Utica Community Schools Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2019
Utica Community Schools 11303 Greendale Sterling Heights, Michigan 48312 COMPREHENSIVE ANNUAL FINANCIAL REPORT
UTICA COMMUNITY SCHOOLS 11303 Greendale Sterling Heights, Michigan 48312 (586) 797-1000
For the Fiscal Year Ended June 30, 2019
BOARD OF EDUCATION Robert A Ross, Ph.D. President Mary K. Thomas, Ph.D Vice President Denyeal Nesovski, Secretary Michele Templeton, Treasurer Jennifer L. Prybys, Trustee Kimberly Becker, Trustee Kelli Rankin, Trustee
SUPERINTENDENT OF SCHOOLS Christine M. Johns, Ed.D., Superintendent
Report prepared by the Finance Department Utica Community Schools Contents
Introductory Section Letter of Transmittal i-ix Organizational Chart x ASBO Certificate of Excellence in Financial Reporting xi Financial Section Independent Auditor's Report 1-2 Management's Discussion and Analysis 3-10 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 11 Statement of Activities 12 Fund Financial Statements: Governmental Funds: Balance Sheet 13 Reconciliation of the Balance Sheet to the Statement of Net Position 14 Statement of Revenue, Expenditures, and Changes in Fund Balances 15 Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances to the Statement of Activities 16 Proprietary Fund - Internal Service Fund: Statement of Net Position 17 Statement of Revenue, Expenses, and Changes in Net Position 18 Statement of Cash Flows 19 Fiduciary Fund - Statement of Assets and Liabilities 20 Notes to Financial Statements 21-41 Required Supplemental Information 42 Budgetary Comparison Schedule - General Fund 43 Schedule of Proportionate Share of the Net Pension Liability 44 Schedule of Pension Contributions 45 Schedule of Proportionate Share of the Net OPEB Liability 46 Schedule of OPEB Contributions 47 Notes to Required Supplemental Information 48 Other Supplemental Information 49 Nonmajor Governmental Funds: Combining Balance Sheet 50-51 Combining Statement of Revenue, Expenditures, and Changes in Fund Balances 52-53 Budgetary Comparison Schedule - Nonmajor Governmental Funds 54-55 Schedule of Bonded Indebtedness 56-57 Agency Fund - School Activities Statement of Cash Receipts and Disbursements 58 Agency Fund - Student Activities - Changes in Assets and Liabilities 59 Utica Community Schools Contents (Continued)
Statistical Section 60 Description of the Statistical Section 61 Financial Trend Information Changes in Governmental Net Position - Governmental Funds 62-63 Net Position by Component - Governmental Funds 64-65 Changes in Fund Balances - Governmental Funds 66-67 Fund Balances, Governmental Funds 68-69 Revenue Capacity Information Taxable Value and Estimated Actual Value of Taxable Property 70-71 Direct and Overlapping Property Tax Rates 72-73 Principal Property Taxpayers 74 Property Tax Levies and Collections 75 Debt Capacity Information Ratios of Outstanding Debt 76-77 Direct and Overlapping Governmental Activities Debt 78 Legal Debt Margin 79-80 Demographic and Economic Information Demographic and Economic Statistics - Macomb County 81 Principal Employers - Within the School District 82 Operating Information Full-Time Equivalent School District Employees 83-84 Capital Asset Information 85-86 Operating Indicators 87 Federal Awards Supplemental Information Issued Under Separate Cover 11303 Greendale Sterling Heights, MI 48312 Administrative Service Center Phone: (586) 797-1000 Fax: (586) 797-1101 www.uticak12.org
Christine M. Johns, Ed.D.
Superintendent of Schools
October 21, 2019
To the Parents and Citizens of Utica Community Schools:
As an introduction to our June 30, 2019 Comprehensive Annual Financial Report (CAFR), this letter of transmittal is intended to provide an overview of Utica Community Schools (the “School District”) financial status as well as economic factors affecting the surrounding communities. The report is the result of the annual independent audit provided for the Board of Education. The report was prepared by the Business and Finance Department, in accordance with generally accepted accounting principles. The basic financial statements have been audited by the firm of Plante & Moran, PLLC, an independent auditor, and the report is preceded by their unmodified opinion.
The Comprehensive Annual Financial Report was prepared to meet the needs of a broad spectrum of financial statement readers and is presented in the following major sections: The introductory section introduces the reader to Utica Community Schools (UCS) and to this report. Included are facts about the School District, this transmittal letter and the School District’s organizational chart. The financial section contains the independent auditor’s report, the management’s discussion and analysis report and basic financial statement information. Included in the School District’s basic financial statements are government-wide financial statements, fund financial statements and notes to the financial statements. The management’s discussion and analysis provides an overview and analysis of the School District’s basic financial statements and should be read in conjunction with the financial statements. The statistical section and other information (unaudited) includes selected historical, financial and demographic information of the School District and its surrounding communities. This section is intended to reflect economic data, financial trends and the fiscal capabilities of the School District.
Utica Community Schools Overview
Utica Community Schools is known nationally and statewide for its educational excellence. As Michigan’s second largest public school district, UCS has earned its reputation with innovative, rigorous programming, high expectations for students and responsible fiscal management. UCS is committed to managing and utilizing its funds reasonably and carefully by providing nationally recognized academic return on the taxpayers’ investment.
Utica Community Schools Board of Education Robert A. Ross, Ph.D., President Mary K. Thomas, Ph.D., Vice President Michele Templeton, Treasurer Denyeal Nesovski, Secretary Jennifer L. Prybys, Trustee Kimberly Becker, Trustee Kelli Rankin, Trustee i Utica Community Schools is located in southeastern Michigan’s Macomb County, approximately 15 miles north of Detroit. The School District currently operates 25 elementary schools, seven junior high schools, four comprehensive high schools, an alternative learning center, and three specialty programs (Utica Academy for International Studies, the Utica Center for Science and Industry and the Utica Center for Mathematics, Science and Technology) serving approximately 27,000 students during the 2018-2019 school year.
Utica Community Schools buildings were originally constructed between 1929 and 2005. UCS facilities have an average age of 50 years. Through the bond issues supported by our community, UCS is strategically maintaining its facilities, technology and infrastructure to ensure safety and security and environments that are conducive to teaching and learning. The district’s needs are identified through a strategic, long-range facility improvement program.
District’s Academic Focus
The School District is guided by its vision, mission, core values and strategic direction.
The vision is that all children have the right to a rigorous, high-quality education which meets their individual needs. UCS will respect, encourage and empower each and every student to acquire the necessary knowledge, skills and attitudes to be successful, contributing members of a diverse community and global society.
The mission is a commitment to exemplary teaching and learning in order for our students to be prepared for success in the 21st century. We will achieve this commitment by engaging the entire community to focus on each child’s achievement, with the expectation that every student will pursue some type of post-high school educational endeavor.
The district’s core values are:
• Every child can learn and achieve. • Parents and guardians are partners in the learning process. • Being “smart” can be achieved through persistence, hard work and effective effort. • Excellence is expected and celebrated. • Data is used to guide our decision-making. • All employees will exemplify ethical behavior; exhibit a strong work ethic; and continue to develop their leadership, performance and service skills. • Technology supports and enhances instruction, business operations, research and communications. • The Board of Education, district educators/staff, parents, community members and business leaders must collaborate and work as a team to enhance educational opportunities for student success.
ii The strategic direction focus areas are: • Providing academic excellence • Promoting student innovation • Preparing positive digital citizens • Ensuring accountability
Below is an overview of initiatives related to the district’s strategic direction.
Providing Academic Excellence
Utica Community Schools is committed to equity, access and excellence for all of its students. The UCS Board of Education has formally adopted a policy to guide our efforts, which includes our quality indicators.
Utica Community Schools students continue to outperform their county, state and national peers. The district’s graduation rate of 93 percent is 12 points higher than the state average. Staff, students and programs continue to be recognized for excellence at all levels.
Through its vision, the district remains committed to a rigorous, high quality education. The district leverages partnerships with local and international organizations to provide students additional academic experiences. For example, all four UCS comprehensive high schools are working with College Board to implement a program that develops skills necessary for advanced content. College Board, which administers Advanced Placement (AP) and SAT assessments, has worked with teachers to integrate these advanced skills into Algebra II and English 11 courses, such as developing greater understanding of how to solve a math problem or having the development of analytical reading and writing skills that are required for SATs.
The district offers 30 Advanced Placement courses, ranging from English Language and Composition, Computer Science Principles and Environmental Science to Studio Art 3-D Design and language and culture in French, German and Spanish. The district continues to increase AP participation for all students by partnering with Lead Higher. This initiative is a national effort aimed at closing achievement gaps among students by creating participation in rigorous college-level courses for underrepresented students.
As a member of Lead Higher, Utica Community Schools has received technical assistance from Equal Opportunity Schools (EOS). Since the EOS partnership began in 2016-2017, UCS has seen an increase of 8 percent in AP participation for 11th and 12th grade.
At the elementary level, teachers introduced a new mathematics series – Math Expressions – that engages students in a comprehensive research-based mathematics program that addresses the rigor of all Michigan Academic Standards and the eight Mathematical Practices. This series integrated student inquiry, discussions focusing on mathematical thinking and hands-on learning and problem solving, as well as the pairing of modeled examples and practices.
The district continues to be recognized for its excellence in music education. For the fifth time,
iii Utica Community Schools has been named one of the nation’s best communities for music education by National Association of Music Merchants (NAMM).
Promoting Student Innovation
Utica Community Schools understands the importance of supporting students’ unique interests and learning styles. From elementary to senior year, UCS students have access to a wide range of classes, programs and extracurricular activities designed to promote innovation.
The district’s portfolio of options include: specialty programs Utica Academy for International Studies, Utica Center for Science and Industry, Utica Center for Mathematics, Science and Technology; partnerships with business and industry to provide real-world experience; and advanced junior high school courses such as Exploratory Design, Digital Literacy, Media Design and Engineering I and II.
This past year, the district introduced two new programs – a high school cybersecurity course and Stevenson Center for Manufacturing, Automation and Design Engineering (MADE) Academy – that prepare students for careers in high demand industries.
The cybersecurity course allows high school students to explore and earn CompTIA A+ certification, a globally recognized industry standard.
Stevenson MADE Academy is a four-year program that blends rigorous academic content with relevant, real world applications by making use of strong business relationships and post-secondary partners in the field of advanced manufacturing. Students participating in the program also earn college credit. They will graduate with practical workforce experiences in fabrication, automation and design engineering, as well as industry recognized certifications.
Preparing Positive Digital Citizens
Utica Community Schools is a recognized leader in the innovative use of education technology by providing digital tools and content that increase student achievement. The district is also committed to ensuring students are able to effectively and responsibility use digital devices.
UCS also continues to expand computer science offerings through its partnership with Code.org. The district was among one of the first in the nation to work with the non-profit organization for professional development resources to integrate coding lessons in elementary media programs and expand courses for secondary students.
During the past year, the district provided all junior high school students with a course that will allow students to explore introductory concepts of coding and computer science. The course, called Computer Science Discoveries, also supported computer science as a medium for creativity, communication and problem solving.
Secondary teachers have been trained to integrate coding concepts into Algebra 1, a course taken by every UCS student. The district also expanded an Advanced Placement Computer Science Course to
iv include both Eisenhower and Utica high school students.
Ensuring Accountability
Utica Community Schools has a proven track record of responsible management of taxpayer funds and dedication to educational excellence. The district continues to meet the highest standards for its financial controls and accountability to taxpayers, according its auditors Plante & Moran, PLLC. Utica Community Schools also continues to earn national recognition for its high standards in reporting financial information to its community. The district is among approximately 500 nationally to earn a Certificate of Excellence in Financial Reporting award for its Comprehensive Annual Financial Report (CAFR) from the Association of School Business Officials International.
The UCS community has trusted and supported the school district to diligently use taxpayer funds to achieve its educational mission. In November, voters approved a $155 million bond issue focused on three critical areas: safety and security; infrastructure improvements identified through the district’s long-range facility program; and technology. This past summer, more than $20 million in improvements were initiated as part of phase one of a five-year program.
The district also remains focused on ensuring its students are learning in a safe and positive environment through its collaborative work with its law enforcement partners, on a Unified Security and Emergency Management Plan. The 2018-2019 school year was the first full year of School Resource Officers at the district’s four comprehensive high schools (Eisenhower, Henry Ford II, Stevenson and Utica).
Through its partnership with law enforcement, all sixth graders take part in programs that proactively promote safe decision-making, particularly while using the internet. This past year, a SMART Moves program through the Sterling Heights Police Department was introduced to sixth grade students. Combined with the DARE program, all UCS sixth graders now have additional resources that promote responsible use of digital devices and content.
Utica Community Schools remains committed to being an outstanding community to live, learn and work. Recently, an independent satisfaction survey from Utica Community Schools staff has resulted in the district being named among the top 39 places in Michigan to work. The district is the only Michigan public school district to be recognized by Forbes Magazine as a top employer.
Economic Conditions and Outlook
Utica Community Schools is comprised primarily of Shelby Township, Sterling Heights, Utica, and portions of Macomb, Ray and Washington townships. Local employment is predominately comprised of the public school district, health care industries and auto-related manufacturing companies. Macomb County’s annual average unemployment level in 2018 was 4.0 percent, the current level is 4.4 percent (June, source: Bureau of Labor Statistics https://data.bls.gov/map/). Property values within the 66 square miles of the district’s boundaries increased by 4.7 percent over last year.
v Michigan school districts are funded with revenue from local, state and federal sources. The primary source of revenue is the foundation allowance1 funded at a state set per student allocation multiplied by the number of students. The UCS 2018-2019 foundation allowance was $8,020 per-pupil, representing an increase of 2.9 percent over the prior year, and is comprised of both state funding and local non-homestead taxes2. The state revenue comprises 81 percent of the School District’s operating revenue.
Utica Community Schools fall 2018 enrollment was approximately 27,000, a decline of 2 percent from the previous year. The enrollment decline is projected to slow and stabilize over the next few years.
The School District was rated ‘A-’ with a revised outlook to positive from stable by Standard & Poor’s (S&P) in February 2019. This favorable rating change was due to the district achieving structurally balanced operations. The district has good general fund reserves, strong income indicators and low overall net debt levels. S&P indicated that the district must continue to rebuild reserves and strengthen financial flexibility to receive a rating upgrade.
The structural balance was achieved through the use of multiple strategies including cost reductions through furlough days and benefit redesign. Fund balance in the general fund improved by $6 million to a total of $28.6 million or 10.6 percent of expenditures. The district continues to spend 80 percent of its budget supporting classrooms including teachers, paraprofessionals, supplies and other supports.
The 2018-2019 foundation allowance of $8,020 per student exceeded, for the first time in a decade, the previous high of $7,807 in 2008-2009. As of the date of this letter, the state has yet to pass a school aid budget for the 2019-2020 school year. Projected funding increases and stabilizing student enrollment coupled with careful expenditure management will continue to move the district in a favorable position for the upcoming year.
Internal Control Structure
Management is responsible for establishing and maintaining an internal control structure. This structure is designed to ensure that the assets of the School District are protected from loss, theft or misuse and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. Internal control systems are subject to inherent limitations with regard to the necessity to balance cost against the benefit produced. The internal control structure is designed to provide reasonable, but not absolute, assurance that the financial statements will be free from material misstatement. Budgetary Control
1 The foundation allowance is the per student allocation to school districts as determined by the state ranging from $7,871 to $15,796 (UCS $8,020). The foundation allowance is funded by local non-homestead property taxes and state funding.
2 Non-homestead taxes are levied by school districts on non-homestead properties (properties used for rental, industrial, commercial, or second homes) to support operating expenses.
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The School District’s Business and Finance Department maintains budgetary controls to ensure that budgets, as established by the Board of Education, are in compliance with legal provisions of the State of Michigan Uniform Budgeting and Accounting Act and with the annual appropriation budget adopted by the Board of Education. Formal budgetary integration is employed as a management control device throughout the year for the General Fund, Special Revenue Funds, Debt Service Fund and Capital Projects Fund. The budget document presents information by fund and function, which is the legal level at which expenditures may not exceed appropriations. The budget is amended in January and June to address variances that occur in enrollment, revenue, and expenditures.
Monthly financial reports are provided as part of regularly scheduled public meetings to the Board of Education which include function budget, actual year-to-date revenues and expenditures, the remaining balance and the percent remaining. Under the guidelines of the State of Michigan’s School Accounting Manual (Bulletin 1022), detailed line-item budget information is provided and appropriate administrators are delegated the responsibility for monitoring and controlling their respective budget allocations. The controls are integrated into the School District’s computerized accounting system. An encumbrance system is used to measure the uncommitted budget amount available at any given point in time during the year. The existing system of budgetary and accounting controls provides a reasonable level of assurance that errors or irregularities that could be material to the financial statements are prevented or that they would be detected within a timely manner. As demonstrated by the statements and schedules included in the financial section of this report, the School District continues to meet its responsibility and accountability for sound financial management.
Capital Projects
On May 5, 2009, the voters approved a $112.5 million bond issue for school building and site purposes. Use of bond funds were approved for items including technology infrastructure and equipment, remodeling and construction, equipping and furnishing buildings, acquiring buses, and improving and developing sites. The eighth and final series was sold in February 2017.
The Utica Community Schools voters approved a $155 million bond proposal on the November 6, 2018 ballot to address safety and security, technology and infrastructure improvements identified through the districts strategic, long-range facilities improvement program. The first series of $105 million was sold in February 2019. Progress of these bond projects is available on the district’s website at www.uticak12.org/2018bond/updates.
Independent Audit
The State of Michigan statutes require that each school district have an annual audit conducted by independent certified public accountants. The Utica Community Schools Board of Education approved the accounting firm of Plante & Moran, PLLC to provide their auditing services for the 2018-2019 fiscal year. In addition, 2 CFR Uniform Administrative Requirements, Cost Principles, and Audit Requirements for federal awards requires that all governmental recipients of federal assistance have organizational-wide financial and compliance audits on an annual basis. Plante &
vii Moran, PLLC conducted the audit of the School District’s Federal Awards. The results of the single audit for the fiscal year ended June 30, 2019 provided no instances of material weaknesses in the internal control structure or significant violations of applicable laws and regulations. The auditor’s report on the basic financial statements is included herein.
Fund Balance Policy
The purpose of a fund balance is to provide adequate working capital to meet the financial requirements during the operating year. The district’s administrative procedures require that the Superintendent recommends annually to the Board of Education a fund balance target to meet operating obligations, the needs of children, and to eliminate the structural deficit. The General Fund appropriations resolution includes the projected level of fund balance.
Fund equity may not be transferred for use without Board of Education approval through an amendment to the budget.
Awards
Utica Community Schools received its seventh Certificate of Excellence in Financial Reporting from the Association of School Business Officials International (ASBO) for its Comprehensive Financial Annual Report (CAFR) for the fiscal year ended June 30, 2018. The Board of Education remains committed to providing its citizens and other users with comprehensive financial reporting.
The CAFR has been prepared following the guidelines recommended by ASBO. In order to be awarded a Certificate of Excellence, the School District must publish an easily readable and efficiently organized report. This report must satisfy both accounting principles generally accepted in the United States of America as well as applicable legal requirements.
A Certificate of Excellence is valid for a one-year period. This is the eighth year that Utica Community Schools is completing a CAFR and we believe this current report will meet the Certificate of Excellence program’s requirements and are submitting it to ASBO to determine its eligibility for this certificate.
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Acknowledgements
The preparation of this report was accomplished through the commitment and dedication of the Business and Finance Department. The Board of Education would like to express appreciation to all staff who assisted in the timely closing of the financial records and the preparation of this report.
Sincerely,
Robert A. Ross, Ph.D. Christine M. Johns, Ed.D. Board of Education, President Superintendent of Schools
Michele Templeton Stephanie M. Eagen, CPA Board of Education, Treasurer Assistant Superintendent for Business Services
ix Board of Education
Administrative Assistant to Superintendent the Superintendent
Assistant Superintendent for Assistant Superintendent for Director of School Assistant Superintendent for Assistant Superintendent for Human Resources Auxiliary Services Community Relations Business Services Teaching and Learning and Transportation
x
The Certificate of Excellence in Financial Reporting is presented to
Utica Community Schools
for its Comprehensive Annual Financial Report (CAFR) for the Fiscal Year Ended June 30, 2018.
The CAFR meets the criteria established for ASBO International’s Certificate of Excellence.
Tom Wohlleber, CSRM David J. Lewis President Executive Director
xi Independent Auditor's Report
To the Board of Directors Utica Community Schools
Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Utica Community Schools (the "School District") as of and for the year ended June 30, 2019 and the related notes to the financial statements, which collectively comprise Utica Community Schools' 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. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Utica Community Schools as of June 30, 2019 and the respective changes in its financial position and, where applicable, cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
1 To the Board of Directors Utica Community Schools
Required Supplemental Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and other required supplemental information, as identified in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, which 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 supplemental 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 an opinion on the financial statements that collectively comprise Utica Community Schools' basic financial statements. The other supplemental information, as identified in the table of contents, and introductory section and statistical section schedules are presented for the purpose of additional analysis and are not a required part of the basic financial statements. The other supplemental information and the schedule of expenditures of federal awards 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 other supplemental information and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The accompanying introductory section and statistical section tables, as identified in the table of contents, 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 October 21, 2019 on our consideration of Utica Community Schools' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Utica Community Schools' internal control over financial reporting and compliance.
October 21, 2019
2 Utica Community Schools This section of the annual financial report for Utica Community Schools (the "School District") presents our discussion and analysis of the School District's financial performance during the year ended June 30, 2019. Please read it in conjunction with the School District's financial statements, which immediately follow this section. Using this Annual Report This annual report consists of a series of financial statements and notes to those financial statements. These statements are organized so the reader can understand Utica Community Schools financially as a whole. The government-wide financial statements provide information about the activities of the whole School District, presenting both an aggregate view of the School District’s finances and a longer-term view of those finances. The fund financial statements provide the next level of detail. For governmental activities, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements look at the School District’s operations in more detail than the government-wide financial statements by providing information about the School District’s most significant funds - the General Fund and the 2018 Bond Series I, with all other funds presented in one column as nonmajor funds. The remaining statement, the statement of fiduciary assets and liabilities, presents financial information about activities for which the School District acts solely as an agent for the benefit of students and parents. This report is comprised of the following elements: Management's Discussion and Analysis (MD&A) (Required Supplemental Information) Basic Financial Statements Government-wide Financial Statements Fund Financial Statements Notes to Financial Statements Required Supplemental Information Budgetary Comparison Schedule - General Fund Schedule of Proportionate Share of the Net Pension Liability Schedule of Proportionate Share of the Net OPEB Liability Schedule of Pension Contributions Schedule of OPEB Contributions Other Supplemental Information
Reporting the School District as a Whole - Government-wide Financial Statements One of the most important questions asked about the School District is, “As a whole, what is the School District’s financial condition as a result of the year’s activities?” The statement of net position and the statement of activities, which appear first in the School District’s financial statements, report information on the School District as a whole and its activities in a way that helps you answer this question. We prepare these statements to include all assets, deferred outflows of resources, liabilities, and deferred inflows of resources, using the accrual basis of accounting, which is similar to the accounting used by most private sector companies. All of the current year’s revenue and expenses are taken into account regardless of when cash is received or paid. These two statements report the School District’s net position - the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources, as reported in the statement of net position - as one way to measure the School District’s financial health or financial position. Over time, increases or decreases in the School District’s net position - as reported in the statement of activities - are indicators of whether its financial health is improving or deteriorating. The relationship between revenue and expenses is the School District’s operating results. However, the School District’s goal is to provide services to our students, not to generate profits as commercial entities do. One must consider many other nonfinancial factors, such as the quality of the education provided and the safety of the schools, to assess the overall health of the School District.
3 Utica Community Schools Management's Discussion and Analysis (Continued)
The statement of net position and the statement of activities report the governmental activities for the School District, which encompass all of the School District’s services, including instruction, support services, community services, athletics, food services, enrichment, student stores, debt service, and internal service. Property taxes, unrestricted state aid (foundation allowance revenue), and state and federal grants finance most of these activities. Reporting the School District's Fund Financial Statements The School District’s fund financial statements provide detailed information about the most significant funds - not the School District as a whole. Some funds are required to be established by state law and by bond covenants. However, the School District establishes many other funds to help it control and manage money for particular purposes (the Food Service Fund is an example) or to show that it is meeting legal responsibilities for using certain taxes, grants, and other money (such as bond-funded construction funds used for voter-approved capital projects). Governmental Funds Governmental fund reporting focuses on showing how money flows into and out of funds and the balances left at year end that are available for spending. They are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the operations of the School District and the services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the School District’s programs. We describe the relationship (or differences) between governmental activities (reported in the statement of net position and the statement of activities) and governmental funds in a reconciliation. Proprietary Funds - Internal Service Fund Proprietary fund reporting focuses on the economic resources measurement and an accounting method called full accrual accounting. The proprietary fund statements present a long-term view of operations and the services it provides to other funds. The School District established a proprietary fund, specifically the Internal Service Fund, to finance specific services provided to other funds of the School District on a cost reimbursement basis. The specific services represent workers' compensation, sick leave, accrued vacation, and unemployment liabilities. Reporting the School District's Fiduciary Responsibilities The School District has certain fiduciary responsibility for its student activity funds. All of the School District’s fiduciary activities are reported in a separate statement of fiduciary assets and liabilities. We exclude these activities from the School District’s other financial statements because the School District cannot use these assets to finance its operations. The School District is responsible for ensuring that the assets reported in these funds are used for their intended purposes.
4 Utica Community Schools Management's Discussion and Analysis (Continued)
The School District as a Whole Recall that the statement of net position provides the perspective of the School District as a whole. The following table provides a summary of the School District’s net position as of June 30, 2019 and 2018:
Governmental Activities 2019 2018 (in thousands) Assets Current and other assets $ 207,837 $ 117,812 Capital assets 285,487 283,143 Total assets 493,324 400,955 Deferred Outflows of Resources 192,724 108,536 Liabilities Current liabilities 51,980 82,492 Noncurrent liabilities 230,317 125,193 Net pension liability 540,180 477,110 Net OPEB liability 139,279 162,742 Total liabilities 961,756 847,537 Deferred Inflows of Resources 110,136 53,189 Net Position Net investment in capital assets 165,743 158,585 Restricted 9,922 2,157 Unrestricted (561,509) (551,977) Total net position $ (385,844) $ (391,235)
The above analysis focuses on net position. The change in net position of the School District’s governmental activities is discussed below. The School District’s net position was $(385.8) million at June 30, 2019. Net investment in capital assets totaling $165.7 million, compares the original cost, less depreciation of the School District’s capital assets, to long-term debt used to finance the acquisition of those assets. Most of the debt will be repaid from voter-approved property taxes collected as the debt service comes due. Restricted net position is reported separately to show legal constraints from debt covenants and enabling legislation that limit the School District’s ability to use that net position for day-to-day operations. The remaining amount of net position $(561.5) million was unrestricted.
The $(561.5) million in unrestricted net position of governmental activities represents the accumulated results of all past years’ operations and the impact from adoption of GASB Statement No. 68 and 75 (recording the School District’s share of the net pension and OPEB liabilities from the state-managed retirement system). Unrestricted net position, when available, would enable the School District to meet working capital and cash flow requirements, as well as to provide for future uncertainties. The operating results of the General Fund and the change in the net pension/OPEB liabilities will have significant impacts on the change in unrestricted net position (deficit) from year to year. The operating results of the General Fund will have a significant impact on the change in unrestricted net position from year to year.
5 Utica Community Schools Management's Discussion and Analysis (Continued)
The results of this year’s operations for the School District as a whole are reported in the condensed statement of activities below, which shows the changes in net position for the years ending June 30, 2019 and 2018.
Governmental Activities 2019 2018 (in thousands) Revenue Program revenue: Charges for services $ 11,474 $ 11,888 Operating grants 67,433 70,296 General revenue: Taxes 56,386 54,644 State aid not restricted to specific purposes 179,642 179,046 Other 3,201 1,581 Total revenue 318,136 317,455 Expenses Instruction 197,606 198,439 Support services 82,365 77,844 Bookstore activities 600 486 Athletics 2,993 2,979 Food services 7,905 7,648 Community services 224 213 Debt service 4,848 5,037 Depreciation expense (unallocated, excluding direct program charges) 11,749 11,745 Other 4,455 4,552 Total expenses 312,745 308,943 Change in Net Position 5,391 8,512 Net Position - Beginning of year (391,235) (234,947) Cumulative Effect of Change in Accounting -(164,800) Net Position - Beginning of year (391,235) (399,747) Net Position - End of year $(385,844) $ (391,235) As reported in the statement of activities, the cost of all of our governmental activities this year was $312.7 million. Certain activities were partially funded from those who benefited from the programs ($11.5 million) or by other governments and organizations that subsidized certain programs with grants and contributions ($67.4 million). We paid for the remaining “public benefit” portion of our governmental activities with $56.4 million in taxes, $179.6 million in state foundation allowance, and with our other revenue (i.e., interest and general entitlements). The School District experienced an increase in net position of $5.4 million. The positive change in net position was attributable to the per pupil foundation allowance increase and operating expenditure reductions. As discussed above, the net cost shows the financial burden that was placed on the state and the School District’s taxpayers by each of these functions. Since property taxes for operations and unrestricted state aid constitute the vast majority of district operating revenue sources, the Board of Education and administration must annually evaluate the needs of the School District and balance those needs with state-prescribed available unrestricted resources.
6 Utica Community Schools Management's Discussion and Analysis (Continued)
The School District's Fund As we noted earlier, the School District uses funds to help it control and manage money for particular purposes. Looking at funds helps the reader consider whether the School District is being accountable for the resources taxpayers and others provide to it and may provide more insight into the School District’s overall financial health. As the School District completed this year, the governmental funds reported a combined fund balance of $153.6 million, which is an increase of $96.8 million from last year. The primary reasons for the increase was the sale of the first series of the 2018 bond in February 2019. In the General Fund, our principal operating fund, the fund balance increased $6.0 million to $28.6 million. The change is mainly due to an increase in the per pupil foundation allowance, a transfer in from the Enrichment Fund and cost reductions primarily in employee compensation and benefits. Fund balance of our special revenue funds increased from $7.5 million last year to $7.8 million this year as a result of the Enrichment Fund, which includes self-sustaining childcare, preschool and activities and enrichment offerings to youth and adults in the community. The fund balance of our debt service funds increased $4.1 million due to the sale of new bonds and refunding bonds resulting in capitalized interest of $3.9 million. The debt millage rates was reduced to 3.76 mills from 3.85 mills for the 2018 levy. Millage rates are determined annually to ensure that the School District accumulates sufficient resources to pay annual bond issue-related debt service. Debt service fund balances are restricted since they can only be used to pay debt service obligations. Combined, the fund balance of our capital project funds increased $105.7 million. Fund balances increased as the School District issued voter-approved bonds during the current year. These bonds were issued in accordance with state law and will be used to address safety and security, technology and infrastructure improvements. Budgetary Highlights The School District revises its budget throughout the year to reflect changes between the assumptions made during budget development and the actual data as it becomes available. Updates are made for items such as student count, staffing levels and grant awards during the school year. State law requires that the budget be amended to ensure expenditures do not exceed appropriations. The final amendment to the budget was adopted just before year end. A schedule showing the School District’s original and final budget amounts compared with amounts actually paid and received is provided in required supplemental information of these financial statements. The overall impact of budget adjustments during the 2018-2019 school year was an improvement of $5.1 million. Revisions were made to 2018-2019 General Fund revenue budget to recognize an additional $1.3 million primarily due to an increase in federal grant and state categorical funding and transfers from other funds offset in part by a lower than anticipated student count. Budgeted expenditures decreased by $3.8 million based on actual personnel staffing levels, heath care cost trend less than inflationary increases, offset in part by corresponding increases for state and federal grants. There were no significant variances between the final budget and actual amounts.
7 Utica Community Schools Management's Discussion and Analysis (Continued)
Capital Assets and Debt Administration Capital Assets As of June 30, 2019, the School District had $285.5 million and $283.1 million, respectively, invested in a broad range of capital assets, including land, buildings, vehicles, furniture, and equipment. This represents a net increase (including additions, disposals, and depreciation) of approximately $2.4 million from 2018 to 2019. Governmental Activities 2019 2018
Land $ 20,090,056 $ 20,145,576 Construction in progress 4,803,338 3,972,858 Buildings and improvements 414,892,766 402,366,404 Furniture and equipment 24,223,894 24,232,886 Buses and other vehicles 23,317,649 22,000,496 Land improvements 41,721,939 41,721,939 Total capital assets 529,049,642 514,440,159 Less - Accumulated depreciation 243,562,627 231,297,339 Total capital assets - Net of accumulated depreciation $ 285,487,015 $ 283,142,820 This year's additions of $11.6 million included controlled front entrances, athletic fields, technology and cafeteria improvements. We present more detailed information about our capital assets in the notes to the financial statements. Debt At the end of this year, the School District had $205.0 million in bonds outstanding versus $137.6 million in the previous year. The School District’s general obligation bond rating is A- with a positive outlook. The state limits the amount of general obligation debt that schools can issue to 15 percent of the assessed value of all taxable property within the School District’s boundaries or $1.3 billion. If the School District issues “qualified debt” (i.e., debt backed by the State of Michigan) as is the case for Utica Community Schools, such obligations are not subject to this debt limit. Other obligations include accrued vacation pay, sick leave, workers' compensation, and unemployment liabilities. We present more detailed information about our long-term liabilities in the notes to the financial statements. Economic Factors and Next Year's Budgets and Rates Utica Community Schools continues to have good General Fund reserves; the total available fund balance is 10.6 percent of 2019 expenditures. Revenue exceeded expenditures by $6 million in the 2018-2019 school year. The district has enacted many strategies to achieve operating balance, this is the third consecutive year of adding to fund balance. General Fund revenue (including other financing sources) increased $.6 million or .2 percent in 2018-2019 as compared to the 2017-2018 fiscal year. The increase was primarily due to $224 per pupil increase in the foundation allowance, fund transfers partially offset by the loss of one-time revenue from the state’s funding of retirement. Expenditures decreased by $3.3 million or 1.2 percent in 2018-2019 as compared to the prior year. This reduction related to an additional furlough day, health insurance redesign and corresponding reduction to the state retirement flow through. The 2019-2020 year’s budget anticipates $.2 million addition to fund balance. The School District will borrow $8 million in 2019-2020 for cash flow purposes, down from $12 million borrowed in 2018-2019.
8 Utica Community Schools Management's Discussion and Analysis (Continued) The per-student foundation allowance has yet to be set by the State but for budgeting purposes Utica Community Schools used an estimated increase of $250 to $8,380 for 2019-2020 year in alignment with the Senate’s budget recommendation; this represents a 3 percent increase. The foundation allowance is multiplied by the blended student count which is 90 percent of the October count and 10 percent of the February count from the previous fiscal year. The School District projects that it will receive funding for approximately 27,000 students, a loss of .6 percent as compared to the prior year. The student population is projected to stabilize over the next five years.
The foundation allowance is made up of both state source of revenue and local source. To receive the full per-student funding, districts must levy a local non-homestead millage. UCS reauthorized its existing millage in November 2014 for 10 years beginning with the 2015 levy. Since that time, property values have increased at a rate higher than inflation, triggering a millage rollback based on the Headlee Amendment which results in $1.4 million loss of revenue. Approximately 78 percent of total General Fund revenue is from the foundation allowance. Revenue in 2019-2020 is projected to increase 1.5 percent or $4.2 million when compared to the prior year. Revenue is increasing due primarily to the foundation allowance increase. Expenditures, as budgeted, are increasing $4.8 million or 1.7 percent in 2019-2020 as compared to the prior year. Increases are primarily due to the elimination of furlough days and a retirement rate increase. Contracts remain open for the teacher and paraprofessional bargaining groups. Bargaining groups have been budgeted in accordance with contract provisions with limited increases to health care due to cap restrictions. Pressures continue in the cost districts bear for retirement. The retirement rate impacting the majority of employees (Basic/MIP) including the stabilization rate is scheduled to increase from 38.39 percent to 39.91 percent of salaries. The budgeted operating gain is currently $.2 million for 2019-2020. School District’s Vision and Mission
Our Vision
All children have the right to a rigorous, high-quality education which meets their individual needs. UCS will respect, encourage and empower each and every student to acquire the necessary knowledge, skills and attitudes to be successful, contributing members of a diverse community and global society.
Our Mission
We are committed to exemplary teaching and learning in order for our students to be prepared for success in the 21st Century. We will achieve this commitment by engaging the entire community to focus on each child’s achievement, with the expectation that every student will pursue some type of post-high school educational endeavor.
Core Values
Every child can learn and achieve. Parents and guardians are partners in the learning process. Being “smart” can be achieved through persistence, hard work and effective effort. Excellence is expected and celebrated. Data is used to guide our decision-making. All employees will exemplify ethical behavior; exhibit a strong work ethic; and continue to develop their leadership, performance and service skills. Technology supports and enhances instruction, business operations, research and communications. The Board of Education, district educators/staff, parents, community members and business leaders must collaborate and work as a team to enhance educational opportunities for student success.
Utica Community Schools continues to move forward with efforts to improve student achievement at every grade level. UCS is a national leader in technology-based learning and individualized instruction that adapts to students’ unique learning styles. Academic excellence and innovation continues to be the School District’s trademark in preparing
9 Utica Community Schools Management's Discussion and Analysis (Continued) graduates who are college and career ready.
UCS students can choose from a district portfolio filled with award-winning learning options that include advanced placement courses at the School District’s four comprehensive high schools and seven junior high schools, plus specialized programs such as Utica Academy for International Studies; Utica Center for Mathematics, Science and Technology; Utica Center for Science and Industry; and a Montessori-based Elementary school. UCS graduates may now earn a Seal of Global Language on diplomas for demonstrating proficiency in multiple languages.
UCS students in all grades continue to achieve at levels that outpace their county, state, and national peers and our programs, staff, and students are recognized regularly for outstanding achievement. The School District’s graduation rate of 93 percent is more than 13 points higher than the state average. UCS has an average attendance rate of 95 percent, demonstrating our students are ready and committed to their learning.
Utica Community Schools is committed to its goal that every student will become proficient in rigorous core curriculum and thrive in the School District’s K-12 college culture. The School District’s long tradition of leadership in exemplary teaching and learning makes it possible for every graduate to succeed in the global economy.
10 Utica Community Schools Statement of Net Position June 30, 2019
Governmental Activities
Assets Cash and investments (Note 4) $ 38,375,813 Receivables (Note 5) 45,859,643 Inventories 1,088,012 Prepaid expenses and other assets 2,656,287 Restricted assets (Notes 4 and 10) 119,857,156 Capital assets: (Note 7) Assets not subject to depreciation 24,893,394 Assets subject to depreciation - Net 260,593,621 Total assets 493,323,926 Deferred Outflows of Resources Deferred charges on bond refunding (Note 9) 554,970 Deferred pension costs (Note 12) 168,636,759 Deferred OPEB costs (Note 12) 23,531,723 Total deferred outflows of resources 192,723,452 Liabilities Accounts payable 15,680,639 Due to other governmental units 71,598 Accrued liabilities and other 29,169,797 State aid anticipation note (Note 13) 4,000,000 Unearned revenue (Note 6) 3,058,296 Noncurrent liabilities: Due within one year (Note 9) 25,463,347 Due in more than one year (Note 9) 204,853,326 Net pension liability (Note 12) 540,179,541 Net OPEB liability (Note 12) 139,278,841 Total liabilities 961,755,385 Deferred Inflows of Resources Revenue in support of pension contributions made subsequent to the measurement date 19,305,912 Deferred pension cost reductions (Note 12) 52,479,608 Deferred OPEB cost reductions (Note 12) 38,350,879 Total deferred inflows of resources 110,136,399 Net Position Net investment in capital assets 165,742,794 Restricted: Debt service 4,495,147 Capital projects 2,036,008 Food service 3,390,457 Unrestricted (561,508,812)
Total net position $ (385,844,406)
See notes to financial statements. 11 Utica Community Schools Statement of Activities Year Ended June 30, 2019
Governmental Program Revenue Activities Net (Expense) Operating Revenue and Charges for Grants and Changes in Net Expenses Services Contributions Position
Functions/Programs Primary government - Governmental activities: Instruction $ 197,606,013 $ 111,890 $ 42,891,070 $ (154,603,053) Support services 82,364,749 - 18,488,654 (63,876,095) Bookstore activities 600,042 618,526 - 18,484 Athletics 2,993,228 879,135 - (2,114,093) Food services 7,904,545 3,300,507 5,260,049 656,011 Community services 223,922 - 50,037 (173,885) Enrichment 4,455,637 6,563,697 - 2,108,060 Interest 4,798,054 - 742,927 (4,055,127) Debt issuance costs 49,969 - - (49,969) Depreciation expense (unallocated, excluding direct program charges) 11,749,254 - - (11,749,254)
Total primary government $ 312,745,413 $ 11,473,755 $ 67,432,737 (233,838,921)
General revenue: Taxes: Property taxes levied for general purposes 29,300,832 Property taxes levied for debt service 27,085,671 State aid not restricted to specific purposes 179,641,739 Interest and investment earnings 1,766,154 Other 1,434,805
Total general revenue 239,229,201
Change in Net Position 5,390,280 Net Position - Beginning of year (391,234,686)
Net Position - End of year $ (385,844,406)
See notes to financial statements. 12 Utica Community Schools Governmental Funds Balance Sheet June 30, 2019
Total Bond 2018 Nonmajor Governmental General Fund Series I Funds Funds
Assets Cash and investments (Note 4) $ 24,093,976 $ - $ 9,870,472 $ 33,964,448 Receivables (Note 5) 45,452,790 - 406,853 45,859,643 Due from other funds (Note 8) 935,906 - 28,811 964,717 Inventories 923,658 - 164,354 1,088,012 Prepaid expenses and other assets 2,656,287 - - 2,656,287 Restricted assets (Note 10) - 99,435,869 20,421,287 119,857,156
Total assets $ 74,062,617 $ 99,435,869 $ 30,891,777 $ 204,390,263 Liabilities Accounts payable $ 12,052,931 $ 3,379,322 $ 248,386 $ 15,680,639 Due to other governmental units 71,598 - - 71,598 Due to other funds (Note 8) 1,304 393 884,199 885,896 Accrued liabilities and other 26,494,111 - - 26,494,111 State aid anticipation note (Note 13) 4,000,000 - - 4,000,000 Unearned revenue (Note 6) 2,414,886 - 643,410 3,058,296 Total liabilities 45,034,830 3,379,715 1,775,995 50,190,540 Deferred Inflows of Resources - Unavailable revenue (Note 6) 406,745 - 183,243 589,988 Total liabilities and deferred inflows of resources 45,441,575 3,379,715 1,959,238 50,780,528 Fund Balances Nonspendable: Inventory 923,659 - 164,354 1,088,013 Prepaids 2,656,287 - - 2,656,287 Restricted: Debt service - - 6,245,152 6,245,152 Capital projects - 96,056,154 13,558,411 109,614,565 Food service - - 3,288,258 3,288,258 Assigned: Capital projects - - 1,327,184 1,327,184 Bookstore - - 72,194 72,194 Enrichment - - 4,276,986 4,276,986 Unassigned 25,041,096 - - 25,041,096 Total fund balances 28,621,042 96,056,154 28,932,539 153,609,735 Total liabilities, deferred inflows of resources, and fund balances $ 74,062,617 $ 99,435,869 $ 30,891,777 $ 204,390,263
See notes to financial statements. 13 Utica Community Schools Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Position June 30, 2019
Fund Balances Reported in Governmental Funds $ 153,609,735 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and are not reported in the funds: Cost of capital assets 529,049,642 Accumulated depreciation (243,562,627) Net capital assets used in governmental activities 285,487,015 Receivables that are not collected soon after year end are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds 589,988 Deferred inflows and outflows related to bond refundings are not reported in the funds 554,970 Bonds payable and capital lease obligations are not due and payable in the current period and are not reported in the funds (227,877,748) Accrued interest is not due and payable in the current period and is not reported in the funds (1,750,005) Some employee fringe benefits are payable over a long period of years and do not represent a claim on current financial resources; therefore, they are not reported as fund liabilities: Net pension liability and related deferred inflows and outflows (424,022,390) Net OPEB liability and related deferred inflows and outflows (154,097,997) Revenue in support of pension contributions made subsequent to the measurement date is reported as a deferred inflow of resources in the statement of net position and is not reported in the funds (19,305,912) Internal service funds are included as part of governmental activities 967,938 Net Position of Governmental Activities $ (385,844,406)
See notes to financial statements. 14 Utica Community Schools Governmental Funds Statement of Revenue, Expenditures, and Changes in Fund Balances Year Ended June 30, 2019
Total Bond 2018 Governmental General Fund Series I Nonmajor Funds Funds
Revenue Local sources $ 32,249,770 $ 696,504 $ 38,223,780 $ 71,170,054 State sources 224,104,741 - 1,272,040 225,376,781 Federal sources 10,403,301 - 5,712,335 16,115,636 Interdistrict sources 5,955,562 - - 5,955,562 Total revenue 272,713,374 696,504 45,208,155 318,618,033 Expenditures Current: Instruction 188,467,345 - 17,032 188,484,377 Support services 76,507,823 - 115,815 76,623,638 Bookstore activities - - 600,042 600,042 Athletics 2,908,444 - - 2,908,444 Food services - - 7,743,226 7,743,226 Community services 217,893 - - 217,893 Enrichment - - 4,446,882 4,446,882 Debt service: Principal - - 22,240,000 22,240,000 Interest - - 5,677,002 5,677,002 Debt issuance costs - - 49,969 49,969 Capital outlay 957,887 6,044,695 10,457,214 17,459,796 Total expenditures 269,059,392 6,044,695 51,347,182 326,451,269 Excess of Revenue Over (Under) Expenditures 3,653,982 (5,348,191) (6,139,027) (7,833,236) Other Financing Sources (Uses) Face value of debt issued (Note 9) - 90,550,000 4,470,000 95,020,000 Proceeds from sale of capital assets 146,568 - - 146,568 Premium on debt issued (Note 9) - 10,854,345 4,054,950 14,909,295 Transfers in (Note 8) 2,152,119 - - 2,152,119 Payment to bond refunding escrow agent - - (5,475,688) (5,475,688) Transfers out (Note 8) - - (2,152,119) (2,152,119) Total other financing sources 2,298,687 101,404,345 897,143 104,600,175 Net Change in Fund Balances 5,952,669 96,056,154 (5,241,884) 96,766,939 Fund Balances - Beginning of year 22,668,373 - 34,174,423 56,842,796
Fund Balances - End of year $ 28,621,042 $ 96,056,154 $ 28,932,539 $ 153,609,735
See notes to financial statements. 15 Utica Community Schools Governmental Funds Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances to the Statement of Activities Year Ended June 30, 2019
Net Change in Fund Balances Reported in Governmental Funds $ 96,766,939 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures; however, in the statement of activities, these costs are allocated over their estimated useful lives as depreciation: Capitalized capital outlay 16,416,558 Depreciation expense (13,822,652) Net book value of assets disposed of (249,711) Revenue in the statement of activities that does not provide current financial resources is not reported as revenue in the funds until it is available (5,694) Revenue in support of pension contributions made subsequent to the measurement date (373,503) Issuing debt, net of premiums and discounts, provides current financial resources to governmental funds, but increases long-term liabilities in the statement of net position (109,929,295) Repayment of bond principal is an expenditure in the governmental funds, but not in the statement of activities (where it reduces long-term debt); amortization of premium/discounts and inflows/outflows related to bond refundings are not expenses in the governmental funds 29,377,962 Interest expense is recognized in the government-wide statements as it accrues (783,326) Some employee costs (pension, OPEB, and compensated absences) do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds (11,882,060) Internal service funds are included as part of governmental activities (124,938) Change in Net Position of Governmental Activities $ 5,390,280
See notes to financial statements. 16 Utica Community Schools Proprietary Fund - Internal Service Fund Statement of Net Position June 30, 2019 Assets Current assets: Cash and investments (Note 4) $ 4,411,365 Due from other funds (Note 8) 3,451 Total assets 4,414,816 Liabilities Current liabilities: Due to other funds (Note 8) 82,272 Accrued liabilities and other: FICA 90,305 Unemployment 835,376 Compensated absences 456,053 Workers' compensation 327,000 Total current liabilities 1,791,006 Noncurrent liabilities: Compensated absences 623,158 Workers' compensation 1,032,714 Total noncurrent liabilities 1,655,872 Total liabilities 3,446,878
Net Position - Unrestricted $ 967,938
See notes to financial statements. 17 Utica Community Schools Proprietary Fund - Internal Service Fund Statement of Revenue, Expenses, and Changes in Net Position Year Ended June 30, 2019 Operating Revenue Workers' compensation $ 413,951 Sick leave 25,885 Vacation 17,548 Total operating revenue 457,384 Operating Expenses Workers' compensation 413,951 Sick leave 24,046 Vacation 16,301 FICA 3,087 Experience adjustment 214,882 Total operating expenses 672,267 Operating Loss (214,883) Nonoperating Revenue - Interest income 89,945 Change in Net Position (124,938) Net Position - Beginning of year 1,092,876
Net Position - End of year $ 967,938
See notes to financial statements. 18 Utica Community Schools Proprietary Fund - Internal Service Fund Statement of Cash Flows Year Ended June 30, 2019 Cash Flows from Operating Activities Receipts from other funds $ 588,829 Payments for services (508,550) Net cash provided by operating activities 80,279 Cash Flows Provided by Investing Activities - Interest received on investments 89,945 Net Increase in Cash and Investments 170,224 Cash and Investments - Beginning of year 4,241,141 Cash and Investments - End of year $ 4,411,365
Reconciliation of Operating Loss to Net Cash from Operating Activities Operating loss $ (214,883) Adjustments to reconcile operating income to net cash from operating activities - Changes in assets and liabilities: Due to and from other funds 213,717 Accrued and other liabilities 81,445
Net cash provided by operating activities $ 80,279
See notes to financial statements. 19 Utica Community Schools Fiduciary Fund Statement of Assets and Liabilities June 30, 2019
Agency Fund
Assets Cash and investments $ 3,042,670 Receivables 10,828 Total assets $ 3,053,498
Liabilities Accounts payable $ 119,517 Due to student activities 2,933,981
Total liabilities $ 3,053,498
See notes to financial statements. 20 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 1 - Nature of Business Utica Community Schools (the "School District") is a school district in the state of Michigan that provides educational services to students. Note 2 - Significant Accounting Policies Accounting and Reporting Principles The School District follows accounting principles generally accepted in the United States of America (GAAP) applicable to governmental units. Accounting and financial reporting pronouncements are promulgated by the Governmental Accounting Standards Board. The following is a summary of the significant accounting policies used by the School District: Reporting Entity The School District is governed by an elected seven-member Board of Education. The accompanying financial statements have been prepared in accordance with criteria established by the Governmental Accounting Standards Board for determining the various governmental organizations to be included in the reporting entity. These criteria include significant operational financial relationships that determine which of the governmental organizations are a part of the School District's reporting entity and which organizations are legally separate component units of the School District. Based on the application of the criteria, the School District does not contain any component units. Report Presentation Governmental accounting principles require that financial reports include two different perspectives, the government-wide perspective and the fund-based perspective. The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units, as applicable. The government- wide financial statements are presented on the economic resources measurement focus and the full accrual basis of accounting. 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 statements also present a schedule reconciling these amounts to the modified accrual-based presentation found in the fund-based statements. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenue. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenue includes: (1) charges to customers or applicants for goods, services, or privileges provided; (2) operating grants and contributions; and (3) capital grants and contributions, including special assessments. Taxes, unrestricted intergovernmental receipts, and other items not properly included among program revenue are reported instead as general revenue. As a general rule, the effect of interfund activity has been removed from the government-wide financial statements. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds, if any, are reported as separate columns in the fund financial statements.
21 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 2 - Significant Accounting Policies (Continued) Fund Accounting The School District accounts for its various activities in several different funds in order to demonstrate accountability for how it spends certain resources; separate funds allow the School District to show the particular expenditures for which specific revenue is used. The various funds are aggregated into three broad fund types: Governmental Funds Governmental funds include all activities that provide general governmental services that are not business-type activities. Governmental funds can include the General Fund, special revenue funds, debt service funds, capital project funds, and permanent funds. The School District reports the following funds as "major" governmental funds: The General Fund is the primary operating fund because it accounts for all financial resources used to provide government services other than those specifically assigned to another fund. The Bond 2018 Series I is used to record bond revenue from bond issuance and disbursements of invoices specifically designed for remodeling or additions at current school buildings, making safety and security improvements, acquiring and installing technology equipment and infrastructure, and acquiring school buses. The fund operates until the purpose for which it was created is accomplished. Additionally, the School District reports the following nonmajor governmental fund types: Special revenue funds are used to account for the proceeds of specific revenue sources that are restricted to expenditure for specified purposes. The School District's special revenue funds include the Enrichment, Food Services, and Bookstore funds. The Enrichment Fund accounts for activities offered to students and the community to enhance education; the Food Services Fund accounts for the activities associated with providing meals to students; and the Bookstore Fund accounts for activities related to the student stores located at each high school building. Any operating deficit generated by these activities is the responsibility of the General Fund. Capital project funds are used to record bond proceeds or other revenue and the disbursement of invoices specifically designated for acquiring new school sites, buildings, and equipment; technology upgrades; and remodeling and repairs. The funds operate until the purpose for which they were created is accomplished. Debt service funds are used to record tax, interest, and other revenue for payment of interest, principal, and other expenditures on long-term debt. The internal service fund is used to finance services provided to other funds on a cost-reimbursement basis. The internal service fund maintained by the School District is for self-insured workers' compensation, unemployment, sick leave, and accrued vacation. It is funded through charges primarily to the General Fund in amounts equal to the normal estimated workers' compensation premium and compensated absences for the fiscal year. There are eight bargaining units covering substantially all employees of the School District, each with unique vesting and payout provisions. Compensated absences are limited to amounts stipulated in each bargaining unit contract. Fiduciary Funds Fiduciary funds include amounts held in a fiduciary capacity for others. These amounts are not used to operate the School District’s programs. The School District maintains a student activity agency fund to record the transactions of student groups for school and school-related purposes. The funds are segregated and are held for the students.
22 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 2 - Significant Accounting Policies (Continued) Interfund Activity During the course of operations, the School District has activity between funds for various purposes. Any residual balances outstanding at year end are reported as due from/to other funds and advances to/from other funds. 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. Furthermore, 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. Basis of Accounting The governmental funds use the current financial resources measurement focus and the modified accrual basis of accounting. This basis of accounting is intended to better demonstrate accountability for how the School District has spent its resources. Expenditures are reported when the goods are received or the services are rendered. Capital outlays are reported as expenditures (rather than as capital assets) because they reduce the ability to spend resources in the future; conversely, employee benefit costs that will be funded in the future (such as pension and retiree healthcare-related costs or sick and vacation pay) are not counted until they come due for payment. In addition, debt service expenditures, claims, and judgments are recorded only when payment is due. Revenue is not recognized until it is collected, or collected soon enough after the end of the year that it is available to pay for obligations outstanding at the end of the year. For this purpose, the School District considers amounts collected within 60 days of year end to be available for recognition. Revenue not meeting this definition is classified as a deferred inflow of resources. Proprietary funds and fiduciary funds, as applicable, use the economic resources measurement focus and the full accrual basis of accounting. Revenue is recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Specific Balances and Transactions Cash and Investments Cash and cash equivalents include cash on hand, demand deposits, and short-term investments with a maturity of three months or less when acquired. Investments are stated at fair value. Inventories and Prepaid Items Inventories are valued at cost, on a first-in, first-out basis. Inventories are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial statements, when applicable. The School District uses the consumption method to report prepaid costs in governmental funds.
23 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 2 - Significant Accounting Policies (Continued) Restricted Assets The following amounts are reported as restricted assets: Unspent bond proceeds and related interest of the bonded capital projects funds required to be set aside for construction or other allowable bond purchases Unspent property taxes levied held in the debt service fund required to be set aside for future bond principal and interest payments Capital Assets Capital assets, which include land, buildings, equipment, and vehicles, are reported in the applicable governmental activities column in the government-wide financial statements. Capital assets are defined by the School District as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated acquisition value at the date of donation. Costs of improvements to sites or buildings in excess of $20,000 and that extend the useful life of the capital asset at least five years are capitalized. Costs of normal repair and maintenance that do not add to the value or materially extend asset life are not capitalized. The School District does not have infrastructure-type assets. Buildings, equipment, and vehicles are depreciated using the straight-line method over the following useful lives: Depreciable Life - Years
Buildings and improvements 20 to 50 years Furniture and equipment 5 to 10 years Buses and other vehicles 5 to 10 years Long-term Obligations In the government-wide financial statements and the proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund-type statement of net position. Bond premiums and discounts are deferred and amortized over the lives of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed at the time they are incurred. In the fund financial statements, governmental fund types recognize bond issuances and premiums as “other financing sources” and bond discounts as "other financing uses." The General Fund and debt service funds are generally used to liquidate governmental long-term debt. 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 represents a consumption of net position that applies to future periods and will not be recognized as an outflow of resources (expense/expenditure) until then. The School District reports deferred outflows related to deferred charges on refundings and deferred pension and OPEB plan costs. 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 represents an acquisition of net position that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time.
24 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 2 - Significant Accounting Policies (Continued) The School District reports deferred inflows related to revenue in support of pension contributions made subsequent to the measurement date, and deferred pension and OPEB plan cost reductions. Net Position Net position of the School District is classified in three components. Net investment in capital assets consists of capital assets net of accumulated depreciation and is reduced by the current balances of any outstanding borrowings used to finance the purchase or construction of those assets. The restricted component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Unrestricted net position is the remaining net position that does not meet the definition of invested in capital or restricted. Net Position Flow Assumption The School District will sometimes fund outlays for a particular purpose from both restricted and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide and proprietary fund financial statements (as applicable), a flow assumption must be made about the order in which the resources are considered to be applied. It is the School District’s policy to consider restricted net position to have been depleted before unrestricted net position is applied. Fund Balance Flow Assumptions The School District will sometimes 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. It is the School District’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Furthermore, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first followed by assigned fund balance. Unassigned fund balance is applied last. Fund Balance Policies 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 nonspendable fund balance component represents amounts that are not in spendable form or are legally or contractually required to be maintained intact. Restricted fund balance represents amounts that are legally restricted by outside parties, constitutional provisions, or enabling legislation for use for a specific purpose. The School District itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the School District’s highest level of decision-making authority. The Board of Education is the highest level of decision-making authority for the School District that can, by passing a resolution prior to the end of the fiscal year, commit fund balance. Once passed, the limitation imposed by the resolution remains in place until a similar action is taken (the passing of another resolution) to remove or revise the limitation.
25 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 2 - Significant Accounting Policies (Continued) 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 School District has, by resolution, authorized the Board of Education or superintendent to assign fund balance. The Board of Education may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. 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 revise a commitment. Property Tax Revenue Properties are assessed as of December 31, and the related property taxes are levied and become a lien on July 1 for approximately 50 percent of the taxes that are due on September 14 and December 1 for the remainder of the property taxes that are due on February 14. The final collection date is February 28, after which they are added to the county tax rolls. The School District considers all receivables to be fully collectible; accordingly, no allowance for uncollectible amounts is recorded. Grants and Contributions The School District receives federal, state, and local grants, as well as contributions from individuals and private organizations. Revenue from grants and contributions (including contributions of capital assets) is recognized when all eligibility requirements, including time requirements, are met. Grants and contributions may be restricted for either specific operating purposes or for capital purposes. Pension and Other Postemployment Benefit (OPEB) Plans For the purpose of measuring the net pension and net OPEB liabilities, deferred outflows of resources and deferred inflows of resources related to each plan, and pension and OPEB expense, information about the fiduciary net position of the Michigan Public School Employees' Retirement System (MPSERS) and additions to/deductions from the MPSERS fiduciary net position have been determined on the same basis as they are reported by MPSERS. MPSERS uses the economic resources measurement focus and the full accrual basis of accounting. Contribution revenue is recorded as contributions are due, pursuant to legal requirements. Benefit payments (including refunds of employee contributions) are recognized as expenses when due and payable in accordance with the plan benefit terms. Related plan investments are reported at fair value. Compensated Absences The liability for compensated absences reported in the government-wide and propriety fund statements consists of unpaid, accumulated annual balances for employee excess sick leave days and accrued vacation. The liability has been calculated using the vesting method, in which leave amounts for both employees who are currently eligible to receive termination payments at normal retirement age and other employees who are expected to become eligible in the future to receive such payments upon normal retirement are included. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.
26 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 2 - Significant Accounting Policies (Continued) Upcoming Accounting Pronouncements In January 2017, the GASB issued Statement No. 84, Fiduciary Activities. This statement establishes criteria for identifying fiduciary activities of all state and local governments. An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements. The School District believes the impact of this standard will be the creation of a special revenue fund for the fiduciary activities. The provisions of this statement are effective for the School District's financial statements for the year ending June 30, 2020. In June 2017, the GASB issued Statement No. 87, Leases, which improves accounting and financial reporting for leases by governments. 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. The School District does not believe this standard will have a major impact on the financial statements when adopted. The provisions of this statement are effective for the School District's financial statements for the year ending June 30, 2021. Note 3 - Stewardship, Compliance, and Accountability Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principles and state law for the General Fund and all special revenue funds. All annual appropriations lapse at fiscal year end. The budget document presents information by fund and function. The legal level of budgetary control adopted by the governing body (i.e., the level at which expenditures may not legally exceed appropriations) is the function level. State law requires the School District to have its budget in place by July 1. Expenditures in excess of amounts budgeted are a violation of Michigan law. State law permits districts to amend their budgets during the year. During the year, the budget was amended in a legally permissible manner. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders or contracts) outstanding at year end are reported as restrictions, commitments, or assignments of fund balances and do not constitute expenditures or liabilities because the goods or services have not been received as of year end; the commitments will be reappropriated and honored during the subsequent year. The amount of encumbrances outstanding at year end was $213,272. Excess of Expenditures Over Appropriations in Budgeted Funds The School District did not have significant expenditure budget variances. Capital Projects Fund Compliance The capital project funds include capital project activities funded with bonds issued after May 1, 1994, except for the Building and Site Fund. For these capital projects, the School District has complied with the applicable provisions of §1351a of the State of Michigan’s School Code. Beginning with the year of bond issuance, the School District has reported the annual construction activity in the Bond 2009 Series VI capital project fund. The project for which the bonds were issued was considered complete on August 12, 2019. The cumulative expenditures recognized for the construction period were $19,982,485, of which $203,120 was incurred from July 1, 2019 to August 12, 2019.
27 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 3 - Stewardship, Compliance, and Accountability (Continued) The capital project funds Bond 2009 Series V, Bond 2009 Series IV, Bond 2009 Series III, and Bond 2009 Series I include capital project activities funded with bonds issued after May 1, 1994. For these capital projects, the projects for which the bonds were issued were considered complete during a prior period, and the School District has completed the required reporting to the Michigan Department of Treasury. Note 4 - Deposits and Investments State statutes and the School District's investment policy authorize the School District to make deposits in the accounts of federally insured banks, credit unions, and savings and loan associations that have offices in Michigan. The School District is allowed to invest in U.S. Treasury or agency obligations, U.S. government repurchase agreements, bankers' acceptances, certificates of deposit, commercial paper rated prime at the time of purchase that matures not more than 270 days after the date of purchase, mutual funds, and investment pools that are composed of authorized investment vehicles. The School District’s deposits are in accordance with statutory authority. The School District has designated 10 banks and credit unions for the deposit of its funds. There are no limitations or restrictions on participant withdrawals for the investment pools that are recorded at amortized cost, except for a one-day minimum investment period on MILAF cash management funds and a 14-day redemption limitation on MILAF MAX Class funds. The School District's cash and investments are subject to several types of risk, which are examined in more detail below: Custodial Credit Risk of Bank Deposits Custodial credit risk is the risk that, in the event of a bank failure, the School District's deposits may not be returned to it. The School District's investment policy and corresponding rules and regulations require that financial institutions be evaluated and only those with an acceptable risk level be used for deposits. At year end, the School District had $20,331,778 of bank deposits (certificates of deposit and checking and savings accounts) that were uninsured and uncollateralized. The School District believes that, due to the dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all deposits. As a result, the School District evaluates each financial institution with which it deposits funds and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level are used as depositories. Custodial Credit Risk of Investments Custodial credit risk is the risk that, in the event of the failure of the counterparty, the School District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The School District's investment policy and corresponding rules and regulations for custodial credit risk state that custodial credit risk will be minimized by limiting investments to the types of securities allowed by state law and by prequalifying the financial institutions, brokers/dealers, intermediaries, and advisors with which the School District will do business using the criteria established in the investment policy and corresponding rules and regulations. At June 30, 2019, the School District does not hold any investment securities that were unregistered. Interest Rate Risk Interest rate risk is the risk that the value of investments will decrease as a result of a rise in interest rates. The School District's investment policy does not restrict investment maturities other than commercial paper, which can only be purchased with a 270-day maturity.
28 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 4 - Deposits and Investments (Continued) Credit Risk State law limits investments in commercial paper to the top two ratings issued by nationally recognized statistical rating organizations. The School District's investment policy and corresponding rules and regulations do not further limit its investment choices. As of year end, the credit quality ratings of debt securities (other than the U.S. government) are as follows: Rating Investment Fair Value Rating Organization
Bank investment pool $ 142,852,863 AAA Moody's Concentration of Credit Risk The School District places no limit on the amount it may invest in any one issuer. The School District's policy and corresponding rules and regulations minimize concentration of credit risk by requiring diversification of the investment portfolio so that the impact of potential losses from any one type of security or issuer will be minimized. Foreign Currency Risk Foreign currency risk is the risk that an investment denominated in the currency of a foreign country could reduce its U.S. dollar value as a result of changes in foreign currency exchange rates. State law and the School District's investment policy prohibit investments in foreign currency. Note 5 - Receivables Receivables as of June 30, 2019 for the School District's individual major funds and the nonmajor, internal service, and fiduciary funds in the aggregate are as follows: Bond 2018 General Fund Series I Nonmajor Funds Total
Receivables: Property taxes receivable $ 406,745 $ - $ 183,243 $ 589,988 Other receivables 690,980 - 4,031 695,011 Due from other governments 44,355,065 - 219,579 44,574,644
Net receivables $ 45,452,790 $ - $ 406,853 $ 45,859,643
Amounts due from other governmental units include approximately $40,282,000 from the State of Michigan for state aid payments, as well as approximately $3,719,000 related to reimbursement for expenditures of federal awards.
29 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 6 - Unavailable/Unearned Revenue Governmental funds report unavailable revenue in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. Governmental funds also report unearned revenue recognition in connection with resources that have been received but not yet earned. At June 30, 2019, the various components of unearned and unavailable revenue were as follows: Governmental Funds
Deferred Inflow - Liability - Unavailable Unearned
Delinquent property taxes $ 589,988 $ - Tuition/fees not yet earned and grant/categorical aid payment received prior to meeting all eligibility requirements - 3,058,296
Total $ 589,988 $ 3,058,296
Note 7 - Capital Assets Capital asset activity of the School District's governmental activities was as follows: Balance Disposals and Balance July 1, 2018 Reclassifications Additions Adjustments June 30, 2019
Capital assets not being depreciated: Land $ 20,145,576 $ - $ - $ (55,520) $ 20,090,056 Construction in progress 3,972,858 (3,972,858) 4,808,876 (5,538) 4,803,338
Subtotal 24,118,434 (3,972,858) 4,808,876 (61,058) 24,893,394 Capital assets being depreciated: Buildings and improvements 402,366,404 4,094,227 8,457,785 (25,650) 414,892,766 Furniture and equipment 24,232,886 (121,369) 1,832,744 (1,720,367) 24,223,894 Buses and other vehicles 22,000,496 - 1,317,153 - 23,317,649 Land improvements 41,721,939 - - - 41,721,939
Subtotal 490,321,725 3,972,858 11,607,682 (1,746,017) 504,156,248 Accumulated depreciation: Buildings and improvements 168,715,418 - 9,277,904 - 177,993,322 Furniture and equipment 17,133,555 - 1,959,245 (1,557,364) 17,535,436 Buses and other vehicles 15,937,304 - 1,067,410 - 17,004,714 Land improvements 29,511,062 - 1,518,093 - 31,029,155
Subtotal 231,297,339 - 13,822,652 (1,557,364) 243,562,627
Net capital assets being depreciated 259,024,386 3,972,858 (2,214,970) (188,653) 260,593,621
Net capital assets $ 283,142,820 $ - $ 2,593,906 $ (249,711) $ 285,487,015
Depreciation expense was charged to programs of the primary government as follows:
Governmental activities: Support services $ 2,073,398 Unallocated 11,749,254
Total governmental activities $ 13,822,652
30 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 7 - Capital Assets (Continued) Depreciation expense was not allocated further, as the School District considers its assets to impact multiple activities, and additional allocation is impractical. Construction Commitments For each bond issue and project listed below, the School District's cumulative expenditures and remaining commitments with contractors as of June 30, 2019 are as follows: Cumulative Expenditures through Commitments at June 30, 2019 June 30, 2019
Bond 2018 Series I $ 6,044,693 $ 13,370,237 Bond 2009 Series VIII 2,717,393 2,180,235 Bond 2009 Series VII 20,412,931 1,219,822 Bond 2009 Series VI 19,779,365 203,120 Bond 2009 Series V 10,522,463 528,466
Total $ 59,476,845 $ 17,501,880
Note 8 - Interfund Receivables, Payables, and Transfers The composition of interfund balances is as follows: Fund Due From Bond 2018 Internal Service Fund Due To General Fund Series I Nonmajor Funds Fund Total
General Fund $ - $ 393 $ 878,204 $ 57,309 $ 935,906 Nonmajor funds - - 3,848 24,963 28,811 Internal service fund 1,304 - 2,147 - 3,451
Total $ 1,304 $ 393 $ 884,199 $ 82,272 $ 968,168
Outstanding balances between funds are the result of the time lag between the dates that transactions are recorded in the accounting system and payments between funds are made. All interfund balances are expected to be repaid within one year. Interfund balances are routine and temporary cash flow assistance from the General Fund and are also amounts owed to student stores from various student groups. All amounts are expected to be repaid within one year. During the year, the Food Services Fund transferred funds to the General Fund as a reimbursement of overhead costs. Additionally, the Enrichment and Bookstore funds transferred funds to the General Fund as the resources were no longer committed by the School District for use in those funds.
31 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 9 - Long-term Debt Long-term debt activity for the year ended June 30, 2019 can be summarized as follows: Beginning Due within Balance Additions Reductions Ending Balance One Year
Bonds payable: General obligations $ 137,585,000 $ 95,020,000 $ (27,615,000) $ 204,990,000 $ 22,140,000 Unamortized bond premiums 9,852,409 14,909,295 (1,873,956) 22,887,748 2,540,294
Total bonds payable 147,437,409 109,929,295 (29,488,956) 227,877,748 24,680,294
Self-insured liabilities 1,180,755 319,000 (140,041) 1,359,714 327,000 Compensated absences 1,157,875 40,347 (119,011) 1,079,211 456,053
Total governmental activities long-term debt $ 149,776,039 $ 110,288,642 $ (29,748,008) $ 230,316,673 $ 25,463,347
The School District had deferred outflows of $554,970 related to deferred charges on bond refundings at June 30, 2019. General Obligation Bonds and Contracts The School District issues general obligation bonds to provide for the acquisition and construction of major capital facilities. General obligations have been issued for governmental activities. General obligation bonds are direct obligations and pledge the full faith and credit of the School District. The School District’s bonds are all qualified bonds that are fully guaranteed by the State of Michigan. The primary source of any required repayment is from the School District’s property tax levy; however, the State of Michigan may withhold the School District’s state aid funding in order to recover amounts it has paid on behalf of the School District. General obligations outstanding at June 30, 2019 are as follows:
Remaining Annual Interest Rate(s) Purpose Installments (Percent) Maturing May 1 Outstanding
$95,020,000 Bond Issue 2018 Series I Building $1,450,000 - and Site and Refunding Bonds $7,500,000 4.00 - 5.00 2034 $ 95,020,000 $18,765,000 Bond Issue 2009 Series VIII Building $320,000 - and Site and Refunding Bonds $4,220,000 3.50 - 4.00 2032 18,620,000 $25,375,000 Bond Issue 2009 Series VII Building $770,000 - and Site and Refunding Bonds $2,560,000 2.00 - 5.00 2031 23,915,000 $25,105,000 Bond Issue 2009 Series VI Building $1,425,000 - and Site and Refunding Bonds $2,240,000 3.00 - 5.00 2030 21,180,000 $9,115,000 Bond Issue 2009 Series V Building $525,000 - and Site Bonds $950,000 4.00 2029 8,575,000 $30,280,000 Bond Issue 2009 Series IV Building $5,035,000 - and Site and Refunding Bonds $6,895,000 3.00 - 4.00 2021 11,930,000 $53,035,000 Bond Issue 2009 Series III Building $1,000,000 - and Site and Refunding bonds $10,500,000 3.25 - 4.00 2021 11,500,000 $3,550,000 - $14,250,000 Bond Issue 2009 Series II $3,575,000 5.75 - 6.05 2024 14,250,000
Total governmental activities $ 204,990,000
Other Long-term Liabilities Compensated absences attributable to the governmental activities will be liquidated primarily by the General Fund. The net pension liability and the net OPEB liability will be liquidated from the funds from which the individual employee’s salaries are paid, generally the General Fund and the Food Services Fund.
32 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 9 - Long-term Debt (Continued) Debt Service Requirements to Maturity Annual debt service requirements to maturity for the above bonds and note obligations are as follows: Governmental Activities Maximum Years Ending June 30 Principal Interest Interest Subsidy Total
2020 $ 22,140,000 $ 9,883,342 $ (744,514) $ 31,278,828 2021 19,960,000 8,424,450 (744,514) 27,639,936 2022 21,135,000 7,561,474 (559,039) 28,137,435 2023 18,415,000 6,648,312 (373,563) 24,689,749 2024 18,120,000 5,856,250 (186,782) 23,789,468 2025-2029 59,525,000 19,906,688 - 79,431,688 2030-2034 45,695,000 6,167,850 - 51,862,850
Total $ 204,990,000 $ 64,448,366 $ (2,608,412) $ 266,829,954
Current Bond Refunding During the year, the School District issued $95,020,000 in general obligation (revenue) bonds with an average effective interest rate of 2.85 percent. A portion of the proceeds of these bonds was used to advance refund $1,100,000 of outstanding 2008 Series V bonds and $4,275,000 2009 Series I bonds with an average interest rate of 4.0 and 4.49 percent, respectively. The net proceeds of $5,475,688 (after payment of $584,107 in underwriting fees, insurance, and other issuance costs) were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the original bonds. As a result, the bonds are considered to be defeased, and the liability for the bonds has been removed from long-term debt. The refunding reduced total debt service payments over the next three years by approximately $210,000, which represents an economic gain of approximately $183,000. At June 30, 2019, $5,375,000 of bonds outstanding are considered defeased. Note 10 - Restricted Assets At June 30, 2019, restricted assets are composed of the following: Governmental Activities
Unspent bond proceeds and related interest $ 113,602,178 Property tax collections for repayment of bonded indebtedness 6,254,978
Total $ 119,857,156
Note 11 - Risk Management The School District is exposed to various risks of loss related to property loss, torts, errors and omissions, and employee injuries (workers' compensation), as well as medical benefits provided to certain employees. The School District is self-insured for workers' compensation claims. The School District has purchased commercial insurance for health claims for employees. The School District participates in the Metropolitan Association for Improved School Legislation (MAISL) risk pool for claims relating to property loss, torts, and errors and omissions. Settled claims relating to the commercial insurance have not exceeded the amount of insurance coverage in any of the past three fiscal years. The shared-risk pool program in which the School District participates operates as a common risk-sharing management program for school districts in Michigan; member premiums are used to purchase commercial excess insurance coverage and to pay member claims in excess of deductible amounts.
33 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 11 - Risk Management (Continued) The School District estimates the liability for workers' compensation claims that have been incurred through the end of the fiscal year, including both those claims that have been reported, as well as those that have not yet been reported. Changes in estimates are the result of adjusting the estimated liability based on an actuarial valuation triennially. These estimates are recorded in the internal service fund. Changes in the estimated liability for the past two fiscal years were as follows: 2019 2018
Estimated liability - Beginning of year $ 1,180,755 $ 1,673,026 Estimated claims incurred, including changes in estimates 319,000 403,000 Claim payments (140,041) (170,456) Actuarial adjustments - (724,815)
Estimated liability - End of year $ 1,359,714 $ 1,180,755
Note 12 - Michigan Public School Employees' Retirement System Plan Description The School District participates in the Michigan Public School Employees' Retirement System (MPSERS or the "System"), a statewide, cost-sharing, multiple-employer defined benefit public employee retirement system governed by the State of Michigan that covers substantially all employees of the School District. Certain school district employees also receive defined contribution retirement and healthcare benefits through the System. The System provides retirement, survivor, and disability benefits to plan members and their beneficiaries. The System also provides postemployment healthcare benefits to retirees and beneficiaries who elect to receive those benefits. The System is administered by the Office of Retirement Services (ORS). The Michigan Public School Employees' Retirement System issues a publicly available financial report that includes financial statements and required supplemental information for the pension and postemployment healthcare plans. That report is available on the web at http://www.michigan.gov/orsschools or by writing to the Office of Retirement System (ORS) at 7150 Harris Drive, P.O. Box 30171, Lansing, MI 48909. Benefits Provided Benefit provisions of the defined benefit (DB) pension plan and the postemployment healthcare plan are established by state statute, which may be amended. Public Act 300 of 1980, as amended, establishes eligibility and benefit provisions for the defined benefit pension plan and the postemployment healthcare plan. Depending on the plan option selected, member retirement benefits are calculated as final average compensation times years of services times a pension factor ranging from 1.25 to 1.50 percent. The requirements to retire range from attaining the age of 46 to 60 with years of service ranging from 5 to 30 years, depending on when the employee became a member. Early retirement is computed in the same manner as a regular pension, but is permanently reduced 0.50 percent for each full and partial month between the pension effective date and the date the member will attain age 60. There is no mandatory retirement age. Depending on the member’s date of hire, MPSERS offers the option of participating in the defined contribution (DC) plan that provides a 50 percent employer match (up to 3 percent of salary) on employee contributions.
34 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 12 - Michigan Public School Employees' Retirement System (Continued) Members are eligible for nonduty disability benefits after 10 years of service and for duty-related disability benefits upon hire. Disability retirement benefits are determined in the same manner as retirement benefits, but are payable immediately without an actuarial reduction. The disability benefits plus authorized outside earnings are limited to 100 percent of the participant's final average compensation, with an increase of 2 percent each year thereafter. Benefits may transfer to a beneficiary upon death and are determined in the same manner as retirement benefits, but with an actuarial reduction. Benefit terms provide for annual cost of living adjustments to each employee's retirement allowance subsequent to the employee's retirement date. The annual adjustment, if applicable, is 3 percent. Some members who do not receive an annual increase are eligible to receive a supplemental payment in those years when investment earnings exceed actuarial assumptions. MPSERS provides medical, prescription drug, dental, and vision coverage for retirees and beneficiaries. A subsidized portion of the premium is paid by MPSERS, with the balance deducted from the monthly pension of each retiree healthcare recipient. Depending on the member’s date of hire, this subsidized portion ranges from 80 percent to the maximum allowed by the statute. Contributions Public Act 300 of 1980, as amended, required the School District to contribute amounts necessary to finance the coverage of pension benefits of active and retired members. Contribution provisions are specified by state statute and may be amended only by action of the state Legislature. Under these provisions, each school district's contribution is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance a portion of the unfunded accrued liability. Under the OPEB plan, retirees electing this coverage contribute an amount equivalent to the monthly cost for Part B Medicare and 10 percent, or 20 percent for those not Medicare eligible, of the monthly premium amount for the health, dental, and vision coverage at the time of receiving the benefits. The MPSERS board of trustees annually sets the employer contribution rate to fund the benefits. Participating employers are required to contribute at that rate. Under Public Act 300 of 2012, members were given the choice between continuing the 3 percent contribution to the retiree health care and keeping the premium subsidy benefit described above, or choosing not to pay the 3 percent contribution and, instead, opting out of the subsidy benefit and becoming a participant in the Personal Healthcare Fund (PHF), a portable tax-deferred fund that can be used to pay healthcare expenses in retirement. Participants in the PHF are automatically enrolled in a 2 percent employee contribution into their 457 account as of their transition date, earning them a 2 percent employer match into a 401(k) account. Members who selected this option stop paying the 3 percent contribution to the retiree health care as of the day before their transition date, and their prior contributions were deposited into their 401(k) account. The School District's contributions are determined based on employee elections. There are multiple different pension and healthcare benefit options included in the plan available to employees based on date of hire and the elections available at that time. Contribution rates are adjusted annually by the ORS. The range of rates is as follows: Pension OPEB
October 1, 2017 - January 31, 2018 13.54% - 17.89% 7.42% - 7.67% February 1, 2018 - September 30, 2018 13.54% - 19.74% 7.42% - 7.67% October 1, 2018 - September 30, 2019 13.39% - 19.59% 7.57% - 7.93%
35 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 12 - Michigan Public School Employees' Retirement System (Continued) Depending on the plan selected, member pension contributions range from 0 percent up to 7.0 percent of gross wages. For certain plan members, a 4 percent employer contribution to the defined contribution pension plan is required. In addition, for certain plan members, a 3 percent employer match is provided to the defined contribution pension plan. The School District's required and actual pension contributions to the plan for the year ended June 30, 2019 were $46,341,688, which include the School District's contributions required for those members with a defined contribution benefit. The School District's required and actual pension contributions include an allocation of $19,305,912 in revenue received from the State of Michigan and remitted to the System to fund the MPSERS unfunded actuarial accrued liability (UAAL) stabilization rate for the year ended June 30, 2019. The School District's required and actual OPEB contributions to the plan for the year ended June 30, 2019 were $11,939,298, which include the School District's contributions required for those members with a defined contribution benefit. Net Pension Liability At June 30, 2019, the School District reported a liability of $540,179,541 for its proportionate share of the net pension liability. The net pension liability was measured as of September 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of September 30, 2017, which used updated procedures to roll forward the estimated liability to September 30, 2018. The School District's proportion of the net pension liability was based on a projection of its long- term share of contributions to the pension plan relative to the projected contributions of all participating reporting units, actuarially determined. At September 30, 2018 and 2017, the School District's proportion was 1.79 and 1.84 percent, respectively, representing a change of (2.40) percent. Net OPEB Liability At June 30, 2019, the School District reported a liability of $139,278,841 for its proportionate share of the net OPEB liability. The net OPEB liability for fiscal year 2019 was measured as of September 30, 2018, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of September 30, 2017, which used updated procedures to roll forward the estimated liability to September 30, 2018. The School District’s proportion of the net OPEB liability was based on a projection of its long-term share of contributions to the OPEB plan relative to the projected contributions of all participating reporting units, actuarially determined. At September 30, 2018 and 2017, the School District’s proportion was 1.75 and 1.84 percent, respectively, representing a change of (4.66) percent.
36 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 12 - Michigan Public School Employees' Retirement System (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For 2019, the School District recognized pension expense of $66,017,339, inclusive of payments to fund the MPSERS UAAL stabilization rate. At June 30, 2019, the School 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 $ 2,506,534 $ (3,925,391) Changes in assumptions 125,105,137 - Net difference between projected and actual earnings on pension plan investments - (36,934,549) Changes in proportion and differences between the School District's contributions and proportionate share of contributions 1,642,465 (11,619,668) The School District's contributions to the plan subsequent to the measurement date 39,382,623 -
Total $ 168,636,759 $ (52,479,608)
The $19,305,912 reported as deferred inflows of resources resulting from the pension portion of state aid payments received pursuant to the UAAL payment will be recognized as state appropriations revenue for the year ended June 30, 2020. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Years Ending Amount
2020 $ 33,020,791 2021 22,617,819 2022 15,243,041 2023 5,892,877
Total $ 76,774,528
In addition, the contributions subsequent to the measurement date will be included as a reduction of the net pension liability in the next year. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2019, the School District recognized OPEB expense of $5,245,457.
37 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 12 - Michigan Public School Employees' Retirement System (Continued) At June 30, 2019, the School 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
Difference between expected and actual experience $ - $ (25,923,371) Changes in assumptions 14,749,701 - Net difference between projected and actual earnings on OPEB plan investments - (5,352,819) Changes in proportionate share or difference between amount contributed and proportionate share of contributions - (7,074,689) Employer contributions to the plan subsequent to the measurement date 8,782,022 -
Total $ 23,531,723 $ (38,350,879)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows (note that employer contributions subsequent to the measurement date will reduce the net OPEB liability and, therefore, will not be included in future OPEB expense): Years Ending Amount
2020 $ (5,634,688) 2021 (5,634,688) 2022 (5,634,688) 2023 (4,508,018) 2024 (2,189,096)
Total $ (23,601,178)
Actuarial Assumptions The total pension liability and total OPEB liability as of September 30, 2018 is based on the results of an actuarial valuation as of September 30, 2017 and rolled forward. The total pension liability and OPEB liability were determined using the following actuarial assumptions:
Actuarial cost method Entry age normal Investment rate of return - Pension 6.00% - 7.05% Net of investment expenses based on the groups Investment rate of return - OPEB 7.15% Net of investment expenses based on the groups Salary increases 2.75% - 11.55% Including wage inflation of 2.75% for 2019 and 3.50% for 2018 Healthcare cost trend rate - OPEB 7.50% Year 1 graded to 3.0% year 12 Mortality basis RP2014 Male and Female Employee Annuitant Mortality tables, scaled 100% (retirees: 82% for males and 78% for females) and adjusted for mortality improvements using projection scale MP2017 from 2006 Cost of living pension adjustments 3.00% Annual noncompounded for MIP members Assumption changes as a result of an experience study for the periods from 2012 to 2017 have been adopted by the System for use in the annual pension and OPEB valuations beginning with the September 30, 2017 valuation.
38 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 12 - Michigan Public School Employees' Retirement System (Continued) Discount Rate The discount rate used to measure the total pension liability was 6.00 to 7.05 percent as of September 30, 2018 depending on the plan option. The discount rate used to measure the total OPEB liability was 7.15 percent as of September 30, 2018. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that district contributions will be made at statutorily required rates. Based on those assumptions, the pension plan's fiduciary net position and the OPEB plan’s fiduciary net position were projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan and OPEB plan investments was applied to all periods of projected benefit payments to determine the total pension liability and total OPEB liability. The long-term expected rate of return on pension plan and OPEB 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 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 target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-term Expected Real Asset Class Target Allocation Rate of Return
Domestic equity pools 28.00 % 5.70 % Private equity pools 18.00 9.20 International equity pools 16.00 7.20 Fixed-income pools 10.50 0.50 Real estate and infrastructure pools 10.00 3.90 Absolute return pools 15.50 5.20 Short-term investment pools 2.00 -
Total 100.00 %
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the School District, calculated using the discount rate depending on the plan option. The following also reflects what the School District's net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate: 1 Percent Current Discount 1 Percent Decrease Rate Increase (5.00 - 6.05%) (6.00 - 7.05%) (7.00 - 8.05%)
Net pension liability of the School District $ 709,214,017 $ 540,179,541 $ 399,739,370
39 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 12 - Michigan Public School Employees' Retirement System (Continued) Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the School District, calculated using the current discount rate. It also reflects what the School District's net OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate: 1 Percent Current Discount 1 Percent Decrease Rate Increase (6.15%) (7.15%) (8.15%)
Net OPEB liability of the School District $ 167,201,416 $ 139,278,841 $ 115,792,543 Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate The following presents the net OPEB liability of the School District, calculated using the current healthcare cost trend rate. It also reflects what the School District's net OPEB liability would be if it were calculated using a healthcare cost trend rate that is 1 percentage point lower or 1 percentage point higher than the current rate: 1 Percent 1 Percent Decrease Current Rate Increase (6.50%) (7.50%) (8.50%)
Net OPEB liability of the School District $ 114,555,312 $ 139,278,841 $ 167,641,776 Pension Plan and OPEB Plan Fiduciary Net Position Detailed information about the plan’s fiduciary net position is available in the separately issued MPSERS financial report. Payable to the Pension Plan and OPEB Plan At June 30, 2019, the School District reported a payable of $8,813,056 and $1,551,279 for the outstanding amount of contributions to the pension plan and OPEB plan, respectively, required for the year ended June 30, 2019. Note 13 - State Aid Anticipation Note State Aid Anticipation Note The School District has direct borrowings from the Michigan Finance Authority (the “Lender”) to provide sufficient resources before receiving its scheduled state aid. This liability is recorded as a fund liability in the General Fund. During the year, the School District redeemed $10,000,000 of a state aid anticipation note (the “note”) and issued a new note of $12,000,000, with an outstanding balance of $4,000,000 at June 30, 2019. The current note bears interest at 1.75 percent and is due and was paid on August 20, 2019. At June 30, 2019, the School District has accrued interest of $70,000 on this note. In the event of default, the note is fully collateralized by the School District’s future state aid funding, and the Lender has the authority to intercept state aid payments at its discretion. In the event that all or a portion of the required payments at maturity are not made, payments will automatically be deducted from future state aid payments and, if the state aid received during the scheduled deduction is not sufficient, it will be deducted from future state aid payments. If the Lender has reason to believe that the School District will be unable to fulfill the required repayments, the Lender has the sole discretion to accelerate the principal and interest repayments.
40 Utica Community Schools Notes to Financial Statements June 30, 2019 Note 13 - State Aid Anticipation Note (Continued) Subsequent to year end, in July 2019, the School District borrowed $8,000,000 in a state aid anticipation note, with an interest rate of 1.30 percent. The note matures in August 2020 and have similar terms and provisions as the note outstanding at June 30, 2019. Note 14 - Tax Abatements The School District receives reduced property tax revenue as a result of Industrial Facilities Tax exemptions (PA 198 of 1974) granted by cities and townships within the boundaries of the School District. Industrial facility exemptions are intended to promote construction of new industrial facilities, or to rehabilitate historical facilities. For the fiscal years ended June 30, 2019, the School District’s property tax revenue was reduced by approximately $1,243,000 under these programs. The School District is reimbursed for lost revenue caused by tax abatements on the operating millage of nonhomestead properties from the State of Michigan under the School Aid formula. The School District received approximately $1,021,000 in reimbursements from the State of Michigan. The School District is not reimbursed for lost revenue from debt service millages. There are no abatements made by the School District.
41 Required Supplemental Information
42 Utica Community Schools Required Supplemental Information Budgetary Comparison Schedule - General Fund Year Ended June 30, 2019
Over (Under) Original Budget Final Budget Actual Final Budget
Revenue Local sources $ 32,555,053 $ 31,849,803 $ 32,249,770 $ 399,967 State sources 227,086,055 226,643,701 224,104,741 (2,538,960) Federal sources 10,596,003 11,944,863 10,403,301 (1,541,562) Interdistrict and other financing sources 7,088,916 8,157,875 8,254,249 96,374 Total revenue 277,326,027 278,596,242 275,012,061 (3,584,181) Expenditures Current: Instruction: Basic programs 157,078,451 152,190,620 150,851,994 (1,338,626) Added needs 40,641,938 40,568,478 37,589,473 (2,979,005) Adult/Continuing education 582,031 894,854 862,257 (32,597) Total instruction 198,302,420 193,653,952 189,303,724 (4,350,228) Support services: Pupil 16,815,661 16,919,123 16,890,030 (29,093) Instructional staff 9,148,262 9,522,754 8,352,114 (1,170,640) General administration 847,795 822,321 672,164 (150,157) School administration 14,825,856 14,397,471 14,262,829 (134,642) Business 2,197,212 2,141,396 2,030,135 (111,261) Operations and maintenance 19,791,905 20,302,811 19,406,625 (896,186) Pupil transportation services 11,691,411 11,891,604 10,971,239 (920,365) Central 4,665,767 4,616,540 3,970,624 (645,916) Other - 6,450 5,650 (800) Total support services 79,983,869 80,620,470 76,561,410 (4,059,060) Athletics 3,131,536 3,071,008 2,967,610 (103,398) Community services 166,497 393,244 217,893 (175,351) Other governmental expenditures 8,775 29,775 8,755 (21,020) Total expenditures 281,593,097 277,768,449 269,059,392 (8,709,057) Net Change in Fund Balance (4,267,070) 827,793 5,952,669 5,124,876 Fund Balance - Beginning of year 22,668,373 22,668,373 22,668,373 -
Fund Balance - End of year $ 18,401,303 $ 23,496,166 $ 28,621,042 $ 5,124,876
See notes to required supplemental information. 43 Utica Community Schools Required Supplemental Information Schedule of Proportionate Share of the Net Pension Liability Michigan Public School Employees' Retirement System Last Five Plan Years Plan Years Ended September 30
2018 2017 2016 2015 2014
School District's proportion of the net pension liability 1.79690 % 1.84111 % 1.84223 % 1.85626 % 1.81562 % School District's proportionate share of the net pension liability $ 540,179,541 $ 477,110,473 $ 459,621,052 $ 453,392,480 $ 399,917,444 School District's covered employee payroll $ 148,773,678 $ 153,939,251 $ 154,483,113 $ 154,382,798 $ 154,020,935 School District's proportionate share of the net pension liability as a percentage of its covered employee payroll 363.09 % 309.93 % 297.52 % 293.68 % 259.65 % Plan fiduciary net position as a percentage of total pension liability 62.12 % 63.96 % 63.01 % 62.92 % 66.20 %
See notes to required supplemental information. 44 Utica Community Schools Required Supplemental Information Schedule of Pension Contributions Michigan Public School Employees' Retirement System Last Five Fiscal Years Years Ended June 30
2019 2018 2017 2016 2015
Statutorily required contribution $ 45,947,441 $ 45,989,781 $ 43,284,088 $ 42,923,597 $ 33,743,237 Contributions in relation to the statutorily required contribution 45,947,441 45,989,781 43,284,088 42,923,597 33,743,237 Contribution Deficiency $ - $ - $ - $ - $ -
School District's Covered Employee Payroll $ 147,860,427 $ 149,911,269 $ 154,853,474 $ 154,110,579 $ 154,977,954 Contributions as a Percentage of Covered Employee Payroll 31.07 % 30.68 % 27.95 % 27.85 % 21.77 %
See notes to required supplemental information. 45 Utica Community Schools Required Supplemental Information Schedule of Proportionate Share of the Net OPEB Liability Michigan Public School Employees' Retirement System Last Two Plan Years For the Plan Year Ended June 30
2018 2017
School District's proportion of the net OPEB liability 1.75217 % 1.83775 % School District's proportionate share of the net OPEB liability $ 139,728,841 $ 162,741,529 School District's covered employee payroll $ 148,773,678 $ 153,939,251 School District's proportionate share of the net OPEB liability as a percentage of its covered employee payroll 93.92 % 105.72 % Plan fiduciary net position as a percentage of total OPEB liability 43.10 % 35.53 %
See notes to required supplemental information. 46 Utica Community Schools Required Supplemental Information Schedule of OPEB Contributions Michigan Public School Employees' Retirement System Last Two Fiscal Years Years Ended June 30
2019 2018
Statutorily required contribution $ 11,614,474 $ 10,827,679 Contributions in relation to the statutorily required contribution 11,614,474 10,827,679 Contribution Deficiency $ - $ -
School District's Covered Employee Payroll $ 147,860,427 $ 149,911,269 Contributions as a Percentage of Covered Employee Payroll 7.86 % 7.22 %
See notes to required supplemental information. 47 Utica Community Schools Notes to Required Supplemental Information June 30, 2019 Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the General Fund, all special revenue funds in aggregate, and all debt service funds in aggregate. All annual appropriations lapse at fiscal year end. The budget document presents information by fund and function, which is the legal level at which expenditures may not legally exceed appropriations. The statement of revenue, expenditures, and changes in fund balances presents capital outlay and other financing sources separately, as required by generally accepted accounting principals. Additionally, the budgetary comparison schedule reflects the transfer of $2,152,119 from the Enrichment Fund, Bookstore Fund, and Food Services Fund to the General Fund as fund modification, which is how the transfer was budgeted. State law requires the School District to have its budget in place by July 1. Expenditures in excess of amounts budgeted are a violation of Michigan Law. State law permits districts to amend their budgets during the year. There were no significant amendments during the year, except for adjustments to state and federal awards and the corresponding expenditures for federal grants and state categoricals. Pension Information Ultimately, 10 years of data will be presented in both of the pension-related schedules. The number of years currently presented represents the number of years since the accounting standard requiring these schedules first became available. Benefit Changes There were no changes of benefit terms for each of the reported plan years ended September 30. Changes in Assumptions There were no significant changes of assumptions for each of the reported plan years ended September 30, except for the following: 2018 - The discount rate used in the September 30, 2017 actuarial valuation decreased by 0.45 percent. 2017 - The discount rate used in September 30, 2016 actuarial valuation decreased by 0.50 percent. OPEB Information Ultimately, 10 years of data will be presented in both of the OPEB-related schedules. The number of years currently presented represents the number of years since the accounting standard requiring these schedules first became applicable. Benefit Changes There were no changes of benefit terms for each of the reported plan years ended September 30. Changes in Assumptions There were no significant changes of assumptions for each of the reported plan years ended September 30, except for the following: 2018 - The discount rate used in the September 30, 2017 actuarial valuation decreased by 0.35 percent.
48 Other Supplemental Information
49 Utica Community Schools
Debt Service Special Revenue Funds Fund Total Special Enrichment Food Services Bookstore Revenue Common Debt Fund Fund Fund Funds Service Fund
Assets Cash and investments $ 5,188,293 $ 3,282,801 $ 72,194 $ 8,543,288 $ - Receivables - 223,610 - 223,610 183,243 Due from other funds - 28,811 - 28,811 - Inventories - 102,199 62,155 164,354 - Restricted assets - - - - 6,254,978
$ 5,188,293 $ 3,637,421 $ 134,349 $ 8,960,063 $ 6,438,221 Total assets
Liabilities Accounts payable $ 10,828 $ - $ - $ 10,828 $ - Due to other funds 417,081 86,952 - 504,033 9,826 Unearned revenue 483,398 160,012 - 643,410 -
Total liabilities 911,307 246,964 - 1,158,271 9,826
Deferred Inflows of Resources - Unavailable revenue - - - - 183,243
Total liabilities and deferred inflows of resources 911,307 246,964 - 1,158,271 193,069
Fund Balances Nonspendable - 102,199 62,155 164,354 - Restricted: Debt service - - - - 6,245,152 Capital projects - - - - - Food service - 3,288,258 - 3,288,258 - Assigned: Capital projects - - - - - Bookstore - - 72,194 72,194 - Enrichment 4,276,986 - - 4,276,986 -
Total fund balances 4,276,986 3,390,457 134,349 7,801,792 6,245,152
Total liabilities, deferred inflows of $ 5,188,293 $ 3,637,421 $ 134,349 $ 8,960,063 $ 6,438,221 resources, and fund balances
50 Other Supplemental Information Combining Balance Sheet Nonmajor Governmental Funds June 30, 2019
Nonmajor Capital Project Funds
Building and Bond 2009 Bond 2009 Bond 2009 Bond 2009 Total Capital Site Fund Series V Series VI Series VII Series VIII Project Funds Total
$ 1,327,184 $ - $ - $ - $ - $ 1,327,184 $ 9,870,472 ------406,853 ------28,811 ------164,354 - 547,510 1,294,926 5,734,241 6,589,632 14,166,309 20,421,287
$ 1,327,184 $ 547,510 $ 1,294,926 $ 5,734,241 $ 6,589,632 $ 15,493,493 $ 30,891,777
$ - $ 1,717 $ 25,920 $ 191,551 $ 18,370 $ 237,558 $ 248,386 - 7,281 40,604 319,858 2,597 370,340 884,199 ------643,410
- 8,998 66,524 511,409 20,967 607,898 1,775,995 ------183,243
- 8,998 66,524 511,409 20,967 607,898 1,959,238
------164,354
------6,245,152 - 538,512 1,228,402 5,222,832 6,568,665 13,558,411 13,558,411 ------3,288,258
1,327,184 - - - - 1,327,184 1,327,184 ------72,194 ------4,276,986
1,327,184 538,512 1,228,402 5,222,832 6,568,665 14,885,595 28,932,539
$ 1,327,184 $ 547,510 $ 1,294,926 $ 5,734,241 $ 6,589,632 $ 15,493,493 $ 30,891,777
51 Utica Community Schools
Debt Service Special Revenue Funds Fund Total Special Enrichment Food Services Bookstore Revenue Common Debt Fund Fund Fund Funds Service Fund
Revenue Local sources $ 6,616,235 $ 3,319,965 $ 618,526 $ 10,554,726 $ 27,289,329 State sources - 305,990 - 305,990 966,050 Federal sources - 4,969,408 - 4,969,408 742,927
Total revenue 6,616,235 8,595,363 618,526 15,830,124 28,998,306
Expenditures Current: Instruction 17,032 - - 17,032 - Support services 3,681 112,134 - 115,815 - Bookstore activities - - 600,042 600,042 - Food services - 7,743,226 - 7,743,226 - Enrichment 4,446,882 - - 4,446,882 - Debt service: Principal - - - - 22,240,000 Interest - - - - 5,677,002 Debt issuance costs - - - - 49,969 Capital outlay 664 461,553 - 462,217 -
Total expenditures 4,468,259 8,316,913 600,042 13,385,214 27,966,971
Excess of Revenue Over (Under) Expenditures 2,147,976 278,450 18,484 2,444,910 1,031,335
Other Financing Sources (Uses) Face value of debt issued - - - - 4,470,000 Premium on debt issued - - - - 4,054,950 Payment to bond refunding escrow agent - - - - (5,475,688) Transfers out (1,835,683) (273,513) (42,923) (2,152,119) -
Total other financing (uses) sources (1,835,683) (273,513) (42,923) (2,152,119) 3,049,262
Net Change in Fund Balances 312,293 4,937 (24,439) 292,791 4,080,597
Fund Balances - Beginning of year 3,964,693 3,385,520 158,788 7,509,001 2,164,555
$ 4,276,986 $ 3,390,457 $ 134,349 $ 7,801,792 $ 6,245,152 Fund Balances - End of year
52 Other Supplemental Information Combining Statement of Revenue, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2019
Nonmajor Capital Project Funds
Building and Bond 2009 Bond 2009 Bond 2009 Bond 2009 Total Capital Site Fund Series V Series VI Series VII Series VIII Project Funds Total
$ - $ 12,214 $ 33,760 $ 178,539 $ 155,212 $ 379,725 $ 38,223,780 ------1,272,040 ------5,712,335
- 12,214 33,760 178,539 155,212 379,725 45,208,155
------17,032 ------115,815 ------600,042 ------7,743,226 ------4,446,882
------22,240,000 ------5,677,002 ------49,969 - 132,116 1,800,724 7,152,250 909,907 9,994,997 10,457,214
- 132,116 1,800,724 7,152,250 909,907 9,994,997 51,347,182
- (119,902) (1,766,964) (6,973,711) (754,695) (9,615,272) (6,139,027)
------4,470,000 ------4,054,950 ------(5,475,688) ------(2,152,119)
------897,143
- (119,902) (1,766,964) (6,973,711) (754,695) (9,615,272) (5,241,884) 1,327,184 658,414 2,995,366 12,196,543 7,323,360 24,500,867 34,174,423
$ 1,327,184 $ 538,512 $ 1,228,402 $ 5,222,832 $ 6,568,665 $ 14,885,595 $ 28,932,539
53 Utica Community Schools Other Supplemental Information Budgetary Comparison Schedule - Nonmajor Governmental Funds Special Revenue Funds Year Ended June 30, 2019
(Under) Over Original Budget Final Budget Actual Final Budget
Revenue Local sources $ 10,426,712 $ 10,597,890 $ 10,554,726 $ (43,164) State sources 303,183 288,005 305,990 17,985 Federal sources 4,275,931 4,924,750 4,969,408 44,658 Total revenue 15,005,826 15,810,645 15,830,124 19,479 Expenditures Current: Instruction - Basic programs 13,900 17,400 17,032 (368) Support services: Pupil 161,472 141,472 112,134 (29,338) Operations and maintenance - 15,500 1,340 (14,160) Central - 7,000 3,005 (3,995) Other 8,490,784 8,946,554 8,636,867 (309,687) Community services 4,652,117 4,658,957 4,446,882 (212,075) Building improvements 50,000 514,656 167,954 (346,702) Total expenditures 13,368,273 14,301,539 13,385,214 (916,325) Other Financing Uses - Transfer out (930,259) (2,128,607) (2,152,119) (23,512) Net Change in Fund Balances 707,294 (619,501) 292,791 912,292 Fund Balances - Beginning of year 7,509,001 7,509,001 7,509,001 -
Fund Balances - End of year $ 8,216,295 $ 6,889,500 $ 7,801,792 $ 912,292
54 Utica Community Schools Other Supplemental Information Budgetary Comparison Schedule - Nonmajor Governmental Funds (Continued) Debt Service Fund Year Ended June 30, 2019
Over (Under) Original Budget Final Budget Actual Final Budget
Revenue Local sources $ 27,236,956 $ 27,199,969 $ 27,289,329 $ 89,360 State sources 966,050 966,050 966,050 - Federal sources 741,340 742,927 742,927 - Total revenue 28,944,346 28,908,946 28,998,306 89,360 Expenditures 28,069,876 33,452,782 33,442,659 (10,123) Excess of Revenue Over Expenditures 874,470 (4,543,836) (4,444,353) 99,483 Other Financing Sources - 8,524,950 8,524,950 - Net Change in Fund Balance 874,470 3,981,114 4,080,597 99,483 Fund Balance - Beginning of year 2,164,555 2,164,555 2,164,555 -
Fund Balance - End of year $ 3,039,025 $ 6,145,669 $ 6,245,152 $ 99,483
55 Utica Community Schools
March 12, 2019 February 23, 2017 June 22, 2016 June 23, 2015 November 24, Debt Fund Debt Fund Debt Fund Debt Fund 2014 Debt Fund Years Ending June 30 Principal Principal Principal Principal Principal
2020 $ 1,450,000 $ 320,000 $ 770,000 $ 1,680,000 $ 525,000 2021 5,845,000 405,000 1,190,000 2,185,000 750,000 2022 8,600,000 3,775,000 2,120,000 2,240,000 850,000 2023 6,125,000 4,115,000 2,300,000 1,425,000 875,000 2024 6,125,000 4,220,000 1,725,000 1,575,000 900,000 2025 5,700,000 675,000 1,950,000 1,775,000 900,000 2026 5,925,000 675,000 2,050,000 1,875,000 925,000 2027 6,150,000 675,000 2,150,000 1,975,000 950,000 2028 6,375,000 700,000 2,250,000 2,075,000 950,000 2029 6,625,000 725,000 2,375,000 2,150,000 950,000 2030 6,850,000 755,000 2,475,000 2,225,000 - 2031 7,050,000 770,000 2,560,000 - - 2032 7,250,000 810,000 - - - 2033 7,450,000 - - - - 2034 7,500,000 - - - -
Total remaining payments $ 95,020,000 $ 18,620,000 $ 23,915,000 $ 21,180,000 $ 8,575,000
Interest rate 4.00% to 5.00% 3.50% to 4.00% 2.00% to 5.00% 3.00% to 5.00% 4.00% Original issue $ 95,020,000 $ 18,765,000 $ 25,375,000 $ 25,105,000 $ 9,115,000
56 Other Supplemental Information Schedule of Bonded Indebtedness June 30, 2019
June 12, 2013 May 31, 2012 February 9, 2011 Debt Fund Debt Fund Debt Fund Principal Principal Principal Total
$ 6,895,000 $ 10,500,000 $ - $ 22,140,000 5,035,000 1,000,000 3,550,000 19,960,000 - - 3,550,000 21,135,000 - - 3,575,000 18,415,000 - - 3,575,000 18,120,000 - - - 11,000,000 - - - 11,450,000 - - - 11,900,000 - - - 12,350,000 - - - 12,825,000 - - - 12,305,000 - - - 10,380,000 - - - 8,060,000 - - - 7,450,000 - - - 7,500,000
$ 11,930,000 $ 11,500,000 $ 14,250,000 $ 204,990,000
3.00% to 4.00% 3.25% to 4.00% 5.75% to 6.05% $ 30,280,000 $ 53,035,000 $ 14,250,000 $ 270,945,000
Principal payments for the bond issues are due on May 1 of each year. Interest payments for the bond issues are due on May 1 and November 1 of each year.
57 Utica Community Schools Other Supplemental Information Agency Fund - School Activities Statement of Cash Receipts and Disbursements
Year Ended June 30, 2019 Balance Balance July 1, 2018 Receipts Disbursements June 30, 2019
Elementary Schools Burr Elementary $ 23,339 $ 39,224 $ 37,518 $ 25,045 Wiley Elementary 5,059 18,813 14,728 9,144 Dresden Elementary 8,727 38,015 35,168 11,574 West Utica Elementary 30,185 37,010 31,594 35,601 W B Browning Elementary 11,888 15,520 12,995 14,413 Harvey Elementary 16,872 30,335 30,456 16,751 Plumbrook Elementary 25,802 59,875 64,318 21,359 Switzer Elementary 9,643 36,556 37,767 8,432 Flickinger Elementary 16,268 45,632 51,597 10,303 Messmore Elementary 8,968 41,541 43,343 7,166 Morgan Elementary 52,947 67,686 88,341 32,292 Schwarzkoff Elementary 12,078 50,679 45,950 16,807 Monfort Elementary 15,998 58,920 50,634 24,284 Crissman Elementary 29,836 48,935 46,133 32,638 Collins Elementary 28,182 7,442 9,096 26,528 Roberts Elementary 28,668 50,820 54,894 24,594 Dekeyser Elementary 4,852 27,699 23,934 8,617 Oakbrook Elementary 29,422 66,286 57,786 37,922 Havel Elementary 32,381 54,749 45,075 42,055 Graebner Elementary 4,712 47,266 44,027 7,951 Schuchard Elementary 27,791 39,531 46,990 20,332 Ebeling Elementary 63,358 74,486 67,916 69,928 Beck Centennial Elementary 20,751 36,999 35,881 21,869 Duncan Elementary 51,669 104,930 133,672 22,927 Beacon Tree Elementary 15,294 74,578 66,697 23,175 Total Elementary Schools 574,690 1,173,527 1,176,510 571,707
Middle Schools Eppler Jr. High 46,216 89,114 83,070 52,260 Bemis Jr. High 78,958 56,842 41,234 94,566 Shelby Jr. High 77,678 158,702 165,903 70,477 Davis Jr. High 23,238 48,086 60,238 11,086 Malow Jr. High 169,718 307,471 272,310 204,879 Heritage Jr. High 35,188 22,932 23,440 34,680 Jeannette Jr. High 34,854 45,878 43,944 36,788 Total Middle Schools 465,850 729,025 690,139 504,736
High Schools Utica High 169,180 556,951 545,273 180,858 Stevenson High 264,583 830,079 815,524 279,138 Eisenhower High 359,620 1,331,301 1,278,097 412,824 Ford II High 326,840 765,765 832,977 259,628 U.C.A.L. 12,439 11,997 10,535 13,901 TDC 460 - - 460 Joan C. Sergent I. R. C. 43,281 88,169 105,933 25,517 Academy For Int'l Studies 63,659 195,609 185,453 73,815 Total High Schools 1,240,062 3,779,871 3,773,792 1,246,141
Other Memorials, Scholarships, Other 564,319 318,543 271,465 611,397 Total $ 2,844,921 $ 6,000,966 $ 5,911,906 $ 2,933,981
58 Utica Community Schools Other Supplemental Information Agency Fund - School Activities Changes in Assets and Liabilities
Year Ended June 30, 2019
2018 Additions Deletions 2019 Assets Cash and investments $ 2,960,363 $ 6,000,966 $ 5,918,658 $ 3,042,671 Due from other funds - - - Accounts receivable 12,579 - 1,752 10,827
Total assets $ 2,972,942 $ 6,000,966 $ 5,920,410 $ 3,053,498
Liabilities Accounts payable$ 128,021 -$ $ 8,504 $ 119,517 Due to student groups 2,844,921 6, 000,966 5, 911,906 2,933,981 Due to other funds - - -
Total liabilities $ 2,972,942 $ 6,000,966 $ 5,920,410 $ 3,053,498
59 Statistical Section and Other Information (Unaudited)
60 Utica Community Schools Description of Statistical Section
This part of Utica Community Schools' Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplemental information says about the government’s overall financial health. Many of the schedules present data for the past fiscal years that will allow the reader to discern trends that cannot be seen in a single year’s financial statements.
Contents
Financial Trend Information These schedules contain trend information to help the reader understand how the School District’s financial performance and well-being have changed over time.
Revenue Capacity Information These schedules contain information to help the reader assess the School District’s most significant local revenue source, the property tax.
Debt Capacity Information These schedules present information to help the reader assess the affordability of the School District’s current levels of outstanding debt and the School District’s ability to issue additional debt in the future.
Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the School District’s financial activities take place.
Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the School District’s financial report relates to the services the School District provides and the activities it performs.
61 Utica Community Schools
As of June 30, 2019 2018 2017 2016 Expenses Governmental activities: Instruction$ 197,606,013 $ 198,438,538 $ 199,098,310 $ 192,924,083 Support services 82,364,749 77,844,354 76,908,253 75,308,877 Bookstore 600,042 485,570 517,375 448,893 Athletics 2,993,228 2,978,942 2,942,951 2,973,459 Food services 7,904,545 7,648,033 7,448,925 7,322,793 Community services 223,922 212,591 282,020 246,551 Enrichment 4,455,637 4,552,398 4,410,394 4,119,325 Building improvements - - - 160,248 Interest on long-term debt and other 4,848,023 5,037,237 5,502,857 5,823,919 Depreciation expense (unallocated) 11,749,254 11,744,558 11,451,027 11,095,013 Total governmental activities 312,745,413 308,942,221 308,562,112 300,423,161 Program revenue Charges for services: Instruction 111,890 221,953 110,850 60,721 Bookstore 618,526 519,077 519,624 478,800 Athletics 879,135 921,263 977,343 937,112 Food services 3,300,507 3,740,606 3,774,403 3,675,980 Enrichment 6,563,697 6,485,309 6,287,475 5,685,367 Operating grants and contributions 67,432,737 71,035,613 62,788,109 47,366,510 Total program revenue 78,906,492 82,923,821 74,457,804 58,204,490 Net (expense) revenue (233,838,921) (226,018,400) (234,104,308) (242,218,671) General Revenue Property taxes, levied for general purpose 29,300,832 28,226,071 27,832,138 26,703,223 Property taxes, levied for debt purposes 27,085,671 26,455,247 25,605,413 25,606,032 State aid not restricted to specific purpos 179,641,739 179,045,929 180,897,697 179,123,193 Federal sources - unrestricted - - - - Investment and investment earnings 1,766,154 666,442 346,456 97,744 Gain/loss on sale of capital assets - (983,907) (1,404,899) (5,562) Other 1,434,805 1,121,466 2,115,056 941,990 Total general revenue 239,229,201 234,531,248 235,391,861 232,466,620 Change in Net Position $ 5,390,280 $ 8,512,848 $ 1,287,553 $ (9,752,051)
Note: FY 2011-12: This is the last year ARRA funds were received
Source: Utica Community Schools Current Year and Prior Years' Audited Financial Statements FY 2010 through 2019
62 Financial Trend Information Changes in Governmental Net Position - Governmental Funds Last Ten Fiscal Years
As of June 30, 2015 2014 2013 2012 2011 2010
$ 193,572,324 $ 184,887,910 $ 178,616,404 $ 180,310,702 $ 176,492,904 $ 179,379,741 74,886,044 76,320,936 74,297,043 77,121,946 78,913,017 87,114,082 278,953 440,577 458,163 1,040,804 421,878 432,664 2,920,602 2,877,816 2,835,298 2,875,574 2,757,511 2,932,000 8,232,072 6,670,643 6,653,207 7,488,844 6,098,715 6,549,548 262,127 95,630 86,059 95,104 81,174 102,408 4,547,672 4,559,683 4,580,598 4,945,631 4,712,574 5,009,423 ------5,997,424 6,005,476 10,678,268 11,630,433 9,894,465 9,306,606 9,055,002 11,329,403 10,532,303 10,545,771 10,678,811 10,176,579 299,752,220 293,188,074 288,737,343 296,054,809 290,051,049 301,003,051
128,550 109,230 102,142 122,965 129,271 142,776 258,308 435,511 433,696 497,032 473,539 434,385 913,404 990,697 900,779 913,099 765,036 735,798 3,884,888 3,867,218 4,055,810 4,126,821 4,032,440 4,398,506 5,471,196 5,330,181 5,591,319 5,921,542 5,655,824 5,447,197 55,596,695 48,144,090 43,006,433 41,928,804 40,927,866 40,826,028 66,253,041 58,876,927 54,090,179 53,510,263 51,983,976 51,984,690 (233,499,179) (234,311,147) (234,647,164) (242,544,546) (238,067,073) (249,018,361)
34,731,803 27,198,002 26,496,778 28,119,316 31,530,114 33,125,962 16,584,419 24,340,622 24,183,798 24,982,428 26,626,169 27,682,567 179,975,586 182,373,163 181,077,895 180,255,041 180,224,311 176,135,578 - - - 6,139,642 3,415,778 8,249,423 10,132 40,572 76,256 120,141 207,844 620,589 3,121,401 - - - - - 923,273 546,183 874,663 2,044,140 916,964 2,085,815 235,346,614 234,498,542 232,709,390 241,660,708 242,921,180 247,899,934 $ 1,847,435 $ 187,395 $ (1,937,774) $ (883,838) $ 4,854,107 $ (1,118,427)
63 Utica Community Schools
As of June 30, 2019 2018 2017 2016 Governmental Activities: Net investment in capital assets$ 165,742,794 $ 158,585,279 $ 151,591,660 $ 150,227,441 Restricted Debt service 4,495,147 1,197,876 512,937 631,081 Capital projects 2,036,008 959,779 547,318 302,370 Food service 3,390,457 - - - Unrestricted (561,508,812) (551,977,620) (387,599,405) (387,395,935) Total primary government net position $ (385,844,406) $ (391,234,686) $ (234,947,490) $ (236,235,043)
Note: FY 2017/18: The School District adopted GASB 75 - Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions FY 2014/15: The School District adopted GASB 68 - Accounting and Financial Reporting for Pensions
Source: Utica Community Schools Current Year and Prior Years' Audited Financial Statements FY 2010 through 2019
64 Financial Trend Information Net Position by Component - Governmental Funds Last Ten Fiscal Years
As of June 30, 2015 2014 2013 2012 2011 2010
$ 143,474,378 $ 132,636,393 $ 127,009,675 $ 121,201,826 $ 123,578,604 $ 122,573,174
425,905 293,798 57,802 1,243,145 1,241,218 3,175,746 249,441 1,836,134 1,822,444 5,962,429 6,738,860 3,685,892 2,753,435 3,925,573 3,623,205 2,853,968 3,048,728 - (373,386,184) 37,110,131 43,101,508 46,291,040 43,828,836 44,147,327 $ (226,483,025) $ 175,802,029 $ 175,614,634 $ 177,552,408 $ 178,436,246 $ 173,582,139
65 Utica Community Schools
As of June 30, 2019 2018 2017 2016 Revenue Local revenue$ 71,170,054 $ 68,112,927 $ 67,588,498 $ 64,896,891 State revenue 225,376,781 227,976,797 224,098,415 218,783,701 Federal revenue 16,115,636 15,557,580 15,277,901 13,916,301 Interdistrict revenue and other 5,955,562 6,150,062 6,062,49 5 6,124,04 4 Total revenue 318,618,033 317,797,366 313,027,309 303,720,937 Expenditures Current: Instruction 188,484,377 194,655,316 197,647,170 196,338,077 Support services 76,623,638 74,369,061 72,716,205 72,831,200 Bookstore 600,042 485,570 517,375 448,893 Athletics 2,908,444 2,937,371 2,929,001 2,965,234 Food services 7,743,226 7,567,747 7,423,673 7,176,504 Community services 217,893 209,759 280,475 249,540 Enrichment 4,446,882 4,475,411 4,388,005 4,167,921 Debt service: Principal 22,240,000 21,025,000 20,255,000 19,330,000 Interest and other 5,726,971 6,728,936 6,856,314 6,944,968 Capital Outlay 17,459,796 17,229,190 18,105,274 12,106,456 Other - - - - Total expenditures 326,451,269 329,683,361 331,118,492 322,558,793 Excess of Revenue (Under) Over Expenditures (7,833,236) (11,885,995) (18,091,183) (18,837,856) Other Financing Sources (Uses) Proceeds from sale of capital assets 146,568 1,384,186 5,556,816 - Payment to escrow agent (5,475,688) - (11,338,956) (4,193,421) Transfers in 2,152,119 753,870 1,773,248 2,117,012 Transfers out (2,152,119) (753,870) (1,773,248) (2,117,012) Proceeds from sale of bonds 90,550,000 - 8,490,000 21,460,000 Issuance of refunding debt 4,470,000 - 10,275,000 3,915,000 Premium on debt issued 14,909,295 - 1,413,062 3,871,59 6 Total other financing sources (uses) 104,600,17 5 1,384,18 6 14,395,92 2 25,053,17 5 Net change in fund balances 96,766,939 (10,501,809) (3,695,261) 6,215,319 Fund Balances - Beginning of year 56,842,79 6 67,344,60 5 71,039,86 6 64,824,54 7 Fund Balances - End of year $ 153,609,73 5 $ 56,842,79 6 $ 67,344,60 5 $ 71,039,86 6
Debt service as a percentage of noncapital expenditures 9.02% 8.88% 8.61% 9.19% Note: FY 2012/13: Implemented all-day Kindergarten program and implementation of custodial, grounds and warehouse service contracts, retirement reform FY 2011/12: One-time operating transfers and Federal ARRA revenue FY 2010/11: Federal ARRA revenue, four elementary schools closed and began contracting for custodial services FY 2009/10: Federal ARRA revenue Source: Utica Community Schools Current Year and Prior Years' Audited Financial Statements FY 2010 through 2019 66 Financial Trend Information Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years
As of June 30, 2015 2014 2013 2012 2011 2010
$ 62,973,970 $ 62,150,592 $ 62,851,037 $ 68,402,228 $ 70,251,290 $ 74,837,968 214,235,368 209,738,466 202,668,949 198,242,930 194,962,122 190,480,582 14,435,236 14,207,564 14,461,778 23,868,626 22,051,051 27,563,959 6,901,677 6,571,22 3 6,953,601 6,211,931 7,554,781 7,166,48 8 298,546,251 292,667,845 286,935,365 296,725,715 294,819,244 300,048,997
193,884,298 184,893,093 178,929,508 176,288,798 173,797,680 175,465,705 73,135,814 72,842,997 70,202,322 73,436,999 76,304,274 85,039,200 278,953 440,577 458,163 1,040,804 421,878 432,664 2,886,632 2,836,964 2,792,627 2,844,729 2,785,534 2,932,000 7,056,883 6,449,713 6,413,207 6,739,832 6,098,715 6,549,548 265,585 95,630 86,059 95,104 81,174 102,408 4,546,260 4,559,683 4,580,598 4,945,631 4,712,574 5,009,423
18,660,000 17,750,000 17,190,000 16,560,000 17,500,000 17,060,000 6,872,802 7,332,269 8,828,653 10,432,895 9,941,528 9,960,136 9,595,304 13,030,871 13,247,367 16,414,803 13,466,235 17,149,451 - - 133,799 617,442 661,571 892,349 317,182,531 310,231,797 302,862,303 309,417,037 305,771,163 320,592,884
(18,636,280) (17,563,952) (15,926,938) (12,691,322) (10,951,919) (20,543,887)
3,475,769 92,986 48,598 6,417 27,306 186,069 (6,239,425) - (26,743,156) (53,116,427) (16,525,000) - 16,347,085 2,321,652 729,510 7,691,500 1,247,038 3,275,405 (16,096,748) (1,071,297) (729,510) (7,691,500) (1,247,038) (3,275,405) 28,615,000 - 5,520,000 4,605,000 14,250,000 - 5,605,000 - 24,760,000 48,430,000 15,940,000 - 3,030,212 - 2,696,843 5,260,86 6 860,410 - 34,736,893 1,343,341 6,282,285 5,185,85 6 14,552,71 6 186,069 16,100,613 (16,220,611) (9,644,653) (7,505,466) 3,600,797 (20,357,818) 48,723,934 64,944,545 74,589,19 8 82,094,66 4 78,493,86 7 98,851,685 $ 64,824,547 $ 48,723,934 $ 64,944,54 5 $ 74,589,19 8 $ 82,094,66 4 $ 78,493,867
9.00% 9.16% 9.78% 9.89% 10.26% 9.74%
67 Utica Community Schools
As of June 30, 2019 2018 2017 2016 General Fund: Prior to adoption of GASB 54: Reserved$ - -$ -$ -$ Unreserved - - - - Subsequent to adoption of GASB 54: Nonspendable: - - Inventories 923,659 905,928 821,865 873,744 Prepaid costs 2,656,287 2,835,235 341,475 470,237 Restricted - - - - Committed - - - - Assigned - 4,267,070 8,323,884 11,879,246 Unassigned 25,041,096 14,660,140 11,208,642 4,687,456 Total general fund 28,621,042 22,668,373 20,695,866 17,910,683
All other governmental funds: Prior to adoption of GASB 54: Reserved - - - - Unreserved, reported in: Special revenue funds - - - - Capital project funds - - - - Debt service funds - - - -
Subsequent to adoption of GASB 54: Nonspendable Inventories 164,354 152,956 172,402 125,061 Prepaid costs - - - - Restricted - Capital projects 109,614,565 24,500,867 39,105,674 46,279,169 Debt service 6,245,152 2,164,555 1,741,521 1,764,592 Food service 3,288,258 3,305,506 3,109,548 2,878,174 Committed - - - - Assigned: Capital projects 1,327,184 - - - Bookstore 72,194 85,846 106,867 252,853 Enrichment 4,276,986 3,964,693 2,412,727 1,829,334 Unassigned - - - - Total all other governmental funds 124,988,693 34,174,423 46,648,739 53,129,183
Total of all governmental funds$ 153,609,735 $ 56,842,796 $67,344,605 $71,039,866
Note: The School District adopted GASB 54 on July 1, 2010.
Source: Utica Community Schools Current Year and Prior Years' Audited Financial Statements FY 2010 through 2019
68 Financial Trend Information Fund Balances, Governmental Funds Last Ten Fiscal Years
As of June 30, 2015 2014 2013 2012 2011 2010
$ - $ - $ - $ - $ - $ 3,567,263 - - - - - 27,710,675
893,082 879,936 858,117 800,804 740,833 - 555,458 923,556 866,083 2,238,674 2,523,635 ------16,623,494 14,735,459 16,150,598 23,218,045 5,179,245 - 7,958,662 16,106,219 20,161,295 15,802,635 23,805,799 - 26,030,696 32,645,170 38,036,093 42,060,158 32,249,512 31,277,938
- - - - - 37,431,984
- - - - - 6,012,919 - - - - - 3,771,026 ------
115,584 123,895 147,646 120,928 95,794 - - - - 78,306 78,307 -
32,074,480 8,432,294 19,605,979 25,666,277 35,602,414 - 1,544,047 1,320,384 1,195,209 2,044,891 2,327,078 - 2,682,059 3,846,488 3,505,590 2,682,177 2,903,403 ------
107,099 107,230 251,994 264,984 4,214,362 - 254,196 304,710 363,953 391,008 933,447 - 2,016,386 1,943,763 1,838,081 1,280,469 3,690,347 ------38,793,851 16,078,764 26,908,452 32,529,040 49,845,152 47,215,929
$ 64,824,547 $ 48,723,934 $ 64,944,545 $ 74,589,198 $ 82,094,664 $ 78,493,867
69 Utica Community Schools
Taxable Value by Property Type (Includes Renaissance Zone): Real Property Tax Agricultural & Personal I I I I I Year Residential Commercial Industrial other property Total Value 2018 5,572,798,813 876,190,418 361,287,364 548,886 331,478,744 7,142,304,225 2017 5,313,595,974 831,309,874 333,762,635 727,122 341,561,135 6,820,956,740 2016 5,135,323,274 805,325,710 322,567,509 720,642 358,312,336 6,622,249,471 2015 4,999,741,594 771,290,159 320,088,549 3,902,937 495,212,405 6,590,235,644 2014 4,823,109,545 755,170,055 309,289,749 3,730,307 490,210,644 6,381,510,300 2013 4,696,364,396 759,088,627 321,620,231 3,633,143 503,920,106 6,284,626,503 2012 4,559,828,504 794,421,767 322,076,992 3,929,715 526,665,642 6,206,922,620 2011 4,762,271,547 857,176,019 364,472,933 1,212,817 540,598,668 6,525,731,984 2010 5,056,488,392 920,466,528 421,055,527 1,403,730 562,209,743 6,961,623,920 2009 5,746,736,176 942,377,750 449,623,596 1,589,050 612,026,990 7,752,353,562
Note: Under Michigan law, the revenue base is Taxable Value. Taxes levied in a particular "tax year" become revenue of the subsequent fiscal year. Beginning in 2014, Commercial and Industrial Personal Property of less than $80,000 became exempt from ad valorem taxes. Eligible manufacturing personal property put into service beginning 2013 became exempt beginning in 2016. UCS is reimbursed by the State of Michigan for the lost personal property tax revenue
Source: 1 Macomb County Michigan - School District Taxable Values (http://equalization.macombgov.org/Equalization-Reports) 2 Utica Community Schools L-4029 Tax Rate Form 3 Macomb County Michigan - School District Assessed Values (http://equalization.macombgov.org/Equalization-Reports)
70 Revenue Capacity Information Taxable Value and Estimated Actual Value of Taxable Property (Unaudited) Last Ten Years
Estimated Actual Non-Principal Taxable Value as a 2 3 I I Tax rate (mills) Value % of Actual Principal Residence Residence 21.0728 17,932,649,030 39.83% 5,432,851,713 1,709,452,512 21.4176 17,238,776,586 39.57% 5,209,817,691 1,611,139,049 21.5468 16,400,221,962 40.38% 5,038,738,172 1,583,511,299 21.7582 15,400,174,130 42.79% 5,053,280,678 1,536,954,966 21.7816 13,828,756,414 46.15% 4,898,429,365 1,483,080,935 21.7816 13,153,577,456 47.78% 4,796,716,652 1,487,909,851 21.7816 12,771,727,544 48.60% 4,715,235,013 1,491,687,607 21.7816 13,392,029,908 48.73% 4,920,194,431 1,605,537,553 21.6816 14,191,142,948 49.06% 5,221,518,542 1,740,105,378 21.4316 16,601,135,810 46.70% 5,931,360,379 1,820,993,183
71 Utica Community Schools
I 2 Millage rates - Direct Utica Community Schools District Taxes Overlapping taxes Operating Total direct taxes Fiscal Macomb Year Non- Sinking Non- Macomb Community Tax Year Ended Homestead Homestead Debt* Fund* Homestead Homestead County college 2018 2019 - 17.3128 3.76 - 3.76 21.0728 4.4925 1.4640 2017 2018 - 17.5676 3.85 - 3.85 21.4176 4.5242 1.4072 2016 2017 - 17.6968 3.85 - 3.85 21.5468 4.6014 1.4174 2015 2016 - 17.9082 3.85 - 3.85 21.7582 4.6135 1.5302 2014 2015 - 17.9316 3.85 - 3.85 21.7816 4.6135 1.5262 2013 2014 - 17.9316 3.85 - 3.85 21.7816 4.6135 1.5312 2012 2013 - 17.9316 3.85 - 3.85 21.7816 4.6135 1.5712 2011 2012 - 17.9316 3.85 - 3.85 21.7816 4.6135 1.5712 2010 2011 - 17.9316 3.75 - 3.75 21.6816 4.6135 1.4212 2009 2010 - 17.9316 3.50 - 3.50 21.4316 4.6135 1.4212
Note: Michigan law restricts the maximum millage that may be levied by the City without a vote of our residents, as follows:
*Debt and sinking fund millages apply to homestead and non-homestead property. **Suburban Mobility Authority Regional Transportation
Source: 1 Utica Community Schools L-4029 Tax Rate Form 2 Macomb County Michigan - Apportionment Report by Tax Year
(http://finance.macombgov.org/finance-ApportionmentReport)
72 Revenue Capacity Information Direct and Overlapping Property Tax Rates (Unaudited) Last Ten Years 2 Overlapping taxes
Macomb State City of school Education City of Sterling Township Township of Township Township district Tax Utica Heights of Macomb Washington of Ray of Shelby SMART** 2 .8945 2.8945 6.0000 21.2867 17.1804 6.3243 8.3726 3.4905 9.2999 1.0000 2 .9147 2.9147 6.0000 21.3524 16.1499 6.3470 8.4178 3.4980 9.2999 0.9903 2 .9354 2.9354 6.0000 20.9864 15.1858 4.9443 8.4811 3.5296 9.2999 0.9974 2 .9430 2.9430 6.0000 22.5017 15.1858 4.9660 8.5035 3.5529 9.2999 1.0000 2 .9430 2.9430 6.0000 22.6753 15.1858 4.9786 7.5265 3.5573 9.2999 1.0000 2 .9430 2.9430 6.0000 22.6170 12.6858 4.5886 7.5265 3.5573 9.2999 0.5900 2 .9430 2.9430 6.0000 22.5358 12.6858 4.5886 7.5265 3.5573 9.2999 0.5900 2 .9430 2.9430 6.0000 21.6998 12.6858 4.5886 7.5265 3.5573 9.2999 0.5900 2 .9430 2.9430 6.0000 21.9794 12.6858 4.5886 7.5265 3.2312 9.2999 0.5900 2 .9430 2.9430 6.0000 21.8835 10.7858 4.5814 7.4841 3.2312 9.2999 0.5900
73 Utica Community Schools Revenue Capacity Information Principal Property Taxpayers (Unaudited) Current and Nine Years Ago
2018 Taxable % of 2009 Taxable % of 2009 Taxpayer Value total Taxpayer Value total Rank 1 Ford Motor Co. $ 72,476,391 1.01% Ford Motor Co. $ 242,280,950 3.13% 1 2 DTE 44,284,995 0.62% Chrysler LLC 129,542,975 1.67% 2 3 FCA US LLC/Chrysler LLC 37,271,584 0.52% DTE 69,039,790 0.89% 3 4 Consumers Energy 32,824,125 0.46% GGP LLP/Lakeside Mall 31,452,700 0.41% 4 5 Comcast Cable Communications 14,579,648 0.20% Automotive Components Holdings 28,969,990 0.37% 5 6 International Transmission 13,471,121 0.19% International Transmission 23,198,270 0.30% 6 7 Oak Hill Apts. 10,777,437 0.15% Consumers Energy 19,382,173 0.25% 7 8 Utica Park PIace Owner LLC 10,044,700 0.14% TRW/TR-VSS 16,848,540 0.22% 8 9 PC Sterling Heights LLC 9,967,900 0.14% Ledd's Development Enterprises 15,343,000 0.20% 9 10 Laguna Associates LTD Partners 9,774,191 0.14% Utica Park Place Mgt Prtns 14,216,078 0.18% 10
Total $ 255,472,092 3.57% $ 590,274,466 7.62%
Total School District Taxable Value $ 7,142,304,225 $ 7,752,353,562
NOTE: Includes IFT Taxable Values
Source: Utica Community Schools Annual Disclosure Document - Major Taxpayer Macomb County Michigan - School District Taxable Values (http://equalization.macombgov.org/Equalization-Reports)
74 Utica Community Schools Revenue Capacity Information Property Tax Levies and Collections (Unaudited) Last Ten Fiscal Years
Delinquent Year Collections for Collections for Percent of Ended Total Levy for Current Fiscal Percent Prior Fiscal Total Tax Levy I 2 2 Tax Year June 30, Fiscal Year Year Collected Years Collections Collected 2018 2019$ 56,316,204 56,255,799 99.89%$ - $ 56,255,799 99.89% 2017 2018 54,484,294 54,418,818 99.88% 45,748 54,464,565 99.96% 2016 2017 53,330,202 53,237,326 99.83% 48,956 53,286,282 99.92% 2015 2016 53,004,602 52,932,129 99.86% 72,784 53,004,914 100.00% 2014 2015 51,352,383 51,256,174 99.81% 80,548 51,336,722 99.97% 2013 2014 50,461,911 50,348,571 99.78% 101,507 50,450,078 99.98% 2012 2013 50,614,031 50,504,956 99.78% 100,696 50,605,652 99.98% 2011 2012 54,004,283 53,883,410 99.78% 102,655 53,986,065 99.97% 2010 2011 58,503,165 58,011,107 99.16% 322,199 58,333,306 99.71% 2009 2010 61,019,378 60,857,219 99.73% 139,136 60,996,355 99.96%
Source: 1 Michigan Department of Education Taxable Value (https://mdoe.state.mi.us/TVS/Menu) 2 Utica Community Schools AS400 Report (FX0305 - Class 111)
75 Utica Community Schools
General Less Pledged Net General Fiscal Year Obligation Debt Service Bonded Other General Total General I I Ended Bonds Funds Debt Obligation Debt Obligation Debt
2019$ 204,990,000 $ - $ 204,990,000 $ - $ 204,990,000 2018 137,585,000 - 137,585,000 - 137,585,000 2017 158,610,000 - 158,610,000 - 158,610,000 2016 170,625,000 - 170,625,000 - 170,625,000 2015 168,630,000 - 168,630,000 - 168,630,000 2014 159,070,000 - 159,070,000 - 159,070,000 2013 176,820,000 - 176,820,000 - 176,820,000 2012 188,200,000 - 188,200,000 - 188,200,000 2011 201,265,000 - 201,265,000 - 201,265,000 2010 205,100,000 - 205,100,000 - 205,100,000
Source: 1 Utica Community Schools Current Year and Prior Years' Audited Financial Statements FY 2010 through 2019
2 Macomb County Michigan - School District Taxable Values (Includes Renaissance Zone)
(http://equalization.macombgov.org/Equalization-Reports)
3 Utica Community Schools Bond Disclosure Documents - Debt Statement & Debt Ratios
76 Debt Capacity Information Ratios of Outstanding Debt (Unaudited) Last Ten Fiscal Years
Net General Bonded Debt as a Total Debt as a Net General Total Debt per Taxable Value Percentage of Percentage of Estimated Bonded Debt Capita 3 (Includes RZ) 2 Taxable Value Taxable Value Population per Capita per Capita
$ 7,142,304,225 2.87% 2.87% 183,434 $ 1,118 $ 1,118 6,820,956,740 2.02% 2.02% 184,878 744 744 6,622,249,471 2.40% 2.40% 184,878 858 858 6,590,235,644 2.59% 2.59% 179,914 948 948 6,381,510,300 2.64% 2.64% 188,518 895 895 6,284,626,503 2.53% 2.53% 185,278 859 859 6,206,922,620 2.85% 2.85% 181,580 974 974 6,525,731,984 2.88% 2.88% 182,136 1,033 1,033 6,961,623,920 2.89% 2.89% 181,967 1,106 1,106 7,752,353,562 2.65% 2.65% 175,712 1,167 1,167
77 Utica Community Schools Debt Capacity Information Direct and Overlapping Governmental Activities Debt (Unaudited)
June 30, 2019
Estimated Estimated share percent of overlapping Governmental unit Debt outstanding applicable debt
City of Sterling Heights $ 131,363,453 62.22%$ 81,734,340 City of Utica 4,523,253 100.00% 4,523,253 Macomb Township 64,852,428 26.60% 17,250,746 Shelby Township 25,047,255 97.42% 24,401,036 Washington Township 23,222,525 13.35% 3,100,207 Macomb County 291,754,742 26.34% 76,848,199 Macomb ISD 2,250,000 25.72% 578,700 Clinton-Macomb Public Library 13,925,000 14.92% 2,077,610
Total overlapping debt 210,514,091
Direct district debt 204,990,000
Total direct and overlapping debt $ 415,504,091
Source: Utica Community Schools Bond Disclosure Documents - Debt Statement Municipal Advisory Council of Michigan - EMMA Services (http://www.mi-macsite.com/MACSitePM/EmmaService.aspx)
Note: Overlapping Debt - The issuer's proportionate share of the debt of other local governmental units that either overlap it (the issuer is located either wholly or partly within the geographic limits of the other units) or underlie it (the other units are located within the geographic limits of the issuer). The debt is generally apportioned based upon relative Assessed Values.
78 Utica Community Schools
As of June 30, 2019 2018 2017 2016 Calculation of debt limit I State Equalized Valuation (SEV)$ 8,963,109,215 $ 8,615,071,593 $ 8,190,568,431 $ 7,691,050,965 Debt Limit (15% of SEV) 1,344,466,382 1,292,260,739 1,228,585,265 1,153,657,645
Calculation of debt subject to limit 2 Debt outstanding 204,990,000 137,585,000 158,610,000 170,625,000 Less qualified bonds (204,990,000) (137,585,000) (158,610,000) (170,625,000)
Net debt subject to limit - - - -
Additional debt which could be legally incurred 1,344,466,382 1,292,260,739 1,228,585,265 1,153,657,645
Net debt subject to limit as a percentage of debt limit 0.00% 0.00% 0.00% 0.00%
Source: 1 http://equalization.macombgov.org/Equalization-Reports (SEV) 2 Utica Community Schools Current Year and Prior Years' Audited Financial Statements FY 2010 through 2019
79 Debt Capacity Information Legal Debt Margin (Unaudited) Last Ten Fiscal Years As of June 30, 2015 2014 2013 2012 2011 2010
$6,905,777,057 $ 6,567,844,878 $ 6,385,863,772 $ 6,696,014,954 $ 7,095,571,474 $ 8,300,567,905 1,035,866,559 985,176,732 957,879,566 1,004,402,243 1,064,335,721 1,245,085,186
168,630,000 159,070,000 176,820,000 188,200,000 201,265,000 205,100,000 (168,630,000) (159,070,000) (176,820,000) (188,200,000) (201,265,000) (205,100,000)
------
1,035,866,559 985,176,732 957,879,566 1,004,402,243 1,064,335,721 1,245,085,186
0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
80 Utica Community Schools Demographic and Economic Information Demographic and Economic Statistics - Macomb County (Unaudited) Last Ten Fiscal Years
Total Personal General Ratio of Total Calendar Income (in Obligation Bonds Debt to Personal Per Capita Unemployment year Population Thousands) (in Thousands) Income Personal Income Rate
2018 874,759 26,015,333 245,038 0.94% 29,740 4.00% 2017 871,375 24,910,869 260,256 1.04% 28,588 4.40% 2016 867,730 23,884,268 275,223 1.15% 27,525 5.30% 2015 864,840 23,476,082 289,727 1.23% 27,145 6.00% 2014 860,112 23,248,238 39,755 0.17% 27,029 8.20% 2013 854,769 22,752,241 44,930 0.20% 26,618 9.30% 2012 847,383 22,592,078 49,670 0.22% 26,661 10.00% 2011 842,145 20,587,077 57,445 0.28% 24,446 11.50% 2010 840,978 22,306,100 63,065 0.28% 26,524 14.40% 2009 833,430 22,533,447 68,230 0.30% 27,037 18.40%
Note: The statistics shown above are for the entire County of Macomb, which encompasses the entire School District and surrounding communities.
Source: Macomb County Audited Financial Statement (http://finance.macombgov.org/finance-CAFR)
81 Utica Community Schools Demographic and Economic Information Principal Employers - Within the School District (Unaudited)
2018-19 Percentage 2009-10 Percentage 2009 I 2 Employer Employees of total Employees of total rank 1 Chrysler Group - Sterling Plant 2,900 0.68% - 2 Ford Motor Company 2,753 0.64% 1,777 0.51% 4 3 Utica Community Schools 2,332 0.55% 3,496 1.00% 1 4 MNP Corporation - Headquarters 1,200 0.28% 1,200 0.34% 6 5 TRW Automotive 543 0.13% 600 0.17% 9 6 Kuka Systems Corporation N.A. 450 0.11% - 7 The Romine Group 350 0.08% - 8 Mayco Plastics Inc. 300 0.07% - 9 Key Safety Systems Inc. 295 0.07% - 10 U.S. Post Office 250 0.06% 1,100 0.31% 7 Chrysler Sterling Stamp 3,300 0.94% 2 Automotive Components LLC 2,000 0.57% 3 DaimlerChrysler Corporation - Sterling Heights Assembly Plant 1,500 0.43% 5 Utica Enterprises - Headquarters 600 0.17% 8 Milliken Millwork, Inc - Headquarters - 500 0.14% 10
Total principal employers 11,373 2.66% 16,073 4.59%
3 Total employment - Macomb County 427,445 350,053
*These employers are located within the Utica Community Schools District and its surrounding communities
Source: 1 Utica Community Schools Bond Disclosure Documents - Employment Characteristics 2 Utica Community Schools Annual Disclosure Documents - Employment Characteristics Michigan Manufacturers Directory, Crain's Detroit Business Book of Lists, Manta via www.manta.com, and individual employers 3 Michigan Department of Technology, Management & Budget (DTMB) (http://milmi.org/datasearch)
82 Utica Community Schools
Function/ program: As of June 30, 2019 2018 2017 2016* General government Instruction 1,720 1,711 1,736 1,774 Support services 895 883 897 1,205 Community service 138 138 102 - Food service 93 99 100 -
Total 2,846 2,831 2,835 2,979
*Community Service & Food Service are included in Support Services for Fiscal Year 2016 NOTE: Contracted & Direct Hire FTE are included since Fiscal Year 2016
Source: CEPI - Assignment Code Summary (EOY)
83 Operating Information Full-Time Equivalent School District Employees (Unaudited) Last Ten Fiscal Years
As of June 30, 2015 2014 2013 2012 2011 2010
1,665 1,717 1,666 1,599 1,663 1,679 591 666 798 811 957 1,001 141 161 171 165 150 160 107 107 102 103 107 96
2,504 2,651 2,737 2,678 2,877 2,936
84 Utica Community Schools
Function/ program As of June 30, 2019 2018 2017 2016 Instructional buildings: Elementary: Number of buildings (a) 25 25 25 25 Square footage (a) 1,469,536 1,469,536 1,469,536 1,469,536 Capacity (b) 17,468 17,468 17,468 17,468 Enrollment (c) 13,459 13,709 13,839 14,041 Junior: Number of buildings (a) 7 7 7 7 Square footage (a) 903,842 903,842 903,842 889,656 Capacity (b) 10,200 10,200 10,200 10,200 Enrollment (c) 6,509 6,621 6,823 6,857 High: Number of buildings (a) 4 4 4 4 Square footage (a) 1,012,361 1,009,050 1,009,050 1,009,050 Capacity (b) 10,064 10,064 10,064 10,064 Enrollment (c) 6,710 6,808 6,847 6,777 Other (ULA and Parochial): Enrollment (c) 200 230 450 461
Total enrollment 26,878 27,369 27,960 28,136
Administrative: Number of buildings (a) 1 1 1 1 Square footage (a) 47,837 47,837 47,837 47,837 Other Buildings: Number of buildings (a) 6 6 7 8 Square footage (a) 243,623 243,623 295,651 353,491 Transportation/Maintenance: Number of garages (a) 1 1 1 1 Square footage (a) 116,178 116,178 116,178 116,178 Buses (d) 245 230 247 267 Athletics: Football fields (e) 21 21 21 21 Soccer fields (e) 4 4 4 4 Running tracks (e) 4 4 4 4 Baseball/softball (e) 28 28 28 28 Swimming pools (e) 2 2 2 2 Playgrounds (e) 25 25 25 25
NOTE: 2018/19: Stevenson MADE Academy addition to Stevenson High School. 2017/18: Magahay Elementary was sold. Parochial schools no longer requesting service. 2016/17: Davis and Malow Junior Highs added auxiliary gyms. Ewell Elementary was sold. 2012/13: Utica High School added a media center. 2011/12: District discontinued UCAL lease for Alternative Learning. 2009/10: Four elementary buildings closed at fiscal year end.
Source: (a) Utica Community Schools Maintenance Department (CAD Operator) (b) Utica Community Schools UEA Teacher Contract (Capacity Factor) and Utica Community Schools Architect Building Utilization (c) Fall FTE Count Audited (DS4120) (d) Michigan Department of Education - School Bus Inventory (e) Utica Community Schools Athletic Department
85 Operating Information Capital Asset Information (Unaudited) Last Ten Fiscal Years
As of June 30, 2015 2014 2013 2012 2011 2010
25 25 25 25 25 29 1,469,536 1,469,536 1,469,536 1,469,536 1,682,145 1,682,145 17,468 17,468 17,468 17,468 17,468 19,832 14,241 14,506 14,586 14,680 14,713 14,994
7 7 7 7 7 7 889,656 889,656 889,656 889,656 889,656 889,656 10,200 10,200 10,200 10,200 10,200 10,200 6,885 6,862 6,333 6,789 7,006 6,556
4 4 4 4 4 4 1,009,050 1,009,050 1,009,050 1,002,707 1,002,707 994,346 10,064 10,064 10,064 10,064 10,064 10,064 6,900 7,054 7,583 7,277 7,168 7,610
294 282 316 238 307 263
28,321 28,704 28,818 28,983 29,194 29,423
1 1 1 1 1 1 47,837 47,837 47,837 47,837 47,837 47,837
8 8 8 8 9 5 353,491 353,491 353,491 353,491 371,294 158,685
1 1 1 1 1 1 116,178 116,178 116,178 116,178 116,178 116,178 254 256 256 247 247 258
21 21 21 21 21 21 4 4 4 4 4 4 4 4 4 4 4 4 28 28 28 28 28 28 2 2 2 2 2 4 25 25 25 25 25 29
86 Utica Community Schools Operating Information - General Fund Operating Indicators (Unaudited) Last Ten Fiscal Years
Percentage of students Cost Total qualifying for Average Operating per Operating Revenue teaching free/reduced teacher I 2 2 3 4 5 Year Enrollment expenditures pupil revenue per pupil staff meals salary
2019 26,878 268,101,505 9,975 272,713,374 10,146 1,415 38.08% * 2018 27,369 272,037,107 9,940 273,571,627 9,996 1,440 35.68% 79,799 2017 27,960 273,447,461 9,780 269,512,041 9,639 1,466 30.83% 80,840 2016 28,136 272,279,117 9,677 262,941,714 9,345 1,495 30.78% 80,334 2015 28,321 270,057,953 9,536 259,277,803 9,155 1,547 30.24% 77,435 2014 28,704 260,540,645 9,077 254,197,400 8,856 1,523 29.83% 78,101 2013 28,818 252,004,242 8,745 248,158,106 8,611 1,520 29.80% 78,449 2012 28,983 253,060,621 8,731 255,789,875 8,825 1,518 28.72% 85,725 2011 29,194 253,446,490 8,681 254,894,548 8,731 1,582 23.51% 83,646 2010 29,423 261,499,662 8,887 257,642,411 8,756 1,862 23.05% 82,637
* Data not available
Note: 2 Operating Expenditures Excludes Other Financing Uses and Capital Outlay Operating Revenues Excludes Other Financing Sources
Source: 1 Fall FTE Count Audited (DS4120) 2 Utica Community Schools Current Year and Prior Years' Audited Financial Statements FY 2010 through 2019 3 Utica Community Schools Annual Disclosure & Bond Disclosures 4 MI School Data (https://www.mischooldata.org/Default.aspx) 5 Michigan Department of Education Bulletin 1014 (http://www.michigan.gov/mde/0,4615,7-140-6530_6605-21514--,00.html)
87