Conemaugh Township Area School District Davidsville
Transcription
Conemaugh Township Area School District Davidsville
Conemaugh Township Area School District West Campus Avenue Davidsville, Pennsylvania 15928 Single Audit as required by OMB Circular A-133 For the Year Ended June 30,2014 Table of Contents List of Report Distribution 2 Independent Auditors' Report J Management's Discussion and Analysis 5 Basic Financial Statements Statement of Net Position.................. l5 l6 Statemsnt of Activities t'/ Balance Sheet - Governmental Funds......... Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position........................ t8 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds l9 Reconciliation of the Statement of Revenues, Expenditures 20 and Changes in Fund Balances to the Statement of Activities 22 Statement of Net Position - Proprietary Fund Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Fund 23 Statement of Cash Flows - Proprietary Fund Statement of Fiduciary Net Position - Fiduciary Funds Supplemental Information Schedule ofRevenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund 24 25 - 49 Schedule of Expenditures of Federal Awards and Certain State Grants 50 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Støndards 54 Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by OMB Circular A-133 56 Schedule of Findings and Questioned Costs. 58 KOTZAN CPA6L Dennis ASSOCIATES, P.C. C¡mn¡o Pu¡ucAcclorxrnrrs & Busnpss P. Koøan, CPA, CFF Brenda A. Pawlowski, CPA, CFE KimberþA. Dorchal<, CPA, CGFM CoNsu-r¡m MEMBER AICPA . PICPA List of Report Distribution December 15,2014 To the Members of the Board Conemaugh Township Area School District West Campus Avenue Davidsville, Pennsylvania I 5928 Board Members: Not later than thirty days after receipt of the audit report, Conemaugh Township Area School District must distribute the audit report as follows: One (l) copy to: Commonwealth of Pennsylvania Bureau of Audits (submitted electronicalþ One (l) copy to: Single Audit Clearinghouse (submitted electronically) Sincerely, (,ot-¡¡,^.¡cQÀr 0¡¡o. tr^-Ì C' fottYnCPA & Associates, P.C. 2 Budfield Street Professional Building . 334 Budfield Street . Suite 100 8L4-269-4972' Fax: 814-266-9577 www.kotzancpa.com ' Johnstown, PA 15904 KOTZAN CPAEL Dennis ASSOCTATES, P.C. CmïR¡¡ fusuc Acmrxr¡Nrs & Busnlsss P. Koøan, CPA, CFF Brenda A. Pawlowski, CPA, MEMBERAICPA. PICPA CoNST.JLTANTS Independent Auditors' RePort To the Members of the Board Conemaugh Township Area School District West Campus Avenue Davidsville, Pennsylvania I 5928 Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Conemaugh Township Area School District as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the District's basic financial statcments as listed in the table of contents. Mahagement's Responsibility for the Financial Statements Management is responsible for the preparation and fairpresentation of those financial statements in accordance wit]¡ accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are fres from material misstatement, whether due to fraud or eror. Auditors' Responsibility Our responsibilþ is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits cont¿ine d in Government Audíting Standards, issued by the Comptroller General of the Úoit"¿ States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or eror. In making those risk assessments, the auditor considers internal confol relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entþ's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the Conemaugh Township Area School District as of June 30, 2014, and the respectivã changes in financial position and, where applicable, cash flows thereof for the year then ended in In our opinion, the financial st¿tements referred accordance with accounting principles generally accepted in the United States of America. 3 Budfield Street Professional Building . 334 Budfield Street . 814-269 -4912' CFE Kimberþ A. Dorchak, CPA, CGFM Suite 100 Fax: 8t4-266-9577 www.kotzancpa.com ' Johnstown, PA 75904 Change in Accounting Principle As discussed in Note 22 to the financial statements, in fiscal year 2014, the District adopted new accounting guidance, GASB St¿tement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information on pages 5 through 13 and page 49, respectively, 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 financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary 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 for consistency with management's responses to our inquiries, the basic financial 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. Supp I ementary Inþ rmation Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements. The accompanyng schedule of expenditures of federal awards and certain state grants is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. The schedule of expenditures of federal awards and certain state grants is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards and certain state grants is fairly stated in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Sløndørds In accordance with Government Auditing Standards, we have also issued our report dated December 15,2014 on our consideration of Conemaugh Township Area School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standqrds in considering Conemaugh Township Area School District's internal control over financial reporting and compliance. (oU.*r^r¡ Q-€'tr. s g¡.,rocro.Jrr fotzHCPR & Associates, P.C. Johnstown, Pennsylvania December 15,2014 4 Þ C Management's Discussion and Analysis C onemøugh T ownship Areø S cho ol District 2013-2014 This Managemenfs Discussion and Analysis (MD & A) offers an overview of the Conemaugh Township Area School Districfs (CTASD) financial performance during the fiscal year July 1, 2013-June 30,20L4. It should be read in conjunction with the financial statements, which follow. Comparative data from fiscal year 2012-2013 is required and is included in this report. FIN,{NCIA¿ STATEMENTS Financial Statements have been audited by Kotzan CPA & Associates, P.C. and prepared in accordance with GASB Statement No. 34, presenting both entity-wide and fund-type reports using both the accrual and modified accrual basis of accounting respectively. GASB # 34 REPORTING Every effort has been made to ensure this report is easy-to-read and understandable to all citizens of the Conemaugh Township Area School District and other interested parties. Questions and comments regarding the included information may be obtained either in person or by mail by contacting: Mrs. Gina Rembold, Business Manager, 300 W. Campus Avenue, Davidsville, PA 15928; Phone (814) 479-7431 or email [email protected]. The remainder of the report contains information included in the fiscal year 2013-2014 Annual Financial Report (PDE form 2057) and local auditor's repott. Comparative data for 2012-2013 vs.2013-2014 is included in the following report. Government-wide Statements The government-wide statements report information about the District as a whole using the accrual method of accounting. Net assets include all of the districfs assets and liabilities. Current year revenues and expenditures are included in the statement of activity regardless of when paid or received. This approach allows school districts to account for assets and liabilities more like a "for-profl(' business would, making comparisons easier and more consistent. The financial well-being of the District can be more easily assessed using the net assets report or the overall difference between assets and liabilities. The following reports only show the Districfs financial stability and do not address the overall success or failure of the District. Determining if the District is providing a quality education to its students while maintaining financial stability is much more difficult and involves many non-financial factors not included in this analysis. It is important to keep in mind, as these reports are reviewed, financial statements, although very important, are only one part of the overall operation of the District. The government-wide statements are divided into two categories: l. Government Activities - Includes all basic activities, such as education, 2. administration, transportation, capital projects and athletics. Business-Type Activities - Food Service Department. Fees and charges to staff and students help support the cost of operation. 5 Conemaugh Township Area School District Manogemenl's Díscussíon and Anolysis (MD&A) Fund Financial Statements Fund financial statements provide information about the significant funds, not the district as o whole Gotsernmental Funds - Governmental funds encompass most of the Districf s activities. Government fund statements present a detailed, short-term financial view of the District on a modified accrual basis. Proprietary Funds - Proprietary funds are more like a business-type activity. The District Food Service Fund is a proprietary fund in that money is collected through fees and charges and supports the expenses of the fund. Fiduciary Funds - Funds where the District is a custodian or trustee. The District cannot use these funds for any operational expenditure. The Student Activities Fund and Scholarship Fund represent fiduciary funds. FINANCIAL HIGHLIGHTS The Conemaugh Township Area School Districfs general fund posted revenues of 513,201,,661 and expenditures of fi12,67'L,085. The difference resulted in a surplus of revenues over expenditures in the amount of $530,576. Conemaugh Township Area School Districfs general fund maintains a healthy fund balance of $5,518,699 at ]une 30,20't 4, $800,000 of which was assigned in an effort to offset the anticipated PSERS rate increases. These amounts are reflected in the fund financial statements (modified accrual basis). Property taxes were increased 3.66 mills for the 2012-2013 fiscal year to fund the debt service payments associated with the Elementary School renovation/ addition. t};re 2012-2013 fiscal year the District issued the Series of 2012 General Obligation Bonds in the amount of 58,225,000 to fund the Elementary School renovation. The balance outstanding at June 30,2014 was 57 ,675,000. During tl:re 2013-201.4 fiscal year the District issued the Series of 2014 General Obligation Bonds in the amount of $4,095,000 to fund various capital improvements in the District and to refund the Districfs 2006 lease agreement with the Bank of America. The balance outstanding at June 30,2014 was During $4,095,000. 6 Conemaugh Township Area School District Mønagement's Díscussíon ønd Anølysis (MD&A) Entity-Wide Financial Analysis Table 1 summarizes the assets, liabilities, and net position of the District at June 30,20'1.4, as compared to fune 30,2013. Table L Condensed Schedule of Net Position (Page EW-{EW-2) Governmental Activities 2014 Assets Current assets Capital assets Net Position Invested in capital assets, net of related debt Total net position * Restated - see 2013 $105,186 12,342,605 * 155,713 $ 928,219,234 fi 25,575,174 9260,899 fi 26-t,075 fi29,490,133 fi fi g 1,877,02'1. g 2,474,'1.47 g,ggL,536 1'1,,669,702 34,113 fi 6,997,986 fi fi14,672,5\].. g 7,622,851 6,596,640 14,219,491. $ 3L,505 $13,531,528 187,397 * 14,948,605 10,485 22,211. fi 1,91'1.,134 g g 97,153,699 fi 39,568 fi 187,397 * 40,982 * $195,281 g 228,379 914,867,792 fi 32,696 Change 201}2014 13,306,247 12,530,002 25,836,249 $ 2,643,984 2,494,632 8,903,747 1'1,,701,,207 g ',ß $155,713 * 73,678 913,612,341 913,il6,723 $11,355,683 $65,618 7,674,525 Unrestricted 2014 2013 13,232,569 1.4,792,892 Liabilities Cur¡ent liabilities Long-term liabilities Total liabilities 2014 2013 Total School District g fi13,426,342 Total assets Business-type Activities 7,7't4,093 11,388,379 fi2,223,962 7,910,249 6,637,622 $ 1.4,447,870 $ 419,922 Note 23 to the financial statements. Current assets are largely comprised of cash and investments. Capital assets represent land, buildings, and equipment less accumulated depreciation. Current liabilities primarily include accrued salaries and wages as well as the current portion of long-term debt. Long-term debt is comprised of the compensated absences liability, the OPEB liability, and the Series 2012 and Series 2014 Bonds. The most significant flucfuations reflected above are the increases in capital assets and long-term liabilities. The increase in capital assets reflects the ongoing building renovations and additions. Liabilities increased as a result of debt service incurred for the Series 2014 bond issue. 7 Conemaugh Township Area School District Management's Díscussion and Analys¡s (MD&A) Table 2 summarizes the revenues, expenses, and changes in net position of the District for the year ended June 30, 2014 compared to the year ended June 30,2013. Table 2 (REPÆRO-3A) Changes in Net Position GovernmentalActivities Business-typeActivities 2014 Program Revenues: Charges for services Operating grants and contributions Capital grants and contributions $ 73,884 2073 $ 2014 70,088 2013 Total School District Variance 2014 2013-2014 g 2013 g 328,308 30't,617 2,868,664 0 0 50,991 0 3,746,092 6,798,044 0 0 3,704,290 0 6,868,30'1, 11.,955 18,605 11 27 11.,966 3,746,092 6,798,044 18,632 (41,,812) 0 3,524 8,373 0 0 3,524 8,373 4.849\ 13,809,333 13,54'1,,239 2,505,919 2,343,029 9227,733 362,845 50,981 0 3,704,280 6,868,301 $ 228,673 298,761. $ 2,671,,337 2,856 197,327 50,981 General Revenues: Taxes levied Grants and entitlements Investment earnings Other Total Revenues Program Expenses: Instruction Support services Instructional student support Administrative and f inancial support services Operation and maintenance Pupil transportation Student activities Interest on long-term debt Food service Total Expenses Increase (Decrease) in net position 13,218,7M 12,984,231, 7,599,550 552008 590,589 7,599,550 7,1,65,487 0 0 542,863 609,906 0 o 2,048,797 1,648,190 0 0 0 0 0 0 623,687 12,765,724 11,803,955 623,687 57't,42't 13,389,41'L q__4qq&?q g_J;t80,ú9 (14,413\ g 419,922 fi '1,,19'1,,634 'L,054,006 714,754 411,050 726,498 39L,634 208,234 257,076 0 fl9lq2q) 8 g 70,257 (6,666) 268,094 434,063 7,1.65,487 542,863 609,906 0 2,048,797 '1,,648,190 400,607 0 0 0 0 57L,421. 'L,19L,634 1.,054,006 137,628 714,754 726,498 39L,634 208,234 (1'1.,744) 57't,,421. 52,266 411,050 257,076 623,687 (67,043) 19,416 48,842 '1,,074,035 12,375,376 L,L65,863 ç (745,9411 Conemaugh Township Area School District Mønøgement's Díscussion and Analysis (MD&A) The Change in Net Position across funds from 2012-2013 to 2013-201.4 was an increase of fi419,922. of the governmental activities increased in 2013-2014 as a result of the tax increase. The Districfs food service expenses increased 952,266 over prior year. Revenues Despite rising costs, the District continued to offer free breakfast to all students, grades K-12. The previous table shows the cost of program services and the charges for services and grants offsetting those services. The table below reflects the cost of program services and the net cost of those services after taking into account the program revenues and unrestricted state entitlements. Net Revenue/Expenses (Page EW-38) Program Expenses Governmental Activities Total Cost of Services 2014 Net Cost Net Cost of Services Total Cost of Services of Services 2014 2013 2013 : Instruction g support Administration Maintenance Pupil transportation Student activities Community services Interest and fiscal charges Net program expenses Instructional student 7,599,550 542,863 2,048,797 1.,19L,634 7't4,754 41't,050 fis,628,955 541,569 2,027,785 1,140,653 177,295 g 361,827 fis,39'1,771 609,906 609,906 1,,648,190 '1,554,009 1,,054,006 'L,054,006 726,498 39L,634 232,526 340,710 (324) 0 (120) 0 7,1.65,487 257,076 257,076 208,234 208,234 fi12,765,724 10,135,040 $4Éa¿gt g,3go,g3g Less: Unreshicted state entitlements (6,868,301) (6,798,044) Total governmental activities w,266,739 fi2,592,794 Business-type activities Food service : g 623,687 $ 33,109 g 571,421 g___!!,440 Governmental Activities Total net cost of service increased from2012-2013 to 2013-20't4,largely due to personnel costs; salaries and retirement contributions. Business-Type Activities Food service management-the cafeteria showed an increase in the net cost of service compared to 2012-2013, reflecting the overall increase in food service expenses. 9 n 2013-201.4 Conemaugh Township Area School District Manøgemenf's Díscussìon ønd Anølysis (MD&A) FTIND FINANCI,4.¿,4N,4L YSIS General Fund Reuenues The Conemaugh Township Area School District derived its revenue from three main sources; local effort, state subsidy and reimbursements, and federal funding. State funding continued to be the largest revenue source for Conemaugh Township Area School District in 2013-201.4. State subsidies and/or reimbursements accounted for 68% of the total revenue received tn 2013-201.4 ($8,951,009); 30% (94,015,594) was local efÍort, consisting largely of real estate tax collections; 2% (9235,058) represented the federal share which was basically Title grants and Medical ACCESS reimbursements. 201.3-2014 Function/Description 6000-Local Revenues 7000-State Revenues 8000-Federal Revenues 9000-Other Revenues Totals Actual Budgeted $ 3,836,038 8,924,647 284,819 $ Variance 4,015,594 g 8,951,,009 26,362 (49,761\ 235,058 0 0 $ 13,045,504 g 13,201.,661 179,556 0 g 156,157 201}20L4 Differences from Budseted to Actual Local a Increased EIT collections and other local revenues accounted actual. State a Small increases in state funding account for the modest increase. Federal a Reduction in ACCESS and Title funding. l0 for the increase from budget to Conemaugh Township Area School District Management's DÍscussion and Analysís (MD&A) General Fund Expenditares CTASD expenditures during 2013-201,4 totaled 912,67L,085. A breakdown of expenditures is illustrated in the table below. Function/Description Actual Budgeted fi 11O0-Rezular Education 1200-Special Education 5,76't,281 $ Variance 5,303,985 g 457,296 'L,640,289 1,,546,008 94,281 308,000 194,731, 113,269 300-Vocational Education 1400-Other Education 150O-Nonpublic School Program 2100-Pupil Services 2200-Media Services 1 67,608 59,017 6,500 13,1.66 42't,200 422,060 202,647 '1,67,376 8,591 (6,666) (860) 35,27'1, 2300-Administration 945,273 944,751 522 2400-Health Services 266,141 256,929 9,2-1.2 2500-Business Office 331,,82't 360,492 (28,671\ 1,205,699 1,1,65,890 39,809 767,700 678,803 308,324 403,012 11L,048 15,269 2600-Maintenance 2700-Transportation 2800/2900-IU Prosrams 3000-Extracurricular Activities 4000-Construction 5000-Financing 419,372 41,8,281 0 0 0 't,697,092 846,541 850,551 fi 14,458,904 g Totals - rounded 201.3-2014 Differences 88,897 12,67'1.,085 g -1.,787,819 from Budgeted to Actual a Overall savings in the 1100 category was largely realized due to a result of conservative spending in the other purchased services and supply objects, lower than expected healthcare/salary a Savings in the 1300 category was primarily due to maintaining much lower than expected GICTC rates and enrollment. Savings in the 2600 category was largely due to lower than expected spending for utilities such as natural gas and electricity and newly negotiated contracts. The "5000" category was under budget as a result of lower than expected interfund transfers to increases. a a Capital Reserve. General Fund Expenditure Comparative Data 2012-20L3 vs. 2013-2014 An illustrative comparative chart below shows the overall expenditures from 2012-2013 vs.2013-2014. Fiscal Year 2012-2013 2013-201,4 Difference Category- Category- Category- Category 1000 2000 3000 $6,928,408 $3,851,L85 fi373,494 97,1'1.6,907 M,304,625 188,499 453,M0 g g l1 9403,012 29,518 g Category- 4000 $o $o $o 5000 9L,099,086 g u6,541 g (252,545) Conemaugh Township Area School District Manøgement's Discussion ønd Anølysís (MD&A) Data 2Ol3-2O]4 Fund Financials The State recommends school districts maintain a General Fund "fund balance" of 8-12%, and has enacted legislation to limit the abitity of districts to raise real estate tax rates when a district has a fund balance over 8% (if budgeted expenditures exceed $19 million) or 12% (if budgeted expenditures are less than $19 million). CTASD's fund balance exceeded the State's recommendation and was more than enough to cover cash flow issues throughout the year. The fund balance as of June 30,20-1,4 is higher than the previous year. Overall, the District continues to maintain a fund balance higher than recommended by the State. Controlled, further reduction of this fund balance to enhance the educational experience for the students of Conemaugh Township Area School District would not put the District in any financial danger. It should be noted, however, that reducing the fund balance also reduces the ability to earn interest on those funds throughout the fiscal year. It is advisable to maintain a reasonable fund balance, while not over-taxing the citizens of the District, and yet maintaining a balance between educational and financial responsibilities. The District also has assigned $800,000 of the Fund Balance to be used for the anticipated PSERS rate hikes in2014-2015 and beyond. Capital Assets The following table illustrates changes in capital assets, net of depreciation, by asset type. Capital Assets - Net of Depreciation (EW-l.) Governmental Activities Land Site improvements Buildings Construction in progress Equipment and furniturr Total fi 20't4 +o,seo 2,240,261" 11,,405,69'1, '1.46,774 950,957 Business-type Total Percentage Activities School District Change 2014 2013 20],4 2013 * g 0 o fi 46,560 5 46,560 46,560 $ * 2,240,26'1. 2,383,090 0 2,383,090 0 * 4,'1,45,129 0 1'1,405,69L 4,'145,129 0 '146,774 4,663,334 o 0 4,663,334 '1.,106,670 'J,,104,492 * 155,713 * 1,291,889 187,397 2013 $ fi't4,790,243 fi 12,342,605 9155,713 9187,397 914,945,956 912.-9002 The increase in capital assets in fiscal year 2014 reflects the significant additions and renovations to the Elementary School. The construction fund was nearly depleted during tllre 2013-2014 as construction at the elementary was completed. t2 2013-2014 0.0% -6.0% 175.2% -96.9% -14.3% 1g.g% Conemaugh Township Area School District Management's Discussion und Analysìs (MD&A) Debt The following table illustrates a condensed summary of outstanding long-term debt, including percentage change. Outstanding Long-Term Debt Total School District 2013 fil't,770,000 $8.971,008 2014 Other general obligation debt Total wJz!,000 $8.92L008 Total Percentage Change 2013-201,4 3L.27o 3L.2l' Total debt includes funding the Elementary School renovations and additions as well as debt to fund a High School renovation project and retire previous energy saving project debt. Ãct7Ufuct"l. of 2006 The Board of Directors took no action on Act T2which signified that the District opted out of Act 72. Act 'T., of 2006, a revamped Act72, with many of the same provisions was approved by the State in june 2006. Final Notes: The Board and Administration of the Conemaugh Township Area School District encourages the citizens and taxpayers of the District to review this document in conjunction with other financial resources that are available, including the Pennsylvania Department of Education's website at www.pde.state.pa.us and the CTASD website at www orq. The Districfs website contains a wealth of information about the District, its stafl students, Board, and financial status. Lastþ when reviewing this data included in this report it is important to note that the financial condition of the District while very important, is not the only indicator of a successful school dishict and must be considered only as one piece of the complex picture that makes up the Conemaugh Township Area School District. t3 Basic Financial Statements t4 Conemaugh Township Area School District Statement of Net Position June 30, 2014 Governmental Business-Type Activities Activities Total Assets Current assets: $ $ 861,301 0 9,106,396 3,005,644 861,301 Intergovernmental receivables 308,132 7,336 315,468 Other receivables 77,795 50,000 143,500 1,252 30,172 0 19,047 80,172 143,500 13,426,342 105,186 13,531,528 46,560 14,596,909 146,774 2,649 0 155,713 0 0 Total noncurrent assets 14,792,892 155 713 14,948,605 Total 28,219,234 260,899 28,480,133 0 0 0 $ 28,219,234 q__æ9É92 s $ Cash and equivalents Investrnents Taxes receivable Inventories Prepaid expenses Total current assets Noncurrent assets: Land Depreciable capital assets, net Construction in progress OPEB asset assets Deferred Outflows of Resources Total assets and deferred outflows ofresources 9,039,970 3,005,644 $ 66,426 0 46,560 14,752,622 146,',|74 2,649 $ 28,480,133 Liabilities Current liabilities: Intergovernmental payables Accounts payable Accrued salaries and benefits Payroll deductions and withholdings Accrued interest payable Current portion of long-term obligations 73,69s 428902 0 )s l4 $ 934,557 16,195 0 934,557 16,195 73,695 431,416 0 22,393 0 22,383 40r,289 600 401,889 0 30,999 30,999 1,877,021 34,113 1,911,134 I1,300,668 369,034 0 31,505 I1,300,668 Total noncurrent liabilities 11,669,702 31,505 11,701,207 Total liabilities 13,546,723 65,618 13,612,341 0 0 0 Invested in capital assets, net ofdebt Restricted for capital projects 6,997,986 155,713 7,153,699 1,782,167 0 Unrestricted 5,892 ,358 39,568 1,782,167 5,931,926 14,672,511 195,281 14,867,792 Unearned revenues Total current liabilities Noncurrent liabilities : Bonds payable, net Long-term portion of compensated absences Deferred Inflows of Resources 400,539 Net Position Total net position Total liabilities, deferred inflows of resources s and net position See accompanying notes 28,219,234 $ to the basic financial statements. l5 260,899 $ 28,480,133 Conemaugh Township Area School District Statement of Activities For the Year Ended June 300 2014 Program Revenues Charges for Services Expenses Governmental Activities: Instruction Instructional student support Administration and fi nancial support services Operations and maintenance ofplant services $ 7,599,550 542,863 s 1,931,752 Activities Activities $ (5,628,955) Total 0 $ (5,628,955) 0 (54r,569) 0 1,294 2,048,797 0 21,012 0 (2,027,785) 0 (2,027,785) I,tgt,634 0 0 714,754 0 34,921 120 (1,140,653) (177,295) (361,827) 0 257,076 0 0 0 50,98 I 0 0 0 0 0 0 0 0 0 (1,140,653) (177,295) 4l I ,050 537,459 14,302 12,765,724 73,884 2,505,819 50,981 (10,135,040) 623,687 227,733 362.84s 0 $ 13.389,41l q_!9_1,612 Business-Type Activities: Food service Total primary government 38,843 Capital Grants and Contributions 0 0 Pupil transportation Student activities Communify services Interest on long-term debt Total governmental activities $ Operating Grants and Contributions Net (Expenses) Revenues and Chanses in Net Position Governmental Business-Type $ 2,868,664 $ $ 50.981 General Revenues: Taxes levied Grants, subsidies and contributions, not restricted Investment earnings (541,569) r20 (2s7.076\ 0 (10,135,040) $ (36r,827) 120 (2s7.076\ 0 (10,135,040) (33,109) (33,109) (33,109) 110.168.149) 3,704,280 0 3,704,280 6,868,301 I 1,955 3,524 0 ll 6,868,301 11,966 3,524 Total general revenues 10.588.060 ll Change in net position 453,020 Miscellaneous Net position, beginning of year, restated Net position, end of year See accompanying notes to the basic financial statements t6 0 (33,098) 14,2r9,49r 228,379 814.672.51t $__ur2!! 10.588,07r 419,922 14"447 "870 s14,867,792 Conemaugh Township Area School District Balance Sheet Governmental Funds June 30, 2014 General Fund Major Fund Total Capital Projects Fund Governmental $ $ Funds Assets s Cash and cash equivalents Investments Taxes receivable Due from other governments Other receivables Inventories Prepaid expenditures Total assets 5,643,262 600,000 861,301 s 9,039,970 3,005,644 861,301 308,132 308,132 0 17,795 50,000 143,500 0 17,795 0 50,000 0 143 500 7,623,990 5,802,352 13,426,342 0 0 0 7,623,990 g___lw;2 Deferred Outflows of Resources Total assets and deferred outflows ofresources 3,396,708 2,405,644 0 g 13,426,342 Liabilities Due to other governments Accounts payable Accrued salaries and benefits Payroll deductions and withholding $ Total liabilities 46,774 73,695 428,902 934,557 16,195 0 0 934,557 16,195 1,306,575 146,774 1,453,349 798 716 0 798,716 798 7t6 0 798,',|16 73,695 282,128 $ 0 $ Deferred Inflows of Resources Delinquent taxes receivable Total deferred inflows of resources Fund Balance Nonspendable Restricted Assigned Unassigned Total fund balance Total liabilities, deferred inflows of resources, s and fund balance 193,500 0 193,500 0 5 ,655,578 5,655,578 800,000 4,525 .r99 0 800,000 0 4,525,199 5,518,699 5,655,578 tt,174,277 7,623 ,990$5,802,352$t3,426,342 See accompanying notes to the basic financial statements. t7 Conemaugh Township Area School District Reconciliation of the Governmental Funds Balance Sheet To the Statement of Net Position June 300 2014 Total fund balance - Amounts reported governmental funds for $ 11,174,277 governmental activÍties in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore, are not reported as assets in governmental funds. The cost of assets is$27,992,281 and the accumulated depreciation is $I 14,790,243 3,202,038. Property taxes receivable will be collected in the future, but are not available soon enough to pay for the current period's expenditures and therefore, are recorded as deferred inflows of resources in the funds. 798,716 Long-term liabilities are not due and payable in the current period and therefore, are not reported as liabilities in the funds. Long-term liabilities at year end consist of: Bonds payable $(1t,77o,ooo) Unamortized bond discounts Accrued interest payable Compensated absences OPEB asset 104,332 (22,383) (405,323) 2.649 (,12.090.72s) Total net position of governmental activities s_!4.fr2.51L See accompanying notes to the basic financial statements. l8 Conemaugh Township Area School District Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30,2014 General Fund Revenues Local sources $ 4,015,594 Major Fund Total Capital Projects Fund Governmental 3,616 $ Federal sources Total revenues $ 4,019,210 235,058 0 0 8,951,009 235,058 13,201,661 3,616 13,205,277 7,116,907 4,304,625 403,012 0 71,342 0 0 596,541 3,026,069 983,852 7,116,90'l 4,375,967 403,012 3,026,069 l,5go,3g3 12,421,085 4,08 1,262 16,502,347 780,576 (4,077,646) (3,297,070) 0 0 4,095,000 (13,021) 4,095,000 (13,021) 8,951,009 State sources Funds Expenditures Instruction Support services Non-instructional services Capital outlay Debt service (principal and interest) Total expenditures Excess ofrevenues over (under) expenditures Other linancing sources (uses) Bond proceeds Bond discount Interfund transfers Total other financing sources (uses) Net change in fund balance Fund balance, beginning ofyear Fund balance, end ofyear See (250,000) 250,000 0 (250,000) 4,331,979 4,081,979 530,576 254,333 784,909 4,9 88,123 5,401,245 10,389,368 $ 5,518,699 $ 5,655,578 S 11,174,277 accompanying notes to the basic financial statements t9 Reconciliario n or th e r,,t :iäi :iïTåi:::iï:ffi i::i Tiiä:"*"s in F un d B arances To the Statement of Activities For the Year Ended June 30, 2014 Total net change in fund balance Amounts reported for - $ governmental funds governmental activities in 784,909 the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation expense in the current period. Capital outlay Depreciation expense 93,078,349 630.7tt) 2,447,639 Because some property taxes will not be collected for several months after the District's year end, they are not considered as "available" revenues in the governmental funds. Deferred inflows of resources from tax revenues increased by this amount this year. 13,467 Interest on long-term debt is recognized in the governmental funds when it is due. In the statement of activities, interest expense is recognized as interest accrues. The liability for accrued interest expense decreased by this amount this year. 27,309 In the governmental funds, compensated absences measured by the amounts used. The statement measures by the are of activities amounts earned. The liability for compensated absences increased by this amount this year. (33, I s9) Post-employment benefits are recognized as expenditures in the governmental funds when they are paid. In the statement of activities, post-employment benefits are recognized as expenses when incurred. This amount represents the 2,783 difference. See accompanying notes to the basic financial statements. 20 Conemaugh Township Area School District Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances To the Statement of Activities For the Year Ended June 30, 2014 The proceeds and principal payments on long-term debt provide and consume current financial resources of governmental funds, respectively. However, they respectively increase or reduce long-term liabilities on the statement of net position. Further, the effect of bond discounts are reported in the funds in the year of issue but are deferred and amortized in the statement of activities. The effect is shown below: Proceeds on 2014 Bond Discount on 2014 Bond Bond principal payments $(4,095,000) 13,021 240,000 Energy Saver Project principal pa¡rrnents Amortization of bond discount 1,056,009 ç.es6) Change in net position of governmental activities (2.789.927\ $__453-0æ See accompanying notes to the basic financial statements. 2t Conemaugh Township Area School District Statement of Net Position Proprietary Fund June 30, 2014 Food Service Assets Current assets: Cash and cash equivalents Intergovernmental rec $ eivables 66,426 '7,336 1,252 30,172 Other receivables Inventory 105, I 86 Total current assets Noncurrent assets: Furniture and equipment, net 155,7t3 Total noncr¡rrent assets 155,713 Total assets 260,899 0 Deferred Outflows of Resources $ Total assets and deferred outflows ofresources 260,899 Liabilities Current liabilities: Accounts payable $ Unearned revenue 2,514 30,999 600 Current portion of compensated absences 34 113 Total current liabilities Noncurrent liabilities : Long-term portion of compensated absences 31,505 Total noncurrent liabilities 3l.505 Total liabilities 65.618 0 Deferred Inflows of Resources Net Position 155,713 39,568 Invested in capital assets Unrestricted 195,281 Total net position Total liabilities, deferred inflows of resources and net position See accompanying notes to the basic financial statements. 22 $ 260,899 Conemaugh Township Area School District Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Fund For the Year Ended June 30,2014 Food Service Operating revenues s Food service revenue 227,733 227,733 Total operating revenues Operating expenses t93,620 Salaries Employee benefits Purchased property services Other purchased services Supplies 81,606 5,049 1,150 310,278 31,684 Depreciation 300 Dues and fees Total operating expenses 623,687 Operating income (loss) (395,954) Nonoperating revenues (expenses) ll Eamings on investrnents 48,417 State sources 314,428 Federal sources Total nonoperating revenues (expenses) 362,856 Change in net position (33,098) Total net position, beginning ofyear, restated 228,379 $ Total net position, end ofyear See accompanying notes to the basic financial statements. 23 195,281 Conemaugh Township Area School District Statement of Cash Flows Proprietary Fund For the Year Ended June 30, 2014 Food Service Cash flows from operating activities fi Cash payments to employees for services 228,559 (184,847) Cash payments to suppliers for goods and services (4t7,597) Cash received from users (373,885) Net cash provided by (used for) operating activities Cash flows from non-capital financing activities 47,799 328,658 State sources Federal sources 376,457 Net cash provided by (used for) non-capital financing activities Cash flows from investing activities Eamings on investrnents ll ll Net cash provided by (used for) investing activities 2,583 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning Cash and cash equivalents, end 63,843 ofyear g ofyear 66,426 Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: $ Operating income (loss) (39s,9s4) Adjustments to reconcile operating income (loss) to net cash provided by (used for): 31,684 Depreciation (Increase) decrease in (Increase) decrease in Increase (decrease) in Increase (decrease) in accounts receivable 139 (21,727) 2,514 inventories accounts payable accrued salaries/benefits 8,7',72 687 Increase (decrease) in unearned revenue 22,069 Total adjustrnents Net cash provided by (used for) operating activities See accompanying notes to the basic financial statements. 24 $ (373,885) Conemaugh Township Area School District Statement of Fiduciary Net Position Fiduciary Funds June 30,2014 Agency Fund Assets $ 30,978 Cash and cash equivalents 30,978 Total assets 0 Deferred Outflows of Resources Total assets and deferred outflows of resowces $_3082q Liabilities $ 30,978 Due to students 30,978 Total liabilities Deferred Inflows of Resources 0 Net Position 0 Toøl liabilities, deferred inflows of resources and net position See accompanying notes to the basic financial statements. 25 $ 30,978 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 1. Description of School District and Reporting Entity The Conemaugh Township Area School District is a Local Education Agency of the third class, govemed by a nine-member publicly elected board, located in the Commonwealth of Pennsylvania. The District has approximately 1,020 enrolled students and operates two school buildings, including an elementary school (grades K-5) and a middle/senior high school (grades 6-12). The District also participates in a local area vocationaVtechnical school with various other districts A reporting entity is comprised of the primary government, component units and other organizations that are included to ensure that the basic financial statements of the School District are not misleading. The primary government consists of all funds, departments, boards and agencies that are not legally separate from the School District. For Conemaugh Township Area School District, this includes general operations, food service, and student related activities of the School District, Component units are legally separate organizations for which the School District is financially accountable or other organizations whose nature and significant relationship with the School District are such that exclusion would cause the School District's financial statements to be misleading. Financial account¿bility is defined as the appointment of a voting majority of the component unit's board, and (1) either the School District's ability to impose its will on the organization; or (2) there is potential for the organization to provide a financial benefit to or impose a financial burden on the School District. The School District has no component units. 2. Summary of Significant Accounting Policies The financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to local govemmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing goverrìmental accounting and financial principles. The more significant of these accounting policies are described below. A. Basis of Presentation The School District's basic financial statements consist of government-wide statements, including a statement of net position and a statement of activities, and fund financial statements which provide a more detailed level of financial information. Government-wide Financial Statements The statement of net position and the statement of activities display information about the School District as a whole. These statements include the financial activitics of the primary government, except for fiduciary funds. 26 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 The statement of net position presents the financial condition of the governmental and business-type activities of the School District at year end. The statement of activities presents a comparison between direct expenses and program revenues for each program or function ofthe School District's governmental and business-type activities. Direct expenses are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of goods and services offered by the program, and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues which are not classified as program revenues are presented as general revenues of the School District. The comparison of direct expenses with program revenues identifies the extent to which each business segment or governmental function is self-financing or draws from the general revenues of the School District. Fund Financial Statements Fund financial statements are also provided in the report for all governmental funds, proprietary funds, and the fiduciary funds of the School District. Major individual govemmental funds and major individual enterprise funds are reported as separate columns in the fund statements. Non-major funds are aggregated and presented in a single column. Fiduciary funds are reported by fund type. B. Fund Accounting The School District uses funds to maintain its financial record during the year. A fund is defined as a fiscal and accounting entity with a self balancing set of accounts. There are three categories of funds: governmental, proprietary and fiduciary. Governmental Funds Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between goverffnental fund assets and liabilities is reported as fund balance. The following are the School District's major governmental funds: General Fund - The general fund is the operating fund of the School District and is used to account for all financial resources except those required to be accounted for in another fund. Capital Projects Fund - The capital projects fund is used to account for and report financial resources that are restricted to be used for the acquisition, construction, renovation, and deferred maintenance of major capital facilities or equipment, and for debt service. Prog"ietary Funds Proprietary funds focus on the determination of net position, changes in net position and cash flows and are classified as either internal service or enterprise funds. Internal service funds account for the financing of services provided by one department or agency to other departments or agencies of the School District. There are no internal service funds. Enterprise funds may be used to account for any activity for which a fee is charged to external users for goods and services. The following is the School District's major enterprise fund: 27 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 Food Service Fund - This fund accounts for the financial transactions related to the food service operation of the School District. Fiduciar.v Fund Fiduciary fund reporting focuses on net position and changes in net position. The fiduciary fund category is split into four classifications: pension trust funds, investment trust funds, private-purpose trust funds and agency funds. Trust funds are used to account for assets held by the School District under a trust agreement for individuals, private organizations, or other governments and are therefore not available to support the School District's own programs. The School District has no private purpose trust funds. The agency fund is custodial in nature (assets equal liabilities) and does not involve measurement of results of operations. The School District's agency fund accounts for those student activity progralns which have student participation in the activity and have students involved in the management of the program. C. Measurement Focus Government-wide Financial Statements Government-wide financial statements are prepared using the economic resourccs measurement focus. All assets, deferred outflows of resources, liabilities and deferred inflows of resources associated with the operation of the School District are included on the statement of net position. Fund Financial Statements Fund financial statements are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports on the sources (i.e. revenues and other financing sources) and uses (i.e. expenditures and other financing uses) of current financial resor¡rces. This approach differs from the manner in which the governmental activities of the government-wide financial statements are prepared. Governmental fund financial statements therefore include a reconciliation with brief explanations to better identifu the relationship between the governmentwide statements and the statements for govemmental funds. Like the government-wide statements, the proprietary fund is accounted for on a flow of economic resources measurement focus. All assets, deferred outflows of resources, liabilities and deferred inflows of resources associated with the operation of these funds are included on the statement of net position. The statement of changes in fund net position presents increases (i.e. revenues) and decreases (i.e. expenses) in net position. The statement of cash flows provides information about how the School District finances and meets the cash flow needs of its proprietary activities. Proprietary Fund types distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operation. The principal operating revenues of the Food Service fund are charges for sales and services. Operating expenses for Enterprise Funds include the cost of sales and services and administrative expenses. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Fiduciary funds are reported using the economic resources measurement focus. 28 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 D. Basis of Accounting Basis ofaccounting determines when transactions are recorded in the financial records and reported on the financial statements. Government-wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Proprietary and fiduciary funds also use the accrual basis of accounting. Differences in the accrual and the modified accrual basis of accounting arise in the recognition ofrevenue, the recording ofunearned revenue and deferred inflows and outflows of resources, and in the presentation of expenses versus expenditures. Unearned revenues are addressed in Note 2L, and deferred inflows/outflows of resources in Note 2M. Revenues - Exchange and Non-Exchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the acçrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the School District, available means expected to be received within sixty days of fiscal year-end. Non-exchange transactions, in which the School District receives value without directly giving equal value in retum, include income taxes, property taxes, grants, entitlements and donations. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied (see Note 5). Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specifu the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the School District must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. Under the modified accrual basis, the following revenue sources are considered to be both measurable and available atyear end: property taxes available as an advance, interest, tuition, grants, fees and rentals. Expenses/Expenditures On the accrual basis of accounting, exp€nses are recognized at the time they are incurred. The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable. Allocations of cost, such as depreciation and amofüzation, are not recognized in governmental funds. E. Budgetary Data An operating budget is adopted each year for the General Fund on a modified accrual basis of accounting The Pennsylvania School Code dictates specific procedures relative to adoption of the School District's budget and reporting of its financial statements, specifically: The School District, before levyrng annual school taxes, is required to prepare an operating budget for the succeeding fiscal year. 29 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 The School District is required to adopt a proposed budget at least thirty (30) days prior to adoption ofthe annual budget. The proposed budget shall be printed or otherwise made available for public inspection to all persons and shall be made available for duplication to any person, on request, at least twenty (20) days prior to the date set for the adoption of the budget. Final action shall not be taken on the proposed budget until after ten (10) days ofpublic notice. The Board of Directors may make transfers of funds appropriated to any particular item of expenditure by legislative action. An affirmative vote of two{hirds of all members of the board is required. The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts in the certificate when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary statements reflect the amounts in the final amended certificate issued during fiscal year 2014. Fund balances in Budgetary Funds may be appropriated based on resolutions passed by the Board of Education, which authorized the School District to make expenditures. Appropriations lapse at the end of the fiscal period. In order to preserve a portion of an appropriation for which an expenditure has been committed by a purchase order contract, or other form of commitment, an encumbrance is recorded. Included in the General Fund budget are program budgets as prescribed by the State and Federal agencies funding the program. These budgets are approved on a program by program basis by the State or Federal funding agency. An Enterprise fund budget is not adopted; however, a formal budget is prepared and approved by management and expenditures are controlled on the basis of this budget. F. Prepaid Items Payments made to vendors for services that will benefit periods beyond June 30, 2014, are recorded as prepaid items using the consumption method. A current asset for the prepaid amount is recorded at the time of the purchase and an expenditure/expense is reported in the year in which serviçes are consumed. G. Inventory On government-wide financial statements inventories are presented at the lower cost or market on a first-in, frrst-out basis and are expensed when used. Inventories in governmental funds are stated at cost by the first-in, first-out method. The purchase method is used to account for inventories. Under the purchase method, inventories are recorded as expenditures when purchased; however, an estimated value of inventories ($50,000) is reported as an asset in the General Fund. The inventories in the General Fund are equally offset by nonspendable fund balance which indicates they do not constitute "available spendable resources" even though they are a component ofnet current assets. The General Fund is the only governmental fund that has material inventory balances as of Iune30,2014. as of June 30, 2014. The inventory consisted of government donated commodities which were valued at estimated fair market value, and purchased commodities and supplies, both valued at cost using the first-in, first-out (FIFO) method. Any unused commodities donated by the federal government at June 30,2014 are reported as unearned A physical inventory of the Food Service Fund food and supplies was taken revenue. 30 Conemaugh Township Area School District Notes to Financial Statements June 30' 2014 H. Capital Assets General capital assets result from expenditures in the governmental funds. These assets are reported in the goveÍunental activities column of the govemment-wide statement of net position but are not reported in the fund financial statements. Capital assets used by the proprietary fund are reported in both the business-type activities column on the government-wide statement of net position and in the fund financial statements. All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Donated fixed assets are recorded at their fair market values as of the date received. The School District maintains a capitalizaÍion threshold of fifteen hundred dollars ($ 1,500). The School District does not possess any infrastructure. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not capitalized. All reported capital assets, except for land and construction in progress, are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following useful lives: Estimated Lives ôn Buildings and Improvements Furniture and Equipment Site Improvements I. 15 - 40 years 5 - 20 years 15 - 30 years Original Issue Discounts Bond discounts are reported as direct adjustments to the face amount of the bond and are deferred and amortized over the life of the bond using the straight-line method of amortization. J. Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the hscal year are referred to as either "due to/from other funds" (i.e. the current portion of interfund loans) or "advances to/from other funds" (i.e. the non-current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." In governmental fund financial statements, advances between funds are offset by an amount reported as nonspendable fund balance to indicate that they are not available for appropriation and are not expendable available financial resources. All receivables are determined to be collectible. and no allowance has been established. Receivables from and payables to extemal parties are reported separately and are not offset in the of the government-wide financial proprietary fund financial statements and business-type activities statements, unless a right of offset exists. K. Accrued Liabilities and Long-term Obligations All payables, accrued liabilities and long-term obligations are reported in the govemment-wide financial statements, and all payables, accrued liabilities and long-term obligations payable from proprietary funds are reported on the proprietary fund financial statements. 3l Conemaugh Township Area School District Notes to tr'inancial Statements June 30, 2014 In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources, are reported as obligations of the funds. However, claims and judgments, compensated absences, special termination benefits and contractually required pension contributions that will be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they are due for payment during the current year. Bonds are recognized as a liability on the fund financial statements when due. L. UnearnedRevenues The District reports uneamed revenue on its government-wide and fund financial statements. Unearned revenues arise when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period (fund financial statements). Unearned revenues also arise when resources are unearned by the District and received before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifuing expenditures (fund financial statements and government-wide financial statements). In subsequent periods, when both rovenue recognition criteria are met, or when the District has a legal claim to the resources, the liability for unearned revenue is removed from the applicable financial statement and revenue is recognized. M. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and thus, will not be recognized as an outflow of resources (expense/expenditure) until then. The District currently reports no deferred outfl ows of resources. In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has one item, which arises only under a modified accrual basis of accounting, that qualifies for reporting in this category. Accordingly, unavailable revenue from delinquent taxes receivable of$798,716 is reported as a deferred inflow ofresources on the governmental funds balance sheet only. N. Fund Balance Classification GASB Statement No. 54, "Fund Bqlance Reporting and Governmental Fund Type Definitions," provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government's fund balances more transparent. The following classifications describe the relative strength of the spending constraints: a Nonspendable Fund Balance - amounts that are not in nonspendable form (such as inventory or prepaid items) or are legally or contractually required to be maint¿ined intact. Restricted Fund Balance - amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels ofgovernment), through constitutional provisions, or by enabling legislation. 32 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 a Committed Fund Balance - amounts constrained to specific purposes by the District itself, using its highest level of decision-making authority (i.e., School Board). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. a Assigned Fund Balance - amounts the District intends to use for a specific purpose. Intent can be expressed by the School Board or by an official or body to which the School Board delegates the authority. a Unassigned Fund Balance - amounts that are available for any purpose. Positive amounts are reported only in the general fund. As of June 30,2014, fund balance components, other than unassigned, consist of the following: Nonspendable General Fund: Inventory 50,000 143,500 $ Prepaid items Future retirement costs Capital Projects Fund Total $ Restricted Assigned So $0 0 0 0 800,000 0 5,655,578 0 193,500 $ 5,65s,578 0 s 800,000 The School Board establishes (and modifies or rescinds) fund balance commitments by resolution of the board. A fund balance commitment is further indicated in the budget document as a commitment of thc fund. Assigned fund balance may be established by the Business Manager and/or Superintendent, as delegated by the School Board. The District would typically use Restricted fund balances first, followed by Committed resources, and then Assigned resources, as appropriate opportunities arise, but reserves the right Unassigned resor¡rces first to defer the use of these other classified funds. O. to selectively spend Net Position Net position represents the difference between assets and dsferred outflows of resources, and liabilities and deferred inflows ofresources. Net position invested in capital assets, net ofrelated debt consists ofcapital assets, net ofaccumulated depreciation, reduced by the outstanding balances ofany borrowings used for the acquisition, construction or improvement of those assets. Net position is reported as restricted when there are limitations imposed on its use either through the enabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. When both restricted and unrestricted resources are available for use, restricted resources first, then unrestricted resources as they are needed. it is the District's policy to use The government-wide statement of net position reports 51,782,167 of restricted net position, which is restricted by enabling legislation for capital projects. JJ Conemaugh Township Area School District Notes to Financial Statements June 30,2014 P. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Q. PensÍon Plan Substantially all fulI-time and part-time employees of the District participate in a cost-sharing multiple employer defined benefit pension plan. GASB Statement No. 27, Accounting þr Pensions by Støte and Local Governmental Employers, requires an employer that participates in such a plan to recognize annual pension expenditures or expenses equal to its contractually required contributions, subject to the modified accrual basis of accounting in governmental funds. (That is, if contributions from governmental funds are required but not made, the difference would not be reported as an expenditure but as a long-term liability if not payable with expendable, available financial resources.) The District made all required contributions for the year ended June 30, 2014, and has recognized them as expenditures and expenses in the governmental and proprietary funds, respectively. 3. Cash and Cash Equivalents and Investments Under Section 440.1 of the Public School Code of 1949, as amended, the District is permitted to invest its monies as follows: Obligations of (a) the United States of America or any of its agencies or instrumentalities backed States of America, (b) the Commonwealth of Permsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the Commonwealth, or (c) any political subdivision of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the political subdivision. by the full faith and credit of the Unitsd Deposits in savings or time deposits or share accounts of institutions insured by the Federal Deposit Insurance Corporation to the extent that such accounts are so insured and, for any amounts above the insured maximum, provided that approved collateral as provided by law is pledged by the depository. The deposit and investment policy of the school district adheres to state statutes and prudent business practice. Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash and include investments with original maturities of three months or less. Cash and cash equivalents consist of demand deposits at local financial institutions, money market mutual fund investments and certificates of deposit with Pennsylvania Local GoveÍrment Investment Trust (PLGIT) and the Pennsylvania School District Liquid Asset Fund (PSDLAF), and cash on hand of $200. The market values of deposits are equal to the cost of the deposits. The investments are stated at cost including accrued interest which approximates market value. 34 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 The District invests in the Pennsylvania School District Liquid Asset Fund (PSDLAF) and the Pennsylvania Local Government Investment Trust (PLGIT) as authorized by the Board. PSDLAF was established to enable school districts to pool funds for investment in instruments authorized by Section 440.1 of the Pennsylvania School Code of 1949, as amended. PLGIT insures that it will not place deposits with any single issuing institution if the largest participant's pro rata share of such deposits exceeds insurance limits unless such deposits are collateralized as prescribed by Act 72 of the Commonwealth of Pennsylvania. These funds have the characteristics of open-end mutual funds and are not subject to credit risk classification. The District's investments include multþle long-term certificates of deposit with PSDLAF and PLGIT Cash Custodial Credit Risk - Deposits Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District does not have a policy for custodial credit risk, however the District's deposits in excess of the FDIC limit are collateralized in accordance with the Pennsylvania Security for Public Deposit Act. As of June 30,2014, S9,854,765 of the District's bankbalance of $10,377,538 was exposed to custodial risk as: Uninsured and uncollateralized Collateralized with securities held by the pledging financial institution Uninsured and collateral held by the pledging bank's trust department not in the District's name Total 0 $ 0 9.854.765 $_9.854Jé5 Reconciliation to Financial Statements $ Uninsured amount above Plus: Insured amount Less: Outstanding checks Carrying amount - bank balances Plus: Petty cash Pooled cash equivalents Less: Ccrtificates of deposit considered investments Total cash per financial statements 9,854,765 522,773 1170.850) 10,206,688 200 1,936,130 (3.005.644) $_9-131Å14 Investments As of June 30,2014, the District had the following investments: Investment Certificates of Deposit Maturity Fair Value 4-12 months $3,005,644 N/A N/A PA Local Government Investment Trust PA School District Liquid Asset Fund Total 1,7 63,819 t72"3tl $4p41J14 35 Conemaugh Township Area School District Notes to Financial Statements June 300 2014 Interest Rate Risk The District does not have a formal investment policy that limits inveshnent maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk The District has no investment policy that would limit its investment choices to certain credit ratings. As June 30, 20l4,the District's investments were rated of as: Standard & Poor's AJqAm AJqAm Investment PA Local Government Trust PA School District Liquid Asset Fund Concentration of Credit Risk The District places no limit on the amount the District may invest in any one issuer Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral security that are in possession of an outside party. The District has no investment subject to custodial credit risk. Reconciliation to Financial Statements Total investments above Less: Deposits in investment pool considered cash equivalents Total investments per financial statements 4. g 4,941,774 0.936.130) $l-005,644 Real Estate Taxes Real estate taxes for the School District are collected from the Borough of Benson and the Townships of Conemaugh and West Paint. The tax on real estate for public school purposes for fiscal 2014 was 27.96 mills (527.96 per $1,000 of assessed valuation) as levied by the Board. Assessed valuations of property (5113,473,570) are determined by Somerset County and the elected tax collectors are responsible for collection. The schedule for real estate taxes levied for each fiscal year is as follows: July I Julyl-September30 - Levy Date - 2% Discount Period - Face Payment Period - l0% Penalty Period - Lien Date October I -November30 December I -December3l January 15 36 Conemaugh Township Area School DistrÍct Notes to Financial Statements June 30,2014 5. Taxes Receivable The elected tax collectors are required to return any uncollected taxes to the county's tax claim bureau by January 15. It has been determined the amount of outstanding taxes as of June 30, 2014 is $861,301. The School District, in accordance with accounting principles generally accepted in the United States of America, recognized the delinquent and unpaid taxes receivable. An allowance for uncollectible taxes was not est¿blished by the administration. A portion of the amount estimated to be collectible, which was measurable and available within 60 days, was recognized as revenue and the balance recorded as a deferred inflow of resources in the fund financial statements. Uncollected taxes for the year ended June 30,2014: s Realty Transfer Tax Delinquent Real Estate 4,023 33,088 14,813 Earned Income Taxes Occupation Taxes Delinquent Per Capita Tax Delinquent Occupation Taxes 1,373 2,871 6.417 Uncollected Taxes Recognized as Revenue (received Real Estate Taxes - 62,585 within 60 days) Deferred Inflow of Resources Total Taxes Receivable 6. 798"716 $861"301 Unearned Revenues Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Unearned revenues of$30,999 in the Proprietary Fund represent credits on student cafeteria accounts ($5,952) and donated commodities inventory on hand (925,047) at June 30,2014. 7. Due From Other Governments Amounts due from other governments represent receivables for revenues earned by the School District or collections made by another governmental unit on behalf of the School District. At June 30, 2014, the following amounts are due from other govemmental units: Due From Federal State Local Proprietar.v Fund General Fund $ 76,434 231,698 0 96,717 619 0 $30&132 vÆ6 37 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 8. Capital Assets Capital asset activity for the fiscal year ended June 30,2014, was as follows: Beginning Balance Additions Transfers/ Deductions Ending Balance Governmental Activities Capital assets, not being depreciated: Land 46,560 * $ Construction in progress Total capital assets, not being depreciated Capiøl assets, being depreciated: Site improvements Less accumulated depreciation: Buildings and improvements Furniture and equipment $ 146,774 4, 709.894 146,774 (4,663,334) 193,334 * 3,347,332 * 2,843,024 4,663 ,334 20,440,032 88,551 0 3,435,883 3,923,032 * 0 0 3,923,032 12,571,327 Total accumulated depreciation $12 459,503 *$ 459,503 Total capital assets, being depreciated Less accumulated depreciation: 272,106 Equipment 272,106 Total accumulated depreciation I 0 0 142,829 0 630,711 0 s 2,447,638 Business-Type Activities Capital assets, being depreciated: $ 245,796 242,086 187,397 * 0 27,798,947 9,034,341 2,494,926 1,682,771 13,202 ,038 2,300,864 4,663,334 7,63 2.711 Total capital assets, being depreciated, net 46,560 (4,663,334) 8,788,545 * 2,242,840 * 1,539,942 * Site improvements Business-type activities capiøl assets, net $o 20,204,038 2,931,575 4,663,334 Total capital assets, being depreciated Equipment 0 146,774 12,933,674 Buildings and improvements Furniture and equipment Governmental activities capital assets, net $ 4,663,334 14,596,909 $ 0 $ 14,790,243 $ 0 $ 459,503 0 0 459,503 31,684 0 303 790 31,684 0 303,790 * $ (31,684) $ 0 $ 155,713 *Fixed assets and associated accumulated depreciation values were restated as of July 1,2013. See Note 23 to ¡he financial statements. 38 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities : Instruction Instruction support Administration and finance Operation and maintenance of plant Pupil transportation Student activities Total depreciation expense 9. - governmental $383,471 27,121 103,437 59,918 35,951 20.8t3 activities $é30JlL DefÌned Benefït Pension PIan Plan Description The District contributes to a governmental cost-sharing multiple-employer defined benefit pension plan administered by Pennsylvania Public School Employee's Retirement System (PSERS). Benefit provisions of the plan are established under the provisions of the Pennsylvania Public School Employees' Retirement Code (the Code) and may be amended by an act of the Pennsylvania State Legislature. The plan provides retirement and disability, legislatively mandated ad hoc cost-of-living adjustments, and healthcare insurance premium assistance to qualifying plan members and beneficiaries. It also provides for refunds of a member's accumulated contribution upon termination of a member's employment in the public school sector. PSERS issues a publicly available financial report that includes financial statements and required supplementary information for the plan. That report may be obtained by writing to Diane J. Wert, Office of Financial Management, Public School Employees' Retirement System, 5 N. 5th Street, Harrisburg, PA, l7l0l-1905. This publication is also available on the publications section of the PSERS website at ww\M.psers.state.pa.us. Fundine Policv The contribution policy is set by the Code and requires contributions by active members, employers, and the Commonwealth. Contribution rates: Member contributions - Active members who joined PSERS prior to July 22, 1983, contribute at 5.25o/o (Membership Class T-C) or at6.50Yo (Membership Class T-D) of the member's qualifying compensation. Members who joined PSERS on or after July 22, 1983, and who were active or inactive as of July l, 2001, contribute at 6.250/o (Membership Class T-C) or at 7 .50%o (Membership Class T-D) of the member's qualifying compensation. Members who joined PSERS after June 30,2001 and before July 1,2011, contribute at7.50Yo (automatic Membership Class T-D). For all new hires and for members who elected Class T-D membership, the higher contribution rates began with service rendered on or after January 1,2002. 39 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 Members who joined PSERS after June 30,2011, automatically contribute at the Membership Class T-E rate of 7.50o/o (base rate) of the member's qualifuing compensation. All new hires after June 30, 201l, who elect Class T-F membership, contribute at 10.30o/o (base rate) of the member's qualifying compensation. Membership Class T-E and Class T-F are affected by a "shared risk" provision in Act 120 of 2010 that in future fiscal years could cause the Membership Class T-E contribution rate to fluctuate between 7.50% and 9.50o/o and Membership Class T-F contribution rate could fluctuate between 10.30% and 12.30%. Employer contributions - The contribution required of participating employers is based on an actuarial valuation and is expressed as a percentage ofannual covered payroll during the period for which the amount is determined. Before July l, 1995, the school district and the Commonwealth shared the employer contribution rate equally. Since July l, 1995, the school districts are required to pay the entire employer contribution rate and are reimbursed by the Commonwealth in an amount equal to the Commonwealth's share as determined by the market valueþersonal income aid ratio (as defined in Act 29 of 1994), which is at least one-half of the total employer rate. For the fiscal year ended June 30, 2014, the rate of the employer's contribution was 16.93 perc€nt ofcovered payroll. The 16.93 percent rate is composed ofa pension contribution rate of 16.00 percent for pension benefits and 0.93 percent for healthcare insurance premium assistance. Conemaugh Township Area School District's contributions to PSERS forthe years ending June 30,2014,2013 and2012were5919,674, 5656,767, and $468,440, respectively. Those amounts are equal to the required contribution for each year. 10. Post-employment Healthcare Benefits The Public School Employees' Retirement System (PSERS) provides a health insurance premium assistance program (premium assistance), a post-employment healthcare plan as defined in the Public School Employees' Retirement Code and amended by Act 29. The program is available to all eligible annuitants who elect to participate. Under this program, an employer contribution rate for premium assistance was established to provide reserves in the Health Insurance Account that are sufficient for the payment of premium assistance benefits. Participating eligible aruruítants are entitled to receive premium assistance payments equal to the lesser of $100 per month or their monthly insurance premium. In order to receive premium assistance, eligible annuitants must obtain their health insurance through their employer or the System's Health Options Program (HOP), in which the system acts as a conduit between the insurance companies and the eligible annuitant. 11. Postemployment Benefits From an accrual accounting perspective, the cost of postemployment healthcare benefits, like the cost of pension benefits, should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. In adopting the requirements of GASB Statement No. 45 during the year ended June 30, 2009,the District recognizes the cost of postemployment healthcare in the year when employee services are received, reports the accumulated liability from prior years, and provides information useful in assessing potential demands on the District's future cash flows. Because the District adopted the requirements of GASB Statement No. 45 prospectively, recognition of the liability accumulated from prior years will be phased in over 20 years, commencing with the 2009 liability. 40 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 Plan Description The District provides continuation of medical and pharmacy benefits to employees who retire from the District. Further, the District offers retirement cash bonuses. Retirement cash bonuses include $1,500 plus $5O/year of service. Elieibility A. Teachers and Administrators: a) Healthcare Ð b) B. - 30 years of PSERS service, including at least 15 years with the District, and PSERS retirement eligibility iÐ AcI ll0/43 - if employee does not meet District incentive requirements Cash bonus - l5 years of District service and PSERS retirement eligibility District incentive Support Staf?Superintendent: a) b) Healthcare - Eligibility for Act ll0l43 Cash Bonus - 15 years of District service and PSERS retirement eligibility Duration of Healthcare Benefits Teachers and Administrators eligible for District incentive: of l0 years or until age 65 or qualification for Medicare if earlier. Spousal coverage can also be purchased. Spousal coverage ceases with the ccssation of retiree coverage, or upon spouse's attainment of age 65 or qualification for Medicare if earlier. Retirees receive coverage for the lesser Teachers and Administrators eligible for Act ll0l43 Retirees can purchase coverage until the earlier of age 65 or qualification for Medicare. Spousal coverage can also be purchased. Spousal coverage ceases with the cessation ofretiree aoverage, or upon spouse's attainment of age 65 or qualification for Medicare if earlier. Support Staff: Retirees can purchase coverage until the earlier of age 65 or qualification for Medicare. Spousal coverage can also be purchased. Spousal coverage ceases with the cessation ofretiree coverage, or upon spouse's attainment of age 65 or qualification for Medicare if earlier. Participant Contributions A. Teachers and Administrators: a) b) B. Eligible for District Incentive Ð Retiree submits $100 monthly premium assistance to the District and pays any increases in premium rate post-retirement Spouse - premium rate Eligible under Act ll0l43 - premium rate iÐ Support StafflSuperintendent - premium rate 4t Conemaugh Township Area School DÍstrict Notes to Financial Statements June 30,2014 All contacts with the District's union employees will be renegotiated at various times in the future and, thus, costs and benefits are subject to change. OPEB benefits are administered by District personnel. No separate financial statements are issued. The number of participants as of July l,20ll, the effective date of the triennial OPEB valuation, follows. There have been no significant changes in the number covered or the type ofcoverage since that date. District Active employees 106 Retired employees 37 Spouses of retired employees Total 5 148 Funding Policy The District currentþ pays for postemployment health care benefits on a pay-as-you-go basis, and these financial statements assume that pay-as-you-go frrnding will continue. Annual Other Postemployment Benefit Cost For the fiscal year ended June 30,2014, the District's annual OPEB cost (i.e., expense) of $236,517 is equal to the Annual Required Contribution. Considering the District's annual OPEB cost as well as the payment of current health insurance premiums, which totaled $239,300, the result was a decrease in the District's Net OPEB Obligation of $2,783 for the year ended June 30, 2014. District Actuarial Accrued Liability (AAL) Retired employees $ 1,43g,goo Active employees Unfunded actuarial accrued liability (UAAL) Normal cost at beginning of year Annual covered payroll UAAL as s s 2,291,300 78,700 16.0439 Amortization factor based on 20 years o/o 851,500 To be determined of covered pawoll To be determined 42 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 District ARC Normal Cost $ 87,981 Amortization of UAAL 148.s40 Annual required contribution (ARC) 236,521 Interest on Net OPEB Obligation 0 (4) Adjustment to ARC Arurual OPEB cost (expense) 236,517 (239,300) Contribution for the fiscal year (2,783) Decrease in Net OPEB Obligation r34 Net OPEB Obligation June 30, 2013 Net OPEB Asset June 30,2014 $ (2,649) l0l.l8o/o Percent ofannual OPEB cost contributed The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation of the fiscal years ending June 30, 2014,2013 and2012 for the benefits were as follows: Year Ar¡rual Percentage of OPEB Cost Net OPEB Obligation Ended OPEB Cost Contributed (Asset) 6/3012014 s 236,5t7 101.18% s 6/3012013 s 228,4s3 109.96% s 134 613012012 g r19.30% $ 22,881 22r.s36 Q.649) Actuarial Methods and Assumptions Projections ofbenefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit Çosts between the employer and plan members to that point. Most included coverages are "community-rated" and annual premiums for communiÍy-rafed coverages were used as a proxy for claims costs without age adjustment. The unfunded actuarial accrued liability is being amortized over 20 years on a level percent ofpayroll closed basis. The projection of future benefits for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrencc of future events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the acfuarial value of assets, consistent with the long-term perspective ofthe calculations. 43 Conemaugh Township Area School District Notes to FinancÍal Statements June 30, 2014 l, 20ll actuarial valuation, the liabilities were computed using the projected unit credit method and level percent of payroll amortization. The actuarial assumptions utilized a 4olo discount rate. Because the plan is unfunded, reference to the general assets, which are short-term in nature (such as money market funds), was considered in the selection of the 4Yo rate. The valuation assumes a 7.lo/o healthcare cost trend increase for fiscal year 2014-15, reduced by decrements to a rate of 5.8%by 2027 . In the July 12. Long-Term Obligations During the fiscal year ended June 30, 2014, general long-term obligations changed $ Beginning of year Additions Payable 7,915,000 $ 1,056,008 0 Less: Original issue discount, net Long-term liabilities 9,366,504 0 41,932 47 932 11,770,000 (365,000) 0 0 437,428 (36,889) (r04,332) 0 $ I1,300,669 0 (1,056,008) 0 Less: current portion $ 395,496 $ 0 Changes in compensated absences End ofyear Long-term Obligations Compensated Absences 4,095,000 (1,296,009) 4,095,000 (240,000) Principal retirement follows: Total General Other Long-term Financins Bonds as 12,207,428 (401,889) (104,332) 0 0$400,539511,701,207 $ The future annual payments required to amortize all outstanding debt and obligations, except for the compensated absences, as of June 30,2014, including total interest payments are as follows: General Obligation Bonds Year Ended June 30, 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2038 $ Total Principal Interest 291,110 $ 365,000 619,084 405,000 410,000 420,000 425,000 2,250,000 2,555,000 2,985,000 129 104 1,955,000 $_!,672]0 $ 11,770,000 319,627 312,781 304,481 296,681 1,351,528 1,047 ,766 44 $ 656,1 l0 724,627 722,781 724,481 721,681 3,601,528 3,602,766 3,604,084 2,084,104 s 16,442 ,162 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 General Oblieation Bonds. Series of 2014 The District issued General Obligation Bonds, Series of 2014, dated June 17, 2014, tn the principal amount of $4,095,000. The proceeds of the bonds were used to fund various capital improvements to the facilities of the School District, refund the District's 2006 lease agreement with the Banc of America, and to pay all costs and expenses incurred by the District in connection with the issuance and sale of these bonds. The bonds bear interest rates ranging from 0.37Yo to 4.00Yo with annual principal maturities from March 2015 through September 2035. The balance outstanding at June 30,2014 was 54,095,000. General Oblieation Bonds. Series of 2012 The District issued General Obligation Bonds, Series of 2012, dated September 26, 2012, in the principal amount of $8,225,000. The proceeds of the bonds were used to fund certain additions and alterations to the Conemaugh Township Area Elementary School and other capital projects within the District, and to pay all costs incidental to the issuance of these bonds. The bonds bea¡ interest rates ranging from 0.600% to 3.625Yo with annual principal maturities from December 2012 through December 2037. The balance outstanding at June 30, 2014 was $7,675,000. Other Long-Term Financing: Enerey Saver Project In December 2006, the District entered into an agreement with Banc of America Public Capital Corp., a Kansas corporation, whereby the District purchases ooenergy-saving" equipment from Banc of America. The intent is that this energy-savings project will save the District $1,567,035 over the next 15 years in utility costs (or approximately S104,469 annually). The District is financing this project totaling $1,594,067 through Banc of America aI a rate of 4.01%o with annual payments of $142,092 commencing September 28, 2007 and ending September 28,2021. The project was finalized in fiscal year 2009. The balance of the financing agreement was paid in its entirety through the use of the Series of 2014 bond proceeds, resulting in a $0 balance outstanding at June 30, 2014. Accumulated Compensated Absences In accordance with accounting principles generally accepted in the United States of America, the District accrues liabilities for compensated absences. Compensated absences reflect the potential cost of sick leave 30,2014. The School District allows all employees to accumulate their unused sick leave. Upon retirement, eligible employees shall receive separation benefits based upon the tot¿l days of unused sick leave accumulated while in the employ of Conemaugh Township Area School District at the rate of $40 per day for the first 100 days, $50 per day for days 101-200 and 460 per day for accumulated unused days in excess of 200. The School District has computed a total liability of $437,428 at June 30,2014 with $405,323 reflected in the general fund and $32,105 reflected in the proprietary fund. Due to the nature of the obligation for accrued separation benefits, annual requirements to amofüze such obligations are not determinable and have earned by employees as of June not been presented. General obligation bonds and other long-term financing agreements entered into for governmental activity purposes are liquidated by the general fund. Compensated absences liabilities will be paid by the general fund; whereas, those related to business-type activities will be paid by the proprietary fund. 45 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 13. Interfund Transactions Interfund transfers during the year ended June 30,2014 consisted of the following: Transfer in Capital Projects Fund (major fund) General Fund (major fund) $250,000 0 s250.000 Transfer out $0 250.000 $250p00 In fiscal year 2014, the District transferred funds to the Capital Projects Fund to assist with capital expenditures 14. Operating Leases The School District entered into noncancellable operating leases for computers and copiers. Rental expenditures under all operating lease agreements were 820,716 for fiscal year 2014. Future minimum rental payments required under operating leases that have remaining lease terms as of June 30 are as follows: Year Ended June 30. Payment 2015 2016 2017 2018 $19,895 18,374 16,927 16,927 2019 2.821 Total minimum payments required VAp44 15. Jointly Governed Organization The School District governs, with several other school districts, a vocational technical school. Each district is represented on the vo-tech's school board. However, no on-going financial interest or responsibility exists between the School District and the vo-tech. The district's tuition expense for its students attending the vo-tech for fiscal 2014 was 5194,731. 16. Contingent Liabilities Grant Programs The School District participates in both state and federally assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. The School District is potentially liable for any expenditures which may be disallowed pursuant to the term of these grant programs. Management is not aware of any material items of noncompliance which would result in the disallowance of program expenditures. 46 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 17. Self Insurance - Medical Insurance The School District is participating in the insurance consortium with the Greater Johnstown A¡ea Consortium to provide for the medical care for eligible employees and their dependents. The consortium, which administers the plan, monitors the school's deposits into the school district trust account to be held for the benefits described above and Highmark Services, the plan administrator, processes and pays the claims. The consortium limits its liability by purchasing stop-loss insurance coverage. Conemaugh Township Area School District's liability at June 30, 2014 for unpaid claims incurred prior to the fiscal year end is not readily determinable. No liability has been recorded for these claims at June 30,2014 as the District recognizes medical claim expense as claims are paid. 18. Risk Management The District is exposed to various risks of loss related to theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The District has purchased various insurance policies to safeguard its assets from risk of loss. Insurance coverage appears to be consistent with previous years. During the year ended June 30,2014 and the two previous fiscal years, no settlements exceeded insurance coverage. 19. Related Party Transactions Intermediate Unit Participation The District is a member of Appalachia Intermediate Unit 8. The District avails itself of various services provided by this membership including special education, curriculum development, and certain internal service functions. The total of services provided to Conemaugh Township A¡ea School District for the year ended June 30,2014 for IU8 programs amounted to $298,411. At June 30,2014, the District had a balance due to Appalachia IU8 of $29,934 for services. Vocational Technical School Participation The District is served by the Greater Johnstown Area Vocational-Technical School. Students of the District have available at the Vocational-Technical School courses and curriculums related to the technical training fields. Costs of the Vocational-Technical School are shared with other local school districts. Conemaugh Township Area School District made direct payments totaling 5194,731 for the current year's operations. 20. Economic Dependency Conemaugh Township Area School District receives approximately 68% of ils revenue from the State of Pennsylvania in the form of state subsidies. Changes in funding levels by the State could have a material effect on future operations of the District. 21. Nonmonetary Transactions The District receives one of its federal program subsidies by means of noncash transfer. The U.S. Departrnent of Agriculture, through the Pennsylvania Department of Agriculture, provides food commodities under the National School Lunch Program. These nonmonetary commodity items are valued at market values and recorded as r€venue as received. The total food commodities donated by the federal government for the fiscal year 2014 totaled $53,8 17. 47 Conemaugh Township Area School District Notes to Financial Statements June 30, 2014 22. Changes in Accounting Principles and Restatement of Net Position For the year ended June 30, 2014, the District has implemented GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. This Statement establishes accounting and hnancial reporting standards that reclassiff, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities. In accordance with GASB 65, debt issuance costs, except any portion related to prepaid insurance costs, should be recognized as an expense in the period incurred. Prior to the implementation of GASB 65, such costs were deferred and amortized over the life of the debt. This change in accounting principle has resulted in a restatemcnt (decrease) of the District's net position, effective July l, 2013, in the amount of 5165,442, representing the unamortized deferred financing costs no longer meeting the definition of an asset. 23. Restatement of Net Position The net position of the Distriçt was restated effective July l, 2013 to reflect the impact of the change in accounting principles with the implementation of GASB Statement No. 65, as discussed in Note 22. The restatement resulted in a decrease in net positionol$165,442. Net position of the governmental activities was restated effective July l, 2013 Io correçt for overstated capital assets and accumulated depreciation. This prior year adjustment is reflected on the government-wide financial statements only, resulting in a decrease in net position of the governmental activities of $520,013 as of July l, 2013. Net position ofthe business-tlpe activities was restated effective July l, 2013 to correct for overstated capital assets and accumulated depreciation. This prior year adjustment is reflected on both the fund financial statements and the government-wide financial statements, with the net effect resulting in an increase in net position of the business-type activities and proprietary fund of $129,987 as of July 1,2013. 48 Conemaugh Township Area School District Schedule of Revenues, Expenditures and Changes In Fund Balance - Budget and Actual General Fund For the Year Ended June 30, 2014 Actual (Budgetary Budgeted Amounts Original Final Basis) Variance with Final Budget Favorable (Unfavorable) Revenues: Local sources $ State sources Federal sources 3,836,038 8,924,647 284,819 $ 3,836,038 8,924,647 $ $ 8,951,009 235,058 284,819 13,045,504 13,045,504 Total revenues 4,015,594 179,556 26,362 (49,761) 13,201,661 156,157 457,296 Expenditures: Instruction: Regular programs Special programs Vocational education programs Other instructional programs Nonpublic school programs 5,761,281 5,761,281 1,640,289 308,000 1,640,289 308,000 5,303,985 1,546,008 194,731 67,608 67,608 59,017 8,591 (6,666) Support services: Pupil personnel Instructional staff 6,500 6,500 13,166 42r,200 421,200 202,647 422,060 167,376 35,271 944,751 256,929 9,2r2 202,647 Administration 945,273 945,273 Pupil health 266,141 266,14r (28,671) 331,821 r,20s,699 767,700 767,700 417,372 2,000 4l'7,3',72 2,000 678,803 30s,362 2,962 415,78t 415,781 401,612 2,500 2,s00 1,400 14,169 1,100 597 092 597,092 596,541 551 13,358,904 13,358,904 12,421,085 937,819 Principal and interest Excess (deficiency) of revenues over expenditures 360,492 1,165,890 (313,400) (313,400) (1,000,000) (100,000) (250,000) Tofal other financing sources (uses) (1,100,000) (1,100,000) (250,000) Net change in fund balance (1,413,400) (1,413,400) 530,576 5,300,000 5,300,000 4,988,123 3,886,600 El]!.,999. Fund balance, begiruring ofyear $ 3,886,600 $ 88,897 I12,010 (e62) 1,093,976 750,000 100,000 0 See accompanying notes to the basic financial statements. 49 39,809 780,576 (1,000,000) (100,000) Fund balance, end ofyear s22 33t,821 Operation and maintenance of plant Student transportation Central Other support services Operation of noninstructional services: Student activities Community services Debt service: Other financing sources (uses) Interfund fransfers Budgetary reserve (860) 1,205,699 Business Total expenditures 94,281 113,269 850,000 1,943,976 (31t,877) s l,632,099 Conemaugh Township Area School District Schedule of Expenditures of Federal Awards and Certain State Grants For the Year Ended June 30, 2014 FederaVGrant Project Title Pass Program Total Federal Through Received Source c.F.D.A. Grantors Code Number Number Or Award Amount 84.010 013-r40094 07 t01/t3-09/30/t4 84.010 013-130094 07/01/12-09/30n3 84.367 84.367 020-140094 07 /01/13-09/30/t4 020-130094 07/0t/12-09/30n3 Grant Period Beginning/EndDate Accrued (Uneamed) Accrued (Uneamed) Revenueat For the Year July 1.2013 Revenue Revenue Recosnized Expenditures June30.2014 U.S. DEPARTMENT OF EDUCATION Passed through the Pennsylvania Department of Education: ECIATitIeI ECIATitIeI ECLA Title II Part ECIA Title II Part I I I | A A Total passed through the Pennsylvania Department ofEducation $ 0 $ 1s8,788 $ S 124,202 $ 187,703 60,071 34,000 26,07t $ 26,071 47 ,ttt 34,594 0 47 ,ttt 47,ttt 49,325 14,572 t,794 1,79! 450,835 235,233 48,572 233,764 233,764 166,ó96 1s8,788 34,58ó 0 t2,517 0 47,103 Passed through Appalachia Intermediate Unit 08: IDEAPaTtB-sectionóll IDEAPaTtB-Section6ll IDEA - Section 619 IDEA - Section 619 I I I | 07/0U13-09/30n4 /01/t2-09/30/13 84.027 062-140008 84.027 062-130008 07 84.173 84.173 l3l-1300088 l3l-1200088 07 Science I 84.366 unknown 157,557 0 t84,517 t84,st7 26,960 125,840 t25,840 0 0 0 1,537 1,537 1,537 01/0U13-06/30n4 1,537 0 0 /01/t2-06/30/r3 959 480 480 Subtotal Special Education Cluster Title II-B Mathematics and 184,517 203,942 07/01113-06/30114 390,955 283,877 126,320 186,054 186,054 0 0 150 150 150 391,105 283,877 126,320 t86,204 Total passed through Intermedicate Unit #8 Total U.S. Dçartment of Education See accompanying notes to the basic 50 0 28,497 150 186,204 28,647 84t,940 519,110 t74,892 419,968 419,968 75,750 financial statements. Conemaugh Township Area School District Schedule of Expenditures of Federal Awards and Certain State Grants For the Year Ended June 30, 2014 Federal FederaVGrant Project Title Source C.F.D.A. Code Number Pass Program Total Accrued Accrued Through Or Award Amount Received (Uneamed) (Uneamed) Grantors Grant Period Number Beginning/End Date For the Year Revenueat Julv 1.2013 Revenue Recosnized Revenue Expenditures June30.2014 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed through the Pennsylvania Depaftment of Public Welfare: Medical Assistance Program - Reimbursement SBAP Administration Reimbursement | 93.778 044-147367 07t01/13-06/30n4 N/A Total U.S. Department of Health and Human Services 1,294 0 1,294 t,294 0 1,294 0 1,294 r,294 0 U.S. DEPARTMENT OF AGRICULTURE Passed through the Pennsylvania Department of Agriculture: National School Lunch - (USDA Commodities) Passed through the Pennsylvania Department Federal Program I 10.555 N/A 07/0v13-06/30tr4 (a) (b) N/A 53,817 (4,099) N/A N/A 201,999 0 206,677 72,843 0 74,882 74,882 314,428 314,428 I 10.555 School Breakfast I 10.553 N/A N/A 07 0'7 /0t/13-06130/t4 /01/13-06t30/14 26,168 26,168 340,596 340,596 Subtotal Child Nutrition Cluster Funds (d) (2s,047) ofEducation: National School t¡nch State Matching (c) 32,869 32,869 328,659 S N/A N/A 07101/13-06130/14 N/A 2s,s49 3s4,208 Total U.S. Department of Agriculture TOTAL FINANCTAL ASSISTANCE $___q4lp4q 0 (4,099) 4,6',78 (l 8,330) 619 (t7,711) $__\ryþr2 $_l_2u21 $___?ÉL$q $____zÉLq¡q $____r!p32 See accompanying notes to the basic fìnancial statements. 5l (4,099) 206,6'17 Conemaugh Township Area School District Schedule of Expenditures of Federal Awards and Certain State Grants For the Year Ended June 30, 2014 Notes to Schedule of Expenditures of Federal Awards and Certain State Grants Note A - Significant Accounting Policies The accompanying schedule of expenditures of federal awards and certain state grants is prepared on the accrual basis ofaccounting. Note B - Donated CommodÍties Nonmonetary assistance is reported in the schedule at the fair market value of the commodities received and disbursed. At June 30,2014, the District had food commodities totaling 925,047 in inventory. (a) (b) (c) (d) Total amount of commodities received from the Department of Agriculture. Beginning inventory at July 1,2013. Total amount of commodities used. Ending inventory at June 30,2014. Note C - Direcflndirect Funding The following source codes reflect program funding: D Direct Funding Indirect Funding F Federal Share State Share I: S: Note D - Reconciliation to Financial Statements Total Federal Sources reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Add: IDEA-B Section 611 passed through, recorded as Local Sources Add: IDEÄ - Section 619 passed through, recorded as Local Sources Add: Title II-B passed through, recorded as Local Sources Total Federal Expenditures - - 184,517 1,537 150 42r.262 Governmental Funds Total Federal Sources reported on Statement ofRevenues, Expenses, and Changes in Fund Net Position - Proprietary Funds Tot¿l Federal Expendinres $235,058 314"428 314.428 Proprietary Fund Tot¿l Federal Expenditures $735-690 52 Conemaugh Township Area School District Schedule of Expenditures of Federal Awards and Certain State Grants For the Year Ended June 30' 2014 Note E - Test of 507o Rule $761,858 Total Expenditures Less: State's Share ofNational School Lunch Program and School Breakfast Program Q6.168\ Total Federal Expenditures s735.690 Special Education Cluster Child Nutrition Cluster $186,054 314.429 Tested $500.483 s735,690 Total Federal Expenditures 53 : 68.00/o KOTZAN CPA6L Dennis ASSOCIATES, P.C. C¡nïn¡o fusuc Accou¡¡reNrs & P. Koøan, CPA, CFF Brenda A. Pawlowski, CPA, CFE KimberþA. Dorchal<, CPA, CGFM MEMBER BusNpss CoNsti-r:cNTS AICPA . PICPA Report on fnternal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Audítíng Snndards Independent Auditors' Report To the Members of the Board Conemaugh Township Area School District West Campus Avenue Davidsville, Pennsylvania I 5928 We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-t)æe activities, each major fund, and the aggregate remaining fund information of Conemaugh Township Area School District as of and for the year ended June 30,2014, and the related notes to the financial statements, which collectively comprise Conemaugh Township Area School District's basic financial statements, and have issued our report thereon dated December 15,2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Conemaugh Township Area School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of Conemaugh Township Area School District's internal control. in internal control exists when the desigrr or operation of a control does not allow management or employees, in the normal cor¡rse of perforrning their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A signifi.cant deficiency is a deficiency, oÍ a A defi.ciency combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identiff all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identifu any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assr¡rance about whether Conemaugh Township Area School District's financial st¿tements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those 54 Budfield Street Professional Building . 334 Budfield Street ,ro-2u, ug 72u. Fo, ' w6_9 Suite 100 577 ' Johnstown, PA 75904 provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standørds. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's intemal control and compliance. Accordingly, this communication is not suitable for any other purpose. .r4o+ar-rC,g¿ì O.,'^.;l^r:Þ. Kotzan CPA & Associates, P.C Johnstown, Pennsylvania December 15,2014 55 C' KOTZAN CPAEL Dennis P Koøan, CPA, CFF Brenda A. Pawlowski, CPA, CFE ASSOCIATES, P.C. Kimberþ A. Dorchalq CPA, CGFM C¡runpo Pu¡ucAcmu¡lreNrs &. Busnws CoNs¡naNrs MEMBERAICPA,. PICPA Report on Compliance for Each Maior Federal Program and on Internal Control Over Compliance Required by OMB Circular A-133 IndePendent Auditors' RePort To the Members of the Board Conemaugh Towrship Area School District West Campus Avenue Davidsville, Pennsylvania I 5928 Report on Compliance for Each Major Federal Program 'We have audited Conemaugh Township Area School District's compliance with the types of compliance requirements described nt¡1e OMB Circulør A-133 Compliance Supplementthat couldhave a direct and material ef|ect on each of Conemaugh Township Area School District's major federal programs for the year ended June 30, 2014. Conemaugh Townshþ Area School District's major federal programs are identified in the summary of auditors' results section ofthe accorrpanying schedule offindings and questioned costs. Management's Responsibility Management is responsible for compliance applicable to its federal progrims. with the requirements of laws, regulations, contracts, and grants Auditors' Responsibility Our responsibility is to express an opiniòn on compliance for each of Conemaugh Township Area School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of cãmpüance in accordance with auditing standards generally accepted in the United States of America; the st¿ndards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the Uoite¿ States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the ar¡dit to obtain reaionable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Conemaugh Township Area School District's compliance with those requirements and perforrning such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Conemaugh Township Area School District's compliance. Opinion on Each Major Federal Program respects, with the rypes of compliance requirements ieferred to above that could have a direct and material effect on each of its major federal In our opinion, Conemaugh Township Area School District complied, in all material prograrns for the year ended June 30,20t4. 56 . 334 Budfield Street ' Suite 100 8L4-266-9577 874-269-4912' www.kotzancpa.com Budfield Street Professional Building Fa¡<: ' Johnstown, PA 75904 Report on Internal Control Over Compliance Management of Conemaugh Township Area School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Conemaugh Township Area School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Conemaugh Township Area School District's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material wealcness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. V/e did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Purpose of This Report The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements Accordingly, this report is not suitable for any other purpose. of OMB Circular A-133. ' a--\ ¿("u.¡*.,gQ-!r C\¡^oc-r'c'k-'r'' ç C rcotzblcPe & Associates, P.C. Johnstown, Pennsylvania December 15,2014 57 Conemaugh Township Area School District Schedule of Findings and Questioned Costs For the Year Ended June 30,2014 Section I - Summary of Auditors'Results Financial Statements Type of auditors' report issued: unmodified Internal control over financial reporting: Material weakness(es) identified? Signifi cant deficiency identified not considered to be material weaknesses? Noncompliance material to financial statements noted? Yes XNo Yes X Yes XNo Yes XNo None reported Federal Awards Internal control over major programs: Material weakness(es) identified? Significant deficiency identified not considered to be material weakness(es)? _Y"r X None reported X No Tlpe of auditors'report issued on compliance for major programs: unmodiJìed Any audit findings disclosed that are required to be reported in accordance with Circular A-l33,Section .5 10(a)? Yes Identification of major programs: Name of Federal Program or Cluster CFDANumber(s) Special Education Cluster 84.027,84.173 10.553, 10.555 Child Nutrition Cluster Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk Section II - Financial Section III - $300,000 Yes auditee? X Statement Findings No Findings Federal Award Findings and Questioned Costs No Findings or Questioned Costs 58 No