Audited Annual Financial Report Fiscal Year Ended June 30, 2017
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LOS ANGELES UNIFIED SCHOOL DISTRICT ED NIFI SCH U O S O E L L E D I G S T Audited Annual N R A I C S T O L • • B O N A IO RD AT FINANCIAL OF EDUC REPORT For Fiscal Year Ended June 30, 2017 2016-2017 Los Angeles, CA LOS ANGELES UNIFIED SCHOOL DISTRICT LOS ANGELES, CALIFORNIA AUDITED ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2017 MS. MICHELLE KING, ED.D. SUPERINTENDENT OF SCHOOLS MR. SCOTT S. PRICE, PH.D. CHIEF FINANCIAL OFFICER (EFFECTIVE JULY 3, 2017) MS. MEGAN K. REILLY CHIEF FINANCIAL OFFICER (DECEMBER 1, 2007 – MARCH 23, 2017) MR. V. LUIS BUENDIA CONTROLLER PREPARED BY ACCOUNTING AND DISBURSEMENTS DIVISION 333 S. BEAUDRY AVENUE LOS ANGELES, CALIFORNIA 90017 LOS ANGELES UNIFIED SCHOOL DISTRICT Audited Annual Financial Report Year Ended June 30, 2017 Table of Contents I N T R O D U C T O R Y S E C T I O N Page Letter of Transmittal ………………………………………………………………………………………………….…………………i Board of Education and Principal School District Officials ………………………………………………………………………..v Organizational Structure …………………………………………………………………………………………………………………………….vi F I N A N C I A L S E C T I O N Independent Auditor's Report ………………………………………………………………………………………………………………………………………..1 Management’s Discussion and Analysis …………………………………………………………………………………………………………….4 B a s i c F i n a n c i a l S t a t e m e n t s: G o v e r n m e n t - w i d e F i n a n c i al S t a t e m e n t s: Statement of Net Position …………………………………………………………………………………………………………………14 Statement of Activities ………………………………………………………………………………………………………………………….15 F u n d F i n a n c i a l S t a t e m e n t s: Balance Sheet – Governmental Funds ………………………………………………………………………………………..16 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position …………………………………………………………………………………….17 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ………………………………………………………….18 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities ……………………………………………………………………………………………………………………19 Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – General Fund ……………………..………………………………………………………………………………………….20 Statement of Net Position – Proprietary Funds – Governmental Activities – Internal Service Funds ………………………21 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds – Governmental Activities – Internal Service Funds ………………………………………………………………………………………………..22 Statement of Cash Flows – Proprietary Funds – Governmental Activities – Internal Service Funds ……………………….…….23 Statement of Net Position – Fiduciary Funds …………………………………………………………………………………………………24 Statement of Changes in Net Position – Fiduciary Funds …………………………………………………………………………………………………25 N o t e s t o B a s i c F i n a n c i a l S t a t e m e n t s ………………………………………………………………………………………………………………….26 R E Q U I R E D S U P P L E M E N T A R Y I N F O R M A T I O N Schedule of Funding Progress for Postemployment Healthcare Benefits …………………………………………………………………………………………………75 Schedule of Changes in the Net Pension Liability and Related Ratios – Agent Multiple-Employer Defined Benefit Pension Plan – California Public Employees' Retirement System (Safety Plan) …………………………………………………………………………………………………76 Schedule of Contributions – Agent Multiple-Employer Defined Benefit Pension Plan – California Public Employees' Retirement System (Safety Plan) …………………………………………………………………………………………………77 Schedule of District Proportionate Share of the Net Pension Liability and Related Ratios and District Contributions – California Public Employees' Retirement System (Miscellaneous Plan) …………………………………………………………………………………………………78 Schedule of District Proportionate Share of the Net Pension Liability and Related Ratios and District Contributions – California State Teachers' Retirement System…………………………………………………………………………………………………79 Los Angeles Unified School District LOS ANGELES UNIFIED SCHOOL DISTRICT Audited Annual Financial Report Year Ended June 30, 2017 Table of Contents C o m b i n i n g a n d I n d i v i d u a l F u n d S c h e d u l e s a n d S t a t e m e n t s : Page District Bonds Fund – Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual………………………………………………………………………………………………………..80 Bond Interest and Redemption Fund – Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual………………………………………………………………………………………………………..81 N o n m a j o r G o v e r n m e n t a l F u n d s : Special Revenue Funds/Debt Service Funds/Capital Projects Funds: Nonmajor Governmental Funds – Combining Balance Sheet …………………………………………………………………………………………………………………………84 Nonmajor Governmental Funds – Combining Statement of Revenues, Expenditures, and Changes in Fund Balances …………………………...……...……………………..………………………………… 88 Special Revenue Funds – Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual …………………………...……...……………………..…………………………………92 Debt Service Funds – Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual …………………………...……...……………………..…………………………………96 Capital Projects Funds – Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual …………………………...……...……………………..…………………………………98 Internal Service Funds: Internal Service Funds – Combining Statement of Net Position ...………………………………………………………………………105 Internal Service Funds – Combining Statement of Revenues, Expenses, and Changes in Fund Net Position …………………………………………………………………………………………………..106 Internal Service Funds – Combining Statement of Cash Flows ……………..………………………………………………………………107 Fiduciary Funds: Fiduciary Funds – Agency Funds – Combining Statement of Changes in Assets and Liabilities ………….……………………………………………………..…………109 S U P P L E M E N T A R Y I N F O R M A T I O N Assessed Value of Taxable Property – Last Ten Fiscal Years ………………………………………………………………………………………………………………………….111 Largest Local Secured Taxpayers – Current Year and Nine Years Ago……………………………………………………………………………………………..112 Property Tax Levies and Collections – Last Ten Fiscal Years ……………………………………………………………………………………………………………………….113 Average Daily Attendance/Hours of Attendance – Annual Report – Last Ten Fiscal Years ………………………………………………………………………………………………………….114 Organization Structure ……….……………………………………………………………………....…………………………………………………………117 Schedule of Average Daily Attendance/Hours of Attendance ……….………………………..…………………………………………………………118 Schedule of Average Daily Attendance – Affiliated Charter Schools ……….………………………..…………………………………………………………120 Schedule of Instructional Time Offered ............................................................................................................................................124 Schedule of Financial Trends and Analysis ...........................................................................................................................................................125 Schedule to Reconcile the Annual Financial Budget Report (SACS) with Audited Financial Statements ………………………….126 Schedule of Charter Schools ……………………………..……….………………………………………………………………………….127 Notes to Supplementary Information ...........................................................................................................…………………………………132 Schedule of Expenditures of Federal Awards ......................................................................................................................... 133 Notes to Schedule of Expenditures of Federal Awards …............................................................................................................…………………………………137 Audited Annual Financial Report LOS ANGELES UNIFIED SCHOOL DISTRICT Audited Annual Financial Report Year Ended June 30, 2017 Table of Contents O T H E R I N D E P E N D E N T A U D I T O R R E P O R T S Page Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ………………………..………….139 Report on Compliance for Each Major Federal Program and on Internal Control over Compliance ………………………..……………………………………………………….……………………………………………………….….141 Independent Auditor's Report on State Compliance .......................................................................................................................……………144 Schedule of Findings and Questioned Costs ...........................................................................................................…………….148 Status of Prior Year Findings and Recommendations ..........................................................................................…………… 197 Independent Auditor's Management Letter ........................................................………………………………………...…………………208 Los Angeles Unified School District INTRODUCTORY SECTION MEMBERS OF THE BOARD LOS ANGELES UNIFIED SCHOOL DISTRICT MÓNICA GARCÍA MICHELLE KING, Ed.D. KELLY GONEZ Superintendent of Schools DR. GEORGE J. MCKENNA III NICK MELVOIN SCOTT S. PRICE, Ph.D. DR. REF RODRIGUEZ Chief Financial Officer SCOTT M. SCHMERELSON DR. RICHARD A. VLADOVIC V. LUIS BUENDIA Controller December 14, 2017 The Honorable Board of Education Los Angeles Unified School District 333 South Beaudry Avenue Los Angeles, California 90017 Dear Board Members: The Audited Annual Financial Report of the Los Angeles Unified School District (District), for the fiscal year ended June 30, 2017, is hereby submitted. Responsibility