SAN YSIDRO SCHOOL DISTRICT CQUNTY OF SAN DIEGO SAN DIEGO, CALIFORNIA AUDIT REPORT JUNE 39, 2014 Witkiasan Hadley King 8: Co. LLP CPA's and Advisors 218 W. Douglas Ave. El Cajun, Califomia introductory Section San Ysidro Sonooi District Audit Report For The Year Ended June 30, 2014 EABLE QF 2NTENTS FENANCIAL SECTJON independent Auditor?s Report .. Management's Discussion and Analysis (Required Supplementary information) .. iFinnil mn Government?wide Financial Statements: Statement of Net Position .. Statement of Activities t. Fund Financial Statements: Balance Sheet - Governmentai Funds .. Reconcttiation oi the Governmental Funds Balance Sheet to the Statement of Net Position .. Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds .. oi the Statement of Revenees, Expenditures, and Changes in Fund Baiances of Governmental Funds to the Statement of Activities .. Statement of Fiduciary Net Position Fiduciary Funds .. Notes to the Financial Statements t. 'r intrm? Budgetary Comparison Schedules: General Fund .. Schedute of Funding Progress for Other Post Employment Benefits Ptan .. Notes to Required Supplementary information .. mintn -tmn Combining Baiance Sheet - Ali Nonmajor Governmental Funds .. Combining Statement of Revenues, Expenditures and Changes in Fund Balances - All Nonmajor Governmentai Funds .. Spectat Revenue Funds: Combining Baiance Sheet - Nonmajor Special Revenue Funds .. Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmaior Special Revenue Funds .. Debt Service Fonds: Combining Baiance Sheet - Nonmajor Debt Service Funds .. Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds .. Page ExhibithabEe Exhibit Art Exhibit Exhibit A-3 Exhibit A-4 Exhibit A-5 Exhibit Exhibit A-7 Exhibit 3-1 Exhibit 0-1 Exhibit 0?2 Exhibit (3-3 Exhibit 0-4 Exhibit 0-5 Exhibit (3-6 San Ysidro Schooi District Audit Report For The Year Ended June 30, 2014 TABLE OF CONTENTS Page Exhi it/i? bi Capitai Projects Funds: Combining Balance Sheet - Nonmajor Capitai Profects Funds .. 56 Exhibit {3-7 Combining Statement of Revenues! Expenditures and Changes in Fund Balances Nonmajor Capital Projects Funds .. 57 Exhibit 0?8 OTHER SUPPLEMENTARY ENFORMATSOM SECTION Local Education Agency Organization Structure .. 58 Schedule of Average Deity Attendance .. 59 Table Dd Scheduie of instructional Time .. 60 Table [3-2 Soheduie of Financial Trends and Analysis .. 61 Table 133 of Annual Financial and Budget Report With Audited Financiei Statements .. 62 Tabie [3-4 Schedule of Charter Schools .. 63 Tabte 3-5 Schedute of Expenditures of Federal Awards .. 64 Tabie {3?6 Notes to the Schedule of Expenditures of Fedora? Awards .. 65 Report on interned Controi over Financial Reporting and on Compiiance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .. 66 Report on Compiianoe for Each Major Program and on internal Control over Compiianoe Required by OMB Circeiar A4 33 ., 68 independent Auditor's Report on State Compiiance .. 70 Scheduie of Findings and Questioned Costs .. 72 Summary Schedeie of Prior Audit Findings .. Y7 Financial Section i i Ki if HAD r: assert arteries, are "t @239? 2% ggl?g' i i 3.: atsharti ii. Settings, sea Erase ti, iterates, titre isiataiie ti; teasers, {Stirs ?3 pasta a, Empty To the Board of Trustees San Ysidro Schooi District San Diego, Caiitornia Report on the hinanciai Statements We have audited the accompanying financiai statements of the governmentai activities, each major tuna, and the aggregate remaining tend information at San ?r?sidro Schooi Bistrict ("the ?istrict?) as at and for the year ended June 30, 20%, and the rotated notes to the financiai statements, which coiiectively comprise the District's basic financiai statements as listed in the tabie of contents. Management?s for the Financial Statements Management is responsible for the preparation and fair presentation of these financiai statements in accordance with accounting principies generally accepted in the United States of America; this inciudes the design, implementation, and maintenance of internal controi relevant to the preparation and fair presentation of financiai statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generain accepted in the United States of America and the standards applicabie to financial audits contained in Government Auditing Standards, issued by the Comptroiier General of the United States Those standards require that we plan and perform the audit to obtain reasonabie assurance about whether the tinanciai statements are free of materiai misstatement. An audit invoives performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures seiected depend on the auditor?s judgment, including the assessment of the risks of materiai misstatement of the financial statements, whether due to fraud or error. in making these risk assessments, the auditor considers internal controi reievant to the District?s preparation and fair presentation oi the iinanciai statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose oi expressing an opinion on the effectiveness of the District?s internai control. Accordingiy, we express no such opinion. An audit also includes evatuating the appropriateness of accounting poiicies used and the reasonableness of significant accounting estimates made by management, as wait as evaiuating the overall presentation of the financial statements. We beiieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion in our opinion, the financial statements referred to above present tairiy, in material respects, the respective financiai position of the governmentai activities, each major fund, and the aggregate remaining fond information of San Ysidro Schooi District as oi June 30, 2014, and the respective changes in financiai position, for the year then ended in accordance with accounting principles generally accepted in the United States of America. Ei {Satori Critics- titties Sit-8- W. Eieagiias disease in ii Qatari, ?rst ?ii?tii?ifi teas titrated Street, Spite asses ?is, rate; essence a rat {stat tit-tastier i re. rats} asserts ii are {are} asserts Emphasis of Matter Change in Accounting Principles As described in Note A to the financiai statements, in 2014, San Ysidro School District adopted new accounting guidance, Government Accounting Standards Board Statement No. 65, items Previousfy Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter. Going Concern The accompanying tinancial statements have been prepared assuming that San Ysidro Schooi District continue as a going concern. As described in Note to the financiai statements, the District has flied negative certifications with the San Siege County Office of Education indicating that they wiil not be state to meet their financiai obligations. Management's plans with regards to these matters are also described in Note to the financiai statements. The financiat statements do not inciude any adjustments that might result from the outcomes of this uncertainty. Other Matters Required Suppiementan/ Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, budgetary comparison information and schedule of funding progress for OPEB benetits identified as Required Suppiementary information in the tabie of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of iinanciai reporting for piecing the basic tinancial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Required Suppiernentary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information tor consistency with management's responses to our inquiries, the basic financiai statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other information Our audit was conducted for the purpose of forming opinions on the financial statements that ccilectiveiy comprise the San Ysidro Schooi District's basic iinanciai statements. The combining financial statements are presented for purposes oi additional anaiysis and are not required parts oi the basic financiai statements. The schedule of expenditures of federal awards is presented for purposes of additional anaiysis as required by U. 8. Cities of Management and Budget Circular Audits of States, Locai Governments, and Non-Pro?t Organizations, and is aiso not a required part of the basic financial statements. The accompanying other supplementary information is presented for purposes of additionai analysis as required by the State?s audit guide, Standards and Procedures for Audits of California K42 Local Education Agencies 201344, published by the Education Audit Appeais Panel, and is also not a required part of the basic financial statements. The combining tinanciai statements and other supplementary information and the scheduie of expenditures of federai awards are the oi management and were derived from and relate directiy to the underiying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures appiied in the audit of the basic financiai statements and certain additional procedures, including comparing and reconciling such information directly to the underiying accounting and other records used to prepare the basic financiai statements or to the basic financial statements themsetves, and other additionai procedures in accordance with auditing standards generally accepted in the United States of America. in our opinion, the combining financial statements and other supplementary information and the scheduie of expenditures of federal awards are fairiy stated in alt materiai respects in relation to the basic tinanciat statements as a whoie. Other Reporting Required by Government Auditing Standards in accordance with Government Auditing Standards, we have also issued our report dated {December 15, 2014 on our consideration of San Ysidro Schooi District's internal controi over financial reporsing and on our tests of its compiiaoce with certain provisions of ans, regulations, contracts, and gran: agreements and other matters. The purpose of that report is :0 describe the scope oi our testing of internal control over financial reporting and compiience and the resuits of that testing, and not to provide an opinion on internai control over financial reporting or on compliance. That repori is an integral part of an audit performed in accordance with Government Auditing Standards in considering San Ysidrc School Sistrict?s internal control over financial reporting and compliance. Wad?fx?yg? Co. 41.10 El Cajon, California December 15, 20M San Ysidro School District Management?s Discussion and Analysis Fiscal Year 201344 (Unaudited) Pro?le of the District The San Ysidro School District (District) was formed in 1887 and serves the children of the City of San Ysidro and portions of the unincorporated area of San Diego County. The District operates one preschool, four elementary schools, one 4-8 school, one school and one middle school housing 5103 students. Management?s Discussion and Analysis This section of San Ysidro School District?s annual ?nancial report presents Management?s Discussion and Analysis of the District?s ?nancial performance during the year ending June 30, 2014. The is required as an element of the reporting model established by the Governmental Accounting Standards Board (GASB) in Statement Number 34. The District implemented GASB 34 in. 200l-02. Please read the in conjunction with the District?s ?nancial statements, which follow this section. Comparisons to the Previous Fiscal Year 2912-13 In 2013-14, the district?s Net Assets are $19.6 million compared to $24.1 million in 2012-13. 0 In 2013-14, overall revenues were $54.4 million and expenses were $52.0 million. The district?s revenue exceeded expenses by $2.4 million. In 20l2-13 the district?s overall revenues were $50.8 million and expenses were $59.3 million. Expenses exceeded revenue by $8.5 million. 0 The District enrollment in October 2013 was 5103. This is a decrease of 132 students from October 2012 when the enrollment was at 5235. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the District?s basic ?nancial statements. The District?s basic ?nancial statements are comprised of three components: 1) government- wide financial statements; 2) fund ?nancial statements; and 3) notes to the ?nancial statements. This report also contains other supplementary information in addition to the basic ?nancial statements themselves. San Ysidro School District, Management Discussion Anaiysis cont?d Government-wide ?nancial statements The government?wide ?nancial statements are designed to provide readers with a broad overview of the District?s ?nances, in a manner similar to a private~sector business. The statement ofner assets presents information on all of the assets and liabilities of the District, 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 ?nancial position of the District is improving or deteriorating. The statement of activities presents information showing how the net assets of the District changed during the most recent ?scal 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 ?ows in future ?scal periods uncollected taxes and earned but unused vacation leave). The government-wide ?nancial statements can be found on pages lS?io of this report. Fund ?nancial statements A fund is a group of related accounts that is used to maintain control over resources that have been segregated for speci?c activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with ?nance-related legal requirements. All of the funds of the District can be divided into two categories: governmental funds, and ?duciary funds. - Governmental funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide ?nancial statements. However, unlike the government~wide ?nancial statements, governmental fund ?nancial statements focus on near- term in?ows and out?ows 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 government?s near-term ?nancing requirements. Because the focus of governmental funds is narrower than that of the government-wide ?nancial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government~wide ?nancial statements. By doing so, readers may better understand the long?term impact of the government?s near-term ?nancing decisions. Both the goverrnnental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains twelve 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 fund, building fund, and the blended component unit fund, each of which are considered to be major funds. Data from the other nine governmental funds are combined into a single, aggregated presentation. Individual data for each of these non-maj or funds is provided in the form of combining statements elsewhere in this report. The District adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget on page 48 of this report. - Fiduciary funds Fiduciary funds are used to account for resources held for the bene?t of parties outside the governmental entity. The District maintains an agency fund for associated student body funds. The basic agency fund ?nancial statements can be found on pages 21 of this report. San Ysidre School District, Management Discussion Analysis eont?d Netes to the ?nancial statements The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund ?nancial statements. The notes t0 the ?nancial statements can be found on pages 22-47 of this report. San Ysidro School District, Management Discussion Analysis cent?d Government-wide Financiai Analysis As noted earlier, net assets may serve overtime as a useful indicator of a government?s stability and ?nancial position. The district?s assets exceeded liabilities by $19.6 million at the close 0f 20 13?14. SAN YSIBRO SCHGOL 281344 NET ASSETS (In ofDoliars) Gevernmeatal Governmental Activities Activities 2912-13 2013-14 Cement and Other Assets $58.3 $56.2 Capitai Assets $163.4 $158.9 Total Assets $215.1 Deferred Out?uws of Resources $3.4 Long?Term Debt Outstamiing $191.5 $193.4 Other Liabilities $6.1 $5.5 Total 31973.6 $198.9 et Assets: Invested in Capital Assets, Net officiated Debt $16.2 $5.1 Restricted $50.5 $49.3 ?Linrestrieted $63.6) $84.8) Total Net Assets $24.1 $19.6 At the end at the 291344, the District is slate is repeat a. pesiti?se beienee in net assets. San Ysidro School District, Management Discussion Analysis cont?d Governmental activities. The key elements of the District?s net assets for the year ended June 30, 2014 are as foiiows: Revenues Program Revenues Charges for services Operating grants and contributions Capital grants and contributions Generai Revenues Property taxes SAN YSIDRO SCHOOL DISTRICT GOVERNMENT-WIDE STATEMENT OF ACTIVITEES Federai and state aid not restricted to speci?c purposes Interest and investment earnings interagency revenues Miscellaneous Special and extraordinary items Total Reveau es Emenditures by Function Governmental Activities Instruction Papil services General administration Plant services Auciilary services Community services Enterprise activities Interest on long-term debt Other 011th Easiness-type Activities Enterprise activities Total Expenditures Increase (Decrease) in Net Assets Net Position - Beginning Net Position Ending 201243 of Total 2013-14 9/0 of Totai i,433,i73 2.83% 1,715,627 3.15% i2,2i6,539 24.11% i0,146,947 18.65% 0.00% 0.00% 22,052,139 43.52% 23,501,102 43.20% 14,716,205 29.05% 18,801,602 34.56% 21,109 0.04% 21,420 0.04% - 0.00% - 0.00% 226,683 0.45% 219,266 0.40% - 0.00% - 0.00% 50,665,848 100.00% 3 54,405,964 100.00% 30,777,518 53.25% $30,605,276 53.07% 4,345,546 7.52% 4,698,106 8. i 5% 3,655,420 6.32% 4,668,085 8.09% 5,237,729 9.06% 4,312,947 7.48% - 0.00% 0.00% - 0.00% 0.00% - 0.00% - 0.00% 8,918,303 15.43% 8,655,137 15.01% 4,865,136 8.42% 4,735,851 8.20% - 0.00% - 0.00% 8 57,799,652 100.00% 57,675,902 100.00% 8 (7,133,804) (3,269,938) 31,225,846 22,892,984 (Restated) 3 24,092,042 3 19,623,046 0 The district?s total revenue this year increased from $50.7 million in FY 2012-13 to $54.4 million in FY 2013-14. a State aid COLA (Cost of Living Adjustment) in 2013-14 is 1.57% percent which is 1.67 percent 1ess than last year. State aid is based primarily on average daily attendance (ADA) and other appropriations. If a student is in attendance for 180 days, the state awards the District one ADA. - Expenses related to educating and caring for students (see Figure is 61.22 percent of the district?s total expenditures. San Ysidro School District, Management Discussion Analysis cont?d Figure A-l Figure A-2 2013?2014 Revenues by Source Government-wideAc-tivities for services Fedeml and mead notrcaricted to may?? Interest i??ld Opemting mints and conhibutims Property taxes 2813?2014 Expenditures by Function Government?wideActivities Otha' ?ago Interest on long-tmn dd" Instruction Phat services Gena?! adnimismtiou Plan} services San Ysidro School District, Management Discussion Analysis cont?d Financial Analysis of the District?s Funds As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with ?nance- related legal requirements. Governmentai funds. The focus of the District?s governmenraifunds is to provide information on near?term in?ows, out?ows, and balances of spendable resources. Such information is useful in assessing the District?s ?nancing requirements. As the District completed the year, its governmental funds reported a combined fund balance of $52.2 million, $2.4 million more than last year?s fund balance. The Governmental Accounting Standard Board (GASB) has issued Statement 54- (GASB 54) that went into effect in fiscal year 2010-11. This statement considerably altered the categories and terminology used to describe the components of the ending fund balance. These changes are intended to enhance how fund balance information is reported by establishing new classi?cations that are easier to understand. GASB 54 also clari?es the de?nition of some governmental funds. Fund balance reporting is unique to governmental fund accounting GASB 54 implements a five~tier fund balance classification based on spending constraints on the use of these resources. The components of the district ending fund balance as of June 30, 2014 were: SAN YSIDRO SCHOOL DISTRICT GOVERNMENTAL FUNDS COMPONENTS OF ENDING FUND BALANCE IN ACCORDANCE WITH GASB STATEMENT 54 JUNE 30, 2914 a) NonSpendabie Revolving Cash 9711 7,753 Stores 9712 97,295 Prepaid Expenditures 9713 3,000 All Others 9719 - b) Restricted 9740 49,219,814 c) Committed Stabilization Arrangements 9750 - Other Commitments 9760 d) Assigned Other Assignments 9780 - d) Unassigned Reserve for Economic Uncertainties 9789 1,175,893 Unassigned/Unappropriated 9790 1,728,509 10 San Ysidro School District, Management Discussion Anaiysis cont?d General Fund Budgetary Highlights During the year, the Board revised the District?s budget. Budget amendments were to re?ect changes in programs and related funding. The difference between the original budget and the final amended budget was a decrease of $0.56 million or 1.28% in total general fund expenditures budget. During the year, final budgeted revenues exceeded original budgetary estimates by $3.4 million or 9% to account for implementation of the LCFF and increases in federal and state aid and local donations. Variances primarily result from expenditure?driven federal and state grants that are included in the budgets at their full amounts. grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met; unspent grant amounts are carried forward and included in the succeeding year?s budget. Therefore, actual grant revenues and expenditures are normally less than the amounts budgeted. For comparative purposes, the following table is presented to show General Fund actuals by Standardized Account Code Structure (SACS) functions and changes from fiscal year 2012-13 to 2013-14. SAN YSIDRO SCHOOL GENERAL FUND MAJOR 2013-14 Change Expenditures by Function 2012-43 Amount Amount General Education Grades K-12 $25,949,643 $25,037,045 63.88% ($912,598) 8.52% instruction Reiated Services 1,100,739 910,304 2.32% {390,435} 47.30% School Administration 2,300,218 2,118,842 5.41% ($181,376) 4.89% Pupii Services 1,750,863 1,871,599 4.77% $120,736 6.90% Transportation 524,370 509,254 1.30% (815,1 36) 4.88% General Administration 2,667,376 3,5 1 8,469 8.98% $851,093 31.91% Central Data i?rocessing 614,386 601,887 1.54% {$12,500} 4.03% Maintenance Operations 4,186,169 4,1 ?3,591 10.49% {872,578} -1.73% Other Outgo 488,729 515,432 1.3 i% $26,703 5.46% Total $39,582,495 $39,196,422 100.00% $686,071) Finai October CBEDS Enroilrnent 5,235 5,103 (132) Expenditures per Student $7,561.33 $7,681.05 $119.92 1.59% The expenditnres per student went up 1.59% from $7,561.13 to $7,681.05. ll San Ysidro Schooi Bistrict, Management Discussion Analysis eont?d Capital Asset and Debt Administration Capital Assets. The building and blended component unit funds are used to account for the costs incurred in improving sites, constructing and remodeling and educationai programs for all students within the District. procuring equipment necessary for providing Capital assets as of June 30, 2013 and June 30, 2014 are outlined below: Additional information on the District?s capital assets can be found in Note to the basic ?nancial statements. Land Improvement of Sites Buildings Equipment Work in Progress Total Capitai Assets SAN SCHOOL DISTRICT CAPETAL ASSETS NET OF DEPRECIATION Governmental Activities June 39, 21313 June 31}, 2014 Total Change 5 45,896,267 $45,896,267 $0 18,013,956 $18,073,171 $59,2i5 120,546,266 $119,628,726 {912,498} 4,355,378 $4,381,446 $26,068 3,722,359 $3,993,174 $270,815 192,534,226 $191,972,834 (561,392) 12 San Ysidro School District, Management Discussion Analysis cont?d Debt Administration. At year-end the District had $193 .4 million in general obligation bonds, certi?cates of participation, Quali?ed Zone Academy Bonds and employment bene?ts an increase of 0.82% from last year as shown in the table below. SAN YSIDRO SCHOOL DISTRICT LONG-TERM DEBT Governmental Activities June 36, 2013: Jane 30, 2014 Total Change Genera! obiigation bonds 146,016,483 148,685,944 $2,389,461 Certi?cates of Participation 40,583,395 39,986,582 ($596,813) Quali?ed zone academic bonds 2,282,620 2,029,040 Comeensaied absences 223,484 323,394 $99,910 SERP 935,798 467,899 Net OPEB obligations 1,504,738 1,910,139 $405,451 Total Lonngerm Debt 191,546,568 8 193,403,948 8 1,576,488 Additional information on the District?s longwterm debt can be found in Note I to the basic ?nancial statements. 13 San Ysidro Schooi District, Management Discussion Analysis cont?d Changing Enrollment wiihin the District Enrollment can ?uctuate due to factors such as growth, competition from private, parochial, and public charter schools, interudistrict transfers in or out, economic conditions and housing vaiues. Losses in enrollment will cause a school district to lose operating revenues without necessariiy permitting the district to make adjustments in fixed operating costs. SAN YSIDRO SCHOOL CHANGES IN CBEDSFOR THREE YEARS Grade Get 201}. Oct 2012 Oct 2913 573 (29646 (126584 (11572 (45) 527 5 582 (22600 (77641 (61) 580 11 591 TOTAL 5,261 (262 5,235 1332! 5,103 2911?12 2912-13 2013-44 Elementary 4,955 41 4,996 (153) 3,943 Middle 7-8 1,206 1,139 21 1,160 TOTAL 132) A Reqaesis for Information This ?nancial report is designed to provide a general overview of the San Ysidro School District?s ?nances. Questions concerning any of the information provided in this report or requests for additional ?nanciai information should he addressed to the Assistant Superintendent of Business Services, San Ysidro School District, 4350 Otay Mesa Road, San Ysidro, CA 92173. 14 Basic Financial Statements SAN YSIDRO SCHOOL DISTRICT STATEMENT or: NET JUNE 39, 2914 ASSETS Cash Receivables Steres Prepaid Expenses Capital Assets: Land improvements Buildings quiprnent Work in Progress Less Accumuiared Depreciation Total Assets DEFERRED OUTFLOWS OF RESOURCES LIABILITEES Acceunrs Payabie and Other Current Liabilities Current Leans Revenue Long-Term Liabilities: Due Within One Year Due in More Than One Year Accreteci interest Totai Liabilities DEFERRED INFLOWS OF RESOURCES NET Net investment in Ca-eitei Assets Restricted for: Capital Projects Debt Service Educational Programs Other Purposes (Expendable) Other Purposes (Nenexpendabie) Unrestricted Total Net Position The accompanying notes are an integrai part of this statement. Governmentai Activities 52,525,393 3,624,171 97,295 3,999 45,993,297 19,999,171 119,929,799 4,391,443 3,993,174 (33,199,999) at 5,991 ,397 3,445,384 3,161,154 2,319,333 500 5,137,732 167,192,570 21 372,746 198,884,035 5,107,541 39,851,?26 4,959,129 3,399,913 1 342,949 199,943 (34,399,357) $mLs?m SAN SCHOOL STATEMENT OF FOR THE YEAR sense JUNE 30,2011: Severnmental Activities: instruction Services: instructional Supervision and Administration instructional Library, Media and Technotcgy School Site Administration Pupit Services: Home-to-Sohool Transportaticn Feed Services Alt Other Pupil Services General Administration: Centralized Data Processing All Other Genera} Administration Piant Services interest on Leng??l?ern': Debt Debt Essue Costs Depreciation (Unallocated}* Total Expenses *Th?is amount exctudes depreciation that is inctuded in the direct expenses at various programs. A-2 The accompanying notes are an integrat part of this statement. t6 Net (Expense) Revenue and Changes in Program Revenues Net Assets Operating Capital Charges for Grants and Grants and Governmental; Expenses Services Constitutions Contributions Activities 27,269,807 1,564,235 6,594,153 3 - (19,17: ,419} 705,532 8,996 297,840 - messes} 418,174 - 202,838 - (215,336} 2,212,263 4,979 50,725 (2,156,556) 514,904 - - (514,904) 2,1 78,875 99,186 2,172,942 93,253 2,064,327 ?2,854 39,854 - {1,673,619} 605,198 4,001 1,160 (600,037) 4,062,887 16,751 341 ,834 - (3,704,362) 4,3? 2,947 64,625 67,601 (4,680,721) 8,655,137 - - (8,655,137) 102,466 - - (102,468) 4,633,363 - - (4,633,363) 57,675,902 6 1,715,627 10, 46,947 - {45,813,326} Genera! Revenues: Taxes and Subventiens: Taxes Levied for Genera! Purposes 15,240,740 "Faxes Levied for Debt Service 5,370,216 Taxes Levied for Other Specific Purposes 2,890,146 Federat and State Aid Not Restricted to Specific Programs $6,801,602 interest and investment Earnings 21,420 Miscellaneous 219,266 Totai General Revenues 42,543,396 Change in Net Position {3,269,936} Net Position Beginning As Restated (See Note 8) 22,892,984 Net Pesition Ending 19,623,646 SAN SCHOOL DISTRICT BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2014 Other Total General Building Governmental Governmental and Fund Funds Funds ASSETS: Cash in County Treasury 6,861 ,753 3 36,997,179 6 8,576,406 52,435,838 Cash on Hand and in Banks 17,630 1,055 18,685 Cash in Revolving Fund 7,753 - - 7,753 Cash with a Fiscai Agent/Trustee - 63,528 63,528 Accounts Receivable 3,162,110 36,435 425,625 3,624,170 Que from Other Funds 212,995 - 1,035 214,030 Stores inventories 75,571 - 21,724 97,295 Prepaid Expendiiures 3,000 - - 3,000 Tote! Assets 10,340,812 37,033,614 9,089,373 56,463,799 AND FUND BALANCE: Liabilities: Accounts Payable 1,659,305 14,407 23,960 1,697,672 Due to Other Funds 1,035 - 212,995 214,039 Current Loans 2,319,333 2,319,333 Unearned Revenue 500 - 500 Total Liabilities 3,980,173 14,407 236,955 4,231,535 Fund Balance: Nonspendabie Fund Ealances 86,324 - 21,724 108,048 Restricted Fund Balances 3,369,913 37,019,207 8,830,694 49,219,814 Unassigned Fund Baiances 2,904,402 2,904,402 Totai Fund Baiance 6,360,639 37,019,207 8,852,418 52,232,264 Total and Fund Balances 10,340,812 37,033,614 9,089,373 56,463,799 The accompanying notes 819 an integtal part of this statement. 17 Ae4 SAN YSIDRO SCHOOL DISTRICT RECONCILIATION cs ?tee GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT cs NET Posrt?ION JUNE 30, 2014 Totai fund balances - governmental fonds balance sheet 52,232,264 Amooets reported for assets and for governmental activities in the statement of net position are different from amounts reported in governmental funds because: Capital assets: in governmental funds, onty curreet assets are reported. in the statement of net position, ail assets are reported, including capital assets and accumolated depreciation. Capital assets rotating to governmental activities, at historicai cost 191,972,834 Accumulated depreciation (33,t 60,906) Net 158,8i1,928 Linamortized costs: In governmeetal funds, debt issue costs are recognized as expenditures in the period they are incurred. in the government-wide statements, debt issue costs for prepaid debt insurance are amortized over the lite oi the debt. Unamortized debt insurance costs inciuded in deferred out?ows of resources on the statement oi eet position are: ,449,?i 7 Unmatured interest on long?term debt: in governmental funds, interest on long-term debt is not recognized uetii tide period in which it matures and is paid. in the government-wide statement of activities, it is recognized in the period that it is incurred. The additional liability for unmatured interest owing at the end of the period was: (1,463,483) Long-term iiabilities: In governments! funds, oniy current are reported. in the statement of net position, alt iiabitities, inciuding long-term relating to governmentai activities consist of: Genera! obiigation bonds payable 148,685,944 Certificates of participation payable 39,986,582 Other general long term debt 2,496,939 Net OPEB obligation payabie 1,910,189 Compensated absences payable 323,394 Total 93,403,048) Deferred gain or toes on debt refunding: la the government wide ?nanciai statements deferred gain or loss on debt refunding is recognized as a defetred outiiow of resources (for a toss) or deferred inflow of resources (for a gain) and subsequentiy amortized over the titre of the debt. Deferred gain or toss on debt refunding recognized as a deferred outflow of resources or deferred intiow ot resources so the statement oi net position was: 1,995,968 Net position of governmental activities - statement of net position 19,623,046 The accompanying notes are an integral part of this statement. 18 SAN YSIDRO SCHOOL DISTRICT OF REVENUES, EXPENDEYURES, AND CHANGES 1N FUND BALANCES - GGVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2014 Revenues: LCFF Sources: State Appoeionment or Sta?e Aid Educatioe Proiection Account Funds Local Sources Federal Revenue Other Staie Revenue cher Local Revenue Total Revenues Expenditures: instruction - Relaied Services Pupii Servfces General Adminisiratien Piant Services Other 00190 Debt Service: Principal interest Debt issue 00313 Total Expenditures Excess (Qeficiency) of Revenues Over (Under) Expenditures cher Financing Sources (Uses): Transfers in Transfers Out Totaf Other Financing Sources (Uses) Net Change in Fund Baiance Fund Balance, duly 1 Fund Balance, June 30 The accompanying notes are an integral part of this statement. A-5 Deter Toial General Building Governmen?al Governmeetai Fuse Fund unds Funds 11,897,153 8 - 11,897,1_ 53 5,250,793 - 5,250,793 15,240,740 - - 15,240,740 2,763,321 - 2,175,824 4,939,145 3,253,736 - 1,081,374 4,335,110 3,475,984 436,855 8,8303 85 12,743,024 41 ,881 ,727 436,855 12,087,383 54,405,965 25,974,419 - 1,024,381 26,998,800 3,0293 48 - 185,192 3,214,338 2,380,854 - 2,301,658 4,682,512 4,120,355 - 208,352 4,328,707 4,113,591 445,405 63,217 4,622,218 35,640 - - 35,640 467,899 - 3,688,630 4,156,529 - 3,946,858 3,946,858 1 1 ,893 1 1 ,893 40,133,797 445,405 1 1,418,288 51 997,490 1,747,930 (8,550) 669,095 2,408,475 - - 2,476,977 2,476,977 - (2,476,977) (2,476,977) 1 ,747,930 (8,550) 669,095 2,408,475 4,612,709 37,027,757 8,183,323 49,823,789 6,360,639 37,019,207 8,852,418 52,232,264 19 EXHIBET SAN SCHOOL DISTRICT or: res STATEMENT or: REVENUES, sxeenonunEs, AND CHANGES iN FUND BALANCES OF ooveenrviENTAL runes To THE STATEMENT or son ?res YEAR super) JUNE 30, 2014 Net change in fund balances total governmentai tends 2,468,475 Amounts reported for governmentai activities in the statement of activities are different from amounts reported in governmental funds because: Capitai outlay: In governmental funds, the costs of capital assets are reported as expenditures in tire period when the assets are acquired. In the statement or activities, costs of capital assets are al'iocated over their estimated useiul iives as depreciation expense. The difference between capital outlay expenditures and depreciation expense for the period is: (4,268,264) Debi semice: in governmentai funds, repayments of long-term debt are reported as expenditures. in the government-wide statements, repayments of long-term debt are reported as reductions of iiabitities. Expenditures for repayment of the principal portion of long?term debt were: 4,156,529 Debt issoe costs for prepaid debt insorance: la governmentai funds, debt issue costs are recognized as expenditures in tire period they are incurred. In the government?wide statements, debt insurance costs are amortized over the life of the debt. The difference between debt insurance costs recognized in the current period and insurance costs amortized for the period is: (54,955) Gain or loss trom disposai of capitai assets: In governmental funds, the entire proceeds from disposal of capitai assets are reported as revenue. In the statement of activities, only the resulting gain or loss is reported. The difference between the proceeds from disposal of capital assets and the resulting gain or loss is: (298,082) Unmatured interest on long-term debt: In governmentai funds, interest on iong~term debt is recognized in tire period that it becomes due. in the government-wide statement of activities, it is recognized in the period that it is incurred. Unmatured interest owing at the end of the period, iess matured interest paid during the period but owing from a prior period, was: (4,810,824) Compensated absences: in governmental funds, compensated absences are measured by the amounts paid during the period. in the statement of activities, compensated absences are measured by the amounts earned. The difference between compensated absences paid and compensated absences earned was: (99,910) Postemployment benefits other than pensions (OPEB): ln governmental funds, OPEB costs are recognized when employer contributions are made. in the statement of activities, OPEB costs are recognized on the accrual basis, This year, the difference between OPEB costs and actual employer contributions was: (405,45i) Amortization of debt issue premium or discount or deferred gain or toss from debt refunding: in governmentai funds, it debt is issued at a premium or at a discount, the premium or discount is recognized as an Other Financing Source or an Other Financing Lise in tire period it is incurred. in the government-wide statements, the premium or discount pius any deferred gain or toes from debt refunding, is amortized as interest over the life of the debt. Amortization of premium and discount or deferred gain or ioss from debt refunding, for the period is: i02,544 Change in net position oi governmental activities - statement at activities (3,269,938) Tire accompanying notes are an integrai part of this statement. 20 SAN YSIDRO SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET FIDUCIARY FUNDS JUNE 30, 2014 Agency Fund Student Body Fund Cash on Hana and in Banks 5 45,134 Total Assets 46,184 Due to Student Groups 46,334 Total Liabilities 46,134 NET Totai Net Position The accompanying notes are an integral! part of ibis statement. 21 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 A. Summary of Significant Accounting Policies San Ysiciro Schooi District (District) accounts for its financial transactions in accordance with the policies and procedures of the Department of Education?s "Caliiornia School Accounting Manual". The accounting policies of the District conform to accounting principtes generaliy accepted in the United States of America (GAAP) as prescribed by the Governmentai Accounting Standards Board (GASB) and toe American institute of Certified Public Accountants Reporting Entity the District?s combined financial statements include the accounts of all its operations. The District evaluated whether any other entity should be included in titese financial statements. The criteria for including organizations as component units within the District?s reporting entity, as set forth in GASB Statement No. 14, ?The Financial Reporting Entity," include whether: tire organization is iegally separate (can see and be sued in its name) - the District holds tire corporate powers of the organization the District appoints a voting majority of the organization's board - the District is abie to impose its wiil on the organization - the organization has the potential to impose a financiai benefitfburden on tire District - there is fiscal dependency by the organization on the District The District aiso evaluated each iegaliy separate, tax-exempt organization whose resources are used principaliy to provide support to the District to determine if its omission trom the reporting entity would result in tinanciai statements which are misleading or incomplete. GASB Statement No. 14 requires inclusion of such an organization as a component unit when: t) The economic resources received or held by the organization are entirety or almost entirety tor the direct benetit of the District, its component units or its constituents; and 2) The District or its component units is entitled to, or has the ability to otherwise access, a maiority of the economic resources received or heid by the organization; and 3) Such economic resources are significant to the District. Based on these criteria, the district has two component units which have been inciuded as blended component units. San Ysiclro School District Financing Corporation: The corporation is a nonprofit, pubiic benefit corporation incorporated under the laws of the State of Caiifornia and recorded by the Secretary of State in 2001. The corporation was formed for the sets purpose of providing financial assistance to the District by acquiring, constructing, financing, seliing and leasing public tacilities, land, personai property and equipment tor the use and benefit of the District. "Fire District leases certain school from the corporation under various tease purchase agreements. Community Districts The district has estabiisned three CFDs. The CFDs are authorized to levy speciai taxes on parcels of taxable property within the CFDs to pay the principai and interest on the certificates of participation. Basis of Presentation, Basis of Accounting a. 8 i i Government?wide Statements: The statement of net position and the statement of activities include the financial activities of the overaii government, except tor fiduciary activities. Eiiminations have been made to minimize the doubts?counting of internai activities. Governmental activities generain are financed througit taxes, intergovernmental revenues, and other nonexcnange transactions. 22 SAN SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30, 2014 The statement of activities presents a comparison between direct expenses and program revenues for each function of the District?s governmentai activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are cieariy identifiabte to a particular function. The District does not ailocate indirect expenses in the statement of activities. Program revenues inctude fees. tines, and charges paid by the recipients of goods or services offered by the programs and grants and contributions that are restricted to meeting operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including ail taxes, are presented as general revenues. Fund Financiai Statements: The tund financiai statements provide information about tits District?s funds, with separate statements presented for each fund category. The emphasis of fund financiat statements is on major governmentai funds, each displayed in a separate column. All remaining governments! funds are aggregated and reported as nonmaior funds. The District reports the foliowing major governmentat funds: General Fund. This is the District's primary operating fund. It accounts tor all financiai resources of the District except those required to be accounted for in another fund. Buiiding Fund. This fund exists primarily to account separately for proceeds from the sale of bonds (Education Code Section 15146) and may not be used tor any purposes other than those for which the bonds were issued. Other authorized revenues to the Buiiding Fund (Fund 21) are proceeds from the sale or lease with option-to-purchase of reai property (Education Code Section 17462) and revenue from rentals and leases at real property speciticaily authorized for deposit into the fund by the governing board (Education Code Section 41003). in addition, the District reports the foilowing fund types: Special Revenue Funds. Speciat revenue funds are established to account for the proceeds from speci?c revenue sources (other than trusts, major capital proiects, or debt service) that are restricted or committed to the financing of particular activities and that compose a substantiai portion of the inflows of the fund. Additional resources that are restricted, committed, or assigned to the purpose of the fund may aiso be reported in the fund. Capital Projects Funds. Capital projects funds are established to account for financiat resources to be used for the acquisition or construction of major capital facilities and other capitai assets (other than those financed by proprietary funds and trust tends). Debt Service Funds. Debt service tends are established to account for the accumulation of resources for and the payment at principal and interest on generai longwterm debt. Fiduciary funds are reported in the fiduciary tund financial statements. i?iowever, because their assets are betel in a trustee or agent capacity and are therefore not available to support District programs, these funds are not included in the government-wide statements. Student Body Fund. in the financial reports of the LEA, the Student Body Fund (Fund 95) is an agency fund and, therefore, consists only of accounts such as cash and balancing liability accounts, such as Due to Student Groups. The student body itself maintains its own general fund, which accounts tor the transactions of that entity in raising and expanding money to promote generat welfare, morale, and educational experiences of the student body (Education Code sections 48930-48398). 23 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE so, 2014 b. Measurement Focus. Basis oi Accounting Government-wide and Fiduciary Fund Financiai Statements: ?these iinancial statements are reported using tire economic resources measurement iocus. They are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time are incurred, regardless of when tire related cash flows take piace. Nonexcbange transactions, in which the District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which tire taxes are levied. Revenue irom grants, entitlements, and donations is recognized in the fiscai year in which ail eligibility requirements have been satisfied. Governmental Fund Financial Statements: Governmentai funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The Bistrict does not consider revenues coliected after its year-end to be available in the current period. Revenues from iocai sources consist primariiy of property taxes. Property tax revenues and revenues received from the State are recognized under the suscepticie-to-accruai concept. Misceiianecus revenues are recorded as revenue when received in cash because are generain not measurable until actually received. investment earnings are recorded as earned, since they are both measurable and avaiiable. Expenditures are recorded when the related fund is incurred, except for principai and interest on generai iong-term debt, ciaims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Generai capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capitai ieases are reported as other financing sources. When the District incurs an expenditure or expense for which both restricted and unrestricted resources may be used, it is the District?s policy to use restricted resources first, then unrestricted resources. 3. Encumbrances Encumbrance accounting is used in ail budgeted tends to reserve portions of applicabie appropriations for which commitments have been made. Encumbrances are recorded tor purchase orders, contracts, and other commitments when they are written. Encumbrances are liquidated when the commitments are paid. Ail encumbrances are liquidated as of June 30. 4. Budgets and Budgetary Accounting Annual budgets are adopted on a basis consistent with generaiiy accepted accounting principles for ail governmental funds. By state law, the District's governing board must adopt a final budget no iater than July 1. A pubiic hearing must be conducted to receive comments prior to adaption. The District's governing board satisfied these requirements. These budgets are revised by the District's governing board and district superintendent during the year to give consideration to unanticipated income and expenditures. Formal budgetary integration was used as a management control device during the year ior ail budgeted funds. the District empioys budget control by minor object and by individual appropriation accounts. 24 SAN SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30, 2014 5. Revenues and Expenses a. Revenues - Exchange and Non-Exchange Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded. on the accrual basis when the exchange takes piece. On- a modified accruai'basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources he coilected within the current year or expected to be collected soon enough thereafter, to be used to pay liabilities of the current fiscal year. Generally, available is defined as collectible within 60 days. However, to achieve comparability of reporting among California districts and so as to not distort normal revenue patterns, with specific respect to reimbursement grants and corrections to State?aid apportionments, the California Department of Education has defined available for districts as collectible within one year. The ioliowing revenue sources are considered to be both measurable and avaiiable at fiscal yearnend: State apportionments, interest, certain grants, and other local sources. Nomexchange transactions are transactions in which the District receives value without directly giving equal value in return, property taxes, certain grants, entitlements, and donations. Revenue from property taxes is recognized in the fiscal year in which the taxes are received. Revenue from certain grants, entitiements, and donations is recognized in the fiscai year in which ali eligibility requirements have been satisfied. Eligibility requirements include time and purpose restrictions. On a modified. accrual basis, revenue from non?exchange transactions must also be availabis before it can be recognized. Expenses/Expenditures On the accrual basis of accounting, expenses are recognized at the time they are incurred. The measurement focus at governmental fund accounting is on decreases in net iinanciai resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the reiated fund is incurred, ii measurable, and typicaily paid within 90 days. Principal and interest on tong-term. obiigatl-ons, which has not matured, are recognized when paid in the governmentai funds as expenditure-s. Allocations of costs, such as depreciation and amortization, are not recognized in the governmental funds but are recognized in the government-wide financial statements. 6. Assets, Liabilities, and Equity a. Deposits and investments Cash balances held in banks and in revolving funds are insured to $250,000 by the Federal {Depository Insurance Corporation. All cash held by the financial institutions is lolly insured or collateralized. In accordance with Education Code Section 41001, the District maintains substantially all its cash in the San Diego County Treasury. The county pools these funds with those of other districts in the county and invests the cash. These pooied funds are carried at cost, which approximates market value. interest earned is deposited quarterly into participating funds, except for the Tax Gverride Funds, in which interest earned is credited to the generai fund. Any investment tosses are proportionately shared by ali funds in the pool. The county is authorized to deposit cash and invest excess funds by California Government Code Section 53648 et seq. The funds maintained by the county are either secured by tederal depository insurance or are collateraiized. information regarding the amount of dollars invested in derivatives with San Diego County Treasury was not availabie. 25 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30,2014 b. Stores Inventories and Prepaid Exoenditores Inventories are recorded using ins purchases meihod in inst the cosi is recorded as an expenditure at the time individual inventory items are purchased. inventories are valued at average cost and consist of expendabie suppiies held for consomption. Reported inventories are equaliy offset by a fund balance reserve, which indicates that these amounts are not "availabie ior appropriation and expendiiore" even ihoogii they are a component of net curreni assets. The District has the option of reporting an expenditure in governmentai funds for prepaid items either when purchased or during the bene?ting period. The District nas ceases to report the expenditure during the benefiting period. Qapitai Assets Purchased or constructed capiial assets are reported at cost or estimated hisioricai cost. Donated fixed assets are recorded at their estimated fair value at the date of the donation. The cost of normal maintenance and repairs that do not add to the vaiue oi the asset or materialiy extend assets' Fives are not capitalized. A capitalization threshold of $5,000 is used. Capital assets are being depreciated using the straight?line method over the foliowing estimated usequ lives: Estimated Asset Ciass Usefui Lives Boiidings and improvements 25-50 Furniture and Equipment 520 Vehicles 8 Qompensated Absences Accumoiated unpaid ernpicyee vacation benefits are recognized as liabilities of the District. The current portion of the liabilities is recognized in the general fund at year end. Accumuiated sick leave benefits are not recognized as of the Elisirict. District's policy is to record sick leave as an operating expense in the period taken since such benefits do not vest nor is payment probable; however, unused sick leave is added to the creditable service period for calculation of retirement benefits when iris empioyee retires. Linearned Revenue Unearned revenue arises wiien potentiai revenue does not meet both the "measurable" and "availabie" criteria for recognition in the current period or when resources are received by the District prior to the occurrence of qoaliiying expenditures. in subsequent periods, when both revenue recognition criteria are met, or when the Disirict has a legai claim to the resources, the liability for unearned revenue is removed from the combined balance sheet and revenue is recognized. lnten?d nd Activity lnterfund activity resulis from ioans, services provided, reimbursements or transfers between funds. Loans are reported as intertond receivabies and payabies as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be ai market or near market rates, are treated as revenues and expenditures or expenses. Reimbursemenis occur when one fund incurs a cost, charges the appropriate benefiting iond and reduces iis related cost as a reimbursement. Ail other inierfund transactions are treated as transfers. Transfers in and iransters Out are netted and presented as a single 'Transfers" iine on the government?wide staiement of activities. Simiiarly, interfund receivabies and payables are netted and presented as a singie "Internal Balances" line of ihe government?wide statement oi net position. 26 SAN SCHOOL DISTRICT NOTES TO THE FENANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 g. Property Taxes Secured property taxes attach as an enforceabie lien on property as of Marco t. Taxes are payable in two installments on November 15 and March 15. Unsecured property taxes are payable in one installment on or before August 31. The County of San Diego biils and collects the taxes for the District. Fund Baiances Governmental Funds Fund balances of the governmental funds are as follows: Nonspendable Fund Balance represents amounts that cannot be spent because they are either not in spendabie form (such as inventory or prepaid insurance) or legally required to remain intact (such as notes receivable or principat of a permanent fund). Restricted Fund Balance represents amounts that are constrained by externai parties, constitutional provisions or enabling legislation. Committed Fund Balance represents amounts that can only be used for a specific purpose because of a tormal action by the District?s governing board. Committed amounts cannot be used for any other purpose untess the governing board removes those constraints by taking the same type of format action. Committed fund balance amounts may be used tor other purposes with appropriate due process by the governing board. Commitments are typically done through adoption and amendment of the budget. Committed fund balance amounts differ from restricted balances in that the constraints on their use do not come from outside parties, constitutionai provisions, or enabling leglstation. Assigned Fund Eaiance - represents amounts which the District intends to use for a specific purpose, but that do not meet the criteria to be classified as restricted or committed. intent may be stipuiated by the governing board or by an official or body to which the governing board delegates the authority. Speci?c amounts that are not restricted or committed in a special revenue, capital projects, debt service or permanent fund are assigned for purposes in accordance with the nature of their fund type or the fund?s primary purpose. Assignments within the general fund conveys that the intended use of amounts is for a specific purpose that is narrower than the generai purposes of the District itself. Unassigned Fund Balance - represents amounts which are unconstrained in that they may be spent tor any purpose. Only the general fund reports a positive unassigned fund baiance. Other governmental funds might report a negative balance in this classitication because of overspending for speci?c purposes for which amounts had been restricted, committed or assigned. When an expenditure is incurred for a purpose for which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finain unassigned funds. Minimum Fund Baiance "the District has adopted a poiicy to maintain a minimum economic uncertainty reserve of at least 3% of total general fund expenditures and other financing uses. The reserve may be increased from time to time in order to address specific anticipated revenue or cash tiow shorttalls. it is tire District?s intent to continuously sustain a 3% economic uncertainty reserve. The primary purpose of this reserve is to avoid the need for service levei reductions in the event of economic downturn. The District is committed to maintaining a prudent level of financial resources to protect against the need to reduce service levels because of temporary revenue shortfalls or unpredicted expenditures. Because amounts in the nonspendable, restricted, committed, and assigned categories are subject to varying constraints in use, tire Reserve for Economic Uncertainties consists of balances that are otherwise unassigned. 27 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30,2014 Deferred Inflows and Deferred Outiiows of Resources Deferred outflows of resources is a consumption oi net assets or net position that is applicable to a future reporting period. Deferred inflows of resources is an acquisition of net assets or net position that is applicable to a future reporting period. {Deferred outflows of resources and deterred intiows of resources are recorded in accordance with GASB Statement numbers 63 and 65. For the year ended June 30, 2014 the district did not have any deferred inflows of resources. Use of ?stimates the preparation of financial statements in conformity with GAAP requires the use of management's estimates. Actual resuits could differ from those estimates. it hit nin Pi?i in March 2012, the GASB issued Statement No. 65, items Previously Reported as Assets and Liabilities. This statement estabiisnes accounting and financiai reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and Concepts Statement No. 4, Elements of Financial Statements, introduced and defined the elements inciuded in financial statements, inciuding deferred outflows of resources and deferred iniiows of resources. in addition, Concepts Statement No. 4 provides that reporting a deferred outfiow of resources or a deferred inflow of resources snouid be limited to those instances identified by the Board in authoritative pronouncements that are established atter appiicable due process. Prior to the issuance oi this Statement, only two such pronouncements have been issued. Statement No. 53, Accounting and Financiai Reporting tor Berivative Instruments, requires the reporting of a deferred out?ow oi resources or a deferred infiow of resources for the changes in fair value of hedging derivative instruments, and Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements, requires a deferred iniiow of resources to be reported by a transferor government in a quaiifying service concession arrangement. This statement amends the financial statement element classification of certain items previousiy reported as assets and to be consistent with the definitions in Concepts Statement No. 4. This statement aiso provides other iinanciai reporting guidance related to the impact of the tinanciai statement eiements deferred outflows of resources and deterred inflows of resources, such as changes in the determination of the major fund caicuiations and limiting the use of the term deterred in financial statement presentations. The District has impiemented the provisions of this Statement for the year ended tiune 3t}, 2014. B. Compiiance and 1. Finance?Fielated Legal and Contractual Provisions in accordance with GASES Statement No. 38, "Certain Financial Statement Note Disciosures," vioiations of ?nance- related legal and contractuai provisions, it any, are reported below, along with actions taken to address such violations: Action Taken l?iot applicable Violation None reported 28 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30, 2014 D. Deficit Fund Balance or Fund net position of individuat Fonds Fotlowing are iueds having dettcit fund balaoces otiund net position at year end, if any, along with remarks which address such dettcits: Deficit Fund Name Amount Remarks None reported Not appticable Not applicabte Excess of Expenditures Over Appropriations As of June 30, 2014, expenditures exceeded appropriations in individuai funds as toliows: Excess Appropriations Category Expenditures General Fund: Other Outgo 6 35,640 General fund: The District incurred unanticipated expenditures for other outgo associated with transfers ot services. Cash and investments 1. Tr in accordance with Education Code Section 41001, the District maintains substantiatly all of its cash in the San Diego County TreaSUty as part of the common investment poet ($52,435,337 as of June 30, 20t4). The fair value at the District?s portion of this pool as of that date, as provided by the poo! sponsor, was $52,502,848. Assumptions made in determining the fair value of the pooled investment portiolios are avaiiable from the County Treasurer. The District is considered to be an involuntary participant in an externat investment pool as the District is required to deposit ail receipts and coliections of monies with their County Treasurer (Education Code Section 41001). The fat:r value of the District's investments is the pool is reported tn the accounting financial statements as amounts based upon the District?s pro-rata share of the fair value provided by the County Treasurer for the entire portfolio (in relattoe to the amortized cost of poniolio). The batance avaitable for withdrawai is based on the accounting records maintained by the County Treasurer, which is recorded on the amortized cost basis. Cash on Hand. in Banks. and in Revolvino Fund Cash baiances on sand and in banks ($64,819 as of June 30, 2014) and is the tevoiving fund ($7,753) are insured up to $250,000 by the Federal Depository Insurance Corporation. Ail cash held by the financial institution is idily insured or cotlateraiized. investments: The District?s investments at June 30, 2014 are shown below. Avatage Days to Amount Fair investment or investment Type Maturity Repotted Value us. Treasury Obligations <30 Days 63,528 63,528 San Diego County Treasury Footed levestments 366 Days 52,435,337 52,502,648 Total investments 52,498,865 52,566,376 29 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30, 2014 4. generai Authorizations Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in the schedules below: Maximum Maximum Maximum Remaining Percentage investment in Authorized investment ?i?ype Maturity oi {Zine issuer Locai Agency Bonds, Notes, Warrants 5 Years None None Registered State Bonds, Notes, Warrants 5 Years None None Treasury Obiigations 5 Years ixione None US. Agency Securities 5 Years None None Banker's Acceptance Days 40% 30% Commerciai Paper 270 Days 25% 10% Certificates oi Deposit 5 Years 30% None Repurchase Agreements 1 Year None None Reverse Repurchase Agreements 92 Days 20% of Base None Medium-Term Corporate Notes 5 Years 30% None Motuai Funds 20% 10% Money Market Mutuai Funds 20% 10% Mortgage Pass-Through Securities 5 Years 20% None County Pooled investment Fonds None None Local Agency investment Fund None None Joint Powers Authority Pcois NIA None None i ifiD iniv mnik GASB Statement No. 40 requires a determination as to whether the District was exposed to the following specific investment risks at year and and if so, the reporting of certain reiated disclosures: a. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment wiil not its obligations. Tire county is restricted by Government Code Section 53635 pursuant to Section 53603 to invest only in time deposits, government securities, state registered warrants, notes or bonds, State Treasurer?s investment pooi, bankers' acceptances, commercial paper, negotiable certificates of deposit, and repurchase or reverse repurchase agreements. The ratings of securities by nationain recognized rating agencies are designed to give an indication oi credit risk. The San Diego County investment Pooi is rated by Standard and Peers. Custodial Credit Risk Deposits are exposed to custodiai credit risk if they are not covered by depository insurance and the deposits are coiiateralized with securities held by the piedging financial institution, or coliateraiized with securities held by the piedging financiai institution?s trust department or agent but not in the District?s name. California Government Code requires that a financial institution secore deposits made by State or Local Governmental units by piedging securities in an undivided collateral pool held by a depository regulated under State iaw (unless so waived by tire governmeniai unit). The market vaiue of the pledged securities in the collateral pooi most equai at ieast 110% of the totai amount deposited by the pobiic agency. California iaw also aiiows financial institutions to secure pubiio deposits by pledging first trust deed mortgage notes having a veins of 150% of the secured public deposits and letters of credit issued by tire Federal Home Loan Bank of San Francisco having value of 105% of the secured deposits. 30 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered is the name ot the government, and are held by either the counterparty or the counterparty's trust department or agent but not in the District's same. At year end, the District was not exposed to custodiai credit risk. c. Concentration of Credit Risk This risk is the risk of loss attributes to the magnitude of a government?s investment in a single issuer. At year end, the District was not exposed to concentration of credit risk. 6. Interest Rate Fiisit This is the risk that changes in interest rates wiil adverseiy affect the fair vaiue of an investment. Generaily, the longer the maturity of an investment, the greater the sensitivity of its fair vaiue to changes in market interest tates. The District maeages its exposure to interest rate risk by investing in the county poet. a. Foreign Currency Risk This is the risk that exchange rates wiil adverseiy affect the fair value at an investment. At year end, the District was not exposed to foreign currency risk. 5. tnvestmertt Accountinc Poitoy The District is required by GASB Statement No. St to disciose its pciicy for determining which investments, if any, are reported at amortized cost. The District?s generai policy is to report money market investments and shortwterm participatieg interest-?earning investment contracts at amortized cost and to report nouparticipatirtg interest-earning investment contracts using a cost?based measure. However, if the fair vafue of an investment is significantiy affected by the impairment of the credit stasding of the issuer or by other factors, it is reported at fair value. Ail other investments are reported at fair vaiue unless a legai coetract exists which guarantees a higher vaiue. The term "shorbterm" refers to investments which have a remaining. term of one year or less at time of purchase. The term ?nonpartisipating? means that the investments value does not vary with market interest rate changes. Nonnegotiabie certificates of deposit are exampies of nonparticipatieg interest?earning investment contracts. The District's investments in external investment poets are reported at art amount determined by the fair value per share of the poet?s underlying portfolio, unless the pool is 2a7~iike, in which case they are reported at share value. A 2a7-like poet is one which is not registered with the Securities and Exchange Commission as an investment company, but nevertheiess has a pciicy that it wiil, and (toes, operate is a manner coasistent with the Rule 2a? of the investment Company Act of 1940. 31 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30, 2014 E. Accoants Receivabie As 0? done 30, 2014, Accounts Receivabie consisted oi: Major Governmental Funds Nonmajor Total General Building Goverameetal Governmental Fund Fund Funds Funds Federai Government Federal Programs 6 514,751 33 8 301 ,429 6 816,180 State Government LCFF State Aid 1,654,512 1,654,512 iottery 384,542 384,542 Categorical Programs 67,713 - 103,900 171 ,613 Special Education 466,357 - 466,357 Other State Programs 17,755 17,153 34,908 Locai Sources interest 7,958 36,435 3,143 47,536 Other Local Sources 48,522 - - 48,522 Total 6 3,162,110 6 36,435 6 425,625 3,624,170 There are no significant receivables which are not scheduied for coliection within one year of year eod. F. Qamiaiessets Capitai asset activity for the year ended June 30, 2014, was as toliows: Beginning Ending Baiances increases Decreases Balances governmental activities: Capital assets not being depreciated: - Land 6 45,896,267 - - 6 45,896,267 Week in progress 3,722,358 270,816 - 3,993,174 Total capital assets not being depreciated 49,618,625 270,816 - 49,889,441 Capitai assets being depreciated: Buiidings 20,546,266 917,490 119,628,776 Improvements 18,013,956 59,215 18,073,171 Equipment: 4,355,378 35,068 9,000 4,381,446 Total capitai assets being depreciated 142,915,600 94,283 926,490 142,083,393 Less accumuiated depreciation for: Buiidings (19,844,377) (3,356,140) (619,858) (22,580,659) improvements (6,041,545) (1,078,428) (7,1 19,973) Equipment (3,270,029) (198,795) (8,550) (3,460,274) Total accumulated depreciation (29,155,951) (4,633,363) (628,408) (33,160,906) Total capital assets being depreciated, net 113,759,649 (4,539,080) 298,082 108,922,487 Gevernmeetal activities capital assets, net 6 163,378,274 8 (4,268,264) 6 298,082 6 158,81 ,928 Depreciation was charged to functions as follows: Unallocated Depreciation 4,633,363 4,633,363 32 SAN YSIDFIO SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30,2014 is Deferred Outtlows of Resources in 2.012 the District issued refunding bonds to repay a portion of the 3997 Election Series A and 1997 Eiection Series Bonds. The refunding resulted in a loss on refuedieg of $2,246,472 which is recorded as a deferred outflow of resources and amortized over 18 years (the life of the bonds). The District prepaid debt insurance when issuing the 1997 Election Series Bonds, the 1997 Election Series Bonds, the 2012 Refunding Bonds, the 2007 Certificates of Participation, and the 2012 Certificates of Participation. in accordance with GASB Statement No. 65 the prepaid debt insurance is recorded as a deferred outflow of resources and amortized over the fife of the debt, A summary of the deferred outflows of resources as of dune 30, 2014, are as toliows: Amortizatioe Beginning Current Year Current Year Ending Description term Baiance Additions Amortization Balance 2012 Refunding Loss 18 Years 2,120,716 - 124,748 1,995,968 Prepaid insurance - 1997 Series 40 Years 702,240 18,480 683,760 Prepaid insurance 1997 Series 30 Years 429,896 - 14,824 ?315,072 Prepaid insurance 2012 Ref. 18 Years ?19,085 7,005 112,080 Prepaid insurance - 2007 COPS 30 Years 83,650 3,346 80,304 Prepaid Insurance 2012 COPS 30 Years 163,850 5,650 158,200 Total Deferred Outflows of Resources 55 3,619,437 174,053 3,445,384 Aceounts Payaole As of June 30, 2014, Accounts Payable consisted of: Major Governmental Funds Nonmaior Total General Building Governmenta? Governmental Fund Fund Funds Funds Vendor payabies 1,376,579 9 6,727 1,397,713 Payroil and related liabilities 282,726 - t7,233 299,959 Tote? 1,659,305 14,407 23,960 1,697,672 Intedund Saiances and Activities 1, Due To and Due From Other Funds Batances due to and due from other funds at June 30, 2014, consisted of the following: ?ue To Fund Due From Fund Amount Purpose General Fund Chiid Development Fund 9t ,151 indirect Costs and OPEB General Fund Cafeteria Fund 121,844 indirect Costs and OPEB Chi-?d Development Fund General Fund 1,035 Reimburse expenses Total 21 ?3,030 All amounts due are scheduled to be repaid within one year. 33 SAN SCHOOL NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 2. Transfers To and From Other Funds Transfers to and from other funds at June 30, 2014, consisted of the foliowing: Transfers From Transfers To Amount Reason Blended Component Unit {49) Blended Component Unit (52) 2,599,285 Debt Service Payments Totet 2,599,285 J. Unearned Revenue As of dune 30, 2014, Unearned Bevenoe consisted of: General Fund State Government Categorical Programs 3 500 Total 500 K, Short?Term Debt Ag?vity The District accounts for short-term debts tor maintenance purposes through the General Fund. The proceeds from loans are shown in the financial statements as Other Resources. During the 2012-13 fiscat year, the District issued $1,810,332 of a short term Principai Apportionment Temporary Transfer of Funds (TTF) agreement with the San Diego County. The temporary transfer was repaid in July 2013. During the 201344 fiscal year, the District issued $2,319,333 of short term Principal Apportionment Temporary Transfer of Funds agreement with the San Diego County. The temporary transfer was repaid in Juiy 2014. Beginning Ending Baiance issued Redeemed Balance Temporary Transfer of Funds 3 1,810,332 2,319,333 1,810,332 3 2,319,333 L. Components of Ending Fund Balance As of June 30, 2014, ending fund balances in governmental funds consisted of: Mater Governmental Funds Nonmajor Total General Building Governmental Governmental Fund Fund Funds Fonds Nonspendable Fond Ba1ances Bevoivlng Cash 7,753 - - 3 7,753 Stores inventory 75,571 - 21,724 97,295 Prepaid Expenses 3,000 - - 3,000 Restricted Fund Balances Educationai Programs 3,369,913 - 46,330 3,416,243 Capitai Projects - 37,019,207 2,832,519 39,851,726 Debt Service a - 4,650,129 4,650,129 Child Nutrition Fragrant - 1,301,716 1,301 ,716 Unassigned Fund Balances For Economic Uncertainty 1,175,893 - - 1,175,893 Other Unassigned 1,728,509 - 1 728,509 Total Fund Balance 3 6,360,639 37,019,207 8,852,418 3 52,232,264 34 SAN SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30, 2014 M. Lang-Yarns leigatigns 1. Long-Term Obligation Activity Long?term obligations include debt and other long-term liabilities. Changes in tang-term obiigatiens for the year ended June 30, 2014, are as foilews: Amounts Beginning Ending Due Within Balance increases Decreases Balance One Year gavemmental activities: General ebligatien bonds 148,298,483 3 5,386,754 8 2,997,293 5 148,885,944 3,353,480 Certificates of partieipatice 40,583,395 82,537 859,350 39,986,582 729,349 Other generai leng term debt 3,218,468 - 721,529 2,498,939 721,529 Net OPEB obligation 1,504,738 738,774 331,323 1,910,189 - Compensated absences 223,484 99,910 - 323,394 323,394 Total governmental activities 191,828,588 8 6,285,975 8 4,709,495 8 193,403,048 8 5,137,732 Other longwterm liabilities The funds typicaliy use? to liquidate other Jung-term iiabiEities in the past are as follows: Liability Activity Tyne Funci Compensated absences Governmental 2. Debt Service Requirements General Fund Debt service requirements on long?term debt, net of certificates at participation, premium, discount, and net 0888 obligation as of June 30, 2014, are as fcilews: Govemmentai Activities Accreted Year Ending Jane 80, Principal interest interest Total 2015 4,199,923 - 2,008,507 8,206,430 2016 3,813,830 1,853,882 5,867,512 2017 4,258,830 1 872,582 5,981,212 2018 4,001,476 737,154 1,520,982 6,259,812 2019 4,294,044 859,588 1,398,557 8,552,187 2020-2024 25,008,828 7,229,084 4,880,841 37,098,531 2025-2029 23,320,344 21 ,794,658 1,058,871 48,171,871 2030?2034 18,203,032 38,221 ,988 23,700 54,448,700 2035-2039 18,019,212 50,185,788 68,185,000 2040-2044 1 1 ,784,098 77,815,902 89,580,000 2045-2049 8,329,707 1 10,335,293 - 1 18,885,000 2050-2054 2,992,022 53,197,978 - 56,190,000 Totais 128,202,944 3 380,357,389 8 14,393,722 8 500,954,055 35 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE FENANCEAL STATEMENTS YEAR ENDED JUNE 30, 2014 3. General Obligation Bones General obligation bonds as of June 30, 2014, consisted of: Amount of Date of interest Maturity Griginal issue Rate Date issue 1997 Election Series A 08/01/1997 3.80 - 5.30% 08/01/2021 10,590,000 1997 Election Series 09/01/2004 3.50 - 6.00% 08/01/2029 15,875,000 1997 Etection Series 02/01/2005 3.00 - 4.25% 08/01/2029 24,619,362 1997 Election Series 11/15/20077 4.00 - 5.00% 08/002032 33,952,740 1997 Election Series 06/28/2011 2.00 - 10.9% 08/01/2050 17,599,623 1997 Election Series (3 05/31/2012 5.45 - 12.0% 08/01/2041 28,990,884 2012 Refunding Bonds 06/27/2012 0.50 5.00% 08/012029 29,860,000 Totat GO Bonds 161,487,609 Beginning Ending Balance increases Decreases Batance 1997 Election Series A 8 485,000 - 485,000 8 1997-A Bond Premium 12,624 - 12,624 - 1997 Election Series 380,000 - 380,000 - 1997-0 Bond Premium 6,209 6,209 1997 Eiectien Series 0 18,514,363 980,000 ?7,534,363 1997?0 Bond Premium 333,624 - 19,624 314,000 199743 Accreted Interest 8,137,466 1,269,157 - 9,406,623 1997 Election Series 32,917,741 495,000 32,422,741 1997?8 80nd Fremium 542,803 - 27,140 515,663 Accreted Interest 4,288,386 971,537 - 5,259,923 1997 Election Series 15,599,623 - t5,599,623 1997-1: Bond Premium 1,032,711 27,177 1,005,534 1997?12 Accreted interest 2,028,427 t,408,263 - 3,436,690 1997 Eiectien Series 28,990,884 - 28,990,884 199743 Bend Premium 892,307 30,770 861,537 Accreted interest 1,105,597 1,737,797 2,843,394 2012 Refunding Bonds 29,265,000 - 430,000 28,835,000 2012 Bond Premium 1,763,718 - t03,749 1,659,969 Totai GO Bonds 146,296,483 6 5,386,754 2,997,293 148,685,944 36 SAN YSIDHO SCHOOL DISTRICT NOTES TO THE FENANCEAL STATEMENTS YEAR ENDED JUNE 30, 2014 The annual requirements to amortize the bonds outstanding at ?une 30, 2014, are as foiiows: Accreted Year Enging 0053 30, Principal interest Interest Total 2015 3,155,000 6 5 2,006,507 5 5,161,507 2016 3,560,000 - 1- 853,882 5,413,882 2017 4,005,000 - 1 672,562 5,677,582 2018 3,747,846 737,154 1 520,982 6,005,082 2019 4,040,414 850,586 1 398,557 6,298,557 2020-2024 24,245,036 7,220,064 4,860,641 36,335,64t 2025-2029 23,320,344 21 194,856 1 356,871 46,171 ,871 2030?2034 16,203,032 38,221 ,968 23,700 54,448,700 2035?2030 18,019,212 50,165,788 68,185,000 2040-2044 1 1 ,764,008 77,815,002 - 89,580,000 2045-2040 8,329,707 1 10,335,203 1 18,665,000 2050-2054 2,992,022 53,1 07,978 56,190,000 Totals 6 123,382,151 1 360,357,363 3 14,393,722 5 498,133,722 Amounts for accreted interest in the tabie represent amounts accrued as of year end. Amounts for accreted interest in the repayment schedule represent total payments of accreted isterest over the life 0101s bonds. 4. Certificates of Participation (COPS) Certificates of Participatisrt (COPS) as of June 30, 2014, consisted of: Amount of Date of interest Maturity Originai issue Rate Sate Issue 1998 COPS 09123111998 3.90 - 6.75% 007002023 3,050,000 2001- 00195 0571572001 450 6.50%- 001?0172030 7,075,000 2005 COPS 017062005 2.50 - 5.00% 09701112034 17,000,000 2007 COPS 1172072007 350 - 4.75% 00/01/2037 7,330,000 2012 COPS 017317201 2 2.00 - 6.20% 09/002041 10,400,715 "totat COPS 44,864,715 Beginning Ending Baiance increases Decreases Baiasce 1998 COPS 1,825,000 130,000 8 1,605,000 2001 COPS 5,025,000 - 205,000 5,720,000 2001 COPs (15,186) - (844) (14,342) 2005 COPS 15,590,000 - 270,000 15,320,000 2005 COPS Discount (77,834} - (3,538) (74,296) 2007 COPS 7,060,000 60,000 7,000,000 2007 COPs Premium 650 - 26 624 2012 COPS 10,249,715 - 10,249,715 2012 COPS Discount (37,529) - (1 ,204) (36,235) 2012 COPs Accreted interest 63,579 62,537 126,1 6 Tetat COPS 40,583,305 62,537 6 650,350 5 39,986,582 37 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 The annual requirements to amortize the COPS outstanding at June 30, 201 a, are as foliows: Accreted Year Ending ,igne 30, Principai interest interest Total 2015 745,000 - 1,783,138 2,528,138 2018 835,000 1 ,750,547 2,585,547 2017 925,000 1 ,7i 3,831 2,838,831 2018 1,025,000 - 1,672,531 2,897,531 20i 9 1,130,000 - 1,626,609 2,756,809 2020-2024 7,1 95,000 7,278,753 1 4,471 ,753 20252029 8,890,000 - 5,751 ,545 i4,641 ,545 2030-2034 10,380,000 - 3,908,829 14,288,829 2035-2039 7,930,000 1 526,503 9,458,503 2040-2044 929,715 1 335,285 183,675 2,448,575 Totais 39,984,715 1,335,285 27,193,781 5 88,5i3,781 Amounts for accreted interest in the table represent amounts accrued as of year end. Amounts for accreted interest in the repayment schedule represent totai payments of accreted interest over tire life of the bonds. On September 23, 1998, the District issued $3,050,000 Certificates oi Participation pursuant to a lease agreement with the San Ysidro Schooi District Financing Corporation for the purpose at a school facilities protect. The certificates consist of: a) Seriai 1998 Certificates of $2,t10,000 with interest rates ranging from 3.9% to 6.75% and fuliy maturing on September 1, 2018; and, b) Term 1993 Certificates of $940,000 with a stated interest rate of 4.6% and fuliy maturing on September 1, 2023. On May 15, 200i the District issued $7,075,000 Certificates of Participation pursuant to a lease agreement with the San Ysidro Schooi District Financing Corporation for the purpose of a school protect. The certificates consist oi: a) Serial 200i Certificates of $2,115,000 with interest rates ranging From 4.5% to 0.5% and fuiiy metering on September 1, 2016; lo) Term 2001 Certificates oi $1,310,000 with a stated interest rate of 5.125% and firin maturing on September 1,2020; c) Term 2001 Certificates oi $2,255,000 with a stated interest rate oi 5.21% and maturing on September 1,2025; and, ti) Term 2001 Certificates of $1,395,000 with a states interest-rate 015.2% and telly maturing on September 1, 2030. Orr January 8, 2005 the District issued $17,000,000 Certi?cates of inerticipation pursuant to a tease agreement with the San Ysiciro School District Financing Corporation for tire purpose of a school project. The certificates consist oi: a) Serial 2005 Certificates of $14,925,000 with interest rates ranging from 2.5% to 4.625% and fuily maturing on September 1, 2032, and b) Term 2005 Certificates of $2,075,000 with a stated interest rate of 5.0% and fully maturing on September 1, 2034. Orr November 29, 2007 the District issued $7,330,000 Certificates of Participation pursuant to a lease agreement with the San Ysidro Schooi District Financing Corporation for tire purpose of a school project. The certificates consist of a) Seriai 2007 Certificates of $2,940,000 with interest rates ranging from 3.5% to 3.875% and tuliy maturing on September 1, 2028, and b) Term 2007 Certiticates of $1,715,000 and $2,675,000 with stated interest rates of 4.625% and 4.750% and fuily metering on September 1, 2032 and September 1, 2037 . {3n January 31, 2012 the District issued $10,409,7i5 in Certificates of Participation pursuant to a lease agreement with the San Ysidro School District Financing Corporation for 819 purpose of a school facilities project. Tire certificates consist at a) current interest certificates of $9,480,000 with interest rates ranging irom 2.0% to 5.0% anci fuily maturing on September 1, 2038; and b) convertibie capital appreciation certificates of $929,715 which are accreting at a rate of 82% until September 1, 2028 at which time they convert to current interest bonds with a stated interest rate of 8.2% anti folly maturing on September 1, 2041. 38 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30, 2014 5. Other General Long Term Debt Other generat long term debt as of June 30, 2014, consisted of: Amount of Date of interest Materity Original issue Rate Date lssee QZAB Bonds 10114,!2005 NIA 1022712021 3 5,000,000 SERP Retirement 06/09/2011 07!01/2015 2,339,495 Total Other GLTD 9 ??339,495 Beginning Ending Salance Increases Decreases Balance QZAB Bonds 3 2,282,670 6 - 3 253,630 2,029,040 SERP Retiremeat 935,793 - 467,899 4617.899 Totai Other GLTD 3 3,218,469 3 721,529 3 2,496,939 The annual requirements to amortize other generai long term debt is as fotlows: Accreted Year Ending June 30, Principal interest interest Total 2015 "121529 - 3 721,529 2016 253,630 - 253,630 2017 253,630 - - 253,630 2018 253,630 - - 253,630 20t9 253,630 - - 253,630 2020?2024 760,390 $760,890 Totals 3 2,496,939 6 - - 2,496,939 On October 14, 2005, the District issued $5,000,000 in Qualified Zone Academy Bonds (QZABS) to provide funds to finance certain capitai improvements, equipment and other educational development programs of the District. The District is required to make a scheduled deposit of $253,630 each year through the maturity date of October 27, 2021. Accumulated interest earned on the account provides the additionai funding required to pay the beads in fell upon maturity. The escrow account accrues interest at a fixed rate of 5.51%. As of June 30, 2014 the escrow account carried an accrued baiance of $1,760,974. The District does not have a legai right to claim cash in the escrow account and is not obiigated to make payments in excess 0% the scheduied deposit amounts. in 2010-11, the District ofiered its classi?ed and certificated employees to participate in a one?time Supptementat Eariy Retirement Pian (SE09). A SERP is a program designated to create incentives that effectiveiy and efficiently increase and accelerate the retirement rate, in excess of the aatural attrition rate in order to iiscai savings as a result oi the salary di?ereotiai of a retiring employee and new hire, while factoring in the District cost at the incentive. There were a total of 33 employees who elected to participate in the plan. Under this five-year plan the District will contribute annualiy to as annuity from Mutual oi Omaha to provide supplemental income to eatiy retirees. The total amount of expected premium instailments to be paid by the District is $2,339,495. The District submitted its initiai payment of $467,899 prior to June 30, 2011. 39 SAN SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR JUNE 30, 2014 N. 6. Debt issue Premium or Discount Beet issue premium arises when the market rate of interest is higher than the stated interest rate on the debt. Generalty Accepted Accounting Principies (GAAP) require that the premium increase the face value of the debt and then be amortized over the tits at the debt. The premium is being amortized over the fits of the dept usirig the straight iirte method. Debt issue discount arises when the market rate of ioterest is lower than the stated interest rate on the debt. Gerteraliy Accepted Accounting Prirtciples (GAAP) require that the discourtt decrease the face valoe of the debt and thee be amortized over the fits of tire debt. The discount is being amortized over the life oi the debt using the straight tine method. The foilowing debt instruments were issued at a premium or at a discount resulting in effective interest as toltows: Bonds Bonds Bonds Bonds ?oods i997 Series 33 t997 Series 1997 Series 1997 Series 2012 Ref. Totai interest 8 30,814,043 43,043,707 3 213,389,044 8 88,034,116 8,538,818 Less Premium (594,308) (723,738) (1,090,083) (925,828) (1867068) Pius Discount - - - Net interest 30,220,337 42,319,969 212,298,961 87,108,288 7,871 ,150 Par Amount of COPS 24,619,363 33,952,741 17,599,623 28,990,884 29,860,000 Periods 25 25 89 30 1 8 Effective interest Rate 4.91 4.99% 30.93% 10.02% 1 43% COPS COPS COPS COPS CGPS 998 2001 2005 2007 201. 2 Total interest 2,155,055 8 6,835,504 8 15,698,9t2 7,118,495 10,853,144 Less Premium - - - (930) - Plus Discount 30,500 25,905 t07,484 39,820 Net interest 2,185,555 8,88?i ,409 15,809,396 7,117,585 10,892,78e Par Amount of COPs 3,050,000 7,075,000 17,000,000 8 7,330,000 t0,409,715 Periods 25 30 30 30 30 Effective interest Rate 2.87% 3.23% 3t 0% 3.24% 3.49% in 'n A The District participates in one toint venture under a joint powers agreement (JPA), the San Diego County Schools Risk Management JPA The reiatioaship behesen the District and the is such that the is not a component unit of the District for financial reporting purposes. The arranges for and provides workers? compensation, health, and property and liability insurance for its member school districts. The 313A is govemed by a board consisting of a representative from each member district. The governing board controls the operations of the JPA independent of any in?uence by the member districts beyond their representation on the governing board. Each member district pays a premium commensurate with the level ct coverage requested and shares surpluses and deficits proportionately to its participation in the JPA. 40 SAN YSIDRO SCHOOL DISTRICT NOTES To THE STATEMENTS YEAR ENDED JUNE 30, 2014 The Districts share of combined unaudited financial information for the year ended June 30, 2014 is as follows: (Unaudited) June 30, 2014 iota! Assets 2,220,055 Totai Liabilities 2,079,476 Total Fund Balance 35 140,5?9 Total Revenues 1,601,738 "iota! Expenses 944,686 Net Change in Furid Balance 6571052 The District had a deficit in fund balance for two funds within the JPA, the Worker?s Compensation Fund and tire Property and Fund. The District is working on an agreement with tire JPA to fund the deficits through a payment pian. The terms of that payment piari have riot yet been determined. 0. Empioyee Retiremerit Systems Qualified empioyees are covered under multipieempioyer defined benefit pension plans mairitained by agencies oi the State of California. Certificated empicyees are members of the State Teachers? Retirement System (STRS), and classified empioyees are members oi the Peblic Empioyees? Retirement System (PERS). PERS: Pin riin The District contributes to the Schooi Employer Pcoi under the Caliiornia Public Employees? Retirement System a cost-sharing multipleemployer public empioyee retirement system defined benefit pension pian administered by The pier: provides retirement and benefits, annuai cost-of-living adiustments, and death benefits to pier: members and beneficiaries. Benefit provisions are established by state statutes, as legisiatively amended, within the Public Employees? Retirement Law. issues a separate comprehensive annual iinanciai report that includes financial statements and required supplementary information. Copies of the annuai financial report may be obtained from tire Executive Office, 400 Street, Sacramento, Caiifornia 95814. Fundin Poli Active pian members are required to contribute 7% of their salary and the District is required to contribute an actuariaily determined rate. The actuariai methods and assumptions used for determining the raie are those adopied by the Board of Administration. Tire required employer contribution rate for fiscai year 2013-14 was i1.442% of annual payroli. The coritribution requirements oi the pian members are established by state statute. The District?s contributions to for the fiscai year ending dune 30, 2014, 2013 and 2012 were $758,860, $773,103 and $36,312, respectiveiy, and equal 100% of the required contributions for each year. STRS: Pian Description The District contributes to the State Teachers' Retirement System (STRS), a cost?sharing multiple-employer public empioyee retirement system defieed benefit pension plan administered by The pian provides retirement, disability, and survivor benefits to beneficiaries. Benefit provisions are established by state statutes, as legisiativeiy amended, within tire State Teachers' Retirement Law. STRS issues a separate comprehensive annual fieanciai report that includes financial statements and required supplementary information. Copies of the STRS annual iinanciai report may be obtained from the STRS, 766? Folsom Boulevard, Sacramento, Caiifornia 95826. 41 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 Funding Policy Active piari members are reqeired to contribute 8% or their salary and the District is required to contribute an acteariaily determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the STRS Teachers? Retirement Board. Tire required employer contribution rate ior fiscai year 201344 was 8.25% of annoai payroli. The contribution requirements of the pian members are established by state statute. The District's contributions to STRS tor the ?scal year ending June 30, 2014, 2013 and 2012 were $1,533,284, $1,591,600 and $1 ,655,i 16, respectiveiy, and equai i00% of the required contributions for each year. Qn Behalf Payments The State of makes contributions to STRS on behalf of the District. These payments consist of State Generai Fond contributions to STR8 in the amount of $967,178 (5.204002% of saiaries subject to Under accounting principles generally accepted in the United States of America, these amounts are to be reported as revenues and expenditures. Accordingly, these amounts have been recorded in these financiai statements. On behalf payments have been exciuded irom the caicuiation or avaiiable reserves, and have not been included in the budgeted amounts reported in the General Fund Budgetary Comparison Schedule. P. mimanti nii Plan Descrigtions and Contribution Information San Ysidro Schoot District administers a single-employer defined benefit other costempioyment benefit (OPEB) plan that provides medicai, dentai, and vision insurance benefits to eiigibie retirees and their spouses. The District impiemented Governments! Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Empioyers for Postemployrnent Benefit Plans Other Than Pension Plans in 2008-09. Membership in the plan consisted of the toilowing: Retiree-s and beneficiaries receiving bene?ts 65 Active pian members 431 Total 496 Annul Nt PEB bli ai ?the District's annual OPES cost (expense) is caiculated based on the annuai required contribution of the employer (ARC), an amount actuariaily determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a levei of funding that, it said on an ongoing basis, is oroiected to cover normal cost each year and amortize any unfunded actuarial accrued (UAAL) (or funding excess) over a period not to exceed thirty years. The following table shows the components of the District's annual OPEB cost for tire year, the amount aciuaily contributed to the Plan, and changes in the District?s net OPEB obligation to the Pian: Annual Fiscal OPEB Percentage Net OPEB Year Cost Contributed Obiigation 200009 5 5?5,016 42% 336,252 2009-10 583,555 45% 659,900 2010-11 622,989 48% 984,954 201 1-12 653,411 59% 1,184,564 201 2-i 3 709,892 55% i,504,738 2013-14 736,774 45% 1,910,189 42 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENoeo JUNE so, 20% The District's annual cost, the percentage of annual OPEB cost contributed to the pian, and the net OPEB ooiigation for 2014 is as follows: Annual required contribution 749,046 interest on net GPEB obligation 75,23? Adiustment to annual required contribution. (87,509) Annual OPEB Cost 736,774 Contributions made (33t ,823) increase in GPEB obligation 405,451 Net OPEB obligation, beginning oi year 1,504,738 Net OPEB obligation, end of year 1,9t0,18u Funded Status and Funding Prooress As Of July 1, 20t2, tire most recent actuarial valuation date, the plan was not funded. This results in an unfunded actuariai accrued liability (UAAL) of $5.9 million. The covered payroli (annual payroil of active empioyees covered by the plan) was $24.2 million, and the ratio of UAAL to the covered payroll was 24.6 percent. Actuarial valuations of an ongoing plan invoive estimates of the value at reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment mortatity, and the neaithcare cost trend. Amounts determined regarding tire funded status of the plan and the annual required contributions of the empioyer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule oi funding progress, presented as required supplementary intormation foilowing tire notes to the financial statements, presents multi-year trend information about whether the actuarial value oi plan assets is increasing or decreasing over time relative to the actuarial accrued for bene?ts. riiM hd max in ion Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the clan members) and include tire types of benefits provided at the flats oi eacit Valuation and the historical pattern of sharing of benefit costs between the empioyer and pian members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term voiatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the catculations. in the duty 1, 2032 actuarial valuation the entry age normal method was used. The actuarial assumptions included a five percent investment rate of return per year (net of administrative expenses), based on long-term historicai returns for surplus funds invested pursuant to California Government Code Sections 53601 or see. The is being amortized as a level percentage of payroil over a period of 30 years. The remaining amortization period at duty 3, 2Gt2, was 26 years. The actuarial value of assets was not determined in this actuarial valuation as there were none. Q. ngmitments and Litigation The District is involved in various iitigation. in the opinion of management and iegal counsel, the disposition of all litigation pending will not have a material effect on the financiat statements. nF rlAilwn Awr rn The District has received state and federal runds tor specific purposes that are subiect to View and audit by the grantor agencies. Although such audits could generate expenditure disallowances under tenns oi the grants, it is believed that any required reimbursement wilt not be material. 43 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 Qomrnittments As oi dune 30, 2013, the Bistrict has suspended ali construction projects. R. Suoseguent Events New Accounting Pronouncement in June 2012, the GASB issued Statement No. 68, Accounting and Financiai Reporting for Pensions - an amendment of GASB Statement his. The primary obiectlve or this Statement is to improve accounting and financiai reporting by state and iocal governments for pensions. lt aiso improves information provided by state and iocai governmental employers about financiai support for pensions that is provided by other entities. This Statement resuits from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-usefui information, supporting assessments of accountability and inter-period equity, and creating additional transparency. This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmentai Empioyers, as weli as the requirements of Statement No. 50 Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafter jointiy referred to as trusts) that meet certain criteria. The requirements of Statements 27 and 50 remain applicabte for pensions that are not covered by the scope of this Statement. The scope of this Statement addresses accoonting and financial reporting for pensions that are provided to the empioyees of state and local governmentai employers through pension plans that are administered through trusts that have the ioliowing characteristics: Contributions from empioyers and non-empioyer contributing entities to the pension plan and earnings on those contributions are irrevocable. Pension pian assets are dedicated to providing pensions to pian members in accordance with the benefit terms. -- Pension pian assets are iegaliy protected irom the creditors of empioyers, non-empioyer contributing entities, and the pension pian administrator. if the pian is a defined benefit pension pian, plan assets aiso are iegaily protected from creditors of the pian members. This Statement estabiishes standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred iniiows of resources, and expensefexpenditures. For defined benefit pensions, this Statement identifies the methods and assumptions that shooid be used to project benefit payments, discount projected benefit payments to their actoariai present value, and attribute that present vaiue to periods of employee service. Note disclosure and reqoired suppiementary information requirements about pensions are also addressed. Distinctions are made regarding the particuiar requirements for employers based on the number of employers whose employees are provided with pensions through the pension plan and whether pension obligations and pension plan assets are shared. Employers are in one at the foilowing categories for the purposes of this Statement: Singie employers are those whose employees are provided with defined benefit pensions through singie-empioyer pension plans pension piano in which pensions are provided to the employees of onty one empioyer {as detined by this statement). Agent empioyers are those whose empioyees are provided with defined benefit pensions through agent muitipiemempioyer pension plans - pension piece in which plan assets are pooled for investment purposes but separate accounts are maintained for each individual employer so that each empioyer?s share of the pooied assets is legaliy available to pay the benefits of only its employees. 44 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30, 2014 Cost?sharing employers are whose employees are provided with detined benefit pensions through cost-sharing multiplememployer pension plans a pension pians in which tne pension obiigations to the emptoyees of more than one employer are pooled and plan assets can be used to pay the benefits of the employees of any employer that provides pensions through the pension plan. in addition, this Statement details tne recognition and disclosure requirements for employers with (payables) to a defined benetit pension plan and forr employers whose emptoyees are provided with defined contribution pensions. This Statement also addresses circumstances in which a non-empioyer entity has a legal requirement to make contributions directiy to a pension plan. This Statement is effective for the 2014-i5 fiscal year. in November 20i3, the GASB issued Statement No. "it, Pension Transition for Contributions Made Subsequent to the Measurement Date An Amendment of GASB Statement No. 68. The obiective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financiai Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a state or iocai government empioyer or nonempioyer contributing entity to a defined benefit pension plan after the measurement date of the government?s beginning net pension iiability. Statement No. 68 requires a state or local government employer (or nonempioyer contributing entity in a special funding situation) to recognize a net pension liability measured as of a date (the measurement date) no earlier titan the end of its prior fiscal year. if a state or iocal government empioyer or nonemployer contributing entity makes a contribution to a defined beneiit pension plan between the measurement date of the reperted net pension liability and the end of the government's reporting period, Statement No. 68 requires recognition of deferred outflows of resources and deferred inflows of resources for changes in the net pension liability of a state or local government employer or nonempioyer contributing entity that arise from other types of events. At transition to Statement No. 68, it it is not practice! for an employer or nonemployer contributing entity to determine the amounts of ali deterred outflows of resources and deferred inflows of resources related to pensions, paragraph 137 ct Statement No. 68 required that beginning baiances for deferred outiiows of resources and deterred inflows of resources not be reported. Consequentty, if it is not practicai to determine the amounts of all deterred outtiows of resources and deferred intiows ot resources related to pensions, contributions made after the measurement data of the beginning net pension liability couid not have been reported as deferred outflows of resources at transition. this couid have resulted in a significant understatement of an empioyer or nonemployer contributing entity's beginning net position and expense in the initial period of impiementation. GASB Statement No. 71 amends paragraph 137 of Statement No. 88 to require that. at transition, a government recognize a beginning deferred outiiow oi resources for its pension contributions, it any, made subsequent to the measurement date of the beginning net pension liability. Statement No. 68, as amended, continues to require that beginning balances for other deferred outiiows of resources and deterred inflows of resources related to pensions be reparted at transition only if it is practical to determine all such amounts. ?the provisions of this statement are required to be applied with the provisions of Statement No. 68 which is eftective for the 2014-15 fiscai year. 45 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE STATEMENTS YEAR ENDED JUNE 30, 2014 8. Prior Period Restatements "The District implemented GASB Statement No. 65 during the current iiscai year which resulted in an accounting change in the treatment of the debt issue costs. Under previous standards, debt issue costs were recorded as prepaid expenses and amortized over the life of tine debt. Under newiy impiemented standards prepaid insurance is recorded as a deferred outflow of resources and ail remaining debt issue costs are expensed in the period the debt is issued. in addition, the pronouncement requires that the gain or loss on refunding be caiculated and amortized over the shorter of the iife of tire old or new debt. While caicuiating the gain or ioss on refunding the district realized that generai obiigation bonds were understated by $280,000. The district elected to correct beginning net position. The resulting accounting poiicy changes and correction required a restatement to beginning net position as foiiows: Net Position, Beginning (As Originaiiy Stated) 24,092,042 Change in accounting policy debt issue costs Change in accounting policy - gainlioss on refunding 2,120,7i6 Net Assets, Beginning (As Restated) 22,892,984 T. Going ancern The District?s past deficit spending coupled with reductions in revenue sources provided by the State oi California and impasse in negotiations with unions, have resulted in substantiai doubt about the Districts ability to continue as a going concern. Tire foliowing issues indicate that the district may not be able to meet their financial obligations: t. The District has filed negative certifications for 2012-13 second interim reports, 2013-14 first interim reports, 2013-14 second interim reports, and 201445 first interim reports with the San Diego County Otiice oi Education. The negative certification status states that the District wili not meet its cash iiow lneeds. 2. Deciine in iocai enrollment of tire District's students has adverseiy impacted state apportionment funding. in response to these issues, the San Diego County Office of Education is monitoring and overseeing activities of tire District. in addition, a state mediator has been brought in to assist in negotiations between the District and the unions. The District was able to come to agreements with iabor unions in October 2014. Between the agreed upon consessions and the additional funding that the district will receive through the new iunding modeis, the district beiieves it be able to continue over the course oi the next iiscal year. in tire event that die District cannot meet their financial obiigaiions, tne State Superintendent of Public instruction will issue an emergency icon to help the District meet their obiigations. if this occurs, the law requires that the State Superintendent of Pubiic instruction assume the legal rights, duties, and powers of the governing board of the District and appoint a state administrator. The District?s elected governing board serves oniy in an advisory capacity untii a number of conditions are met. 46 Required Supplementary information Required supplementary in?ormation includes financial informatlen and disclosures required by the Governmental Accounting Standards Board but not considered a part of the basic financial statements. SAN YSIDRO SCHOOL DISTRICT GENERAL FUND BUDGETARY COMPARESON SCHEDULE FOR THE ENDED JUNE 30, 2014 Revenues: LCFF Sources: State Apportionment or State Aid Education Frotec?tien Account Fonds Local Sources Federal Revenue Other State Revenue Other Local Revenue Total Revenues Expenditures: Current: Certi?cated Salaries Ciassi?ed Salaries Emptoyee Benefits Books And Suoplies Services And Other Operating Expenditures Other Outgo Direct Support/Indirect Costs Capitai Outlay Debt Service: Principal Total Expenditures Excess (De?ciency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Tote? Other Financing Sources (Uses) Net Change in Fund Balance Feed Beience, Juiy 1 Fund Balance, June 30 EXHIBIT Variance with Final Budget Budgeted Amounts Positive Originat Final Actuei (Negative) 11 324,137 8 12,120,060 11,697,153 (222,907) - 5,250,793 5,250,793 - 13,504,570 14,927,356 15,240,740 313,384 2,932,847 3,394,762 2,763,321 (631 ,441) 6,621 ,958 2,296,659 2,316,361 19,702 3,529,783 3,344,550 3,475,984 131 ,434 37,913,295 41 334,180 40,944,352 (389,828) 20,797,683 19,793,632 18,490,096 1,303,536 6,7761 13 6,531 ,032 6,305,497 225,535 7,262,855 7,179,498 6,833,953 345,545 2,594,680 1 ,785,190 996,955 788,235 5,884,857 7,469,000 6,256,608 1 212,392 - - 35,640 (35,640) (188,587) (205,755) (197,202) (8,553) 16,976 6,976 10,000 467,899 467,899 467,899 - 43,595,500 43,037,472 39,196,422 3,841,050 (5,682,205) (1 (703,292) 1 ,747,930 3,451 ,222 (5,682,205) (1 ,703,292) 1 ,747,930 3,451 ,222 4,612,709 4,612,709 4,612,709 (1,069,496) 2,909,417 6,360,639 3,451,222 Erie accompanying notes to required supplementary informaties is an integrai part of this statement. 47 SAN YSIDRO SCHOOL DISTRICT REQUIRED SUPPLEMENTARY ENFORMATION SCHEDULE OF FUNQENG PROGRESS POST EMPLOYMENT HEALTHCARE BENEFITS YEAR ENDEQ JUNE 30, 2014 Actuarial Acturiai Accrued Unfunded UML as a Actuarial Vaiue o? (AAL) AAL Funded Covered Percemage of Vaiuation Assets - Entry Age (UAAL) Ratio Payroii Covered Payroii Date .. . (M). (aft). (E) - 07f01 12008 - 4,658,106 4,658,106 - 26,750,000 114% 07101/2010 5,385,216 5,385,121 6 23,594,060 22.8% 07/01!2012 - 5,943,918 24,188,000 24.6% 48 SAN YSIDRO SCHOOL DISTRICT NOTES TO REQUIRED SUPPLEMENTARY FOR THE YEAR ENDED JUNE 30, 2034 Budgetary Comparison Scheduie - General Fund The budgetary comparison schedule does not include revenue and expenses associated with on benaii payments made by the state for the fiscal year as follows: General Fund - Fund Financial Statements Revenues and Other Financing Sources 55 40,944,352 Less On Behaii Payments for year ended June 30, 2014 (937,375) Genera! Fund - Budgetary Comparison Schedule Revenues and Other Financing Sources 40,006,977 General Fund Fund Financial Statements Expenditures and Other Financing Uses 39,196,422 Less On Behan Payments for year ended June 30, 2014 (937,375) Generai Fund - Budgetary Comparison Schednie Expenditures and Other Financing Uses 381259347 49 Combining Statements and Budget Comparisons as Supplementary Information This supplementary information includes ?nancial statements and sche?ules not required by the Governmental Accounting Standards Board, nor a part of the basic financial statements, but are presented for purposes 0% additionai analysis. SAN YSIDRO SCHOOL DISTRICT CGMBINING BALANCE SHEET NONMNOR GOVERNMENTAL FUNDS JUNE 30, 2014 ASSETS: Cash in Ceueiy ?i?reasury Cash on Hand and in Banks Gash with a Fiscai Agent/Trestee Accounts Receivable Due from Oiher Fun?s Stores lnventcries Totai Assess AND FUND BALANCE: Liabilities: Accounts Payabie Due to Other Funds Totai Liabilities Fund Balance: Nonspendabie Fund Baiances: Stores inventories Restricted Fund Balances Totai Fund Baiance Total and Fund Balances EXHEBIT 0-1 Total Nonmajer Speciai Debt Capital Governmentai Revenue Service Projects Funds (See Funds Funds Funds Exhibit N13) 1,159,586 4,6503 29 35 2,766,691 8,573,436 1,055 - - 1,955 - - 63,528 63,528 423,325 - 2,300 425,625 1,935 - 1 ,035 21,724 21,724 1,606,?25 4,650,129 2,832,519 9,089,373 23,960 3 - - 23,950 212,995 - 2,995 236,955 - 236,955 21,724 - 21 ,724 1,348,046 4,650,129 2,832,519 8,830,694 1,369,770 4,650,129 2,832,519 8,852,41 8 1,606,725 4,659,129 2,832,519 9,089,373 50 SAN YSIDRO SCHOOL DISTRICT COMBINING SYA75MENT OF REVENUES, AND CHANGES IN FUND BALANCES NONMAJOR FUNDS FOR YEAR ENDED JUNE 30, 2014 C-2 Totai Nonmajcr Special Debt Capiiei Governmental Revenue Service Projects Funds (See Funds Hinds Funds Exhibit A-S) Revenues: Federal Revenue 2,175,824 - - 2,175,824 Other State Revenue 1,058,564 22,810 - 1,081,376 Other Local Revenue 588,916 5,354,788 2,886,481 8,830,185 Totei Revenues 3,823,304 5,377,598 2,886,481 12,087,383 Expenditures: instruction 1,024,381 - 1,024,381 instruction - Reiated Services 185,192 - - 185,192 Pupil Services 2,301,658 - 2,301,658 Genera! Administrason 197,202 - 1 1,150 268,352 Piant Services 48,314 14,903 63,217 Debt Semice: Principei 3,435,000 253,630 3,688,630 interest 3,946,858 - 3,946,858 Total Expenditures 3,756,747 7,381,858 279,663 1 1 ,418,288 Excess (Deficiency) of Revenues Over (Under) Expenditures 66,557 (2,004,260) 2,606,798 669,095 Other Financing Sources (Uses): Transfers in 2,476,977 - 2,476,977 Transfers Out - (2,476,977) (2,476,977) Totai Other Financing Sources (Uses) - 2,476,977 (2,476,977) - Net Change is Fond Baiance 66,557 472,717 129,821 669,095 Fund Ba1ance, July 1 1,303,213 4,177,412 2,702,698 8,183,323 Fenci Baiance, June 30 8 1,369,770 8 4,650,129 2,832,519 6 8,852,418 51 SAN YSIDRO SCHOOL DISTRICT COMBINING BALAMCE SHEET NONMAEOR REVENUE FUNDS JUNE 30, 20:4 ASSETS: Cash in County Treasury Cash on Hand and in Banks Accounts Receivable Due from Other Funds Stares Enverziorles Totai Assets AND FURD BALANCE: Liabiil?es: Accaunts Payabie Due to Other Funds Totai Liabilities Fund Balance: Nonspendable Fund Balances: Stores Enventories Restricted Fund Balances Totai Fund Balance Total Liabilities and Fund Balances Chiid Development Cafeteria Fund Fund 44,468 1,115,118 - 1 ,855 104,334 319,291 1,035 - 21,724 149,537 1,457,188 1 1 ,055 12,905 92,152 120,843 103,207 133,748 - 21 ,724 46,330 1,301,716 46,330 1,323,440 149,53? 1,4511 88 52 Exhibit 236,955 1,369,770 Total Nonmajer Special Revenue Funds (See 1,159,588 1,055 423,325 1,035 21 23,980 212,995 21 ,724 1 348,046 1,606,?25 6-4 SAN YSIDRO SCHGOL DISTRICT STATEMENT eF REVENUES, EXPENDETURES, AND CHANGES EN FUND BALANCES NONMAJOR SPECEAL REVENUE FUNDS FOR THE YEAR ENDED JUNE 30, 2014 Total Nonmalor Special Child Revenue Deveiopmeet Cafeteria Funds (See Fund Fund Exhibit 6-2} Revenues: Federal Revenue 35 44,18? 35 2,131,632? 2,175,824 Other State Revenue 909,435 149,129 1,058,584 Other-Lesa! Revenue 482,288 108,61 8 588,91 6 ?fetal Revenues 1,435,920 2,387,384 3,823,884 Expenditures: instruction 3 ?24,381 - 1 324,381 Instruction Related Services 185,182 - 185,192 Pupil Services 118,479 2,191,179 2,301,658 Generai Administration 88,18? 1 1 1,015 187,202 Piant Sewices 48,314 - 48,314 Total Expenditures 1 354,553 2,382,194 325834? Excess (Deficiency) of Revenues Over (Under) Expenditures (18,833) 85,190 86,557 Net Change in Fund Baiance (18,633) 85,198 68,557 Fund Balance, July 1 64,983 1,238,250 1,308,213 Fund Balance, June 30 46,330 1,323,440 1,389,770 53 SAN YSIDRO SCHOOL DISTRICT BALANCE SHEET NONMAJOR DEBT sag-was}: FUNDS L;qu so, 2014 ASSETS: Cash in County Treasury Totai Assets ANQ FUND BALANCE: Total Fund Balance: Restricted Fund Balances Total Fund Balance Totai Liabilities an? Fund Salances Totai Nonmajor Debt Bond Blended Service Interest Componeai Funds (See Reciemption Unit Exhibit 4,658,129 - 4,650,129 4,6595! 29 - 4,850,! 29 4,650,129 - 4,650,129 4,650,129 - 4,650,129 4,650,129 4,65?,129 54 EXHIBST 0-5 EXHEBST c-e SAN YSIDRO SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES lN FUND BALANCES NONMAJOR DEBT seevace FUNDS FOR THE YEAR ENDED JUNE 30, 2014 Totei Noemajor Debt Bond Biended Sewice leterest Component Funds (See Redemption Unit Exhibit (3-2) Revenues: Other State Revenue 22,810 - 22,810 Other Local Sevenue 5,354,788 - 5,354,788 Total Revenues 5,377,598 - 5,377,598 Expenditures: Debt Service: ??rinci?3ai 2,770,000 665,000 3,435,000 interest 2,134,881 1,81 1 ,977 3,946,858 T0131 Expenciitures 4,904,881 2,476,977 7,381,858 Excess (Deficiency) of Revenues Over (Under) Expenditures 472,717 (2,476,977) (2,004,260) Other Financing Sources (Uses): Transiers in 2,476,977 2,476,977 Total Other ?nancing Sources (Uses) 2,476,977 2,476,977 Net Change in Fued Balance 472,717 - 472,717 Fund Balance, July 1 4,177,412 - 4,177,412 Fund Balance, June 30 4,650,129 4,650,129 55 EXHIBIT SAN YSIDRO SCHOOL DISTRICT COMBINING BALANCE NONMAJOH CAPITAL PROJECTS FUNDS JUNE 30, 2014 ToiaI Ncnmajcr Capital Capitai Capitai BIended Proiects Outiay Component Funds (See Progects Uni: Fund Exhibit Cd) ASSETS: Cash In County Treasury 698,37? 5,307 2,063,607 2,766,691 Cash with 3 Fiscal A913an rustee 63,528 63,528 Accounts Receivabie 68'? 5 1,608 2,300 Totai Assets 699,064 5,312 2,1 28,3 43 2,832,519 LIABILITIES AND FUND BALANCE: Liabilities: Tote: LIabiIities - - - - Fund Balance: Restricted Fusd Baiances 699,064 5,312 2,128,143 2,832,519 Fund Baiance 699,064 5,312 2,128,143 2,832,519 Totai and Fund Baiances 6 699,064 5,312 6 2,128,143 2,832,519 56 EXHIBIT c-s SAN YSIDRO SCHOOL DISTRICT STATEMENT OF REVENUES, AND CHANGES EN FUND BALANCES NONMAJOR CAPITAL PROJECTS FUNDS FOR THE YEAR ENDED JUNE 30, 2014 Tetal Nenmajor Capital Capital Capital Blended Projects Facilities Outlay Component Funds (See Fund Projects Unit Fund Exhibit Revenues: Other Locai Revenue 209,100 19 2,677,362 9 2,886,481 Total Revenues 209,190 19 2,677,362 2,886,481 Expenditures: General Administratioe 1 1,150 - 1 1 ,159 Plant Services - 14,903 14,993 Bebt Service: Principal - - 253,630 253,630 Total Expendiiures 1 1 ,150 - 268,533 279,683 Excess (Deficiency) of Revenues Over (Under) Expenditures 197,950 19 2,468,829 2,696,798 Other Financing Sources (Uses): Transiers Out (2,476,977) (2,476,977) Total Other Financing Sources (Uses) (2,476,977) (2,476,977) Net Change in Fund Balance 197,950 19 (68,148) 129,821 Fund Baiance, Juiy 1 501,114 5,293 2,196,291 2,792,698 Fend Balance, June 39 699,064 9 5,312 2,128,143 9 2,832,519 57 Other Suppiementary Information This section includes financiai informaiion and disclosures not required by the Governmentai Accounting Standards Board add not considered a part of the basic ?nanciai statements. It may, however, include information which is required by other entities. Supplementary information Section SAN YSIDRO SCHOOL DISTRICT LOCAL EDUCATEON AGENCY ORGAN STRUCTURE JUNE 30, 2014 The San Ysidro Schooi District was established in 1887. The District boundaries include the City of San Ysidro and baritone of the unincorporated area of San Diego County. There were no changes to rite District's boundaries during the year. The district operates one preschool, five elementary schools, one school and one middle school. Governing Board Name Office Term and Term Expiration Jason Michaeh?radiey Weits President Four Year Term Expires December 2014 Antonio Maninez Vice President Four Year Term Expires December 2016 Jose F. Barajas Ciertr Four Year Term Expires December 2016 Luciana Corrales Member Four Year Term Expires December 2014 Vacant Member Administration George Cameron, Edi}. interim Superintendent Gtorie Madera Assistant Superintendent Educationat Services Dena Whittington Assistant Superintendent Business Services Jason Romero Assistant; Superintendent Human Resources 58 SAN SCHOOL DISTRICT SCHEDULE 01: AVERAGE ATTENDANCE YEAR ENDED 3UNE 30, 2014 TABLE D-1 Second Period Report Aonoai Report Original Revised Original Revised Regular ADA 2,160.67 2,155.57 WA Extended Year Special Education 1.72 Nonpublic, Noesectarian Schools 0.51 WA 0.91 TKJK-S Totals 2,161.18 NIA 2,158.20 Grades 4-6: Regular ADA 1 585.36 1 583.61 Extended Year Specie! Education - NIA 1.06 NIA Nonpubiic, Nonsectarian Schools 0.81 NIA 0.96 NIA Grades 4?6 Totals 1,586.17 NIA 1,585.57 Grades 7 and 8: Reguiar ADA 1,111.96 1,1 $2.86 Extended Year Special Education - WA 0.44 Nonpubiio, Nonsectarian Schools 1.25 WA 1.28 Grades 7 and 8 Totals 1,113.21 1,114.58 NIA ADA Totais 4,860.56 4,858.35 NIA - There were no audit findings which resulted in necessary revisions to attendance. Average daiiy attendance is a measurement of the numbe:r of pupils attending ciasses of the district or charter sohooi. The purpose of attendance accounting from a fiscai standpoint is to provide the basis on which apportionments of state funds are made to school districts and charter schoois. This schedule provides infoimation regarding the attendance of students at various grade tevels and in different programs. 59 SAN YSIDRO SCHOOL DISTRICT TABLE 9-2 SCHEDULE OF TIME YEAR ENDED JUNE 30, 2014 Ed. Code Ed. Code Number Number 46207 46207 201 3?i 4 of Days of Days Minutes Adjusted Actuai Tradltloaal Grade Level Requirement Reduced Minutes Caiendar Calendar Status Transitional Kindergarten 36,000 35,000 40,500 180 Compiled Kindergarten 36,000 35,000 55,796 180 Compiled Grade 1 50,400 49,000 55,705 180 Compiled Grade 2 50,000 49,000 55,796 180 Complied Grade 3 50,400 49,000 55,796 i80 - Complied Grade ti 54,000 52,500 55,706 160 - Complied Grade 5 54,000 52,500 55,?96 180 - Compiled Grade 6 54,000 52,500 55,796 180 - Compiled Grade 7 54,000 52,500 56,431 180 - Compiled Grade 8 54,000 52,500 56,431 180 Complied School districts and charter schools must maintain their instructional minutes as defined in Education Code Section 46207. This scheduie is required of ali districts, including basic aid districts. The District has received incentive funding for increasing instructionai time as provided by the incentives for Longer insiractional Day. This scheduie presents information on the amount of instruction time offered by the District and whether the ijistriot compiled with the provisions of Education Code Sections 46200 through 45206. The District neither met nor exceeded its target funding. 80 SAN YSIDRO SCHOOL DISTRICT TABLE 1343 SCHEDULE OF TQENDS AND YEAR ENQED JUNE 39, 2014 Budget 2915 General Fund (see note 1) 2014 2013 2012 Revenues and other financial sources 43,952,554 41 ?81,727 39,790,539 9 42,486,738 Expenditures, other uses aed transfers out 47,828,048 40,133,779? 40,548,648 42,204,433 Change in fond baiance (deficit) (3,875,494) (758,1t8) 282,303 Ending fund balance 2,485,144 6,360,838 4,612,708 5,370,826 Avaiiable reserves (see note 2) - 3 2,904,402 2,666,197 3,559,949 Availabte reserves as a percentage of totai outgo (see note 3) - 7.4% 6.7% 8.6% Totat tong-term debt 188,861,?50 35 193,241,763 191,546,568 9 193,148,614 Average deity attendance at P2 4,767 4,861 4,919 4,999 This schedule discloses the district's fioanciai trends by displaying east years? data atoeg with current year budget information, These trend disclosures are used to evaluate the district?s ability to continue as a going concern for a reasonable period of time. The fund baiance of the general fund has increased by $989,812 over the past two years. The fiscal year 2014?2015 budget projects a decrease of $3,875,494 For a district of this size, the State recommends avaitabte reserves of at least 3% of total general fund expenditures, transfers out and other uses (totai outgo). Total long?teen debt has increased by $93,149 over the past two years. Average daily attendance has decreased by 138 over the past two years. Notes: 1 Budget 2015 is included for anaiyticat purposes oniy and has not been subg?ected to audit. 2 Avatlahte reserves consist of alt unassigned fond balances and all funds reserved for economic contained within the Generai Fund. 3 On behalf payments of $937,375, $933,153, and $94t,108, have been excluded from the calculation of available reserves for the fiscal years endiag June 30, 2014, 2913 and 2012. 61 SAN YSIDRO SCHOOL DISTRICT TABLE 13-4 OF ANNUAL Ann BUDGEY REPORT wne STATEMENTS YEAR ENDED JUNE 30, 2014 Child General Development Cafeteria Fund Fund Fund June 30, 2014, annual financial and budget report tend balances 6 5,308,599 46,330 3,323,440 Adjustments and reciassitications: increasing (decreasing) the fund naiance: inclusion of on behalf payments for in State Revenue 937,375 29,803 - lnciusion of on behalf payments for CalSTi?tS in instructionai Expenses (937,375) (29,803) - Overstatement of Unearned Revenue for Common Core Funding 1,052,040 - inclusion of noncash commodities received in Federal Revenue 72,414 inclusion of noncash commodities received in Pupil Services Expenses - (72,414) Net adiustments and rectassitications 1,052,040 - - June 30, 2014, audited financial statement fund baiances 6 6,360,639 3 46,330 1,323,440 Government Wide Net Position June 30, 2014, annual financial and budget report total net position 3 22,096,753 Adjustments and reciassitications: increase (decrease) in total liabitltles: Deferred out?ows of resources understatement 3,445,384 General soilgatien bonds understatement (5,439,461) Certificates of participation understatement (68,187} Unmatured interest understatement (1,463,483) Unearned revenue overstaternent 1,052,040 Net adjustments and reciassitications (2,473,707) June 30, 2014, audited financiai statement total net position 3 19,623,046 This scheduie provides the information necessary to reconcile the fund baiances of ail funds and the total balance of the general long?term debt account group as reported on the SACS report to ?ne audited financial statements. Funds that required no adjustment are not presented, 62 SAN YSIBRO SCHOOL DISTRICT TABLE 0-5 SCHEBULE OF CHARTER SCHOOLS YEAR ENDED sum?: 39, 2014 No charter schools are chartered by San Ysicfre Schoal District. in Charts; Schogls Audit? None NIA 63 SAN YSIDHO SCHOOL DISTRICT SCHEDULE OF on FEDERAL AWARDS YEAR ENDED JUNE 30, 2014 Federal Grantorl Federal Pass-Through Pass?Through Graetor/ CFDA Entity Identifyiog Program Title Number Number U. S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Direct Progi?ams: Meiji-Cal Bilian Option 93.778 Total Medl-Cal Ciuster Passed Through State Deeartment of Education: Federai Chitd Care 93.596 13609 Total 1.5. S. Department of Health and Human Services U. 8. DEPARTMENT OF EDUCATION Passed Through State Deoarttnent of Edccatioo: Titie 1: Part A Basic 84.610 14329 Specie! Education: Mentai Health 84.02? 14468 Speciai Education: Basic 84.027 13379 Special Education: Local Assistance 84.027 10115 Special Education: IDEA Preschool Local 84.027A 13682 Special Education: IDEA Preschool 84.t73 13430 Specie! Education: SDEA Preschool Staff Deveiopment 84.173151 t3431 Total Special Education Ciuster Title X: McKinney-Vesta Homeless Assistance 84.196 14332 Title Ili: Immigrant Education 84365 15146 Titie Limited Engiish Proficiency 84.365 14346 Totai 'i'itle Title li: Teacher Quaiin 84.367 14341 Total Passed Through" State Department of Edocation Total U. S. Department of Education U. S. DEPARTMENT OF Passed Through State Department of Education: School Breakfast Program 10.553 13526 Natiooal Scoot): Lunch Section 11 10.555 13396 National Soho-oi Lunch Meat Supplement 10.555 23165 National School Lunch Section 4 10.555 13391 Commodity Supplemental Food Program 10.555 13896 Totai Chiid Nutrition Cluster Total U. S. Department of Agriculture TOTAL OE FEDERAL AWARDS Indicates noncash expenditure The accompanying notes are an integral part of this schedule. 64%- TABLE 9-6 Federal Expenditures 47,915 47,915 44,18? 92,102 967,145 33,684 754,573 i ,373 61 ,594 34,425 333 885,982 111,461 34,462 353,988 388,450 35$,031 2,719,069 266,773 1 ,446,867 97,714 247,871} 72,414 2,131,838 2,131,638 4,942,809 SAN YSIDRO SCHOOL DISTRICT NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2014 1. itPr nin The accompanying schedule of expenditures of federal awards inciudes the federai grant activity of San Ysidrc School District and is presented on the modified accrual basis of acoeueting. The information in this schedule is presented in accordance with the requirements of OMB Circular A433, Audits of States, Local Governments, and Non?Profit Organizations. Therefore, same amounts presented in this scheduie may differ from amounts presented in, or used in the preparation of, the general purpose financiei statements. 2. Sebreciaients Of the federai expenditures presented in the scheduie, San Ysidro School District provided federal awards to subrecipients as fellows: Federal CFDA Amount Provided Program Title Number to Subrecipients TitEe 1 Part A: Basic 84.010 4,912 Title El: Teacher Quality 84.367 887 Title lil: Limited English Proficiency 84.365 Tctai Provided to Subrecipients 61609 65 Other Independent Auditor's Reports 0N HAD it. assert {it?s . artistes tithe arias it. tiadiee, Richard ti- densest, are etataiie street, can ?53? 5% a 5% 3 3 treats a, entrant; independent Auditor?s Report on internai Controi over Financiai Fienortino and .- . a! i- "ft-?13 Eerfornted in Accordance With GovernmentAudifin Standards Board of Trustees San Ysidro Schooi District San Diego, Caiifornia Members at the Board oi Trustees: We have audited, in accordance with the auditing standards generaiiy accepted in the United States of America and the standards appiicabie to financiai audits contained in Government Auditing Standards issued by the Comptrolier Generai oi the United States, the iinanciai statements oi the governmental activities, each major fund, and the aggregate remaining fund information oi San Ysidro Schooi District, as of and for the year ended June 30, 20M, and the related notes to the financial statements, which coiiectively comprise San Ysidro Schooi District's basic iinanciai statements, and have issued our report thereon dated December 15, 20?! 4. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered San Ysidro School District's internai control over tinanciai reporting (internai controi) to determine the audit procedures that are appropriate in the circumstances for the purpose oi expressing our opinions on the tinanciai statements, but not for the purpose of expressing an opinion on the effectiveness of San Ysidro Schooi District's internai controi. Accordingiy, we do not express an opinion on the effectiveness of San Ysidro Schooi District's internai control. A de?ciency in internal contra! exists when the design or operation of'a controi does not aiiow management or empioyees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of de?ciencies, in internai control, such that there is a reasonable possibility that a motorist misstatement oi the entity?s financial statements not be prevented, or detected and corrected on a timeiy basis. A signi?cant deficiency is a deficiency, or a combination of deficiencies, in internai controi that is iess severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration oi internai centre! was for the limited purpose described in the first paragraph oi this section and was not designed to identify deticiencies in internal controi that might be rnaterial weaknesses or significant deticiencies and therefore, rnateriai weaknesses or signiticant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internai controi that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. We did identity certain de?ciencies in internai controi, described in the accompanying schedule of findings and questioned costs as item(s) 2014?00i, that we consider to be significant deficiencies. ti Saints ?fties {Si-tics are tart Sonatas insert-rte Ei ?e?en, ca ?E?2it igtii} iterareii Street, State t3th sEntertratiie, {its asses iei. to?? rte-?b?iili has {stat 66 ?i?ei- {big} a tea Compliance and Other Matters As part of obtaining reasonabie assurance about whether San Ysidro Schooi District?s financial statements are free from materiai misstatement, we performed tests at its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompiiance with which couid have a direct and material effect on the determination of tinanciai statement amounts. However, providing an opinion on corripiiance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncomptiance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as item(s) 2014-003. San Ysidro School District's Response to Findings San Ysidro School District's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. San Ysidro School District?s response was not subjected to the auditing procedures applied in the audit of the financiai statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal controi and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal controi or on compliance. This report is an integrai part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingty, this communication is not suitable for any other purpose. ?a?f Katie? Ca. AM El Cajon, December 15, 2014 67 i Hap i Kine Com it? 23:: drier; a. i?iadieat can g: g: a; a; E: i2, azaamt are i i i' iievinra. Sprout can independent Auditor?s Report on Compliance for Each Maior Program and on internal Controi Over Comoiiance Rednired by OMB Circular A-?t 33 Board of Trustees San Ysidro School District San Biego, Caiitornia iviernbers oi the Board oi Trustees: Report on Sompiiance tor Each Major Federai Program We have audited San Ysidro School District's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and materiai effect on each of San Ysidro Schooi District?s major federal programs for the year ended June 30, 2014. San Ysidro Schooi Bistrict's major federal programs are identified in the summary of auditor's resuits section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federai programs. Auditor's Responsibility Our responsibitity is to express an opinion on compliance for each oi San Ysidro School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards a-ppiicaoie to iinanciai audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circu-iar A433, Audits oi States, Local Governments, and Non-Pro?t Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compiiance requirements referred to above that could have a direct and materiai effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about San Ysidro School District?s compiiance with those requirements and periorrning such other procedures as we considered necessary in the circumstances. We beiieve that our audit provides a reasonable basis for our opinion on compiiance for each major federal program. However, our audit does not provide a legal determination of San Ysidro Schooi District's compliance. Opinion on Each Major Federal Program in our opinion, San Ysidro Schooi District compiled, in all material respects, with the types of compliance requirements referred to above that couid have a direct and material effect on each of its maior iederai programs identi?ed in the summary oi auditor's results section of the accompanying schedule of findings and questioned costs for the year ended June 30, 2014. Caron {Ii-time Stripe Bid W. gauges arisen-tie {Taipei ca igtilii?} Pea-rah Street; ?nite-edit agreements; grit asses ta {are} iterates Pair: {are} rarer-er 58 Ta. taro} sea-arse rat are; sea-era?: Other Matters The resuits of our auditing procedures disciosed instances of noncompliance, which are required to be reported in accordance with OMB Circular A??t33 and which are described in the accompanying schedule of findings and questioned costs as item 2014-003 Our opinion on each major federal program is not modified with respect to these matters. San Ysidro School District?s response to the noncompliance findings identified in our audit is described in the accompanying scheduie of findings and questioned costs. San Ysidro Schooi District?s response was not subiected to the auditing procedures appiied in the audit of compiiance and, accordingiy, we express no opinion on the response. Report on Internal Control Over Comptianoe Management of San Ysidro Schooi Bistrict is responsibie for establishing and maintaining etfectiye internal control over compiiance with the types of compliance requirements referred to above. ln pianning and performing our audit ct compiiance, we considered San Ysidro Schooi District?s internai control over compiiance with the types of requirements that could have a direct and material effect on each major federai program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compiiance for each major fedora! program and to test and report on internal control over ccmpiiance in accordance with OMB Circuiar A433, but not for the purpose of expressing an opinion on the effectiveness of internai control over compiiance. Accordingiy, we do not express an opinion on the effectiveness of San Ysidro School District's internai controf over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not aiiow management or employees, in the comet course of performing their assigned functions, to prevent, or detect and correct, noncompfiance with a type of compiiance requirement of a federai program on a timely basis. A material weakness in internal centre! over compiiance is a deficiency, or combination of deficiencies, in internai controi over compiiance, such that there is a reasonable possibility that materiai noncompiiance with a type of compliance requirement of a tederai program not be prevented, or detected and corrected, on a timeiy basis. A signi?cant de?ciency in internal control over compfiance is a deficiency, or a combination of deficiencies, in internai coniroi over compliance with a type of cornpiiance requirement of a tederai program that is less severe than a materiai weakness in internal controi over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internai control over compiiance was for the iimited purpose described in the first paragraph of this section and was not designed to identify alt deficiencies in internai controi over compiiance that might be material weaknesses or significant deficiences. We did not identify any deficiencies in internal control over compliance that we considered to be materiai weaknesses. However, material weaknesses may exist that have not been identified. San Ysidro Schooi District?s response to the internai control over compliance findings identified in our audit are described in the accompanying schedule of findings and questioned costs. San Ysidro Schcoi District?s response was not subjected to the auditing procedures appiied in the audit of compiiance and, accordingiy, we express no opinion on the response. The purpose of this report on internal controi over compliance is solely to describe the scope of our testing of internal controi over compliance and the resuits of that testing based on the requirements ct OMB Circuiar A-f 33. Accordingiy, this report is not suitabie for any other purpose. El Caion, Caiifomia December 15, 2014 69 i i, Ki i, EY at ease: anteater, can i ?f . seerse er, area, can arise is; iterates, are E) archard is; Serra- are pat..- (jet, eras arse ecsiseas gr tiara is i r, hears a, Sprout, are Board of Trustees San Ysidro Schooi District San Siege, idem-bars oi the Board of "trustees: Report on State Cornpiiance We have audited the Sistrict's compiiance with the types of compiiance requirements described in the Standards and Procedures for Audits of California K42 Local Education Agencies 2073-14, pubiished by the California Education Audit Appeals Panel that could have a direct and material effect on each oi the District?s state programs identified below for the iiscai year ended June 30, 20M. Management's Responsibility for State Compliance Management is responsibie for cornpiiance with the requirements of iaws, regulations, contracts, and grants applicable to its state programs. Auditor's Our responsibility is to express an opinion on compliance for each applicable program as identified in the State's audit guide, Standards and Procedures for Audits of California 12 Local Education Agencies 2013-14 pubiished by the Education Audit Appeals Panei. We conducted our audit of compiiance in accordance with auditing standards generaiiy accepted in the United States of America; the standards applicabie to financiai audits contained in Government Auditing Standards issued by the Comptroiier Generai oi the United States; and the State?s audit guide, Standards and Procedures for Audits of California K42 Locai Education Agencies 2013-14 pubiished by the Education Audit Appeals Panel. Those standards and audit guide require that we plan and perform the audit to obtain reasonable assurance about whether nonco-nipiiance with the compliance requirements referred to above that could have a direct and materiai effect on the state programs noted below occurred. An audit inciudes examining, on a test basis, evidence about the District's compiiance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legai determination of the District?s compiiance with those requirements. in connection with the audit referred to above, we seiected and tested transactions and records to determine the District's compiiance with the state iaws and reputations applicable to the foiiowing items: Procedures ln Procedures Description Audit Guide Performed Attendance Accounting: Attendance Reporting 6 Yes Teacher Certification and Misassignments 3 Yes Kindergarten Continuance 3 Yes independent Study 23 Continuation Education 10 NIA instructions! Time for Schooi Districts it) Yes instructionai Materiais, General Requirements 8 Yes Ratios of Administrative Empioyees to Teachers 1 Yes gated {Ediee are set, gong-tee disease ?9 Ei ?atter}, Ca ditdZi?i iei. {dd 3% rid-3e??ifi is rare {Er-i Street, Sir-tie see ca eases 70 ?re. tarot asserts a as {are} seseret Ciassroom Teacher Saiaries 1 Yes Early Retirement incentive 4 GANN Limit Calcuiation 1 Yes School Accountability Report Card 3 Yes Juveniie Court Schools 8 Locai Control Funding Formuia Certification 1 Yes Caiitornia Ciean Energy Jobs Act 3 Yes After School Education and Safety Program: General Requirements 4 Yes After School 5 Yes Before School 6 Yes Education Protection Account Fund-s Yes Common Core impiementation Funds 3 Yes Undupiicated Locai Controi Funding Formats Pupii Counts 3 Yes For Charter Schoois: Contemporaneous Records of Attendance 8 MIA Mode of instruction 1 MIA Nonciassroorn?Based Instruction/independent Study 15 Psi/A Determination of Funding tor Nonclassrocmasased instruction 3 Annaai instructionai Minutes Classroom Based 4 Facility Grant Program 1 The term is used above to mean either the District did not otter the program during the current tiscai year or the program appiies to a different type of local education agency. Opinion on State Compiiance in our opinion, San Ysidro Schooi District complied, in ali material respects, with the compiiance requirements referred to above that are applicable to the statutory requirements iisted in the schedule above for the year ended June 30, 2014. Purpose of This Report The purpose ct this report is soieiy to describe the scope of our testing of compiiance and the results of that testing, and not to provide "an opinion of the effectiveness of the entity?s internal corrtroi or on compiiartce outside of the items tested as noted above. This report is an integral part of an audit performed in accordance with Standards and Procedures for Audits of California K42 Local Education Agencies 2013-14, published by the Education Audit Appeals Panel in considering the entity's compliance Accordingly, this communication is not suitabie for any other purpose. Maegan, Co. 4.4/0 Cajun, Caiifornia December 15, 2014 71 Findings and Recommendations Section SAN YSIDRO SCHOOL DISTRICT SCHEDULE OF AND COSTS FOR THE YEAR ENDED JUNE 30, 2014 A. Summary of Auditor?s Resuits 1. Financial Statements Type of auditor?s report issued: Modified Internal control over iinanoiai reporting: One or more material weaknesses identified? Yes No One or more significant deficiencies identified that are not considered to be material weaknesses? Yes None Reported Noncompliahoe material to iinanciai statements noted? Yes No Federal Awards lntemai control over major programs: One or more material weaknesses identified? Yes No One or more significant deficiencies identified that are not considered to be materiai weaknesses? Yes None Reported Type of auditor's report issued on compliance for major programs: unmodified Any audit findings disoiosed that are required to be reported in accordance with section 510(a) of Circular Yes No identification of major programs: CFDA i i Pr i 10.553, 10.555 Chiid Nutrition Ciusier 84.010 Title I 84.927, 84.173 Speciai Education Cluster 84365 Title lEl Limited Engiish Proficiency 84.367 Title ll Teacher Quality Doliar threshold used to distinguish between type A and type 8 programs: mm Auditee qualified as iow-risk auditee? Yes No 72 SAN YSIDRO SCHOOL DISTRICT SCHEDULE OF AND COSTS FOR THE YEAR ENDED JUNE 30, 2014 3. State Awards Any audit findings disciosed that are required to be reported in accordance with Standards and Procedures for Audits of California 2 Locai Education Agencies? Yes No Type of auditor's report issued on compliance for state programs: Unmodified B. Financiai Statement Findings Finding 2014-00i (30000) Associated Student Body Accounts Criteria or Specific Reduirement Determine that the District has procedures and controis in piece to safeguard assets at the associated student body accounts. Bonding: San Ysidro Middle Schooi was unable to provide supporting documentation tor twelve out of twelve deposits made in student body accounts. in addition, the school operates a student store but does not keep an inventory of items on hand. tin None Qantaxt in order to detect errors and deter fraud, internai controis must be established over deposits and inventory of student body activities. Effect The associated student body funds at San Ysidro Middle School are exposed to significant risk of error and fraud because controis are not in piece to detect errors and deter fraud. Gauss The associated student body funds are overseen by muttipie teachers without an established adviser responsible tor the accounts as a whole. There is some documentation, but it is not detailed enough to verify that amounts deposited are in agreement with amounts collected. There is not a process in piece to track inventory of the student body store. Recommendation Establish procedures to reguiarly inventory student body stores. Estabiisn procedures over deposits to ensure amounts deposited are in agreement with amounts coliected. Establish an ASB Advisor and ensure they understand that they are responsibie for oversight of all associated student body activities and deposits. Response A new ASB advisor with previous experience in ASB procedures is now in charge. She has met with Business Coordinator. Sign in sheet and agenda of meeting is availabie. 73 SAN YSIDRO SCHOOL DISTRICT SCHEDULE OF AND QUESTJONED COSTS FOR THE YEAR ENDED JUNE 30, 2014 Finding 20132 (60000) Going Concern issues Criteria or Reguirement District tinanciai statements are prepared on the assumption that the district will continue as a going concern. if substantiai doubt about going concern arises during the course of the audit, management?s pian to mitigate the effects (if the adverse conditions or events is evaluated and disciosed in the notes to the financial statements. Qondition The District faces numerous tinanciai ditficuitles in the coming years. The District has not been state to make budget cuts sufficient to meet or exceed revenue shortfaiis associated with several years of state budget cuts and declining enrollment. Management proiects that absent an emergency state loan, the District wilt depicts its cash balances in June 2016. Questioned?osjs None Eifth There is a going concern issue that the District might not meet its financial obiigations uniess cash flow shortages can be stopped and the budget is brought into balance. Recommendation We recommend the District take necessary corrective actions to remediate looming budget and cash flow issues. Response The district continues to monitor the budget and make any appropriate and necessary budget cuts. The district was abie to come to an agreement with iabor unions in October 2014. The agreement will not a-liow for any turtough days or saiary rotlbacks through 20%th tiscai year. Budget cuts necessary be required to come irom other areas. C. Federal Award Findings and Questioned Costs Finding 2013?3 (50000) Allowabie Costs, Cost Principles Federal Tirne Accounting Federai Program information 84.010 - Titie 84.02? 84.173 - Speciai Education Ciuster 84.367 - Title il Teacher Quality 84.365 - Title Limited Engiish Proficiency Wm US. Department of Education ~Tr rA California Department of Education riri irmt Verify that amounts charged to federai major programs for payroil and benefits meet the 74 SAN YSIDRO SCHOOL DISTRICT SCHEDULE OF AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2014 documentation requirements for time accounting as outiined in OMB Circular Aw87. andition in our review of individuais charged to federal major programs we identified the foliowing: A. The District was unabie to provide signed semi?annuat certifications or personnei activity reports (PARS) for six individuais charged to federal major programs. 8. The District provided documentation for nine empioyees charged as substitutes or extra duty that was not in compliance with requirements for OMB Circular A-87. C. The district provided semi-annuai certifications for eleven employees charged to multiple cost objectives rather than monthiy PARS. Questioned Qosts Estimated questioned costs are as tollows: QFDA it Program Questioned Costs 84.010 20i 3?i 4 Titie I $43,096 84.027 201344 Special Education Basic $19.,t62 84.367 2m 3-i 4 Titie ii Teacher Quaiity 84.365 201344 Titie ili Limited English Proficiency $19,256 Total Questioned Costs $82,054 Qantex: Pursuant to OMB Circuiar Attachment B, Section Employees who work soleiy on a singie federai cost objective must compiete a periodic certification that meets the toitowing requirements: 1. Be prepared at ieast semiannuatiy. 2. Be signed by the empioyee or supervisory officiai having firsthand knowiedge of the work performed by the employee. 3. State that the employee worked solely on that single federal program or cost obiective during the period covered by the certification. 4. Be an after-the-fact certification oi actual effort expended. Pursuant to OMB Circuiar A-87, Attachment 8, Section (5), and (7), Employees who work on muitiple federal programs or cost obiectives must compiete personnei activity reports (PARS) or equivalent documentation that meets the foiiowing requirements: 1. Re?ect an after-the-fact distribution of the actuai activity of each empioyee. 2. Account for the total activity for which each employee is compensated. 3. Be prepared at ieast monthiy and coincide with one or more pay periods. 4. Be signed by the employee. Budget estimates or other distribution percentages determined before the services are performed do not quaiify as support for charges to federai awards. ?ttest The district has not compiied with the requirements for documenting salaries and wages charged to tederai programs as required by OMB Circuiar Qause individuals preparing documentation dict not have a complete understanding of the requirements. 75 SAN YSIDRO SCHOOL DISTRICT SCHEDULE OF FINDENGS AND COSTS FOR THE YEAR EMBED JUNE 30, 2014 Recommendation Establish procedures for documenting time charged to tederai programs that is consistent with the requirements of OMB Circuiar A437. Procedure 905 o? the Caiitoroia Schooi Accounting Manual provides detaiieci information on the requirements and sampie reports which can be used in establishiog procedures. Provide training to individuals charged with preparing documentation as to the requirements of federal time accounting and district procedures. Ensure that: reporting takes piece based open actual activities rather than badgeted Response Director of State and Federal Projects position has been reestablished. Payroll reports with actual empioyees charged to federal and state programs are provided every month. D. State Award Findings and Questioned Costs None 76 SAN YSIDRO SCHOOL DISTRICT SUMMARY SCHEDULE OF PRIOR FENDENGS FOR THE YEAR ENDED JUNE 30, 2014 Finding/?ecommendation Current Status Management?s Explanation if Not implemented Finding 20134 (30000) Associated Student Body Accounts San Ysidrc Middle School was unable to provide supporting documentation for nine out oi ten deposits made in student body accounts. in addition, the schooi operates a student store but does not keep an inventory of items on hand. Establish procedures to regularly inventory student body stores. Establish procedures over deposits to ensure amounts deposited are in agreement with amounts collected. Estabiisn an ASB Advisor and ensure they understand that they are responsible for oversight of all associated student body activities and deposits. Finding 2013?2 (60000) Going Concern issues The district has not been able to make budget cuts sufficient to nteet or exceed revenue shortfalls associated with several years of state budget cuts and declining enrolirnentr The District is at an imoasse in negotiations with unions which is preventing the necessary budget cuts to eliminate deficit spending, Management prolects that absent an emergency state loan, the District wili deplete its cash balances in May 2014. remidiate Take necessary actions to looming budget and cash flow issues. Finding 20136 (50000) Allowable Costs, Cost Principles Federal Tints Accounting District documentation of salaries and wages charged to federal programs was not in compiiance with the requirements of OMB Circular Establish procedures to ensure salaries and wages are documented in accordance with OMB Circular ?ll-87. 77 Not implemented Being lmpiernen?ied Partiaily implemented See Current Year Finding See Current Year Finding See Current Year Finding SAN YSIDRO SCHOOL DISTRICT SUMMARY SCHEDULE OF AUDET FINDINGS FOR THE YEAR ENDED JUNE 30, 20M Finding/Recommendation Finding 2013?4 (50000) Special Tests and Provisions Schoolwide Plans 20i2-13 schoolwide plans were not approved untii April 2013. Establish procedures that ensure schooiwide plans are completed prior to the beginning of the fiscal year to ensure compliance with federal requirements. Finding 20136 (50000) Special Tests and Provisions Assessment of Need The district was unable to provide a copy of an assessment of local needs for professional development and hiring. Maintain a ccpy of the needs assessment for audit purposes. Finding 2013-6 (70000) instructional Materials The district?s pubiic hearing to determine the sufficiency of instructionai materials was not held within the first eight weeks of school. Establish procedures to ensure pubiic hearing is held within the first eight weeks of schooi to determine sufficiency of instructional materials and supplies. 78 Management's Expiaeetion Current Status if Not implemented implemented implemented implemented