thomas H. Lashley, Superintendent from 11-18-08 Note (1): Deceased, position was vacant from 8-30-08 through 11-17-08. The Auditor General conducts audits of governmental entities to provide the Legislature, Florida’s citizens, public entity management, and other stakeholders unbiased, timely, and relevant information for use in promoting government accountability and stewardship and improving government operations. The audit team leader was Tiffany R. Wilson, and the audit was supervised by Cathy L. Bandy, CPA. For the information technology portion of this audit, the audit team leader was Danielle M. Alvarez, CISA, and the supervisor was Nancy M. Reeder, CPA, CISA. Please address inquiries regarding this report to Gregory L. Centers, CPA, Audit Manager, by e-mail at gregcenters@aud.state.fl.us or by telephone at (850) 487-9039. This report and other reports prepared by the Auditor General can be obtained on our Web site at www.myflorida.com/audgen; by telephone at (850) 487-9024; or by mail at G74 Claude Pepper Building, 111 West Madison Street, Tallahassee, Florida 32399-1450.
  3. 3. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD TABLE OF CONTENTS PAGE NO. EXECUTIVE SUMMARY ......................................................................................................................... i INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS ...................................... 1 MANAGEMENT’S DISCUSSION AND ANALYSIS ............................................................................... 3 BASIC FINANCIAL STATEMENTS ....................................................................................................... 9 Statement of Net Assets ...................................................................................................................... 9 Statement of Activities....................................................................................................................... 10 Balance Sheet – Governmental Funds .............................................................................................. 12 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets ......................................................................................................... 14 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ............................................................................................ 16 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities ........................................................................................................... 18 Statement of Fiduciary Assets and Liabilities – Fiduciary Funds .................................................... 19 Notes to Financial Statements .......................................................................................................... 20 OTHER REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule – General and Major Special Revenue Funds ............................. 34 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS ............................................................ 36 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ......................................... 37 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 ................ 39 SCHEDULE OF FINDINGS AND QUESTIONED COSTS ................................................................ 41 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS – FEDERAL AWARDS ............................ 45 EXHIBIT A – MANAGEMENT’S RESPONSE ............................................................................................. 46
  4. 4. FEBRUARY 2010 REPORT NO. 2010-098 EXECUTIVE SUMMARY Summary of Report on Financial Statements Our audit disclosed that the District’s basic financial statements were presented fairly, in all material respects, in accordance with prescribed financial reporting standards. Summary of Report on Internal Control and Compliance Our audit did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards issued by the Comptroller General of the United States; however, we noted certain additional matters as summarized below. ADDITIONAL MATTERS Finding No. 1: Improvements are needed in controls over the reporting of instructional contact hours for adult general education to the Florida Department of Education. Finding No. 2: The District lacked written policies and procedures for certain information technology functions. Finding No. 3: Certain security controls related to the authentication of system processes and users needed improvement. Summary of Report on Federal Awards We audited the District’s Federal awards for compliance with applicable Federal requirements. The Title I, Special Education Cluster, and Twenty-First Century programs were audited as major Federal programs. The results of our audit indicated that the District materially complied with the requirements that were applicable to the major Federal programs tested. However, we did note a compliance finding as summarized below. Federal Awards Finding No. 1: Contrary to registration requirements for Federal Awards, the District did not timely register with the Central Contractor Registration database. Audit Objectives and Scope Our audit objectives were to determine whether the Lafayette County District School Board and its officers with administrative and stewardship responsibilities for District operations had: Presented the District’s basic financial statements in accordance with generally accepted accounting principles; Established and implemented internal control over financial reporting and compliance with requirements that could have a direct and material effect on the financial statements or on a major Federal program; Established internal controls that promote and encourage: 1) compliance with applicable laws, rules, regulations, contracts, and grant agreements; 2) the economic and efficient operation of the District; 3) the reliability of records and reports; and 4) the safeguarding of District assets; Complied with the various provisions of laws, rules, regulations, contracts, and grant agreements that are material to the financial statements, and those applicable to the District’s major Federal programs; and Taken corrective actions for findings included in our report No. 2009-125. The scope of this audit included an examination of the District’s basic financial statements and the Schedule of Expenditures of Federal Awards as of and for the fiscal year ended June 30, 2009. We obtained an understanding of the District’s environment, including its internal control and assessed the risk of i
  5. 5. FEBRUARY 2010 REPORT NO. 2010-098 material misstatement necessary to plan the audit of the basic financial statements and Federal awards. We also examined various transactions to determine whether they were executed, both in manner and substance, in accordance with governing provisions of laws, rules, regulations, contracts, and grant agreements. Audit Methodology The methodology used to develop the findings in this report included the examination of pertinent District records in connection with the application of procedures required by auditing standards generally accepted in the United States of America, applicable standards contained in Government Auditing Standards issued by the Comptroller General of the United States, and Office of Management and Budget Circular A-133. ii
  6. 6. FEBRUARY 2010 REPORT NO. 2010-098 AUDITOR GENERAL STATE OF FLORIDA G74 Claude Pepper Building DAVID W. MARTIN, CPA 111 West Madison Street PHONE: 850-488-5534 AUDITOR GENERAL Tallahassee, Florida 32399-1450 FAX: 850-488-6975 The President of the Senate, the Speaker of the House of Representatives, and the Legislative Auditing Committee INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Lafayette County District School Board, as of and for the fiscal year ended June 30, 2009, which collectively comprise the District’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the school internal funds, which represent 67 percent of the assets and 99 percent of the liabilities of the aggregate remaining fund information. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the school internal funds, is based on the report of the other auditors. 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. The financial statements of the school internal funds were not audited in accordance with Government Auditing Standards. 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 and the report of the other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit and the report of the other auditors, 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 for the Lafayette County District School Board as of June 30, 2009, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report on our consideration of the Lafayette County District School Board's internal control over financial reporting and on our tests of its compliance with 1
  7. 7. FEBRUARY 2010 REPORT NO. 2010-098 certain provisions of laws, rules, regulations, contracts, and grant agreements and other matters included under the heading INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS. 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. The MANAGEMENT’S DISCUSSION AND ANALYSIS (pages 3 through 8) and the BUDGETARY COMPARISON SCHEDULE (pages 34 and 35) are not required parts 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 the District’s basic financial statements. The accompanying SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS is presented for purposes of additional analysis as required by the United States Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is 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. Respectfully submitted, David W. Martin, CPA January 22, 2010 2
  8. 8. FEBRUARY 2010 REPORT NO. 2010-098 MANAGEMENT’S DISCUSSION AND ANALYSIS The management of the Lafayette County District School Board has prepared the following discussion and analysis to provide an overview of the District’s financial activities for the fiscal year ended June 30, 2009. The information contained in the Management’s Discussion and Analysis (MD&A) is intended to highlight significant transactions, events, and conditions and should be considered in conjunction with the District’s financial statements and notes to financial statements found on pages 9 through 33. FINANCIAL HIGHLIGHTS Key financial highlights for the 2008-09 fiscal year are as follows: The assets of the District exceed its liabilities at the close of the 2008-09 fiscal year by $14,099,473. The District’s total net assets decreased by $168,983. As of the close of the 2008-09 fiscal year, the District’s governmental funds report combined fund balances of $2,254,473, an increase of $192,470 in comparison with the 2007-08 fiscal year. During the 2008-09 fiscal year, General Fund expenditures exceeded revenues by $54,572. During the 2007-08 fiscal year, General Fund revenues exceeded expenditures by $202,575. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements. The District’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. This report also contains other supplementary information in addition to the basic financial statements. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the District’s assets and liabilities, with the difference between the two reported as net assets. The statement of activities presents information about the change in the District’s net assets, the results of operations, during the fiscal year. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. All of the District’s nonfiduciary activities and services are reported in the the government-wide statements as governmental activities. The District’s governmental activities include its educational programs: basic, vocational, adult, and exceptional education. Support functions such as transportation and administration are also included. Local property taxes and the State’s education finance program provide most of the resources that support these activities. Over a period of time, changes in the District’s net assets are an indication of improving or deteriorating financial condition. This information should be evaluated in conjunction with other nonfinancial factors, such as changes in the District’s property tax base, student enrollment, and the condition of the District’s capital assets including its school buildings and administrative facilities. 3
  9. 9. FEBRUARY 2010 REPORT NO. 2010-098 Fund Financial Statements Fund financial statements are one of the components of the basic financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements and prudent fiscal management. Certain funds are established by law while others are created by legal agreements, such as bond covenants. Fund financial statements provide more detailed information about the District’s financial activities, focusing on its most significant or “major” funds rather than fund types. This is in contrast to the entitywide perspective contained in the government-wide statements. All of the District’s funds may be classified within one of two broad categories as discussed below. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, the governmental funds utilize a spendable financial resources measurement focus rather than the economic resources measurement focus found in the government-wide financial statements. The financial resources measurement focus allows the governmental fund statements to provide information on near-term inflows and outflows of spendable resources, as well as balances of spendable resources available at the end of the fiscal year. Consequently, the governmental fund statements provide a detailed short-term view that may be used to evaluate the District’s near-term financing requirements. This short-term view is useful when compared to the long-term view presented as governmental activities in the government-wide financial statements. To facilitate this comparison, both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation of governmental funds to governmental activities. The governmental funds balance sheet and statement of revenues, expenditures, and changes in fund balances provide detailed information about the District’s most significant funds. The District’s major funds are the General Fund, Special Revenue – Other Fund, Special Revenue - ARRA Economic Stimulus Fund, Capital Projects – Public Education Capital Outlay Fund, and Capital Projects - Local Capital Improvement Fund. Data from the other governmental funds are combined into a single, aggregated presentation. The District adopts an annual appropriated budget for its governmental funds. A budgetary comparison schedule has been provided for the General and major Special Revenue Funds to demonstrate compliance with the budget. Fiduciary Funds. Fiduciary funds are used to report assets held in a trustee or fiduciary capacity for the benefit of external parties, such as student activity funds. Fiduciary funds are not reflected in the government-wide statements because the resources are not available to support the District’s own programs. In its fiduciary capacity, the District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes. Notes to Financial Statements The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements. 4
  10. 10. FEBRUARY 2010 REPORT NO. 2010-098 GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the District, assets exceed liabilities by $14,099,473 at the close of the 2008-09 fiscal year. The following is a summary of the District’s net assets as of June 30, 2009, compared to net assets as of June 30, 2008: Net Assets, End of Year Governmental Activities 6-30-09 6-30-08 Current and Other Assets $ 2,362,665.27 $ 2,157,262.60 Capital Assets 12,966,919.75 13,257,947.53 Total Assets 15,329,585.02 15,415,210.13 Long-Term Liabilities 1,121,920.39 1,051,495.42 Other Liabilities 108,191.94 95,259.02 Total Liabilities 1,230,112.33 1,146,754.44 Net Assets: Invested in Capital Assets - Net of Related Debt 12,741,919.75 13,017,947.53 Restricted 1,148,801.00 821,821.60 Unrestricted 208,751.94 428,686.56 Total Net Assets $ 14,099,472.69 $ 14,268,455.69 By far the largest portion of the District’s net assets (90.37 percent) reflects its investment in capital assets (e.g., land, buildings, furniture, fixtures, and equipment), less any related debt still outstanding. The District uses these capital assets to provide services to students of Lafayette County, Florida; consequently, these assets are not available for future spending. Although the District’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the District’s net assets (8.15 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets totaling $208,752, may be used to meet the government’s ongoing obligations. 5
  11. 11. FEBRUARY 2010 REPORT NO. 2010-098 At the end of the current fiscal year, the District is able to report positive balances in net assets. The key elements of the changes in the District’s net assets for the fiscal year ended June 30, 2009, and June 30, 2008, are as follows: Operating Results for the Year Governmental Activities 6-30-09 6-30-08 Program Revenues: Charges for Services $ 147,392.07 $ 157,396.38 Operating Grants and Contributions 483,525.35 467,102.00 Capital Grants and Contributions 331,377.49 1,032,472.26 General Revenues: Property Taxes, Levied for Operational Purposes 1,340,658.18 1,283,172.86 Property Taxes, Levied for Capital Projects 327,190.03 478,076.96 Grants and Contributions Not Restricted to Specific Programs 8,333,448.96 8,659,917.06 Unrestricted Investment Earnings 22,878.03 74,042.51 Miscellaneous 202,340.36 89,676.17 Total Revenues 11,188,810.47 12,241,856.20 Functions/Program Expenses: Instruction 5,399,886.89 5,441,989.47 Pupil Personnel Services 560,395.42 547,738.49 Instructional Media Services 135,398.75 162,160.54 Instruction and Curriculum Development Services 731,365.25 751,738.05 Instructional Staff Training Services 282,130.84 259,054.35 Instruction Related Technology 88,688.10 101,961.22 Board of Education 243,721.08 281,186.84 General Administration 286,641.84 251,760.27 School Administration 409,930.64 406,291.13 Facilities Acquisition and Construction 55,455.18 137,792.14 Fiscal Services 255,773.05 245,676.28 Food Services 509,488.60 484,673.65 Central Services 6,273.53 3,678.52 Pupil Transportation Services 652,765.01 687,432.82 Operation of Plant 641,745.45 646,570.37 Maintenance of Plant 370,040.65 344,994.96 Administrative Technology Services 120,142.04 114,882.35 Interest on Long-Term Debt 12,039.14 12,791.50 Unallocated Depreciation Expense 595,912.01 544,407.72 Total Functions/Program Expenses 11,357,793.47 11,426,780.67 Increase (Decrease) in Net Assets $ (168,983.00) $ 815,075.53 Governmental activities resulted in a decrease in the District’s net assets of $168,983. Key factors contributing to this decrease include the following: A reduction in State Florida Education Finance Program revenue in the amount of $361,043. A decrease in capital grants and contributions of $701,095. This decrease is primarily a result of the receipt of a Classrooms for Kids allocation totaling $617,911 for the completion of elementary school classrooms in the previous year, with no allocation received in the current year. A reduction in Local Capital Improvement Tax revenue of $150,887, due to a decrease in the millage rate. Expenses were consistent with the prior year. 6
  12. 12. FEBRUARY 2010 REPORT NO. 2010-098 FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Major Governmental Funds The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a District’s net resources available for spending at the end of the fiscal year. As of the end of the 2008-09 fiscal year, the District’s governmental funds report combined ending fund balances of $2,254,473, an increase of $192,470 in comparison with the 2007-08 fiscal year. Approximately 77 percent of this total amount, or $1,740,713, constitutes unreserved fund balances, which are available for spending at the District’s discretion. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed to: 1) liquidate contracts and purchase orders outstanding at year-end ($165,421); 2) pay debt service ($9,108); 3) fund State categorical programs ($216,608); 4) provide consumable supplies inventory ($26,770); and 5) provide for potential claims under the self-insurance plan ($95,854). The General Fund is the chief operating fund of the District. At the end of the current fiscal year, unreserved fund balance is $1,047,659, while the total fund balance is $1,418,134. During the current fiscal year, unreserved fund balance in the General Fund decreased from $1,111,734 in 2007-08 fiscal year to $1,047,659 in the 2008-09 fiscal year. This decrease can be attributed to continued shortfalls in State revenues. However, the District experienced a slight increase in student enrollment to offset a portion of the revenue decrease from the State. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total expenditures. Unreserved fund balance represents 13.08 percent of total General Fund expenditures, while total fund balance represents 17.71 percent of that same amount. The fund balance of the General Fund decreased by $3,163 during the current fiscal year. The Special Revenue – Other Fund has a zero fund balance at the end of the current fiscal year. Because revenue is recognized to the extent that eligible expenditures have been incurred, this fund does not generally accumulate a fund balance. Revenues and expenditures increased by $59,992 primarily due to the receipt of additional Title I revenues. The Special Revenue - ARRA Economic Stimulus Fund also has a zero fund balance at the end of the 2008-09 fiscal year. Because revenue is recognized to the extent that eligible expenditures have been incurred, this fund also does not generally accumulate a fund balance. Revenues and expenditures were $9,707 for the 2008-09 fiscal year. The Capital Projects – Public Education Capital Fund and the Capital Projects - Local Capital Improvement Fund have combined total fund balances of $773,083, all of which is restricted for capital projects. The combined fund balances increased in the current year by $192,647 due to a reduced level of expenditures in the 2008-09 fiscal year. Of this amount, $120,993 is reserved to liquidate purchase orders outstanding at year-end. 7
  13. 13. FEBRUARY 2010 REPORT NO. 2010-098 GENERAL FUND BUDGETARY HIGHLIGHTS During the fiscal year, the District increased its General Fund budgeted revenues by $45,703. At the same time, final appropriations were more than the original budgeted amounts by $490,108. Actual revenues exceeded final budgeted amounts by $242,532, while actual expenditures were $904,010 less than final budgeted amounts, due to cost saving measures implemented by the District in anticipation of decreased State funding. The actual ending fund balance exceeded the estimated fund balance contained in the final amended budget by $1,146,643. CAPITAL ASSETS AND LONG-TERM DEBT Capital Assets The District’s investment in capital assets for its governmental activities as of June 30, 2009, amounts to $12,966,920 (net of accumulated depreciation). This investment in capital assets includes land; improvements other than buildings; buildings and fixed equipment; furniture, fixtures, and equipment; motor vehicles; and audio visual materials and computer software. Major capital asset events during the current fiscal year included the following: New construction and replacement of covered walkways at Lafayette Elementary School. Demolition of the wooden playground at Lafayette Elementary School. Purchase of one school bus. Additional information on the District’s capital assets can be found in Note 4 to the financial statements. Long-Term Debt At June 30, 2009, the District had total bonded debt outstanding of $225,000. The bonds are backed by the full faith and credit of the State of Florida. The District total bonded debt decreased $15,000 during the 2008-09 fiscal year. Additional information on the District’s long-term debt can be found in Notes 5 through 7 to the financial statements. OTHER MATTERS OF SIGNIFICANCE The District was awarded $ 240,094 in Federal funds from the American Recovery and Reinvestment Act (ARRA) for use in the 2008-09 fiscal year. The act, intended to provide a stimulus to the nation’s economy, earmarks Federal revenues for states to use in key educational areas such as the instruction of students with disabilities, services for low-income students, and the stabilization of local school district funding. Additional ARRA revenues were awarded for the 2009-10 fiscal year to assist the District in these areas. In an environment of uncertain State resources, District staff continues to work with the School Board and administrators to develop cost saving measures to reduce the impact of the nonrecurring ARRA revenues. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the District’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Department, Lafayette County District School Board, 363 NE Crawford Street, Mayo, FL 32066-9248. 8
  14. 14. FEBRUARY 2010 REPORT NO. 2010-098 BASIC FINANCIAL STATEMENTS LAFAYETTE COUNTY DISTRICT SCHOOL BOARD STATEMENT OF NET ASSETS June 30, 2009 Governmental Activities ASSETS Cash and Cash Equivalents $ 2,072,309.51 Investments 48,541.73 Accounts Receivable 89,864.22 Due from Fiscal Agent 109,138.90 Due from Other Agencies 16,040.90 Inventories 26,770.01 Capital Assets: Nondepreciable Capital Assets 214,561.10 Depreciable Capital Assets, Net 12,752,358.65 TOTAL ASSETS $ 15,329,585.02 LIABILITIES Salaries and Benefits Payable $ 65,867.42 Payroll Deductions and Withholdings 19,267.87 Due to Other Agencies 314.63 Matured Interest Payable 427.50 Deferred Revenue 9,029.87 Estimated Insurance Claims Payable 13,284.65 Long-Term Liabilities: Portion Due Within One Year 82,430.44 Portion Due After One Year 1,039,489.95 Total Liabilities 1,230,112.33 NET ASSETS Invested in Capital Assets, Net of Related Debt 12,741,919.75 Restricted for: State Categorical Programs 216,607.82 Debt Service 9,108.04 Capital Projects 807,802.38 Other Purposes 115,282.76 Unrestricted 208,751.94 Total Net Assets 14,099,472.69 TOTAL LIABILITIES AND NET ASSETS $ 15,329,585.02 The accompanying notes to financial statements are an integral part of this statement. 9
  15. 15. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD STATEMENT OF ACTIVITIES For the Fiscal Year Ended June 30, 2009 Net (Expense) Revenue and Changes Expenses Program Revenues in Net Assets Charges Operating Capital Governmental for Grants and Grants and Activities Services Contributions Contributions Functions/Programs Governmental Activities: Instruction $ 5,399,886.89 $ 8,649.50 $ $ $ (5,391,237.39) Pupil Personnel Services 560,395.42 (560,395.42) Instructional Media Services 135,398.75 (135,398.75) Instruction and Curriculum Development Services 731,365.25 (731,365.25) Instructional Staff Training Services 282,130.84 (282,130.84) Instruction Related Technology 88,688.10 (88,688.10) Board of Education 243,721.08 (243,721.08) General Administration 286,641.84 (286,641.84) School Administration 409,930.64 (409,930.64) Facilities Acquisition and Construction 55,455.18 304,930.05 249,474.87 Fiscal Services 255,773.05 (255,773.05) Food Services 509,488.60 122,824.54 296,559.35 (90,104.71) Central Services 6,273.53 (6,273.53) Pupil Transportation Services 652,765.01 15,918.03 186,966.00 (449,880.98) Operation of Plant 641,745.45 (641,745.45) Maintenance of Plant 370,040.65 (370,040.65) Administrative Technology Services 120,142.04 (120,142.04) Interest on Long-Term Debt 12,039.14 26,447.44 14,408.30 Unallocated Depreciation Expense 595,912.01 (595,912.01) Total Governmental Activities $ 11,357,793.47 $ 147,392.07 $ 483,525.35 $ 331,377.49 (10,395,498.56) General Revenues: Taxes: Property Taxes, Levied for Operational Purposes 1,340,658.18 Property Taxes, Levied for Capital Projects 327,190.03 Grants and Contributions Not Restricted to Specific Programs 8,333,448.96 Unrestricted Investment Earnings 22,878.03 Miscellaneous 202,340.36 Total General Revenues 10,226,515.56 Change in Net Assets (168,983.00) Net Assets - Beginning 14,268,455.69 Net Assets - Ending $ 14,099,472.69 The accompanying notes to financial statements are an integral part of this statement. 10
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  17. 17. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2009 General Special Special Fund Revenue - Revenue - Other ARRA Economic Fund Stimulus Fund ASSETS Cash and Cash Equivalents $ 1,249,564.57 $ 9,044.50 $ Investments 40,668.95 Accounts Receivable 89,864.22 Due from Fiscal Agent 109,138.90 Due from Other Agencies 14,031.36 Inventories 13,586.34 TOTAL ASSETS $ 1,516,854.34 $ 9,044.50 $ LIABILITIES AND FUND BALANCES Liabilities: Salaries and Benefits Payable $ 65,867.42 $ $ Payroll Deductions and Withholdings 19,267.87 Due to Other Agencies 300.00 14.63 Matured Interest Payable Deferred Revenue 9,029.87 Estimated Insurance Claims Payable 13,284.65 Total Liabilities 98,719.94 9,044.50 Fund Balances: Reserved for State Categorical Programs 216,607.82 Reserved for Encumbrances 44,427.17 Reserved for Inventories 13,586.34 Reserved for Self-Insurance 95,854.25 Reserved for Debt Service Unreserved, Reported in: General Fund 1,047,658.82 Special Revenue Funds Capital Projects Funds Total Fund Balances 1,418,134.40 TOTAL LIABILITIES AND FUND BALANCES $ 1,516,854.34 $ 9,044.50 $ 0.00 The accompanying notes to financial statements are an integral part of this statement. 12
  18. 18. FEBRUARY 2010 REPORT NO. 2010-098 Capital Capital Other Total Projects - Projects - Governmental Governmental Public Education Local Capital Funds Funds Capital Outlay Improvement Fund Fund $ $238,921.85 $ 533,552.59 $ 41,226.00 $ 2,072,309.51 7,872.78 48,541.73 89,864.22 109,138.90 608.35 1,401.19 16,040.90 13,183.67 26,770.01 $ 238,921.85 $ 534,160.94 $ 63,683.64 $ 2,362,665.27 $ $ $ $ 65,867.42 19,267.87 314.63 427.50 427.50 9,029.87 13,284.65 427.50 108,191.94 216,607.82 4,443.90 116,549.50 165,420.57 13,183.67 26,770.01 95,854.25 9,108.04 9,108.04 1,047,658.82 6,244.84 6,244.84 234,477.95 417,611.44 34,719.59 686,808.98 238,921.85 534,160.94 63,256.14 2,254,473.33 $ 238,921.85 $ 534,160.94 $ 63,683.64 $ 2,362,665.27 13
  19. 19. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2009 Total Fund Balances - Governmental Funds $ 2,254,473.33 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets, net of accumulated depreciation, used in governmental activities are not financial resources and, therefore, are not reported as assets in the governmental funds. 12,966,919.75 Long-term liabilities are not due and payable in the current period and, therefore, are not reported as liabilities in the governmental funds. Long-term liabilities at year-end consist of: Bonds Payable $ 225,000.00 Special Termination Benefits Payable 233,544.30 Compensated Absences Payable 663,376.09 (1,121,920.39) Total Net Assets - Governmental Activities $ 14,099,472.69 The accompanying notes to financial statements are an integral part of this statement. 14
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  21. 21. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Fiscal Year Ended June 30, 2009 General Special Special Fund Revenue - Revenue - Other ARRA Economic Fund Stimulus Fund Revenues Intergovernmental: Federal Direct $ $ 761,652.93 $ Federal Through State and Local 53,968.27 1,380,553.58 9,706.51 State 6,315,000.61 Local: Property Taxes 1,340,658.18 Charges for Services - Food Service Miscellaneous 243,226.86 100.00 Total Revenues 7,952,853.92 2,142,306.51 9,706.51 Expenditures Current - Education: Instruction 4,154,118.98 1,204,654.26 1,554.19 Pupil Personnel Services 317,906.54 236,969.34 Instructional Media Services 136,034.87 Instruction and Curriculum Development Services 269,250.69 456,326.17 3,576.49 Instructional Staff Training Services 155,941.47 122,618.96 Instruction Related Technology 87,988.41 Board of Education 239,593.56 General Administration 212,325.78 72,220.78 228.83 School Administration 399,044.17 Facilities Acquisition and Construction 15,845.66 Fiscal Services 254,150.24 Food Services Central Services 5,962.02 95.32 Pupil Transportation Services 571,187.16 18,377.83 Operation of Plant 632,372.04 1,776.85 Maintenance of Plant 367,724.03 Administrative Technology Services 119,288.16 Fixed Capital Outlay: Facilities Acquisition and Construction 17,789.33 Other Capital Outlay 50,903.20 29,167.00 4,347.00 Debt Service: Principal Interest and Fiscal Charges Total Expenditures 8,007,426.31 2,142,206.51 9,706.51 Excess (Deficiency) of Revenues Over Expenditures (54,572.39) 100.00 Other Financing Sources (Uses) Transfers In 132,409.66 Transfers Out (81,000.00) (100.00) Total Other Financing Sources (Uses) 51,409.66 (100.00) Net Change in Fund Balances (3,162.73) Fund Balances, Beginning 1,421,297.13 Fund Balances, Ending $ 1,418,134.40 $ 0.00 $ 0.00 The accompanying notes to financial statements are an integral part of this statement. 16
  22. 22. FEBRUARY 2010 REPORT NO. 2010-098 Capital Capital Other Total Projects - Projects - Governmental Governmental Public Education Local Capital Funds Funds Capital Outlay Improvement Fund Fund $ $ $ $ 761,652.93 289,730.35 1,733,958.71 294,961.00 42,778.55 6,652,740.16 327,190.03 1,667,848.21 122,824.54 122,824.54 593.04 5,356.62 509.40 249,785.92 295,554.04 332,546.65 455,842.84 11,188,810.47 5,360,327.43 554,875.88 136,034.87 729,153.35 278,560.43 87,988.41 239,593.56 284,775.39 399,044.17 17,666.52 21,943.00 55,455.18 254,150.24 506,817.78 506,817.78 6,057.34 589,564.99 634,148.89 367,724.03 119,288.16 43,201.40 128,083.98 189,074.71 7,351.72 84,897.85 176,666.77 15,000.00 15,000.00 12,039.14 12,039.14 68,219.64 234,924.83 533,856.92 10,996,340.72 227,334.40 97,621.82 (78,014.08) 192,469.75 81,000.00 213,409.66 (60,596.26) (71,713.40) (213,409.66) (60,596.26) (71,713.40) 81,000.00 166,738.14 25,908.42 2,985.92 192,469.75 72,183.71 508,252.52 60,270.22 2,062,003.58 $ 238,921.85 $ 534,160.94 $ 63,256.14 $ 2,254,473.33 17
  23. 23. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD 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, 2009 Net Change in Fund Balances - Governmental Funds $ 192,469.75 Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported in the 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. This is the amount of depreciation expense in excess of capital outlays in the current period. (291,027.78) Repayment of long-term debt is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount of repayments in the current period. 15,000.00 In the statement of activities, the cost of special termination benefits is measured by the amounts earned during the year, while in the governmental funds expenditures are recognized based on the amounts actually paid for special termination benefits. This is the net amount of special termination benefits earned in excess of the amount paid in the current period. (23,234.64) In the statement of activities, the cost of compensated absences is measured by the amounts earned during the year, while in the governmental funds expenditures are recognized based on the amounts actually paid for compensated absences. This is the net amount of compensated absences earned in excess of the amount paid in the current period. (62,190.33) Change in Net Assets - Governmental Activities $ (168,983.00) The accompanying notes to financial statements are an integral part of this statement. 18
  24. 24. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES - FIDUCIARY FUNDS June 30, 2009 Agency Funds ASSETS Cash and Cash Equivalents $ 126,660.00 LIABILITIES Internal Accounts Payable $ 126,660.00 The accompanying notes to financial statements are an integral part of this statement. 19
  25. 25. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The District School Board has direct responsibility for operation, control, and supervision of District schools and is considered a primary government for financial reporting. The Lafayette County School District is considered part of the Florida system of public education. The governing body of the school district is the Lafayette County District School Board, which is composed of five elected members. The elected Superintendent of Schools is the executive officer of the School Board. Geographic boundaries of the District correspond with those of Lafayette County. Criteria for determining if other entities are potential component units that should be reported within the District's basic financial statements are identified and described in the Governmental Accounting Standards Board's (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Sections 2100 and 2600. The application of these criteria provides for identification of any entities for which the District School Board is financially accountable and other organizations for which the nature and significance of their relationship with the School Board are such that exclusion would cause the District's basic financial statements to be misleading or incomplete. Based on these criteria, no component units are included within the reporting entity of the District. Basis of Presentation Government-wide Financial Statements - Government-wide financial statements, including the statement of net assets and the statement of activities, present information about the School District as a whole. These statements include the nonfiduciary financial activity of the District. Government-wide financial statements are prepared using the economic resources measurement focus. The 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 thereby clearly identifiable to a particular function. Depreciation expense associated with the District’s transportation department is allocated to the pupil transportation services function, while remaining depreciation expense is not readily associated with a particular function and is reported as unallocated. Program revenues include charges paid by the recipient of the goods or services offered by the program, and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. 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. The effects of interfund activity have been eliminated from the government-wide financial statements. Fund Financial Statements - Fund financial statements report detailed information about the District in the governmental and fiduciary funds. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is reported in a separate column. Nonmajor funds are aggregated and reported in a single column. Because the focus of governmental fund financial statements differs from the focus of government-wide financial statements, a reconciliation is presented with each of the governmental fund financial statements. 20
  26. 26. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2009 The District reports the following major governmental funds: General Fund – to account for all financial resources not required to be accounted for in another fund, and for certain revenues from the State that are legally restricted to be expended for specific current operating purposes. Special Revenue – Other Fund – to account for certain Federal grant program resources. Special Revenue – ARRA Economic Stimulus Fund – to account for certain Federal grant program resources related to the American Recovery and Reinvestment Act (ARRA). Capital Projects – Public Education Capital Outlay Fund – to account for the financial resources to be used for new construction and renovation and remodeling projects. Capital Projects – Local Capital Improvement Fund – to account for the financial resources generated by the local capital improvement tax levy to be used for educational capital outlay needs, including new construction and renovation and remodeling projects. Additionally, the District reports the following fiduciary fund type: Agency Funds – to account for resources of the school internal funds, which are used to administer moneys collected at the schools in connection with school, student athletic, class, and club activities. Basis of Accounting Basis of accounting refers to when revenues and expenditures, or expenses, are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. The government-wide financial statements are prepared using the accrual basis of accounting, as are the fiduciary funds financial statements. Revenues are recognized when earned and expenses are recognized when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized in the year for which they are levied. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements imposed by the provider have been satisfied. Governmental fund financial statements are prepared using the modified accrual basis of accounting. Revenues, except for certain grant revenues, are recognized when they become measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The District considers revenues to be available if they are collected within 30 days of the end of the current fiscal year. When grant terms provide that the expenditure of resources is the prime factor for determining eligibility for Federal, State, and other grant resources, revenue is recognized at the time the expenditure is made. Under the modified accrual basis of accounting, expenditures are generally recognized when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, special termination benefits, and compensated absences, which are recognized when due. Allocations of cost, such as depreciation, are not recognized in governmental funds. When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, then unrestricted resources as they are needed. 21
  27. 27. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2009 Deposits and Investments The District’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term, highly liquid investments with original maturities of three months or less. Investments classified as cash equivalents include amounts placed with the State Board of Administration (SBA) Local Government Surplus Funds Trust Fund Investment Pool (LGIP), which, effective, July 1, 2009, is known as Florida PRIME. Cash deposits are held by banks qualified as public depositories under Florida law. All deposits are insured by Federal depository insurance, up to specified limits, or collateralized with securities held in Florida's multiple financial institution collateral pool as required by Chapter 280, Florida Statutes. Investments consist of amounts placed in SBA Debt Service accounts for investment of debt service moneys, and amounts placed with SBA for participation in LGIP and the Fund B Surplus Funds Trust Fund (Fund B) investment pools created by Sections 218.405 and 218.417, Florida Statutes. The investment pools operate under investment guidelines established by Section 215.47, Florida Statutes. The District’s investments in LGIP, which SBA indicates is a Securities and Exchange Commission Rule 2a7-like external investment pool, as of June 30, 2009, are similar to money market funds in which shares are owned in the fund rather than the underlying investments. These investments are reported at fair value, which is amortized cost. The District’s investments in Fund B are accounted for as a fluctuating net asset value pool, with a fair value factor of 0.51370946 at June 30, 2009. Fund B is not subject to participant withdrawal requests. Distributions from Fund B, as determined by SBA, are effected by transferring eligible cash or securities to LGIP, consistent with the pro rata allocation of pool shareholders of record at the creation date of Fund B. One hundred percent of such distributions from Fund B are available as liquid balance within LGIP. Types and amounts of investments held at fiscal year-end are described in a subsequent note on investments. Inventories Inventories consist of expendable supplies held for consumption in the course of District operations. Inventories are stated at last invoice, which approximates the first-in, first-out basis, except that United States Department of Agriculture surplus commodities are stated at their fair value as determined at the time of donation to the District's food service program by the Florida Department of Agriculture and Consumer Services, Bureau of Food Distribution. The costs of inventories are recorded as expenditures when purchased during the year, and are adjusted at year-end to reflect year-end physical inventories. Capital Assets Expenditures for capital assets acquired or constructed for general District purposes are reported in the governmental fund that financed the acquisition or construction. The capital assets so acquired are reported at cost in the government-wide statement of net assets but are not reported in the governmental fund financial statements. Capital assets are defined by the District as those costing more than $750. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated assets are recorded at fair value at the date of donation. 22
  28. 28. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2009 Capital assets are depreciated using the straight-line method over the following estimated useful lives: Description Estimated Lives Improvements Other than Buildings 10 - 35 years Buildings and Fixed Equipment 20 - 50 years Furniture, Fixtures, and Equipment 5 - 15 years Motor Vehicles 5 - 10 years Audio Visual Materials and Computer Software 5 years Current year information relative to changes in capital assets is described in a subsequent note. Long-Term Liabilities Long-term obligations that will be financed from resources to be received in the future by governmental funds are reported as liabilities in the government-wide statement of net assets. In the governmental fund financial statements, bonds and other long-term obligations are not recognized as liabilities until due. In the government-wide financial statements, compensated absences (i.e., paid absences for employee vacation leave and sick leave) are accrued as liabilities to the extent that it is probable that the benefits will result in termination payments. A liability for these amounts is reported in the governmental fund financial statements only if it has matured, such as for occurrences of employee resignations and retirements. Changes in long-term liabilities for the current year are reported in a subsequent note. State Revenue Sources Revenues from State sources for current operations are primarily from the Florida Education Finance Program administered by the Florida Department of Education (Department) under the provisions of Section 1011.62, Florida Statutes. In accordance with this law, the District determines and reports the number of full-time equivalent (FTE) students and related data to the Department. The Department performs certain edit checks on the reported number of FTE and related data, and calculates the allocation of funds to the District. The District is permitted to amend its original reporting for a period of nine months following the date of the original reporting. Such amendments may impact funding allocations for subsequent years. The Department may also adjust subsequent fiscal period allocations based upon an audit of the District's compliance in determining and reporting FTE and related data. Normally, such adjustments are treated as reductions or additions of revenue in the year when the adjustments are made. The State provides financial assistance to administer certain categorical educational programs. State Board of Education rules require that revenue earmarked for certain programs be expended only for the program for which the money is provided, and require that the money not expended as of the close of the fiscal year be carried forward into the following year to be expended for the same 23
  29. 29. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2009 categorical educational programs. The Department generally requires that categorical educational program revenues be accounted for in the General Fund. A portion of the fund balance of the General Fund is reserved in the governmental fund financial statements for the unencumbered balance of categorical educational program resources. The State allocates gross receipts taxes, generally known as Public Education Capital Outlay money, to the District on an annual basis. The District is authorized to expend these funds only upon applying for and receiving an encumbrance authorization from the Department. A schedule of revenue from State sources for the current year is presented in a subsequent note. District Propert Taxes The School Board is authorized by State law to levy property taxes for district school operations, capital improvements, and debt service. Property taxes consist of ad valorem taxes on real and personal property within the District. Property values are determined by the Lafayette County Property Appraiser, and property taxes are collected by the Lafayette County Tax Collector. The School Board adopted the 2008 tax levy on September 9, 2008. Tax bills are mailed in October and taxes are payable between November 1 of the year assessed and March 31 of the following year at discounts of up to 4 percent for early payment. Taxes become a lien on the property on January 1, and are delinquent on April 1, of the year following the year of assessment. State law provides for enforcement of collection of personal property taxes by seizure of the property to satisfy unpaid taxes, and for enforcement of collection of real property taxes by the sale of interest bearing tax certificates to satisfy unpaid taxes. The procedures result in the collection of essentially all taxes prior to June 30 of the year following the year of assessment. Property tax revenues are recognized in the government-wide financial statements when the Board adopts the tax levy. Property tax revenues are recognized in the governmental fund financial statements when taxes are received by the District, except that revenue is accrued for taxes collected by the Lafayette County Tax Collector at fiscal year-end but not yet remitted to the District. Millages and taxes levied for the current year are presented in a subsequent note. Federal Revenue Sources The District receives Federal awards for the enhancement of various educational programs. Federal awards are generally received based on applications submitted to, and approved by, various granting agencies. For Federal awards in which a claim to these grant proceeds is based on incurring eligible expenditures, revenue is recognized to the extent that eligible expenditures have been incurred. 2. BUDGETARY COMPLIANCE AND ACCOUNTABILITY The Board follows procedures established by State statutes and State Board of Education rules in establishing budget balances for governmental funds, as described below: Budgets are prepared, public hearings are held, and original budgets are adopted annually for all governmental fund types in accordance with procedures and time intervals prescribed by law and State Board of Education rules. 24
  30. 30. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2009 Appropriations are controlled at the object level (e.g., salaries, purchased services, and capital outlay) within each activity (e.g., instruction, pupil personnel services, and school administration) and may be amended by resolution at any School Board meeting prior to the due date for the annual financial report. Budgets are prepared using the same modified accrual basis as is used to account for governmental funds. Budgetary information is integrated into the accounting system and, to facilitate budget control, budget balances are encumbered when purchase orders are issued. Appropriations lapse at fiscal year-end and encumbrances outstanding are honored from the subsequent year’s appropriations. 3. INVESTMENTS Section 218.415(17), Florida Statutes, authorizes the District to invest in the State Board of Administration (SBA) Local Government Surplus Funds Trust Fund Investment Pool (LGIP); any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act as provided in Section 163.01, Florida Statutes; Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; interest-bearing time deposits or savings accounts in qualified public depositories, as defined in Section 280.02, Florida Statutes; and direct obligations of the United States Treasury. The District’s investment policy does not further limit the District’s investment choices, and the policy does not limit investment maturities as a means of managing its exposure to fair value losses from increasing interest rates. Investments, reported as cash equivalents, with a fair value of $112,593.61 at June 30, 2009, are in SBA LGIP with a weighted average days to maturity (WAM) of 46 days. A portfolio’s WAM reflects the average maturity based on final maturity or reset date, in the case of floating rate instruments. WAM measures the sensitivity of the portfolio to interest rate changes. The District’s investment in LGIP is rated AAAm by Standard & Poor’s. Investments with a fair value of $40,668.95 at June 30, 2009, are in the SBA Fund B Surplus Funds Trust Fund (Fund B) with a weighted average life (WAL) of 6.87 years. A portfolio’s WAL is the dollar weighted average length of time until securities held reach maturity. WAL, which also measures the sensitivity of the portfolio to interest rate changes, is based on legal final maturity dates for Fund B as of June 30, 2009. However, because Fund B consists of restructured or defaulted securities there is considerable uncertainty regarding the WAL. The District’s investment in Fund B is unrated. In addition, the District reports investments totaling $7,872.78 at June 30, 2009, in the SBA Debt Service accounts to provide for debt service payments on bond debt issued by the State Board of Education for the benefit of the District. These investments consist of United States Treasury securities, with maturity dates of six months or less, and are reported at fair value. The District relies on policies developed by SBA for managing credit risk for this account. 25
  31. 31. FEBRUARY 2010 REPORT NO. 2010-098 LAFAYETTE COUNTY DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2009 4. CHANGE IN CAPITAL ASSETS Changes in capital assets are presented in the table below. Balance Additions Deletions Balance 7-1-08 6-30-09 GOVERNMENTAL ACTIVITIES Capital Assets Not Being Depreciated: Land $ 214,561.10 $ $ $ 214,561.10 Capital Assets Being Depreciated: Improvements Other Than Buildings 1,001,397.67 112,581.78 888,815.89 Buildings and Fixed Equipment 17,724,398.11 189,074.71 17,913,472.82 Furniture, Fixtures, and Equipment 1,669,597.12 62,570.43 125,617.54 1,606,550.01 Motor Vehicles 868,144.96 84,897.85 953,042.81 Audio Visual Materials and Computer Softw are 360,729.71 29,198.49 389,928.20 Total Capital Assets Being Depreciated 21,624,267.57 365,741.48 238,199.32 21,751,809.73 Less Accumulated Depreciation for: Improvements Other Than Buildings 668,301.75 33,742.59 112,581.78 589,462.56 Buildings and Fixed Equipment 5,660,517.21 392,925.52 6,053,442.73 Furniture, Fixtures, and Equipment 1,262,458.84 142,232.93 125,617.54 1,279,074.23 Motor Vehicles 696,850.18 60,857.25 757,707.43 Audio Visual Materials and Computer Softw are 292,753.16 27,010.97 319,764.13 Total Accumulated Depreciation 8,580,881.14 656,769.26 238,199.32 8,999,451.08 Total Capital Assets Being Depreciated, Net 13,043,386.43 (291,027.78) 12,752,358.65 Governmental Activities Capital Assets, Net $ 13,257,947.53 $ (291,027.78) $ 0.00 $ 12,966,919.75 Depreciation expense was charged to functions as follows: Function Amount GOVERNMENTAL ACTIVITIES Pupil Transportation Services $ 60,857.25 Unallocated 595,912.01 Total Depreciation Expense - Governmental Activities $ 656,769.26 26

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