Great Valley School District Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2018

Great Valley School District Comprehensive Annual Financial Report For the fiscal year ended June 30, 2018

47 Church Road, Malvern, Chester County, Pennsylvania 19355 610-889-2100 Great Valley School District Malvern, Pennsylvania 19355 www.gvsd.org

Comprehensive Annual Financial Report for the fiscal year ended June 30, 2018 Prepared by the Business Office Charles E. Linderman, RSBA Director of Business Affairs Dolores D’Amore, PCSBA Assistant Director of Business Affairs GREAT VALLEY SCHOOL DISTRICT

TABLE OF CONTENTS

INTRODUCTORY SECTION

Page

Transmittal Letter ...... 1

June 30, 2017 ASBO International Certificate of Excellence in Financial Reporting ...... 9

June 30, 2017 GFOA Certificate of Achievement for Excellence in Financial Reporting ...... 10

List of Board of School Directors ...... 11

Organizational Chart ...... 12

List of District Administrators ...... 13

List of Instructional Buildings ...... 14

List of Consultants and Advisors ...... 15

FINANCIAL SECTION

Independent Auditor’s Report ...... 16

Management’s Discussion and Analysis (MD&A) ...... 19 (Required Supplementary Information)

BASIC FINANCIAL STATEMENTS:

Government-Wide Financial Statements: Statement of Net Position ...... 35 Statement of Activities ...... 36

Fund Financial Statements Balance Sheet – Governmental Funds ...... 37 Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position ...... 38 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Fund ...... 39 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-wide Statement of Activities ...... 40 Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – General Fund ...... 41 Statement of Net Position – Proprietary Funds ...... 42 Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds ...... 43 Statement of Cash Flows – Proprietary Funds ...... 44

i TABLE OF CONTENTS

(Continued)

Page

Statement of Net Position – Fiduciary Funds ...... 46 Statement of Changes in Net Position-Fiduciary Funds ...... 47 Notes to Basic Financial Statements ...... 48-86

REQUIRED SUPPLEMENTARY INFORMATION Schedule of the District’s Proportionate Share of the Net - Pension Liability and Related Ratios – Pension Plan ...... 87 Schedule of District Contributions – Pension Plan ...... 88 Schedule of the District’s Proportionate Share of the net OPEB - Obligation and Related Ratios – Health Insurance Premium Assistance Program ...... 89 Schedule of the District Contributions – Health Insurance Premium Assistance Program ...... 90 Schedule of Changes of Total OPEB Obligation and Related Ratios - District OPEB Plan ...... 91

SUPPLEMENTARY INFORMATION:

INDIVIDUAL FUND SCHEDULES – GENERAL FUND Schedule of Revenues and Other Financing Sources– Budget and Actual...... 92 Schedule of Expenditures and Other Financing Uses – Budget and Actual ...... 94-97

INDIVIDUAL FUND SCHEDULES – AGENCY FUND Combining Statement of Changes in Net Position –Agency Funds ...... 98 Agency Funds-Activity Funds – Statement of Changes in Assets and Liabilities ...... 99 Agency Funds – Retiree Medical Claims – Statement of Changes in Assets and Liabilities ...... 100

STATISTICAL SECTION

FINANCIAL TRENDS

Net Position by Component ...... 102

Changes in Net Position ...... 103-104

Fund Balances – Governmental Funds ...... 105

Changes in Fund Balances – Governmental Funds ...... 106-107

General Fund Revenues and Other Financing Sources by Source ...... 108-109

General Fund Expenditures and Other Financing Uses by Function ...... 110

ii TABLE OF CONTENTS

(Continued)

Page

REVENUE CAPACITY

Governmental Funds-Most Significant Own Source Revenues ...... 111

Assessed Value and Estimated Actual Value of Taxable Property...... 112

Property Tax Rates (per $1,000 of Assessed Valuation) Direct and Overlapping Governments ...... 113

Principal Property Taxpayers ...... 114

Property Tax Levies and Collections ...... 115

Building Construction ...... 116

DEBT CAPACITY:

Computation of Nonelectorial Debt Margin ...... 117

Ratio of General Bonded Debt Outstanding ...... 118

Schedule of Direct and Overlapping Debt ...... 119

Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita and Net Bonded Debt Per Student ...... 120

DEMOGRAPHIC AND ECONOMIC INFORMATION:

Demographic and Economic Statistics – Population Trends ...... 121

Vital Statistics ...... 122

Principal Employers ...... 123

OPERATING INFORMATION:

Personnel Distribution Summary ...... 124

Teacher Salary Matrix Analysis ...... 125

Operating Statistics ...... 127

CONTINUING DISCLOSURE INFORMATION:

Enrollment History and Projections ...... 128

School Building Information...... 129

Capital Asset Information ...... 130

National School Lunch Program-Free and Reduced Data ...... 131

GLOSSARY OF TERMS ...... 132

iii Great Valley School District

Introductory Section

The mission of Great Valley School District is to ensure that every student is inspired and prepared to be a passionate lifelong learner and a productive invested participant in the local and global community. Great Valley School District Mission Statement Great Valley Board of School Directors Great Valley School District

47 Church Road Malvern, PA 19355 Phone 610-889-2125, ext. 52123 Fax 610-889-2120 CHARLES E. LINDERMAN [email protected] Director of Business Affairs www.gvsd.org

December 18, 2018

Members of the Board of School Directors and Citizens of the District Great Valley School District 47 Church Road Malvern, Pennsylvania 19355

Dear Board Member:

The Comprehensive Annual Financial Report (CAFR) of the Great Valley School District for the fiscal year ended June 30, 2018 is submitted. The report was prepared by the district’s business office with assistance from our independent auditors, Herbein + Company, Inc. This report is prepared in conformity with generally accepted accounting principles (GAAP) in the United States of America for governments as promulgated by the Government Accounting Standards Board (GASB). It is presented in a manner designed to fairly set forth the economic condition and results of operations of the District as a whole as measured by the financial activity of its funds, and all disclosures necessary to maximize user comprehension of the contents are included. Responsibility for the accuracy of the presented data and the completeness and the fairness of the presentation, including all disclosures, rests with the Superintendent and the Director of Business Affairs. To provide a reasonable basis for making these representations, management of the District has established a comprehensive internal control framework that is designed both to protect the District’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the District’s financial statements in conformity with accounting principles. Because the cost of internal controls should not outweigh their benefits, the District’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we believe the data presented in this financial report is accurate and reliable in all material respects. Herbein and Company, Inc, Certified Public Accountants, have issued an unmodified (“clean”) opinion on the Great Valley School District’s financial statements for the year ended June 30, 2018. The independent auditor’s report is located at the front of the financial section of this report. Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. Profile of the District The Great Valley School District was formed by state law and began operation July 1, 1969. The District is a school district of the third class located in Chester County. The District is an independent reporting entity governed by an elected nine-member board. The board is accountable to its citizenry for all its activities through a system of financial reports and audits, public and state oversight, and of course, the election process. A more detailed description of the reporting entity can be found in the Notes to Financial Statements. The primary responsibility for the activities of a school district lies with the locally elected school board. While local control has a strong tradition in Pennsylvania, the board must direct the affairs of the school within the framework of the Pennsylvania School Code, other state laws, and various regulations and standards. These regulations and standards are established primarily by the PDE, the State Board of Education, the Pennsylvania State Legislature and other state agencies.

Michael E. Detwiler, Sr. Nicole Melia James Abraham Erik Bowers Dolores T. D’Amore Transportation/Attendance Supervisor Food Service Supervisor Supervisor of Buildings and Grounds Supervisor of Information Technology Asst. Director of Business Affairs Extension 52132 Extension 52135 Extension 52137 Extension 52302 Extension 52142 [email protected] [email protected] [email protected] [email protected] [email protected]

Great Valley High School • Great Valley Middle School • Charlestown Elementary • Kathryn D. Markley Elementary • General Wayne Elementary • Sugartown Elementary

1 The financing and operations of Pennsylvania’s public school districts is a process that involves multiple parties, including local business owners, retirees, parents, residents, taxpayers, school administrators, teachers, staff, and the students themselves. The annual state required budget for the general fund serves as the foundation for the district’s financial planning and control. State law requires that each Pennsylvania school district prepare an annual budget. The Pennsylvania State Legislature has therefore required specific actions for school districts to carry out as part of their budgetary process. The objective of the budgetary controls is to ensure compliance with provisions established in the annual budget approved by the district governing board. The district is located in the eastern portion of Chester County partially bordering Delaware County. The District comprises the Borough of Malvern and the Townships of Charlestown, East Whiteland and Willistown, an area of 43.3 square miles with a population of 29,816. The district is located 25 miles west of Philadelphia, with access east to King of Prussia and Philadelphia by Route 202, the Schuylkill Expressway, and the Pennsylvania Turnpike and west to Exton by Route 30. Corporate development in the area centers in the technological and service fields. Students come from diverse socio-economic backgrounds, although most residents have middle to upper level incomes. A map of the district can be found at the end of this transmittal letter. Most school district residents find employment in the well-diversified financial, medical and industrial sectors of Chester County and surrounding area labor markets. The trends using the last census (2000) information from U.S. Department of Commerce, Bureau of Census show total employment rates in Chester County to be 254,550 employed and 4.7% is unemployed. The state of Pennsylvania shows 5% unemployed and 6% for the U.S. The district employs 576 employees comprised of 29 full-time administrators and 117 full-time support staff, 89 part- time employees and a teaching staff of 341. Teachers in the district are members of the Pennsylvania State Education Association (PSEA) and the Great Valley School District Education Association (GVEA), which is the representative bargaining unit. A new contract with the Association was approved on June 30, 2016 through June 30, 2018 (Professional employees have a right to strike under Act 195 if bargaining and mediation do not result in agreement on a new contract). Professional Staff Profile: Number of Teachers 340.65 Percentage of Certified Teachers 100% % of Teachers with Bachelor’s Degree 32.19% % of Teachers with Master’s Degree 67.81% Average Teacher Salary $88,800 Average Years of Service in the District 13 years Average Years of Teaching 15 years

Currently, the District accommodates 4,145 students in four K-5 elementary schools, one 6-8 middle school, and one 9- 12 high school. In addition, Great Valley is one of four sending districts to a 9-12 vocational-technical school. Elementary school attendance boundaries cross municipal lines to provide the best balance of classes per grade level and educational services in each building. Below is a table for actual enrollments for the last five years and a table for projections for the next five years. All of the Great Valley schools are state of the art facilities that are designed to support teaching and learning.

ACTUAL: GRADE 2017-18 2016-17 2015-16 2014-15 2013-14 K-5 1,877 1,731 1,752 1,761 1,759 6th -8th grade 1,001 978 978 955 953 9th -12th grade 1,267 1,278 1,245 1,216 1,247 Total K-12 4,145 3,987 3,975 3,932 3,959 PROJECTIONS: GRADE 2018-19 2019-20 2020-21 2021-22 2022-23 K-5 1,921 1,950 1,972 1,984 2,007 6th -8th grade 1,031 1,085 1,146 1,161 1,163 9th -12th grade 1,319 1,338 1,373 1,430 1,457 Total K-12 4,271 4,373 4,490 4,575 4,626

2 The district is committed to providing facilities that are safe and that support the educational program. We note 2006-07 school year was the first since 1998 with no construction. The renovated Sugartown Elementary School opened in the fall of 2006 and construction at Great Valley High School finished ahead of schedule in fall of 2007. All six school buildings have been built new or completely renovated since the year 2000. The district facilities are designed and ready to support the rich educational experience of our students. The district has some project that keep our educational goals and cost savings at the forefront. All of our schools are compliant with current safety codes. In addition, Building Response Teams are in place in each building. Exercises and simulations are conducted throughout the year, in collaboration with local emergency responders. The following is a list of school buildings of the district, as well as the year constructed, capacity and number of classrooms in each building. Year of Construction Number of Classrooms Building Original Addition Sq. Ft. *Capacity Regular Total *Enrollment 1964, 1968 & Charlestown Elementary 1925 2013 65,000 450 18 24 331 District Administration (located on same site as KDM) 1939 1951 &1956 22,000 N/A N/A N/A N/A Kathryn D. Markley Elementary 2001 81,150 675 27 36 630

Sugartown Elementary 1957 1967 & 2007 77,000 568 18 22 479 General Wayne Elementary 1958 1975 & 2001 112,889 675 27 38 437 Great Valley Middle School 2000 175,530 1,175 47 65 1001 1968, 1995,& Great Valley High School 1962 2003-05 285,700 1,450 50 88 1267

*Source: Pennsylvania Department of Education. “Capacity of Buildings” Form#1522, 1990-1991 **Third day enrollment

The district provides a full range of educational services appropriate to grade levels K through 12. These include regular, enriched academic and vocational educational programs, as well as special education for gifted and handicapped students, and an extensive arts program. The district also offers additional English programs for those students with limited English proficiency and summer school enrichment and academic programs. Both the United States and the Pennsylvania Department of Education have recognized Great Valley High School for excellence. With a class size that averages 24 students, the high school offers a wide range of regular, honors, and Advanced Placement (AP) courses. Instruction is adapted for those who need assistance in building basic skills, or who learn in alternate ways. A modified block schedule allows longer time periods for instruction on a regular basis. A highly trained staff challenges students to become active and passionate learners. The high school has a balance graduation requirement. Courses include English, Mathematics, World Language, Science, Social Studies, Visual Arts, Music, Health and Physical Education. In addition to required courses, students may fulfill their graduation requirements through various offerings in art, business education, computer programming, English electives, world language, consumer and family sciences, instrumental music, social studies electives, technology education (including opportunities to work with computer-aided drafting and design and engineering), vocal and instrumental music. Remediation is available and ongoing through a variety of resources, including alternative education, the Resource Room, the Writing Center, the Help Center, student tutors sponsored by the Honor Society, and One on One work with teachers who are work with teachers who are available before and after school and during 8th period to provide assistance. Great Valley Middle School focuses on the development of individuals “in transition.” We recognize that for middle schoolers to be academically successful, consideration must be given to each child’s growth, maturation, and beginning steps toward independence. The middle school is divided into teams, increasing communication between and among students, teachers, and parents. The curriculum and program at Middle School include required courses in reading, language arts, math, social studies, science, physical education and health. Courses in technology education, family and consumer science, art and music, Spanish, French, Latin, German, and computer applications are offered.

3 While each elementary school has its own personality, the same quality program and curriculum, focused on academic rigor and relevance, is found at all four schools. Programs and offerings are consistent across all four elementary schools. These include Library, Computer Lab, Science Lab, Chorus, Band/Orchestra, Art, Music, Physical Education, Intramural Sports, Extracurricular Activities, and Computer Work Stations in classrooms. Other offerings include half-day kindergarten, after-school programs, business partnerships, community service programs, environmental education center, and day care on site. Full-day kindergarten is available to some students. The State provides the district with some financial assistance for students enrolled in a charter school, who attended a nonpublic school in the prior school year in order to offset the additional costs directly related to the enrollment of those students in a public charter school. The state reimburses the school district of residence of a student enrolled in a nonpublic school in the prior school year who is attending a charter school, an amount equal to the school district’s average daily membership for the prior school year. The district population increased between 2000 and 2010. From 2000 to 2010, the county increased from 433,501 to 498,886 gaining approximately 65,385 or 15.1%. East Whiteland increased 14.1%, Malvern Borough decreased 2%, Charlestown increased 40% and Willistown increased 4.9%.

AREA DEMOGRAPHICS Population and Density

% 2000 Area in Change Density Municipality 2000 2010 Sq. 2000- (Persons/ Miles Population Population 2010 Sq. Mile) Charlestown Twp. 12.5 4,051 5,671 40.0% 324.1 E. Whiteland Twp. 11.0 9,333 10,650 14.1% 848.5 Malvern Borough 1.3 3,059 2,998 -2.0% 2,353.1 Willistown Twp. 18.2 10,011 10,497 4.9% 550.1 School District Total 43.0 26,454 29,816 12.7%

Chester County 756.0 433,501 498,886 15.08% 573.4 Pennsylvania 44,888 12,081,021 12,702,379 5.14% 273.6

Source: U.S. Department of Commerce, Bureau of the Census 2000 & 2010

Economic Outlook The district has diverse tax base and heavily depends on its property taxpayers. The top ten taxpayers represent 12.39 percent of the total assessed values as of December 31, 2017 The 2017-18 property tax collection rate decreased 0.03% over 2016-17, with rate of collection of 98.36%. This year the district liened $1,241,871 in unpaid property taxes, an increase of 4.90% over 2016-17. However, financially the future is not without challenges. The district continually explores new and improved methods of delivering the best education possible for students while minimizing the financial impact on the taxpayers providing this education. More information can be found in the MD&A and the statistical section of this document. The Chester County Commissioners completed a countywide reassessment during the 1997 calendar year. The new assessments were used for the July 1, 1999 tax billing. This reassessment resulted in the reduction of tax assessment appeals, which helped strengthen the stability of the school district’s tax base. The 2017-18 tax billing is in the seventeenth year using the new tax assessments and the district is once again faced with a growing number of tax appeals with new commercial and residential properties. Many different economic indicators continue to point to growth that is both constant and manageable. The school district’s financial condition at the end of the 2017-18 year showed revenues increased by 3.68%, $3,485,640 over 2016-17. Significant transfers of property, new residential and commercial development are taking place. The growth in assessed value and related taxes will have an impact on economic conditions for 2018-19. The school district’s financial condition is good and the immediate future is bright with an expected increase in the real estate tax base.

Total Revenues Total Local Sources Real Estate % Tax Revenue of % Tax Revenues of Tax Revenue Total Revenues Local Revenues

$98,160,984 $82,277,792 $80,410,320 82% 98%

A major area of costs for 2017-18 was Charter School tuition. While the District does not have any Charter Schools within its geographic boundaries, there are currently ninety-seven (97) students who live within the District that attend Charter Schools. The District is obligated to pay the tuition for students that attend Charter Schools. During the year ending June 30, 2018, $1,676,565 in tuition fees was paid to Charter Schools, including cyber charter schools. State law mandates that school districts pay charter schools a tuition rate based upon the school district’s total expenditures for each resident student enrolled. Each school district has two charter school tuition rates: one for regular education students and one for special education students.

RECENT LEGISLATION

The Pennsylvania Tax Relief Act of 2007 (known as “ACT 1”) was signed into law by Governor Ed Rendell on June 27, 2007. This law follows the failed attempts of Act 50 of 1998 and Act 72 of 2004 to address property tax reform. This legislation for property tax relief is merely shifting a portion of local property taxes to a local income tax. It does not eliminate property taxes. Act 1 does not give school districts the choice of whether or not to participate in the program as its predecessors Act 50 and Act 72 did. Act 1 mandates all school districts to meet certain deadlines with very few exceptions. School districts have to develop a preliminary budget during the months of October, November, and December so that it can be made publicly accessible for the first board meeting in January. There are problems associated with developing a school budget so far removed from the start of the 2017-18 school year. There is information concerning district needs, costs of services and state funding that will not be available to districts while developing the budget. Information that is more detailed can be found in the Management’s Discussion and Analysis. Long-Term Financial Planning The school district’s primary objective is to provide the best education possible to the students attending the district’s schools. The district is committed to the No Child Left Behind Act’s objectives of strong academic achievement for all children and closing the achievement gap. A secondary objective of the district is to minimize the financial impact on the taxpayers for providing this education. In order to reconcile the primary and secondary objectives of the district, the board, administration and public are continually exploring new and improved methods of delivering the educational programs of the district. Wherever, or whenever possible, the district has reduced the cost of providing education through consolidation of efforts, or the introduction of new less costly processes. Care is continually taken to insure that any reduction in cost is not at the expense of the district’s primary objective, that of providing the best education possible. While the district is continually seeking new and less costly methods of delivering its educational programs, it has also explored ways of increasing revenues to finance these educational programs. One item that has assisted in this area has been the growth in the residential and commercial assessed values of the school district. These values have increased in the past and are expected to continue to increase, but at a much slower pace than previously enjoyed by the district. The board, administration, and public of the Great Valley School District are prepared to meet the challenges these and future conditions may impose in an effort to provide the best education possible while maintaining a watch on the cost to our taxpayers. The Great Valley School District has a policy to transfer excess revenues from its general fund to its capital projects fund to be utilized for building and land improvements, maintenance and repairs, technology upgrades, replacement equipment, and other needs caused by the continuing growth within the District. The hope is to reduce the amount of debt that will be incurred to finance future construction.

Non-Financial Initiatives 2017-18 Class of 2018 Great Valley High School’s Class of 2018 contained 313 students, of which 93 percent chose to continue their education at colleges and universities. Eighty-four percent of the students selected four-year programs while 9 percent enrolled in two-year programs. The remaining 7 percent of students pursued the military, employment, travel or were undecided. Twenty-nine percent of the students chose schools outside of Pennsylvania, thirteen class members were Merit Scholarship Semi-Finalists and 11 National Merit Commended Students. The Class of 2018 SAT mean scores were 598 evidence based reading and writing and 594 math, significantly above state and national means.

Great Valley High School Post-Secondary Education Report: Class of 2018 (Class size of 313)

Information as of June 30, 2018, indicated that 93% of the class of 2018 plan to formally continue their education at the types of institutions

Four Year Programs One and Two Year Program PA state universities 18% Independent colleges outside of PA 0% PA commonwealth universities 23% Independent colleges in PA 1% PA independent colleges 14% Community Colleges 8% Colleges outside of PA 29% Vo/technical schools 0%

The remaining 7% of the class pursued the military, employment, travel or undecided.

NATIONAL MERIT SCHOLARSHIP PROGRAM 2014 Two members of the Class of 2014 were named National Merit Scholarship Semi-Finalists and 9 were recognized as Commended Students. 2015 Eight members of the Class of 2015 were named National Merit Scholarship Semi-Finalists and 13 were recognized as Commended Students. 2016 Ten members of the Class of 2016 were named National Merit Scholarship Semi-Finalists and 11 were recognized as Commended Students. 2017 Eleven members of the Class of 2017 were named National Merit Scholarship Semi-Finalists and 22 were recognized as Commended Students. 2018 Thirteen members of the Class of 2018 were named National Merit Scholarship Semi-Finalists. An additional 11 were recognized as Commended Students.

6 Curriculum Teachers across the Great Valley School District are working with students to develop a growth mindset when it comes to learning math. The concept of growth mindset means that teachers are recognizing effort and encouraging students to learn from their mistakes as they work toward a solution. Lessons come through the development of new strategies to approach problems and through the thorough consideration of how an answer is derived. Growth mindset research shows that student mindsets and persistence are linked to academic success and that positive learning attitudes are critical in areas like mathematics. Teachers in all grades (K-12) are therefore using the first few weeks of school this year to reinforce growth mindset with students. Teachers in K-12 classrooms will be using specific lessons in their classrooms that encourage students to collaborate with their peers, learn from mistakes and explore mathematics in ways that encourage critical thinking. These skills will be reinforced throughout the year. The growth mindset approach to mathematics focuses on the development of critical thinking skills around math and encourages students to think about how they arrived at an answer. Of course, we want students to be able to get the right answer. But we also want them to understand how they got there. Growth mindset views mistakes as a valuable learning tool from which new strategies and understandings can occur.” Because teachers are using the first few weeks of school to approach math in this way, parents may notice that students are not using their assigned textbooks right away. They may also notice that if homework is assigned, it is intended only to review previous learning in preparation for what’s to come this school year. Some students may not have math homework at all the first few weeks of school.

Accounting Systems Internal Controls Internal controls within the District are refined each year to provide reasonable, but not absolute, assurance regarding both the safeguarding of assets against loss from unauthorized use or disposition and the reliability of financial records. Changes in internal controls recognize that the cost of the control should not exceed the benefits likely to be derived. Cost and benefits are discussed with both the Board and the independent auditors, as changes become desirable. We believe the District’s internal controls with the accounting system adequately safeguard assets and provide reasonable assurance as to proper recording of financial activity. Fund Accounting The District’s accounting records are maintained according to the “fund” basis of accounting. School districts, like businesses, use their accounting systems to keep track of financial activities. However, school districts must assure the public that public monies are received and spent in keeping with the legal requirements the state has established. In order to measure and control the legal and budgeted activities properly, separate accounting funds are set up. An accounting fund is a set of self-balancing accounts used for a legally defined or prescribed purpose. Each fund is a separate accounting entity with its own set of self-balancing assets, liabilities and fund/equities/retained earnings. At the end of the fiscal year, the district prepares an Annual Financial Report (AFR). This is a public document that the school district must submit to the state. A number of financial statements and supporting documents make up the AFR. The most important ones include the balance sheet; statement of revenues, expenditures, and changes in fund balances; statement of net position; and statement of activities. The funds encompassing the District’s financial affairs are described in the Financial Section. Budgeting The Pennsylvania School Code of 1949, as amended, requires that each Pennsylvania school district prepare and adopt an annual budget for the General Fund, it is not required for the other funds. There are two separate budgets: one for expenditures and one for revenues. The budget includes details on the expected costs of programs and services (expenditures) and identifies the sources of the funds needed to pay for them, including taxes to be levied (revenues). The programs and services are the means used to achieve the district’s education goals and objectives. The budget is the financial plan to produce the educational program of the school district, and it sets legal limits on how much may be spent for various purposes throughout the year. It estimates the revenues to be received. The State School Code clearly makes the Board responsible for conducting the financial affairs of the district, but there are others in this process; they include: State Legislature and the Governor, who determine state subsidies and regulations; Congress and the President, who determine federal subsidies and/or grants; superintendents; administrators; principals; teachers; voters; and the district’s students and their needs. Ultimately, the board is responsible for the financial status of the district through the preparation, adoption, and execution of the budget.

7 Awards {or ExceHepce in Einancial Rep0ctine: The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting and The Association of School Business Officials International (ASBO) awarded a Certificate of Excellence in Financial Reporting to Great Valley School District for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2017. These programs contribute to the enhancement of credibility of financial management and the adoption of generally accepted accounting principles and sound budgetary and reporting procedures.

In order to be awarded a Certificate of Excellence and/or a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual fiscal report whose contents conform to each of the program's standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. Legal budgeting control is maintained at the sub function, major objects level.

Both the Certificate of Achievement and the Certificate of Excellence are valid for a period of one year only. We believe our current report conforms to both programs' requirements, and we are submitting it to ASBO and GFOA to determine its eligibility for the award for the year ended June 30, 2018. Acknowledgements The preparation of this report could not have been accomplished without the diligent and dedicated services of the Business Office and secretarial staff. We would also like to express our appreciation and respect to the administrators and employees of the Great Valley School District for their interest and dedication in planning and conducting the financial affairs of the Great Valley School District in a responsible and progressive manner.

Respectfully submitted, /2 -t?~~ ~ ker-Palu District Superintendent

Charles E. Linderman, RSBA Director of Business Affairs ~~ Dolores T. D' Amore, PCSBA Assistant Director of Business Affairs

The Certificate of Excellence in Financial Reporting is presented to

Great Valley School District

for its Comprehensive Annual Financial Report (CAFR) for the Fiscal Year Ended June 30, 2017.

The CAFR has been reviewed and met or exceeded ASBO International’s Certificate of Excellence standards.

Charles E. Peterson, Jr., SFO, RSBA, MBA John D. Musso, CAE President Executive Director

G~ Government Finance Officers Association

Certificate of Achievement for Excellence in Financial Reporting

Presented to Great Valley School District Pennsylvania

For its Comprehensive Annual Financial Report for the Fiscal Year Ended

June 30, 2017

~ p. ~ Executive Director/CEO

10 GREAT VALLEY SCHOOL DISTRICT ORGANIZATION 2017-18

BOARD OF SCHOOL DIRECTORS

David Barratt, President

Ellen Behrle, Vice President

Stephanie Gunderson, Treasurer

Jennifer Armstrong Samantha Jouin

Amy Chain Bryan Paluch

Philip Foret Mary Ravenfeld

Charles E. Linderman, Secretary

Administration

Regina Speaker Palubinsky, Ed.D., District Superintendent

Daniel F. Goffredo, Ed.D., Assistant Superintendent for Administrative Services

Stephen O’Toole, Ed.D., Assistant Superintendent for Educational Services

Charles E. Linderman, RSBA, Director of Business Affairs

No. 008 GREAT VALLEY SECTION: LOCAL BOARD PROCEDURES TITLE: ORGANIZATIONAL CHART 2ND READING/ADOPTED: March 18, 1998 SCHOOL DISTRICT October 19, 2009 June 13, 2011 June 26, 2012 June 20, 2013 June 8, 2015 December 7, 2015 Board Secretary Board of Directors June 13, 2016 December 3, 2018

Superintendent Solicitor

Director of Business Affairs

Assistant Superintendent Assistant Superintendent of Educational Services of Administrative Services

Director of Pupil Director of Teaching Director of Services & Learning Communications and Outreach 12

Elementary Principal GV Principal GV Asst. Director of Principals Middle School High School Business Affairs

Elementary Secondary Supervisor of Supervisor Elementary Secondary Asst. Principal Asst. Principal Asst. Principal Food Trans./ Supervisor Supervisor of Spec. Ed. Spec. Ed. Instructional of Special Supervisor Supervisor Service Attendance of Buildings Information Supervisors Supervisor Technology Programs of Teaching of Teaching Supervisor Supervisor & Grounds Technology & Learning & Learning

Coordinator of Student Services Athletic Director Asst. Supervisor Psychological Coordinator of Bldgs. & Services Grounds GREAT VALLEY SCHOOL DISTRICT 2017-18 List of District Administrators

DISTRICT LEVEL: Main Number (610) 889-2100

Superintendent Regina C. Speaker Palubinsky, Ed.D. Extension: 52112 Director of Communications and Outreach Jennifer Blake Extension: 52305 Assistant Superintendent of Administrative Daniel Goffredo, Ed.D. Extension: 52158 Services Assistant Superintendent of Educational Services Stephen O’Toole, Ed.D. Extension: 51973 Director of Teaching and Learning Tricia Beck Extension: 52155 Elementary Supervisor of Teaching and Learning Abby Linderman Extension: 52128 Secondary Supervisor of Teaching and Learning Marshall Hoffritz, Ed.D. Extension: 52150 Supervisor of Instructional Technology Jason Rasmussen Extension: 52129

Director of Pupil Services Joanna Wexler, Ph.D. Extension: 52113 Supervisor of Special Education Carolyn Shoemaker Extension: 52166 Supervisor of Special Education Andrea Dinsmore, M.Ed. Extension: 52149 Supervisor of Special Education Megan McGee-Heim Extension: 52120

Director of Business Affairs Charles E. Linderman, RSBA Extension: 52123 Assistant Director of Business Affairs Dolores D’Amore, PCSBA Extension: 52142 Supervisor of Buildings & Grounds James Abraham Extension: 52136 Supervisor of Transportation/Child Accounting Michael Detwiler, PCSBS Extension: 52133 Supervisor of Food Services Nicole Melia, RD LPN Extension: 52135 Supervisor of Informational Technology Erik Bowers Extension: 52302

BUILDING LEVEL:

Great Valley High School Main Number (610) 889-1900 Principal Michael Flick Extension: 21910 Assistant Principal Patrick Connors Extension: 21912 Assistant Principal for Instruction Heidi Capetola, Ed.D. Extension: 21916 Student Services Coordinator Jane Trimble Extension: 21926 Athletic Director Russell Wren Extension: 21920

Great Valley Middle School Main Number (610) 644-6440 Principal Edward Souders, Ed.D. Extension: 72006 Assistant Principal Amanda Pierce, Ed.D. Extension: 72007

K.D. Markley Elementary School Main Number (610) 644-1790 Principal Victoria Morris Extension: 41105

General Wayne Elementary School Main Number (610) 647-6651 Principal Bonnie Citron Extension: 61303

Sugartown Elementary School Main Number (610) 699-1500 Principal Kyle Hammond Extension: 31106

Charlestown Elementary School Main Number (610) 935-1555 Principal Christopher Pickell Extension: 10201

GREAT VALLEY SCHOOL DISTRICT Administration – Instructional Buildings 47 Church Road Malvern, Pennsylvania 19355 (610) 889-2100

Charlestown Elementary School Sugartown Elementary School 2060 Charlestown Road 611 Sugartown Road Malvern, PA 19355 Malvern, PA 19355 Phone: (610) 935-1555 Phone: (610) 699-1500

Principal: Christopher Pickell Principal: Kyle Hammond

General Wayne Elementary School Kathryn D. Markley Elementary School 20 Devon Road 354 Swedesford Road Malvern, PA 19355 Malvern, PA 19355 Phone: (610) 647-6651 Phone: (610) 644-1790

Principal: Bonnie Citron Principal: Victoria Morris

Great Valley Middle School Great Valley High School 255 North Phoenixville Pike 225 North Phoenixville Pike Malvern, PA 19355 Malvern, PA 19355 Phone: (610) 644-6440 Phone: (610) 610-889-1900

Principal: Dr. Edward Souders, Ed.D. Principal: Michael Flick Asst. Principal: Dr. Amanda Pierce, Ed.D. Asst. Principal: Patrick Connors Asst. Principal: Dr. Heidi Capetola, Ed.D.

District Office 47 Church Road Malvern, PA 19355 Phone: (610) 889-2100

Superintendent: Dr. Regina Speaker-Palubinsky, Ed.D.

http://www.gvsd.org

GREAT VALLEY SCHOOL DISTRICT Consultants and Advisors 2017-18

AUDIT FIRM

Herbein and Company, Inc. 2763 Century Blvd. Reading, PA 19610

ATTORNEYS

Wisler Pearlstine, LLP 460 Norristown Road, Suite 110 Blue Bell, PA 19422-2323

FISCAL AGENT

RBC Dain Rauscher One Logan Square, 17th Floor 130 North 18th Street Philadelphia, PA 19103

OFFICIAL DEPOSITORIES

PNC Bank Two PNC Plaza 620 Liberty Plaza Pittsburgh, PA 15222

TD Bank 101 Lancaster Avenue Malvern, PA 19355

WSFS Bank 199 Lancaster Avenue Malvern, PA 19355

ARCHITECTS

Breslin Ridyard Fadero 1226 Union Boulevard Allentown, PA 18109

Great Valley School District

Financial Section Herbein + Company, Inc. 2763 Century Boulevard Reading, PA 19610 P: 610.378.1175 F: 610.378.0999 www.herbein.com

INDEPENDENT AUDITOR'S REPORT

To the Board of School Directors Great Valley School District Malvern, Pennsylvania

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 Great Valley School District, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with 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 free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility 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 contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control 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 entity’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.

16 Succeed With Confidence Opinio ns

In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Great Valley School District, as of June 30, 2018, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of a Matter

As described in Note 15 to the financial statements, effective July 1, 2017, the Great Valley School District adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This statement modifies the accounting for the District’s other Postemployment Benefits Other Than Pensions. 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, the schedule of district’s proportionate share of the net pension liability and related ratios - pension plan, the schedule of district contributions - pension plan, the schedule of the District’s proportionate share of the net OPEB obligation and related ratios - health insurance premium assistance program, the schedule of district contributions - health insurance premium assistance program, and the schedule of changes of total OPEB obligation and related ratios - district OPEB plan, 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.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Great Valley School District’s basic financial statements. The introductory section, the combining and individual fund statements and schedules, including the budgetary comparison schedules and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements.

17 Succeed With Confidence The combining and individual fund statements and schedules, including the budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic 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 basic 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 combining and individual fund statements and schedules, including the budgetary comparison schedules, are fairly stated in all material respects in relation to the basic financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 18, 2018, on our consideration of the 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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.

Reading, Pennsylvania December 18, 2018

18 Succeed With Confidence

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018

The discussion and analysis of Great Valley School District’s financial performance provides an overall review of the District’s financial activities for the fiscal year ended June 30, 2018. The intent of the discussion and analysis is to look at the District’s financial performance as a whole. GASB Statement No. 34 issued June 1999 requires that certain comparative information between the current year and the prior year be presented in the MD&A. This discussion and analysis should be read in conjunction with the District’s accompanying financial statements. Readers should also review the basic financial statements and the notes thereof to enhance their understanding of the District’s financial performance.

FINANCIAL HIGHLIGHTS • The district’s overall financial position, as reflected in total net position, decreased by $1,533,260; this change plus the inclusion of the Districts’ total postemployment benefit liability caused the overall net position to be a negative balance of $30,498,903. District wide revenues increased 3.2 million over the prior year as a result of improving economic conditions with most of the increase coming from local tax sources. • At the close of the current year, the District’s governmental funds reported combined ending fund balances of $20,030,380 which is $2,543,703 a decrease from the prior year. This resulted in a $805,827 decrease for the general fund and a $1,735,503 decrease for the Capital Project Fund. This includes $700,000 transfer from the General Fund at June 30,2018. • The trends of prior years’ indicated that during the fiscal year 2017-18, Great Valley School District General Fund would experience another year of significant increases in the cost of special education professional services and health benefits for our employees, with the most cost being attributed to the District’s 32.57% contribution to the Pennsylvania Public School Employees’ Retirement System (PSERS). In the budgeting process, the Board of School Directors was able to balance the budget with no increase in taxes to our taxpayers. The actual results of operation showed increases in benefits and special education expenditures as was anticipated. At the close of the year, the expenditures were under what was budgeted, which allowed the District to transfer funds to the capital project fund. • The adoption of Statement No. 75, resulted in the district restating beginning net position as of July 1, 2017. The governmental activities net position June 30, 2017 was ($14,581,252). The restated net position July 1, 2017 was ($28,436,392). • The net position of business-type activities – food services – as a result of restating beginning net position as of July 1, 2017, at June 30, 2017 was ($376,182). The restated net position July 1, 2017 was ($529,251).

OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts: management’s discussion and analysis (this section), the basic financial statements, and the required supplementary information (RSI). The basic financial statements include two types of statements that present different views of the district. • The first two statements are government-wide financial statements that provide both short-term and long-term information about the district’s overall financial status.

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

The remaining statements are fund financial statements that focus on individual parts of the district, reporting the district’s operation in more detail than the government-wide statements. • The governmental fund statements tell how basic services such as regular and special education were financed in the short-term as well as what remains for future spending. • Proprietary funds statements offer short and long-term financial information about the activities the district operates like businesses, such as food services. • Fiduciary funds statements provide information about the financial relationships in which the district acts solely as a trustee or agent for the benefit of others. The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements with schedules of the District’s proportionate share of pension liability and contributions. Figure A-1 shows how the various parts of this annual report are arranged and related to one another.

Figure A-1 Required components of Great Valley School District Financial Report

Management’s Required Basic Discussion and Supplementary Financial Analysis Information Statements

Notes to the Government- Fund Financial Wide Financial Financial Statements Statements Statements

Summary Detail Figure A-2 summarizes the major features of the District’s financial statements, including the portion of the District they cover and the types of information they contain. The remainder of this overview section of management discussion and analysis explains the structure and contents of each of the statements.

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

Figure A-2 Major Features of Great Valley School District Government-wide and Fund Financial Statements Government-wide Fund Financial Statements Statements Governmental Funds Proprietary Funds Fiduciary Funds Entire District The activities of the Activities the Instances in which (Except fiduciary District that are not district operates the district is the funds) proprietary or similar to private trustee or agent to Scope fiduciary, such as business – Food someone else’s education, Services, other resources - administration and propriety-internal Scholarship Funds community service service fund • Statement of • Balance sheet • Statement of • Statement of net position • Statement of net position fiduciary net • Statement of revenues, • Statement of position Required financial activities expenditures, revenues, • Statement of statements and changes in expenses and changes in fund balances changes in net fiduciary net position position • Statement of cash flows Accrual Modified accrual Accrual accounting Accrual accounting Accounting Basis accounting and accounting and and economic and economic and measurement economic current financial resources focus resources focus focus resources focus focus All assets and Generally assets All assets and All assets and liabilities, both expected to be used liabilities, both liabilities, both financial and up and liabilities that financial and short-term and Type of financial capital, short-term come due during the capital, and short- long-term; funds information and long-term and year or soon term and long- do not currently deferred thereafter; no capital term, deferred contain capital inflows/outflows assets or long-term inflows/outflows of assets, although of resources liabilities included resources they can All revenues and Revenues for which All revenues and All additions and expenses during cash is received expenses during deductions during the year, regardless during or soon after the year, regardless the year, regardless of when cash is the end of the year; of when cash is of when cash is Type of inflow/out received or paid. expenditures when received or paid. received or paid. flow information Change reported as goods or services Change reported as Change reported as soon as underlying have been received soon as underlying soon as underlying event related to and the related event related to event related to change takes place. liability is due and change takes place. change takes place. payable

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

OVERVIEW OF FINANCIAL STATEMENTS

Government-wide Statements The government-wide statements report information about the district as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the district’s assets, liabilities and deferred inflows/outflows of resources with the difference reported as net position. All of the current year’s revenues and expenses are accounted for in the statement of activities as soon as underlying events giving rise to the change occurs. The two government-wide statements report the district’s net position and how they have changed. Net position-the difference between the district’s assets, liabilities, and deferred inflows/outflows-is one way to measure the district’s financial health or position. • Over time, increases or decreases in the district’s net position are an indicator of whether its financial health is improving or deteriorating, respectively. • To assess the overall health of the district you need to consider additional non-financial factors such as changes in the district’s tax base and the condition of the school buildings and other facilities. In the government-wide financial statements, the district’s activities are divided into two categories: • Governmental activities: Most of the district’s basic services are included here, such as regular and special education, transportation, and administration. Property taxes, state and federal subsidies, and grants finance most of those activities. • Business-type activities: The district operates a food service operation and charges fees to staff, students, and visitors to help cover costs of the food service operation.

Fund Financial Statements The District’s fund financial statements provide more detailed information about the district funds, focusing on its most significant or “major” funds – not the district as a whole. Funds are accounting devices the district uses to keep track of specific sources of funding and spending on particular programs. Some funds are required by state law and by bond covenants. The District may establish other funds to control and manage money for particular purposes, such as repaying its long-term debts. The District has three kinds of funds: • Governmental funds-Most of the District’s basic services are included in governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the District’s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, additional reconciliation information is provided behind all of the governmental funds statement that explains the relationship (or differences) between them. • Proprietary funds-Services for which the District charges a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long and short-term financial information. The District’s Enterprise funds (one type of proprietary fund and one internal service fund) are the same as the business-type activities, but provide more detail and additional information, such as cash flows.

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

• Fiduciary funds-The District is the trustee, or fiduciary, for its employees’ pension plans. It is also responsible for other assets that because of a trust arrangement can be used only for trust beneficiaries. The District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the District’s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. The District excludes these activities from the District government-wide financial statements because the District cannot use these assets to finance its operations.

FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE

The District’s net position was adversely affected by the District’s recognition of its proportionate share of net pension liability and the District’s net OPEB liability. For June 30, 2018, the District’s share of net pension liability is $147,770,000 and the District’s net OPEB liability is $17,188,018. The District’s total net position was ($30,498,902) at June 30,2018 which is a decrease from June 30, 2017. The following table provides comparative financial information for the net assets of fiscal year 2017 to 2018.

Table A-1 Comparative Statement of Net Position Governmental Activities Business-Type Activities Total Assets 2017 2018 2017 2018 2017 2018 Current & other Assets $ 40,456,807 $ 41,923,786 $ 1,030,088 $ 954,201 $ 41,486,895 $ 42,877,987 Capital Assets 114,189,403 111,229,727 87,157 99,916 114,276,560 111,329,643 Total Assets 154,646,210 153,153,513 1,117,245 1,054,117 155,763,455 154,207,630 Deferred Outflows of Resources 32,422,979 28,992,566 330,109 322,503 32,753,088 29,315,069 Liabilities Current Liabilities 21,209,323 20,337,974 122,440 109,843 21,331,763 20,447,817 Long-term Liabilities 176,914,803 187,092,238 1,597,262 1,507,778 178,512,065 188,600,016 Total Liabilities 198,124,126 207,430,212 1,719,702 1,617,621 199,843,828 209,047,833 Deferred Inflows of Resources 3,546,315 4,680,098 103,834 293,671 3,650,149 4,973,769 Net Position: Net Investment in Capital Assets 79,528,530 85,181,450 87,157 99,916 79,615,687 85,281,366 Restricted for Capital project 4,150,976 2,415,473 - - 4,150,976 2,415,473 Unrestricted (Deficit) (98,260,758) (117,561,154) (463,339) (634,588) (98,724,097) (118,195,742) Total Net Position (Deficit) $ (14,581,252) $ (29,964,231) $ (376,182) $ (534,672) $ (14,957,434) $ (30,498,903) Restatement - GASB #75 (13,855,140) - (153,069) - (14,008,209) - Total Net Position (Deficit) $ (28,436,392) $ (29,964,231) $ (529,251) $ (534,672) $ (28,965,643) $ (30,498,903)

The results of this year’s operations as a whole are reported in the Statement of Activities. All expenses are reported in the first column. Specific charges, grants, revenues and subsidies that directly relate to specific expense categories are represented to determine the final amount of the District’s activities that are supported by other general revenues. The two largest general revenues are the local taxes assessed to taxpayers, and grants and entitlements not restricted to specific programs, the majority of which is the basic education subsidy provided by the Commonwealth of Pennsylvania.

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

Changes in net position. Table A-2 shows the changes in net position for fiscal year 2017 to 2018.

Changes in Net Position from Operating Results Governmental Activities Business-Type Activities Total 2018 2017 2018 2017 2018 2017 Revenues Program revenues Charges for services $ 566,384 $ 633,610 $ 1,681,083 $ 1,685,721 $ 2,247,467 $ 2,319,331 Operating Grants and contributions 12,341,505 11,352,267 596,952 610,847 12,938,457 11,963,114

Capital grants and contributions 447,153 432,628 - - 447,153 432,628 General Revenues Property taxes and other levied for general purpose 76,784,979 76,061,813 - - 76,784,979 76,061,813 Other Taxes 3,421,042 3,282,257 - - 3,421,042 3,282,257 Grants, subsidies, and contributions unrestricted 3,650,084 2,598,280 - - 3,650,084 2,598,280 Other Revenue 799,632 427,798 11,863 4,429 811,495 432,227 Total Revenues $ 98,010,779 $ 94,788,653 $ 2,289,898 $ 2,300,997 $ 100,300,677 $ 97,089,650 Expenses Instruction $ 64,473,977 $ 63,623,799 $ - $ - $ 64,473,977 $ 63,623,799 Instructional student support 2,615,316 2,395,300 - - 2,615,316 2,395,300 Pupil Services 3,933,510 3,765,826 - - 3,933,510 3,765,826 Administrative and financial support services 11,368,660 11,253,051 - - 11,368,660 11,253,051 Operation and maintenance of plant services 9,421,518 10,456,463 - - 9,421,518 10,456,463 Pupil Transportation 4,806,089 4,578,088 - - 4,806,089 4,578,088 Student Activities 1,838,104 1,883,330 - - 1,838,104 1,883,330 Interest on Long-term debt 678,976 872,495 - - 678,976 872,495 Unallocated Depreciation 402,468 402,467 - - 402,468 402,467 Food Service - - 2,295,319 2,353,887 2,295,319 2,353,887 Total Expenses $ 99,538,618 $ 99,230,819 $ 2,295,319 $ 2,353,887 $ 101,833,937 $ 101,584,706 Change in Net Position ($1,527,839) ($4,442,166) ($5,421) ($52,890) ($1,533,260) ($4,495,056) Restatement - GASB #75 - ($13,855,140) - ($153,069) - ($14,008,209) Net Position - Beginning ($28,436,392) ($10,139,086) ($529,251) ($323,292) ($28,965,643) ($10,462,378) Net Position - Ending ($29,964,231) ($28,436,392) ($534,672) ($529,251) ($30,498,903) ($28,965,643)

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

Total governmental activities expenses of $99,538,618 include $4,386,713 of depreciation expense. Total business-type activities (food service) expenses of $2,295,319 include the costs necessary to operate the cafeterias in all schools and indirect expenses, such as utilities and cleaning costs. Table A-3 represents the cost of the District’s nine functions in governmental activities as well as each program’s net cost (total cost less revenues generated by the activities). This table shows the net costs offset by the other unrestricted grants, subsidies and contributions, to show the financial burden placed on the district’s taxpayers by each of these functions.

Net Cost of Governmental Activities Total Cost of Services Net Cost of Services 2018 2017 2018 2017 Instruction $ 64,473,977 $ 63,623,799 $ 55,506,514 $ 55,452,131 Instructional Student Support 2,615,316 2,395,300 2,428,990 2,217,404 Pupil Services 3,933,510 3,765,826 3,465,025 3,362,139 Administrative & Financial Support Services 11,368,660 11,253,051 10,518,841 10,337,593 Operation & Maintenance of Plant Services 9,421,518 10,456,463 8,695,127 9,646,865 Transportation 4,806,089 4,578,088 3,752,635 3,588,785 Student Activities 1,838,104 1,883,330 1,390,793 1,365,063 Interest on long-term debt 678,976 872,495 23,183 439,867 Unallocated Depreciation 402,468 402,467 402,468 402,467 Total Governmental Activities $ 99,538,618 $ 99,230,819 $ 86,183,576 $ 86,812,314 Less : Unrestricted grants, subsidies $ 3,650,084 $ 2,598,280 $ 82,533,492 $ 84,214,034 TOTAL NEEDS FROM LOCAL TAXES AND OTHER REVENUES

The cost of all governmental activities this year was $99,538,618. • The state and federal government subsidized certain programs with grants and unrestricted contributions totaling $3,650,084.

Business-Type Activities Table A-4 reflects the activities of the Food Service program, the only business-type activity of the District.

Table A-4 Net Cost of Business-Type Activities Total Cost of Services Net Cost of Services 2018 2017 2018 2017 Functions/Programs Food Services $ 2,295,319 $ 2,353,887 $ 17,284 $ 57,319

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

The statement of revenues, expenses and changes in net position for this proprietary fund further details the actual results of operations.

FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS

At June 30,2018, the District governmental funds reported a combined fund balance of $20,030,080 which is a decrease of $2,543,703. The schedule below indicates the fund balance and the total change in fund balances as of June 30, 2018 and 2017.

Fund Balances

2018 2017 Difference % of Inc (Dec) General Fund $ 17,614,907 $ 18, 420,734 $ (805,827) -4.37% Capital Projects 2,415,473 4,150,976 (1,735,503) -41.81% Debt Service - 2,373 (2,373) 0.00% Total $ 20,030,380 $ 22,574,083 $ (2,543,703) -12.70%

The general fund had $98,160,984 in revenues and $88,918,612 in expenditures for 2018 plus net other financing sources (uses) of ($10,048,199). Revenues increased 3.68% over 2016-17. Expenditures in the General Fund increased 2.8 %. A huge part is because Special Education Professional services keep increasing. Expenditures for the capital project were $2,475,440 with revenues of $39,937. The capital project fund had other financing sources of $700,000 as a result of a transfer from the general fund REVENUES General Fund revenues totaling $98,160,984 increased $3,485,640 over the 2016-17 revenues. Revenues for Real Estate Taxes increased 2.7% from 2016-17 The following table reflects a comparison of current year revenues with the revenues recognized in the prior year.

Table A-6 Comparison of Revenues-General Fund Increase (Decrease) 2018 2017 from 2016-17 % of Inc (Dec) Local Sources $ 82,277,792 $ 79,829,787 $ 2,448,005 3.07% State Sources 15,124,864 14,306,073 818,791 5.72% Federal Sources 758,328 539,484 218,844 40.57% TOTAL REVENUES $ 98,160,984 $ 94,675,344 $ 3,485,640 3.68%

26 Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

The district’s general fund revenue distribution is demonstrated by the graph below that indicates 84% of total revenues come from local sources. Real estate tax is 82% of local sources and 75% of total revenues.

Distribution of General Fund Revenues for Fiscal 2018

Federal Sources State Sources .8% 15.4%

Local Sources 83.8%

The district reliance upon tax revenue is indicated in the table below.

Real Estate Taxes % of Inc 2018 2017 Difference (Dec) Real Estate taxes $ 73,399,838 $ 71,421,098 1,978,740$ 2.8% Interim taxes 1,845,838 2,216,572 $ (370,734) -16.7% Delinquent Tax 1,743,602 1,321,435 $ 422,167 31.9% Real Estate Transfer Tax 3,345,656 3,204,549 141,107 4.4%

With completed new construction in the district, there was a 2.8% increase in Real Estate taxes. A 4.4% increase in Transfer Tax for sales of homes and commercial properties with big assessments.

27 Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

EXPENDITURES

General fund expenditures and other financing uses totaling $98,966,811 increased $3,323,973 or 3.5% over 2017-18 expenses. These expenditures were segregated into various programs depending on the functions of the activity. The following table shows these programs and the costs associated with each, as well as comparison to the costs incurred in the prior year.

Table A-7 Comparison of Expenditures-General Fund Increase (Decrease) from % of Inc 2018 2017 2016-17 (Dec) Current: Instruction $ 60,326,346 $ 57,744,792 $ 2,581,554 4.5% Supporting Services 26,885,071 26,189,066 696,005 2.7% Non-Instructional Services 1,707,195 1,657,292 49,903 3.0% Other Financing Sources (Uses) 10,048,199 10,051,688 (3,489) 0.0% TOTAL EXPENDITURES $ 98,966,811 $ 95,642,838 $ 3,323,973 3.5% The chart below shows the percentage in each of the areas to the total expenditures.

Distribution of Expenditures for Fiscal 2018

Other Financing Sources Non-Instructional 10.2% 1.7%

Instructional 60.9%

Support Services 27.2%

28 Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

As the following schedule illustrates, the largest portions of General Fund expenditures are for salaries and fringe benefits. The district is a service entity and as such is labor intensive.

Expenditures by Object-General Fund % of Inc 2018 2017 Difference (Dec) Salaries & Wages 40,493,168$ $ 39,348,336 $ 1,144,832 2.9% Fringe Benefits 24,641,108 23,700,572 940,536 4.0% Purchased & Technical Services 10,236,039 10,220,628 15,411 0.2% Purchased Property Services 1,315,853 1,460,350 (144,497) -9.9% Other Purchased Services 10,227,330 8,849,862 1,377,468 15.6% Supplies 1,757,773 1,716,235 41,538 2.4% Property 100,887 58,061 42,826 73.8% Other Objects 146,454 237,106 (90,652) -38.2% Debt Services Transfers 10,048,199 10,051,688 (3,489) 0.0% Total 98,966,811$ 95,642,838 $ 3,323,973 3.5%

Salaries and benefits are 65.8% of the total expenditures and 34.2% are from other expenditures such as other purchased services, supplies and debt service transfer. A large portion of increase is due to pension expense. General Fund Budgetary Highlights During the fiscal year, the Board of School Directors (The Board) authorizes revisions to the original budget to accommodate differences from the original budget to the actual expenditures of the District. All adjustments are again confirmed at the time the annual audit is accepted. This is after the end of the fiscal year, which is not prohibited by law. A schedule showing the District’s original and final budget amounts compared with actual revenues and expenditures is provided. The local economy is improving which is why we have a positive variance in our tax revenue. The final budget was adjusted for expenditures that required functional category changes in Special Education. The Special Education cost increased to cover increased staffing needs due to enrollment. Special Education expenditures for professional educational and technical services increased due to legal settlements and legal fees. The Physical Plant budget was less than originally budgeted due partly to a mild winter therefore reducing energy cost. Savings in Pupil Services and Instructional Staff Services occurred as more staff resources were applied directly to program costs. Final budget comparison to actual results. A table of the most significant differences between estimated revenues/expenditures and actual revenue/expenditures is as follows:

Great Valley School District Malvern, PA 19355 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

2017-18 Budget Actual Variance Comments

Revenues $ 96,250,000 $ 98,160,984 $ 1,910,984 Local rev enues increased by because of Expenditures 89,805,921 88,918,612 887,309 real estate transfer tax rev enue. State Other Financing Sources/Uses (9,994,079) (10,048,199) (54,120) Rev enues increase 8.97% due an increase in State Subsidies. Net $ (3,550,000) $ (805,827) $ 2,744,173 Contributing Line Items: Revenues: Local Revenue

Interim Taxes 1,700,000 1,845,838 145,838 New residential and commercial properties Large v alue Commerical Properties sold Transfer Taxes 1,920,000 3,345,655 1,425,655 during the y ear Delinquent Taxes 1,450,000 1,743,602 293,602 Use of new delinquent tax collection agency Earnings on Investments 250,000 604,550 354,550 Rates av eraged 2.1% increase from 1% IDEA Pass-Thru Grant 440,000 548,186 108,186 Increase from federal funds run thru CCIU State Revenues Basic Education State Subsidy 2,550,000 2,588,344 38,344 Increase in State Subsidy from the State Student Transportation Subsidy 810,000 1,014,620 204,620 Increase from state for transportation State Budget had no line item, w hen GV Debt Service State Reimb. 340,000 383,702 43,702 adopted budget. Ready to Learn Block Grant 135,000 136,602 1,602 Slight increase aw ard from state Slight increase from the state for pior y ear State Share-Retirement Employer 6,674,670 6,685,928 11,258 adjustments Expenditures and Other Financing Uses: Sav ings w ith use of consultants/outside Salaries 40,586,897 40,493,168 93,729 serv ices Benefits 24,981,569 24,641,108 340,461 Self Insurance Sav ings Professional Educational Services 10,252,493 10,236,039 16,454 Increases in Special Education Serv ice cost. Major repairs being paid from Capital Project Other Prof. Services 1,491,335 1,315,853 175,482 Fund More w as budgeted; 2016-17 ex penditures Other Purchased Services 10,298,329 10,227,330 70,999 w ere ov er budget. Supplies ordered on "as needed basis" Supplies 1,870,059 1,757,773 112,286 resulting in sav ings. Property 114,215 100,887 13,328 Miscellaneous-Technology related Other Objects 156,903 146,454 10,449 Dues & Fees for Professional Organizations

CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets By the end of 2018, the district had invested $111,329,643 in a broad range of capital assets, including buildings, sites, library books, and equipment (See Table A-8). More detail information can be found in Note 6 to the financial statements. Total accumulated depreciation on these assets was $72,431,058 for governmental activities and $340,965 for business-type activities.

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

Table A-8 Capital Assets(net depreciation) Governmental Activities Business-Type Activities Total 2017 2018 2017 2018 2017 2018 Land & improvements $ 9,726,962 $ 11,841,536 $ - $ - $ 9,726,962 $ 11,841,536 Construction in progress 2,422,908 1,011,619 - - 2,422,908 1,011,619 Building & Improvements 95,657,934 93,140,257 - - 95,657,934 93,140,257 Equipment & furniture 6,317,281 5,187,757 87,157 99,916 6,404,438 5,287,673 Vehicles 56,403 44,625 - - 56,403 44,625 Library Books 7,915 3,933 - - 7,915 3,933 Total $ 114,189,403 $ 111,229,727 $ 87,157 $ 99,916 $ 114,276,560 $ 111,329,643

Long-Term Debt At year-end, the district had $28,534,905 for governmental activities in general obligation bonds and other long-term liabilities outstanding. More detailed information about the district’s long-term liabilities is presented in Note 7of the financial statements.

Table A-9 Outstanding Long-Term Debt 2018 2017

General Obligation Debt & Long-Term Liabilities $ 28,534,905 $ 37,151,332

• The district continues to pay down its debt. • Other obligations include accrued vacation pay and sick leave for District employees and early retirement incentive payments FACTORS BEARING ON THE DISTRICT’S FUTURE At the time these financial statements were prepared and audited, the District was aware of the following two circumstances that will have a major impact on its future economic position. Special Session Act 1 of 2006, known as the Taxpayer Relief Act. The law intends to ease the financial burden of home ownership by providing school districts the means to lower property taxes to homeowners, especially senior citizens. The legislation is complex, setting rules for gaming revenue allocations, requiring front-end voter referenda on tax shifting, mandating new school district budget restrictions, and requiring back-end voter referenda on future real estate tax increases above an “index”.

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

Below is a table of - The Index-Special Session Act 1 of 2006 comparison:

Base Index 2012-13 1.7% 2013-14 1.7% 2014-15 2.1% 2015-16 1.9% 2016-17 2.4% 2017-18 2.5% School districts cannot increase the real estate tax rate above an inflationary index percentage as determined by the state with an adjustment provided for less wealthy schools. School Districts that wish to increase millage beyond the index to maintain or improve existing programs must either apply for exceptions from the Department of Education or receive voter approval for an increase via a tax increase referendum question during the May primary election. There are referendum exceptions built into Act 1 should a district need to raise taxes beyond the new inflationary index cap. The exception categories provide partial relief for increase in the cost of special education, retirement and health care expenses, emergencies and disasters and some school construction projects. It is anticipated that most school districts will be requesting relief through some of the exceptions.

Act I is an amalgamation to its predecessors Acts 50 and 72. The key difference is that Act 1 is mandatory and provides very few school board options. Act 1 will have many collateral consequences for school districts, including negative education program impacts, possible bond downgrade and related borrowing expense, substantial implementation expense, and many diverse required actions.

About the Pennsylvania Public School Employees’ Retirement System • PSERS is the 18th largest state-sponsored defined benefit pension fund in the nation and has a membership of more than 267,000 active members and over 209,000 annuitants and beneficiaries receiving benefits. For more information visit PSERS’ website at www.psers.state.pa.us. • The Public School Employees’ Retirement System (PSERS) is a defined benefit plan. PSERS is funded through three sources: contributions from employees (members), the employer contribution rate which is contributions from employers (generally school districts) and the Commonwealth, and investment returns from the System. • Employee (Member) contributions range from 5.25% to 10.30% of payroll depending on the class of membership of the employee and when they joined PSERS • As of July 1, 2011 new members bear some of the investment risk via the shared risk provisions of Act 120 of 2010. With a “shared risk” program new members since July 1, 2011 benefit when investments of the fund are doing well and share some of the risk when investments underperform. • Both the employer and the Commonwealth are responsible for paying a portion of the employer contribution rate. Employers are divided into two groups: school entities and non-school entities. School entities are responsible for paying 100 percent of the employer share of contributions to PSERS. The Commonwealth reimburses school entities for one-half the payment for employees hired on or before June 30, 1994. School entities are reimbursed by the Commonwealth based on a statutory formula for employees hired after June 30, 1994, but not less than one-half of the payment. Non-school entities and the Commonwealth each contribute one-half of the total employer rate.

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

The chart below shows the employer contribution rate history over the past 10 years.

HISTORY OF EMPLOYER CONTRIBUTION RATES Total Fiscal Employer Normal Preliminary Employer Health Care Employer Year Cost % Pension Rate % Contributions % Contribution % 2007-08 6.68 6.44 0.69 7.13 2008-09 6.68 4.00 0.76 4.76 2009-10 7.35 4.00 0.78 4.78 2010-11 8.08 5.00 0.64 5.64 2011-12 8.12 8.00 0.65 8.65 2012-13 8.66 11.50 0.86 12.36 2013-14 8.57 16.00 0.93 16.93 2014-15 8.46 20.50 0.90 21.40 2015-16 8.38 25.00 .84 25.84 2016-17 8.31 29.2 .83 30.03 2017-18 7.70 31.74 .83 32.57

History of PSER’S Contribution Rates as a Percent of Payroll:

Great Valley School District Malvern, PA 19355

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) June 30, 2018 (Continued)

• The chart below shows the 10-year projected employer contribution rates using the June 30,2018 valuation.

PROJECTED EMPLOYER CONTRIBUTION RATES *(Presumes an 7.25% rate of return) Projected Total Fiscal Year Total Employer Employer Contribution Ending June Contribution Rate % (thousands) $ 14/15 21.40 2,596,731 15/16 25.84 3,576,651 16/17 30.03 4,160,639 17/18 32.57 4,380,339 18/19 33.43 4,668,189 19/20 35.53 4,933,711 20/21 35.95 5,081,955 21/22 36.40 5,244,647

Investment Returns

• During 2016-17, net investment income was $5 billion. The investment portfolio, which is one part of the System’s net position, totaled %52.5 billion, at fair value, as of June 30,2018, the time- weighted net rate of return on the System’s investments was 10.14%. • The employer normal cost continues to decrease as the impact of the benefit reductions in Act 120 is realized.

Contacting the District’s Financial Management This financial report is designed to provide the District’s citizens, taxpayers, customers, investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the Business Office, Great Valley School District, at 47 Church Road, Malvern, PA 19355.

*The projection of contribution rates is based on the assumption that there are no changes in demographics or economic assumptions, no changes in benefit provisions, and no actuarial gains or losses other than gains or losses on the actuarial value of assets that result from recognizing currently deferred gains or losses on the market value of assets. Those assumptions may vary from actual experience and as a result projected employer contribution rates will increase or decrease.

GREAT VALLEY SCHOOL DISTRICT STATEMENT OF NET POSITION June 30, 2018

Business- Governmental Type Activities Activities Total ASSETS Cash and Investments $ 37,612,576 $ 808,433 $ 38,421,009 Taxes Receivable, Net 987,953 - 987,953 Intergovernmental Receivables 3,299,557 69,817 3,369,374 Other Receivables - 36,565 36,565 Inventories - 39,386 39,386 Prepaid Expenses 23,700 - 23,700 Capital Assets Not Being Depreciated: 10,738,581 - 10,738,581 Capital Assets, Net of Accumulated Depreciation: 100,491,146 99,916 100,591,062 TOTAL ASSETS 153,153,513 1,054,117 154,207,630 DEFERRED OUTFLOWS OF RESOURCES Deferred Charge on Bond Refunding 618,410 - 618,410 Deferred Outflows of Resources for Pension 27,604,988 299,602 27,904,590 Deferred Outflows of Resources for Other Postemployment - - - Benefits - Health Insurance Premium Assistance Program 380,802 3,727 384,529 Deferred Outflows of Resources for Other Postemployment - - - Benefits - District Plan 388,366 19,174 407,540 TOTAL DEFERRED OUTFLOWS OF RESOURCES 28,992,566 322,503 29,315,069 LIABILITIES Accounts Payable 5,241,822 8,534 5,250,356 Accrued Interest 268,877 - 268,877 Accrued Salaries and Benefits 6,616,097 12,242 6,628,339 Payroll Deductions and Withholdings 1,437,656 - 1,437,656 Unearned Revenue 194,479 89,067 283,546 Other Liabilities 1, 176,209 - 1,176,209 Noncurrent Liabilities, Due Within One Year 5,402,834 - 5,402,834 Noncurrent Liabilities: - - - Bonds and Note Payable, Net 22,261,311 - 22,261,311 Long-Term Portion of Compensated Absences 870,760 9,927 880,687 Net Pension Liability 146,440,070 1,329,930 147,770,000 Net Other Postemployment Benefits Obligation - Health - - - Insurances Premium Assistance Program 6,041,136 54,864 6,096,000 Total Other Postemployment Benefit Obligation - District Plan 11,478,961 113,057 11,592,018 TOTAL LIABILITIES 207,430,212 1,617,621 209,047,833 DEFERRED INFLOWS OF RESOURCES Deferred Inflows of Resources for 2018/19 Property Taxes 3, 212,232 - 3,212,232 Deferred Inflows of Resources for Pension 883,075 291,115 1,174,190 Deferred Inflows of Resources for Other Postemployment - - - Benefits - Health Insurance Premium Assistance Program 281,444 2,556 284,000 Deferred Inflows of Resources for Other Postemployment - District Plan 303,347 - 303,347 TOTAL DEFERRED INFLOWS OF RESOURCES 4,680,098 293,671 4,973,769 NET POSITION Net Investment in Capital Assets 85,181,450 99,916 85,281,366 Restricted for Capital Projects 2,415,473 - 2,415,473 Unrestricted (Deficit) (117,561,154) (634,588) (118,195,742) TOTAL NET POSITION (DEFICIT) $ (29,964,231) $ (534,672) $ (30,498,903)

See accompanying notes. 35 GREAT VALLEY SCHOOL DISTRICT STATEMENT OF ACTIVITIES For the Year Ended June 30, 2018

Net (Expense) Revenue and Program Revenue Changes in Net Position Operating Capital Charges for Grants and Grants and Governmental Business-Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities: Instructional Services: Regular Programs - Elementary/Secondary $ 44,413,369 $ 43,185 $ 5,323,511 $ - (39,046,673) $ - $ (39,046,673) Special Programs - Elementary/Secondary 18,828,861 - 3,598,791 - (15,230,070) - (15,230,070) Vocational Education 1,204,312 - - - (1,204,312) - (1,204,312) Other Instructional Programs - Elementary/Secondary 27,435 - 1,976 - (25,459) - (25,459) Total Instructional Services 64,473,977 43,185 8,924,278 - (55,506,514) - (55,506,514) Support Services: Students 3,933,510 - 468,485 - (3,465,025) - (3,465,025) Instructional Staff 2,615,316 - 186,326 - (2,428,990) - (2,428,990) Administration 5,849,661 - 587,498 - (5,262,163) - (5,262,163) Pupil Health 950,400 - 201,960 - (748,440) - (748,440) Business Services 1,304,812 - 147,869 - (1,156,943) - (1,156,943) Operation of Plant and Maintenance Services 9,421,518 263,608 462,783 - (8,695,127) - (8,695,127) Student Transportation Services 4,806,089 - 1,053,454 - (3,752,635) - (3,752,635) Central Support 3,221,642 - 121,132 - (3,100,510) - (3,100,510) Other Support Services 42,145 - - - (42,145) - (42,145) Total Support Services 32,145,093 263,608 3,229,507 - (28,651,978) - (28,651,978) Noninstructional Services: Student Activities 1,838,104 259,591 187,720 - (1,390,793) - (1,390,793) Interest on Long-Term Debt 678,976 - - 447,153 (231,823) - (231,823) Unallocated Depreciation, Excludes Direct Depreciation 402,468 - - - (402,468) - (402,468) Total Noninstructional Services 2,919,548 259,591 187,720 447,153 (2,025,084) - (2,025,084) Total Governmental Activities 99,538,618 566,384 12,341,505 447,153 (86,183,576) - (86,183,576) Business-Type Activities: Food Service 2,295,319 1,681,083 596,952 - - (17,284) (17,284) Total Primary Government $ 101,833,937 $ 2,247,467 12,938,457$ $ 447,153 (86,183,576) (17,284) (86,200,860)

General Revenues: Taxes: Property Taxes 76,784,979 - 76,784,979 Public Utility Realty and Transfer Taxes 3,421,042 - 3,421,042 Grants, Subsidies, and Contributions Not Restricted to a Specific Program 3,650,084 - 3,650,084 Investment Earnings 658,644 11,863 670,507 Miscellaneous 140,988 - 140,988 Total General Revenues 84,655,737 11,863 84,667,600 Change in Net Position (1,527,839) (5,421) (1,533,260) Net Position (Deficit) - Beginning of Year, Restated (28,436,392) (529,251) (28,965,643) Net Position (Deficit) - End of Year $ (29,964,231) $ (534,672) $ (30,498,903)

See accompanying notes. 36 GREAT VALLEY SCHOOL DISTRICT BALANCE SHEET GOVERNMENTAL FUNDS

June 30, 2018

Total Capital Debt Governmental General Projects Service Funds ASSETS Cash and Investments $ 30,029,351 $ 3,338,846 $ - $ 33,368,197 Taxes Receivable 1,002,636 - - 1,002,636 Interfund Receivables - 174,525 - 174,525 Intergovernmental Receivables 3,299,557 - - 3,299,557 Prepaid Expenditures 23,700 - - 23,700 TOTAL ASSETS $ 34,355,244 $ 3,513,371 $ - $ 37,868,615

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES LIABILITIES Interfund Payables $ 520,093 $ - $ - $ 520,093 Accounts Payable 1,861,528 1,088,308 - 2,949,836 Accrued Salaries and Benefits 6,616,097 - - 6,616,097 Payroll Deductions and Withholdings 1,437,656 - - 1,437,656 Current Portion of Compensated Absences 997,458 - - 997,458 Unearned Revenue 184,889 9,590 - 194,479 Other Current Liabilities 1,176,209 - - 1,176,209 TOTAL LIABILITIES 12,793,930 1,097,898 - 13,891,828

DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 3,946,407 - - 3,946,407

FUND BALANCES Nonspendable 23,700 - - 23,700 Restricted - 2,415,473 - 2,415,473 Committed for Future OPEB Costs 6,300,000 - - 6,300,000 Assigned for: Appropriation for 2018/19 Budget 3,000,030 - - 3,000,030 Future Devereux Tuition Charges 500,000 - - 500,000 Unassigned Fund Balance 7,791,177 - - 7,791,177 TOTAL FUND BALANCES 17,614,907 2,415,473 - 20,030,380

TOTAL LIABILITIES, DEFERRED INFLOWS, OF RESOURCES AND FUND BALANCES $ 34,355,244 $ 3,513,371 $ - $ 37,868,615

See accompanying notes. 37 GREAT VALLEY SCHOOL DISTRICT

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE GOVERNMENT-WIDE STATEMENT OF NET POSITION

June 30, 2018

Amounts reported for governmental activities in the statement of net position are different because:

TOTAL FUND BALANCES - GOVERNMENTAL FUNDS $ 20,030,380

Capital assets used in genvernmental activites are not financial resources and, therefore, are not reports as assets in gonvernmental funds. The cost of the assets is $183,660,785 and the accumulated depreciation is $72,431,058. 111,229,727

Property and other taxes receivable will be collected this year, but are not available soon enough to pay for the current period's expenditures and, therefore, are reported as unavailable revenue in the funds adjusted for allowance for doubtful accounts. 719,492

An internal service fund is used by the District to charge the cost of health insurance claims to the individual funds. The assets and liabilities of the internal service fund are included with governmental activities. 2,297,961

The net pension liability and related deferred outflows and inflows of resources for pension are not reflected on the fund financial statements. (119,718,157)

The other postemployment benefit obligations and related deferred outflows and inflows of resources for other postemployment benefits are not reflected on the fund financial statements. (17,335,720)

Long-term liabilities, including bonds and note payable, 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 and Note Payable $ (25,191,980) Accrued Interest on Bonds (268,877) Unamortized Bond Discount 55,966 Unamortized Bond Premium (1,530,673) Deferred Charge on Bond Refunding 618,410 Long-Term Portion of Compensated Absences (870,760) (27,187,914)

TOTAL NET POSITION (DEFICIT) - GOVERNMENTAL ACTIVITIES $ (29,964,231)

See accompanying notes. 38 GREAT VALLEY SCHOOL DISTRICT

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS

For the Year Ended June 30, 2018

Total Capital Governmental General Projects Debt Service Funds REVENUES Local Sources $ 82,277,792 $ 39,937 $ 14,157 $ 82,331,886 State Sources 15,124,864 - - 15,124,864 Federal Sources 758,328 - - 758,328 TOTAL REVENUES 98,160,984 39,937 14,157 98,215,078

EXPENDITURES Current: Instructional Services 60,326,346 4,500 - 60,330,846 Support Services 26,885,071 1,050,839 - 27,935,910 Operation of Noninstructional Services 1,707,195 - - 1,707,195 Capital Outlay - 1,420,101 - 1,420,101 Debt Service: Principal - - 8,405,376 8,405,376 Interest - - 959,353 959,353 TOTAL EXPENDITURES 88,918,612 2,475,440 9,364,729 100,758,781

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 9,242,372 (2,435,503) (9,350,572) (2,543,703)

OTHER FINANCING SOURCES (USES) Transfers In $ - $ 700,000 $ 9,348,199 $ 10,048,199 Transfers Out (10,048,199) - - (10,048,199) TOTAL OTHER FINANCING SOURCES (USES) (10,048,199) 700,000 9,348,199 -

NET CHANGE IN FUND BALANCES 19,290,571 (1,735,503) (2,373) (2,543,703) FUND BALANCES - BEGINNING OF YEAR 18,420,734 4,150,976 2,373 22,574,083 FUND BALANCES - END OF YEAR $ 37,711,305 $ 2,415,473 $ - $ 20,030,380

See accompanying notes. 39 GREAT VALLEY SCHOOL DISTRICT

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES

For the Year Ended June 30, 2018

Amounts reported for governmental activities in the statement of activities are different because:

NET CHANGE IN FUND BALANCES OF GOVERNMENTAL FUNDS $ (2,543,703)

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.

Capital Outlays $ 1,427,037 Less: Depreciation Expense (4,386,713) (2,959,676)

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. (204,299)

The change in long-term settlement claims are reflected as an adjustment to expense on the statement of activities, but not included in the fund statements. 43,163 Issuance of long-term debt (e.g., bonds) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds.

Repayment of Bond and Note Principal 8,405,376 Amortization of Deferred Charge on Bond Refunding (33,665) Amortization of Bond Discount (14,837) Amortization of Bond Premium 255,722 8,612,596

Interest expense incurred on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. 73,157 In the statement of activities, certain operating expenses - compensated absences (vacations and sick days) are measured by the amounts earned during the year. 1,636

An internal service fund is used by the District to charge the costs of health insurance claims to the individual funds. The excess revenue (expense) is reported with governmental activities. 759,918 The change in net pension liability and related deferred outflows and inflows of resources are reflected as an adjustment to expense on the statement of activities, but not included in the fund statements. (4,653,839)

The change in other postemployment benefit obligations and related deferred outflows and inflows of resources for other postemployment benefits are reflected as an adjustment to expense on the statement of activities, but not included in the fund statements. (656,792)

CHANGE IN NET POSITION (DEFICIT) OF GOVERNMENTAL ACTIVITIES $ (1,527,839)

See accompanying notes. 40 GREAT VALLEY SCHOOL DISTRICT

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND

For the Year Ended June 30, 2018

Variances Budgeted Amount Actual Final to Original Final (GAAP Basis) Actual REVENUES Local Sources $ 80,731,943 $ 80,731,943 $ 82,277,792 $ 1,545,849 State Sources 14,891,999 14,891,999 15,124,864 232,865 Federal Sources 626,058 626,058 758,328 132,270 TOTAL REVENUES 96,250,000 96,250,000 98,160,984 1,910,984

EXPENDITURES INSTRUCTIONAL SERVICES: Regular Programs - Elementary/Secondary 42,614,537 41,071,661 40,920,007 151,654 Special Programs - Elementary/Secondary 16,495,612 18,200,412 18,182,979 17,433 Vocational Education Programs 966,367 1,204,367 1,204,312 55 Other Instructional Programs - Elementary/Secondary 104,061 23,582 19,048 4,534 TOTAL INSTRUCTIONAL SERVICES 60,180,577 60,500,022 60,326,346 173,676

SUPPORT SERVICES Students 3,956,957 3,747,827 3,742,544 5,283 Instructional Staff 2,418,018 2,504,038 2,482,876 21,162 Administration 5,635,036 5,631,636 5,628,871 2,765 Pupil Health 1,049,765 915,132 905,339 9,793 Business 1,294,325 1,256,575 1,251,714 4,861 Operation and Maintenance of Plant Services 6,544,578 6,416,590 6,097,771 318,819 Student Transportation Services 4,906,150 4,795,360 4,791,032 4,328 Central Support 1,734,685 1,961,010 1,942,779 18,231 Other Support Services 42,212 42,212 42,145 67 TOTAL SUPPORT SERVICES 27,581,726 27,270,380 26,885,071 385,309

OPERATION OF NONINSTRUCTIONAL SERVICES Student Activities 2,043,618 1,981,394 1,707,195 274,199 TOTAL EXPENDITURES 89,805,921 89,751,796 88,918,612 833,184 EXCESS OF REVENUES OVER EXPENDITURES 6,444,079 6,498,204 9,242,372 2,744,168

OTHER FINANCING SOURCES (USES) Transfers Out (9,994,079) (10,048,204) (10,048,199) 5 TOTAL OTHER FINANCING SOURCES (USES) (9,994,079) (10,048,204) (10,048,199) 5 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES $ (3,550,000) $ (3,550,000) (805,827) $ 2,744,173

FUND BALANCE - BEGINNING OF YEAR 18,420,734 FUND BALANCE - END OF YEAR $ 17,614,907

See accompanying notes. 41 GREAT VALLEY SCHOOL DISTRICT STATEMENT OF NET POSITION PROPRIETARY FUNDS

June 30, 2018

Enterprise Fund Internal Food Service Service Fund ASSETS CURRENT ASSETS Cash and Investments $ 808,433 $ 4,244,379 Inerfund Receivable - 345,568 Intergovernmental Receivables 69,817 - Other Receivables 36,565 - Inventories 39,386 - TOTAL CURRENT ASSETS 954,201 4,589,947 NONCURRENT ASSETS Machinery and Equipment, Net 99,916 - TOTAL ASSETS 1,054,117 4,589,947 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows of Resources for Pension 299,602 - Deferred Outflows of Resources for Other Postemployment Benefits - Health Insurance Premium Assistance Program 3,727 - Deferred Outflows of Resources for Other Postemployment Benefits - District Plan 19,174 - TOTAL DEFERRED OUTFLOWS OF RESOURCES 322,503 - LIABILITIES CURRENT LIABILITIES Accounts Payable 8,534 2,291,986 Accrued Salaries and Benefits 12,242 - Unearned Revenue 89,067 - TOTAL CURRENT LIABILITIES $109,843 $2,291,986 NONCURRENT LIABILITIES Compensated Absences 9,927 - Net Pension Liability 1,329,930 - Net Other Postemployment Benefits Obligation - Health Insurance Premium Assistance Program 54,864 - Total Other Postemployment Benefits Obligation - District Plan 113,057 - TOTAL LIABILITIES $1,617,621 - DEFERRED INFLOWS OF RESOURCES Deferred Inflows of Resources for Pension 291,115 - Deferred Inflows of Resources for Other Postemployment Benefits - Health Insurance Premium Assistance Program 2,556 - TOTAL DEFERRED INFLOWS OF RESOURCES 293,671 - NET POSITION Net Investment in Capital Assets 99,916 - Unrestricted (Deficit) (634,588) 2,297,961 TOTAL NET POSITION (DEFICIT) $ (534,672) $ 2,297,961

See accompanying notes. 42 GREAT VALLEY SCHOOL DISTRICT

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS

For the Year Ended June 30, 2018

Enterprise Fund Internal Food Service Service Fund

OPERATING REVENUES Food Service Revenue $ 1,681,083 $ - Charges for Services - 7,153,637

TOTAL OPERATING REVENUES 1,681,083 7,153,637

OPERATING EXPENSES Salaries 810,399 - Employee Benefits 282,297 - GASB Pension and OPEB Expense (47,891) - Other Operating Expenses 135,931 - Supplies 1,091,825 - Depreciation 22,758 - Payment for Health Claims and Administrative Services - 6,445,765

TOTAL OPERATING EXPENSES 2,295,319 6,445,765

OPERATING LOSS (614,236) 707,872

NONOPERATING REVENUES Earnings on Investments 11,863 52,046 State Sources 42,014 - Federal Sources 554,938 -

TOTAL NONOPERATING REVENUES 608,815 52,046

CHANGE IN NET POSITION (5,421) 759,918

NET POSITION (DEFICIT) - BEGINNING OF YEAR, RESTATED (529,251) 1,538,043

NET POSITION (DEFICIT) - END OF YEAR $ (534,672) $ 2,297,961

See accompanying notes. 43 GREAT VALLEY SCHOOL DISTRICT

STATEMENT OF CASH FLOWS PROPRIETARY FUNDS

For the Year Ended June 30, 2018

Enterprise Fund Internal Food Service Service Fund CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Users $ 1,677,814 $ 6,288,626 Cash Payments to Employees for Services (1,083,910) - Cash Payments to Suppliers for Goods and Services (974,506) - Cash Payments for Other Operating Expenses (146,049) - Cash Payments for Health Claims and Administrative Services - (6,288,626)

NET CASH USED FOR OPERATING ACTIVITIES (526,651) -

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Sources 42,934 - Federal Sources 428,938 -

NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 471,872 -

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets (35,517) -

CASH FLOWS FROM INVESTING ACTIVITIES Earnings on Investments 11,863 52,046

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (78,433) 52,046

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 886,866 4,192,333

CASH AND CASH EQUIVALENTS - END OF YEAR $ 808,433 $ 4,244,379

See accompanying notes. 44 GREAT VALLEY SCHOOL DISTRICT

STATEMENT OF CASH FLOWS - CONTINUED PROPRIETARY FUNDS

For the Year Ended June 30, 2018

Enterprise Fund Internal Food Service Service Fund Reconciliation of Operating Loss to Net Cash Used for Operating Activities:

Operating Income (Loss) $ (614,236) $ 707,872

Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used For) for Operating Activities: Depreciation 22,758 - Donated Commodities Used 137,947 -

Changes in Assets, Deferred Inflows of Resources, Liabilities, and Deferred Outflows of Resources: Interfund Receivables/Payables (10,118) (865,011) Other Receivables (10,812) - Inventories 5,517 - Deferred Outflows of Resources for Pension 30,507 - Deferred Outflows of Resources for Other Postemployment Benefits Health Insurance Premium Assistance Program (719) - Deferred Outflows of Resources for Other Postemployment Benefits District Plan (6,095) - Accounts Payable (26,145) 157,139 Accrued Salaries and Benefits 6,005 - Unearned Revenue 7,543 - Compensated Absences 2,781 - Net Pension Liability (260,186) - Other Postemployment Benefit Obligation - Health Insurance Premium Assistance Prorgam (2,736) - Total Other Postemployment Benefit Obligation - District Plan 1,501 - Deferred Inflows of Resources for Pension 187,281 - Deferred Inflows of Resources for Other Postemployment Benefits - Health Insurance Premium Assistance Program 2,556 -

Total Adjustments 87,585 (707,872)

NET CASH USED FOR OPERATING ACTIVITIES $ (526,651) $ -

NONCASH NONCAPITAL FINANCING ACTIVITIES During the year, the District used $137,947 of food commodities from the Department of Agriculture.

See accompanying notes. 45 GREAT VALLEY SCHOOL DISTRICT

STATEMENT OF NET POSITION FIDUCIARY FUNDS

June 30, 2018

Private Purpose Agency Trust Funds Funds ASSETS

CURRENT ASSETS Cash and Investments $ 2,349,106 $ 1,258,217

TOTAL ASSETS 2,349,106 $ 1,258,217 LIABILITIES

CURRENT LIABILITIES Other Current Liabilities 30,900 $ 1,258,217

TOTAL LIABILITIES 30,900 $ 1,258,217

NET POSITION HELD IN TRUST FOR SCHOLARSHIPS $ 2,318,206

See accompanying notes. 46 GREAT VALLEY SCHOOL DISTRICT

STATEMENT OF CHANGES IN NET POSITION FIDUCIARY FUNDS

For the Year Ended June 30, 2018

Private Purpose Trust Funds

ADDITIONS Contributions $ 154,294 Earnings on Investments 26,196

TOTAL ADDITIONS 180,490

DEDUCTIONS Scholarships 42,700

TOTAL DEDUCTIONS 42,700

CHANGE IN NET POSITION 137,790

NET POSITION - BEGINNING OF YEAR 2,180,416

NET POSITION - END OF YEAR $ 2,318,206

See accompanying notes. 47 GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

Great Valley School District (“School District” or the “District”) is located in Chester County, Pennsylvania. The District tax base consists of the Townships of Charlestown, East Whiteland, Willistown, and the Borough of Malvern. The District is governed by a board of nine school directors who are residents of the District and who are elected every two years, on a staggered basis, for a four-year term. The board of school directors has the power and duty to establish, equip, furnish, and maintain a sufficient number of elementary, secondary, and other schools necessary to educate every person, residing in such district, between the ages of six and 21 years, who may attend. In order to establish, enlarge, equip, furnish, operate, and maintain any school herein provided, or to pay any school indebtedness which the District is required to pay, or to pay an indebtedness that may at any time hereafter be created by the District, the board of school directors are vested with all the necessary authority and power annually to levy and collect the necessary taxes required and granted by the legislature, in addition to the annual state appropriation, and are vested with all necessary power and authority to comply with and carry out any or all of the provisions of the Public School Code of 1949.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of Great Valley School District have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the authoritative standard-setting body for the establishment of governmental accounting and financial reporting principles. The more significant of these accounting principles are as follows:

A. Reporting Entity As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the District and its component units. The District used guidance contained in generally accepted accounting principles to evaluate the possible inclusion of related entities (authorities, boards, councils, etc.) within its reporting entity. Accounting principles generally accepted in the United States of America require that the reporting entity consists of the primary government and organizations for which the primary government is financially accountable. In addition, the primary government may determine through the exercise of management’s professional judgment that the inclusion of an organization that does not meet the financial accountability criteria is necessary in order to prevent the reporting entity’s financial statements from being misleading. In such instances, that organization should be included as a component unit if the nature and significance of their relationship with the primary government or other component units are such that the exclusion from the financial reporting entity would render the financial reporting entity’s financial statements incomplete or misleading. In evaluating how to define the reporting entity, management has considered all potential component units. Based on the foregoing criteria, the District has determined it has no component units. Governments commonly enter into special arrangements with each other to provide or obtain needed services. A common type of such an arrangement is a joint venture. In addition to joint ventures, governments also enter into contracts to plan for and address certain activities for their mutual benefits; i.e., a jointly governed organization. The District has one of each of these relationships: Joint Venture: The District participates in a joint venture which is not a component unit of the District. See Note 12 for details of involvement and financial information of the joint venture. Jointly Governed Organizations: The District is a participating member of Chester County Intermediate Unit (CCIU). CCIU is run by a joint committee consisting of members from each participating district. No participating district appoints a majority of the joint committee. The board of directors of each participating district must approve CCIU’s annual operating budget. CCIU is a self-sustaining organization that provides services for fees to participating districts. As such, the District has no ongoing financial interest or responsibility in CCIU. CCIU contracts with participating districts to supply special education services, computer services, and to act as a conduit for certain federal programs.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

B. Basis of Presentation - Government-Wide Financial Statements

Government-wide financial statements (i.e., the statement of net position and the statement of activities) display information about the reporting entity, except for its fiduciary activities. All fiduciary activities are reported only in the fund financial statements. The government-wide statements include separate columns for the governmental and business- type activities of the primary government, as well as any discretely presented component units. Governmental activities, which normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are reported separately from business-type activities which rely to a significant extent, on fees and charges for support. Likewise, the primary government is reported separately from the legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function to the District are offset by the program revenues related to that function. Direct expenses are those that are directly related to and clearly identified with a function. Program revenues include 1) charges to customers or others who purchase, use, or directly benefit from services or goods provided by a given function, or 2) grants and contributions that are restricted to meet the operational or capital requirements of a function. Taxes and other items properly not included in program revenues are reported as general revenues. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are the contributions made to any component unit from the District’s governmental funds and transfers between governmental funds and business-type and fiduciary funds. Elimination of these contributions would distort the direct costs and program revenues reported for the various functions concerned. C. Basis of Presentation - Fund Financial Statements

The fund financial statements provide information about the government’s funds, including its fiduciary funds. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor funds. The District Reports the Following Major Governmental Funds:

General Fund: This fund is established to account for resources devoted to financing the general services that the District performs. Intergovernmental revenues and other sources of revenue used to finance the fundamental operations of the District are included in this fund. The fund is charged with all costs of operating the District for which a separate fund has not been established. Capital Projects Fund: This fund is established to account for financial resources to be used for the acquisition or construction of major capital equipment and facilities (other than those financed by proprietary funds). Debt Service Fund: This fund accounts for the financial resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds.

The District has the Following Major Enterprise Fund:

Food Service Fund: This fund accounts for all revenues, food purchases, and costs and expenses for the food service program. The food service fund is a major enterprise fund where the intent of the governing body is that the costs of providing food services are covered by user charges and subsidies received.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

C. Basis of Presentation - Fund Financial Statements - continued

Additionally, the District Reports the Following Fund Types:

Internal Service Fund: This fund accounts for the financing of services provided by one department or agency to the other governmental units. The District’s internal service fund is a major proprietary fund used to account for the activity related to the District’s self-insured medical and prescription drug plan. Since this fund supports largely governmental activities, its activity is included in governmental activities in the government-wide statements. Fiduciary Funds: The District’s fiduciary funds are trust funds and agency funds. Trust funds are used to account for assets held by the District under a trust agreement for individuals, private organizations, or other governments and, therefore, are not available to support the District’s own programs. The District’s only trust funds are the private- purpose trusts (scholarships). Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The District’s agency funds include its student activities funds and its retiree medical claims fund. During the course of operations, the government has activity between funds for various purposes. Any residual balances outstanding at year-end are reported as interfund receivables and payables. While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in governmental activities (i.e., the governmental and internal service funds) are eliminated so that only the net amount is included as internal balances in the governmental activities column. Similarly, balances between the funds included in business-type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as internal balances in the business-type activities column. Further, certain activity occurs during the year involving transfers of resources between funds. In fund financial statements these amounts are reported at gross amounts as transfers in/out. While reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. Similarly, balances between the funds included in business-type activities are eliminated so that only the net amount is included as transfers in the business-type activities column. D. Measurement Focus and Basis of Accounting

The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The government-wide financial statements are reported using the economic resources measurement focus, and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers tax revenues to be available if they are collected within 60 days of the end of the current fiscal period. Property taxes and interest associated with the current fiscal period is considered to be susceptible to accrual and so has been recognized as revenue of the current fiscal period. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met. If time eligibility requirements are not met, deferred inflows of resources would be recorded. All other revenue items are considered to be measurable and available only when cash is received by the government.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

D. Measurement Focus and Basis of Accounting - continued

Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long- term debt and acquisitions under capital leases are reported as other financing sources. The proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting. The trust fund is reported using the economic resources measurement focus and the accrual basis of accounting. The agency funds have no measurement focus but utilize the accrual basis of accounting for reporting their assets and liabilities. E. Budgetary Process

An operating budget is adopted prior to the beginning of each year for the General Fund on the modified accrual basis of accounting. The General Fund is the only fund for which a budget is legally required. In accordance with Act 1 of 2006, the board shall annually, but not later than 110 days before the primary election, decide the budget option to be used for the following fiscal year. The board shall approve either the Accelerated Budget Process Option or the Board Resolution Option. Accelerated Budget Process Option Under this option, a preliminary budget must be adopted 90 days prior to the primary election. Under this option, the preliminary budget must be available for public inspection at least 20 days prior to the budget adoption. The board shall give public notice of its intent to adopt the preliminary budget at least 10 days prior to the adoption. If the primary budget exceeds the increase authorized by the Index, an application for an exception may be filed with the Pennsylvania Department of Education and made available for public inspection. The board may opt to forego applying for an exception by submitting a referendum question seeking voter approval for a tax increase, in accordance with Act 1. The final budget shall include any necessary changes from the adopted preliminary budget. Any reduction required as the result of the failure of referendum shall be clearly stated. The final budget shall be made available for public inspection at least 20 days prior to final adoption. The board shall annually adopt the final budget by a majority vote of all members of the board prior to June 30. Board Resolution Option Under the Board Resolution Option, the board shall adopt a resolution that it will not raise the rate of any tax for the following fiscal year by more than the Index. Such resolution shall be adopted no later than 110 days prior to the primary election. At least 30 days prior to adoption of the final budget the board shall prepare a proposed budget. The proposed budget shall be available for public inspection at least 20 days prior to adoption of the budget. The board shall give public notice of its intent to adopt at least 10 days prior to adoption of the proposed budget. The board shall annually adopt the final budget by a majority vote of all members of the board by June 30. Legal budgetary control is maintained at the sub-function/major object level. The PA School Code allows the school board to make budgetary transfers between major function and major object codes only within the last nine months of the fiscal year, unless there is a two-thirds majority of the board approving the transfer. Appropriations lapse at the end of the fiscal period. Budgetary information reflected in the financial statements is presented at or below the level of budgetary control and includes the effect of approved budget amendments. The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts in the PDE 2028 when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary statements reflect the amounts after all 2017/2018 budget transfers.

51 GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

F. Financial Position

1. Cash and Cash Equivalents For purposes of the statement of cash flows, the proprietary fund type considers all highly-liquid investments with a maturity of three months or less when purchased to be cash equivalents.

2. Investments Investments are valued at fair value in accordance with Governmental Accounting Standards Board Statement No. 72, Fair Value Measurement and Application, except for investments in external investment pools, which are valued at amortized costs if required criteria are met as outlined in Governmental Accounting Standards Board Statement No. 79, Certain External Investment Pools and Pool Participants. The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

3. Interfund Transactions Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the year are referred to as “interfund receivables/payables.” Any residual balances outstanding between the governmental and business-type activities are reported in the government-wide financial statements as “internal balances.”

4. Inventories and Prepaid Expenses/Expenditures On government-wide financial statements, inventories are presented at cost using the first-in, first-out basis and are expensed when consumed. Inventories of the governmental funds, consisting principally of textbooks and instructional supplies, are not valued since it is the policy of the District to charge these items to expense upon acquisition. Inventories of the Enterprise Fund consisting of food and paper supplies are carried at cost, using the first-in, first-out method. Federal donated commodities are valued at their fair market value as determined by the U.S. Department of Agriculture at the date of donation. The inventories on hand at June 30, 2018, consist of the following:

Purchased food $ 7,284 Supplies 20,538 Donated commodities 11,564

$ 39,386

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid expenses in the government-wide financial statements and prepaid expenses/expenditures in the fund financial statements. The costs of prepaid items are recorded as expenses/expenditures when consumed rather than when purchased. 5. Capital Assets, Depreciation, and Amortization The District’s property, plant, and equipment, with useful lives of more than one year, are stated at historical cost and comprehensively reported in the government-wide financial statements. Proprietary capital assets are also reported in their respective financial statements. The reported value excludes normal maintenance and repairs which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or extend its useful life beyond the original estimate. Donated capital assets, donated works of art and similar items, and capital assets receivable in a service concession arrangement should be reported at acquisition value rather than fair value.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

F. Financial Position – continued

5. Capital Assets, Depreciation, and Amortization - continued

The District generally capitalizes assets with costs of $5,000 or more as purchase and construction outlays occur. Management has elected to include certain homogeneous asset categories with individual assets less than $5,000 as composite groups for financial reporting purposes. Assets purchased or constructed with long-term debt may be capitalized regardless of the threshold established. Interest incurred during the construction phase of the business- type activities is included in the capitalized value of the assets constructed. The costs of normal maintenance and repairs that do not add to the asset value or materially extend useful lives are not capitalized. Capital assets, including those of component units, are depreciated using the straight-line method. When capital assets are disposed, the cost and applicable accumulated depreciation are removed from the respective accounts, and the resulting gain or loss is recorded in operations.

Estimated useful lives, in years, for depreciable assets are as follows:

Assets Years

Building and building improvements 50 Site improvements 20 Furniture and equipment 3 - 20 Library books 10 Vehicles 8

6. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expenses) until then. The District has three items that qualify for reporting in this category:

A deferred charge on bond refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.

Deferred outflows of resources for pension relate to the District’s net pension liability and pension expense and arise from changes in assumptions, actual versus expected results, changes in benefits, variances in expected versus actual investment earnings, changes in the employer’s proportion, differences between employer contributions and the proportionate share of total contributions reported by the pension plan, or changes in the internal allocation of the net pension liability between governmental and business-type activities or funds. These amounts are deferred and amortized over either a closed 5-year period or the average remaining service life of all employees depending on what gave rise to the deferred outflow. Also included are contributions made to the pension plan subsequent to the measurement date and prior to the District’s year end. The contributions will be recognized as a reduction in net pension liability in the following year.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

F. Financial Position - continued

6. Deferred Outflows/Inflows of Resources – continued

Deferred outflows of resources for other postemployment benefit obligations relate to the District’s obligation for postemployment benefits other than pensions and related expenses and arise from the changes in assumptions, actual versus expected results, changes in benefits, variances in expected versus actual investment earnings, changes in the employer’s proportion, differences between employer contributions and the proportionate share of total contributions reported by the plan, or changes in the internal allocation of the net other postemployment benefit obligation between governmental and business-type activities or funds. These amounts are deferred and amortized over either a closed 5-year period or the average remaining service life of all employees depending on what gave rise to the deferred outflow. Also included are contributions or benefit payments made subsequent to the measurement date and prior to the District’s year end. These payments will be recognized as a reduction to the net other postemployment benefit obligation in the following year.

In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position 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 three types of items that qualify for reporting in this category.

Unavailable revenue has one component that arises only under a modified accrual basis of accounting related to current year property tax assessment and is reported only in the governmental funds balance sheet. The second component unavailable revenue or deferred inflows of resources for 2018/2019 property taxes arises when future property tax levies are collected in the current year and are reported in both the governmental funds balance sheet and the government-wide statement of net position. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

Deferred inflows of resources for pensions relate to the District’s net pension liability and pension expense and arise from changes in assumptions, actual versus expected results, changes in benefits, variances in expected versus actual investment earnings, changes in the employer’s proportion, differences between employer contributions and the proportionate share of total contributions reported by the pension plan, or changes in the internal allocation of the net pension liability between governmental and business-type activities or funds. These amounts are deferred and amortized over either a closed 5-year period or the average remaining service life of all employees depending on what gave rise to the deferred inflow.

Deferred inflows of resources for other postemployment benefit obligations relate to the District’s obligation for postemployment benefits other than pensions and related expenses and arise from changes in assumptions, actual versus expected results, changes in benefits, variances in expected versus actual investment earnings, changes in the employer’s proportion, differences between employer contributions and the proportionate share of total contributions reported by the plan, or changes in the internal allocation of the other postemployment benefit obligation between governmental and business-type activities or funds. These amounts are deferred and amortized over either a closed 5-year period or the average remaining service life of all employees depending on what gave rise to the deferred inflow.

7. Unearned Revenues Revenues that are received but not earned are reported as unearned revenues in the government-wide, governmental and enterprise funds financial statements. Unearned revenues arise when resources are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the District has legal claim to the resources, the liability for unearned revenue is removed from the respective financial statement and revenue is recognized.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

F. Financial Position - continued

8. Net Position Net position represents the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources. Net investment in the capital assets component of net position is comprised of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction, or improvement of those assets. In addition, any deferred outflows of resources and/or deferred inflows of resources related to such capital assets or liabilities associated with the capital assets should also be added to or deducted from the overall net investment in capital assets. The restricted component of net position is used when there are limitations imposed on their use either through the enabling legislation adopted by a higher governmental authority or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. The remaining component of net position is unrestricted.

The District applies restricted resources first when an expense is incurred for purposes for which both the restricted and unrestricted components of net position are available.

9. Fund Balance Policies and Flow Assumptions Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The government itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance).

The restricted fund balance classification represents funds that are limited in use due to constraints for a specific purpose through restrictions by external parties, grant agreements, or enabling legislation.

The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority. The board of directors is the highest level of decision-making authority for the government that can, by adoption of a resolution prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution remains in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation.

Amounts in the assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as committed. The board of directors may assign fund balance. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or review a commitment.

The unassigned fund balance of the general fund at the end of each fiscal year end shall not be less than 5% of the following year’s projected budgeted expenditures. In any fiscal year where the District is unable to maintain this minimum reservation of fund balance as required in this section, the District shall not budget any amount of unassigned fund balance for the purpose of balancing the general fund budget until this level is achieved. A negative unassigned fund balance may be reported in other governmental funds if expenditures incurred for specific purposes exceeded the amounts restricted, committed, or assigned to those purposes.

Sometimes the government will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned and unassigned fund balance in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. The District’s policy is to decide at the time an expenditure is incurred for a purpose in which unrestricted fund balance amounts are available under committed, assigned or unassigned fund balance. The decision will be at the discretion of the business manager or designee.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

G. Revenues and Expenditures/Expenses

1. Program Revenues Amounts reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions (including special assessments) that are restricted to meeting the operations or capital requirements of a particular function or segment. All taxes and other internally dedicated resources are reported as general revenues rather than as program revenues.

2. Compensated Absences The District accounts for compensated absences by recording a liability for certain compensated absences as the benefits are earned by employees instead of when they are paid.

Vested or accumulated vacation, sick leave, or sabbatical leave that is expected to be liquidated with expendable available financial resources and that has matured is reported as an expenditure and a fund liability of the governmental fund that will pay it. Amounts of vested or accumulated vacation, sick leave, or sabbatical leave that are not expected to be liquidated with expendable available financial resources and that have not matured are reported as long-term liabilities in the government-wide statements. Vested or accumulated vacation or sick leave of proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits; however, a liability is recognized for that portion of accumulating sick leave benefits that is estimated will be taken as "terminal leave" prior to retirement. The liability for compensated absences includes salary related benefits, where applicable.

Full Time Employees Vacation days are earned at various rates and are required to be utilized annually, except that five days may be carried forward.

Sick pay is accumulated without limit for each employee at the rate of one day for each month worked. Leave with pay is provided when employees are absent for health reasons. Eligible employees are vested at the completion of 10 to 15 years of service to the District and are then eligible for payment for each sick day accumulated. Payment amount ranges from $50 to $100 per day based on a graduated scale. Eligible employees must retire from service to receive this benefit.

Sabbatical leave is granted in accordance with the provisions of the School Code. Sabbaticals are granted for travel, study or the restoration of health. A sabbatical leave may not exceed one year and is, therefore, included with accrued salaries and benefits in the general fund.

3. Proprietary Funds Operating and Nonoperating Revenues and Expenses Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the food service fund are charges to customers for meals and services provided. Operating revenues for the internal service fund are fees charged for insurance coverage. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

H. Other Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates

56 GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Compliance with Finance Related Legal and Contractual Provisions

The District has no material violations of finance related legal and contractual provisions.

B. Deficit Fund Balance or Net Position of Individual Funds

Deficit Net Position - Proprietary Fund (Food Service Fund) For the year ended June 30, 2018, the implementation of GASB No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, and the accounting under GASB No. 68, Accounting and Financial Reporting for Pensions, and GASB No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date, created a deficiency in net position at year-end of $534,672. The District will fund this deficiency in future years through contributions to the Pennsylvania Public School Employees’ Retirement Plan (PSERS) at a rate required by the PSERS.

C. Excess of Expenditures Over Appropriations in Individual Funds

No individual fund which had a legally adopted budget had an excess of expenditures over appropriations.

D. Budgetary Compliance

The District’s only legally adopted budget is for the General Fund. All budgetary transfers were made within the last nine months of the fiscal year. The District cancels all purchase orders open at year end; therefore, it does not have any outstanding encumbrances at June 30, 2018. In addition, the District includes a portion of the prior year’s fund balance represented by unappropriated liquid assets remaining in the fund as budgeted revenue in the succeeding year. The results of operations on a GAAP basis does not recognize the fund balance allocation as revenue as it represents prior period’s excess of revenues over expenditures.

NOTE 3 - CASH AND INVESTMENTS

Under Section 440.1 of the Public School Code of 1949, as amended, the District is permitted to invest funds in the following types of investments:

Obligations of (a) the United States of America or any of its agencies or instrumentalities backed by the full faith and credit of the United States of America, (b) the Commonwealth of Pennsylvania 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.

Deposits in savings accounts, 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, therefore, shall be pledged by the depository.

Pennsylvania Act 10 of 2016 became effective May 25, 2016, and expanded the permitted investment types to include commercial paper, bankers’ acceptances, negotiable certificates of deposit, and insured bank deposit reciprocals as long as certain safeguards related to credit quality and maturity are met.

The deposit and investment policy of the District adheres to state statutes. There were no deposits or investment transactions during the year that were in violation of either the state statutes or the policy of the District.

57 GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 3 - CASH AND INVESTMENTS - CONTINUED

The breakdown of total cash and investments at June 30, 2018, is as follows:

Cash $ 1,061,747 Pooled cash and investments 40,966,585

$ 42,028,332

Deposits Custodial Credit Risk Custodial credit risk is the risk that in the event of a bank failure, the government’s deposits may not be returned. The District does not have a policy for custodial credit risk on deposits. As of June 30, 2018, the carrying amount of the District’s deposits was $1,061,747 and the bank balance was $1,070,286. Of the bank balance, $83,952 was covered by federal depository insurance, $250,000 was covered by National Credit Union Administration share insurance and $736,334 was exposed to custodial credit risk, but covered under collateralization requirements in accordance with Act 72 of the 1971 Session of the General Assembly.

Investments As of June 30, 2018, the District had the following investments: Maturities Fair Value Carrying Value

PA School District Liquid Asset Fund (PSDLAF): Full Flex Pool < 1 year $ 27,400,000 $ 27,400,000 Certificates of Deposit < 1 year 5,480,000 5,480,000 MAX Account Balance 8,849,689 8,849,689 PA Local Government Investment Trust (PLGIT): PLGIT and PLGIT/PLUS - Class shares 73 73 Total 41,729,762 Reconciling items (763,177)

Total Investments $ 40,966,585

Certain external investments held by the District, based on portfolio maturity, quality, diversification, and liquidity measures, qualify for measurement at amortized cost at both the pool and participating government level consistent with GASB Statement No. 79. The District measures those investments, which include $41,729,762 (PSDLAF and PLGIT) at amortized cost. All investments in external investment pools that are not registered with the Securities and Exchange Commission are subject to oversight by the Commonwealth of Pennsylvania.

A portion of the District’s deposits were in the Pennsylvania School District Liquid Asset Fund. PSDLAF acts like a money market mutual fund in that the objective is to maintain a stable net asset value of $1 per share, is rated by nationally recognized statistical rating organization, and is subject to an independent annual audit.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 3 - CASH AND INVESTMENTS - CONTINUED

Investments - continued

The PSDLAF Full Flex Pool and Certificates of Deposit, as part of the Fixed-Term Series at PSDLAF, are fixed-term investments collateralized in accordance with Act 72 and invests in assets listed above as permitted under Section 440.1 of the Public School Code of 1949. The Fixed-Term Series are fixed-term investment vehicles with maturities depending upon the maturity date of each particular Fixed-Term Series. All investments in a Fixed-Term Series by a Settlor are intended to be deposited for the full term of the particular Fixed-Term Series; however, participants in the full flex pool may remove funds without early withdrawal penalty. Whether a Fixed-Term Series has only one Settlor or more than one Settlor participating in it, each certificate of deposit in which the monies in such Fixed-Term Series are invested is registered in the name of that particular Fixed-Term Series.

The PSDMAX fund invests in U.S. treasury securities, U.S. government securities, its agencies and instrumentalities, and repurchase agreements, collateralized by such securities and contracted with highly-rated counterparties. Weighted average portfolio maturity for the fund is expected to be kept at or below 60 days. PSDMAX does not have limitations or restrictions on withdrawals.

PLGIT invests primarily in U.S. Treasury and federal agency securities and repurchase agreements secured by such obligations, as well as certain municipal obligations and collateralized or insured certificates of deposit. The fund manager intends to comply with guidelines similar to those mandated for money-market funds as contained in Rule 2a-7 of the Investment Company Act of 1940.

PLGIT - Class Shares are a flexible option within the PLGIT fund which requires no minimum balance, no minimum initial investment, and a one-day minimum investment period. Dividends are paid monthly.

PLGIT/PLUS - Class Shares are an option which requires a minimum investment of $50,000, a minimum investment period of thirty (30) days, and had a premature withdrawal penalty. Dividends are paid quarterly.

As of June 30, 2018, the entire PSDLAF and PLGIT book balance of $40,966,585 is considered to be a cash equivalent for presentation on the government-wide and fund financial statements.

Interest Rate Risk The District does have a formal investment policy that limits investment 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 of June 30, 2018, the District’s investments were rated as:

Standard Investment & Poor's

PA School District Liquid Asset Fund AAA PA Local Government Investment Trust AAA

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 3 - CASH AND INVESTMENTS - CONTINUED

Concentration of Credit Risk The District places no limit on the amount the District may invest in any one issuer. As of June 30, 2018, the District did not have any investments subject to concentration of credit risk.

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 the possession of an outside party. The District has no investment subject to custodial credit risk.

NOTE 4 - REAL ESTATE TAXES RECEIVABLE AND UNAVAILABLE REVENUE

The District has four independently elected tax collectors who have relinquished responsibility for the collection of taxes. The Director of Business Affairs has been appointed as tax collector for the District. Real estate taxes for the District are collected from the Townships of Charlestown, East Whiteland, Willistown, and the Borough of Malvern. The Director of Business Affairs has also entered into an agreement with an independent agent to collect taxes via a lock box account on behalf of the District. Assessed values are established by the Chester County Board of Assessment. All taxable real property was assessed at $3,704,447,281. In accordance with Act 1 of 2006, the District received $1,024,118 in property tax reduction funds for the 2017/2018 fiscal year. The District tax rate for the year ended June 30, 2018, was 20.80 mills ($20.80 per $1,000 of assessed valuation) as levied by the board of school directors. The schedule for real estate taxes levied for each fiscal year is as follows:

July 1 Levy date July 1 - August 31 2% discount period September 1 - October 31 Face payment period November 1 - January 14 10% penalty period January 15 Lien date

The District, in accordance with generally accepted accounting principles, recognized the delinquent and unpaid taxes receivable reduced by an allowance for uncollectible taxes as determined by administration. A portion of the net amount estimated to be collectible, which was measurable and available within 60 days, was recognized as revenue and the balance unavailable in the fund financial statements.

The balances at June 30, 2018, are as follows:

Gross Allowance for Net Tax Unavailable Taxes Uncollectible Estimated to Revenue Revenue - Receivable Taxes be Collectible Recognized Taxes

Real estate $ 1,002,636 $ 14,683 $ 987,953 $ 268,461 $ 734,175

Included in unavailable revenue - property taxes in the fund financial statements is $3,212,232 of 2018/2019 year property tax levies paid in advance which may only be used for 2018/2019 expenditures.

60 GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 5 - INTERGOVERNMENTAL RECEIVABLES

The following schedule represents net intergovernmental receivables at June 30, 2018:

Proprietary General Fund - Food Receivable Fund Service Chester County - Transfer Taxes $ 282,392 $ - Chester County IU - Special Education - Grants to States 182,043 - Commonwealth of Pennsylvania: Retirement 2,176,064 - Social Security 557,214 - Transportation Subsidy 88,898 - Rental Subsidy 11,521 National School Lunch/Breakfast Program - 6,690 Federal Subsidies: National School Lunch/Breakfast Program - 63,127 Other 1,425 - $ 3,299,557 $ 69,817

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 6 - CHANGES IN CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2018, was as follows:

Governmental Activities Beginning Reclass/ Ending Balance Increase Decrease Balance Capital assets not being depreciated: Land $ 9,726,962 $ - $ - $ 9,726,962 Construction in progress - 1,011,619 - 1,011,619 Total not being depreciated 9,726,962 1,011,619 - 10,738,581 Capital assets being depreciated: Buildings 53,037,907 - - 53,037,907 Building improvements 84,082,185 171,880 - 84,254,065 Site improvements 7,137,731 37,500 - 7,175,231 Furniture and equipment 26,257,400 206,038 - 26,463,438 Library books 1,768,664 - - 1,768,664 Vehicles 222,899 - - 222,899 Total assets being depreciated 172,506,786 415,418 - 172,922,204 Less accumulated depreciation for: Buildings 22,638,916 905,516 - 23,544,432 Building improvements 18,823,242 1,784,041 - 20,607,283 Site improvements 4,714,823 345,834 - 5,060,657 Furniture and equipment 19,940,119 1,335,562 - 21,275,681 Library books 1,760,749 3,982 - 1,764,731 Vehicles 166,496 11,778 - 178,274 Total accumulated depreciation 68,044,345 4,386,713 - 72,431,058 TOTAL CAPITAL ASSETS BEING DEPRECIATED, NET 104,462,441 (3,971,295) - 100,491,146 GOVERNMENTAL ACTIVITIES, CAPITAL ASSETS, NET $ 114,189,403 $ (2,959,676) $ - $ 111,229,727

Business-Type Activities Capital assets being depreciated: Equipment $ 405,364 $ 35,517 $ - $ 440,881 Accumulated depreciation for: Equipment 318,207 22,758 - 340,965 BUSINESS-TYPE ACTIVITIES, CAPITAL ASSETS, NET $ 87,157 $ 12,759 $ - $ 99,916

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 6 - CHANGES IN CAPITAL ASSETS - CONTINUED

Depreciation expense was charged to functions/programs of the governmental activities of primary government as follows:

Instructional Services: Regular Programs - Elementary/Secondary $ 726,672 Special Programs - Elementary/Secondary 17,804 other Instructional Programs - Elementary/Secondary 323 744,799 Support Services: Instructional Staff 12,162 Administration 36,647 Business Services 379 Operation and Maintenance of Plant Services 2,786,173 Student Transportation Services 2,858 Central Support 392,363 3,230,582 Student Activities 8,864 Unallocated Depreciation Expense 402,468 TOTAL DEPRECIATION EXPENSE - GOVERNMENTAL ACTIVITIES $ 4,386,713

NOTE 7 - LONG-TERM LIABILITIES

Bonds and notes payable are as follows:

SPSBA, Qualified School Construction Bonds - Series of 2010A: On October 6, 2010, the District entered into a loan agreement with the State Public School Building Authority for $999,000 of Federally Taxable Revenue Bonds Series A of 2010 Qualified School Construction Bonds. The Bonds provide a federal subsidy to the District for interest paid on the Bonds. The Bonds mature in equal amounts from September 1, 2011, to September 1, 2027. Interest is payable semiannually on March 1 and September 1 beginning March 1, 2011. The stated interest rate for the District is 5.00%. The District is then receiving a federal subsidy at a rate of 4.83% leaving an effective interest rate of 0.17%. The District received a subsidy of $44,995 for the year ended June 30, 2018. Proceeds from these bonds were used for renovations at the Charlestown Elementary School. $ 587,646

SPSBA, Qualified School Construction Bonds - Series of 2011C: On November 1, 2011, the District entered into a loan agreement with the State Public School Building Authority for $389,000 of Federally Taxable Revenue Bonds Series C of 2011 Qualified School Construction Bonds. The Bonds provide a federal subsidy to the District for interest paid on the Bonds. The Bonds mature in equal amounts from September 1, 2012, to September 1, 2029. Interest is payable semiannually on March 1 and September 1 beginning March 1, 2012. The stated interest rate for the District is 5.09%. The District is then receiving a federal subsidy at a rate of 5.09% leaving an effective interest rate of 0%. The District received a subsidy of $18,456 for the year ended June 30, 2018. Proceeds from these bonds were used for renovations at the Charlestown Elementary School. 259,334

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 7 - LONG-TERM LIABILITIES - CONTINUED

Bonds and notes payable are as follows:

General Obligation Bonds, Series of 2012: On June 26, 2012, the District issued $16,415,000 of General Obligation Bonds, Series of 2012. The Bonds mature in varying amounts from February 15, 2013, to February 15, 2025. Interest is payable semiannually on February 15 and August 15 beginning August 15, 2012, at rates ranging from 0.5% to 5.0%. The Bonds maturing on or after February 15, 2021, are subject to redemption prior to maturity at the option of the District on or after August 15, 2020. Proceeds of the Bonds were used to advance refund a portion of the Great Valley School District’s General Obligation Bonds, Series 2004 and Series of 2009, and pay the costs of issuance. The refunding resulted in a net cash flow savings of $2,231,876 with a corresponding net present value savings of $2,004,163. 10,270,000

General Obligation Bonds, Series of 2013: On February 14, 2013, the District issued $9,645,000 of General Obligation Bonds, Series of 2013. The Bonds mature in varying amounts from February 15, 2013, to February 15, 2023. Interest is payable semiannually on February 15 and August 15 beginning August 15, 2013, at rates ranging from 1.0% to 3.0%. The Bonds maturing on or after February 15, 2019, are subject to redemption prior to maturity at the option of the District on or after February 15, 2018. Proceeds of the Bonds were used to currently refund a portion of the Great Valley School District’s General Obligation Bonds, Series 2005, advance refund a portion of the Great Valley School District’s General Obligation Bonds, Series of 2009, and pay the costs of issuance. The refunding resulted in a net cash flow savings of $1,055,562 with a corresponding net present value savings of $984,593. 5,875,000

General Obligation Bonds, Series of 2014: On July 9, 2014, the District issued $9,640,000 of General Obligation Bonds, Series of 2014. The Bonds mature in varying amounts from November 1, 2014, to November 1, 2023. Interest is payable semiannually on May 1 and November 1 beginning November 1, 2014, at rates ranging from 1.0% to 4.0%. The Bonds maturing on or after November 1, 2020, are subject to redemption prior to maturity at the option of the District on or after November 1, 2019. Proceeds from these bonds were used fund capital replacements, renovations, and improvements to six school buildings and the administrative offices and technology throughout the District. 6,335,000

General Obligation Notes, Series of 2016: On February 16, 2016, the District issued $12,380,000 of General Obligation Notes, Series of 2016. The Bonds mature in varying amounts from August 1, 2016, to August 1, 2020. Interest is payable semiannually on February 1 and August 1 beginning August 1, 2016, at a fixed interest rate of 1.6%. Proceeds from these bonds were used to currently refund the Great Valley School District’s General Obligation Bonds, Series 2006 and pay the costs of issuance. The refunding resulted in a net cash flow savings of $718,134 with a corresponding net present value savings of $592,359. 1,865,000

Total Bonds and Notes Payable $ 25,191,980

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 7 - LONG-TERM LIABILITIES - CONTINUED

The future annual payments required to amortize all bonds and notes payable for the years ending June 30 are as follows:

SPSBA SPSBA Qualified School Qualified School General General General Construction Construction Obligation Obligation Obligation Bonds, Series Bonds, Series Bonds, Series Bonds, Series Bonds, Series of 2010A of 2011C of 2012 of 2013 of 2014

2019 58,765 21,611 1,435,000 1,265,000 1,010,000 2020 58,765 21,611 1,510,000 1,310,000 1,050,000 2021 58,765 21,611 1,565,000 1,330,000 1,070,000 2022 58,765 21,611 1,625,000 1,355,000 1,095,000 2023 58,765 21,611 1,690,000 615,000 1,115,000 2024 - 2028 293,821 108,055 2,445,000 - 995,000 2029 - 2030 - 43,224 - - -

Total $ 587,646 $ 259,334 $ 10,270,000 $ 5,875,000 $ 6,335,000

General Obligation Total Notes, Series Bonds/Notes Total of 2016 Payable Interest *

2019 615,000 4,405,376 717,723 2020 620,000 4,570,376 561,943 2021 630,000 4,675,376 443,643 2022 - 4,155,376 327,753 2023 - 3,500,376 212,996 2024 - 2028 - 3,841,876 143,587 2029 - 2030 - 43,224 -

Total $ 1,865,000 $ 25,191,980 $ 2,407,645

* Net of federal subsidy from SPSBA Qualified School Construction Bond.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 7 - LONG-TERM LIABILITIES - CONTINUED

Long-term liability balance and activity, except for net pension liability, other postemployment benefit obligation, and settlement claims for the year ended June 30, 2018, were as follows: Amounts Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental Activities Bonds and Notes Payable $ 33,597,356 $ - $ 8,405,376 $ 25,191,980 $ 4,405,376 Bond Discounts (70,803) - (14,837) (55,966) - Bond Premiums 1,786,395 - 255,722 1,530,673 - Total Payables 35,312,948 - 8,646,261 26,666,687 4,405,376

Compensated Absences 1,838,384 718,029 688,195 1,868,218 997,458

Total Governmental Long-Term Liabilities $ 37,151,332 $ 718,029 $ 9,334,456 $ 28,534,905 $ 5,402,834

Business-Type Activities Compensated Absences $ 9,146 $ 16,611 $ 13,830 $ 11,927 $ 2,000

Payments on bonds and notes payable are made by the General Fund via transfers to the Debt Service Fund. The compensated absence liabilities will be fulfilled by the General Fund and Enterprise - Food Service Fund. Total interest paid during the year ended June 30, 2018, was $959,353. $63,451 of the cost was recovered by the receipt of a federal subsidy recorded in federal revenues.

Legal Debt Margin The District is subject to a debt limit that is 225% of borrowing base (the average total revenues for three years). At June 30, 2018, that amount is $210,049,860. As of June 30, 2018, the total outstanding debt applicable to the limit is $26,666,687.

NOTE 8 - EMPLOYEE RETIREMENT PLANS

Employee Defined Benefit Pension Plan

Summary of Significant Accounting Policies

Pension Plan

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public School Employees’ Retirement System (PSERS) and additions to/deductions from PSERS’s fiduciary net position have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms investments are reported at fair value

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 8 - EMPLOYEE RETIREMENT PLANS

General Information About the Pension Plan

Plan Description

PSERS is a governmental, cost-sharing, multi-employer, defined benefit pension plan that provides retirement benefits to public school employees of the Commonwealth of Pennsylvania under Title 24 Part IV of the Pennsylvania General Assembly. The members eligible to participate in the System include all full-time public school employees, part-time hourly public school employees who render at least 500 hours of service in the school year, and part-time per diem public school employees who render at least 80 days of service in the school year in any of the reporting entities in Pennsylvania. PSERS issues a publicly available financial report that can be obtained at www.psers.pa.gov.

Benefits Provided

PSERS provides retirement, disability, and death benefits. Members are eligible for monthly retirement benefits upon reaching (a) age 62 with at least one year of credited service; (b) age 60 with 30 or more years of credited service; or (c) 35 or more years of service regardless of age. Act 120 of 2010 (Act 120) preserves the benefits of existing members and introduced benefit reductions for individuals who become new members on or after July 1, 2011. Act 120 created two new membership classes, Membership Class T-E (Class T-E) and Membership Class T-F (Class T-F). To qualify for normal retirement, Class T-E and Class T-F members must work until age 65 with a minimum of three years of service or attain a total combination of age and service that is equal to or greater than 92 with a minimum of 35 years of service. Benefits are generally equal to 2.0% or 2.5%, depending upon membership class, of the member’s final average salary (as defined in the Code) multiplied by the number of years of credited service. For members whose membership started prior to July 1, 2011, after completion of five years of service, a member’s right to the defined benefits is vested and early retirement benefits may be elected. For Class T-E and Class T-F members, the right to benefits is vested after 10 years of service.

Participants are eligible for disability retirement benefits after completion of five years of credited service. Such benefits are generally equal to 2.0% or 2.5%, depending upon membership class, of the member’s final average salary (as defined in the Code) multiplied by the number of years of credited service, but not less than one-third of such salary nor greater than the benefit the member would have had at normal retirement age. Members over normal retirement age may apply for disability benefits.

Death benefits are payable upon the death of an active member who has reached age 62 with at least one year of credited service (age 65 with at least three years of credited service for Class T-E and Class T-F members) or who has at least five years of credited service (10 years for Class T-E and Class T-F members). Such benefits are actuarially equivalent to the benefit that would have been effective if the member had retired on the day before death.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 8 - EMPLOYEE RETIREMENT PLANS - CONTINUED

Employee Defined Benefit Pension Plan - continued

General Information About the Pension Plan - continued

Contributions

The contribution policy is set by the state statute and requires contributions by active members, employers, and the Commonwealth of Pennsylvania. Member Contributions: Active members who joined the System prior to July 22, 1983, contribute at 5.25% (Membership Class T-C) or at 6.50% (Membership Class T-D) of the member’s qualifying compensation. Members who joined the System on or after July 22, 1983, and who were active or inactive as of July 1, 2001, contribute at 6.25% (Membership Class T-C) or at 7.50% (Membership Class T-D) of the member’s qualifying compensation. Members who joined the System after June 30, 2001, and before July 1, 2011, contribute at 7.50% (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. Members who joined the System after June 30, 2011, automatically contribute at the Membership Class T-E rate of 7.5% (base rate) of the member’s qualifying compensation. All new hires after June 30, 2011, who elect Class T-F membership, contribute at 10.3% (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 7.5% and 9.5% and Membership Class T-F contribution rate to fluctuate between 10.3% and 12.3%. Employer Contributions: The District’s contractually required contribution rate for fiscal year ended June 30, 2018, was 31.74% of covered payroll, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The rate was certified by the PSERS Board of Trustees. Contributions to the pension plan from the District were $12,983,920 for the year ended June 30, 2018. The District is also required to contribute a percentage of covered payroll to PSERS for healthcare insurance premium assistance. Under the current legislation, the Commonwealth of Pennsylvania reimburses the District for no less than one-half of the employer contributions made, including contributions related to pension and healthcare. This arrangement does not meet the criteria of a special funding situation in accordance with GASB Standards. Therefore, the net position liabilities and related pension expense represent 100% of the District’s share of these amounts. The total reimbursement recognized by the District for the year ended June 30, 2018, for pension and OPEB benefits was $6,685,928. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2018, the District reported a liability of $147,770,000 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by rolling forward the System’s total pension liability as of June 30, 2016, to June 30, 2017. The District’s proportion of the net pension liability was calculated utilizing the employer’s one-year reported covered payroll as it relates to the total one-year reported covered payroll. At June 30, 2018, the District’s proportion was 0.2992%, which was an increase of 0.0021% from its proportion measured as of June 30, 2017. The net pension liability will be liquidated through future contributions to PSERS at the statutory rates. Contributions will be made from the general and food service funds.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 8 - EMPLOYEE RETIREMENT PLANS - CONTINUED

Employee Defined Benefit Pension Plan - continued

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - continued

For the year ended June 30, 2018, the District recognized pension expense of $17,595,361. At June 30, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources

Difference between expected and actual experience $ 1,542,000 $ 893,000 Changes of assumptions 4,014,000 - Net difference between projected and actual investment earnings 3,424,000 - Changes in proportions - plan level 5,244,000 - Changes in proportions - internal 281,190 281,190 Difference between employer contributions and proportionate share of total contributions 415,480 - Contributions made subsequent to the measurement date 12,983,920 -

$ 27,904,590 $ 1,174,190

The $12,983,920 reported as deferred outflows of resources resulting from District pension contributions made subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows for the years ending June 30:

2019 $ 4,267,362 2020 5,751,237 2021 3,958,284 2022 (230,403)

$ 13,746,480

Actuarial Assumptions

The total pension liability as of June 30, 2017, was determined by rolling forward the System’s total pension liability as of the June 30, 2016 actuarial valuation to June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement:

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 8 - EMPLOYEE RETIREMENT PLANS - CONTINUED

Employee Defined Benefit Pension Plan - continued

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - continued Changes in assumptions used in measurement of the total pension liability beginning June 30, 2016: • Actuarial cost method - Entry Age Normal - level % of pay. • Investment return - 7.25%, includes inflation at 2.75%. • Salary growth - Effective average of 5.00%, comprised of inflation of 2.75% and 2.25% for real wage growth and for merit or seniority increases. • Mortality rates were based on the RP-2014 Mortality Tables for Males and Females, adjusted to reflect PSERS’ experiences and projected using a modified version of the MP-2015 Mortality Improvement Scale. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The PSERS pension plan’s policy in regard to the allocation of invested plan assets is established and may be amended by the board. Plan assets are managed with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the pension.

Long-Term Target Expected Real Asset Class Allocation Rate of Return

Global public equity 20.0% 5.1% Fixed income 36.0% 2.6% Commodities 8.0% 3.0% Absolute return 10.0% 3.4% Risk parity 10.0% 3.8% Infrastructure/MLPs 8.0% 4.8% Real estate 10.0% 3.6% Alternative investments 15.0% 6.2% Cash 3.0% 0.6% Financing (LIBOR) (20.0%) 1.1%

100.0%

The above was the PSERS board’s adopted asset allocation policy and best estimates of geometric real rates of return for each major asset class as of June 30, 2017. Discount Rate

The discount rate used to measure the total pension liability was 7.25%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate and that contributions from employers will be made at contractually required rates, actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 8 - EMPLOYEE RETIREMENT PLANS - CONTINUED

Employee Defined Benefit Pension Plan - continued

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - continued

Sensitivity of the District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability, calculated using the discount rate of 7.25%, as well as what the net pension liability would be if it were calculated using a discount rate that is one-percentage point lower (6.25%) or one-percentage point higher (8.25%) than the current rate:

Current 1% Decrease Discount Rate 1% Increase 6.25% 7.25% 8.25% District's proportionate share of the net pension liability $ 180,892,000 $ 147,770,000 $ 118,961,000

Pension Plan Fiduciary Net Position Detailed information about PSERS’ fiduciary net position is available in PSERS Comprehensive Annual Financial Report, which can be found on the System’s website at www.psers.pa.gov. Payables to the Pension Plan At June 30, 2018, the District had an accrued balance due to PSERS, including contributions related to pension and OPEB of $4,308,033. This amount represents the District’s contractually obligated contributions for wages earned in April 2018 through June 2018. The balance will be paid in September 2018. 403(b) Tax Shelter Plan The District has established a 403(b) tax shelter plan permitting the establishment of accounts for school employees to voluntarily set aside monies to supplement their retirement income. All school employees are eligible to participate. The District does not contribute to the plan.

NOTE 9 - HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM

Employee Defined Benefit Other Postemployment Benefits Plan

The Health Insurance Premium Assistance Program (HIPAP) is a cost-sharing, multiple-employer, employee defined benefit other postemployment benefits plan administered by PSERS.

Summary of Significant Accounting Policies

Other Postemployment Benefits For purposes of measuring the net OPEB obligation, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Public School Employees’ Retirement System (PSERS) and additions to/deductions from PSERS’s fiduciary net position have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 9 - HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM - CONTINUED

General Information About the Health Insurance Premium Assistance Program

Health Insurance Premium Assistance Program The System provides Premium Assistance which is a governmental, cost-sharing, multiple-employer, other postemployment benefits plan (OPEB) for all eligible retirees who qualify and elect to participate. Employer contribution rates for Premium Assistance are established to provide reserves in the Health Insurance Account that are sufficient for the payment of Premium Assistance benefits for each succeeding year. Effective January 1, 2002, under the provisions of Act 9 of 2001, participating eligible retirees are entitled to receive premium assistance payments equal to the lesser of $100 per month or their out-of-pocket monthly health insurance premium. To receive premium assistance, eligible retirees must obtain their health insurance through either their school employer or the PSERS’ Health Options Program (HOP). As of June 30, 2017, there were no assumed future benefit increases to participating eligible retirees. Premium Assistance Eligibility Criteria Retirees of the System can participate in the HIPAP if they satisfy the following criteria: • Have 24 ½ or more years of service, or • Are a disability retiree, or • Have 15 or more years of service and retired after reaching superannuation age, and • Participate in the HOP or employer-sponsored health insurance program. Pension Plan Description

PSERS is a governmental, cost-sharing, multiple-employer, defined benefit pension plan that provides retirement benefits to public school employees of the Commonwealth of Pennsylvania. The members eligible to participate in the System include all full-time public school employees, part-time hourly public school employees who render at least 500 hours of service in the school year, and part-time per diem public school employees who render at least 80 days of service in the school year in any of the reporting entities in Pennsylvania. PSERS issues a publicly available financial report that can be obtained at www.psers.pa.gov.

Benefits Provided

Participating eligible retirees are entitled to receive premium assistance payments equal to the lesser of $100 per month or their out-of-pocket monthly health insurance premium. To receive premium assistance, eligible retirees must obtain their health insurance through either their school employer or the PSERS’ Health Options Program. As of June 30, 2017, there were no assumed future benefit increases to participating eligible retirees.

Contributions:

The contribution policy is set by state statute. A portion of each employer’s contribution is set aside for premium assistance. The School District’s contractually required contribution rate for the fiscal year ended June 30, 2018, was 0.83% of covered payroll, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions to the OPEB plan from the District were $339,529 for the year ended June 30, 2018.

The District is also required to contribute a percentage of covered payroll to PSERS for pension benefits. Under the current legislation, the Commonwealth of Pennsylvania reimburses the District for no less than one-half of the employer contributions made, including contributions related to pension and healthcare. This arrangement does not meet the criteria of a special funding situation in accordance with GASB Standards. Therefore, the net HIPAP obligation and related expense represents 100% of the District’s share of these amounts. The total reimbursement recognized by the District for the year ended June 30, 2018, for pension and OPEB benefits was $6,685,928.

72 GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 9 - HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

General Information About the Health Insurance Premium Assistance Program - continued

HIPAP OPEB Obligation, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

At June 30, 2018, the District reported an obligation of $6,096,000 for its proportionate share of the net OPEB obligation. The net OPEB obligation was measured as of June 30, 2017, and the total OPEB obligation used to calculate the net OPEB obligation was determined by rolling forward the System’s total OPEB obligation as of June 30, 2016 to June 30, 2017. The District’s proportion of the net OPEB obligation was calculated utilizing the employer’s one-year reported covered payroll as it relates to the total one-year reported covered payroll. At June 30, 2018, the District’s proportion was 0.2922%, which was an increase of 0.0021% from its proportion measured as of June 30, 2017. The net OPEB obligation will be liquidated through future contributions to PSERS at statutory rates. Contributions will be made from the general and food service funds.

For the year ended June 30, 2018, the District recognized OPEB expense of $268,478. At June 30, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources Changes in assumptions $ - $ 284,000 Net difference between projected and actual investment earnings 6,000 - Changes in proportion 39,000 - Contributions made subsequent to the measurement date 339,529 -

$ 384,529 $ 284,000

The $339,529 reported as deferred outflows of resources related to OPEB resulting from District contributions made subsequent to the measurement date will be recognized as a reduction of the net OPEB obligation in the year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows for the years ending June 30:

2019 $ (39,000) 2020 (39,000) 2021 (39,000) 2022 (39,000) 2023 (41,000) Thereafter (42,000)

$ (239,000)

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 9 - HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

HIPAP OPEB Obligation, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB - continued

Actuarial Assumptions

The total OPEB obligation as of June 30, 2017, was determined by rolling forward the System’s total OPEB obligation as of June 30, 2016 to June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement:

• Actuarial cost method - Entry Age Normal - level % of pay. • Investment return - 3.13% - S&P 20 Year Municipal Bond Rate. • Salary growth - Effective average of 5.00%, comprised of inflation of 2.75% and 2.25% for real wage growth and for merit or seniority increases. • Premium Assistance reimbursement is capped at $1,200 per year. • Assumed Healthcare cost trends were applied to retirees with less than $1,200 in premium assistance per year. • Mortality rates were based on the RP-2014 Mortality Tables for Males and Females, adjusted to reflect PSERS’ experience and projected using a modified version of the MP-2015 Mortality Improvement Scale. • Participation rate: • Eligible retirees will elect to participate Pre-age 65 at 50% • Eligible retirees will elect to participate Post-age 65 at 70%

The following assumptions were used to determine the contribution rate:

• The results of the actuarial valuation as of June 30, 2015 determined the employer contribution rate for fiscal year 2017. • Cost Method: Amount necessary to assure solvency of Premium Assistance through the third fiscal year after the valuation date. • Asset valuation method: Market Value. • Participation rate: 63% of eligible retirees are assumed to elect premium assistance. • Mortality rates and retirement ages were based on the RP-2000 Combined Healthy Annuitant Tables with age set back 3 years for both males and females for healthy annuitants and for dependent beneficiaries. For disabled annuitants, the RP-2000 Combined Disabled Tables with age set back 7 years for males and 3 years for females for disabled annuitants. (A unisex table based on the RP-2000 Combined Healthy Annuitant Tables with age set back 3 years for both genders assuming the population consists of 25% males and 75% females is used to determine actuarial equivalent benefits.)

Investments consist primarily of short term assets designed to protect the principal of the plan assets. The expected rate of return on OPEB plan investments was determined using the OPEB asset allocation policy and best estimates of geometric real rates of return for each asset class.

The OPEB plan’s policy in regard to the allocation of invested plan assets is established and may be amended by the PSERS Board. Under the program, as defined in the retirement code employer contribution rates for Premium Assistance are established to provide reserves in the Health Insurance Account that are sufficient for the payment of Premium Assistance benefits for each succeeding year.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 9 - HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

HIPAP OPEB Obligation, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB - continued

Long-Term Target Expected Real Asset Class Allocation Rate of Return Cash 76.4% 0.6% Fixed income 23.6% 1.5%

100.0%

The above was the PSERS Board’s adopted asset allocation policy and best estimates of geometric real rates of return for each major asset class as of June 30, 2017.

Discount Rate

The discount rate used to measure the total OPEB obligation was 3.13%. Under the plan’s funding policy, contributions are structured for short term funding of Premium Assistance. The funding policy sets contribution rates necessary to assure solvency of Premium Assistance through the third fiscal year after the actuarial valuation date. The Premium Assistance account is funded to establish reserves that are sufficient for the payment of Premium Assistance benefits for each succeeding year. Due to the short-term funding policy, the OPEB plan’s fiduciary net position was not projected to be sufficient to meet projected future benefit payments, therefore the plan is considered a “pay-as-you-go” plan. A discount rate of 3.13% which represents the S&P 20-year Municipal Bond Rate at June 30, 2017, was applied to all projected benefit payments to measure the total OPEB liability.

Sensitivity of the District’s Proportionate Share of the Net OPEB Obligation to Changes in Healthcare Cost Trend Rates

Healthcare cost trends were applied to retirees receiving less than $1,200 in annual Premium Assistance. As of June 30, 2017, retirees Premium Assistance benefits are not subject to future healthcare cost increases. The annual Premium Assistance reimbursement for qualifying retirees is capped at a maximum of $1,200. As of June 30, 2016, 91,797 retirees were receiving the maximum amount allowed of $1,200 per year. As of June 30, 2016, 1,354 members were receiving less than the maximum amount allowed of $1,200 per year. The actual number of retirees receiving less than the $1,200 per year cap is a small percentage of the total population and has a minimal impact on Healthcare Cost Trends as depicted below.

The following presents the District’s proportionate share of the net OPEB obligation for the June 30, 2017 measurement date, calculated using current Healthcare cost trends as well as what the District’s proportionate share of the net OPEB obligation would be if the health cost trends were one-percentage point lower or one-percentage point higher than the current rate:

Current Trend 1% Decrease Rate 1% Increase (Between (Between (Between 4% to 7%) 5% to 8%) 6% to 9%) District's proportionate share of the net OPEB obligation $ 6,094,000 $ 6,096,000 $ 6,097,000

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 9 - HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

HIPAP OPEB Obligation, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB – continued

Sensitivity of the District’s Proportionate Share of the Net OPEB Obligation to Changes in the Discount Rate

The following presents the net OPEB obligation, calculated using the discount rate of 3.13%, as well as what the net OPEB obligation would be if it were calculated using a discount rate that is one-percentage point lower (2.13%) or one-percentage point higher (4.13%) than the current rate:

Current 1% Decrease Discount Rate 1% Increase 2.13% 3.13% 4.13% District's proportionate share of the net OPEB obligation $ 6,929,000 $ 6,096,000 $ 5,404,000

OPEB Plan Fiduciary Net Position

Detailed information about PSERS’ fiduciary net position is available in PSERS Comprehensive Annual Financial Report which can be found on the System’s website at www.psers.pa.gov.

Payables Related to the Plan

At June 30, 2018, the District had an accrued balance due to PSERS of $4,308,033, including balances related to pension and OPEB. This amount represents the District’s contractually obligated contributions for wages earned in April 2018 through June 2018. The balance was paid in September 2018.

NOTE 10 - DISTRICT OTHER POSTEMPLOYMENT BENEFITS PLAN

Employee Defined Benefit Other Postemployment Benefits Plan

General Information About the OPEB Plan

Plan Description

Great Valley School District administers a single-employer defined benefit healthcare plan (the OPEB Plan). The District OPEB Plan provides medical, prescription drug, dental, and vision insurance for eligible retirees through the District’s health insurance plan, which covers both active and retired members until the member reaches Medicare age. Benefit provisions are established through negotiation with the District and the unions representing the District’s employees. The OPEB Plan does not issue a publicly available financial report and no assets are accumulated in a trust that meets the criteria in Government Accounting Standards Board Statement No. 75 to pay related benefits.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 10 - DISTRICT OTHER POSTEMPLOYMENT BENEFITS PLAN - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

General Information About the OPEB Plan - continued

Benefits Provided

The District classifies employees in the following categories: Administrators, Teachers, and Support Staff. Contribution requirements are negotiated between the District and union representatives. Below is a summary of the postemployment benefits provided to each of these groups:

I. Administrators

a. Administrators

ELIGIBILITY COVERAGE AND PREMIUM SHARING DURATION Must meet one of the Coverage For Medical, both member following conditions Medical and Prescription Drug and spouse may continue to be eligible: coverage for life. i) 25 years of PSERS Premium Sharing service If member has at least 25 years of PSERS service, GVSD will For Prescription Drug, contribute 100% of premium of the base plan (PC 20/30/70') for both member and spouse may continue coverage for ii) PSERS Retirement Medical and 100% of the premium for Prescription Drug coverage for a number of years according to the table below. Member must pay any the number of years of the additional premium due to coverage in a non-base plan. GVSD subsidy.

If member is receiving the $100 PSERS supplement during the fully paid period, they must forward this amount to GVSD. After the GVSD subsidy ends, member can continue Medical coverage by paying the full premium. Effective for the 2015-2016 school year and after, GVSD will contribute 100% of premium of the base plan at retirement less the PSERS premium assistance; subsequent increases in premiums will be the responsibility of the retiree.

Service with GVSD Years Paid Covered 3 5 Member Only 5 7 Member Only 10 10 Member Only 15 10 Member and Spouse

If a member dies and is eligible to receive or is receiving the above benefit their spouse may use this benefit to purchase Medical and Prescription Drug Coverage.

Dependents Spouse Included

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 10 - DISTRICT OTHER POSTEMPLOYMENT BENEFITS PLAN - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

General Information About the OPEB Plan - continued

Benefits Provided – continued

I. Administrators - continued

b. Senior Administrative Management

ELIGIBILITY COVERAGE AND PREMIUM SHARING DURATION Both member and spouse Must meet one of the Coverage may continue Medical following conditions Medical, Prescription Drug, Dental, and Vision and Life Insurance coverage for life. to be eligible:

i) 25 years of PSERS Premium Sharing Prescription Drug Coverage service If member has at least 25 years of PSERS service, GVSD will for 12 years. contribute 100% of premiums towards Medical, Prescription Drug, ii) PSERS Retirement Dental, and Vision coverage for a period of 12 years for both the Life Insurance is provided member and their spouse. for 12 years on the member's life only. If a member dies and is eligible to receive or is receiving the above benefit their spouse may use this benefit to purchase Medical and Prescription Drug Coverage.

GVSD will contribute 50% of the cost for a 12 Year Term Life Insurance policy in the amount of 3 times their salary at the time of retirement.

Dependents Spouse Included

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 10 - DISTRICT OTHER POSTEMPLOYMENT BENEFITS PLAN - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

General Information About the OPEB Plan - continued

Benefits Provided - continued

II. Teachers

a. Teachers retiring during or after the 2015-2016 school year

ELIGIBILITY COVERAGE AND PREMIUM SHARING DURATION Coverage Must meet one of Same as IIb except if member Medical and Prescription Drug the following qualifies for District subsidy

conditions to be both member and spouse may Premium Sharing continue Prescription Drug eligible: If member retired with at least 25 years of PSERS Service and 15 coverage for 3 years. i) 25 years of years of service with GVSD, GVSD will contribute 100% of the PSERS Service premiums of the base plan (PC 20/30/70•) for Medical coverage less and 15 years of the active employee cost sharing amount for a period of 3 years. service with Member must pay any additional premium due to coverage of a GVSD spouse and coverage in a non-base plan. ii) PSERS Retirement Member must pay the full premium for Prescription Drug coverage for a period of 3 years post retirement for both the member and their spouse. After 3 years, member can continue coverage for Medical by paying the full premium. If a member dies and is eligible to receive or is receiving the above benefit their spouse may use this benefit to purchase Medical and Prescription Drug Coverage. Dependents Spouses Included

III. Support Staff

a. 12-Month Support Staff and 10-Month Cafeteria Support Staff retiring during or after the 2015-2016 school year

ELIGIBILITY COVERAGE AND PREMIUM SHARING DURATION

Same as IIa Same as IIa Same as IIa

b. 10-Month Non-Cafeteria Support Staff retiring after the 2010-2011 school year

ELIGIBILITY COVERAGE AND PREMIUM SHARING DURATION PSERS retirement Coverage Both member and spouse Medical may continue coverage for life. Premium Sharing Member must pay full premium

Dependents Spouses Included

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 10 - DISTRICT OTHER POSTEMPLOYMENT BENEFITS PLAN - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

General Information About the OPEB Plan - continued

Benefits Provided - continued

Act 110/43 Coverage and Premium Sharing: Retired employees are allowed to continue coverage for themselves and their dependents in the employer’s group health plan until the retired employee reaches Medicare age. In order to obtain coverage, those retired employees not meeting eligibility requirements must provide payment equal to the premium determined for the purpose of COBRA. Members or spouses over 65 must enroll in a Medicare Supplement Plan provided by the District.

PSERS Retirement:

1) For individuals who are members of PSERS prior to July 1, 2011, an employee is eligible for PSERS retirement if he or she is eligible for either: a) PSERS early retirement with under 62 with 5 years of PSERS service or b) PSERS superannuation retirement upon reaching age 60 with 30 years of PSERS service, age 62 with 1 year of PSERS service or 35 years of PSERS service regardless of age. 2) For individuals who became members of PSERS on or after July 1, 2011, an employee is eligible for PSERS retirement if he or she is eligible for either: a) PSERS early retirement while under 65 with 10 years of PSERS service or b) PSERS superannuation retirement upon reaching age 65 with 3 years of PSERS service or upon attainment of a total combination of age plus service equal to or greater than 92 with a minimum of 35 years of PSERS service. 3) All individuals are eligible for a special early retirement upon reaching age 55 with 25 years of PSERS service.

Employees Covered by Benefit Terms

At July 1, 2016, the date of the most recent actuary valuation, the following employees were covered by the benefit terms:

Active participants 466 Retired participants 63

Total 529

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 10 - DISTRICT OTHER POSTEMPLOYMENT BENEFITS PLAN - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

General Information About the OPEB Plan - continued

Actuarial Assumptions and Other Inputs

The total OPEB obligation as of July 1, 2017, was determined by rolling forward the District’s total OPEB obligation as of July 1, 2016 to July 1, 2017, using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified:

• Actuarial cost method - Entry Age Normal. • Salary increases - 2.50% cost of living adjustment, 1% real wage growth, and for teachers and administrators a merit increase which varies by age from 2.75% to 0%. • Discount rate - 3.13% - based on the Standards & Poors Municipal Bond 20 Year High Grade Rate Index at 7/1/17. • Mortality rates - Separate rates are assumed preretirement and postretirement using the rates assumed in the PSERS defined benefit pension plan actuarial valuation. Incorporated into the table are rates projected generationally by the Buck Modified 2016 projection scale to reflect mortality improvement. • Healthcare cost trend rates - 6.0% in 2017, and 5.5% in 2018 through 2023. Rates gradually decrease from 5.4% in 2024 to 3.9% in 2075 and later based on the Society of Actuaries Long-Run Medical Cost Trend Model. • Participation rates - 100% of all employees eligible for subsidized benefits, 70% of administrators and teachers, and 10% of support staff who only qualify for the Act 110/43 benefit are assumed to elect coverage.

The actuarial assumptions were selected using input from the District based on actual experience.

Changes in the Total OPEB Liability Total OPEB Obligation Balance at July 1, 2017 $ 11,182,800 Changes for the year: Service cost 854,942 Interest 294,111 Changes of assumptions or other inputs (322,510) Benefit payments (417,325) Net changes 409,218 Balance at June 30, 2018 $ 11,592,018

Changes of assumptions or other inputs reflect the following changes: (1) the discount rate changed from 2.49% to 3.13%; (2) the trend assumption was updated; (3) assumptions for salary, mortality, withdrawal and retirement were updated based on new PSERS assumptions.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 10 - DISTRICT OTHER POSTEMPLOYMENT BENEFITS PLAN - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

Changes in the Total OPEB Liability - continued

Sensitivity of the Total OPEB Obligation to Changes in the Discount Rate

The following presents the total OPEB obligation of the District, as well as what the District’s total OPEB obligation would be if it were calculated using a discount rate that is one-percentage point lower (2.13%) or one-percentage point higher (4.13%) than the current discount rate:

Current 1% Decrease Discount Rate 1% Increase 2.13% 3.13% 4.13%

OPEB Plan - Total OPEB Obligation $ 12,478,940 $ 11,592,018 $ 10,756,322

Sensitivity of the Total OPEB Obligation to Changes in the Healthcare Cost Trend Rates

The following presents total OPEB obligation of the District, as well as what the District’s total OPEB obligation would be if it were calculated using healthcare cost trend rates that are one-percentage point lower or one-percentage point higher than the current healthcare cost trend rates:

Current Healthcare Cost Trend 1% Decrease Rate 1% Increase

OPEB Plan - Total OPEB Obligation $ 10,145,635 $ 11,592,018 $ 13,307,604

At June 30, 2018, the District reported an OPEB obligation of $11,592,018 related to the OPEB Plan. The total OPEB obligation was measured as of July 1, 2017, and was determined by rolling forward an actuarial valuation performed as of July 1, 2016 to July 1, 2017. The liability will be liquidated through future payments from the general and food service funds.

OPEB Expense, and Deferred Outflows of Resources and Deferred inflows of Resources Related to OPEB

For the year ended June 30, 2018, the District recognized OPEB expense of $1,122,177. At June 30, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources Changes in assumptions $ 7,713 $ 303,347 Benefit payments made subsequent to the measurement date 399,827 - $ 407,540 $ 303,347

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 10 - DISTRICT OTHER POSTEMPLOYMENT BENEFITS PLAN - CONTINUED

Employee Defined Benefit Other Postemployment Benefits Plan - continued

OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB-continued

The $399,827 reported as deferred outflows of resources related to OPEB liabilities resulting from benefit payments made subsequent to the measurement date will be recognized as a reduction of the net OPEB obligation in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows for the years ending June 30:

2019 $ (26,876) 2020 (26,876) 2021 (26,876) 2022 (26,876) 2023 (26,876) Thereafter (161,254)

Total $ (295,634)

NOTE 11 - INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS

The following is a summary of interfund receivables and payables at June 30, 2018:

Interfund Interfund Receivables Payables

General Fund $ - $ 520,093 Capital Projects Fund 174,525 - Internal Service Fund 345,568 -

$ 520,093 $ 520,093

Interfund receivables and payables exist as a result of a time lag between dates when goods and services are provided and payments between funds are made. All will be paid within one year. Interfund transfers are summarized as follows: Transfers Transfers In Out General Fund $ - $ 10,048,199 Capital Projects Fund 700,000 - Debt Service Fund 9,348,199 -

$ 10,048,199 $ 10,048,199 Transfers are made to satisfy debt service needs and reserve for future capital needs.

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 12 - JOINT VENTURE

The District is one of four member school districts of the Chester County Technical College High School - Pickering Campus (TCHS-Pickering). TCHS-Pickering is controlled and governed by a joint board, which is composed of representative school board members of the participating schools. Direct oversight of TCHS-Pickering operations is the responsibility of the joint board. The District is not responsible for deficits, nor is the District entitled to operating surplus. The District is a guarantor of outstanding debt, but the amount is immaterial. The District's share of annual operating and capital costs for TCHS-Pickering fluctuates based on the percentage of enrollment and is reflected as intergovernmental expenditures of the General Fund. Since there is no clear residual equity, no asset has been reflected in the District's financial statements. Summary financial information as of June 30, 2017 (the most recent information available) is as follows: Chester County Technical College High School (Governmental Activities) Total Assets and Deferred Outflows of Resources $ 15,300,814 Total Liabilities and Deferred Inflows of Resources 43,396,466

Total Net Position (Deficit) $ (28,095,652) Separate financial statements of the Chester County Technical College High School have been prepared and are available.

NOTE 13 - RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Significant losses are covered by commercial insurance for all major programs except for workers' compensation for which the District retains risk of loss. For insured programs, there were no significant reductions in insurance coverage of the 2017/2018 year. Settlement amounts have not exceeded insurance coverage for the current year or the three prior years. The District is a member of the School Districts Insurance Consortium (SDIC) for workers’ compensation coverage. SDIC is comprised of approximately 75-member school districts which jointly self-assume their workers' compensation liabilities. Even though the member school districts contribute to SDIC's insurance fund, they remain individually liable for their own workers' compensation claims. The members of SDIC are required to participate in any deficiencies of SDIC and are subject to periodic assessments, as required. At June 30, 2018, there was no unfunded liability. Currently, the District is self-insured for medical and prescription insurance for employees and their dependents. Effective June 30, 2011, the District established an internal service fund to administer self-insurance benefits for medical and prescription insurance to all District employees. The District uses a third-party administrator to provide consulting and administrative services to process claims within the self-insurance fund. For the year ended June 30, 2018, the District has coverage for claims in excess of $300,000 per person and an unlimited lifetime benefit. The following table presents the components of the self-insurance benefit obligation and the related changes in the funds benefit obligation at June 30, 2018 and 2017:

2018 2017 Claims payable $ 2,291,986 $ 2,134,847 Changes in benefit obligations are as follows for the year ended June 30, 2018: Claims payable, beginning of year $ 2,134,847 $ 1,955,377 Benefits earned 7,955,112 8,649,357 Claims paid (7,797,973) (8,469,887)

Claims payable, end of year $ 2,291,986 $ 2,134,847

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 14 - CONTINGENCIES AND COMMITMENTS

The District is a defendant in various matters of litigation and claims. These matters result in the normal course of business. It is not presently possible to determine the ultimate outcome or settlement cost, if any, of these matters.

The District receives federal, state, and local funding through a number of programs. Payments made by these sources under contractual agreements are provisional and subject to redetermination based on filing reports and audits of those reports. Final settlements due from or to these sources are recorded in the year in which the related services are performed. Any adjustments resulting from subsequent examinations are recognized in the year in which the results of such examinations become known. District officials do not expect any significant adjustments as a result of these examinations.

At June 30, 2018, the District has a commitment of $2,121,280 related to a roofing project contract. The District plans to use existing funds in the capital projects fund to fulfill the commitment.

NOTE 15 - RESTATEMENT OF BEGINNING NET POSITION

Effective July 1, 2017, the District adopted Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, to be in conformity with generally accepted accounting principles.

Statement No. 75 establishes standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expenditures in order to improve accounting and financial reporting by governments for postemployment benefit plans other than pensions. The statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to actuarial present value, and attribute that present value to periods of employee service. The statement also enhances note disclosure and required supplementary information for these plans. The adoption of this standard resulted in the District restating beginning net position as of July 1, 2017, as follows: Business-Type Activities Governmental Food Service Activities Fund Total Net Position (Deficit) at June 30, 2017 $ (14,581,252) $ (376,182) $ (14,957,434) Restatement for: Deferred Outflow - HIPAP contributions made subsequent to the measurement date 330,470 3,008 333,478 Other postemployment benefit obligation - HIPAP (6,342,400) (57,600) (6,400,000) Deferred Outflow - District benefit plan payments made subsequent to the measurement date 404,246 13,079 417,325 Other postemployment benefit obligation - District Plan (8,247,456) (111,556) (8,359,012)

Net Position (Deficit) at July 1, 2017 - Restated $ (28,436,392) $ (529,251) $ (28,965,643)

GREAT VALLEY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2018

NOTE 16 - FUND BALANCE

Details of the District’s governmental fund balance reporting and policy can be found in Note 1, Summary of Significant Accounting Policies. Fund balance classifications for the year ended June 30, 2018, are as follows:

General Fund The general fund has nonspendable funds of $23,000 related to prepaid expenditures, committed funds of $6,300,000 for future OPEB costs, assigned funds of $3,000,030 appropriated for the 2018/2019 budget, and $500,000 for future Devereux tuition charges, and unassigned fund balance of $7,791,177. The commitments and assignments were authorized by the board of school directors’ resolution to set aside resources for specific purposes.

Capital Projects The capital projects fund has restricted funds of $2,415,473 comprised of surplus moneys transferred from the general fund for the acquisition or construction of capital facilities and qualifying capital assets as authorized by Municipal Code P.L. 145 Act of April 30, 1943.

NOTE 17 - NEW ACCOUNTING PRONOUNCEMENTS

The Governmental Accounting Standards Board (GASB) has issued the following standards which have not yet been implemented:

• Statement No. 84, Fiduciary Activities - This statement establishes criteria for identifying fiduciary activities and describes four types of fiduciary funds, as well as provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources. This statement is effective for the District’s fiscal year ending June 30, 2020.

• Statement No. 87, Leases - This statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. This statement is effective for the District’s fiscal year ending June 30, 2021.

• Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements, have been issued to enhance reporting and disclosures for specific debt transactions. Statement No. 88 is effective for the District’s fiscal year ending June 30, 2019.

The District has not yet completed the analysis necessary to determine the actual financial statement impact of these new pronouncements.

REQUIRED SUPPLEMENTARY INFORMATION

GREAT VALLEY SCHOOL DISTRICT

SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY AND RELATED RATIOS - PENSION PLAN

June 30, 2018

2018 2017 2016 2015 2014

District's proportion of the net pension liability 0.2992% 0.2971% 0.2852% 0.2823% 0.2727%

District's proportionate share of the net pension liability $147,770,000 $147,233,000 $123,535,000 $111,736,000 $111,634,000

District's covered employee payroll $ 39,829,229 $ 38,472,750 $ 36,700,194 $ 36,028,907 $ 34,999,676

District's proportionate share of the net pension liability as a percentage of its covered employee payroll 371.01% 382.69% 336.61% 310.13% 310.13%

Plan fiduciary net position as a percentage of the total pension liability 51.54% 50.14% 54.36% 57.24% 54.50%

The District's covered employee payroll noted above is as of the measurement date of the net pension liability (June 30, 2017, 2016, 2015, 2014 and 2013).

Note: This schedule is to present the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information for only those years for which information is available is shown.

87 GREAT VALLEY SCHOOL DISTRICT

SCHEDULE OF DISTRICT CONTRIBUTIONS - PENSION PLAN

LAST 10 FISCAL YEARS

2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Contractually required contribution $ 12,983,920 $ 11,731,989 $ 9,640,430 $ 7,583,753 $ 5,544,636 $ 3,983,402 $ 2,913,478 $ 1,889,764 $ 1,587,299 $ 1,404,265

Contributions in relation to the contractually required contribution 12,983,920 11,731,989 9,640,430 7,583,753 5,544,636 3,983,402 2,913,478 1,889,764 1,587,299 1,404,265

Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

District's covered employee payroll $ 40,849,835 $ 39,829,209 $ 38,472,750 $ 36,700,194 $ 36,028,907 $ 34,999,676

Contributions as a percentage of covered employee payroll 31.78% 29.46% 25.06% 20.66% 15.39% 11.38%

NOTE: This schedule is presented to present the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information for only those years for which information is available is shown.

88 GREAT VALLEY SCHOOL DISTRICT

SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET OPEB OBLIGATION AND RELATED RATIOS - HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM (HIPAP)

LAST TEN FISCAL YEARS

2018 2017

District's proportion of the collective HIPAP obligation 0.2992% 0.2971%

District's proportionate share of the collective net HIPAP obligation $ 6,096,000 $ 6,400,000

District's covered employee payroll $ 39,829,209 $ 38,472,750

District's proportionate share of the net HIPAP obligation as a percentage of its covered employee payroll 15.31% 16.64%

Plan fiduciary net position as a percentage of the total HIPAP obligation 5.73% 5.47%

The District's covered employee payroll noted above is as of the measurement date of the net HIPAP obligation (June 30, 2017 and 2016).

NOTES TO SCHEDULE

Changes of Benefit Terms None.

Changes of Assumptions Significant changes of assumptions for the June 30, 2017 measurement date are as follows:

· The discount rate changed from 2.71% to 3.13%.

This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information for only those years for which information is available is shown.

89 GREAT VALLEY SCHOOL DISTRICT

SCHEDULE OF DISTRICT CONTRIBUTIONS - HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM

LAST TEN FISCAL YEARS

2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Contractually required contribution $ 339,529 $ 333,478 $ 323,918 $ 332,945 $ 322,282 $ 297,889 $ 236,720 $ 241,890 $ 309,523 $ 266,810

Contributions in relation to the contractually required contribution 339,529 333,478 323,918 332,945 322,282 297,889 236,720 241,890 309,523 266,810

Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

District's covered employee payroll $ 40,849,835 $ 39,829,209 $ 38,472,750 $ 36,700,194 $ 36,028,907 $ 34,999,676

Contributions as a percentage of covered employee payroll 0.83% 0.84% 0.84% 0.91% 0.89% 0.85%

NOTE: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information for only those years for which information is available is shown.

90 GREAT VALLEY SCHOOL DISTRICT

SCHEDULE OF CHANGES IN TOTAL OPEB OBLIGATION AND RELATED RATIOS - DISTRICT OPEB PLAN

LAST TEN FISCAL YEARS

2018 Total OPEB Obligation: Service cost $ 854,942 Interest 294,111 Changes in assumptions (322,510) Benefit payments (417,325)

Net change in total OPEB obligation 409,218

Total OPEB obligation, beginning 11,182,800

Total OPEB obligation, ending $ 11,592,018

Covered Employee Payroll $ 36,048,401

Total OPEB Obligation as a Percentage of Covered Employee Payroll 32.16%

NOTES TO SCHEDULE

Changes of Benefit Terms None.

Changes of Assumptions Significant changes in assumptions for the July 1, 2017 measurement date are as follows:

· The discount rate changed from 2.49% to 3.13%. · The trend assumption was updated. · Assumptions for salary, mortality, withdrawal and retirement were updated based on new PSERS assumptions.

91 SUPPLEMENTARY INFORMATION

GREAT VALLEY SCHOOL DISTRICT

GENERAL FUND

SCHEDULE OF REVENUES AND OTHER FINANCING SOURCES -BUDGET AND ACTUAL

Year Ended June 30, 2018 (Continued on next page)

Budget Actual Variance 6000 REVENUES FROM LOCAL SOURCES Taxes 6111 Taxes, Current Real Estate $ 74,078,943 $ 73,399,838 $ (679,105) 6112 Taxes, Interim Real Estate 1,700,000 1,845,838 145,838 6113 Public Utility Realty Tax 82,000 75,386 (6,614) 6153 Real Estate Transfer Taxes 1,920,000 3,345,655 1,425,655 6400 Delinquent Taxes (All Levels) 1,450,000 1,743,602 293,602 TOTAL 79,230,943 80,410,319 1,179,376

Other 6510 Earnings from Temporary Deposits and Investments 250,000 604,550 354,550 6510 Student Activity Fees 341,000 259,591 (81,409) 68100 Revenue from Local Sources - 5,348 5,348 6830 Revenue from Federal Sources 440,000 548,186 108,186 6910 Rent from School and Other Facilities 285,000 263,608 (21,392) 6920 Donations - - - 6940 Tuition from Patrons 10,000 43,185 33,185 6990 Miscellaneous Revenue 175,000 40,906 (134,094) 6991 Refund of Prior Yr Expenditures - 100,082 100,082 6992 Energy Incentative Revenue - 2,017 2,017

TOTAL 1,501,000 1,867,473 366,473

TOTAL REVENUES FROM LOCAL SOURCES 80,731,943 82,277,792 1,545,849

7000 REVENUES FROM STATE SOURCES 7110 Basic Instructional Subsidy 2,550,000 2,588,344 38,344 7160 Tuition/Court Placed Institutions 40,000 32,274 (7,726) 7270 Special Education of Exceptional Pupils 1,650,000 1,641,676 (8,324) 7299 Other Program Revenues - 6,141 6,141 7310 Transportation 810,000 1,014,620 204,620 7320 Rentals and Sinking Fund Payments 340,000 383,702 43,702 7330 Medical and Dental Services 93,000 92,429 (571) 7340 State Property Tax Reduction 1,024,118 1,024,118 - 7500 State Grants 135,000 136,602 1,602 7810 Social Security 1,575,211 1,519,029 (56,182) 7820 Retirement 6,674,670 6,685,929 11,259

TOTAL REVENUES FROM STATE SOURCES 14,891,999 15,124,864 232,865

92 GREAT VALLEY SCHOOL DISTRICT

GENERAL FUND

SCHEDULE OF REVENUES AND OTHER FINANCING SOURCES - BUDGET AND ACTUAL

Year Ended June 30, 2018 (Continued)

Budget Actual Variance 8000 REVENUES FROM FEDERAL SOURCES 8190 Other Federal Grants 210,000 - (210,000) 8514 Title I 240,000 248,497 8,497 8516 Title III-Language Instruction 18,114 59,603 41,489 8517 Title IV - 5,664 5,664 8519 Other Grants (Title II) 92,944 72,863 (20,081) 8732 ARRA-QSCB 65,000 63,451 (1,549) 8810 Medical Assist Reimb(Access) - 299,999 299,999 8820 Medical Assist Reimb(Access)/Adm & Transp - 8,251 8,251 TOTAL REVENUES FROM FEDERAL SOURCES 626,058 758,328 132,270

9000 REVENUES FROM OTHER SOURCES 9340 Debt Service Fund Transfer - - - 9400 Sale of Real Estate & Equip - - -

TOTAL REVENUES $ 96,250,000 $ 98,160,984 $ 1,910,984

93 GREAT VALLEY SCHOOL DISTRICT GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES - BUDGET AND ACTUAL For Year Ended June 30, 2018 (Continued on next page)

Final Budget Actual Variance 1000 - INSTRUCTIONAL SERVICES Regular Programs -Elementary/Secondary Salaries $ 23,696,664 $ 23,690,392 $ 6,272 Employee Benefits 14,543,965 14,401,958 142,007 Purchased Professional & Technical Services 1,317,182 1,317,162 20 Purchased Property Services 11,444 9,340 2,104 Other Purchased Services 1,079,935 1,079,746 189 Supplies 390,930 390,845 85 Property 12,326 12,255 71 Other Objects 19,215 18,309 906 SUBTOTAL 41,071,661 40,920,007 151,654

Special Programs-Elementary/Secondary Salaries 5,404,364 5,401,771 2,593 Employee Benefits 3,212,252 3,212,153 99 Purchased Professional & Technical Services 6,624,383 6,623,898 485 Purchased Property Services - - - Other Purchased Services 2,783,250 2,783,134 116 Supplies 164,563 152,449 12,114 Property 7,550 6,360 1,190 Other Objects 4,050 3,214 836 SUBTOTAL 18,200,412 18,182,979 17,433

Vocational Education Other Purchased Services 1,204,367 1,204,312 55 SUBTOTAL 1,204,367 1,204,312 55

Other Instructional Services-Elementary/Secondary Salaries 11,500 9,752 1,748 Employee Benefits 5,064 3,901 1,163 Purchased Professional & Technical Services - - - Purchased Property Services 1,500 - 1,500 Other Purchased Services 3,418 3,368 50 Supplies 2,100 2,027 73 Property - - - Other Objects - - - SUBTOTAL 23,582 19,048 4,534

TOTAL INSTRUCTIONAL SERVICES 60,500,022 60,326,346 173,676

94 GREAT VALLEY SCHOOL DISTRICT GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES -BUDGET AND ACTUAL For Year Ended June 30, 2018 (Continued)

2000 - SUPPORTING SERVICES Final Budget Actual Variance Pupil Personnel Salaries 2,313,144 2,312,072 1,072 Employee Benefits 1,385,146 1,384,147 999 Purchased Professional & Technical Services 20,273 20,224 49 Purchased Property Services - - - Other Purchased Services 6,642 6,632 10 Supplies 19,900 17,927 1,973 Property - - - Other Objects 2,722 1,542 1,180 SUBTOTAL 3,747,827 3,742,544 5,283

Instructional Staff Services Salaries 919,742 919,552 190 Employee Benefits 862,758 862,063 695 Purchased Professional & Technical Services 220,725 211,061 9,664 Purchased Property Services 350 32 318 Other Purchased Services 51,900 51,787 113 Supplies 354,516 354,502 14 Property 84,002 73,838 10,164 Other Objects 10,045 10,041 4 SUBTOTAL 2,504,038 2,482,876 21,162

Administration Salaries 2,899,475 2,899,420 55 Employee Benefits 1,526,729 1,524,974 1,755 Purchased Professional & Technical Services 782,050 781,948 102 Purchased Property Services 98,682 98,618 64 Other Purchased Services 103,550 103,257 293 Supplies 142,772 142,595 177 Property 2,500 2,387 113 Other Objects 75,878 75,671 207 SUBTOTAL 5,631,636 5,628,871 2,765

Pupil Health Salaries 540,560 540,559 1 Employee Benefits 345,713 340,273 5,440 Purchased Professional & Technical Services 16,450 15,382 1,068 Purchased Property Services 1,182 511 671 Other Purchased Services 550 514 36 Supplies 10,327 8,100 2,227 Property - - - Other Objects 350 - 350 SUBTOTAL 915,132 905,339 9,793

95 GREAT VALLEY SCHOOL DISTRICT GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES - BUDGET AND ACTUAL For Year Ended June 30, 2018 (Continued on next page)

2000 - SUPPORTING SERVICES - (Cont.) Final Budget Actual Variance Business/Fiscal Services Salaries 731,637 729,765 1,872 Employee Benefits 475,838 475,015 823 Purchased Professional & Technical Services 13,000 11,522 1,478 Purchased Property Services 500 266 234 Other Purchased Services 7,250 6,957 293 Supplies 10,550 10,502 48 Property - - - Other Objects 17,800 17,687 113 SUBTOTAL 1,256,575 1,251,714 4,861

Operation & Maintenance of Plant Services Salaries 2,276,047 2,273,988 2,059 Employee Benefits 1,548,152 1,548,059 93 Purchased Professional & Technical Services 357,500 357,314 186 Purchased Property Services 1,254,191 1,091,928 162,263 Other Purchased Services 364,500 304,665 59,835 Supplies 612,200 518,681 93,519 Property - - - Other Objects 4,000 3,136 864 SUBTOTAL 6,416,590 6,097,771 318,819

Student Transportation Services Salaries 192,268 191,657 611 Employee Benefits 110,942 110,926 16 Purchased Professional & Technical Services 1,700 1,237 463 Purchased Property Services - - - Other Purchased Services 4,477,000 4,474,254 2,746 Supplies 9,820 9,717 103 Property 2,630 2,617 13 Other Objects 1,000 625 375 SUBTOTAL 4,795,360 4,791,032 4,328

Central Services Salaries 598,306 597,808 498 Employee Benefits 361,679 360,489 1,190 Purchased Professional & Technical Services 846,000 845,747 253 Purchased Property Services 100,000 91,520 8,480 Other Purchased Services 23,000 16,993 6,007 Supplies 32,000 30,196 1,804 Property - - - Other Objects 25 25 - SUBTOTAL 1,961,010 1,942,779 18,231

96 GREAT VALLEY SCHOOL DISTRICT GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES -BUDGET AND ACTUAL For Year Ended June 30, 2018 (Continued)

2000 - SUPPORTING SERVICES (Cont.) Final Budget Actual Variance Other Support Services Other Purchased Services 42,212 42,145 67 SUBTOTAL 42,212 42,145 67

TOTAL SUPPORTING SERVICES 27,270,380 26,885,071 385,309

3000 - OPERATION OF NON-INSTRUCTIONAL SERVICES

Student Activities Salaries 1,003,190 926,433 76,757 Employee Benefits 603,331 417,150 186,181 Purchased Professional & Technical Services 51,730 50,544 1,186 Purchased Property Services 24,986 23,638 1,348 Other Purchased Services 150,755 149,567 1,188 Supplies 120,381 120,231 150 Property 5,207 3,430 1,777 Other Objects 21,814 16,203 5,611 SUBTOTAL 1,981,394 1,707,195 274,199

TOTAL NON-INSTRUCTIONAL SERVICES 1,981,394 1,707,195 274,199

5000 - DEBT SERVICE & OTHER EXPENSES Transfers Out 10,048,204 10,048,199 5 Refund of prior year revenues - - -

TOTAL DEBT SERVICE & OTHER EXPENSES 10,048,204 10,048,199 5

TOTAL GENERAL FUND EXPENDITURES $ 99,800,000 $ 98,966,811 $ 833,189

97 GREAT VALLEY SCHOOL DISTRICT

COMBINING STATEMENT OF NET POSITION - AGENCY FUNDS

June 30, 2018

Retiree Total Medical Student Agency Claims Activities Funds

ASSETS

CURRENT ASSETS Cash and Investments $ 986,334 $ 271,883 $ 1,258,217

LIABILITIES

CURRENT LIABILITIES Other Current Liabilities $ 986,334 $ 271,883 $ 1,258,217

98 GREAT VALLEY SCHOOL DISTRICT AGENCY FUNDS - ACTIVITY FUNDS STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED JUNE 30, 2018

Balance Balance June 30, 2017 Additions Reductions June 30, 2018

ASSET CASH

Charlestown Elementary School $ 15,115 $ 6,401 $ 6,318 $ 15,198

K.D. Markley Elementary School 10,524 28,207 31,364 7,367

General Wayne Elementary School 9,022 24,632 26,554 7,100

Sugartown Ellementary School 8,291 33,154 27,741 13,704

Great Valley Middle School 89,635 254,536 247,529 96,642

Great Valley High School 115,795 305,298 289,221 131,872

Cash all Schools $ 248,382 $ 652,228 $ 628,727 $ 271,883

LIABILITIES OTHER CURRENT LIABILITIES

Charlestown Elementary School $ 15,115 $ 6,401 $ 6,318 $ 15,198

K.D. Markley Elementary School 10,524 28,207 31,364 7,367

General Wayne Elementary School 9,022 24,632 26,554 7,100

Sugartown Ellementary School 8,291 33,154 27,741 13,704

Great Valley Middle School 89,635 254,536 247,529 96,642

Great Valley High School 115,795 305,298 289,221 131,872

Total Liabilities $ 248,382 $ 652,228 $ 628,727 $ 271,883

99 GREAT VALLEY SCHOOL DISTRICT AGENCY FUNDS - RETIREE MEDICAL CLAIMS STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED JUNE 30, 2018

Balance Balance June 30, 2017 Additions Reductions June 30, 2018

Assets

Cash and cash equivalents 944,829 102,193 60,688 986,334

Total Retiree Medical Claims $ 561,703 $ 102,193 $ 60,688 $ 986,334

Liabilities 944,829 102,193 60,688 986,334

Total Liabilities $ 944,829 $ 102,193 $ 60,688 $ 986,334

100

Great Valley School District

Statistical Section III. STATISTICAL SECTION Unaudited

This part of the District’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District’s overall financial health.

Contents Page

Financial Trends…...... 102-110 These schedules contain trend information to help the reader understand how the District’s financial performance and well-being have changed over time.

Revenue Capacity……………………………………………………………………………………111-116 These schedules contain information to help the reader assess the District’s most significant local revenue source, the property tax.

Debt Capacity…...... 117-120 These schedules present information to help the reader assess the affordability of the District’s current levels of outstanding debt and the District’s ability to issue additional debt in the future.

Demographic and Economic Information………………………………………………………….121-123 These schedules offer demographic and economic indicators to help the reader understand the environment within the District’s financial activities take place.

Operating Information………………………………………………………………………………124-127 These schedules contain service and infrastructure data to help the reader understand how the information in the District’s financial report relates to the services the District provides and the activities it performs.

Continuing Disclosure Information…………………………………………………………………128-131 These schedules are required as part of the District’s ongoing general obligation bonded debt disclosures and give additional information to investors about the financial trends and tax base of the District.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

101

GREAT VALLEY SCHOOL DISTRICT Net Position by Component Last Ten Fiscal Years (accrual basis of accounting)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Governmental activities Net Investment in capital assets $ 47,602,142 $ 50,991,266 $ 54,140,630 $ 56,789,097 $ 60,038,948 $ 67,421,893 $ 69,471,064 $ 74,179,104 $ 79,528,530 $ 85,181,450 Restricted - - 1,132,695 9,018,360 8,726,932 4,786,319 5,947,026 6,024,577 4,150,976 2,415,473 Unrestricted 22,518,897 23,706,356 23,225,148 18,227,316 20,777,270 20,377,454 (86,742,597) (90,342,767) (98,260,758) (117,561,154) Total governmental activities net position 70,121,039 74,697,622 78,498,473 84,034,773 89,543,150 92,585,666 (11,324,507) (10,139,086) (14,581,252) (29,964,231)

Business-type activities Net Investment in capital assets 23,399 76,469 73,759 102,236 120,552 116,111 111,268 94,828 87,157 99,916 Unrestricted 793,091 737,787 795,849 830,830 842,284 825,526 (421,097) (418,120) (463,339) (634,588) Total business-type activities net position $ 816,490 $ 814,256 $ 869,608 $ 933,066 $ 962,836 $ 941,637 $ (309,829) $ (323,292) $ (376,182) $ (534,672)

Total primary government Net Investment in capital assets 47,625,541 51,067,735 54,214,389 56,891,333 60,159,500 67,538,004 69,582,332 74,273,932 79,615,687 85,281,366 Restricted - - 1,132,695 9,018,360 8,726,932 4,786,319 5,947,026 6,024,577 4,150,976 2,415,473 Unrestricted 23,311,988 24,444,143 24,020,997 19,058,146 21,619,554 21,202,980 (87,163,694) (90,760,887) (98,724,097) (118,195,742) Total primary government 70,937,529 75,511,878 79,368,081 84,967,839 90,505,986 93,527,303 (11,634,336) (10,462,378) (14,957,434) (30,498,903)

Source: District Audited Financial Statements

Starting in 2017-18, the district booked their share of the PSERS multiple employer net OPEB Note: Liability and the district's singe employer total OPEB to comply with GASB 75.

Starting in 2014-15 the district booked their share of the PSERS multiple employer pension plan liability to comply with GASB 67/68.

102 GREAT VALLEY SCHOOL DISTRICT Changes in Net Position -continued Last Ten Fiscal Years (accrual basis of accounting)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Expenses: Government activities Instruction $ 39,164,849 $ 38,992,222 $ 41,042,595 $ 39,275,471 $ 44,376,060 $ 46,190,183 $ 51,849,118 $ 54,674,948 $ 63,623,799 $ 64,473,977 Instructional Student Support 2,578,038 2,566,490 2,524,705 2,535,286 1,984,774 2,223,542 1,997,667 2,131,221 3,765,826 2,615,316 Pupil services 3,242,095 2,813,805 2,484,644 2,958,287 3,278,278 2,773,730 3,095,346 3,278,715 3,396,820 3,933,510 Administrative and Financial Support Services 7,132,838 7,774,686 8,166,967 8,198,420 6,860,552 8,314,174 9,934,461 9,812,883 10,251,531 11,368,660 Operation and maintenance of plant services 8,661,851 8,312,574 8,644,999 8,564,856 8,188,937 8,927,001 8,839,094 9,374,023 10,456,463 9,421,518 Pupil Transportation 3,952,403 3,929,889 3,789,138 3,908,519 4,057,526 3,841,932 4,220,431 4,395,903 4,578,088 4,806,089 Student Activities 1,490,350 1,362,969 1,312,729 1,224,461 1,193,767 1,506,349 1,632,136 1,685,845 1,883,330 1,838,104 Community Services 108,024 127,556 108,271 28,145 ------Interest on long-term liabilities 3,468,023 3,052,356 3,157,489 2,880,526 2,192,341 1,992,223 1,741,530 1,444,806 872,495 678,976 Other - - - 564 507 7,133 114 - - - Unallocated depreciation 498,746 495,757 474,323 430,433 405,262 401,889 402,468 402,468 402,467 402,468 Total Governmental Activities 70,297,217 69,428,304 71,705,860 70,004,968 72,538,004 76,178,156 83,712,365 87,200,812 99,230,819 99,538,618

Business-type activities Food Services 2,345,102 2,328,226 2,272,248 2,494,083 2,467,492 2,470,461 2,561,094 2,443,139 2,353,887 2,295,319

Total primary government expenses 72,642,319 71,756,530 73,978,108 72,499,051 75,005,496 78,648,617 86,273,459 89,643,951 101,584,706 101,833,937

Program revenues: Government Activities Charges for services-instruction 246,812 214,616 362,764 686,007 723,415 660,082 611,701 632,322 633,610 566,384 Operating grants and contributions 6,343,659 7,176,798 6,919,312 6,266,240 7,310,627 7,697,908 9,330,337 10,394,239 11,352,267 12,341,505 Capital grants and contributions 905,239 108,298 1,404,412 503,389 503,428 496,459 462,875 408,035 432,628 447,153

Total governmental program revenues 7,495,710 7,499,712 8,686,488 7,455,636 8,537,470 8,854,449 10,404,913 11,434,596 12,418,505 13,355,042

Business-type activities Charges for services-food services 2,115,902 2,019,657 1,974,756 2,147,778 2,082,301 1,924,210 2,025,729 1,851,364 1,685,721 1,681,083 Operating grants and contributions 293,793 299,501 349,279 408,631 413,502 524,536 515,218 575,974 610,847 596,952 Total business-type program revenues 2,409,695 2,319,158 2,324,035 2,556,409 2,495,803 2,448,746 2,540,947 2,427,338 2,296,568 2,278,035

Total primary government program revenues $ 9,905,405 $ 9,818,870 $ 11,010,523 $ 10,012,045 $ 11,033,273 $ 11,303,195 $ 12,945,860 $ 13,861,934 $ 14,715,073 $ 15,633,077

103 GREAT VALLEY SCHOOL DISTRICT Changes in Net Position -continued Last Ten Fiscal Years (accrual basis of accounting)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Net revenues (expenses) Governmental activities $ 62,801,507 $ 61,928,592 $ 63,019,372 $ 62,549,332 $ 64,000,534 $ 67,323,707 $ 73,307,452 $ 75,766,216 $ 86,812,314 $ 86,186,576 Business-type activities (64,593) 9,068 (51,787) (62,326) (28,311) 21,715 20,147 15,801 57,319 17,284 Total primary governmental expense 62,736,914 61,937,660 62,967,585 62,487,006 63,972,223 67,345,422 73,327,599 75,782,017 86,869,633 86,203,860

General Revenues: Governmental activities Taxes: Property taxes levied for general purposes, net 60,272,300 62,162,815 62,748,424 64,205,364 65,833,475 66,397,734 69,074,780 71,286,966 76,061,813 76,784,979 Public utility realty, earned income and per capita taxes levied for general purposes, net 1,253,215 1,101,637 1,160,274 1,408,726 1,940,624 1,454,011 2,696,271 2,997,754 3,282,257 3,421,042 Grants, subsidies and contributions not restricted 2,395,941 2,176,416 2,005,713 2,249,832 2,507,991 2,308,713 2,351,890 2,444,007 2,598,280 3,650,084 Investment earnings 1,718,005 987,661 811,751 86,295 88,340 118,057 109,322 169,822 301,951 658,644 Miscellaneous Income 131,714 32,279 94,061 135,413 (41,644) 87,708 22,621 54,027 125,847 140,988 Transfers ------(1,368) (939) - - Total governmental activities 65,771,175 66,460,808 66,820,223 68,085,630 70,328,786 70,366,223 74,253,516 76,951,637 82,370,148 84,655,737

Business-type activities Investment earnings 23,909 6,834 3,565 1,132 1,459 516 440 1,399 4,429 11,863 Miscellaneous income ------Transfers ------1,368 939 - -

Total business-type activities 23,909 6,834 3,565 1,132 1,459 516 1,808 2,338 4,429 11,863

Total primary government 65,795,084 66,467,642 66,823,788 68,086,762 70,330,245 70,366,739 74,255,324 76,953,975 82,374,577 84,667,600

Changes in net position Governmental activities 2,969,668 4,532,216 3,800,851 5,536,300 6,328,252 3,042,516 946,064 1,185,421 (444,216) (1,527,839) Business-type activities 88,502 (2,234) 55,352 63,458 29,770 (21,199) (18,339) (13,463) (52,890) (5,421)

Total primary government $ 3,058,170 $ 4,529,982 $ 3,856,203 $ 5,599,758 $ 6,358,022 $ 3,021,317 $ 927,725 $ 1,171,958 $ (497,106) $ (1,533,260)

Source: District Audited Financial Statements.

104 GREAT VALLEY SCHOOL DISTRICT Fund Balances, Governmental Funds, Last Ten Fiscal Years (modified accrual basis of accounting)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

General Fund

NonSpendable $ - $ - $ - $ - $ - $ - $ 139,802 $ - $ 43,163 $ 23,700 Committed - - 5,081,559 9,389,435 10,754,926 10,754,926 10,754,926 9,254,926 7,754,926 6,300,000 Assigned - - 3,457,330 1,577,852 3,058,001 2,749,580 3,310,622 3,847,457 4,007,410 3,500,030 Unassigned - - 6,080,000 6,144,000 6,456,000 6,455,167 6,493,696 6,285,845 6,615,235 7,791,177 Reserved ------Unreserved Designated 6,671,457 6,210,254 ------Undesignated 4,658,872 6,014,771 ------Total general fund $ 11,330,329 $ 12,225,025 $ 14,618,889 $ 17,111,287 $ 20,268,927 $ 19,959,673 $ 20,699,046 $ 19,388,228 $ 18,420,734 $ 17,614,907

All Other Governmental Funds Restricted - Capital Projects $ - $ - $ 970,512 $ 9,553,655 $ 8,798,374 $ 4,855,672 $ 8,607,646 $ 7,243,538 $ 4,470,373 $ 2,415,473 Committed - Capital Projects ------Assigned - Capital Projects - - 9,110,393 ------Restricted - Debt Service - - - 8,282 8,400 - - - - - Unreserved ------Unreserved, reported in Capital projects funds ------Special revenue funds 11,912,185 11,033,607 ------Debt Service 6,305 6,305 ------Non-Major Fund - Interest Rate Stablization - 748,842 ------Total all other governmental funds $ 11,918,490 $ 11,788,754 $ 10,080,905 $ 9,561,937 $ 8,806,774 $ 4,855,672 $ 8,607,646 $ 7,243,538 $ 4,470,373 $ 2,415,473

Source: Audited Financial Statements.

* GASB 54 was implemented for the year ended June 30, 2011, and therefore, changed the classifications for Fund Balance

105 GREAT VALLEY SCHOOL DISTRICT Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Revenues: Local Sources Property taxes $ 58,320,973 $ 60,072,896 $ 60,381,255 $ 61,614,887 $ 63,354,291 $ 64,100,774 $ 66,574,946 $ 68,973,863 $ 73,637,670 $ 75,245,676 Delinquent taxes 1,074,351 1,211,811 1,114,802 1,569,338 1,441,011 1,362,770 1,446,187 1,300,637 1,321,435 1,743,602 Transfer taxes 1,160,764 1,017,931 1,074,027 1,323,738 1,856,549 1,373,742 2,614,240 2,921,569 3,204,549 3,345,656 PURTA 76,811 83,706 86,247 84,988 84,074 80,269 82,031 76,185 77,708 75,385 Earnings on investments 1,030,351 349,391 1,263,489 86,294 90,379 159,307 109,321 142,997 301,953 658,644 Rentals 122,472 120,041 166,523 245,830 260,705 278,959 244,104 263,255 267,938 263,608 Student Activity Fees - - 184,638 337,167 355,591 342,624 344,946 348,982 259,591 Tuition 124,341 94,575 196,241 25,539 125,542 23,890 24,975 24,120 26,870 43,185 Other local sources 868,508 1,053,344 987,912 1,125,570 840,438 541,626 902,170 622,793 677,467 696,539 Total revenue 62,778,571 64,003,695 65,270,496 66,260,822 68,390,156 68,276,928 72,340,598 74,670,365 79,864,572 82,331,886

State sources 9,211,929 8,261,472 9,435,447 9,157,903 9,935,616 10,655,513 11,806,511 13,128,851 14,306,073 15,124,864 Federal sources 520,241 1,390,718 1,094,217 339,963 602,164 314,610 477,457 598,054 539,484 758,328 Total revenues 72,510,741 73,655,885 75,800,160 75,758,688 78,927,936 79,247,051 84,624,566 88,397,270 94,710,129 98,215,078 Expenditures: Current: Instructional services 37,881,887 39,000,005 40,443,229 41,191,629 43,592,017 45,343,832 48,804,185 52,300,244 57,744,792 60,330,846 Supporting services Instructional staff 2,443,954 2,800,066 2,470,905 2,234,724 1,954,313 2,773,730 2,946,861 3,067,104 3,444,199 3,742,544 District administration 2,544,159 2,479,962 2,311,173 2,582,530 2,588,761 2,189,375 1,859,765 2,074,248 2,209,819 2,482,876 School administration 4,575,947 4,397,702 4,352,421 4,293,911 4,394,544 4,239,336 4,831,995 5,039,679 5,705,327 5,628,871 Pupil Health 681,577 753,516 721,112 712,457 711,119 769,427 872,918 892,748 883,313 905,339 Business 871,517 906,470 871,198 864,445 901,208 943,110 1,074,317 1,116,337 1,148,488 1,251,714 Operation & maintenance of facilities 6,300,538 5,890,147 6,404,803 5,686,997 5,752,499 9,070,565 6,022,219 6,382,794 6,509,395 6,288,322 Transportation 3,968,503 3,927,623 3,786,872 3,875,878 4,055,954 3,838,956 4,201,936 4,382,027 4,546,629 4,791,032 Central 1,280,141 1,510,912 2,186,716 1,266,256 1,534,836 2,588,617 3,356,049 3,478,261 2,164,581 2,803,067 Other Support Services 42,059 42,032 63,949 41,232 41,545 41,742 41,978 41,599 42,142 42,145 Non-Instructional Services: Food Services ------Student Activities 1,509,666 1,348,442 1,298,789 1,203,766 1,188,917 1,521,142 1,530,637 1,623,687 1,701,187 1,707,195

106 GREAT VALLEY SCHOOL DISTRICT Changes in Fund Balances, Government Funds-continued Last Ten Fiscal Years (modified accrual basis of accounting)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Community Services 108,024 127,556 108,272 28,311 ------Capital outlay - 1,141,229 699,099 783,494 354,991 758,004 1,431,098 1,249,290 3,349,070 1,420,101 Debt service: Principal 7,020,000 8,995,621 6,175,000 6,488,765 7,150,376 7,250,376 11,040,376 7,640,376 8,230,375 8,405,376 Interest 3,916,258 - 3,277,856 3,103,106 2,432,091 2,235,675 2,117,864 1,854,408 1,132,013 959,353 Refund of Prior Year Expenditures - 28,156 960 563 507 7,133 114 - - - Total expenditures 73,144,230 73,349,439 75,172,354 74,358,064 76,653,678 83,571,020 90,132,312 91,142,802 98,811,330 100,758,781 Excess (deficiency) of revenues over (under) expenditures (633,489) 306,446 627,806 1,400,624 2,274,258 (4,323,969) (5,507,746) (2,745,532) (4,101,201) (2,543,703)

Other financing sources (uses): Issuance of General obligation bonds - - 999,000 389,000 - - 9,640,000 - - - Bond premium - - - 2,201,212 353,029 - 357,692 - - - Issuance of Refunding bonds/notes - - - 16,415,000 9,645,000 - - 12,380,000 - - Payments to escrow agent - - - (18,432,377) (9,869,810) - - (12,310,000) - - Insurance Recovery ------42,610 - Sale of capital assets - 488 937 - - 63,613 2,769 1,545 908 - Refund of Prior Year Revenues ------Transfers In 10,936,258 9,280,308 9,446,551 9,591,871 9,822,147 10,137,946 14,150,429 11,491,577 10,052,596 10,048,199 Transfers Out (10,936,258) (9,280,308) (10,388,279) (9,591,871) (9,822,147) (10,137,946) (14,151,797) (11,492,516) (10,052,596) (10,048,199) Total other financing sources (uses) - 488 58,209 572,835 128,219 63,613 9,999,093 70,606 43,518 - Net change in fund balances $ (633,489) $ 306,934 $ 686,015 $ 1,973,459 $ 2,402,477 $ (4,260,356) $ 4,491,347 $ (2,674,926) $ (4,057,683) $ (2,543,703)

Ratio debt service expenditures to non-capital expenditures 0.94% 12.56% 12.87% 13.05% 12.62% 11.94% 15.00% -10.74% 9.72% 9.42%

Source: Audited Financial Statements.

107 GREAT VALLEY SCHOOL DISTRICT GENERAL FUND REVENUES AND OTHER FINANCING SOURCES BY SOURCE LAST TEN FISCAL YEARS

FISCAL YEAR 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

REVENUE FROM LOCAL SOURCE CURRENT REAL ESTATE TAXES $ 57,905,762 $ 59,684,670 $ 59,926,422 $ 61,614,887 $ 62,878,216 $ 63,697,649 $ 65,468,794 $ 67,631,660 $ 71,421,098 $ 73,399,838 INTERIM REAL ESTATE TAXES 415,211 388,226 454,832 214,497 476,076 403,125 1,103,152 1,342,203 2,216,572 1,845,838 PUBLIC UTILITY REALTY TAX 76,811 83,706 86,247 84,988 84,074 80,269 82,031 76,185 77,708 75,385 REAL ESTATE TRANSFER TAX 1,160,764 1,017,931 1,074,027 1,323,738 1,856,550 1,373,742 2,614,240 2,921,569 3,204,549 3,345,656 DELINQUENT TAXES ALL LEVELS 1,074,351 1,211,811 1,114,802 1,569,338 1,441,011 1,362,770 1,446,187 1,300,637 1,321,435 1,743,602 EARNINGS FR TEMP INVESTMENTS 1,030,351 349,391 1,263,489 76,601 71,411 73,764 96,522 142,997 267,168 604,550 STUDENT ACTIVITY FEES - - - 184,638 337,167 355,591 342,624 344,946 348,982 259,591 FEDERAL REVENUE PASS-THRU 731,270 833,390 823,895 498,240 483,975 446,611 595,473 490,859 548,227 548,186 RENTALS 122,472 120,041 166,524 245,830 260,705 278,959 244,102 263,255 267,938 263,608 DONATIONS - - - - 250,000 - 1,500 - - - TUITION 124,341 94,575 196,241 255,539 125,542 25,532 24,975 24,120 26,870 43,185 ENERGY/INCENTATIVE REV - - - 47,419 58,887 31,740 237,107 25,428 3,395 2,017 MISCELLANEOUS REVENUE 137,238 42,569 93,125 21,926 47,574 61,634 71,092 79,681 125,846 146,336 TOTAL REVENUE-LOCAL SOURCES 62,778,571 63,826,310 65,199,604 66,137,641 68,371,188 68,191,386 72,327,799 74,643,540 79,829,788 82,277,792

REVENUE FROM STATE SOURCES EQUALIZED SUBSIDY BASIC ED 2,212,425 1,989,294 1,886,315 2,212,439 2,212,426 2,277,610 2,277,200 2,377,308 2,508,322 2,588,344 CHARTER SCHOOL REVENUE 112,437 123,841 112,853 ------TUITION-PLACE IN PRIVATE HOME 70,983 63,281 6,545 37,392 41,137 19,272 46,630 61,427 79,778 32,274 HOMEBOUND INSTRUCTION 98 ------ALTERNATIVE EDUCATION 21,952 ------SPECIAL EDUCATION - REG PROG 1,461,405 1,491,523 1,517,877 1,506,177 1,679,014 1,551,915 1,658,687 1,723,955 1,638,372 1,641,676 TRANSPORTATION 858,451 904,831 871,717 875,831 889,225 895,458 873,204 910,060 957,522 1,014,620 RENTAL & SINKING FUND PAYMENTS 905,239 108,298 1,383,100 446,816 435,384 433,824 399,764 344,788 369,245 383,702 MEDICAL SERVICES 97,866 95,882 96,231 95,229 93,130 93,164 92,306 93,259 91,494 92,429 STATE PROPERTY TAX REDUCTION 1,024,099 1,024,069 1,024,122 1,024,065 1,024,017 1,024,182 1,024,185 1,024,109 1,024,184 1,024,118 SAFE SCHOOLS - - - - - 25,000 - - - - STATE GRANTS OTHER 294,846 130,086 136,924 43,153 43,153 43,153 103,697 136,602 136,602 142,743 STATE SHARE FICA TAXES 1,320,164 1,374,077 1,365,061 1,343,020 1,390,496 1,356,184 1,374,541 1,445,894 1,495,772 1,519,029 STATE SHARE-RETIREMENT CONTRIB 831,964 956,290 1,034,702 1,573,781 2,206,381 2,935,751 3,956,297 5,011,449 6,004,782 6,685,929

TOTAL REVENUE-STATE SOURCES 9,211,929 8,261,472 9,435,447 9,157,903 10,014,363 10,655,513 11,806,511 13,128,851 14,306,073 15,124,864

108 FISCAL YEAR 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

REVENUE FROM FEDERAL SOURCES OTHER FEDERAL GRANTS - - 27,049 - - - - - 83,401 - TITLE I 191,736 145,560 139,526 144,022 140,660 121,168 240,730 200,744 250,085 248,497 TITLE III LANGUAGE INSTRUCTION 37,365 10,353 30,722 100,941 40,312 11,132 18,454 37,184 35,987 59,603 TITLE II 104,058 110,212 115,439 21,393 96,428 92,832 92,608 87,909 95,498 72,863 TITLE IV - - 5,664 TITLE V INNOVATIVE PROGRAMS ------DRUG FREE 8,127 8,016 ------ARRA-STATE FISCAL STABILIZATION - 267,377 260,907 ------ARRA-QSCB - - 21,311 56,573 68,044 62,635 63,111 63,247 63,383 63,451 MEDICAL ASSIST REIMB 178,955 494,743 199,138 14,637 256,720 26,843 62,554 208,970 11,130 308,250

TOTAL REVENUE-FEDERAL SOURCES 520,241 1,036,261 948,675 339,963 602,164 314,610 477,457 598,054 539,484 758,328

OTHER FINANCING SOURCES SALE OF REAL ESTATE & EQUIP - 488 937 - - 1,593 2,769 1,545 905 - DEBT SERVICE FUND TRANSFER ------9,902 - - REFUND OF PRIOR YR EXPENDITURES - 17,379 - 113,488 ------

TOTAL OTHER FINANCING SOURCES - 17,867 937 113,488 - 1,593 2,769 11,447 905 -

TOTAL REVENUES $ 72,510,741 $ 73,141,910 $ 75,584,663 $ 75,748,995 $ 78,987,715 $ 79,163,102 $ 84,614,536 $ 88,381,892 $ 94,676,250 $ 98,160,984

Source: Audited Financial Statements.

109 GREAT VALLEY SCHOOL DISTRICT GENERAL FUND EXPENDITURES AND OTHER FINANCING USES BY FUNCTION LAST TEN YEARS

FISCAL YEAR 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Current Instruction: Regular Programs-Elem/Sec 27,689,275 28,184,903 29,072,342 29,678,282 30,400,171 31,537,905 33,751,516 35,714,322 39,017,827 40,920,003 Special Programs-Elem/Sec 9,049,098 9,508,978 9,932,367 10,188,392 12,049,245 12,724,496 14,273,902 15,558,074 17,825,422 18,182,979 Vocational Education Programs 722,315 869,014 911,066 996,262 852,086 770,644 723,398 750,141 858,920 1,204,312 Other Instructional Programs-Elem/Sec 421,200 437,130 284,341 328,692 271,494 307,444 55,370 72,404 42,623 19,048 Support Services Pupil Personnel 2,544,159 2,800,068 2,470,905 2,582,530 2,588,761 2,773,730 2,946,861 3,067,104 3,444,199 3,742,544 Instructional Staff 2,443,954 2,479,969 2,311,173 2,234,724 1,954,313 2,189,375 1,859,765 2,074,248 2,209,819 2,482,876 Administration 4,575,947 4,397,588 4,323,837 3,975,910 4,102,011 4,223,266 4,715,338 4,982,671 5,705,327 5,628,871 Pupil Health 681,577 753,514 721,112 712,457 711,119 769,427 872,918 892,748 883,313 905,339 Business Office 871,517 906,471 871,198 864,446 901,208 943,110 1,074,317 1,116,337 1,148,488 1,251,714 Operation & Maintenance 6,300,538 5,877,500 6,272,925 5,686,997 5,752,499 6,225,048 6,022,219 6,371,006 6,426,575 6,097,771 Student Transportation 3,968,503 3,927,626 3,786,872 3,875,878 4,055,954 3,838,956 4,201,936 4,382,027 4,546,629 4,791,032 Central Support 1,280,141 1,277,884 1,121,254 1,266,256 1,059,350 1,532,471 1,344,153 1,601,510 1,782,574 1,942,779 Other Support Services 42,059 42,032 63,950 41,232 41,545 41,742 41,978 41,599 42,142 42,145 Non-Instructional Services: Food Services ------Student Activities 1,509,666 1,348,444 1,298,789 1,203,766 1,188,917 1,449,663 1,517,426 1,585,905 1,657,292 1,707,195 Community Services 108,024 127,556 108,271 28,311 ------Total Current Expenditures 62,207,973 62,938,677 63,550,402 63,664,135 65,928,673 69,327,277 73,401,097 78,210,096 85,591,150 88,918,608 Refund of prior year's receipts - - - - 507 7,133 114 - - - Other financing uses 10,936,285 9,308,464 10,389,239 9,592,434 9,822,148 10,137,946 10,473,954 11,482,614 10,052,596 10,048,203 Total Expenditures & Other financing uses 73,144,258 72,247,141 73,939,641 73,256,569 75,751,328 79,472,356 83,875,165 89,692,710 95,643,746 98,966,811

Source: Audited Financial Statements.

110 GREAT VALLEY SCHOOL DISTICT Governmental Funds - Most Significant Own Source Revenues Last Ten Fiscal Years

Year Current Ended Millage Property Other Other June 30, Rate Taxes Taxes (1) Revenue (2) Total

2018 20.80 $ 73,399,838 $ 7,010,481 $ 912,643 $ 81,322,962

2017 20.80 $ 73,637,670 $ 4,525,984 $ 1,666,133 $ 79,829,787

2016 20.32 $ 68,973,863 $ 4,298,391 $ 1,371,286 74,643,540

2015 20.00 66,574,946 4,142,458 1,623,194 72,340,598

2014 19.59 64,100,774 2,816,781 1,359,373 68,276,928

2013 19.59 63,354,291 3,472,013 1,563,852 68,390,156

2012 19.03 61,614,887 2,978,064 1,667,871 66,260,822

2011 18.50 60,381,255 2,275,076 2,614,165 65,270,496

2010 18.22 60,072,896 2,313,448 1,617,351 64,003,695

2009 17.92 58,320,973 2,311,926 2,146,052 62,778,951

2008 17.44 57,527,178 2,616,541 2,141,403 62,285,122

(1) Other taxes include delinquent, transfer, utility and interim taxes.

(2) Other revenue includes tuition, rental income, interest and miscellaneous income.

111 GREAT VALLEY SCHOOL DISTRICT Assessed Value and Actual Value of Taxable Property Last Ten Tax Years (Unaudited)

Agriculture/ Total Assessed Value as a Tax Industrial & Vacant/ Total Taxable Direct Actual Taxable Percentage of Actual Year Market Value(1) Residential Commercial Open-Space Assessed Value Tax Rate (3) Value (4) Taxable Value

2017-18 5,722,369,276 (1) 2,381,808,925 1,106,020,616 151,775,690 3,704,447,281 21.295 3,655,220,027 101.35%

2016-17 5,606,909,502 (1) 2,346,622,325 1,113,892,407 148,138,070 3,608,652,802 20.80 3,572,844,223 101.00%

2015-16 5,381,647,892 (1) 2,333,140,915 1,044,831,182 138,343,300 3,516,315,397 20.32 3,465,208,415 101.47%

2014-15 5,285,734,471 (1) 2,299,072,625 983,528,036 130,806,340 3,413,407,001 20.00 3,437,195,501 99.31%

2013-14 5,170,219,560 (1) 2,284,134,583 958,379,216 133,257,730 3,375,771,529 19.59 3,313,300,409 101.89%

2012-13 5,190,975,000 (1) 2,278,511,043 966,370,724 132,354,675 3,377,236,442 19.59 3,380,463,272 99.90%

2011-12 5,186,985,459 (1) 2,264,579,333 920,909,910 210,766,005 3,396,255,248 19.03 3,415,717,918 99.43%

2010-11 5,054,119,773 (1) 2,319,552,843 865,936,420 210,766,005 3,410,946,398 18.50 3,417,308,412 99.81%

2009-10 5,073,804,105 (1) 2,307,328,317 940,630,170 133,923,615 3,381,882,102 18.22 3,412,108,508 99.11%

2008-09 4,648,574,100 (1) 2,289,137,327 991,972,320 92,559,060 3,373,668,707 17.92 3,396,867,367 99.32%

Source: Chester County Treasurer

(1) Market value as determined by the Pennsylvania State Tax Equalization Board, or estimated. (2) Projected. Market Value Not available at this time (3) Per $1,000 of value (4) Per Chester County Tax Office/Treasurer

NOTE: Effective June 30, 2007 - Pennsylvania law has imposed restrictions on a district's ability to increase tax rates to no more than a pre-calculated index.A district may apply for exceptions to the State in order to increase the tax rate above the index.

112 GREAT VALLEY SCHOOL DISTRICT

PROPERTY TAX RATES - ALL DIRECT AND OVERLAPPING GOVERNMENTS

Last Ten Fiscal Years

(Unaudited)

Tax Rates - In Mills

Township Township Township Great Valley County of Borough of of East of of Fiscal Year School District Chester Malvern Whiteland Charlestown Willistown

2017-18 20.80 4.369 4.42 .445 .75 .28

2016-17 20.80 4.163 4.42 .445 .75 .28

2015-16 20.32 4.163 4.42 .445 .75 .28

2014-15 20.00 4.163 4.42 .445 .75 .28

2013-14 19.59 4.163 3.9697 .445 .75 .28

2012-13 19.59 3.965 3.9697 .445 .75 .28

2011-12 19.03 3.965 3.9697 .445 .75 .28

2010-11 18.50 3.965 3.9697 .445 .75 .28

2009-10 18.22 3.965 3.7197 .445 .75 .28

2008-09 17.92 3.965 3.7197 .445 .75 .28

Source: Chester County Board of Assessment Appeals West Chester, Pennsylvania

113 GREAT VALLEY SCHOOL DISTRICT Principal Property Tax Payers Current Year and Nine Years Ago

(Unaudited)

December 31, December 31, 2017 2008 Percent of Percent of Taxable District's Total Taxable District's Total Assessed Taxable Assessed Taxable Taxpayer Value Rank Value(1) Value Rank Value (2)

WPT Land 2 LP $ 98,126,860 1 2.65%

Liberty Property Limited Partner 75,585,870 2 2.04% 168,201,980 1 4.54%

Haven at Atwater Village LLC 54,406,940 3 1.47%

Cerner Health Services Inc 47,495,290 4 1.28%

Mountain Laurel Funding Co LLC 45,382,910 5 1.23%

RT TC Atwater LP 35,788,400 6 0.97%

Horatio Realty Trust 30,702,000 7 0.83%

PR KC Malvern Ownerco LP 24,753,300 8 0.67%

Home Properties 24,099,000 9 0.65% 14,891,210 6 0.40%

CLF Westbrook Malvern 22,557,360 10 0.61%

Shared Medical 66,923,320 2 1.81%

Wyeth Laboratories Inc 44,458,550 3 1.20%

National Liberty 22,311,230 4 0.60%

Riggs Bank Trust 17,969,930 5 0.49%

Valleybrooke Land Holding Inc 12,773,270 7 0.34%

Harte IHR Frazer LP 12,636,380 8 0.34%

Woodview Associates LP 12,630,230 9 0.34%

Liberty Property Development 12,366,230 10 0.33%

TOTALS $ 458,897,930 12.39% $ 385,162,330 11.34%

Source: Chester County Board of Assessment Appeals, West Chester, Pennsylvania.

(1) District 's total taxable value for 2017 $ 3,704,447,281 (2) District 's total taxable value for 2008 $ 3,396,867,367

114 GREAT VALLEY SCHOOL DISTRICT Property Tax Levies and Collections Last Ten Tax Years (Unaudited)

Collected within the Fiscal Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date Year Ended For The Percentage in Subsequent Percentage June 30, Fiscal Year Amount of Levy Years (1) Amount of Levy

2018 $ 75,876,190 $ 74,634,319 98.36% $ - (1) $ 74,634,319 98.36%

2017 73,408,517 72,224,641 98.39% 1,321,435 73,546,076 100.19%

2016 70,413,035 67,631,660 96.05% 1,300,637 68,932,297 97.90%

2015 67,777,409 65,505,587 96.65% 1,446,187 66,951,774 98.78%

2014 65,768,267 63,697,649 96.85% 1,362,770 65,060,419 98.92%

2013 65,206,482 63,032,464 96.67% 1,441,011 64,473,475 98.88%

2012 63,771,636 61,614,887 96.62% 1,569,338 63,184,225 99.08%

2011 62,405,786 60,839,967 97.49% 1,114,802 61,954,769 99.28%

2010 61,617,892 59,684,670 96.86% 1,173,600 60,858,270 98.77%

2009 59,856,470 57,905,762 96.74% 1,211,931 59,117,693 98.77%

Source: District's Financial Records

(1) Collections in subsequent years data not currently available.

115 GREAT VALLEY SCHOOL DISTRICT

BUILDING CONSTRUCTION

Last Ten Years

(unaudited)

Calendar Number Year of Permits Commercial Residential Total

2018 731 $ 64,178,357 $ 56,095,390 $ 120,273,747

2017 756 23,505,752 75,489,079 98,994,831

2016 760 23,505,752 55,403,547 78,909,299

2015 611 70,732,005 36,873,820 107,605,825

2014 751 123,930,161 27,374,729 151,304,890

2013 682 112,663,783 26,071,170 138,734,953

2012 656 29,736,500 27,125,106 56,861,606

2011 656 28,636,479 26,124,206 54,760,685

2010 617 10,838,238 24,049,439 34,887,677

2009 276 30,146,275 16,412,021 46,558,296

2008 378 15,755,500 36,219,385 51,974,885

**Not available at the time this report was prepared.

Source: Municipal Offices of Malvern Borough and Townships of Charlestown, East Whiteland and Willistown.

116 GREAT VALLEY SCHOOL DISTRICT COMPUTATION OF NONELECTORAL DEBT MARGIN* (Unaudited)

Formula for Debt Limit

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total General Fund Revenues $ 75,510,741 $ 73,141,910 $ 75,584,662 $ 75,748,996 $ 78,908,968 $ 79,163,102 $ 84,611,767 $ 88,370,445 $ 94,675,344 $ 98,160,984 Less: Required Deductions if included in total

Revenues Rental & Sinking Fund a. Reimbursement (905,239) (108,298) (1,383,100) (503,389) (435,384) (433,824) (399,764) (344,788) (369,245) (383,702)

Refunds from Prior Years b. expenditures (27) (17,379) (64,604) (113,488) (25) - - - - -

Sale of Property & Non- c. Recurring Revenues - (488) (937) - - (1,593) - - - -

Net Revenues 74,605,475 73,015,745 74,136,021 75,132,119 78,473,559 78,727,685 84,212,003 88,025,657 94,306,099 97,777,282

Multiplier 225% 225% 225% 225% 225% 225% 225% 225% 225% 225% 225%

Total Nonelectoral Debt Limit (1) 160,514,075 163,591,379 166,317,931 166,712,914 170,806,274 174,250,022 181,059,935 188,224,009 199,907,819 210,081,779

Less: Amount of Debt Applicable to Debt Limit 83,160,000 77,210,000 72,034,000 65,214,235 61,345,860 53,763,475 52,348,529 43,781,893 35,312,948 26,666,687

Total Debt Margin $ 77,354,075 $ 86,381,379 $ 94,283,931 $ 101,498,679 $ 109,460,414 $ 120,486,547 $ 128,711,406 $ 144,442,116 $ 164,594,871 $ 183,415,092

Ratio of total Debt to Debt Limit 51.81% 47.20% 43.31% 39.12% 35.92% 30.85% 28.91% 23.26% 17.66% 12.69%

**NOTE: The Local Government Unit Debt Act (Act 52 of 1978, reenacting and amending Act 185 of 1972) describes debt limits for all local government units in Pennsylvania. The "Debt Act" is administered by the Pennsylvania Department of Community Affairs.

(1) 3 Year's average revenue X 225%

117 GREAT VALLEY SCHOOL DISTRICT Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Last Ten Fiscal Years (Unaudited)

General Percentage of Obligation Less: Amounts Estimated Actual Fiscal Year Ended Bonds Available in Debt Assessed Taxable Value of Per Capita June 30 Outstanding (1) Service Fund (2) Total Value Property (3) (4) 2018 $ 26,666,687 $ - $ 26,666,687 3,704,447,281 0.72% N/A 2017 35,312,948 - 35,312,948 3,608,652,803 0.98% N/A 2016 43,781,893 - 43,781,893 3,465,208,415 1.26% N/A 2015 52,348,529 - 52,348,529 3,385,231,701 1.55% N/A 2014 53,763,475 - 53,763,475 3,357,236,693 1.60% N/A 2013 61,345,860 - 61,345,860 3,380,675,644 1.81% N/A 2012 65,214,235 - 65,214,235 3,396,255,248 1.92% 29,816 2011 72,034,000 - 72,034,000 3,417,308,412 2.11% 29,816 2010 77,210,000 - 77,210,000 3,381,882,102 2.28% 30,549 2009 83,160,000 - 83,160,000 3,373,668,707 2.46% 30,549

Note: Details regarding the District's outstanding debt can be found in the notes to the financial statements

(1) This is the general bonded debt of governmental funds, net of original issuance discounts. Not apply to business-type activities. (2) This is the amount restricted for debt service principal payments (3) Assessed Value of Taxable Property can also be found on page 103. (4) Population data can be found in the Schedule of Demographic and Economic Statistics on page104

N/A - Not Available

118 GREAT VALLEY SCHOOL DISTRICT

SCHEDULE OF DIRECT AND OVERLAPPING DEBT

June 30, 2018

(Unaudited)

Percentage (1) Estimated share of Name of Gross Debt Applicable to direct and Governmental Unit Outstanding Governmental Unit overlapping debt

Direct Debt: (3) Great Valley School District $ 26,666,687 100% $ 26,666,687 Overlapping Debt: East Whiteland Township 26,072,913 (2) 100% 26,072,913 Willistown Township 14,300,000 (2) 100% 14,300,000 Charlestown Township 9,735,000 (2) 100% 9,735,000 Malvern Borough 1,344,000 (2) 100% 1,344,000 (1) Chester County (1) 585,568,070 (2) 9.85% 57,678,455 Total Overlapping Debt $ 637,019,983 8.79% $ 109,130,368 TOTAL DIRECT AND OVERLAPPING DEBT $ 663,686,670 13.04% $ 135,797,055

- Gross Direct Debt is the total debt of the District, the municipalities that are within the District boundaries and the County within which the District lies. - Overlapping Debt is the proportinate share of the debt of local governments located wholly or in part within the limits of the reporting government that must be borne by property within each government. The amount of debt of each unit applicable to the reporting unit is arrived at by: (1) determining what percentage of the total assessed value of the overlapping jurisdiction lies within the limes of the reporting unit, and (2) applying the percentage to the total debt of the overlapping jurisdictions. - The direct debt ratios are computed by applying the District's direct debt only. (1) Great Valley School District proportionate share of debt (9.85%) is based on the assessed value of $3,704,447,281 as a percentage of Chester County Assessed value of $37,589,872,977 (2) As of December 31, 2017 - For overlapping debt. (3) As of June 30, 2018 - For overlapping debt. Municipal debt does not included debt approved for exclusion by DCED.

** There is no other debt for which the Great Valley School District is legally responsible. Municipal debt does not inlude debt approved for exclusion by DCED.

Source: School District's Annual Financial Reports and Chester County Finance Office.

119 GREAT VALLEY SCHOOL DISTRICT RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA AND NET BONDED DEBT PER STUDENT

Last Ten Fiscal Years (Unaudited)

Debt Ratio of Net Net Gross Service Net Net Bonded Bonded Percentage Student Bonded Fiscal Assessed Bonded Monies Bonded Debt to Debt Per of Personal Enroll- Debt per Year Value (1) Debt Available Debt Assessed Population Capita Income ment (2) Pupil

2017-18 $ 3,704,447,281 $ 26,666,687 $ - $ 26,666,687 0.72% 29,846 (4) 893 7.6084% 4145 6,433

2016-17 3,608,652,803 35,312,948 - 35,312,948 0.98% 29,846 (4) 1,183 7.6084% 3978 8,877

2015-16 3,465,208,415 43,781,893 - 43,781,893 1.26% 29,846 (4) 1,467 7.6084% 3975 11,014

2014-15 3,385,231,701 52,348,529 - 52,348,529 1.55% 29,846 (4) 1,754 7.6084% 3932 13,313

2013-14 3,357,236,693 53,763,475 - 53,763,475 1.60% 29,846 (4) 1,801 7.6084% 3960 13,577

2012-13 3,380,675,644 61,345,860 - 61,345,860 1.81% 29,846 (4) 2,055 7.6084% 4000 15,336

2011-12 3,396,255,248 65,214,235 - 65,214,235 1.92% 29,846 (4) 2,185 7.6084% 4029 16,186

2010-11 3,417,308,412 72,034,000 - 72,034,000 2.11% 29,846 (4) 2,414 7.6084% 4076 17,673

2009-10 3,381,882,102 77,210,000 - 77,210,000 2.28% 26,454 (3) 2,919 7.6084% 4053 19,050

2008-09 3,373,668,707 83,160,000 - 83,160,000 2.46% 26,454 (3) 3,144 7.6084% 3988 20,853

Sources: (1 ) Chester County Board of Assessment Appeals, West Chester, PA (2 ) Third Day Actual Enrollment (3 ) 2000 Official U.S. Census (4 ) 2010 Official U.S. Census (5 ) County wide reassessment for calendar year 1997. New assessments used for July, 1998 billing.

120 GREAT VALLEY SCHOOL DISTICT Demographic and Economic Statistics (Unaudited)

Great Valley Great Valley Great Valley Chester Chester Chester Year District District District County Pennsylvania County County Ended Estimated Personal Per Capita Estimated Estimated Per Capita Unemployment Population (1) Income (2) Income Population (4) Population (4) Income (4) Rate (5)

2017 30,143 NA 48,473 516,312 12,784,227 n/a 4.0%

2016 30,143 NA 48,473 516,312 12,784,227 n/a 4.0%

2015 30,143 NA 48,473 515,939 12,763,536 n/a 3.7%

2014 30,143 NA 48,473 512,784 12,763,536 40,593 4.3%

2013 30,143 NA 48,473 506,575 12,763,536 40,593 5.8%

2012 30,143 NA 48,473 503,897 12,763,536 40,593 6.0%

2011 29,816 1,634,203,736 (3) 40,763 503,897 12,702,399 40,593 6.1%

2010 29,816 1,634,203,736 (3) 40,763 498,886 12,702,399 40,138 6.9%

2009 30,549 1,260,785,138 41,271 498,894 12,440,621 40,138 6.3%

2008 30,549 1,260,785,138 41,271 491,489 12,440,621 58,136 4.1%

(1) Based on District estimates, Chester County Planning Commission and Official U.S. Census for 2000 and 2010. (2) Pennsylvania Dept. of Education (3) 2010 Data used. (4) U. S. Bureau of the Census (5) Pennsylvania Department of Labor

Certain data on this table are only available on a calendar year basis. The prior calendar year data is used for a given fiscal year N/A = not available

121 GREAT VALLEY SCHOOL DISTICT Vital Statistics Unaudited

Chester County Pennsylvania

Category Estimated Values

Total Population 516,312 12,763,536 Occupied Housing Units 193,919 5,579,275 Persons Per Household 2.63 2.47 Unemployment Rate (%) 3.90 8.10 Total Personal Income ($) 369,054,060 516,391,019 Per Capita Income ($) (1) 57,555 40,604 Median Household Income (1) 84,741 50,398 Median Home Price 330,900 164,700

(1) In 2012 inflation-adjusted dollars

Sources: Bureau of the Census, Chester County Planning Commission, Bureau of Economic Analysis

The above data is from 2000 and 2010, the most recent available. Most of the surveys are not done annually and some of the reporting entities use estimates.

122 GREAT VALLEY SCHOOL DISTICT Principal Employers Current Year and Nine Years Ago (Unaudited)

2017 2008 % of Labor % of Labor Employer Description Rank # Employees Force Rank # Employees Force Vanguard Group ^ Financial Services/Mutal Funds 1 3,327 11.09% 2 1,600 6.53% Cerner Health Services, Inc. * Health Services 2 1,720 5.74% Immaculata University Education 3 980 3.27% Johnson & Johnson(Centocor Division Pharmaceuticals 4 906 3.02% 3 1,500 6.12% Progressive Business Publications Information Company 5 809 2.70% Siemens Medical Solutions USA, Inc. Hospital Software/Technology 6 795 2.65% 1 2000 8.16% Ellucian Company(Sungard & Datatel) Software for Higher Ed. 7 597 1.99% Great Valley School District Education 8 564 1.88% 8 540 2.20% Wegman's Food Market, Inc Food 9 467 1.56% Ikon Office Solutions (ABM) Corporate Office Products 10 444 1.48% 10 250 1.02% Siemens Medical Solutions USA, Inc. Hospital Software/Technology 4 1,000 4.08% Sanofi Syntholab, Inc. Pharmaceuticals 5 800 3.27% Wyeth Ayerst Pharmaceuticals 6 650 2.65% Systems & Computer Technology Computer Equipment 7 600 2.45% Sanchez Computer Computer Systems 9 385 1.57% TOTAL 10,609 35.38% 9,325 38.05%

Source: Philadelphia Business Journal, Book of Business Lists, Chester County Private-Sector Employers (2005) and Pennsylvania Center for Worforce Information and Analysis; and Individual Employers * Formerly Siemens Medical Solutions ^ Includes contracted Employees

123 GREAT VALLEY SCHOOL DISTRICT PERSONNEL DISTRIBUTION - FULL & PART TIME STAFF FOR 2017-18 (Unaudited)

Regular Special Other Pupil Svs. Instr. Supp. Admin. Health Business Maint. Trans. Central Cafeteria St. Act. Com. Svcs Total Program 1100 1200 1400 2100 2200 2300 2400 2500 2600 2700 2800 3100 3200 3300 By Title Administrators - Educational 3.00 4.00 1.00 2.00 11.00 21.00 - Support 1.00 2.00 1.00 1.00 1.00 1.00 1.00 8.00 Teachers - Classroom 248.80 53.65 302.45 Specialists - Library 5.50 5.50 - Psychologist 5.00 5.00 - ESL 7.70 7.70 - Guidance 12.00 12.00 - Nurses 6.00 6.00 - Social Wkrs 2.00 2.00 Support Staff - Secretarial 2.00 3.00 2.00 17.00 1.00 2.00 1.00 1.00 1.00 30.00 - Accountants 4.00 4.00 - Custodial 36.00 36.00 - Maintenance 6.00 6.00 - RN(NonPub) 1.00 1.00 - TV Studio 1.00 1.00 - Technology 5.00 5.00 - Coordinators 1.00 3.00 4.00 - Dietitian 1.00 1.00 - Cafeteria 39.00 39.00 - Trainer 1.00 1.00 - Safety Liaison 2.00 2.00 -Aides 47.00 21.00 1.00 2.00 4.00 1.00 76.00 Function Total 306.50 80.65 0.00 23.00 12.50 35.00 8.00 7.00 45.00 2.00 7.00 45.00 2.00 0.00 575.65

124 GREAT VALLEY SCHOOL DISTRICT 2017-18 Teacher Salary Matrix Analysis (Unaudited)

D Track A B C E F G H I (M/MEQ Step (B) (B+15) (B+30) (M+15) (M+30) (M+45) (M+60) (DR) ) 1 53,597 57,896 62,196 66,496 68,592 70,688 72,784 74,880 76,880 2 53,747 58,046 62,346 66,646 68,742 70,838 72,934 75,030 77,030 3 54,168 58,468 62,768 67,067 69,164 71,260 73,356 75,452 77,452 4 54,590 58,890 63,189 67,489 69,585 71,681 73,777 75,874 77,874 5 55,012 59,311 63,611 67,911 70,007 72,103 74,199 76,295 78,295 6 55,433 59,733 64,033 68,332 70,429 72,525 74,621 76,717 78,717 7 55,855 60,155 64,454 68,754 70,850 72,946 75,042 77,139 79,139 8 56,277 60,576 64,876 69,176 71,272 73,368 75,464 77,560 79,560 9 56,698 60,998 65,298 69,597 71,693 73,790 75,886 77,982 79,982 10 57,120 61,420 65,719 70,019 72,115 74,211 76,307 78,403 80,403 11 58,417 62,658 66,896 73,407 76,130 78,853 81,577 84,300 86,300 12 61,327 65,564 69,803 75,907 78,630 81,353 84,077 86,800 88,800 13 64,539 68,788 73,037 78,407 81,130 83,853 86,577 89,300 91,300 14 69,282 73,487 77,779 84,807 87,530 90,253 92,977 95,700 97,700 15 75,700 80,075 84,454 92,007 94,730 97,453 100,177 102,900 104,900 16 86,451 90,992 93,710 99,807 102,530 105,253 107,977 110,700 113,724

B = Bachelor's Degree M = Master's Degree DR = Doctorate Degree

2017-18 Number of Teachers on Track and Step A B C D E F G H I Track (B) (B+15) (B+30) (M/MEQ) (M+15) (M+30) (M+45) (M+60) (DR) Totals Step 1 0.50 0.00 1.00 0.00 1.00 0.00 0.00 0.00 0.00 2.50 2 3.00 1.50 2.00 2.70 1.00 0.00 0.00 0.00 0.00 10.20 3 3.00 1.80 0.00 2.00 0.00 0.00 0.00 0.00 0.00 6.80 4 0.00 2.00 0.00 2.50 2.00 0.00 0.00 0.00 0.00 6.50 5 1.00 0.00 3.00 4.00 0.00 2.00 1.00 0.00 0.00 11.00 6 0.00 1.00 1.00 4.00 5.00 0.00 0.00 0.00 0.00 11.00 7 0.00 1.00 1.00 2.00 1.00 3.00 3.00 2.00 0.00 13.00 8 0.00 0.00 0.00 4.00 2.00 2.00 3.00 1.00 0.00 12.00 9 0.00 1.00 0.00 2.00 3.00 1.00 5.00 7.00 0.00 19.00 10 1.00 0.00 0.00 3.00 5.00 3.00 1.00 4.00 0.00 17.00 11 1.00 0.00 1.00 2.75 1.00 0.00 2.00 8.00 0.00 15.75 12 0.00 0.00 0.70 5.60 3.00 5.00 2.00 12.00 0.00 28.30 13 0.00 0.00 1.00 2.00 4.00 2.00 3.00 8.00 0.00 20.00 14 0.00 1.00 0.00 1.00 0.00 0.00 2.00 5.00 1.00 10.00 15 0.00 1.00 0.00 4.60 4.00 1.00 1.00 7.00 2.00 20.60 16 0.00 2.00 5.00 30.00 14.00 13.00 9.00 63.00 1.00 137.00 Totals 9.50 12.30 15.70 72.15 46.00 32.00 32.00 117.00 4.00 340.65 Percentage 2.79% 3.61% 4.61% 21.18% 13.50% 9.39% 9.39% 34.35% 1.17%

125 GREAT VALLEY SCHOOL DISTRICT 2017-18 Teacher Salary Matrix Analysis-continued (Unaudited)

2016-17 Teacher Cost on Track and Step A B C D E F G H I Track (B) (B+15) (B+30) (M/MEQ) (M+15) (M+30) (M+45) (M+60) (DR) Totals Step 1 26,798 0 62,196 0 68,592 0 0 0 0 157,586 2 161,240 87,069 124,692 179,944 68,742 0 0 0 0 621,687 3 162,505 105,242 0 134,135 0 0 0 0 0 401,882 4 0 117,779 0 168,723 139,170 0 0 0 0 425,672 5 55,012 0 190,833 271,643 0 144,206 74,199 0 0 735,893 6 0 59,733 64,033 273,330 352,143 0 0 0 0 749,238 7 0 60,155 64,454 137,508 70,850 218,839 225,127 154,277 0 931,210 8 0 0 0 276,703 142,544 146,736 226,392 77,560 0 869,935 9 0 60,998 0 139,195 215,080 73,790 379,429 545,873 0 1,414,364 10 57,120 0 0 210,057 360,576 222,634 76,307 313,614 0 1,240,308 11 58,417 0 66,896 201,869 76,130 0 163,153 674,399 0 1,240,864 12 0 0 48,862 425,079 235,891 406,767 168,153 1,041,598 0 2,326,350 13 0 0 73,037 156,814 324,521 167,707 259,730 714,399 0 1,696,207 14 0 73,487 0 84,807 0 0 185,953 478,499 97,700 920,446 15 0 80,075 0 423,232 378,921 97,453 100,177 720,299 209,800 2,009,956 16 0 181,984 468,550 2,994,209 1,435,422 1,368,294 971,789 6,974,088 113,724 14,508,060 Totals $521,091 $826,522 $1,163,554 $6,077,246 $3,868,581 $2,846,425 $2,830,410 $11,694,605 $421,223 $30,249,658

2017-18 Payroll $30,249,658 2016-17 Payroll $28,916,604 FTEs 340.65 $ Increase $1,333,054 % Increase 4.61% Average $ Increase $3,913 Average Salary $88,800

126 GREAT VALLEY SCHOOL DISTRICT Operating Statistics Last Ten Fiscal Years (Unaudited)

Percentage of Students Year Pupil- Receiving Free Ended Operating Cost Per Percentage Cost Per Percentage Teaching Teacher or Reduced-Price June 30, Enrollment Expenditures Pupil Change Expenses Pupil Change Staff Ratio Lunch

2018 4,145 $ 88,918,612 21,452 14.91% $ 98,966,811 23,876 11.93% 341 12.2 14.79%

2017 3,987 85,591,150 21,468 22.62% 95,642,838 23,989 19.53% 337 11.8 14.79%

2016 3,975 78,210,096 19,675 5.39% 89,692,710 22,564 5.78% 330 12.0 12.66%

2015 3,932 73,404,097 18,668 6.63% 83,875,165 21,331 6.29% 322 12.2 12.66%

2014 3,960 69,327,278 17,507 6.22% 79,472,356 20,069 5.97% 317 12.5 13.03%

2013 4,000 65,929,181 16,482 4.31% 75,751,328 18,938 2.61% 317 12.6 11.97%

2012 4,029 63,664,727 15,802 1.35% 74,358,094 18,456 1.74% 320 12.6 7.70%

2011 4,076 63,551,362 15,592 0.40% 73,940,578 18,140 1.77% 335 12.2 7.09%

2010 4,053 62,938,677 15,529 -0.45% 72,247,141 17,826 -2.81% 337 12.0 7.72%

2009 3,988 62,207,973 15,599 5.07% 73,144,231 18,341 6.45% 345 11.6 7.00%

Source: Nonfinancial information from district records.

N/A= not available

127 GREAT VALLEY SCHOOL DISTRICT ENROLLMENT HISTORY & PROJECTIONS 2017-18 (Unaudited)

YEAR K 1 2 3 4 5 6 7 8 9 10 11 12 K thru 5 6 thru 8 9 thru 12 TOTALS % Change 2008-09 242 288 317 326 340 294 330 314 337 291 287 309 313 1,807 981 1,200 3,988 -1.72% 2009-10 271 298 303 338 324 338 305 330 314 332 292 298 310 1,872 949 1,232 4,053 1.63% 2010-11 240 322 294 305 351 329 344 313 338 315 330 302 293 1,841 995 1,240 4,076 0.57% 2011-12 234 292 328 310 296 348 321 347 303 313 316 323 298 1,808 971 1,250 4,029 -1.15% 2012-13 248 278 291 336 316 297 331 308 356 294 306 325 314 1,766 995 1,239 4,000 -0.72% 2013-14 229 299 286 292 341 312 302 333 318 339 295 296 317 1,759 953 1,247 3,959 -1.03% 2014-15 239 298 300 288 295 341 311 304 340 315 316 288 297 1,761 955 1,216 3,932 -0.68% 2015-16 233 291 306 317 299 306 346 319 313 326 313 325 281 1,752 978 1,245 3,975 1.09% 2016-17 220 294 292 304 328 293 309 354 315 316 317 318 327 1,731 978 1,278 3,987 0.30% 2017-18 266 288 329 325 323 346 314 323 364 325 309 316 317 1,877 1,001 1,267 4,145 4.28%

2019-20 234 296 353 319 363 348 341 368 329 328 357 323 311 1913 1038 1319 4270 1.45% 2020-21 237 296 310 372 333 371 359 352 374 329 322 362 321 1919 1085 1334 4338 1.61% 2021-22 240 300 310 327 389 341 383 370 357 374 323 326 360 1907 1110 1383 4400 1.43% 2022-23 234 303 314 327 342 398 352 395 376 357 367 327 324 1918 1123 1375 4416 0.40% 2023-24

- Enrollment is based on third day actual - Projections are based on the Cohort Survival Method

Retention Ratios YEAR K 1 2 3 4 5 6 7 8 9 10 11 12 K thru 5 6 thru 8 9 thru 12 TOTALS % Change 126.28% 104.98% 105.44% 104.51% 102.40% 103.20% 103.14% 101.51% 100.01% 98.13% 101.38% 99.29%

128 GREAT VALLEY SCHOOL DISTICT SCHOOL BUILDINGS – INFORMATION June 30, 2018 (Unaudited)

The following is a list of school buildings of the district as well as the year constructed, capacity and number of classrooms in each building.

Year of Construction Number of Classrooms Building Original Addition Sq. Ft. *Capacity Regular Total *Enrollment 1964, 1968 & Charlestown Elementary 1925 2013 65,000 450 18 24 331 District Administration (located on same site as KDM) 1939 1951 &1956 22,000 N/A N/A N/A N/A Kathryn D. Markley Elementary 2001 81,150 675 27 36 630

*Source: Pennsylvania Department of Education. “Capacity of Buildings” Form#1522, 1990-1991 **Third day enrollment

*Regular Classrooms do not include rooms utilized jointly by various grades for such subjects as art, music, and technology education.

129

GREAT VALLEY SCHOOL DISTRICT Capital Asset Information Last Ten Fiscal Years (Unaudited) Year Ended June 30, 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 School Building and Age Great Valley High School, 45 (1) Square feet 285,700 285,700 285,700 285,700 285,700 285,700 285,700 285,700 285,700 285,700 Capacity 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 Enrollment 1,200 1,200 1,240 1,250 1,239 1,247 1,216 1,245 1,278 1,267 Great Valley Middle School, 7 Square feet 175,530 175,530 175,530 175,530 175,530 175,530 175,530 175,530 175,530 175,530 Capacity 1,175 1,175 1,175 1,175 1,175 1,175 1,175 1,175 1,175 1,175 Enrollment 981 981 995 971 995 953 953 978 993 1,001 K D Markley Elementary School, 6 (2) Square feet 81,150 81,150 81,150 81,150 81,150 81,150 81,150 81,150 81,150 81,150 Capacity 675 675 675 675 675 675 675 675 675 675 Enrollment 531 531 569 568 579 548 550 529 581 630 Charlestown Elementary School, 82 (3) Square feet 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 Capacity 450 450 450 450 450 450 450 450 450 450 Enrollment 313 313 311 290 250 256 261 281 301 331 General Wayne Elementary School, 49 (4) Square feet 112,599 112,599 112,599 112,599 112,599 112,599 112,599 112,599 112,599 112,599 Capacity 675 675 675 675 675 675 675 675 675 675 Enrollment 478 478 483 465 440 455 465 471 438 437 Sugartown Elementary School, 50 (5) Square feet 77,000 77,000 77,000 77,000 77,000 77,000 77,000 77,000 77,000 77,000 Capacity 568 568 568 568 568 568 568 568 568 568 Enrollment 485 485 478 485 497 501 491 471 469 479 Administrative District Office, 68 (1) Square feet 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 Other Buildings Maintenance Garage 1 1 1 1 1 1 1 1 1 1 Warehouse 1 1 1 1 1 1 1 1 1 1

Source: District Records

N/A= not available (1) Great Valley High School underwent renovations from 2003-2006. All new (2) In 1999 and 2000 KDM and District Office were housed together, along with another building that no longer exists. Square feet not available. Modular classrooms have been used to accommodate enrollment until Sugartown Elemenary School opens. (3) In 2002 Charlestown students were housed at Sugartown during renovations at Charlestown Elementary. Modular classrooms were used. (4) General Wayne was a middle school in 1999 and 2000, then was renovated as an elementary school (5) Sugartown Elementary was vacant since 2001, except while Charlestown was renovated. Sugartown was renovated and reopened in September, 2006.

130 GREAT VALLEY SCHOOL DISTRICT National School Lunch Program Free and Reduced Data Last Nine Fiscal Years (Unaudited)

Percentage of Participation

Year ended June 30, 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Building

Great Valley High School Free 3.50% 4.15% 4.47% 5.80% 8.56% 11.78% 11.28% 12.49% 12.70% 12.32% Reduced 1.20% 1.88% 1.54% 2.20% 2.42% 2.54% 1.92% 1.37% 1.33% 1.85% Great Valley Middle School Free 4.90% 5.94% 6.01% 6.80% 9.17% 12.54% 12.51% 12.25% 13.32% 12.59% Reduced 1.90% 2.81% 1.80% 1.70% 1.50% 1.88% 1.28% 0.91% 1.02% 1.59% KDM Elementary School Free 5.80% 6.90% 6.73% 6.50% 7.09% 10.00% 11.96% 15.22% 15.21% 15.94% Reduced 1.00% 2.41% 1.59% 1.00% 1.06% 0.87% 0.05% 1.16% 1.20% 1.38% CT Elementary School Free 1.70% 2.25% 2.23% 2.80% 2.75% 4.24% 6.97% 8.74% 8.09% 8.00% Reduced 1.30% 0.96% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.01% 0.00% GW Elementary School Free 3.80% 6.90% 5.60% 9.00% 10.96% 14.34% 12.47% 17.62% 11.48% 10.25% Reduced 1.10% 2.41% 2.07% 2.00% 3.29% 2.39% 3.29% 2.76% 1.87% 77.00% ST Elementary School Free 8.90% 7.73% 8.54% 10.20% 12.50% 14.88% 13.03% 16.53% 17.42% 14.38% Reduced 9.60% 2.44% 1.04% 1.80% 3.18% 2.77% 1.22% 0.41% 0.86% 1.57%

Total Free 4.70% 5.42% 5.60% 41.10% 8.93% 11.29% 11.37% 13.61% 13.04% 12.50% Reduced 2.30% 2.30% 8.04% 7.70% 2.04% 1.74% 1.29% 1.18% 1.05% 1.41%

Source: Pennsylvania Department of Education, School District Data

Participation data is from October of each fiscal year and is the highest participation in the month of October. This is the only data required to be reported annually by school.

131

GREAT VALLEY SCHOOL DISTRICT GLOSSARY OF TERMS

This Glossary contains definitions of terms used in this guide and such additional terms as seem necessary to common understandings concerning financial accounting procedures for schools. Several terms which are not primarily financial accounting terms have been included because of their significance for school financial accounting. ACCOUNTING SYSTEM - The total structure of records and procedures which discover, record, classify and report information on the financial position and operations of a school district or any of its funds, balanced account groups and organizational components.

ACCRUAL BASIS - The basis of accounting under which revenues are recorded when levies are made, and expenditures are recorded as soon as they result in liabilities regardless of when the revenue is actually received or the payment is actually made. See also ESTIMATED REVENUE and EXPENDITURES.

ACCRUE - To record revenues when earned or when levies are made, and to record expenditures as soon as they result in liabilities, regardless of when the revenue is actually received or the payment is actually made. Sometimes, the term is used in a restricted sense to denote the recording of revenues earned but not yet due, such as accrued interest on investments and the recording of expenditures which result in liabilities that are payable in another accounting period, such as accrued interest on bonds. See also ACCRUAL BASIS.

APPROPRIATION - An authorization granted by a legislative body to make expenditures and to incur obligations for specific purposes. Note: An appropriation is usually limited in amount and as to the time when it may be expended.

AUTHORITY, SCHOOL - Appointed body created by State Law and vested with the responsibility of securing capital finances for school boards to build new buildings or additions.

BOARD OF SCHOOL DIRECTORS - The elected or appointed body which has been created according to State law and vested with responsibilities for educational activities in a given geographical area.

BUDGET - A plan of financial operation embodying an estimate of proposed expenditures for a given period or purpose and the proposed means of financing them.

CAPITAL RESERVE - Funds appropriated for building maintenance and capital projects. A plan is set forth for each project or maintenance item so that appropriate funds may be designated.

CONTRACTED SERVICES - Labor, material and other costs for services rendered by personnel who are not on the payroll of the local education agency. These are classified as either Professional or Property Service Objects.

COST PER PUPIL - See CURRENT EXPENDITURES PER PUPIL.

CURRENT EXPENDITURES PER PUPIL - Current expenditures for a given period of time divided by a pupil unit of measure (average daily membership, average daily attendance, etc.)

DEBT - An obligation resulting from the borrowing of money or from the purchase of goods and services. Debts of local education agencies include bonds, warrants and notes, etc.

DEBT SERVICE - Expenditures for the retirement of debt and expenditures for interest on debt, except principal and interest on current loans.

EQUIPMENT - Those moveable items used for school operation that are of a non-expendable and mechanical nature, i.e., perform an operation. Typewriters, projectors, vacuum cleaners, accounting machines, computers, lathes, clocks, machinery, and vehicles, etc. are classified as equipment. (Heating and air conditioning systems, lighting fixtures and similar items permanently fixed to or within a building are considered as part of the building.)

132

GREAT VALLEY SCHOOL DISTRICT GLOSSARY OF TERMS (Continued)

ESTIMATED REVENUE - When the accounts are kept on an accrual basis, this term designates the amount of revenue estimated to accrue during a given period regardless of whether or not it is all to be collected during the period.

EXPENDITURES - This includes total charges incurred, whether paid or unpaid, for current expense, capital outlay, and debt service. (Transfers between funds, encumbrances, exchanges of cash for other current assets such as the purchase of stores and investment of cash in U.S. bonds, payments of cash in settlement of liabilities already accounted as expenditures, and the repayment of the principal of current loans are not considered as expenditures.)

FISCAL YEAR - A twelve-month period of time to which the annual budget applies and at the end of which a local education agency determines its financial position and the results of its operations.

FUND - A sum of money or other resources set aside for specific activities of a school district. The fund accounts constitute a complete entity and all of the financial transactions for the particular fund are recorded in them.

FUND BALANCE - The excess of assets of a fund over its liabilities and reserves. During the fiscal year prior to closing, it represents the excess of the fund's assets and estimated revenues for the period over its liabilities, reserves and appropriations for the period.

FUND BALANCE, NONSPENDABLE – Amounts that cannot be spent because they are either (1) not in a spendable form or (2) legally or contractually required to remain intact. Examples of items that would be considered nonspendable include inventories and the principal of a permanent fund. The nonspendable portion of fund balance must be identified before any of the other categories are determined.

FUND BALANCE, RESTRICTED – The part of the fund balance that is restricted to be spent for a specific purpose. The constraints on these amounts must be externally imposed by creditors, grantors, contributors or laws or regulations of other governments; or by enabling legislation. Enabling legislation authorized the government to assess, levy, charge or mandate payment and includes a legally enforceable requirement on the use of these funds.

FUND BALANCE, COMMITTED – The portion of fund balance that can only be used for specific purposes as a result of formal action by the school’s highest level of authority (in most cases this would be the school board). Once the item is committed, it cannot be used for any other purpose unless changed by the same procedures used to initially constrain the money. The action of the board to commit the funds should take place before the end of the reporting period; however, the amount can be determined in the subsequent period.

FUND BALANCE, ASSIGNED – The fund balance assigned reflects the school’s intent to use the money for a specific purpose but is not considered restricted or committed. For funds other than the general fund include in this category all remaining moneys (except for negative balances) that are not considered nonspendable, restricted or committed. Unlike committed fund balances, assigned fund balances can be changed without formal action and do not need to be designated by the board. The assignment of funds for a specified purpose cannot result in a negative unassigned fund balance.

FUND BALANCE, UNASSIGNED – This represents the part of spendable fund balance that has not been categorized as restricted, committed or assigned. The general fund is the only fund permitted to have a positive unassigned fund balance. All other fund types should classify their fund balance within the other categories. A negative unassigned fund balance may occur in any fund when expenditures exceed revenues; however, any amount listed as assigned must be reduced to eliminate the negative unassigned fund balance.

FUND, GENERAL - The fund used to finance the ordinary operations of the local education agency. It is available for a legally authorized purpose and consists of money not specifically designated for some other particular purpose.

133

GREAT VALLEY SCHOOL DISTRICT GLOSSARY OF TERMS (Continued)

FUND, SPECIAL REVENUE - The fund used to finance special operations of the school district. These operations are legally restricted to expenditures for the special purposes.

INSTRUCTION - The activities dealing directly with the teaching of students or improving the quality of teaching.

LEVY - (Verb) To impose taxes or special assessments. (Noun) The total of taxes or special assessments imposed by a governmental unit.

SCHOOL - A division of the school system consisting of a group of pupils composed of one or more teachers to give instruction of a defined type, and housed in a school plant of one or more buildings. More than one school may be housed in one school plant, as is the case when the elementary and secondary programs are housed in the same school plant.

SCHOOL, ELEMENTARY - A school classified as elementary by State and local practice and composed of any span of grades not above grade six. In this handbook this term includes kindergartens and nursery schools if they are under the control of the local board of education. Great Valley's grade structure currently includes students in grades K thru 5.

SCHOOL, MIDDLE - A school offering the transition years between elementary and high school grades. Great Valley's grade structure currently includes students in grades 6, 7, and 8.

SCHOOL, HIGH - A school offering the final years of high school work necessary for graduation; invariably preceded by a junior high school in the same system. Great Valley's grade structure currently includes students in grades, 9, 10, 11, and 12.

SCHOOL, VOCATIONAL - A secondary school which is separately organized under a principal for the purpose of offering training in one or more skilled or semi-skilled trades or occupations. It includes such schools whether federally aided or not. Departments of other types of high schools.

TAXES - Compulsory charges levied by a governmental unit for the purpose of financing services performed for the common benefit. The term includes licenses and permits. It does not include special assessments.

134

Great Valley School District is an equal opportunity education institution and will not discriminate on the basis of race, color, national origin, sex, age, religion, or handicap in its activities, programs, or employment practices as required by Title VI, Title IX, Section 504, Individuals with Disabilities Education Act, Chapter 15 of the Pennsylvania School Code and Americans with Disabilities Act. For information regarding civil rights, grievance procedures, services, activities, and facilities accessible to and usable by handicapped persons, contact Title IX and Section 504 Coordinator, Great Valley School District, 47 Church Road, Malvern, PA 19355, (610) 889-2100.