PRELIMINARY OFFICIAL STATEMENT DATED JANUARY 2, 2014
NEW ISSUE—BOOK-ENTRY ONLY RATINGS: Moody’s: ____ (Underlying) (See Ratings herein)
In the opinion of Bond Counsel, under existing statutes, regulations and judicial decisions interest on the Bonds is excluded from gross income for purposes of federal income taxation and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although in the case of corporations (as defined for federal income tax purposes) such interest is taken into account in determining adjusted offers to buy be accepted accepted be buy to offers current earnings for purposes of such alternative minimum tax. This opinion of Bond Counsel is subject to continuing compliance by the School District with its covenants in the Resolution (as defined herein) and other documents to comply with requirements of the Internal Revenue Code of 1986, as amended, and applicable regulations thereunder. Bond Counsel is also of the opinion that under the laws of the Commonwealth of Pennsylvania (the “Commonwealth”) as presently enacted and construed, the Bonds are exempt from personal property taxes in the Commonwealth and the interest on the Bonds is exempt from the Commonwealth's Personal Income Tax and the Commonwealth's Corporate Net Income Tax. The Bonds are "qualified tax-exempt obligations", for purposes and effect contemplated by Section 265 of the Internal Revenue Code of 1986, as amended (relating to expenses and interest relating to tax-exempt income of certain financial institutions). For further information concerning federal and state tax matters relating to the Bonds, see "Tax Exemption and Other Tax Matters" herein.
$9,255,000* Upper Perkiomen School District Montgomery and Berks Counties, Pennsylvania General Obligation Bonds, Series of 2014
Dated: February 13, 2014 Principal Due: November 15, as shown on inside cover
without notice. The Bonds may not be sold nor may may nor sold be not may Bonds The notice. without Interest Due: May 15 and November 15 First Interest Payment: November 15, 2014
n or qualificationapplicablen under the any securitiesof such laws jurisdiction. The General Obligation Bonds, Series of 2014 (the “Bonds”) in the aggregate principal amount of $9,255,000* will be issued in registered form in denominations of $5,000 or any integral multiple thereof. The Bonds will be registered in the name of Cede & Co., as the registered owner ry Official Statement constituteofferan sell to or solicitationthe ofofferan buy, to nor and nominee of The Depository Trust Company ("DTC"), New York, New York. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or any integral multiple thereof only under the book-entry only system maintained by DTC through its brokers and dealers who are, or act through, DTC Participants. The purchasers of the Bonds will not receive physical delivery of the Bonds. For so long as any purchaser is the beneficial owner of a Bond, that purchaser must maintain an account with a broker or a dealer who is, or acts through, a DTC Participant to receive payment of principal of and interest on the Bonds. See "BOOK-ENTRY ONLY SYSTEM" herein. If, under the circumstances described herein, Bonds are ever issued in certificated form, the Bonds will be subject to registration of transfer, exchange and payment as described herein. The Bonds are general obligations of the Upper Perkiomen School District, Montgomery and Berks Counties, Pennsylvania (the "School District"), payable from its tax and other general revenues. The School District has covenanted that it will provide in its budget in each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the Bonds for such year and will duly and punctually pay or cause to be paid from the sinking fund established under the Resolution or any other of its revenues or funds the principal of every Bond and the interest thereon on the dates, at the place and in the manner stated in the Bonds. For such budgeting, appropriation, and payment the School District irrevocably has pledged its full faith, credit and taxing power which taxing power presently includes the power to levy an annual ad valorem tax on all taxable real property within the School District, within the limits provided by law (See “SECURITY FOR THE BONDS” and “TAXING POWERS AND LIMITS” infra). Interest on each of the Bonds is payable initially on November 15, 2014, and thereafter semiannually on May 15 and November 15 of each year until the maturity date of such Bond or, if such Bond is subject to redemption prior to maturity, until the date fixed for redemption thereof, if payment of the redemption price has been duly made or provided for. The School District has appointed Manufacturers and Traders Trust Company (the “Paying Agent”), as paying agent and sinking fund depository for the Bonds. So long as Cede & Co., as nominee for DTC, is the registered owner of the Bonds, payments of the principal of, redemption premium, if any, and interest on the Bonds, when due for payment, will be made directly to DTC by the Paying Agent, and DTC will in turn remit such payments to DTC Participants for subsequent disbursement to the Beneficial Owners of the Bonds. If the use of the Book-Entry Only System for the Bonds is ever discontinued, the principal of and redemption premium, if any, on each of the Bonds will be payable, when due, upon surrender of such Bond to the Paying Agent at its corporate trust office, located in Harrisburg, Pennsylvania and Buffalo, New York (or any successor paying agent at its designated office(s)) and interest on such Bond will be payable by check made out and mailed to the person(s) in whose name(s) such Bond is registered as of the Record Date with respect to the particular interest payment date (See “THE BONDS,” infra). The Bonds are subject to redemption prior to maturity as described herein. Proceeds of the Bonds will be used to currently refund the School District’s General Obligation Bonds, Series of 2008 and pay costs and expenses of issuing the Bonds.
PRINCIPAL MATURITIES AND AMOUNTS, INTEREST RATES AND PRICES/YIELDS See Inside Front Cover
The Bonds are offered when, as and if issued, subject to withdrawal or modification of the offer without notice, and subject to the approving legal opinion of Rhoads & Sinon LLP, of Harrisburg, Pennsylvania, Bond Counsel to the School District, to be furnished upon delivery of the Bonds. Certain other matters will be passed upon for the School District by Wisler Pearlstine, LLP of Blue Bell, Pennsylvania, School District Solicitor, and Public Financial Management, Inc., of Harrisburg, Pennsylvania, as Financial Advisor to the School District in connection with the issuance of the Bonds. It is expected that the Bonds will be available for delivery in New York, New York, on or about February 13, 2014.
Public Financial Management, Inc. Financial Advisor to the School District Dated:
be anyinof Bonds any the jurisdictionbe sale offer, which such in solicitation or unlawful sale would be prior registratio to
*Estimated, subject to change
This Preliminary Official Statement and the information contained herein are subject to completion, amendment or other change other or amendment completion, to subject are herein contained information the and Statement Official Preliminary This Prelimina this shall circumstances no Under form. final in delivered is Statement Official Preliminary the time the to prior shall there
$9,255,000* Upper Perkiomen School District Montgomery and Berks Counties, Pennsylvania General Obligation Bonds, Series of 2014
Dated: February 13, 2014 Principal Due: November, as shown below Interest Due: May 15 and November 15 First Interest Payment: November 15, 2014
PRINCIPAL MATURITIES AND AMOUNTS, INTEREST RATES AND PRICES/YIELDS
Year of Maturity Principal Interest (November 15) Amounts Rates Yields Prices 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
(A portion of the Bonds may be structured as Term Bonds. See "Invitation to Bid".)
*Estimated, subject to change
UPPER PERKIOMEN SCHOOL DISTRICT Montgomery and Berks Counties, Pennsylvania
BOARD OF SCHOOL DIRECTORS
William G. Scott ...... President Raeann B. Hofkin ...... Vice President Sandra M. Kassel ...... Secretary* Jeffrey A. Feirick, Esquire ...... Treasurer Kerry A. Drake ...... Member Catherine Fenley ...... Member Margie K. Gehlhaus ...... Member John L. Gehman ...... Member Wilfred E. Pike ...... Member Jonathan A. Warren ...... Member
*Non-Member
SUBSTITUE SUPERINTENDENT DR. FRANCIS LESKOWICZ
BUSINESS ADMINISTRATOR SANDRA M. KASSEL
SCHOOL DISTRICT SOLICITOR WISLER PEARLSTINE, LLP Blue Bell, Pennsylvania
BOND COUNSEL RHOADS & SINON LLP Harrisburg, Pennsylvania
FINANCIAL ADVISOR PUBLIC FINANCIAL MANAGEMENT, INC. Harrisburg, Pennsylvania
PAYING AGENT MANUFACTURERS AND TRADERS TRUST COMPANY Harrisburg, Pennsylvania and Buffalo, New York
SCHOOL DISTRICT ADDRESS 2229 E. Buck Rd. Pennsburg, Pennsylvania 18073
No dealer, broker, salesman or other person has been authorized by the School District to give information or to make any representations, other than those contained in this Preliminary Official Statement, and if given or made, such other information or representations must not be relied upon. This Preliminary Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information set forth herein has been obtained from the School District and from other sources which are believed to be reliable but the School District does not guarantee the accuracy or completeness of information from sources other than the School District. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Preliminary Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in any of the information set forth herein since the date hereof.
TABLE OF CONTENTS Page Page INTRODUCTION ...... 1 DEBT AND DEBT LIMITS ...... 18 PURPOSE OF THE ISSUE ...... 1 Debt Statement ...... 18 Debt Limit and Remaining Borrowing Capacity ...... 20 THE BONDS ...... 2 Debt Service Requirements ...... 21 Description ...... 2 Future Financing ...... 22 Payment of Principal and Interest ...... 2 LABOR RELATIONS ...... 22 Transfer, Exchange and Registration of Bonds ...... 2 School District Employees ...... 22 REDEMPTION OF BONDS ...... 3 Pension Program ...... 22 Mandatory Redemption ...... 3 Other Post-Employment Benefits ...... 22 Optional Redemption ...... 3 LITIGATION...... 23 Notice of Redemption ...... 3 Manner of Redemption ...... 3 DEFAULTS AND REMEDIES ...... 23 SECURITY FOR THE BONDS...... 4 TAX EXEMPTION AND OTHER TAX MATTERS ...... 23 PLEDGE OF THE SCHOOL DISTRICT’S FULL FAITH, CREDIT AND CONTINUING DISCLOSURE UNDERTAKING ...... 24 TAXING POWER ...... 4 RATING ...... 26 Bonds Sinking Fund ...... 4 Commonwealth Enforcement of Debt Service Payments...... 4 UNDERWRITING ...... 26 LEGAL OPINION ...... 26 BOOK-ENTRY ONLY SYSTEM ...... 4 FINANCIAL ADVISOR ...... 26 THE SCHOOL DISTRICT ...... 6 Introduction ...... 6 MISCELLANEOUS ...... 27 Administration ...... 6 APPENDIX A - DEMOGRAPHIC AND ECONOMIC INFORMATION School Facilities ...... 6 RELATING TO THE UPPER PERKIOMEN SCHOOL DISTRICT Enrollment Trends ...... 7 Introduction ...... A-1 SCHOOL DISTRICT FINANCES ...... 7 Population ...... A-1 Introduction ...... 7 Employment ...... A-2 Financial Reporting ...... 7 Income ...... A-5 Summary and Discussion of Financial Results ...... 9 Commercial Activity ...... A-5 Revenue ...... 11 Educational Institutions ...... A-5 Medical Facilities ...... A-6 TAXING POWERS AND LIMITS ...... 13 Utilities ...... A-6 Transportation ...... A-6 Limitation on Unreserved Undesignated Fund Balances ...... 14 Real Property Tax ...... 15 APPENDIX B - OPINION OF BOND COUNSEL Other Taxes ...... 18 Commonwealth Aid to School Districts ...... 18 APPENDIX C - AUDITED FINANCIAL REPORT FOR JUNE 30, 2013
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PRELIMINARY OFFICIAL STATEMENT
$9,255,000* Upper Perkiomen School District Montgomery and Berks Counties, Pennsylvania General Obligation Bonds, Series of 2014
INTRODUCTION
This Preliminary Official Statement, including the cover and inside cover pages hereof and Appendices hereto, is furnished by Upper Perkiomen School District, Montgomery and Berks Counties, Pennsylvania (the “School District” or “Issuer”), in connection with the offering of its $9,255,000* aggregate principal amount of General Obligation Bonds, Series of 2014, dated as of February 13, 2014 (the “Bonds”). The Bonds are being issued pursuant to a Resolution of the Board of School Directors of the School District, adopted on ______(the “Resolution”), and pursuant to the Local Government Unit Debt Act, as codified by the Act of December 19, 1996 (53 Pa. Cons. Stat. Chs. 80-82), as amended and supplemented (the “Debt Act”), of the Commonwealth of Pennsylvania (the “Commonwealth” or “State”).
PURPOSE OF THE ISSUE
Proceeds of the Bonds will be used to currently refund the School District’s General Obligation Bonds, Series of 2008, currently outstanding in the aggregate principal amount of $8,890,000 (the “2008 Bonds”) and paying costs of issuing and insuring the Bonds.
Upon issuing the Bonds, a portion of the proceeds of the Bonds will be irrevocably deposited with Manufacturers and Traders Trust Company, as paying agent for the 2008 Bonds in an amount sufficient to redeem the Bonds, at a redemption price of 100% of the principal amount redeemed plus accrued interest, on or about February 15, 2014.
Sources and Uses of Bond Proceeds
The following is a summary of the sources and uses of the proceeds from the issuance of the Bonds.
Source of Funds Bond Proceeds ...... Net Original Issue Premium/(Discount) ...... Accrued Interest...... Total Source of Funds ......
Use of Funds Amount Required to Prepay 2008 Bonds ...... Costs of Issuance(1) ...... Total Use of Funds ......
(1)Includes legal, solicitor, financial advisor, printing, rating, bond discount, CUSIP, paying agent, and miscellaneous costs.
*Estimated, subject to change
1
THE BONDS
Description
The Bonds will be issued in book-entry only form, in denominations of $5,000 principal amount and integral multiples thereof, will be in the aggregate principal amount of $9,255,000*, and will be dated as of February 13, 2014. The Bonds will bear interest at the rates and mature in the amounts and on the dates set forth on the inside front cover of this Preliminary Official Statement. Interest on the Bonds will be payable initially on November 15, 2014, and thereafter, semiannually on May 15 and November 15 of each year until the maturity date of such Bond or, if such Bond is subject to redemption prior to maturity, until the date fixed for redemption thereof, if payment of the redemption price has been duly made or provided for.
When issued, the Bonds will be registered in the name of Cede & Co., as partnership nominee for The Depository Trust Company (“DTC”), New York, New York. Purchasers of the Bonds (the “Beneficial Owners”) will not receive any physical delivery of bond certificates, and beneficial ownership of the Bonds will be evidenced only by book entries. See “BOOK–ENTRY ONLY SYSTEM” herein.
Payment of Principal and Interest
So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payments of principal of, redemption premium, if any, and interest on the Bonds, when due, are to be made to DTC and all such payments shall be valid and effective to satisfy fully and to discharge the obligations of the School District with respect to, and to the extent of, principal, redemption premium, if any, and interest so paid. If the use of the Book-Entry Only System for the Bonds is discontinued for any reason, bond certificates will be issued directly to the Beneficial Owners of the Bonds and payment of principal, redemption premium, if any, and interest on the Bonds shall be made as described in the following paragraphs:
The principal of certificated Bonds, when due upon maturity or upon any earlier redemption, will be paid to the registered owners of such Bonds, or registered assigns, upon surrender of such Bonds to Manufacturers and Traders Trust Company (the “Paying Agent”), acting as paying agent and sinking fund depositary for the Bonds, at its specified corporate trust office, currently located in Harrisburg, Pennsylvania (or to any successor paying agent or alternate designated office(s)).
Interest on Bonds will be payable to the registered owner of a Bond from the interest payment date next preceding the date of registration and authentication of such Bond, unless: (a) such Bond is registered and authenticated as of an interest payment date, in which event such Bond shall bear interest from said interest payment date, or (b) such Bond is registered and authenticated after a Record Date (hereinafter defined) and before the next succeeding interest payment date, in which event such Bond shall bear interest from such interest payment date, or (c) such Bond is registered and authenticated on or prior to the Record Date preceding November 15, 2014, in which event such Bond shall bear interest from February 13, 2014, or (d) as shown by the records of the Paying Agent, interest on such Bond shall be in default, in which event such Bond shall bear interest from the date to which interest was last paid on such Bond. Interest on each certificated Bond will be payable by check drawn on the Paying Agent, which shall be mailed to the registered owner whose name and address shall appear, at the close of business on the fifteenth (15th) day (whether or not a day on which the Paying Agent is open for business) next preceding each interest payment date (the “Record Date”), on the registration books maintained by the Paying Agent, irrespective of any transfer or exchange of such Bond subsequent to such Record Date and prior to such interest payment date, unless the School District shall be in default in payment of interest due on such interest payment date. In the event of any such default, such defaulted interest shall be payable to the person in whose name such certificated Bond is registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Paying Agent to the registered owners of such Bonds not less than fifteen (15) days preceding such special record date. Such notice shall be mailed to the persons in whose names such Bonds are registered at the close of business on the fifth (5th) day preceding the date of mailing.
If the date for payment of the principal of or interest on any Bonds shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the Commonwealth are authorized or required by law or executive order to close, then the date for payment of such principal or interest shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized or required to close, and payment on such date shall have the same force and effect as if made on the nominal date established for such payment.
Transfer, Exchange and Registration of Bonds
Subject to the provisions described below under “BOOK-ENTRY ONLY SYSTEM,” certificated Bonds are transferable or exchangeable by the registered owners thereof upon surrender of such Bonds to the Paying Agent, accompanied by a written instrument or instruments in form, with instructions, and with guaranty of signature satisfactory to the Paying Agent, duly executed by the registered owner of such Bond or his attorney-in- fact or legal representative. The Paying Agent shall enter any transfer of ownership of certificated Bonds in the registration books and shall authenticate and deliver at the earliest practicable time in the name of the transferee or transferees a new fully registered certificated bond or bonds of authorized denominations of the same series, maturity and interest rate for the aggregate principal amount which the registered owner is entitled to receive. The School District and the Paying Agent may deem and treat the registered certificated owner of any Bond as the absolute owner thereof (whether or not such Bond shall be overdue) for the purpose of receiving payment of or on account of principal and interest and for all other purposes, and the School District and the Paying Agent shall not be affected by any notice to the contrary.
*Estimated, subject to change
2
The School District and the Paying Agent shall not be required (a) to register the transfer of or exchange any certificated Bonds then considered for redemption during a period beginning at the close of business on the fifteenth (15th) day next preceding any date of selection of such Bonds to be redeemed and ending at the close of business on the day on which the applicable notice of redemption is mailed or (b) to register the transfer of or exchange any portion of any Bond selected for redemption until after the redemption date. Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same series, maturity, and interest rate.
REDEMPTION OF BONDS
Mandatory Redemption
Bidders may elect to structure the issue to include term Bonds, which term Bonds, if selected by the bidder, will be subject to mandatory redemption prior to maturity, in the years and amounts as shown in the Invitation to Bid (subject to adjustment as permitted therein), upon payment of the principal amount of Bonds to be redeemed, together with accrued interest to the date fixed for redemption, or upon maturity, as applicable. Bonds to be redeemed shall be selected by lot by the Paying Agent.
In lieu of such Mandatory Redemption, the Paying Agent, on behalf of the School District, may purchase from money in the Sinking Fund, at a price not to exceed the principal amount plus accrued interest, or the School District may tender to the Paying Agent, all or part of the Bonds subject to being drawn for redemption in any such year.
Optional Redemption
The Bonds stated to mature on or after November 15, 2019 are subject to redemption prior to maturity, at the option of the School District, as a whole or, from time to time, in part, on May 15, 2019, or on any date thereafter, upon payment of a redemption price of 100% of the principal amount thereof plus accrued interest to the date fixed for redemption. If less than all Bonds of any maturity are to be redeemed, the Bonds of such maturity to be redeemed shall be drawn by lot by the Paying Agent.
Notice of Redemption
So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, however, the School District and the Paying Agent shall send redemption notices only to Cede & Co. See “BOOK-ENTRY ONLY SYSTEM” herein for further information regarding conveyance of notices to Beneficial Owners.
Notice of any redemption shall be given by depositing a copy of the redemption notice in first class mail not less than thirty (30) days prior to the date fixed for redemption addressed to each of the registered owners of Bonds to be redeemed, in whole or in part, at the addresses shown on the registration books; provided, however, that failure to give such notice by mailing, or any defect therein or in the mailing thereof, shall not affect the validity of any proceeding for redemption of other Bonds so called for redemption as to which proper notice has been given.
On the date designated for redemption, notice having been provided as aforesaid, and money for payment of the principal and accrued interest being held by the Paying Agent, interest on the Bonds or portions thereof so called for redemption shall cease to accrue and such Bonds or portions thereof shall cease to be entitled to any benefit or security under the Resolution, and registered owners of such Bonds or portions thereof so called for redemption shall have no rights with respect to such Bonds, except to receive payment of the principal of and accrued interest on such Bonds to the date fixed for redemption.
If at the time of mailing the notice of redemption the School District has not deposited with the Paying Agent money sufficient to redeem all the Bonds called for redemption, such notice may state that it is conditional, that it is subject to the deposit of the redemption money with the Paying Agent no later than the opening of business on the redemption date, and such notice shall be of no effect unless such money is so deposited.
Manner of Redemption
So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payment of the redemption price shall be made to Cede & Co. in accordance with the existing arrangements by and among the School District, the Paying Agent and DTC and, if less than all Bonds of any particular maturity are to be redeemed, the amount of the interest of each DTC Participant, Indirect Participant and Beneficial Owner in such Bonds to be redeemed shall be determined by the governing arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. See “BOOK-ENTRY ONLY SYSTEM” herein for further information regarding redemption of Bonds registered in the name of Cede & Co.
If a Bond is of a denomination larger than $5,000, a portion of such Bond may be redeemed. For the purposes of redemption, a Bond shall be treated as representing the number of Bonds that is equal to the principal amount thereof divided by $5,000, each $5,000 portion of such Bond being subject to redemption. In the case of partial redemption of a Bond, payment of the redemption price shall be made only upon surrender of a certificated Bond in exchange for a Bond or Bonds of authorized denominations in aggregate principal amount equal to the unredeemed portion of the principal amount thereof.
If the redemption date for any Bonds shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the Commonwealth of Pennsylvania are authorized or required by law or executive order to close, then the date for payment of the principal, premium, if any, and interest upon such redemption shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized or required to close, and payment on such date shall have the same force and effect as if made on the nominal date of redemption.
3
SECURITY FOR THE BONDS
Pledge of the School District’s Full Faith, Credit and Taxing Power
The Bonds will be general obligations of the School District, payable from its tax and other general revenues. The School District has covenanted that it will provide in its budget for each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the Bonds for such year, and will duly and punctually pay or cause to be paid from its Sinking Fund, as hereinafter defined, or any other of its revenues or funds, the principal of each of the Bonds and the interest thereon at the dates and place and in the manner stated on the Bonds, and for such budgeting, appropriation and payment the School District irrevocably has pledged its full faith, credit and taxing power, which taxing power includes the power to levy ad valorem taxes on all taxable property in the School District, within the limits provided by law. (See “SCHOOL DISTRICT FINANCES” and “TAXING POWERS AND LIMITS” herein). The Debt Act presently provides for enforcement of debt service payments as hereinafter described (see "DEFAULTS AND REMEDIES" herein), and the Pennsylvania Public School Code presently provides for the withholding and application of subsidies in the event of failure to pay debt service (see "Commonwealth Enforcement of Debt Service Payments" below).
Bonds Sinking Fund
A sinking fund for the payment of the debt service on the Bonds, designated “Sinking Fund, General Obligation Bonds, Series of 2014” (the “Sinking Fund”), has been created under the Resolution and shall be maintained by the Paying Agent, as sinking fund depository. The School District shall deposit in the Sinking Fund a sufficient sum not later than the date when interest and/or principal is to become due on the Bonds so that on each payment date the Sinking Fund will contain an amount which, together with any other funds available therein, is sufficient to pay, in full, interest and/or principal then due on the Bonds.
The Sinking Fund shall be held by the Paying Agent, as sinking fund depository, and invested by the Paying Agent in such securities or shall be deposited in such funds or accounts as are authorized by the Debt Act, upon direction of the School District. Such deposits and securities shall be in the name of the School District, but subject to withdrawal or collection only by the Paying Agent, as sinking fund depository, and such deposits and securities, together with the interest thereon, shall be a part of the Sinking Fund.
The Paying Agent, as sinking fund depository, is authorized without further order from the School District to pay from the Sinking Fund the principal of and interest on the Bonds, as and when due and payable.
Commonwealth Enforcement of Debt Service Payments
Section 633 of the Pennsylvania Public School Code of 1949, as amended (the “Public School Code”), presently provides that in all cases where the board of school directors of any school district fails to pay or to provide for the payment of any indebtedness at date of maturity or date of mandatory redemption or on any sinking fund deposit date, or any interest due on such indebtedness on any interest payment date or on any sinking fund deposit date, in accordance with the schedule under which the bonds were issued, the Secretary of Education shall notify such board of school directors of its obligation and shall withhold out of any Commonwealth appropriation due such school district an amount equal to the sum of the principal amount maturing or subject to mandatory redemption and interest owing by such school district, or sinking fund deposit due by such school district, and shall pay over the amount so withheld to the bank or other person acting as sinking fund depositary for such bond issue. These withholding provisions are not part of any contract with the holders of the Bonds, and may be amended or repealed by future legislation.
There can be no assurance, however, that any payments pursuant to this withholding provision will be made by the date on which such payments are due to the Bondholders. The effectiveness of Section 633 of the Public School Code may be limited by the application of other withholding provisions contained in the Public School Code, such as provisions for withholding and paying over of appropriations for payment of unpaid teachers’ salaries. Enforcement may also be limited by bankruptcy, insolvency, or other laws or equitable principles affecting the enforcement of creditors’ rights generally.
BOOK-ENTRY ONLY SYSTEM
The information in this section has been obtained from materials provided by DTC for such purpose. The School District (herein referred to as the “Issuer”) and the Underwriter do not guaranty the accuracy or completeness of such information, and such information is not to be construed as a representation of the School District or the Underwriter.
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC the world's largest securities depository is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System. a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency'' registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants'') deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing 4 corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner'') is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds: DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal, interest and redemption payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, interest and redemption payments on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to Issuer or Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.
Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.
NEITHER THE ISSUER NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANT, INDIRECT PARTICIPANT OR BENEFICIAL OWNER OR ANY OTHER PERSON WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY TO ANY BENEFICIAL OWNER BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE RESOLUTION TO BE GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY OTHER ACTION TAKEN BY DTC AS BONDHOLDER. 5
The Issuer and the Paying Agent cannot give any assurances that DTC or the Participants will distribute payments of the principal or redemption price of and interest on the Bonds paid to DTC or its nominee, as the registered owner of the Bonds, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis, or that DTC will serve and act in the manner described in this Preliminary Official Statement.
THE SCHOOL DISTRICT
Introduction
Upper Perkiomen School District is located in the beautiful regions of the Upper Perkiomen Valley. The four Boroughs of East Greenville, Green Lane, Pennsburg, and Red Hill (all in Montgomery County) lie in an almost unbroken line of Route 29 from northwest to southeast, approximately 40 miles from Philadelphia to the southeast and 21 miles from Allentown-Bethlehem to the north. The Townships of Marlborough and Upper Hanover in Montgomery County and Hereford in Berks County surround the Boroughs to total approximately 52 square miles. The School District is part of the Philadelphia Primary Metropolitan Statistical Area and is located in the extreme northwest corner of Montgomery County. The assessed value for Hereford Township, located in Berks County approximately 12 percent of the assessed value, therefore the following data will relate to Montgomery County.
Administration
The present Upper Perkiomen School District was reorganized on July 1, 1966 by reason of reorganization to the School District of the Borough of East Greenville and the Upper Perkiomen Joint School District (which consisted of the former School Districts of the Boroughs of Green Lane, Pennsburg and Red Hill and of the Townships of Hereford, Marlborough and Upper Hanover). It is governed by a nine-member Board of School Directors (the “School Board”), elected for four-year terms. The superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Business Administrator is responsible for budget and financial operations. Both of the officials are selected by the School Board.
School Facilities
The School District presently operates two elementary schools, a middle school, and a high school, all as described on the following table. Students in grades 11 and 12 also attend the Western Center for Technical Studies.
TABLE 1
UPPER PERKIOMEN SCHOOL DISTRICT FACILITIES
Original Addition Rated Construction Renovation Pupil 2013 -14 Building Date Date Grades Capacity Enrollment Elementary: Hereford Elementary ...... 1958 1975, 1990, 2008 K-5 1,184 899 Marlborough Elementary ...... 1990 --- K-5 1,069 686 Secondary: Upper Perkiomen Middle School(1) ...... 1959 1972, 2009 6- 8 1,120 739 Upper Perkiomen High School ...... 1968 1985, 1993, 1998 9-12 1,282 936
(1)6th grades are part of secondary enrollments. Source: School District Officials.
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Enrollment Trends
The following table presents recent trends in school enrollment and projections of enrollment for the next five years, as prepared by School District officials.
TABLE 2 UPPER PERKIOMEN SCHOOL DISTRICT ENROLLMENT TRENDS
Actual Enrollments Projected Enrollments School School Year Elementary Secondary Total Year Elementary Secondary Total 2009-10 1,697 1,495 3,192 2014-15 1,697 1,495 3,192 2010-11 1,720 1,472 3,192 2015-16 1,720 1,472 3,192 2011-12 1,757 1,460 3,217 2016-17 1,715 1,500 3,215 2012-13 1,791 1,460 3,251 2017-18 1,710 1,515 3,225 2013-14 1,585 1,675 3,260 2018-19 1,655 1,725 3,380
Source: School District Officials. Enrollments do not include special education students placed outside the School District.
SCHOOL DISTRICT FINANCES
Introduction
The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Business Administrator and submitted to the School Board for approval prior to the beginning of each fiscal year on July 1.
Financial Reporting
The financial statements of the School District are prepared in accordance with accounting principles generally accepted in the United States of America. The School District’s reporting entity applies all relevant Governmental Accounting Standards Board (GASB) pronouncements. The government-wide and proprietary fund financial statements apply Financial Accounting Standards Board pronouncements and Accounting Principles Board opinions issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements, in which case, GASB prevails. The government wide statements report using the economic resources measurement focus and the accrual basis of accounting generally including the reclassification or elimination of internal activity (between or within funds). Its financial statements are audited annually by an independent certified public accountant, as required by Commonwealth law. The firm of Gorman & Associates, of Northampton, Pennsylvania, serves as School District Auditor.
The School District’s auditor has not been engaged to perform, and has not performed, since the date of its report included in an Appendix to this Preliminary Official Statement, any procedure on the financial statements addressed in that report. Such auditor also has not performed any procedures relating to this Preliminary Official Statement.
Budgeting Process in School Districts under Act 1 (Taxpayer Relief Act)
In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1.
Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days’ public notice of its intent to adopt the final budget.
If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district’s Index (see “The Taxpayer Relief Act” or “Act 1” herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act.
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With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see “The Taxpayer Relief Act” or “Act 1” herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district’s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district’s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses.
If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index.
Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days’ public notice be given of the board’s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution.
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Summary and Discussion of Financial Results
A summary of the General Fund balance sheet and changes in fund balances are presented in Tables 3 and 4. Table 5 shows revenues and expenditures for the past five years and the 2013-14 budget. The budget for the 2013-14 school year, as adopted June 13, 2013, projected revenues of $49,191,878 and expenditures of $52,232,311.
TABLE 3
UPPER PERKIOMEN SCHOOL DISTRICT SUMMARY OF COMPARATIVE GENERAL FUND BALANCE SHEET (Years ending June 30)*
ASSETS 2009 2010 2011 2012 2013 Cash and Cash Equivalents ...... $5,776,217 $8,675,797 $9,874,924 $9,992,170 $11,493,326 Investments ...... 3,245,000 25,000 710,000 370,000 1,490,000 Taxes Receivable ...... 784,912 792,484 835,697 1,049,136 1,096,845 Interfund Receivables ...... 9,306 83,857 150,672 85,191 18,868 Intergovernmental Receivables...... 486,381 970,703 794,524 1,332,037 755,535 Other Receivables ...... 0 0 920 0 400 Prepaid Expenses ...... 0 0 0 0 0 TOTAL ASSETS ...... $10,301,816 $10,547,841 $12,366,737 $12,828,534 $14,854,974
LIABILITIES Interfund Payables ...... $57,672 $96,404 $39,157 $45,126 $214,175 Intergovernmental Payables ...... 565 26,501 399 411 146,310 Accounts Payable ...... 484,242 626,404 925,741 1,004,818 765,200 Current Portion on Compensated Absences ..... 161,171 162,231 186,519 226,631 265,881 Accrued Salaries and Benefits ...... 1,436,475 1,472,895 1,757,339 1,873,130 1,824,730 Payroll Deductions and Withholdings ...... 546,215 578,940 680,146 903,366 1,177,073 Deferred Revenues ...... 716,925 748,184 730,585 765,466 882,253 Other Current Liabilities ...... 0 0 0 0 0 TOTAL LIABILITIES ...... $3,403,265 $3,711,559 $4,319,886 $4,818,948 $5,275,622
FUND EQUITIES Reserve for Other ...... $3,000,000 $0 $0 $0 $0 Restricted Fund Balance ...... 0 0 0 0 800 Committed Fund Balance ...... 0 0 514,636 601,694 550,157 Assigned Fund Balance ...... 1,155,000 5,037,342 3,665,464 2,649,747 3,040,433 Unassigned Fund Balance...... 2,743,551 1,798,940 3,866,751 4,758,145 5,987,962 TOTAL FUND EQUITIES ...... $6,898,551 $6,836,282 $8,046,851 $8,009,586 $9,579,352
TOTAL LIABILITIES AND FUND EQUITIES ...... $10,301,816 $10,547,841 $12,366,737 $12,828,534 $14,854,974
*Totals may not add due to rounding. Source: School District Annual Financial Reports.
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TABLE 4
UPPER PERKIOMEN SCHOOL DISTRICT GENERAL FUND SUMMARY OF CHANGES IN FUND BALANCE*
Actual Budget 2009 2010 2011 2012 2013 2014(1) Beginning Fund Balance ...... $6,729,312 $6,898,552 $6,911,283 $8,046,849 $8,009,586 $9,579,351 Surplus (Deficit) of Revenue over Expenditures ...... 169,240 (62,269) 1,196,445 (37,264) 1,569,765 (3,040,433) Changes in Inventory/RS Equity/Prior Year Adj. 0 75,000 (60,878) Ending General Fund Balance ...... $6,898,552 $6,911,283 $8,046,849 $8,009,586 $9,579,351 $6,538,918
*Totals may not add due to rounding. (1)Budget, as adopted June 13, 2013. See “Summary and Discussion of Financial Results” herein. Source: School District Annual Financial Reports and Budget.
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Revenue
The School District received $49,337,784 in revenue in 2012-13 and has budgeted revenue of $49,191,878 in 2013-14. Local sources have contributed an increasing share of total revenue in the past five years, from 63.3 percent in 2008-09 to 66.9 percent in 2012-13. Revenue from Commonwealth sources contributed a decreasing share of total revenue from 35.2 percent to 32.0 percent over this period. Federal and other sources revenue decreased from 1.4 percent to 1.1 percent over this period.
TABLE 5 UPPER PERKIOMEN SCHOOL DISTRICT SUMMARY OF SCHOOL DISTRICT GENERAL FUND REVENUES* (Years Ending June 30)
REVENUE: Actual Budget Local Sources: 2009 2010 2011 2012 2013 2014(1) Real Estate Taxes (Current) ...... $22,264,462 $23,582,671 $24,204,258 $25,672,632 $27,745,559 $28,243,311 Interim Real Estate Taxes ...... 296,227 148,826 135,761 116,248 197,285 100,000 Total Act 511 Taxes ...... 2,955,835 2,908,250 3,185,685 2,877,562 3,090,318 2,778,000 Per Capita (Sec. 679) Tax ...... 66,472 65,769 65,423 64,269 63,591 63,000 Public Utility Tax ...... 32,092 35,771 37,439 38,633 38,917 35,000 Payments in Lieu of Taxes - State & Local ...... 27 27 27 27 27 27 Delinquencies on Taxes Levied ...... 523,581 888,103 856,143 773,225 911,378 610,000 Interest Earnings ...... 349,399 131,199 73,281 98,180 67,100 75,000 Federal Revenue Rec'd from Other PA Public Schools ... 670,209 6,260 684,179 7,251 696,983 639,333 Rentals ...... 10,810 10,624 19,723 41,632 46,817 20,000 Contributions and Donations from Private Sources ...... 11,286 23,864 43,038 10,595 9,425 0 Tuition from Patrons ...... 5,530 14,740 3,065 4,005 3,420 3,500 Revenue from Local Government Units ...... 30,000 0 0 15,870 0 0 Receipts from other LEAS in PA – Education ...... 0 0 0 4,694 6,426 0 Transportation Services Provided Other Govts ...... 199,560 205,016 127,007 58,462 42,253 0 Services Provided Other Local Governmental Units ...... 0 18,068 0 0 0 0 Refunds of Prior Years' Expenditures ...... 9,655 245,274 10,364 73,477 6,459 0 Federal IDEA Pass Through Revenue ...... 0 675,069 0 672,255 0 0 Federal ARRA IDEA Pass Through Revenue ...... 0 283,215 466,878 63,689 2,481 0 Federal Rev. Rcvd. From Other Intermed. Sources ...... 0 25,000 0 0 0 0 Other Sources...... 6,972 90 76,912 76,856 93,701 72,500 Total Local Sources ...... $27,432,118 $29,267,834 $29,989,182 $30,669,562 $33,022,140 $32,639,671 State Sources: Instructional Subsidy ...... $8,161,099 $7,535,144 $7,145,525 $8,161,107 $8,161,107 $8,300,606 Rentals and Sinking Fund Payments ...... 408,850 408,341 480,327 981,235 769,204 526,449 Charter Schools ...... 216,481 188,324 230,654 0 0 0 Transportation ...... 1,669,546 1,656,312 1,773,334 1,597,605 1,563,688 1,575,000 Tuition for Orphans & Children in Private Homes ...... 95,374 51,237 50,820 113,006 89,810 35,000 Homebound Instruction ...... 439 0 0 0 0 0 Special Education ...... 1,684,658 1,717,926 1,647,102 1,648,559 1,659,191 1,619,712 Health Services ...... 59,179 55,349 55,914 56,137 56,390 56,000 Social Security ...... 770,107 794,801 810,592 833,621 819,580 880,000 Revenue for Retirement ...... 499,026 522,607 631,939 987,777 1,395,046 1,794,233 Extra Grants ...... 15,000 0 0 0 0 0 State Property Tax Reduction Allocation ...... 1,102,554 1,103,990 1,109,443 1,108,885 1,137,767 1,111,353 PA Accountability Grant ...... 388,323 388,323 364,146 143,068 143,068 143,068 Other Sources...... 187,588 0 355 0 0 0 Total State Sources...... $15,258,223 $14,422,355 $14,300,151 $15,631,000 $15,794,850 $16,041,421 Federal Sources: Total Federal Sources ...... $621,651 $1,914,587 $2,323,441 $658,927 $518,073 $510,786 Other Sources: Total Other Sources ...... $1,560 $0 $24,648 $1,798 $2,722 $0
TOTAL REVENUE...... $43,313,552 $45,604,776 $46,637,422 $46,961,287 $49,337,784 $49,191,878
*Totals may not add due to rounding. (1)Budget, as adopted June 13, 2013. See “Summary and Discussion of Financial Results” herein. Source: School District Annual Financial Reports and Budget.
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TABLE 5 UPPER PERKIOMEN SCHOOL DISTRICT SUMMARY OF SCHOOL DISTRICT GENERAL FUND EXPENDITURES* (Years Ending June 30)
Actual Budget
EXPENDITURES: 2009 2010 2011 2012 2013 2014(1)
Total Instruction ...... $27,067,740 $28,923,970 $28,580,000 $30,119,136 $30,139,165 $33,463,541 Pupil Personnel ...... 1,296,965 1,386,547 1,364,233 1,401,640 1,289,312 1,507,288 Instructional Staff ...... 833,174 853,788 1,001,693 1,023,790 1,115,049 1,277,431 Administration ...... 2,718,188 2,564,108 2,486,044 2,682,720 2,767,578 3,018,020 Pupil Health ...... 254,669 279,575 278,374 307,016 258,947 321,347 Business ...... 438,465 498,627 518,627 553,851 547,377 649,252 Operation and Maintenance ...... 3,560,660 3,532,523 3,284,266 3,238,085 3,220,200 3,770,122 Student Transportation ...... 2,937,706 2,989,390 3,150,250 3,083,939 3,175,135 3,349,867 Central Support ...... 895,050 863,493 776,908 852,315 924,223 972,476 Other Support...... 30,221 33,077 34,189 34,138 34,096 35,052 Noninstructional Services ...... 124,096 100,107 782,159 783,169 787,309 924,965 Debt Service...... 2,437,378 3,071,840 3,158,873 2,914,464 3,357,934 2,872,950 Fund Transfers ...... 550,000 570,000 0 0 151,694 0 Refund of Prior Year Receipts ...... 0 0 25,361 4,288 0 0 Budgetary Reserve ...... 0 0 0 0 0 70,000
TOTAL EXPENDITURES ...... $43,144,312 $45,667,045 $45,440,977 $46,998,551 $47,768,019 $52,232,311
SURPLUS (DEFICIT) OF REVENUES OVER
EXPENDITURES ...... $169,240 ($62,269) $1,196,445 ($37,264) $1,569,765 ($3,040,433)
*Totals may not add due to rounding. (1)Budget, as adopted June 13, 2013. See “Summary and Discussion of Financial Results” herein. Source: School District Annual Financial Reports and Budget.
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TAXING POWERS AND LIMITS
Subject to certain limitations imposed by the Taxpayer Relief Act (described below), the School District is empowered by the School Code and other statutes to levy the following taxes:
1. A basic annual tax on all real property taxable for school purposes, not to exceed 25 mills on each dollar of assessed valuation, to be used for general school purposes.
2. An unlimited ad valorem tax on the property taxable for school purposes to provide funds:
a. for minimum salaries and increments of the teaching and supervisory staff;
b. to pay rentals due any municipality authority or non-profit corporation or due the State Public School Building Authority;
c. to pay interest and principal on any indebtedness incurred pursuant to the Local Government Unit Debt Act, or any prior or subsequent act governing the incurrence of indebtedness of the school district; and
d. to pay for the amortization of a bond or note issue which provided a school building prior to the first Monday of July, 1959.
3. An annual per capita tax on each resident or inhabitant over 18 years of age of not less than $1.00 and not more than $10.00.
4. Additional taxes subject to division with other political subdivisions authorized to levy similar taxes on the same person, subject, business, transaction or privilege, under Act No. 511, enacted December 31, 1965, as amended (“The Local Tax Enabling Act”). These taxes, which may include, among others, an additional per capita tax, a wage and other earned income tax, a real estate transfer tax, a gross receipts tax, a local services tax and an occupation tax, shall not exceed, in the aggregate, an amount equal to the product of the market valuation of real estate in the School District (as certified by the State Tax Equalization Board of the Commonwealth – “STEB”) multiplied by twelve mills. All local taxing authorities are required by the Local Tax Enabling Act to exempt disabled veterans and members of the armed forces reserve who are called to active duty at any time during the tax year from any local services tax and to exempt from any local services tax levied at a rate in excess of $10 those persons whose total income and net profits from all sources within the political subdivision is less than $12,000 for the tax year. The Local Tax Enabling Act also authorizes, but does not require, taxing authorities to exempt from per capita, occupation, and earned income taxes and any local services tax levied at a rate of $10 or less per year, any person whose total income from all sources is less than $12,000 per year.
Limitations on Local Taxes – Taxpayer Relief Act (Act 1)
Under the Taxpayer Tax Relief Act a school district may not levy any new tax for the support of the public schools or increase the rate of any tax for school purposes by more than the Index (defined below), unless in each case either (a) such increase is approved by the voters in the school district at a public referendum or (b) one of the exceptions summarized below is applicable and the use of such exception is approved by the Pennsylvania Department of Education (PDE):
1. to pay interest and principal on indebtedness originally incurred (i) prior to September 4, 2004, in the case of a school district which had elected to become subject to the provisions of the prior Homeowner Tax Relief Act, Act 72 of 2004, or (ii) prior to June 27, 2006, in the case of a school district which had not elected to become subject to Act 72 of 2004; to pay interest and principal on any indebtedness approved by the voters at referendum (electoral debt); and to pay interest and principal on debt refunding or refinancing debt for which one of the above exceptions is permitted, as long as the refunding or refinancing incurs no additional debt other than for costs and expenses related to the refunding or refinancing and the funding of appropriate debt service reserves; 2. to pay costs incurred in providing special education programs and services to students with disabilities, under specified circumstances; and 3. to make payments into the State Public School Employees’ Retirement System when the increase in the estimated payments between the current year and the upcoming year is greater than the Index, as determined by PDE in accordance with the provisions of Act 1. Any revenue derived from an increase in the rate of any tax allowed under the exception numbered 1 above may not exceed the anticipated dollar amount of the expenditure, and any revenue derived from an increase in the rate of any tax allowed pursuant to any other exception enumerated above may not exceed the rate increase required, as determined by PDE. If a school district’s petition or request to increase taxes by more than the Index pursuant to one or more of the allowable exceptions is not approved, the school district may submit the proposed tax increase to a referendum.
The Index (to be determined and reported by PDE by September of each year for application to the following fiscal year) is the average of the percentage increase in the statewide average weekly wage, as determined by the State Department of Labor and Industry for the preceding calendar year, and the employment cost index for elementary and secondary schools, as reported by the federal Bureau of Labor Statistics for the preceding 12-month period beginning July 1 and ending June 30. If and when a school district has a Market Value/Income Aid Ratio greater than 0.40 for the prior school year, however, the Index is adjusted upward by multiplying the unadjusted Index by the sum of 0.75 and such Aid Ratio.
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The Act 1 Index applicable to the School District in the current and prior fiscal years are as follows:
Fiscal Year Index 2009-10 5.0% 2010-11 3.5% 2011-12 1.7% 2012-13 2.0% 2013-14 2.0%
In accordance with Act 1, the School District placed a referendum question on the May, 15, 2007, primary election ballot seeking voter approval to levy (or increase the rate of) the earned income and net profits tax (“EIT”) or a new personal income tax (“PIT”) and use the proceeds to reduce local real estate taxes by a homestead and farmstead exclusion. The referendum was NOT approved by the voters.
A board of school directors may submit, but is not required to submit, a referendum question to the voters at the municipal election seeking approval to levy or increase the rate of an EIT or impose PIT for the purpose of funding homestead and farmstead exclusions, but the proposed rate of the EIT or PIT shall not exceed the rate that is required to provide the maximum homestead and farmstead exclusions allowable under law.
The information set forth above is a summary of the Taxpayer Relief Act. This summary is not intended to be an exhaustive discussion of the provisions of the Taxpayer Relief Act nor a legal interpretation of any provision of the Taxpayer Relief Act and a prospective purchaser of the Bonds should review the full text of the Taxpayer Relief Act as a part of any decision to purchase the Bonds.
Payment of the Bonds Requires No Tax Increase
The Bonds described in this Preliminary Official Statement are being issued to refund indebtedness that was incurred by the School District under the Local Government Unit Debt Act prior to June 27, 2006, the effective date of The Taxpayer Relief Act. The School District already has levied and has in place sufficient tax millage to provide for payment of the maximum annual debt service on the indebtedness being refunded. The maximum annual debt service on the Bonds will not be more than the maximum annual debt service on the indebtedness being refunded by the Bonds; and, therefore, it will not be necessary for the School District to levy any new tax or to increase the rate of any existing tax in order to provide for payment of the interest and principal of the Bonds.
Optional Occupation Tax Elimination Act (Act 24 of 2001)
Act 24 of 2001 of the Commonwealth (the Optional Occupation Tax Elimination Act) authorizes a board of school directors to schedule a public hearing and conduct a ballot referendum on replacing any existing school district occupation tax with an increase in the local earned income and net profits tax in a revenue neutral manner. Under the Taxpayer Relief Act, a school district may schedule such a referendum at any municipal election except a municipal election at which the school district seeks voter approval to convert its earned income and net profits tax to a personal income tax.
The School District has not imposed an occupation tax which is subject to elimination under Act 24 of 2001.
Limitation on Unreserved Undesignated Fund Balances
Pennsylvania Act No. 2003-48 (enacted December 23, 2003) prohibits a school district from increasing real property taxes unless the school district has adopted a budget for such school year that includes an estimated ending unreserved undesignated fund balance which is not more than a specified percentage of the total budgeted expenditures, as set forth below:
Estimated Ending Unreserved Undesignated Fund Balance Total Budgeted Expenditures as a Percentage of Total Budgeted Expenditures Less than or equal to $11,999,999 12.0% Between $12,000,000 and $12,999,999 11.5% Between $13,000,000 and $13,999,999 11.0% Between $14,000,000 and $14,999,999 10.5% Between $15,000,000 and $15,999,999 10.0% Between $16,000,000 and $16,999,999 9.5% Between $17,000,000 and $17,999,999 9.0% Between $18,000,000 and $18,999,999 8.5% Greater than or equal to $19,000,000 8.0%*
“Estimated ending unreserved undesignated fund balance” is defined in Act 2003-48 as that portion of the fund balance which is appropriable for expenditure or not legally or otherwise segregated for a specific or tentative future use, projected for the close of the school year for which a school district’s budget was adopted and held in the general fund accounts of the school district. The School District’s estimated ending unreserved undesignated fund balance as a percentage of total budgeted expenditures for the 2010-11 budget is shown on Page 9 herein under “Summary and Discussion of Financial Results”.
*Applies to the School District.
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Tax Levy Trends
Table 6 shows the recent trend of tax rates levied by the School District. Table 7 shows the comparative trend of real property tax rates for the School District, three townships, four boroughs and Montgomery and Berks Counties.
TABLE 6 UPPER PERKIOMEN SCHOOL DISTRICT TAX RATES
Real Estate Wage and Real Estate Montgomery County Berks County Income Transfer Per Capita Year (mills) (mills) (%) (%) ($) 2009-10 21.760 23.054 0.5 0.5 10.00 2010-11 21.952* 21.952* 0.5 0.5 10.00 2011-12 21.952 21.952 0.5 0.5 10.00 2012-13 21.952 21.952 0.5 0.5 10.00 2013-14 21.952 21.952 0.5 0.5 10.00
*Calculated in accordance with the options permitted by Public School Code. Source: School District Officials.
TABLE 7 UPPER PERKIOMEN SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value)
2009 2010 2011 2012 2013 School District Berks County...... 22.759 23.054 21.952** 21.952 21.952 Montgomery County ...... 20.754 21.720 21.952** 21.952 21.952 East Greenville Borough ...... 4.397 5.000 5.000 5.000 5.250 Green Lane Borough ...... 2.000 2.000 2.000 2.000 2.000 Marlborough Township ...... 2.250 2.250 2.250 2.250 2.250 Pennsburg Borough ...... 4.725 4.825 4.825 5.225 5.475 Upper Hanover Township...... 1.200 1.200 1.200 1.200 1.200 Hereford Township* ...... 0.800 0.800 0.960 0.960 0.960 Red Hill Borough ...... 1.900 2.200 2.200 2.200 2.200 Montgomery County...... 2.695 2.695 2.695 2.695 2.695 Berks County ...... 6.935 6.935 6.935 6.935 6.935
*Located in Berks County. **Calculated in accordance with the options permitted by the Public School Code. Source: Local Government Officials.
Real Property Tax
The real property tax (excluding delinquent collections) produced $27,942,843 in 2012-13, approximately 56.6 percent of total revenue. The School District’s fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within 60 days receive a 2 percent discount, and those who remit subsequent to October 31 are assessed a 10 percent penalty. The School District has implemented installment payments for qualified homestead/farmstead residential property owners beginning with fiscal year 2007-08 with first installment due July 31.
The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The last countywide assessment in Montgomery County was in 1998. The last countywide assessment in Berks County was in 1994.
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TABLE 8 UPPER PERKIOMEN SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA
Market Assessed Year Value Value Ratio 2008-09 ...... $1,457,531,700 $1,154,630,836 79.22% 2009-10 ...... 1,517,983,300 1,169,324,071 77.03% 2010-11 ...... 1,664,876,389 1,179,169,151 70.83% 2011-12 ...... 1,674,385,386 1,184,270,121 70.73% 2012-13 ...... 1,701,806,919 1,189,954,131 69.92%
Source: Pennsylvania State Tax Equalization Board.
TABLE 9 UPPER PERKIOMEN SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY
2011 2011 2012 2012 Market Assessed Market Assessed Value Value Value Value School District ...... $1,674,385,386 $1,184,270,121 $1,701,806,919 $1,189,954,131 East Greenville Borough ...... 140,256,489 105,667,220 143,210,863 105,777,130 Green Lane Borough ...... 39,216,811 26,369,990 40,769,776 26,065,910 Marlborough Township ...... 276,342,907 205,748,340 284,650,212 206,838,560 Pennsburg Borough ...... 202,985,558 151,866,660 206,988,530 151,845,380 Red Hill Borough ...... 144,928,011 109,211,254 149,902,434 109,122,284 Upper Hanover Township...... 666,674,550 452,676,357 672,463,941 457,562,267 Montgomery County...... 85,964,805,436 58,423,901,585 87,628,015,471 58,292,903,853
Hereford Township* ...... 203,981,059 132,730,300 203,821,163 132,742,600 Berks County ...... 22,818,388,657 18,356,774,000 23,425,896,859 18,368,179,600
*Located in Berks County. Source: Pennsylvania State Tax Equalization Board.
TABLE 10 UPPER PERKIOMEN SCHOOL DISTRICT ASSESSMENT BY LAND USE
2008 2009 2010 2011 2012 Residential ...... $897,380,275 $908,160,444 $916,254,301 $921,930,244 $827,981,754 Lots ...... 13,226,861 12,776,976 13,839,846 14,041,356 13,755,475 Industrial ...... 78,320,070 66,805,980 67,382,620 65,794,150 64,268,860 Commercial ...... 107,543,155 121,499,676 119,943,769 119,729,996 220,409,267 Agriculture...... 51,627,135 53,960,385 56,343,545 57,077,865 58,162,175 Land ...... 6,533,340 6,120,610 5,405,070 5,696,510 5,376,600 Total ...... $1,154,630,836 $1,169,324,071 $1,179,169,151 $1,184,270,121 $1,189,954,131
Source: Pennsylvania State Tax Equalization Board.
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TABLE 11
UPPER PERKIOMEN SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA
Current Year Total Collections Collections Total Current as Percent Current as Percent Total Adjusted Year of Total Plus of Total Flat Flat Collections Adjusted Delinquent Adjusted Year Billing Billing(1) (July-June) Flat Billing Collections Flat Billing 2008-09(2)...... 23,307,921 22,922,044 22,264,462 97.13% 22,774,334 99.36% 2009-10 ...... 24,656,385 24,292,544 23,582,671 97.08% 24,320,364 100.11% 2010-11 ...... 25,282,773 24,905,815 24,204,258 97.18% 24,909,585 100.02% 2011-12 ...... 26,814,042 26,404,206 25,672,632 97.23% 26,407,071 100.01% 2012-13 ...... 29,015,169 28,579,962 27,745,559 97.08% 28,597,683 100.06%
(1)Flat billing plus penalties, less discounts and exonerations. (2)Beginning in 2008-09 the amount of the Adjusted Levy is reduced by the amount of the Homestead/Farmstead Exemptions. The Adjusted levy shown excludes the amount payable from the Property Tax and Rent Rebate Program funded pursuant to Act 1 of the Commonwealth. Source: School District Financial Reports.
The ten largest real property taxpayers, together with 2013 assessed values, are shown in Table 12. The aggregate assessed value of these ten taxpayers’ totals approximately 4.9 percent of total assessed value.
TABLE 12
UPPER PERKIOMEN SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS
2013 Assessed Owner Property Value Westinghouse Acquisitions (Knoll) Business Furniture $13,699,160 Gruner Jahr Printing & Publishing Co.(1) Magazine Publisher 9,618,000 Walmart Real Estate Business Trust(2) Retail Business 7,884,640 Hereford Estates Mobile Home Park 4,747,400 Pennsburg Manor Nursing Home 4,571,740 Red Hill Estates Inc. Mobile Home Park 4,177,440 RAF Pennsburg LP Candy Company (Empty Building) 3,738,000 Blommer Chocolate Company Candy Company 3,605,760 Pennsburg Associates Shopping Center 3,326,560 John L. & Joan M. Gehman (Butter Valley Golf Port )(3) Airport/Golf Course 2,391,960 Totals $57,760,620
(1)An appeal by the taxpayer contesting the assessment for the years 2012 and forward is pending in the Court of Common Pleas of Montgomery County, Pennsylvania. (2)Appeals by both the taxpayer and the School District contesting the assessment for the years 2011 and forward are pending in the Court of Common Pleas of Montgomery County, Pennsylvania. (3)An appeal by the taxpayer contesting the assessment for the years 2009 and forward is pending in the Court of Common Pleas of Montgomery County, Pennsylvania. Source: School District officials.
There are some residential and commercial assessment appeals pending in the Court of Common Pleas of Montgomery County, Pennsylvania with respect to taxpayers other than the ten largest listed above.
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Other Taxes
Under Act 511, the School District collected $3,090,318 in other taxes in 2012-13. Among the taxes authorized by Act 511, the Real Estate Transfer Tax, Wage and Income Tax and Per Capita Tax are levied by the School District. The Act 511 limit, equal to 12 mills on the market value of real property was $20,421,683.
Wage & Income Tax. A tax of one half percent is levied on the earned income of residents. In 2012-13 the collected portion of this tax was $2,683,062 or 5.4 percent of the School District’s total revenue.
Per Capita Taxes. A tax of $10.00 ($5.00 under Act 511 and $5.00 under the School Code) is levied on each resident over 18 years old yielded $65,591 in 2012-13 or less than one percent of the School District’s total revenue.
Real Estate Transfer. A tax of one-half percent of the value of real estate transfers yielded $343,664 in 2012-13 or less than one percent of the School District’s total revenue.
Commonwealth Aid to School Districts
Pennsylvania school districts receive financial assistance from the Commonwealth in a number of forms, all subject to statutory provisions and annual appropriation by the Pennsylvania General Assembly.
The largest subsidy, basic instructional subsidy, is allocated to all school districts based on factors such as: (1) the per pupil market value of assessable real property in the school district; (2) the per pupil earned income in the school district; (3) the school district's tax effort, as compared with the tax effort of other school districts in the Commonwealth; and (4) student count. School districts also receive subsidies for special education, pupil transportation, health service and debt service.
Commonwealth law presently provides that the School District will receive reimbursement from the Commonwealth for a portion of debt service on the Bonds upon final approval of the Department of Education. Commonwealth reimbursement is based on the "Reimbursable Percentage" assigned to the Bonds and the School District's Market Value Aid Ratio (“MVAR”). The School District officials have estimated that the "Reimbursable Percentage" of the Bonds will be a maximum of 62.83 percent. The School District MVAR for the 2013-14 school year is currently 42.58 percent. The product of these two factors is 26.75 percent, which is the maximum potential percentage of debt service that will be reimbursed by the Commonwealth. In future years, this percentage may change as the School District's MVAR changes, or as a result of future legislation. MVAR is a function of the market value per weighted average daily membership of the School District relative to that of the Commonwealth.
DEBT AND DEBT LIMITS
Debt Statement
Table 13 shows the debt of the School District as of December 12, 2013, including the issuance of the Bonds.
TABLE 13 UPPER PERKIOMEN SCHOOL DISTRICT DEBT STATEMENT* (As of December 12, 2013)
Gross Outstanding NONELECTORAL DEBT General Obligation Bonds, Series of 2014 (last maturity 2029) ...... $9,255,000 General Obligation Bonds, Series of 2013 (last maturity 2028) ...... 8,385,000 General Obligation Bonds, Series of 2011 (last maturity 2028) ...... 8,550,000 General Obligation Bonds, Series of 2010 (last maturity 2016) ...... 3,110,000 General Obligation Bonds, Capital Projects Series(1) ...... 5,420,000 TOTAL NONELECTORAL DEBT $34,720,000 LEASE RENTAL DEBT TOTAL LEASE RENTAL DEBT ...... $0 TOTAL PRINCIPAL OF DIRECT DEBT ...... $34,720,000
*Includes the Bonds offered through this Preliminary Official Statement. Excludes the 2008 Bonds being refunded herein. (1)Authorized and incurred debt, but not yet issued.
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Table 14 presents the overlapping indebtedness and debt ratios of the School District. After issuance of the Bonds, the principal of direct debt of the School District will total $34,720,000. After adjustment for available funds and estimated Commonwealth Aid, the local effort of direct debt will total $29,651,225.
TABLE 14
UPPER PERKIOMEN SCHOOL DISTRICT BONDED INDEBTEDNESS AND DEBT RATIOS* (As of December 12, 2013)
Local Effort or Net of Available Funds Gross and Estimated Outstanding State Aid(1) DIRECT DEBT Nonelectoral Debt ...... $34,720,000 $29,651,225 Lease Rental Debt ...... 0 0 TOTAL DIRECT DEBT ...... $34,720,000 $29,651,225
OVERLAPPING DEBT (2) Montgomery County, General Obligations and Lease Rental Debt ...... $8,769,071 $8,769,071 Berks County General Obligations and Lease Rental Debt(3) ...... 2,590,228 2,590,228 Municipal General Obligation Debt...... 5,287,529 5,287,529 TOTAL OVERLAPPING DEBT ...... $16,646,827 $16,646,827
TOTAL DIRECT AND OVERLAPPING DEBT ...... $51,366,827 $46,298,053
DEBT RATIOS Per Capita ...... $2,300.97 $2,073.91 Percent 2012 Assessed Value ...... 4.32% 3.89% Percent 2012 Market Value ...... 3.02% 2.72%
*Includes the estimated Bonds offered through this Preliminary Official Statement. Excludes the 2008 Bonds being refunded herein. (1)Gives effect to current appropriations for payment of debt service and expected future Commonwealth Reimbursement of School District sinking fund payments based on current Capital Account Reimbursement Fraction. See “Commonwealth Aid to School Districts”. (2)Pro rata 1.9 percent share of $451,529,651 principal amount outstanding. (3)Pro rata 0.9 percent share of $297,704,137 principal amount outstanding.
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Debt Limit and Remaining Borrowing Capacity
The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District’s “Borrowing Base”. The “Borrowing Base” is defined as the annual arithmetic average of total “Revenues” (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows:
Total Revenues for 2010-11 ...... $46,132,446 Total Revenues for 2011-12 ...... 45,978,254 Total Revenues for 2012-13 ...... 48,565,859
Total ...... $140,676,559
Annual Arithmetic Average (Borrowing Base) ...... $46,892,186
Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following product:
Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $105,507,419 $34,720,000 $70,787,419
*Includes the estimated Bonds described herein, excludes the 2008 Bonds being issued herein; does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid.
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Debt Service Requirements
Table 15 presents the debt service requirements on the School District’s outstanding general obligation and lease rental indebtedness including debt service on the Bonds.
Table 16 presents data on the extent to which Commonwealth Aid provides coverage for debt service and lease rental requirements.
The School District has never defaulted on the payment of debt service.
TABLE 15 UPPER PERKIOMEN SCHOOL DISTRICT DEBT SERVICE REQUIREMENTS*
Other Series of General 2013 Total Year Obligations Principal Interest Subtotal Requirements 2013-14 $2,107,394 2014-15 2,208,004 2015-16 2,536,754 2016-17 2,375,554 2017-18 1,418,354 2018-19 1,424,914 2019-20 1,424,204 2020-21 1,421,704 2021-22 1,427,810 2022-23 1,436,985 2023-24 1,434,185 2024-25 1,439,205 2025-26 1,442,690 2026-27 1,444,288 2027-28 1,447,240 2028-29 697,935 2029-30 0 Total $25,687,218
*Totals may not add due to rounding.
TABLE 16 UPPER PERKIOMEN SCHOOL DISTRICT COVERAGE OF DEBT SERVICE AND LEASE RENTAL REQUIREMENTS BY COMMONWEALTH AID*
2012-13 State Aid Received ...... $15,794,850 2012-13 Debt Service Requirements ...... $3,357,934 Maximum Future Debt Service Requirements after Issuance of Bonds ...... Coverage of 2012-13 Debt Service Requirements ...... 4.70 times Coverage of Maximum Future Debt Service Requirements after Issuance of Bonds ......
*Assumes current Commonwealth Aid Ratio. See “Commonwealth Aid to School Districts.”
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Future Financing
The School District does not anticipate issuing additional long-term non-electoral debt in the near future.
LABOR RELATIONS
School District Employees
There are presently 407 employees of the School District, including 243 teachers and administrators, and 164 support personnel including secretaries, maintenance staff, teacher aides, and cafeteria employees.
The School District’s teachers are represented by the Upper Perkiomen Education Association, an affiliate of the Pennsylvania State Education Association (“PSEA”), under a collective bargaining agreement with the School District which expires June 30, 2016. Secretaries, cafeteria and maintenance employees are not represented by any union and are not paid under any collective bargaining agreement. The teacher’s union has never struck the School District.
Pension Program
School Districts in Pennsylvania are required to participate in a statewide pension program administered by the State Public School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, please note a recent Pennsylvania Supreme Court decision has removed the hourly de minmis requirement for part-time employees regarding participation in the program.
The PSERS Board of Trustees has set the fiscal year 2013-14 employer retirement contribution rate at 16.93 percent of payroll. Both the School District and the Commonwealth are responsible for paying a portion of the employer's share. Employers are divided into two groups; school entities and non-school entities. School entities are responsible for paying 100 percent of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. Recent School District payments have been as follows:
2008-09 $1,046,303 2009-10 $1,081,636 2010-11 $1,265,441 2011-12 $1,960,262 2012-13 $2,927,107 2013-14 (budgeted) $3,964,707
The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: www.psers.state.pa.us.
Source: PSERS – Financial Highlights.
Other Post-Employment Benefits
The School District is obligated under collective bargaining agreements to provide in the future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. Such estimate has not been determined in accordance with GASB Statements No. 43 and 45. The School District became subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District’s annual financial statements for the fiscal year ending June 30, 2009.
For a full description of the District’s post-employment benefit plan, please refer to Appendix C – Audited Financial Statements – “Notes to Basic Financial Statements”
Source: School District officials.
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LITIGATION
At the time of settlement, the School Board and the Solicitor will deliver a certificate stating that, to his/her knowledge, there is no litigation pending with respect to the Bonds, the Resolution or the right of the School District to issue the Bonds.
DEFAULTS AND REMEDIES
In the event of failure of the School District to pay or cause to be paid the interest on or principal of the Bonds, as the same becomes due and payable, the holders of the Bonds shall be entitled to certain remedies provided by the Debt Act. Among the remedies, if the failure to pay shall continue for 30 days, holders of the Bonds shall have the right to recover the amount due by bringing an action in assumpsit. The Debt Act provides that any judgment shall have an appropriate priority upon the funds next coming into the treasury of the School District. The Debt Act also provides that upon a default of at least 30 days, holders of at least 25 percent of the Bonds may appoint a trustee to represent them. The Debt Act provides certain other remedies in the event of default, and further qualifies the remedies hereinbefore described.
TAX EXEMPTION AND OTHER TAX MATTERS
Federal Income Tax Matters
On the date of delivery of the Bonds, Rhoads & Sinon LLP, Harrisburg, Pennsylvania, as Bond Counsel to the School District, will issue an opinion to the effect that under existing statutes, regulations and judicial decisions, interest on the Bonds is excludable from gross income for purposes of federal income taxation and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although such interest is taken into account in determining adjusted current earnings of corporations (as defined for federal income tax purposes) for purposes of such alternative minimum tax. This opinion of Bond Counsel will assume the accuracy of representations made by the School District and will be subject to the condition that the School District will comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excluded from gross income for federal income tax purposes. See the proposed text of the opinion of Bond Counsel appended to this Preliminary Official Statement. The School District has covenanted to comply with all such requirements, which include, among others, restrictions upon the yield at which proceeds of the Bonds and other money held for the payment of the Bonds and deemed to be "proceeds" thereof may be invested and the requirement to calculate and rebate any arbitrage that may be generated with respect to investments allocable to the Bonds. Failure to comply with such requirements could cause the interest on the Bonds to be included in gross income retroactive to the date of issuance of the Bonds.
Certain maturities of the Bonds may be sold to the public in the initial offering at a price less than the stated redemption price of such Bonds at maturity (that is, at less than par or the stated principal amount), the difference being “original issue discount”. Generally, original issue discount accruing on a tax-exempt obligation is treated as interest excludable from gross income for federal income tax purposes. In addition, original issue discount that has accrued on a tax-exempt obligation is treated as an adjustment to the issue price of the obligation for the purpose of determining taxable gain upon sale or other disposition of such obligation prior to maturity. The Internal Revenue Code of 1986, as amended, provides specific rules for the accrual of original issue discount on tax-exempt obligations for federal income tax purposes. Prospective purchasers of Bonds being sold with original issue discount should consult their tax advisors for further information.
Ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain subchapter S corporations with substantial passive income and Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the Bonds. Bond Counsel will express no opinion as to such collateral tax consequences, and prospective purchasers of the Bonds should consult their tax advisors.
No representation is made or can be made by the School District or any other party associated with the issuance of the Bonds as to whether or not any legislation now or hereafter introduced and enacted will be applied retroactively so as to subject interest on the Bonds to inclusion in gross income for Federal income tax purposes or so as to otherwise affect the marketability or market value of the Bonds. Enactment of any legislation that subjects the interest on the Bonds to inclusion in gross income for federal income tax purposes or otherwise imposes taxation on the Bonds or the interest paid thereon may have an adverse effect on the market value or marketability of the Bonds.
Pennsylvania Tax Matters
On the date of delivery of the Bonds, Bond Counsel will issue an opinion to the effect that under the laws of the Commonwealth of Pennsylvania (the “Commonwealth”) as presently enacted and construed, the Bonds are exempt from personal property taxes within the Commonwealth and the interest on the Bonds is exempt from the Commonwealth’s Personal Income Tax and the Commonwealth’s Corporate Net Income Tax. See the proposed text of the opinion of Bond Counsel appended to this Preliminary Official Statement.
Profits, gains or income derived from the sale, exchange or other disposition of the Bonds are subject to state and local taxation within the Commonwealth, in accordance with Pennsylvania Act No. 1993-68.
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Certain maturities of the Bonds may be sold to the public in the initial offering at a price less than their stated redemption price at maturity (that is, at an “original issue discount”). For Pennsylvania Personal Income Tax purposes, original issue discount on publicly offered obligations is treated under current regulations of the Pennsylvania Department of Revenue as interest and, for purposes of determining taxable gain upon sale or other disposition of an obligation the interest on which is exempt from income taxation by the Commonwealth, as an adjustment to basis. For Pennsylvania Corporate Net Income Tax purposes, original issue discount is to be accorded similar treatment, according to a Private Letter Ruling issued by the Office of the Chief Counsel of the Pennsylvania Department of Revenue dated December 2, 1993, but such Private Letter ruling may be relied upon only by the taxpayer to whom it was addressed.
Prospective purchasers of Bonds issued with original issue discount should consult with their tax advisors for further information and advice concerning the reporting of profits, gains or other income related to a sale, exchange or other disposition of such Bonds for Pennsylvania tax purposes.
No representation is made or can be made by the School District, or any other party associated with the issuance of the Bonds, as to whether or not any legislation now or hereafter introduced and enacted in the Commonwealth will be applied, either prospectively or retroactively, so as to subject interest on such Bonds to taxation in the Commonwealth or so as to otherwise affect the marketability or market value of such bonds. Enactment of any legislation that subjects the interest on such bonds to state or local taxes in the Commonwealth or otherwise imposes taxation on such Bonds may have an adverse effect on the market value or marketability of such bonds.
Federal Income Tax Interest Expense Deductions for Financial Institutions
Under Section 265 of the Internal Revenue Code of 1986, as amended (the "Code"), no deduction is allowed for the portion of a financial institution’s interest expense which is allocable to tax-exempt interest, such portion being an amount which bears the same ratio to the financial institution’s interest expense as the financial institution’s average adjusted bases (within the meaning of Section 1016 of the Code) of tax-exempt obligations acquired after August 7, 1986, bears to such average adjusted bases for all assets of the financial institution.
An exception which reduces the amount of the disallowance is provided for certain tax-exempt obligations that are designated or "deemed designated" by the issuer as "qualified tax-exempt obligations" under Section 265 of the Code.
The Bonds are "qualified tax-exempt obligations" for purposes and effect contemplated by Section 265 of the Code (relating to expenses and interest relating to tax-exempt income of certain financial institutions).
Financial institutions intending to purchase Bonds should consult with their professional tax advisors to determine the effect of the interest expense disallowance on their federal income tax liability.
Proposed Changes in Federal Tax Laws
From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the Bonds or otherwise prevent holders of the Bonds from realizing the full benefit of the tax exemption of interest on the Bonds. Further, such proposals may impact the marketability or market value of the Bonds simply by being proposed. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Bonds would be impacted thereby.
Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The disclosures and opinions expressed herein are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and no opinion is expressed as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation.
CONTINUING DISCLOSURE UNDERTAKING
In accordance with the requirements of the Rule 15c2-12 (the “Rule”) promulgated by the Securities and Exchange Commission (the “SEC”), the School District will agree to provide the following to the Municipal Securities Rulemaking Board (the “MSRB”) in an electronic format as prescribed by the MSRB, either directly or indirectly through a designated agent:
(A) Annually, not later than 180 days following the end of each fiscal year, beginning with the fiscal year ending June 30, 2014, the following financial information and operating information for the School District:
• financial statements for the most recent fiscal year, prepared in accordance with generally accepted accounting principles for local government units • a summary of the budget for the current fiscal year • the assessed value and market value of all taxable real estate for the current fiscal year • the taxes and millage rates imposed for the current fiscal year • the real property tax collection results for the most recent fiscal year, including (1) the real estate levy imposed (expressed both as a millage rate and an aggregate dollar amount), (2) the dollar amount of real estate taxes collected that represented
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current collections (expressed both as a percentage of such fiscal year’s levy and as an aggregate dollar amount), (3) the amount of real estate taxes collected that represented taxes levied in prior years (expressed as an aggregate dollar amount), and (4) the total amount of real estate taxes collected (expressed both as a percentage of the current year’s levy and as an aggregate dollar amount) • a list of the ten (10) largest real estate taxpayers and, for each, the total assessed value of real estate for the current fiscal year • pupil enrollment figures, including enrollment at the end of the most recent fiscal year, current enrollment and projected enrollment for the beginning of the next fiscal year, including a breakdown between elementary and secondary enrollment (to the extent reasonably feasible);
(B) If not submitted as part of the annual financial information, then when and if available, audited financial statements for the School District;
(C) In a timely manner not in excess of ten (10) business days after the occurrence of the event, notice of the occurrence of any of the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax-exempt status of the Bonds, or other material events affecting the tax-exempt status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the School District; (13) the consummation of a merger, consolidation, or acquisition involving the School District or the sale of all or substantially all of the assets of the School District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material; and
(D) in a timely manner, notice of a failure of the School District to provide the required annual financial information specified above, on or before the date specified above.
With respect to the filing of annual financial and operating information, the School District reserves the right to modify from time to time the specific types of information provided or the format of the presentation of such information to the extent necessary or appropriate as a result of a change in legal requirements or a change in the nature of the School District or its operations or financial reporting, but the School District will agree that any such modification will be done in a manner consistent with the Rule.
The events listed in (C) above are those specified in the Rule, not all of which may be relevant to the Bonds. The School District may from time to time choose to file notice of the occurrence of other events, in addition to the events listed in (C) above, but the School District does not commit to provide notice of the occurrence of any events except those specifically listed in (C) above.
The School District acknowledges that its undertaking pursuant to the Rule described herein is intended to be for the benefit of the holders and beneficial owners of the Bonds and shall be enforceable by the holders and beneficial owners of the Bonds, but the right of the holders and beneficial owners of the Bonds to enforce the provisions of the School District’s continuing disclosure undertaking shall be limited to a right to obtain specific enforcement, and any failure by the School District to comply with the provisions of the undertaking shall not be an event of default with respect to the Bonds.
The School District’s obligations with respect to continuing disclosure described herein shall terminate upon the prior redemption or payment in full of all of the Bonds or if and when the School District is no longer an “obligated person” with respect to the Bonds, within the meaning of the Rule.
The MSRB has been designated by the SEC to be the central and sole repository for continuing disclosure information filed by issuers of municipal securities since July 1, 2009. Information and notices filed by municipal issuers (and other “obligated persons” with respect to municipal securities issues) are made available through the MSRB’s Electronic Municipal Market Access (EMMA) System, which may be accessed on the internet at http://www.emma.msrb.org.
25
The School District has entered into prior undertakings to provide information pursuant to continuing disclosure undertakings for several outstanding bond issues. The following table provides information regarding the undertaking, annual filing deadlines and history of filing:
Bond Issues Subject to Disclosure Annual Filing Deadline Annual Filings Due Dates of Filings (Last 5 years)* General Obligation Bonds, Series of 2013 (last maturity 2028) FY End + 180 days December 27, 2013 December 20, 2013 General Obligation Bonds, Series of December 27, 2011 December 20, 2012 2011 (last maturity 2028) FY End + 180 days December 27, 2012 December 26, 2012 December 27, 2013 December 20, 2013 General Obligation Bonds, Series of FY End + 180 days December 27, 2010 March 25, 2011 2010 (last maturity 2016) December 27, 2011 December 20, 2012 December 27, 2012 December 26, 2012 December 27, 2013 December 20, 2013 General Obligation Bonds, Series of FY End + 180 days December 27, 2009 January 11, 2010 2008 (being refunded herein) December 27, 2010 March 25, 2011 December 27, 2011 December 20, 2012 December 27, 2012 December 26, 2012 December 27, 2013 December 20, 2013 General Obligation Bonds, Series of FY End + 180 days December 27, 2009 January 11, 2010 2007 (refunded in full on 2/28/13 by the December 27, 2010 March 25, 2011 GOB, Series of 2013) December 27, 2011 December 20, 2012 December 27, 2012 December 26, 2012 General Obligation Bonds, Series of FY End + 180 days December 27, 2009 January 11, 2010 2006 (refunded in full on 6/16/2011 by December 27, 2010 March 25, 2011 the GOB, Series of 2011)
General Obligation Bonds, Series of FY End + 180 days December 27, 2009 January 11, 2010 2004 (refunded in full on 2/18/10 by the GOB, Series of 2010)
*Filings with EMMA began in July, 2009.
RATING
Moody’s Investor’s Service, Inc. has assigned its underlying rating of “___” to the Bonds. Such rating reflects only the view of such organization and any desired explanation of the significance of such rating should be obtained from the rating agency furnishing the same, at the following address: Moody’s Investor’s Service, Inc., 7 World Trade Center at 250 Greenwich Street, New York, New York 10007. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that any such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by the rating agency, if circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.
UNDERWRITING
The Underwriter has agreed to purchase the Bonds from the School District, subject to certain conditions precedent, and will purchase all of the Bonds if any of such Bonds are purchased. The Bonds will be purchased at a purchase price of $______, which includes the par value of the Bonds less an underwriter’s discount of $______, plus a net original issue premium of $______.
LEGAL OPINION
The Bonds are offered subject to the receipt of the approving legal opinion of Rhoads & Sinon LLP, of Harrisburg, Pennsylvania, Bond Counsel to the School District. Certain legal matters will be passed upon for the School District by Wisler Pearlstine, LLP of Blue Bell, Pennsylvania, School District Solicitor.
FINANCIAL ADVISOR
The School District has retained Public Financial Management, Inc., of Harrisburg, Pennsylvania, as financial advisor (the “Financial Advisor”) in connection with the preparation, authorization, and issuance of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Preliminary Official Statement. Public Financial Management, Inc. is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities.
26
MISCELLANEOUS
This Preliminary Official Statement has been prepared under the direction of the School District by Public Financial Management, Inc., Harrisburg, Pennsylvania, in its capacity as Financial Advisor to the School District. The information set forth in this Preliminary Official Statement has been obtained from the School District and from other sources believed to be reliable. Insofar as any statement herein includes matters of opinion or estimates about future conditions, it is not intended as representation of fact, and there is no guarantee that it is, or will be, realized. Summaries or descriptions of provisions of the Bonds, the Resolution, and all references to other materials not purporting to be quoted in full are only brief outlines of some of the provisions thereof. Reference is hereby made to the complete documents, copies of which will be furnished by the School District or the Financial Advisor upon request. The information assembled in this Preliminary Official Statement is not to be construed as a contract with holders of the Bonds.
Use of the words “shall,” “will,” must,” or other words of similar import or meaning in summaries of documents or law in this Preliminary Official Statement to describe future events or continuing obligations is not intended as a representation that such event will occur or such obligations will be fulfilled, but only that the document or law requires or contemplates such event to occur or such obligation to be fulfilled.
The School District has authorized the distribution of this Preliminary Official Statement.
UPPER PERKIOMEN SCHOOL DISTRICT Montgomery and Berks Counties, Pennsylvania
By: / President, Board of School Directors
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APPENDIX A Demographic and Economic Information Relating to the Upper Perkiomen School District
Introduction
Upper Perkiomen School District is located in Northwest Montgomery County approximately 40 miles northwest of Philadelphia and 21 miles south of Allentown-Bethlehem. The area of the School District consists of a combination of fertile and productive farms, attractive suburban residential communities and areas of light industry. The boroughs are located along a main highway while the townships have scattered residential developments.
Population
Table A-1 which follows shows recent population trends for the School District, Montgomery County and the Commonwealth. Table A-2 shows 2010 age composition and average number of persons per household in Montgomery County and for the Commonwealth. Average household size for the County was the same as the Statewide average.
TABLE A-1
RECENT POPULATION TRENDS
Census: Census: Change: April 1, 2010 April 1, 2000 2000 to 2010 Geographic Area Number Number Number Percent East Greenville Borough ...... 2,951 3,103 -152 -4.9% Green Lane Borough ...... 508 584 -76 -13.0% Marlborough Township ...... 3,178 3,104 74 2.4% Pennsburg Borough ...... 3,843 2,732 1,111 40.7% Red Hill Borough ...... 2,383 2,196 187 8.5% Upper Hanover Township ...... 6,464 4,885 1,579 32.3% Hereford Township* ...... 2,997 3,174 -177 -5.6% School District ...... 22,324 19,778 2,546 1.2% Montgomery County ...... 799,874 750,097 49,777 6.6% Berks County ...... 411,442 373,638 37,804 10.1% Pennsylvania ...... 12,702,379 12,281,054 421,325 3.4%
*Located in Berks County. Pennsylvania Municipalities, Total Decennial Population, 2010 & 2000 Prepared by The Pennsylvania State Data Center Source: U.S. Census Bureau, Census 2000 & 2010 Redistricting Data (Public Law 94-171) Summary File. March 9, 2011
TABLE A-2
AGE COMPOSITION
0-17 18-64 65+ Persons Per Years Years Years Household Montgomery County ...... 22.9% 62.0% 15.1% 2.45 Pennsylvania ...... 22.0 62.6 15.4 2.45
Source: U.S. Bureau of the Census, 2010 Census Summary File 1.
A-1
Employment
Overall employment data are not compiled for the School District or the municipality within it, but such data are compiled for the Philadelphia Metropolitan Statistical Area (“MSA”) for August 2013.
TABLE A-3 DISTRIBUTION OF EMPLOYMENT BY INDUSTRY PHILADELPHIA PRIMARY METROPOLITAN STATISTICAL AREA (Bucks, Chester, Delaware, Montgomery, and Philadelphia – PA Counties)
NONFARM JOBS (Aug 2013)
Industry Employment Net Change From: ESTABLISHMENT DATA Aug 2013 July 2013 Jun 2013 Aug 2012 Jul 2013 Aug 2012 Total Nonfarm ...... 1,893,500 1,894,300 1,917,500 1,872,000 -800 21,500 Total Private ...... 1,707,100 1,707,200 1,710,300 1,679,100 -100 28,000 Goods Producing ...... 198,500 197,300 196,100 196,200 1,200 2,300 Mining, Logging, and Construction ...... 70,300 69,700 68,500 67,000 600 3,300 Manufacturing ...... 128,200 127,600 127,600 129,200 600 -1,000 Durable Goods ...... 68,200 68,300 68,400 67,900 -100 300 Transportation equipment mfg...... 14,700 14,700 14,800 14,700 0 0 Non-Durable Goods ...... 60,000 59,300 59,200 61,300 700 -1,300 Chemical mfg...... 22,300 22,300 22,300 22,700 0 -400 Pharmaceutical and medicine mfg...... 13,900 14,000 13,900 14,000 -100 -100 SERVICE-PROVIDING ...... 1,695,000 1,697,000 1,721,400 1,675,800 -2,000 19,200 PRIVATE SERVICE-PROVIDING ...... 1,508,600 1,509,900 1,514,200 1,482,900 -1,300 25,700 Trade, Transportation and Utilities ...... 328,500 328,200 332,700 330,000 300 -1,500 Wholesale trade ...... 80,100 79,900 81,100 82,900 200 -2,800 Retail trade ...... 190,400 190,600 190,800 190,400 -200 0 Building material and supplies dealers...... 10,400 10,600 10,800 10,400 -200 0 Food and beverage stores ...... 48,600 48,100 48,200 48,000 500 600 Health and personal care stores ...... 15,700 15,900 15,700 15,600 -200 100 Clothing and clothing accessories stores ...... 21,200 21,300 21,400 22,200 -100 -1,000 General merchandise stores ...... 27,600 27,800 28,000 28,700 -200 -1,100 Department stores ...... 19,000 19,300 19,500 19,800 -300 -800 Transportation, Warehousing, and Utilities ...... 58,000 57,700 60,800 58,600 300 -600 Transportation and Warehousing ...... 51,700 51,500 54,400 53,300 200 -1,600 Trucking, couriers & messengers, and warehousing ... 25,800 25,600 25,600 23,900 200 1,900 Information ...... 37,500 37,000 37,300 37,500 500 0 Telecommunications ...... 11,800 11,800 11,800 12,500 0 -700 Financial Activities ...... 132,900 132,600 131,700 130,600 300 2,300 Finance and Insurance ...... 108,400 107,900 107,100 107,000 500 1,400 Credit intermediation and related activities ...... 29,700 29,900 29,900 30,400 -200 -700 Depository credit intermediation ...... 20,900 21,000 21,100 21,800 -100 -900 Insurance carriers and related activities ...... 48,800 48,800 48,600 48,100 0 700 Real estate and rental and leasing ...... 24,500 24,700 24,600 23,600 -200 900
Source: Pennsylvania Department of Labor and Industry – www.paworkstats.state.pa.us
A-2
TABLE A-3 DISTRIBUTION OF EMPLOYMENT BY INDUSTRY PHILADELPHIA PRIMARY METROPOLITAN STATISTICAL AREA (Bucks, Chester, Delaware, Montgomery, and Philadelphia – PA Counties) (continued) NONFARM JOBS (Aug 2013)
Industry Employment Net Change From: ESTABLISHMENT DATA Aug 2013 July 2013 Jun 2013 Aug 2012 Jul 2013 Aug 2012 Professional and Business Services ...... 309,500 311,000 310,600 301,000 -1,500 8,500 Professional and technical services ...... 153,400 155,300 153,600 155,900 -1,900 -2,500 Legal services ...... 25,500 25,900 25,800 25,600 -400 -100 Architectural and engineering services ...... 18,100 18,200 18,100 18,300 -100 -200 Computer systems design and related services ...... 34,500 34,600 34,400 34,000 -100 500 Scientific research and development services ...... 18,600 18,800 18,700 19,000 -200 -400 Management of companies and enterprises ...... 43,900 43,900 44,200 44,200 0 -300 Administrative and waste services ...... 112,200 111,800 112,800 100,900 400 11,300 Administrative and support services ...... 106,900 106,300 107,500 96,100 600 10,800 Employment services ...... 28,600 27,600 28,700 27,800 1,000 800 Education and Health Services...... 435,700 437,100 440,100 440,300 -1,400 -4,600 Educational Services ...... 106,300 109,200 109,800 121,600 -2,900 -15,300 Colleges and universities ...... 60,600 62,500 62,900 78,500 -1,900 -17,900 Health care and social assistance ...... 329,400 327,900 330,300 318,700 1,500 10,700 Ambulatory health care services...... 97,500 97,200 99,300 94,100 300 3,400 Offices of physicians ...... 34,500 34,500 34,400 33,900 0 600 Hospitals ...... 98,800 98,900 99,200 98,500 -100 300 General medical and surgical hospitals ...... 78,900 79,000 79,300 79,100 -100 -200 Nursing and residential care facilities...... 66,700 66,000 66,400 66,200 700 500 Residential mental health facilities ...... 19,100 19,000 19,000 18,900 100 200 Social assistance ...... 66,400 65,800 65,400 59,900 600 6,500 Leisure and Hospitality ...... 177,800 177,000 174,600 162,900 800 14,900 Accommodation and food services ...... 137,700 135,200 136,400 131,500 2,500 6,200 Food services and drinking places ...... 121,700 119,600 121,800 117,800 2,100 3,900 Full-service restaurants ...... 58,800 58,500 58,200 57,400 300 1,400 Limited-service eating places ...... 43,000 43,100 43,300 40,400 -100 2,600 Other Services ...... 86,700 87,000 87,200 84,100 -300 2,600 Government ...... 186,400 187,100 207,200 212,700 -700 -26,300 Federal Government ...... 38,900 38,900 39,300 40,300 0 -1,400 State Government ...... 22,000 22,300 22,300 23,600 -300 -1,600 Local Government ...... 125,500 125,900 145,600 148,800 -400 -23,300 Local government educational services ...... 60,100 59,600 79,100 84,000 500 -23,900 Local government excluding educational services ...... 65,400 66,300 66,500 64,800 -900 600 Data benchmarked to March 2012 ***Data changes of 100 may be due to rounding*** Source: Pennsylvania State Employment Service: www.paworkstats.state.pa.us.
A-3
Major employers located within Montgomery County include:
Approximate Employer Employment Main Line Health Systems 14,000 Abington Health 6,387 Genuardi's Markets 3,520 Lockheed Martin 3,500 Holy Redeemer Health Systems 3,414 ACTS Retirement - Life Communities 2,500 Aetna Inc. 2,400 Prudential 2,332 SunGard 2,000 Teva Pharmaceuticals 1,600 Dow Advanced Materials 1,590 Montgomery County Community College 1,297 Unisys Corp. 1,200 Harleysville Insurance/ Harleysville Group, Inc. 1,100 Source: Montgomery County Economic Development Corporation website.
Table A-4 shows recent trends in labor force, employment, and unemployment for Montgomery County and the Commonwealth.
TABLE A-4 RECENT TRENDS IN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT* (MONTGOMERY COUNTY)
Compound Average Annual % 2008 2009 2010 2011 2012 2013(1) Rate Montgomery County Civilian Labor Force (000) ...... 437.9 425.6 431.5 430.6 437.4 438.1 0.01% Employment (000) ...... 418.8 397 400.8 401.7 407.7 409.3 -0.46% Unemployment (000) ...... 19.1 28.6 30.7 29 29.8 28.8 8.56% Unemployment Rate ...... 4.4 6.7 7.1 6.7 6.8 6.6
Pennsylvania Civilian Labor Force (000) ...... 6,450.0 6,407.0 6,393.0 6,400.0 6,487.0 6,512.0 0.19% Employment (000) ...... 6,105.0 5,898.0 5,855.0 5,893.0 5,973.0 6,011.0 -0.31% Unemployment (000) ...... 345.0 508.0 538.0 507.0 513.0 501.0 7.75% Unemployment Rate ...... 5.3 7.9 8.4 7.9 7.9 7.7
*Residence Data. (1)As of July 2013. Source: paworkstats.state.pa.us website.
A-4
Income
The data on Table A-5 shows recent trends in per capita income for the School District, Montgomery County and the Commonwealth over the 2000-2010 period. The per capita income of the School District and the County is higher than the Commonwealth and the School District’s grew at a faster rate over this period than the per capita for the Commonwealth and County.
TABLE A-5
RECENT TRENDS IN PER CAPITA INCOME*
Compound Average Annual Percentage Change 2000 2010 2000-2010 School District ...... $15,130 $32,058 7.80% Montgomery County ...... 30,989 40,076 2.60% Pennsylvania ...... 20,880 27,049 2.62%
*Income is defined by the Bureau of the Census as the sum of wage and salary income, non-farm self-employment income, net self-employment income, Social Security and Railroad retirement income, public assistance income, interest, dividends, pensions, etc. before deductions for personal income taxes, Social Security, etc. School District income is the population- weighted average for political subdivisions. Source: Pennsylvania State Data Center and U.S. Census Bureau, 2006-2010 American Community Survey.
Commercial Activity
Table A-6 shows 2010 through 2014 trends for retail sales in Montgomery County, the PMSA and Pennsylvania.
TABLE A-6
TOTAL RETAIL SALES (In Millions of Dollars)
2010 2011 2012 2013 2014 Montgomery County ...... $15,650,734 $16,723,717 $16,716,583 $13,453,443 $14,129,459 MSA ...... 89,183,335 94,935,061 94,890,513 89,309,763 91,259,939 Pennsylvania ...... 174,483,292 188,193,104 188,149,727 187,412,600 199,975,257
Source: Sales and Marketing Management Magazine
Educational Institutions
In addition to the numerous institutions of higher education which are located in the Philadelphia area, i.e., Temple University, The University of Pennsylvania and Drexel University, the following institutions of higher education are found in Montgomery County: Academy of New Church, Antonelli Institute of Art and Photography, Arcadia University, Biblical Theological Seminary, Bryn Mawr College, Calvary Baptist Theological Seminary, Combs College of Music, Dropsie College, Eastern Baptist Theological Seminary, Faith Theological Seminary, Gwynedd-Mercy College, Harcum Junior College, Haverford College, Lansdale School of Business (Lansdale and Pottstown), Manor Junior College, Montgomery County Community College, Northeastern Christian Junior College, The Pennsylvania State University (Malvern and Abington Campuses), Reconstructionist Rabbinical College, Rosemont College, St. Charles Borromeo Seminary, Temple University (Ambler Campus), Ursinus College, Welder Training and Testing Institute, and Westminster Theological Seminary. Other nearby institutions located by the School District is: Muhlenberg College Moravian College, Lafayette College, Lehigh University, DeSales University, and Cedar Crest College.
A-5
Medical Facilities
Major medical facilities located within or near the School District:
Medical Facilities Easton Hospital Grandview Hospital Lehigh Valley Hospital and Health Network Pottstown Hospital Reading Hospital St. Luke’s Hospital & Health Network Triumph Hospital Easton Warren Hospital Westfield Hospital
Source: Allentown Chamber of Commerce.
Utilities
Telephone service for the School District is provided by Verizon and Comcast; natural gas and electric service is provided by PECO Electric, PP&L Utilities and GPU. The Boroughs all have water and sewage disposal systems, while the Townships depend upon individual wells and septic tanks for such service. Water service is provided by borough owned East Greenville, Upper Hanover Authority, and Red Hill Water Authority.
Transportation
Five State highways (100, 29, 63, 73 and 663) serve the School District, and the Quakertown Interchange of the Northeast Extension of the Pennsylvania Turnpike is located nearby. Residents utilize the Lehigh Valley International Airport or the Philadelphia International Airport for commercial air service.
A-6
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APPENDIX B Opinion of Bond Counsel
(Date of Closing)
Re: Upper Perkiomen School District Montgomery and Berks Counties, Pennsylvania $ Aggregate Principal Amount General Obligation Bonds, Series of 2014 Dated the Date of Delivery
OPINION
We have acted as Bond Counsel to Upper Perkiomen School District, Montgomery and Berks Counties, Pennsylvania (the “School District”), a school district of the Commonwealth of Pennsylvania (the “Commonwealth”), in connection with the authorization, sale and issuance of its General Obligation Bonds, Series of 2014, in the aggregate principal amount of ______Dollars ($______) (the “Bonds”).
The Board of School Directors of the School District, by a resolution (the “Resolution”), has authorized and directed issuance of the Bonds. The Resolution provides, among other things, that the proceeds of the Bonds are to be used to currently refund the General Obligation Bonds, Series of 2008 of the School District, and to pay related costs and expenses, including the costs and expenses of issuance of the Bonds, all in accordance with applicable and appropriate provisions of the Local Government Unit Debt Act, 53 Pa.C.S. Chs. 80-82 (the “Act”), of the Commonwealth.
The Resolution contains covenants of the School District to comply with applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable regulations promulgated thereunder, to preserve the Federal income tax exemption of the interest on the Bonds. The School District has taken appropriate action to qualify the Bonds as “qualified tax- exempt obligations,” as defined in Section 265(b)(3)(B) of the Code.
As Bond Counsel, we have examined, among other things: the proceedings related to the issuance and delivery of the Bonds, as filed with the Department of Community and Economic Development of the Commonwealth; an executed counterpart of the Resolution; certificates of no litigation; a non-arbitrage and rebate compliance certificate of the School District; and usual closing certificates and documents. We also have examined a specimen of an executed Bond, and assume that all the Bonds have been similarly executed and that all Bonds will be issued in registered form as required by the Resolution.
As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify such facts by independent investigation.
903777.2 (Date of Closing) Page 2
Based on the foregoing, we are of the opinion that:
1. The Bonds are valid and binding general obligations of the School District enforceable in accordance with their terms.
2. The School District has covenanted, in the Resolution, to and with registered owners, from time to time, of the Bonds that shall be outstanding, from time to time, pursuant to the Resolution, that the School District: (i) shall include the amount of the debt service for the Bonds, for each fiscal year of the School District in which such sums are payable, in its budget for that year, (ii) shall appropriate such amounts from its general revenues for the payment of such debt service, and (iii) shall duly and punctually pay or cause to be paid from the sinking fund established under the Resolution or any other of its revenues or funds the principal of and interest on each of the Bonds at the dates and place and in the manner stated in the Bonds, according to the true intent and meaning thereof; and, for such budgeting, appropriation and payment, the School District has pledged, irrevocably, its full faith, credit and taxing power.
3. Under the laws of the Commonwealth as presently enacted and construed, the Bonds are exempt from personal property taxes in the Commonwealth and the interest on the Bonds is exempt from the Commonwealth's Personal Income Tax and the Commonwealth's Corporate Net Income Tax.
4. Assuming investment and application of the proceeds of the Bonds as set forth in the Resolution and the aforementioned non-arbitrage and rebate compliance certificate, the Bonds are not presently “arbitrage bonds” as described in Section 103(b)(2) and Section 148 of the Code and applicable regulations promulgated thereunder.
5. Under present statutes, regulations and judicial decisions, interest on the Bonds is excluded from gross income for purposes of federal income taxation and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although it should be noted that in the case of corporations (as defined for federal income tax purposes) such interest is taken into account in determining adjusted current earnings for purposes of such alternative minimum tax. The opinions expressed in this paragraph are subject to the condition that the School District comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, or continue to be, excluded from gross income for federal income tax purposes, as the School District has covenanted to do in the Resolution and other aforementioned documents. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income retroactive to the date of issuance of the Bonds.
6. Each of the Bonds is a “qualified tax-exempt obligation” for purposes and effect contemplated by Section 265 of the Code (relating to expenses and interest relating to tax-exempt income of certain financial institutions). The opinion expressed in the preceding sentence is subject to the condition that interest on the Bonds is, and continues to be, excluded from gross income for federal income tax purposes under the Code.
(Date of Closing) Page 3
We express no opinion regarding other federal tax consequences arising with respect to the Bonds.
It is to be understood that rights of holders of Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity.
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APPENDIX C Audited Financial Report for June 30, 2013
REPORT ON UPPER PERKIOMEN SCHOOL DISTRICT SINGLE AUDIT REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2013
UPPER PERKIOMEN SCHOOL DISTRICT
Single Audit Report
For the Fiscal Year Ended June 30, 2013
TABLE OF CONTENTS
Page (s)
Introductory Section Transmittal Letter ...... 1
Letter to Governance/Management ...... 2 - 7
Report Distribution List ...... 8
Financial Section Independent Auditor's Report ...... 9 - 11
Management's Discussion and Analysis ...... 12 - 21
Basic Financial Statements District-wide Financial Statements:
Statement of Net Position ...... 22
Statement of Activities ...... 23
Fund Financial Statements:
Balance Sheet - Governmental Funds...... 24
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ...... 25
Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds ...... 26
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities ...... 27 - 28
Statement of Fund Net Position - Proprietary Funds ...... 29
Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds ...... 30
Statements of Cash Flows - Proprietary Funds ...... 31 - 32
Statement of Net Position - Fiduciary Funds ...... 33
Statement of Changes in Net Position - Fiduciary Funds ...... 34
-i- UPPER PERKIOMEN SCHOOL DISTRICT
Single Audit Report
For the Fiscal Year Ended June 30, 2013
TABLE OF CONTENTS (continued)
Page (s) Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund ...... 35
Notes to Basic Financial Statements ...... 36 - 70
Required Supplementary Information
Schedule of Funding Progress ...... 71
Supplemental Information:
Combining Balance Sheet – All Capital Projects Fund ...... 72
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – All Capital Project Funds ...... 73
Combining Statement of Fiduciary Net Position - Private Purpose Trust Funds ...... 74
Combining Statement of Changes in Fiduciary Net Position - Private Purpose Trust Funds ...... 74
Combining Balance Sheet - All Agency Funds ...... 75
Combining Statement of Changes in Asset and Liabilities - All Agency Funds ...... 76
General Fund - Schedule on Tax Collectors' Receipts ...... 77
General Fund - Statement of Revenues, Expenditures, and Changes in Fund Balance ...... 78 - 81
Food Service Fund - Statement of Revenues, Expenses, and Changes In Fund Net Position ...... 82
Food Service Fund - Statement of Fund Net Position ...... 83
Capital Reserve Fund - Statement of Revenues and Expenditures ...... 84
Community Field Lighting Fund - Statement of Revenues and Expenditures ...... 84
2013 Bond Fund – Statement of Revenues and Expenditures ...... 85
Capital Projects Fund – Statement of Revenues and Expenditures ...... 86
Payroll Fund - Statement of Additions and Deductions ...... 87
-ii- UPPER PERKIOMEN SCHOOL DISTRICT
Single Audit Report
For the Fiscal Year Ended June 30, 2013
TABLE OF CONTENTS (continued)
Page (s) General Long-Term Debt:
Schedule on General Obligation Bonds – Series of 2008 ...... 88
Schedule on General Obligation Bonds – Series of 2010 ...... 88
Schedule on General Obligation Bonds – Series of 2011 ...... 89
Schedule on General Obligation Bonds – Series of 2013 ...... 90
Single Audit Section Schedule of Expenditures of Federal Awards ...... 91
Notes to the Schedule of Expenditures of Federal Awards ...... 92 - 93
Independent Auditor’s Report Under Government Auditing Standards ...... 94 – 95
Independent Auditor’s Report Under OMB Circular A-133 ...... 96 – 97
Schedule of Findings and Questioned Costs ...... 98 - 99
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INTRODUCTORY SECTION
Board of School Directors Dr. Elizabeth Hammond-Yonson, Superintendent
In addition, the representation letter provided to us, by management, confirmed there were no uncorrected misstatements. Management has recorded all of our adjusting journal entries, and has agreed to the conversion entries necessary to convert governmental funds and proprietary funds to governmental activities and business-type activities, respectively.
In accordance with auditing standards, generally accepted in the United States of America, we have acquired a sufficient understanding of the District and its environment, including its internal control, to assess the risk of material misstatements of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures that were necessary to express an opinion on the 2012-13 basic financial statements.
Our consideration of the District’s internal control components was not designed for the purpose of making detailed recommendations and would not necessarily disclose all significant deficiencies within the components. Our audit procedures have been appropriately adjusted to compensate for any observed significant deficiencies. The following three paragraphs define the three different types of deficiencies that can occur:
A control deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis.
A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis.
As the primary purpose of our audit is to form an opinion on the basic financial statements, you will appreciate that reliance must be placed on adequate methods of internal control as your principal safeguard against errors and fraud which audit procedures may not disclose. The objective of internal control over financial reporting is to provide reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use and that financial records are reliable for preparing financial statements in accordance with generally accepted accounting principles and for maintaining the accountability for assets. The concept of reasonable assurance recognizes that the cost of internal control should not exceed the related benefits; to operationalize this concept, management is required to formulate estimates and judgments of the cost/benefit ratios of alternative controls.
There are inherent limitations that should be recognized in considering the potential effectiveness of internal control over financial reporting. Errors can result from misunderstanding of instructions, mistakes of judgment, carelessness, fatigue, and other personnel factors. Control procedures whose effectiveness depends upon the segregation of duties can be circumvented by collusion or by management. What's more, any projection of internal control evaluations to future periods is subject to the risk that the procedures may become inadequate because of changes in conditions or due to the deterioration of the degree of compliance with control procedures.
As an adjunct to our audit, we remained alert throughout for opportunities to enhance internal controls and operating efficiency. These matters were discussed with management as the audit progressed and have subsequently been reviewed in detail to formulate practical recommendations. We wish to thank your staff for their courtesies and cooperation, which facilitated the efficient performance of audit procedures. The remainder of this letter will explain any internal control deficiencies discovered during the audit, other auditor recommendations, and other information pertinent to the District.
-3- Board of School Directors · Dr. Elizabeth Hammond-Yonson, Superintendent
A control deficiency is determined to be considered a material weakness or significant deficiency based upon the magnitude of the problem as it pertains to a particular opinion unit. In other words, what is considered a significant deficiency in one fund may only be a control deficiency in another fund of greater size.
The following section in this governance/management letter is separated by categories based on importance, with any material weaknesses or significant deficiencies listed in the beginning:
CONTROL DEFICIENCIES
General Fund - Real Estate Taxes
During our review of real estate tax collection procedures, we discovered the District is having problems with the elected tax collectors for Hereford and Upper Hanover Township. During this past fiscal year, they were submitting incorrect monthly Act 169 reports. As a result, the business office clerk had difficulty correcting their mistakes. Since these corrections were not made prior to our arrival, we had to wait until these reconciliations were completed in order to complete our audit.
We would like to advise the School Board of a provision in Act 169 that allows the Board to charge a penalty to any elected tax collector who submits inaccurate or late monthly reports. If this situation continues, we recommend the Board charge these monthly penalties to resolve the problems.
General Fund - Federal Grants
As we reported in last year’s report, some of the federal grants received during the year were fully expended, but more expenditures were shown in your computer, coded to federal source codes, in excess of the award amount. We made adjustments to correct the over-charging of expenditures to the federal grants. In the future, we suggest management review the expending of these grants to ensure the federal expenditures posted in your system never exceeds the award amount of each grant.
General Fund – Intergovernmental Receivables
During our testing of the account balance of this asset, we discovered the account balance had a negative balance of over $84,000. We had to spend additional time determining the corrections that needed to be made to show this asset in a debit balance situation. In the future, we advise management to reconcile this account during the year to ensure the correct balance at year end.
Food Service Fund
During our review of interfund transactions between the food service fund and general fund, the corresponding interfund receivables and payables did not correlate. We made the appropriate adjustments. We would like to suggest management reconcile these interfund transactions during the course of the year.
OTHER RECOMMENDATIONS
Scholarship Fund
Also, since the scholarship accounts are considered private purpose trust funds, which is different than Activity Funds, the District may want to consider separately these scholarship and memorial accounts from the student activity clubs.
-4- Board of School Directors · Dr. Elizabeth Hammond-Yonson, Superintendent
Journal Entries
During our testing of individual accounts within the various funds, we needed to examine journal entries made by the business office during the fiscal year. Our review discovered the business office maintains the journal entries in monthly binders; however, we would like to make suggestions for additional improvements to the recordkeeping process. Unfortunately, the computer system does not provide a means to explain the purpose behind the journal entry.
While not required, some clients maintain a three-ring binder for journal entries made during the year showing each entry made by using a numeric sequence with a thorough explanation as to the reason for the entry. Some entries will require supporting documentation, while others can be explained by the written explanation. By expanding your procedures to include the explanation, this will enhance the audit trail and provide management the ability to rapidly trace any transaction in the system made by manual journal entry.
Community Field Lighting Fund
As reported in last year’s letter, this fund was created many years ago to seek contributions for lighting costs associated with athletic fields; we discovered this fund has remained inactive for many years without any further contributions received.
As such, we suggest management and the School Board authorize the remaining funds to be transferred into the general fund and eliminate this fiduciary fund. If the School Board so desires, this money can be committed for a specific future purpose within the general fund.
ACH Wire Transfers
During our review of issues affecting the use of advanced technology dealing with financial institutions and the potential for fraud that has been happening throughout the world, we have decided to incorporate suggestions to our clients to make sure your anti-fraud controls are up to date dealing with wire transfers. The following represents an extensive list of controls that should be implemented in all organizations. Please review this list with your existing controls:
1. Require the bank to limit daily wire transfer amounts.
2. Require two persons to consummate all wire transfers to external parties.
3. If the wire transfer request is by phone or by fax, require the bank to call your organization back before the wire transfer is consummated.
4. The bank should require the use of unique passwords to access wire-transfer software.
5. Restrict the bank accounts from which a wire transfer can be made.
6. Restrict certain bank accounts so that wire transfers can only be made to other bank accounts of the organization.
7. Have someone peruse the daily bank account activity, at a minimum, reconcile bank accounts in a timely fashion.
8. Require sufficient documentation for all wire transfer journal entries; require a second person review of these journal entries.
9. Consider using a dedicated computer for all wire transfers.
-5- Board of School Directors · Dr. Elizabeth Hammond-Yonson, Superintendent
10. Use all bank-provided wire transfer controls.
11. Any transactions over a certain high dollar amount must have the approval of the business manager.
Not using controls offered by banks may make your organization liable should funds be stolen by hackers. Make sure your district uses appropriate firewall and antivirus protection.
If one person can make external wire transfers and journal entries to record those transactions, you have the makings of fraud.
OTHER INFORMATION
We would be remissed if we didn’t keep the management and the Board of School Directors informed of changes in accounting principles that will affect the District next year and future years. The Government Accounting Standards Board (GASB) has issued Statement Nos. 67, 68, 69, and 70 that will come into effect in years to come. The statements that could affect the District next year and future years are as follows:
GASB Statement No. 68
This statement and its component statement no. 67 will have a massive impact on all governments’ entity- wide financial statements. It will affect every government in the Commonwealth of PA and every other government located in all 50 states, including state governments.
It will require all governments to report the entire amount of the unfunded actuarial liability for any pension plans associated with each respective government onto their government-wide financial statements that are used by bond rating agencies to establish your debt ratings. Presently, governments only report approximately one-thirtieth of this liability on their financial statements assuming they have a stand-alone pension plan.
Those governments, like this School District, that don’t report any pension obligation because they and you belong to a pension trust (PSERS), will soon have to report your proportionate share of the pension trust’s unfunded actuarial pension liability. Your proportionate share of this significant liability will be based upon the percentage of your contributions into the plan compared to the total contributions submitted by all participating governments in the pension trust.
This standard will have a devastating effect for larger governments, whom are already in dire straits as a result of the poor economy. This standard becomes effective for your 2014-2015 fiscal year.
GASB Statement No. 69
This new accounting standard explains the proper accounting treatment of government mergers, acquisitions, transfer of operations, and disposals of government operations. In the current economic climate, there is much discussion on merging governments or transferring operations from one government entity to another. As a result, the Standards Board deliberated the proper financial recognition of assets, liabilities, deferred outflow or inflow of resources, and net position affected by such transactions. This standard takes effect in the 2014-15 fiscal year.
-6- Board of School Directors · Dr. Elizabeth Hammond-Yonson, Superintendent
GASB Statement No. 70
This new accounting standard takes effect in the 2013-14 fiscal year. It pertains to governments extending non-exchange financial guarantees. As an example, when a school district creates a financing authority, then this Statement will apply. It requires governments extending financial guarantees on debt issued by another government to make certain disclosures in their notes to financial statements, and the government issuing the debt to also make certain disclosures.
In addition, the Statement provides criteria when a liability should be recorded on the Statement of Net Position for the guarantor government, and when the issuing government should reclassify its debt. It also provides guidance on the proper handling when the issuing government reimburses the guarantor government.
This letter is required by our standards and has been combined with, what we previously referred to as the management letter. The intent of this letter is to communicate with those charged with governance on matters pertaining to the audit and includes information that we believe can help you correct or improve operating efficiency, under the limitations of staff availability, within the School District.
Respectively submitted,
December 9, 2013
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REPORT DISTRIBUTION LIST The Upper Perkiomen School District has distributed copies of the Single Audit Act Package to the following:
ONE COPY TO: BUREAU OF THE CENSUS (Submitted Electronically) DATA PREPARATION DIVISION
ONE COPY TO: COMMONWEALTH OF PENNSYLVANIA (Submitted Electronically) OFFICE OF THEBUREAU OF AUDITS
ONE COPY TO: MONTGOMERY COUNTY INTERMEDIATE UNIT 1605 - B WEST MAIN ST. NORRISTOWN, PA 19403-3290
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FINANCIAL SECTION
Upper Perkiomen School District
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, the business-type activities, each major fund, the aggregate remaining fund information, and the general fund budgetary comparison statement of the Upper Perkiomen School District, as of June 30, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 2-F to the financial statements, the Upper Perkiomen School District adopted new accounting guidance from GASB Statement Nos. 63 and 65 for the 2012-13 fiscal year. Our opinion is not modified with respect to these pronouncements.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 12-21, and the Schedule of Funding Progress, on page 71, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Upper Perkiomen School District’s basic financial statements. The combining and individual fund statements and schedules, and schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The combining and individual fund financial statements, schedules, and the schedule of expenditures of federal awards are the responsibility of management and were derived from and related 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
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Upper Perkiomen School District
America. In our opinion, the combining and individual fund financial statements, schedules, 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December 9, 2013, on our consideration of the Upper Perkiomen School District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Upper Perkiomen School District’s internal control over financial reporting and compliance.
Respectfully submitted,
December 9, 2013
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion and Analysis
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) Required Supplementary Information (RSI) (UNAUDITED) June 30, 2013
The discussion and analysis of Upper Perkiomen School District’s financial performance provides an overall review of the District’s financial activities for the fiscal year ended June 30, 2013. The intent of this discussion and analysis is to look at the District’s financial performance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the District’s financial performance.
The Management Discussion and Analysis (MD&A) is an element of the new reporting model adopted by the Governmental Accounting Standards Board (GASB) in their Statement No. 34 Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments issued June 1999. Certain comparative information between the current year and the prior year is required to be presented in the MD&A. The accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts, which are comprised of each fund’s assets, deferred outflow of resources, liabilities, deferred inflow of resources, fund equity, revenues and expenditures or expenses as appropriate. Resources are allocated to and accounted for in the individual funds based on the purposes for which they are to be spent.
FINANCIAL HIGHLIGHTS Key financial highlights for 2013 are as follows:
Overall:
• Total net position increased $1,807,532. Net Position of governmental activities increased $1,787,861 and net position of business-type activities increased $19,671.
• Total revenues of $50,965,465 were comprised of governmental activities revenue in the amount of $49,459,426 and business-type activities revenue in the amount of $1,506,039.
• Total program expenses were $49,157,933, $47,671,565 in governmental activities and $1,488,368 in business-type activities.
In governmental funds, total fund balance increased $1,401,895. The general fund increased $1,569,766. The Capital Projects Fund balance decreased $172,038, and the Non-Major governmental funds increased $4,167. A large portion of the decrease is in the Capital Projects Fund and is due to large capital outlays as a result of adding and updating district facilities.
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion and Analysis
The remaining statements are fund financial statements that focus on individual parts of the District’s operations in more detail than the government-wide statements. The governmental funds statements tell how general District services were financed in the short term as well as what remains for future spending. Proprietary fund statements offer short-and long-term financial information about the activities that the District operates like a business. For this District this is our Food Service Fund. Fiduciary fund statements provide information about financial relationships where the District acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong.
The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data.
Figure A-1 shows how the required parts of the Financial Section are arranged and relate to one another:
Figure A-1 Required components of Upper Perkiomen School District’s Financial Report
Management Basic Required Discussion Financial Supplementary and Analysis Statements Information
Government- Fund Notes to the
wide Financial Financial
Financial Statements Statements Statements
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion and Analysis
Figure A-2 summarizes the major features of the District’s financial statements, including the portion of the District they cover and the types of information they contain. The remainder of this overview section of management discussion and analysis explains the structure and contents of each of the statements.
Figure A -2 Major Features of Upper Perkiomen School District’s Government-wide and Fund Financial Statements
Fund Statements Government - wide Governmental Proprietary Statements Funds Funds Fiduciary Funds Scope Entire District The activities of the Activities the Instances in which (except fiduciary District that are not District operates the District is the funds) proprietary or similar to private trustee or agent to fiduciary, such as business – Food someone else’s education, Services resources – administration and Scholarship Funds community services and Agency Funds Required financial Statement of net Balance Sheet Statement of net Statement of statements position Statement of position fiduciary net Statement of revenues, Statement of position activities expenditures, and revenues, Statement of changes in fund expenses and changes in fiduciary balance changes in net net position position Statement of cash flows Accounting basis Accrual Modified accrual Accrual Accrual accounting and measurement accounting and accounting and accounting and and economic focus economic current financial economic resources focus resources focus resources focus resources focus Type of All assets and Only assets All assets and All assets and asset/liability liabilities, both expected to be used liabilities, both liabilities, both information financial and up and liabilities that financial and financial and capital capital, and come due during the capital, and and short-term and short-term and year or soon short-term and long-term long-term thereafter; no capital long-term assets included Type of inflow- All revenues Revenues for which All revenues and All revenues and outflow information and expenses cash is received expenses during expenses during during year, during or soon after year, regardless year, regardless of regardless of the end of the year; of when cash is when cash is when cash is expenditures when received or paid received or paid received or paid goods or services have been received and payment is due during the year or soon thereafter
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion and Analysis
OVERVIEW OF FINANCIAL STATEMENTS Government-wide Statements The government-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the government’s assets, deferred outflow of resources, liabilities, and deferred inflow of resources. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid.
The two government-wide statements report the District‘s net position and how they have changed. Net Position, the difference between the District’s assets, deferred outflow of resources, liabilities, and deferred inflow of resources, are one way to measure the District’s financial health or position.
Over time, increases or decreases in the District’s net position are an indication of whether its financial health is improving or deteriorating, respectively.
To assess the overall health of the District, you need to consider additional non-financial factors, such as changes in the District’s property tax base and the performance of the students.
The government-wide financial statements of the District are divided into two categories:
• Governmental activities – All of the District’s basic services are included here, such as instruction, administration and community services. Property taxes, and state and federal subsidies and grants finance most of these activities.
• Business type activities –The District operates a food service operation and charges fees to staff, students, and visitors to help it cover the costs of the food service operation.
Fund Financial Statements The District’s fund financial statements provide detailed information about the most significant funds – not the District as a whole. Some funds are required by state law and by bond requirements.
Governmental funds – Most of the District’s activities are reported in governmental funds, which focus on the determination of financial position and change in financial position, not on income determination. 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 District’s operations and the services it provides. Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the District’s programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is reconciled in the financial statements.
Proprietary funds – These funds are used to account for the District activities that are similar to business operations in the private sector; or where the reporting is on determining net income, financial position, changes in financial position, and a significant portion of funding through user charges. When the District charges customers for services it provides – whether to outside customers or to other units in the District – these services are generally reported in proprietary funds. The Food Service Fund is the District’s proprietary fund and is the same as the business-type activities we report in the government-wide statements, but provide more detail and additional information, such as cash flows.
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion And Analysis
Fiduciary funds - The District is the trustee, or fiduciary, for some scholarship funds. All of the District's fiduciary activities are reported in separate Statements of Fiduciary Net Position. We exclude these activities from the District's government-wide financial statements because the District cannot use these assets to finance its operations.
FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE The following tables reflect the condensed statement of Net Position, including internal balances, for the last 2 years:
Table A-1 Fiscal Year ended June 30 Net Position
2013 2012 Governmental Business-type Governmental Business-type Activities Activities TOTAL Activities Activities TOTAL Current assets$ 17,703,236 $ 266,435 $ 17,969,671 $ 16,010,006 $ 299,578 $ 16,309,584 Non-Current assets 52,603,807 181,437 52,785,244 54,647,492 198,568 54,846,060 Deferred Outflow of Resources 297,987 - 297,987 - - - Total Assets & Deferred Outflow of Resources $ 70,605,030 $ 447,872 $ 71,052,902 $ 70,657,498 $ 498,146 $ 71,155,644 ------Current and other liabilities 6,477,985 33,500 6,511,485 6,674,667 104,590 6,779,257 Long-term liabilities 29,928,074 20,752 29,948,826 31,143,047 19,607 31,162,654 Deferred Inflow of Resources ------Total Liabilities & Deferred Inflow of Resources 36,406,059 54,252 36,460,311 37,817,714 124,197 37,941,911
Net Position Net Investment in Capital Assets 24,897,792 181,437 25,079,229 25,250,212 198,568 25,448,780 Restricted: - - Capital Projects 606,490 - 606,490 454,627 - 454,627 Unrestricted 8,694,689 212,183 8,906,872 7,134,945 175,381 7,310,326 Total Net Position$ 34,198,971 $ 393,620 $ 34,592,591 $ 32,839,784 $ 373,949 $ 33,213,733
Most of the District's net position are invested in capital assets (buildings, land, and equipment). The remaining unrestricted net position are a combination of designated and undesignated amounts. The designated balances are amounts set-aside to fund future purchases or capital projects as planned by the district.
The results of this year's operations as a whole are reported in the Statement of Activities. All expenses are reported in the first column. Specific charges, grants, revenues and subsidies that directly relate to specific expense categories are represented to determine the final amount of the District's activities that are supported by other general revenues. The two largest general revenues are the Basic Education Subsidy provided by the State of Pennsylvania, and the local taxes assessed to community taxpayers.
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion And Analysis
Statement of Activities The following table reflects the revenues and expenses for year ending June 30, 2013 and June 30, 2012.
Table A-2 Fiscal Year ended June 30 Changes in Net Position
2013 2012 Governmental Business-type Governmental Business-type Activities Activities TOTAL Activities Activities TOTAL REVENUES Program revenues: Charges for services$ 119,899 $ 872,644 $ 992,543 $ 128,268 $ 915,484 $ 1,043,752 Operating grants and contributions 6,950,736 573,430 7,524,166 6,806,312 535,289 7,341,601 Capital grants and contributions 769,204 - 769,204 612,839 - 612,839 General revenues: - - Property taxes 28,939,753 - 28,939,753 26,543,476 - 26,543,476 Other taxes 3,225,664 - 3,225,664 3,007,006 - 3,007,006 Grants, subsidies and contributions, 9,298,874 - - 9,269,992 - - unrestricted - - Other 155,296 59,965 215,261 240,618 51,819 292,437 TOTAL REVENUES 49,459,426 1,506,039 50,965,465 46,608,511 1,502,592 48,111,103 ------
EXPENSES Instruction 30,522,948 - 30,522,948 30,246,672 - 30,246,672 Instructional student support 2,677,300 - 2,677,300 2,735,985 - 2,735,985 Administrative and financial support 4,494,421 - 4,494,421 4,110,770 - 4,110,770 Operation and maintenance of plant 3,252,094 - 3,252,094 3,297,301 - 3,297,301 Pupil transportation 3,175,692 - 3,175,692 3,084,007 - 3,084,007 Student activities 794,537 - 794,537 788,093 - 788,093 Community services ------Interest on long-term debt 1,144,941 - 1,144,941 1,152,305 - 1,152,305 Unallocated depreciation expense 1,609,632 - 1,609,632 1,590,884 - 1,590,884 Food Services - 1,486,368 1,486,368 - 1,533,973 1,533,973 TOTAL EXPENSES 47,671,565 1,486,368 49,157,933 47,006,017 1,533,973 48,539,990 - - Increase (decrease) in net position$ 1,787,861 $ 19,671 $ 1,807,532 $ (397,506) $ (31,381) $ (428,887)
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion And Analysis
The tables below present the expenses of both the Governmental Activities and the Business-type Activities of the District.
Table A-3 shows the District's eight largest functions - instructional programs, instructional student support, administrative, operation and maintenance of plant, pupil transportation, student activities, community services, food service as well as each program's net cost (total cost less revenues generated by the activities). This table also shows the net costs offset by the other unrestricted grants, subsidies and contributions to show the remaining financial needs supported by local taxes and other miscellaneous revenues.
Table A-3 Fiscal Year ended June 30, Governmental Activities
2013 2012 Total Cost of Net Cost of Total Cost of Net Cost of Functions/Programs Services Services Services Services Instruction $ 30,522,948 $ 25,888,496 $ 30,246,672 $ 25,682,533 Instructional student support 2,677,300 2,327,544 2,735,985 2,414,136 Administrative 4,494,421 4,257,284 4,110,770 3,916,882 Operation and maintenance 3,252,094 3,135,384 3,297,301 3,201,684 Pupil transportation 3,175,692 1,563,138 3,084,007 1,422,731 Student activities 794,537 679,411 788,093 696,832 Community services - (4,900) - (6,550) Interest on long-term debt 1,144,941 375,737 1,152,305 539,466 Unallocated depreciation expense 1,609,632 1,609,632 1,590,884 1,590,884 Total governmental activities 47,671,565 39,831,726 47,006,017 39,458,598 Less: Unrestricted grants, subsidies 9,298,874 9,269,992 Total needs from local taxes and other revenues $ 30,532,852 $ 30,188,606
Table A-4 reflects the activities of the Food Service program, the only Business-type activity of the District.
Table A-4 Fiscal Year ended June 30, Business-type Activities
Total Cost of Services Net Cost of Services Functions/Programs 2013 2012 2013 2012 Food Services$ 1,486,368 $ 1,533,973 $ 40,294 $ 83,200 Less: - Investment earnings and other 59,965 51,819 Total business-type activities $ 19,671 $ (31,381)
The Statement of Revenues, Expenses and Changes in Fund Net Position for this proprietary fund will further detail the actual results of operations.
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion And Analysis
THE DISTRICT FUNDS At June 30, 2013, the District governmental funds reported a combined fund balance of $12,518,095, which is an increase of $1,401,895. The major changes are:
The General Fund balance increased by $1,569,766. The actual expenditures were $3,241,026 or 6.37% under budget and the revenues were $975,459 or 2.02% over budget.
The regular instruction, instructional staff services, special programs, operation and maintenance of plant services and student transportation services were lower than expected. Others such as vocational programs, pupil personnel services, administrative services, pupil health, and central support services were expected. Further, compensated balances were adjusted.
The local tax revenue provides approximately 57.23% of the District’s total revenues. These revenues include the real estate, interim real estate, per capita, earned income, and real estate transfer taxes. This year the local real estate and interim real estate were higher than anticipated due to the economy and a slight recovery in the market.
Capital Fund: The district has maintained a Capital Fund for unexpected and proposed capital projects each year. The capital fund decreased by $172,038. The total expenditures from this fund for year ending 2013 were $329,524. The major expenses for the year included the technology plan at the High School, Ed Center and Middle School security system upgrades and professional services related to the reconstruction of the high school tennis courts..
General Fund Budget During the fiscal year, the Board of School Directors (The Board) authorizes revisions to the original budget to accommodate differences from the original budget to the actual expenditures of the District. CAPTIAL ASSET AND DEBT ADMINIASTRATION
CAPITAL ASSETS At June 30, 2013, the District had $52,785,244 invested in a broad range of capital assets, including land, buildings, furniture, and equipment. This amount represents a net decrease (including additions, deletions and depreciation) of $1,632,142 or 3.0% from last year.
Table A-5 Governmental and Business-Type Activities Capital assets - net of depreciation 2013 2012 Land & Land Improvements$ 3,995,075 $ 4,087,616 Buildings 47,558,402 48,990,063 Furniture, Equipment, & Vehicles 1,223,063 1,339,707 Construction In Progress 8,704 -
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion And Analysis
DEBT ADMINISTRATION As of July 1, 2012, the District had total outstanding bond principal of $32,315,000. During the year, the District made payments against principal of $2,330,000, including the net change in principal from a bond refunding. The ending outstanding debt as of June 30, 2013, is $29,985,000.
Table A-6 Outstanding Debt
2013 2012 General Obligation Bonds: - Series of 2007 $ - $ 8,890,000 - Series of 2008 8,890,000 9,245,000 - Series of 2010 4,160,000 5,190,000 - Series of 2011 8,550,000 8,990,000 - Series of 2013 8,385,000 -
Other obligations include accrued vacation pay and sick leave for specific employees of the District and our OPEB obligation. More detailed information about our long-term liabilities is included in the financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The district is located 40 miles north of Philadelphia and has experienced modest increases in its tax base with average wealth levels. With approximately 3200 students and four schools, the Upper Perkiomen School District tends to reflect the community which operates in-small town atmosphere. The district has kept funds in a reserve in anticipation of future capital needs. The availability of these funds will lessen the impact on the taxpayer.
The revenue budget for the 2013-2014 year increased $826,450 which represents a 1.71 % increase in budgeted revenues. The expenditures budgeted for the 2013-2014 year increased $1,222,962 which represents a 2.40% increase in budgeted expenditures. The district’s real estate assessment increased by 1.24%. The tax rate percent on median assessed values increased .11% for Montgomery and Berks County. The tax increase along with planned use of a portion of the fund balance supported the budget increase.
Salaries and benefits for staff increased $1,383,760. There were small increases in both total salaries and medical benefits. There was a significant increase in retirement costs due to the employer retirement rate increasing from 12.36% to 16.93%. Healthcare increased $42,775 and staffing salaries increased by $144,810. The minimal increase in healthcare benefits is due to the involvement of the district in a self- funded benefit trust consortium.
.
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion And Analysis
Table A-7 BUDGETED REVENUES
2013-2014 2012-2013 Local 66.3% 67.0% State 32.6% 31.7% Federal/Other 1.1% 1.3%
BUDGETED EXPENDITURES
2013-2014 2012-2013 Instruction 64.1% 62.9% Support Services 28.5% 28.7% Non-Instruction/Community 1.8% 1.8% Fund Transfers/Debt 5.6% 6.6%
CONTACTING THE DISTRICT FINANCIAL MANAGEMENT
Our financial report is designed to provide our citizens, taxpayers, parents, students, investors and creditors with a general overview of the District's finances and to show the Board's accountability for the money it receives. If you have questions about this report or wish to request additional financial information, please contact Sandra M. Kassel, Business Administrator/Board Secretary at Upper Perkiomen School District, 2229 East Buck Road, Suite 2, Pennsburg, PA 18073, and 215-541-2446
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BASIC FINANCIAL STATEMENTS
Upper Perkiomen School District Statement of Net Position As of June 30, 2013
PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES TOTAL ASSETS Current Assets: Cash and cash equivalents $ 14,290,701 $ 135,530 $ 14,426,231 Investments 1,490,000 - 1,490,000 Receivables, net 1,076,107 - 1,076,107 Internal Balances 7,941 62,481 - (1) Due From Other Governments 755,535 15,784 771,319 Other Receivables 1,327 4,381 5,708 Inventories 81,625 48,259 129,884 Prepaid Expenses - - - Other Current Assets - - - Total Current Assets 17,703,236 266,435 17,899,249 ------Non-Current Assets: Restricted Cash and Cash Equivalents - - - Land 1,954,546 - 1,954,546 Site Improvements (net of depreciation) 2,040,529 - 2,040,529 Building and Bldg. Improvements (net of depreciation) 47,558,402 - 47,558,402 Furniture and Equipment (net of depreciation) 1,041,626 181,437 1,223,063 Construction in Progress 8,704 - 8,704 Total Non-Current Assets 52,603,807 181,437 52,785,244 TOTAL ASSETS $ 70,307,043 $ 447,872 $ 70,684,493 DEFERRED OUTFLOW OF RESOURCES Deferred Charges on Bond Refundings, net 297,987 - 297,987 TOTAL ASSETS AND DEFERRED OUTFLOW OF RESOURCES $ 70,605,030 $ 447,872 $ 70,982,480
LIABILITIES Current Liabilities: Internal Balances $ 62,481 $ 7,941 $ - (1) Due to other governments 146,310 - 146,310 Accounts Payable 765,525 736 766,261 Current Portion of Long-Term Obligations 2,130,881 - 2,130,881 Accrued Salaries and Benefits 1,824,730 - 1,824,730 Payroll Deductions and Withholdings 1,177,073 - 1,177,073 Prepayments - - - Other Current Liabilities 370,985 24,823 395,808 Total Current Liabilities 6,477,985 33,500 6,441,063
Non-Current Liabilities: Bonds and Notes Payable 28,467,088 - 28,467,088 Lease Purchase Obligations - - - Long-Term Portion of Compensated Absences 1,115,541 20,752 1,136,293 Net OPEB Obligation 345,445 - 345,445 Other Long-Term Liabilities - - - TOTAL LIABILITIES 36,406,059 54,252 36,389,889 DEFERRED INFLOW OF RESOURCES Unearned Revenue - - - TOTAL LIABILITIES AND DEFERRED INFLOW OF RESOURCES 36,406,059 54,252 36,389,889 ------NET POSITION Net Investment in Capital Assets 24,897,792 181,437 25,079,229 Restricted For: Retirement of Long-Term Debt - - - Capital Projects 606,490 - 606,490 Other Restrictions - - - Unrestricted (deficit) 8,694,689 212,183 8,906,872 TOTAL NET POSITION 34,198,971 393,620 34,592,591 TOTAL LIABILITIES, DEFERRED INFLOW OF RESOURCES, AND $ 70,605,030 $ 447,872 $ 70,982,480 NET POSITION
The Accompanying Notes are an integral part of these financial statements.
(1) Internal balances represent the amount owed to or from the two types of activities within the Primary Government. Since internal balances do not represent assets or liabilities of the total Primary Government, their balances are eliminated in the "total" column (GASB Statement No. 34, para. 58).
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Upper Perkiomen School District Statement of Activities For the Year Ended June 30, 2013
PROGRAM REVENUES NET (EXPENSE) REVENUE OPERATING CAPITAL AND CHANGES IN NET POSITION CHARGES FOR GRANTS AND GRANTS AND GOVERNMENTAL BUSINESS-TYPE FUNCTIONS/PROGRAMS EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES ACTIVITIES TOTAL GOVERNMENTAL ACTIVITIES: Instruction $ 30,522,948 $ 3,420 $ 4,631,032 $ - $ (25,888,496) $ - $ (25,888,496) Instructional Student Support 2,677,300 - 349,756 - (2,327,544) - (2,327,544) Admin. & Fin'l Support Services 4,494,421 - 237,137 - (4,257,284) - (4,257,284) Oper. & Maint. of Plant Svcs. 3,252,094 - 116,710 - (3,135,384) - (3,135,384) Pupil Transportation 3,175,692 42,253 1,570,301 - (1,563,138) - (1,563,138) Student activities 794,537 69,326 45,800 - (679,411) - (679,411) Community Services - 4,900 - - 4,900 - 4,900 Scholarship & Awards - - - - Interest on Long-Term Debt 1,144,941 - - 769,204 (375,737) - (375,737) Unallocated Depreciation Expense 1,609,632 - - - (1,609,632) - (1,609,632) TOTAL GOVERNMENTAL ACTIVITIES 47,671,565 119,899 6,950,736 769,204 (39,831,726) - (39,831,726)
BUSINESS-TYPE ACTIVITIES: Food Services 1,486,368 872,644 573,430 - (40,294) (40,294) Other Enterprise Funds ------
TOTAL PRIMARY GOVERNMENT $ 49,157,933 $ 992,543 $ 7,524,166 $ 769,204 $ (39,831,726) $ (40,294) $ (39,872,020)
GENERAL REVENUES: Property taxes. Levied for general purposes, net $ 28,939,753 $ - $ 28,939,753 Taxes levied for specific purposes 3,225,664 - 3,225,664 Grants, subsidies, & contributions not restricted 9,298,874 - 9,298,874 Investment Earnings 72,893 246 73,139 Miscellaneous Income 82,398 59,719 142,117 Special item - Gain or (Loss) on sale of capital assets 5 - 5 Extraordinary Items - - - Transfers - - - TOTAL GENERAL REVENUES, SPECIAL ITEMS, EXTRAORDINARY ITEMS, AND TRANSFERS 41,619,587 59,965 41,679,552 CHANGES IN NET POSITION 1,787,861 19,671 1,807,532 NET POSITION - BEGINNING 32,839,784 373,949 33,213,733 PRIOR PERIOD ADJUSTMENT (428,674) - (428,674)
NET POSITION - ENDING $ 34,198,971 $ 393,620 $ 34,592,591
The Accompanying Notes are an integral part of these financial statements.
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Upper Perkiomen School District Balance Sheet Governmental Funds As of June 30, 2013 NON-MAJOR TOTAL CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL PROJECTS FUNDS FUNDS ASSETS Cash and cash equivalents $ 11,493,326 $ 2,793,207 $ 4,167 $ 14,290,700 Restricted Cash - - - Investments 1,490,000 - - 1,490,000 Taxes Receivable, net 1,096,845 - - 1,096,845 Due from other funds 18,868 151,694 - 170,562 Due from Other Governments 755,535 - - 755,535 Other Receivables 400 - - 400 Inventories - - - - Other Current Assets - - - - TOTAL ASSETS $ 14,854,974 $ 2,944,901 $ 4,167 $ 17,804,042
DEFERRED OUTFLOW OF RESOURCES Deferred Charges on Refundings, net - - - - TOTAL ASSETS AND DEFERRED OUTFLOW OF RESOURCES $ 14,854,974 $ 2,944,901 $ 4,167 $ 17,804,042
LIABILITIES Due to Other Funds $ 214,175 $ 10,000 $ - $ 224,175 Due to Other Governments 146,310 - - 146,310 Accounts Payable 765,200 325 - 765,525 Current Portion of Long-Term Debt 265,881 - - 265,881 Accrued Salaries and Benefits 1,824,730 - - 1,824,730 Payroll Deductions and Withholdings 1,177,073 - - 1,177,073 Prepayments - - - - Other Current Liabilities - - - - TOTAL LIABILITIES 4,393,369 10,325 - 4,403,694
DEFERRED INFLOW OF RESOURCES Unearned / Unavailable Revenue 882,253 - - 882,253 TOTAL LIABILITIES AND DEFERRED INFLOW OF RESOURCES ------5,275,622 ------10,325------5,285,947 ------FUND BALANCES: Nonspendable Fund Balance - - - - Restricted Fund Balance 800 2,934,576 - 2,935,376 Committed Fund Balance 100,157 - - 100,157 Assigned Fund Balance 3,040,433 - 4,167 3,044,600 Unassigned Fund Balance 6,437,962 - - 6,437,962 TOTAL FUND BALANCES 9,579,352 2,934,576 4,167 12,518,095 TOTAL LIABILITIES, DEFERRED INFLOW OF RESOURCES, AND FUND BALANCES $ 14,854,974 $ 2,944,901 $ 4,167 $ 17,804,042
The Accompanying Notes are an integral part of these financial statements. -24-
Upper Perkiomen School District Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position As of June 30, 2013
TOTAL FUND BALANCES - GOVERNMENTAL FUNDS $ 12,518,095
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 therefore are not reported as assets in governmental funds. The cost of the assets is $76,362,576 and the accumulated depreciation is $23,758,769. 52,603,807
Additional receivables established that do not meet the availability criteria reflected in the fund financial statements. This amount represents the difference between the prior year receivables and the current year receivables established under the accrual basis of accounting. -
Property taxes receivable will be collected this year, but are not available soon enough to pay for the current period's expenditures and therefore are deferred in the funds. 861,516
This represents deferred outflow of resources resulting in deferred charges on refunding prior bond issues. This amount was previously reported as a contra to Bonds Payable under long-term debt; however GASB Statement No. 65 changed the classification of this item to deferred outflow of resources. 297,987
The governmental funds follow the purchase method of inventory; therefore no inventory is reflected on the balance sheet. However, the statement of net position uses the consumption method of inventory. 81,625
Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year end consist of: Bonds payable$ (30,332,088) Accrued interest on the bonds (370,985) Compensated absences (1,115,541) Other Long Term Liabilities - Net OPEB Obligation (345,445) (32,164,059)
TOTAL NET POSITION - GOVERNMENTAL ACTIVITIES $ 34,198,971
The Accompanying Notes are an integral part of these financial statements.
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Upper Perkiomen School District Statement of Revenues, Expenditures, and Changes Fund in Balances Governmental Funds For the Year Ended June 30, 2013
NON-MAJOR TOTAL CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL PROJECTS FUNDS FUNDS REVENUES Local Sources $ 33,022,139 $ 5,792 $ -$ 33,027,931 State Sources 15,794,851 - - 15,794,851 Federal Sources 518,073 - - 518,073 TOTAL REVENUES 49,335,063 5,792 - 49,340,855 ------
EXPENDITURES Instruction 30,139,166 260,848 - 30,400,014 Support Services 13,331,916 55,903 138,459 13,526,278 Operation of Non-Instructional Services 787,309 - - 787,309 Capital Outlay - 12,773 - 12,773 Debt Service 3,357,934 - - 3,357,934 TOTAL EXPENDITURES 47,616,325 329,524 138,459 48,084,308
EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,718,738 (323,732) (138,459) 1,256,547
OTHER FINANCING SOURCES (USES) Bond Proceeds - - - - Refunding Bond Proceeds - - 8,385,000 8,385,000 Proceeds from Extended Term Financing - - - - Bond Premium - - 306,306 306,306 Bond Discount - - (16,176) (16,176) Interfund Transfers In - 151,694 - 151,694 Sale/Compensation for Fixed Assets 2,722 - - 2,722 Payment to bond refunding escrow agent - - (8,532,504) (8,532,504) Operating Transfers Out (151,694) - - (151,694) TOTAL OTHER FINANCING SOURCES (USES) (148,972) 151,694 142,626 145,348
SPECIAL/EXTRAORDINARY ITEMS Special Items - - - - Extraordinary Items - - - -
NET CHANGE IN FUND BALANCES 1,569,766 (172,038) 4,167 1,401,895
FUND BALANCES - BEGINNING 8,009,586 3,106,614 - 11,116,200
FUND BALANCES - ENDING $ 9,579,352 $ 2,934,576 $ 4,167 $ 12,518,095
The Accompanying Notes are an integral part eof financial thes statements.
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Upper Perkiomen School District Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities For the Year Ended June 30, 2013
NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS $ 1,401,895
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, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Depreciation expense $ 1,658,518 less - capital outlays 46,001 (1,612,517)
Some of the capital assets acquired this year were financed with capital leases. The amount financed by the leases is reported in the governmental funds as a source of financing. On the other hand, the capital leases are not revenues in the statement of activities, but rather constitute long-term liabilities. -
In the statement of activities, only the gain on the sale of the capital assets is reported, whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net position differs from the change in fund balance by the cost of fixed assets sold. (2,494)
Because some property taxes will not be collected for several months after the District's fiscal year ends, they are not considered as "available" revenues in the governmental funds. Deferred inflow of resources decreased by this amount this year. 118,343
Repayment of bond and lease principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. 2,195,000
In the statement of activities, certain operating expenses--compensated absences (vacations) and special termination benefits (early retirement)--are measured by the amounts earned during the year. In the governmental funds; however, expenditures for these items are measured by the amount of financial resources used. This amount represents the difference between the amount earned versus the amount used. (172,205)
SUB-TOTAL IN CHANGES BETWEEN BASIS OF ACCOUNTING 1,928,022
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Upper Perkiomen School District Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities For the Year Ended June 30, 2013
SUB-TOTAL IN CHANGES BETWEEN BASIS OF ACCOUNTING (CONT'D) $ 1,928,022
Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, interest expense is recognized as the interest accrues, regardless of when it is due. This would include accumulated interest accreted on capital appreciation bonds. The additional interest accrued in the statement of activities over the amount due is shown here. 17,993
In the statement of activities, certain operating revenues are recognized when earned versus the revenues using the modified accrual basis of accounting in the fund statements that are recognized when the funds are available. As such, the amount shown here represents the difference between earned revenues and revenues that are earned, but not available. -
Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Refunding bond issues becomes a use of current financial resources in governmental funds, but refundings represents payments of long-term debt in the statement of net position. This figure represents the difference between bond proceeds and refunding payments made to paying agents. (142,626)
The governmental funds use the purchase method of inventory, where all items purchased are charged to expenditures. However, the statement of activities is reflected on the consumption method of recording inventory type items; therefore, this adjustment reflects the inventory difference. (15,528)
CHANGES IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ 1,787,861
The Accompanying Notes are an integral part of these financial statements.
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Upper Perkiomen School District Statement of Fund Net Position Proprietary Funds As of June 30, 2013
FOOD NON-MAJOR
SERVICE FUNDS TOTAL ASSETS CURRENT ASSETS: Cash and cash equivalents $ 135,530 $ - $ 135,530 Investments - - - Due from other funds 62,481 - 62,481 Due From Other Governments 15,784 - 15,784 Other Receivables 4,381 - 4,381 Inventories 48,259 - 48,259 Prepaid expenses - - - Other Current Assets - - - TOTAL CURRENT ASSETS 266,435 - 266,435 ------NON-CURRENT ASSETS: Building & Bldg. Improvements (net) - - - Machinery & Equipment (net) 181,437 - 181,437 Other Long-Term Receivables - - - TOTAL NON-CURRENT ASSETS 181,437 - 181,437 TOTAL ASSETS $ 447,872 $ - $ 447,872 DEFERRED OUTFLOW OF RESOURCES Deferred Charges on Refundings, net - - - TOTAL ASSETS AND DEFERRED OUTFLOW OF RESOURCES $ 447,872 $ - $ 447,872
LIABILITIES CURRENT LIABILITIES: Due to Other Funds $ 7,941 $ - $ 7,941 Due to Other Governments - - - Accounts Payable 736 - 736 Current Portion of Long-Term Debt - - Accrued Salaries and Benefits - - - Payroll Deductions and Withholdings - - - Prepayments from Students 24,823 - 24,823 TOTAL CURRENT LIABILITIES 33,500 - 33,500 NON-CURRENT LIABILITIES: ------Long-Term Portion of Compensated Absences 20,752 - 20,752 Net OPEB Obligation - - - TOTAL NON-CURRENT LIABILITIES 20,752 - 20,752 TOTAL LIABILITIES 54,252 - 54,252
DEFERRED INFLOW OF RESOURCES Unearned Revenue - - - TOTAL LIABILITIES AND DEFERRED INFLOW OF RESOURCES 54,252 - 54,252 ------FUND NET POSITION Net Investment in Capital Assets 181,437 - 181,437 Restricted for Legal Purposes - - - Unrestricted 212,183 - 212,183 TOTAL FUND NET POSITION 393,620 - 393,620
TOTAL LIABILITIES, DEFERRED INFLOW OF RESOURCES, AND $ 447,872 $ - $ 447,872 FUND NET POSITION
The Accompanying Notes are an integral part of these financial statements.
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Upper Perkiomen School District Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30, 2013
FOOD NON-MAJOR SERVICE FUNDS TOTAL OPERATING REVENUES: Food Service Revenue $ 872,644 $ - $ 872,644 Charges for Services - - - Other Operating Revenues 59,719 - 59,719 TOTAL OPERATING REVENUES 932,363 - 932,363 ------OPERATING EXPENSES: Salaries 525,770 - 525,770 Employee benefits 152,942 - 152,942 Purchased Professional and Technical Services 4,121 - 4,121 Purchased Property Service 23,625 - 23,625 Other Purchased Services 4,239 - 4,239 Supplies 752,870 - 752,870 Depreciation 17,131 - 17,131 Dues and Fees 245 - 245 Claims and Judgments - - - Other Operating Expenses 5,425 - 5,425 TOTAL OPERATING EXPENSES 1,486,368 - 1,486,368 OPERATING INCOME (LOSS) (554,005) - (554,005) ------NON-OPERATING REVENUES (EXPENSES) Earnings on investments 246 - 246 Contributions and Donations - - - Gain/Loss on Sale of Fixed Assets - - - State Sources 88,058 - 88,058 Federal Sources 485,372 - 485,372 Claims and Judgments - - - Interest Expenses - - - TOTAL NON-OPERATING REVENUES (EXPENSES) 573,676 - 573,676
INCOME (LOSS) BEFORE CONTRIBUTIONS 19,671 - 19,671
Capital contributions - - - Transfers in (out) - - - CHANGES IN FUND NET POSITION 19,671 - 19,671
FUND NET POSITION - BEGINNING 373,949 - 373,949
FUND NET POSITION - ENDING $ 393,620 $ - $ 393,620
The Accompanying Notes are an integral part of these financial statements.
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Upper Perkiomen School District Statement of Cash Flows Proprietary Funds As of June 30, 2013
FOOD NON-MAJOR SERVICE FUNDS TOTAL CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Users $ 857,534 $ - $ 857,534 Cash Received from Assessments made to Other Funds - - - Cash Received from Earnings on Investments - - - Cash Received from Other Operating Revenue 59,719 - 59,719 Cash Payments to Employees for Services (677,567) - (677,567) Cash Payments for Insurance Claims - - - Cash Payments to Suppliers for Goods and Services (801,443) - (801,443) Cash Payments to Other Operating Expenses (890) - (890) NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (562,647) - (562,647) ------
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Local Sources - - - State Sources 88,048 - 88,048 Federal Sources 421,782 - 421,782 Contributions - - - Interest Paid on Notes/Loans - - - Operating Transfers In (Out) - - - NET CASH PROVIDED BY (USED FOR) NON-CAPITAL FINANCING ACTIVITIES 509,830 - 509,830 ------
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Facilities Acquisition/Const./Improvement Svcs. - - - Capital Contributions - - Gain/Loss on Sale of Fixed Assets (Proceeds) - - - NET CASH PROVIDED BY (USED FOR) CAPITAL AND RELATED FINANCING ACTIVITIES ------
CASH FLOWS FROM INVESTING ACTIVITIES Earnings on Investments 246 - 246 Purchase of Investment Securities/Deposits to Investment Pools - - - Withdrawals from Investment Pools - - - Proceeds from Sale and Maturity of Investment Securities - - - NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 246 - 246
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (52,571) - (52,571)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 188,101 - 188,101
CASH AND CASH EQUIVALENTS - END OF YEAR $ 135,530 $ - $ 135,530
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Upper Perkiomen School District Statement of Cash Flows Proprietary Funds As of June 30, 2013
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
FOOD NON-MAJOR SERVICE FUNDS TOTAL OPERATING INCOME (LOSS) $ (554,005) $ - (554,005) ------
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Depreciation and Net Amortization 17,131 - 17,131 Provision for Uncollectible Accounts - - - Donated Commodities Used 54,950 - 54,950
CHANGE IN ASSETS AND LIABILITIES: (Increase) Decrease in Accounts Receivable 2,245 - 2,245 (Increase) Decrease in Advances to Other Funds (17,355) - (17,355) (Increase) Decrease in Inventories 4,331 - 4,331 (Increase) Decrease in Prepaid Expenses - - - (Increase) Decrease in Other Current Assets - - - Increase (Decrease) in Accounts Payable (7,838) - (7,838) Increase (Decrease) in Accrued Salaries and Benefits 1,146 - 1,146 Increase (Decrease) in Advances from Other Funds (67,145) - (67,145) Increase (Decrease) in Prepayments from Students 3,893 3,893 Increase (Decrease) in Other Retirement Benefits - - - TOTAL ADJUSTMENTS (8,642) - (8,642)
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ (562,647) $ - $ (562,647)
The Accompanying Notes are an integral part of these financial statements.
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Upper Perkiomen School District Statement of Net Position Fiduciary Funds As of June 30, 2013
PENSION AND PRIVATE OTHER EMPLOYEE PURPOSE BENEFIT AGENCY TRUST TRUST FUNDS ASSETS & DEFERRED OUTFLOW OF RESOURCES Cash and cash equivalents $ 41,349 $ - $ 154,063 Investments 184,321 - 285,000 Due from Other Funds - - - Other Receivables - - - Prepaid Expenses - - - Other Current Assets - - - Deferred Outflow of Resources - - - TOTAL ASSETS & DEFERRED OUTFLOW OF RESOURCES $ 225,670 $ - $ 439,063
LIABILITIES & DEFERRED INFLOW OF RESOURCES Accounts Payable $ - $ - $ 8,427 Due to Other Funds - - 927 Due to Student Clubs - - 145,300 Other Current Liabilities - - 284,409 Deferred Inflow of Resources - - - TOTAL LIABILITIES & DEFERRED INFLOW OF RESOURCES - - 439,063
NET POSITION Restricted - - - Unrestricted 225,670 - - TOTAL NET POSITION $ 225,670 $ - $ -
The Accompanying Notes are an integral part of these financial statements.
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Upper Perkiomen School District Statement of Changes in Net Position Fiduciary Funds For the Year Ended June 30, 2013
PENSION AND PRIVATE- OTHER EMPLOYEE PURPOSE BENEFIT TRUST FUND TRUST FUNDS ADDITIONS: Contributions $ 22,700 $ - Transfers from other funds - - INVESTMENT EARNINGS: Interest and Dividends 829 - Net increase (decrease) in fair value of investments - - Less investment expense - - TOTAL ADDITIONS 23,529 ------
DEDUCTIONS: Transfers to other funds - - Signs & Tiles - Administrative charges - - Scholarships 20,655 - TOTAL DEDUCTIONS 20,655 -
CHANGES IN NET POSITION 2,874 -
NET POSITION - BEGINNING OF YEAR 222,796 -
NET POSITION - END OF YEAR $ 225,670 $ -
The Accompanying Notes are an integral part of these financial statements.
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Upper Perkiomen School District Statement of Revenue, Expenditures, and Changes inFund Balance - Budget and Actual General Fund For the Year Ended June 30, 2013
VARIANCE WITH ACTUAL FINAL BUDGET BUDGET TO ACTUAL BUDGETED AMOUNTS (BUDGETARY POSITIVE GAAP AMOUNTS ORIGINAL FINAL BASIS) (NEGATIVE) DIFFERENCE GAAP BASIS REVENUES Local Sources $ 32,393,044 $ 32,393,045 $ 33,022,139 629,094 - 33,022,139 State Sources 15,311,598 15,311,597 15,794,851 483,254 - 15,794,851 Federal Sources 654,962 654,962 518,073 (136,889) - 518,073 TOTAL REVENUES 48,359,604 48,359,604 49,335,063 975,459 - 49,335,063 ------EXPENDITURES Regular Instruction 22,281,551 22,120,669 20,786,879 1,333,790 - 20,786,879 Special Programs 7,475,691 7,475,692 7,058,324 417,368 - 7,058,324 Vocational Programs 2,200,111 2,200,111 2,193,109 7,002 - 2,193,109 Other Instructional Programs 136,126 136,126 100,854 35,272 - 100,854 Adult Education Programs ------Community/Junior College Ed. Programs ------Pupil Personnel Services 1,370,419 1,370,669 1,289,311 81,358 - 1,289,311 Instructional Staff Services 1,324,310 1,323,511 1,115,049 208,462 - 1,115,049 Administrative Services 2,835,877 2,844,507 2,767,578 76,929 - 2,767,578 Pupil Health 320,207 320,207 258,947 61,260 - 258,947 Business Services 638,527 638,527 547,377 91,150 - 547,377 Operation & Maintenance of Plant Services 3,803,669 3,803,669 3,220,200 583,469 - 3,220,200 Student Transportation Services 3,335,397 3,335,397 3,175,135 160,262 - 3,175,135 Central Support Services 994,597 995,397 924,223 71,174 - 924,223 Other Support Services 34,788 34,788 34,096 692 34,096 Student Activities 900,147 900,147 787,309 112,838 - 787,309 Community Services ------Scholarship and Awards - - - - - Facilities, Acquisition and Construction ------Debt Service 3,357,934 3,357,934 3,357,934 - - 3,357,934 TOTAL EXPENDITURES 51,009,351 50,857,351 47,616,325 3,241,026 - 47,616,325 Excess (deficiency) of revenues over expenditures ,649,747) (2 (2,497,747) 1,718,738 4,216,485 - 1,718,738 ------OTHER FINANCING SOURCES (USES) Proceeds From Extended Term Financing ------Interfund Transfers In ------Sale/Compensation for Fixed Assets - - 2,722 2,722 - 2,722 Refund of Prior Year Expenditures ------Fund Transfers Out - (152,000) (151,694) 306 - (151,694) Budgetary Reserve ------TOTAL OTHER FINANCING SOURCES (USES) - (152,000) (148,972) 3,028 - (148,972) Special Items ------Extraordinary Items ------
NET CHANGE IN FUND BALANCES (2,649,747) (2,649,747) 1,569,766 4,219,513 - 1,569,766 FUND BALANCE - JULY 1, 2012 6,001,440 6,001,440 8,009,586 2,008,146 - 8,009,586
FUND BALANCE - JUNE 30, 2013$ 3,351,693 $ 3,351,693 $ 9,579,352 $ 6,227,659 $ - $ 9,579,352
The Accompanying Notes are an integral part of these financial statements.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Note 1 - Description of the School District and Reporting Entity School District The Upper Perkiomen School District is located in the upper regions of the Perkiomen Valley. The four boroughs of East Greenville, Green Lane, Pennsburg, and Red Hill (all in Montgomery County) lie in an almost unbroken line of Route 29 from northwest to southeast, approximately 40 miles from Philadelphia to the southeast and 21 miles from Allentown-Bethlehem to the north. The townships of Marlborough and Upper Hanover in Montgomery County and Hereford in Berks County surround the boroughs to total approximately 52 square miles.
The Upper Perkiomen School District is a unit established, organized, and empowered by the Commonwealth of Pennsylvania for the expressed purpose of carrying out, on the local level, the Commonwealth's obligation to public education, as established by the constitution of the Commonwealth and by the School Law Code of the same (Article II; Act 150, July 8, 1968).
As specified under the School Law Code of the Commonwealth of Pennsylvania, this and all other school districts of the state "shall be and hereby are vested as, bodies corporate, with all necessary powers to carry out the provisions of this act" (Article II, Section 211).
Board of School Directors The public school system of the Commonwealth shall be administered by a board of school directors, to be elected or appointed, as hereinafter provided. At each election of school directors, each qualified voter shall be entitled to cast one vote for each school director to be elected.
The Upper Perkiomen School District is governed by a board of nine school directors who are residents of the School District and who are elected every two years, on a staggered basis, for a four year term.
The Board of School Directors has the power and duty to establish, equip, furnish, and maintain a sufficient number of elementary, secondary, and other schools necessary to educate every person, residing in such district, between the ages of six and twenty-one years, who may attend.
In order to establish, enlarge, equip, furnish, operate, and maintain any schools herein provided, or to pay any school indebtedness which the School District is required to pay, or to pay any indebtedness that may at any time hereafter be created by the School District, the Board of School Directors are vested with all the necessary authority and power, to annually levy and collect the necessary taxes required and granted by the legislature, in addition to the annual State appropriation, and are vested with all necessary power and authority to comply with and carry out any or all of the provisions of the Public School Code of 1949.
Administration The Superintendent of Schools shall be the executive officer of the Board of School Directors and, in that capacity shall administer the School District in conformity with Board policies and the School Laws of Pennsylvania. The Superintendent shall be directly responsible to, and therefore appointed by, the Board of School Directors. The Superintendent shall be responsible for the overall administration, supervision, and operation of the School District.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
The Business Manager, recommended by the Superintendent and appointed by the Board of School Directors, shall supervise and coordinate all business aspects of the School District. In this capacity, he or she shall be responsible to insure that all work accomplished by him/her, or by persons under his/her supervision, is in the best interests of the Upper Perkiomen School District. The Business Manager is directly responsible to the Superintendent.
Reporting Entity A reporting entity is comprised of the primary government, component units, and other organizations that are included to insure that the financial statements of the School District are not misleading. The primary government consists of all funds, departments, boards, and agencies that are not legally separate from the School District. For Upper Perkiomen School District, this includes general operations, food service, and student related activities of the School District.
Upper Perkiomen School District is a municipal Corporation governed by an elected nine-member board. As required by generally accepted accounting principles, these financial statements are to present Upper Perkiomen School District (the primary government) and organizations for which the primary government is financially accountable. The School District is financially accountable for an organization if the School District appoints a voting majority of the organization's governing board and (1) the School District is able to significantly influence the programs or services performed or provided by the organization; or (2) the School District is legally entitled to or can otherwise access the organization's resources; the School District is legally obligated or has otherwise assumed the responsibility to finance the deficits of, or provide financial support to, the organization; or the School District is obligated for the debt of the organization. Component units may also include organizations that are financially dependent on the School District in that the School District approved the budget, the issuance of debt, or the levying of taxes. The Upper Perkiomen School District does not have any component units.
Joint Ventures Western Center for Technical Studies The School District is a participating member of the Western Center for Technical Studies. The Center is run by a joint committee consisting of members from each participating district. No participating district appoints a majority of the joint committee. The board of directors of each participating district must approve the Center's annual operating budget. Each participating district pays a pro-rata share of the Center's operating costs based on the number of students attending the Center for each district. The District's share of the Center's operating costs for 2012-2013 was $2,193,109.
On dissolution of the Western Center for Technical Studies, the net position of the Center will be shared on a pro-rata basis of each participating district's current market value of taxable real property as certified by the Pennsylvania State Tax Equalization Board. However, the District does not have an equity interest in the Center as defined by GASB Statement No. 14, except a residual interest in the net position upon dissolution that should not be reflected on the basic financial statements. Complete financial statements for the Center can be obtained from the Center's administrative office.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Jointly Governed Organizations The School District is a participating member of the Montgomery County Intermediate Unit (MCIU). The MCIU is run by a joint committee consisting of members from each participating district. No participating district appoints a majority of the joint committee. The board of directors of each participating district must approve MCIU's annual operating budget. The MCIU is a self-sustaining organization that provides services for fees to participating districts. As such, the District has no on-going financial interest or responsibility in the MCIU. The MCIU contracts with participating districts to supply special education services, computer services, and to act as a conduit for certain federal programs.
Note 2 - Summary of significant accounting policies The financial statements of the District have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. On June 15, 1987, the GASB issued a codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The more significant of these accounting policies are described below and, where appropriate, subsequent pronouncements will be referenced. GASB Statement No. 62 was issued to include all prior Financial Accounting Standards Board’s statements and interpretations, along with predecessors’ statements and interpretation pertaining to governments into the hierarchy of the Governmental Accounting Standards Board’s jurisdiction.
A. Basis of Presentation The School District's basic financial statements consist of government-wide statements, including a statement of net position, a statement of activities, and fund financial statements which provide a more detailed level of financial information.
Government-wide Financial Statements The statement of net position and the statement of activities display information about the School District as a whole. These statements include the financial activities of the primary government, except for fiduciary funds. The statements distinguish between those activities of the School District that are governmental and those that are considered business-type activities.
The statement of net position presents the financial condition of the governmental and business-type activities of the School District at year-end. The statement of activities presents a comparison between direct expenses and program revenues for each program or function of the School District's governmental activities and for one business-type activity of the School District. Direct expenses are those that are specifically associated with a service, program, or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants, and contributions that are restricted to meeting the operational or capital requirements of a particular program, and interest earned on grants that is required to be used to support a particular program. Revenues which are not classified as program revenues are presented as general revenues of the School District, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business activity or governmental function is self- financing or draws from the general revenues of the School District.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Fund Financial Statements During the year, the School District segregates transactions related to certain School District functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the School District at this more detailed level. The focus of governmental and enterprise fund financial statements is on major funds. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. The fiduciary funds are reported by type.
B. Fund Accounting The School District uses funds to maintain its financial records during the year. A fund is defined as a fiscal and accounting entity with a self balancing set of accounts. There are three categories of funds: governmental, proprietary, and fiduciary.
Governmental Funds Governmental funds are those through which most governmental functions typically are financed. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Deferred Outflow of Resources is recorded in a particular governmental fund where costs are spent for a future period. Current Liabilities are assigned to the governmental fund from which they will be paid. Deferred Inflow of Resources is recorded in a particular governmental fund that has received resources for a future period. The difference between the sum of assets and deferred outflow of resources minus the sum of liabilities and deferred inflow of resources is reported as fund balance. The following are the School District’s major governmental funds:
General Fund
The general fund should be used to account for and report all financial resources not accounted for and reported in another fund.
Special Revenue Fund
Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The term proceeds of specific revenue sources establishes that one or more specific restricted or committed revenues should be the foundation for a special revenue fund. The restricted or committed proceeds of specific revenue sources should be expected to continue to comprise a substantial portion of the inflows reported in the fund. Other resources also may be reported in the fund if those resources are restricted, committed, or assigned to the specified purpose of the fund.
Under this definition, the District does not have any special revenue funds.
Capital Projects Fund
Capital project funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Capital project funds exclude those types of capital-related outflows financed by proprietary funds or for assets that will be held in trust for individuals, private organizations, or other governments.
The District has the following Capital Project Funds:
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Capital Project Fund
This fund has received the proceeds from various bond issues in the past that was used to acquire, design, construct, furnish, and equip additions, alterations, renovations, and other improvements to school district facilities. During a prior fiscal year, this fund received the proceeds from $10,000,000 of General Obligation Bonds – Series of 2008, which will be used to acquire, construct, equip, furnish, additions, and improvements to various school district facilities.
Capital Reserve Fund
This fund was created in accordance with Section 1432 of the Municipal Code. The Municipal Code restricts how the resources are spent within this fund.
Proprietary Funds Proprietary funds focus on the determination of changes in net position, financial position, and cash flows and are classified as enterprise funds.
Enterprise Funds Enterprise funds may be used to account for any activity for which a fee is charged to external users for goods or services. The School District's major enterprise fund is:
Food Service Fund This fund accounts for the financial transactions related to the food service operations of the School District.
Fiduciary Funds Fiduciary funds reporting focuses on net position and changes in net position. The fiduciary fund category is split into four classifications: pension trust funds, investment trust funds, private- purpose trust funds, and agency funds. Trust funds are used to account for assets held by the School District under a trust agreement for individuals, private organizations, or other governments and are therefore not available to support the School District's own programs. The School District's only trust funds are private purpose trusts. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations.
C. Measurement Focus Government-wide Financial Statements The government-wide financial statements are prepared using the economic resources measurement focus. All assets, deferred outflow of resources, liabilities, and deferred inflow of resources associated with the operation of the School District are included on the statement of net position. Fund Financial Statements All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet, along with deferred outflow of resources or deferred inflow of resources required to be reported. The statement of revenues, expenditures, and changes in fund balances reports on the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the governmental activities of the government-wide financial statements are prepared. Governmental fund financial statements therefore include reconciliation's with brief explanations to better identify the relationship between the government-wide statements and the statements for governmental funds. Like the government-wide statements, all enterprise funds are accounted for on a flow of economic resources measurement focus. All assets and all liabilities, including required deferred outflow of resources or required deferred inflow of resources, associated with the operation of these funds are included on the statement of net position. The statement of revenues, expenses, and changes in fund net position presents increases (i.e., revenues) and decreases (i.e., expenses) in net total
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013 position. The statement of cash flows provides information about how the School District finances and meets the cash flow needs of its enterprise activities. D. Basis of Accounting Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements. Government-wide financial statements are prepared using the accrual basis of accounting. Government funds use the modified accrual basis of accounting. Proprietary and fiduciary funds also use the accrual basis of accounting. Differences in the accrual and the modified accrual basis of accounting arise in the recognition of revenue, the recording of deferred inflow of resources, and in the presentation of expenses versus expenditures.
Revenues - Exchange and Non-Exchange Transactions . Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year.
Non-exchange transactions, in which the School District receives value without directly giving equal value in return, include property taxes, grants, entitlements, and donations. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the fiscal year when use is first permitted, matching requirements, in which the School District must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized.
E. Budgetary Process An operating budget is adopted prior to the beginning of each year for the General Fund on the modified accrual basis of accounting. The General Fund is the only fund for which a budget is legally required. In accordance with Act 1 of 2006, the Board shall annually, but not later than the first business meeting of January, decide the budget option to be used for the following fiscal year. The Board shall approve either the Accelerated Budget Process Option or the Board Resolution Option. Accelerated Budget Process Option
Under this option, a preliminary budget must be prepared 150 days prior to the primary election. Under this Option, the preliminary budget must be available for public inspection at least 110 days prior to the primary election. The Board shall give public notice of its intent to adopt the preliminary budget at least 10 days prior to the adoption. The adoption must occur at least 90 days prior to the primary election. If the preliminary budget exceeds the increase authorized by the Index, an application for an exception may be filed with either a Court of Common Pleas with jurisdiction or PDE and made available for public inspection. The Board may opt to forego applying for an exception by submitting a referendum question seeking voter approval for a tax increase, in accordance with Act 1.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
The final budget shall include any necessary changes from the adopted preliminary budget. Any reduction required as the result of the failure of referendum shall be clearly stated. The final budget shall be made available for public inspection at least 20 days prior to final adoption. The Board shall annually adopt the final budget by a majority vote of all members of the Board prior to June 30. Board Resolution Option
Under the Board Resolution Option, the Board shall adopt a resolution that it will not raise the rate of any tax for the following fiscal year by more than the Index. Such resolution shall be adopted no later than 110 days prior to the primary election. At least 30 days prior to adoption of the final budget the Board shall prepare a proposed budget. The proposed budget shall be available for public inspection at least 20 days prior to adoption of the budget. The Board shall give public notice of its intent to adopt at least 10 days prior to adoption of the proposed budget. The Board shall annually adopt the final budget by a majority vote of all members of the Board by June 30.
Legal budgetary control is maintained at the sub-function/major object level. The PA School Code allows the School Board to make budgetary transfers between major function and major object codes only within the last nine months of the fiscal year, unless there is a two-thirds majority of the Board approving the transfer. Appropriations lapse at the end of the fiscal period. Budgetary information reflected in the financial statements is presented at or below the level of budgetary control and includes the effect of approved budget amendments.
The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts in the PDE 2028 when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary statements reflect the amounts after all 2012-13 budget transfers. F. Change in Accounting Principles During the 2012-13 fiscal year the District implemented the required GASB Statement No. 63, which establishes five (5) elements to the financial position statement previously known as the Statement of Net Assets , and now known as the Statement of Net Position. The five (5) elements are: Assets, Deferred Outflow of Resources, Liabilities, Deferred Inflow of Resources, and Net Position. The definition of these elements can be found in GASB Concepts Statement No. 4; however, a deferred outflow of resources is a consumption of net assets by the government that is applicable to a future reporting period. A deferred inflow of resources is an acquisition of net assets by the government that is applicable to a future reporting period.
In addition, the District has chosen to early implement GASB Statement No. 65, which was issued to explain what items previously classified as assets and liabilities will now be classified as deferred outflows of resources and deferred inflows of resources. As such, previously unamortized bond issuance costs are being adjusted to expense on the Statement of Activities because Statement No. 65 now requires bond issuance costs to be expensed in the year incurred. Also, deferred charges on refundings of bond issues has been reclassified by GASB Statement No. 65 from a contra of bonds payable to a deferred outflow of resources .
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
G. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
H. Assets, Liabilities, and Net Position Cash and Cash Equivalents For purposes of the Statement of Cash Flows, the Proprietary Fund type considers all highly liquid investments with a maturity of three months or less, when purchased, to be cash equivalents.
Investments In accordance with GASB Statement 31, investments are stated at fair value, except:
a) Non-participating interest earning investment contracts are recorded at amortized cost; Money market investments and participating interest earning investment contracts that mature within one year of acquisition are recorded at amortized cost; and,
b) Investments held in 2a7-like pools (Pennsylvania Local Government Investment Trust, Pennsylvania Treasurer's Invest Program, and Pennsylvania School District Liquid Asset Fund) are recorded at the pool’s share price.
Receivables and Payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as "due to/from other funds". Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances".
Property Tax Levy Property taxes, which were levied during the fiscal year ended June 30, 2013, are recognized as revenue in the fund financial statements when received by the District during the fiscal year and also estimated to be received by the District within sixty (60) days after the fiscal year ended.
Property taxes that were levied during the current fiscal year, which are not estimated to be received within sixty (60) days after the fiscal year-end, are recorded as receivable and deferred inflow of resources in the fund financial statements.
In the government-wide financial statements, all property taxes levied during the fiscal year are recognized as revenue, net of estimated uncollectible amount.
Inventories On government-wide financial statements, inventories are presented at the lower of cost or market on a first-in, first-out basis, and are expensed when used. A physical inventory was taken as of June 30, 2013. As a result, the governmental activities column reflects $81,625 in inventory and the business-type activities column reflects $48,259 in inventory.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Inventory type items in governmental funds utilize the purchase method; that is, they are charged to expenditures when purchased. There is no inventory shown on the governmental funds financial statements; therefore, is no nonspendable fund balance.
Inventory type items in Proprietary Funds use the consumption method; in which items are purchased for inventory and charged to expenses when used. The only Proprietary Fund of the District is the Food Service Fund. Inventory within this fund consists of donated commodities, which are valued at U.S.D.A.'s approximate costs, and purchased food Inventories on hand at June 30, 2013, consist of:
Supplies $ 20,549 Purchased Food 21,724 Donated Commodities 5,986 TOTAL $ 48,259
Prepaid Expenses In both the government-wide and fund financial statements, prepaid expenses are recorded as assets in the specific governmental fund in which future benefits will be derived.
Capital Assets General capital assets are those assets not specifically related to activities reported in the proprietary funds. These assets generally result from expenditures in the governmental funds. These assets are reported in the governmental activities column of the government-wide statement of net position, but are not reported in the fund financial statements. Capital assets utilized by the enterprise funds are reported both in the business-type activities column of the government-wide statement of net position and in the respective funds.
All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Donated fixed assets are recorded at their fair market values as of the date received. The School District maintains a capitalization threshold of two thousand-five hundred ($2,500) dollars. The School District does not possess any infrastructure. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Interest incurred during the construction of capital assets utilized by the enterprise funds is also capitalized.
All reported capital assets except land, certain land improvements and construction in progress are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets.
Depreciation is computed using the straight-line method over the following useful lives:
Governmental Business-Type Activities Activities Description Estimated Lives Estimated Lives Buildings and Improvements 15 -50 years 15-50 years Furniture and Equipment 3 - 20 years 3 - 20 years Vehicles 8 - 10 years N/A
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Compensated Absences The School District reports compensated absences in accordance with the provisions of GASB No. 16, "Accounting for Compensated Absences". Vacation benefits are accrued as a liability as the benefits are earned if the employees' rights to receive compensation are attributable to services already rendered and it is probable that the School District will compensate the employees for the benefits through paid time off or some other means.
Sick leave benefits are accrued as a liability using the termination method. An accrual for earned sick leave is made to the extent that it is probable that benefits will result in termination payments. The liability is an estimate based on the School District's past experience of making termination payments.
The entire compensated absence liability is reported on the government-wide financial statements.
For governmental funds, the current portion of unpaid compensated absences is the amount that is normally expected to be paid using expendable available financial resources. In enterprise funds, the entire amount of compensated absences is reported as a fund liability.
Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities or proprietary fund type statement of net position. Bond premiums and discounts, and deferred amounts on refundings are deferred and amortized over the life of the bonds using modification of the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Any deferred amount on refundings are reported as deferred outflow of resources and amortized over the life of the bond issue. Bond issuance costs are expensed in the year they are incurred.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources while discounts and premiums on debt issuances are reported as other financing uses and other financing sources, respectively. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as support service expenditures.
Reclassification Certain amounts have been reclassified to conform to the June 30, 2013, presentation of government- wide financial statements on the accrual basis of accounting versus the governmental fund financial statements reported on the modified accrual basis of accounting.
Net Position
Net Position represents the difference between assets and deferred outflow of resources less liabilities and deferred inflow of resources. Net Investment in Capital Assets component of Net Position is comprised of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. In addition, any deferred outflow of resources and/or deferred inflow of resources related to such capital assets or liabilities associated with the capital assets should also be added to or deducted from the overall Net Investment in Capital Assets. The restricted component of Net Position is used when there are limitations imposed on their use either through the enabling legislation adopted by a higher governmental authority or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. The remaining component of Net Position is unrestricted.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
The School District applies restricted resources first when an expense is incurred for purposes for which both the restricted and unrestricted components of net position are available.
Fund Balance Categories
Fund balance for governmental funds should be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Below are the potential categories of fund balance the government may use with their definitions, the actual categories used is explained in Note 7 to the financial statements:
Nonspendable Fund Balance
This category includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.
Restricted Fund Balance
Fund balance should be reported as restricted when constraints placed on the use of resources are externally imposed by creditors, grantors, contributors, or other government laws or regulations, or the constraint is imposed by enabling legislation or constitutional provisions.
Committed Fund Balance
This category pertains to amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority. The committed amounts cannot be used for any other purpose unless the government removes or changes the specified use by taking the same type of action.
This government’s governing body is the School Board and the formal action taken to commit resources is done by resolution.
Assigned Fund Balance
This category includes all remaining amounts that are reported in governmental funds, except the general fund, that are not classified in one of the above-mentioned categories. In the general fund, this category represents the District’s intent to use resources for a specific purpose, which does not require formal action by the governing body. The District’s policy dictates the business manager is responsible to make these assignments.
Unassigned Fund Balance
This category of fund balance represents the residual classification for the general fund after segregating resources used in the other categories listed above. Unassigned fund balance will only be shown in other governmental funds if those governmental funds have a negative net fund balance. The District’s policy on fund balance does not dictate which category of unrestricted fund balance is spent first, when resources are available to be spent in various categories. As such, committed amounts will be reduced first, followed by assigned amounts, and then unassigned amounts. The District’s policy also does not dictate whether restricted (nonspendable or restricted) or unrestricted (committed, assigned, and unassigned) is spent first when resources are available in both
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013 categories. As such, in these circumstances, restricted will be assumed to have been spent first followed by the unrestricted categories. Contributions of Capital Contributions of capital in proprietary fund financial statements arise from outside contributions of fixed assets, or from grants or outside contributions of resources restricted to capital acquisition and construction. The proprietary funds did not receive any capital contributions during this fiscal year.
Note 3 - Reconciliation of government-wide and fund financial statements A. Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net position. The governmental fund balance sheet includes a reconciliation between "fund balance -total governmental funds" and "net position - governmental activities" as reported in the government-wide statement of net position. One element of that reconciliation explains that "long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds". The details of this $32,164,059 difference are:
Bonds and Note Payable $ 29,985,000 Less: Issuance discount (to be amortized as interest expense) (90,970) Issuace premium (to be amortized as interest expense) 438,058 Accrued interest payable 370,985 Compensated Absences 1,115,541 Other Post Employment Benefits 345,445 Net adjustment to reduce "fund balance - total governmental funds" to arrive at "net position - governmental activities" $ 32,164,059
B. Explanation of Differences between Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances and the Statement of Activities Due to the differences in the measurement focus and basis of accounting used on the government fund statements and district-wide statements certain financial transactions are treated differently. The basic financial statements contain a full reconciliation of these items. Differences between the governmental funds statement of revenues, expenditures, and changes in fund balance and the statement of activities fall into one of three broad categories. The amounts shown in the columns on the following page represent.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013 a) Long-term revenue differences arise because governmental funds report revenues only when they are considered "available", whereas the statement of activities reports revenues when earned. Differences in long-term expenses arise because governmental funds report on a modified accrual basis whereas the accrual basis of accounting is used on the statement of activities. The long-term expenses reported below recognize the change in vested employee benefits. b) Capital related differences include (1) the difference between proceeds for the sale of capital assets reported on governmental fund statements and the gain or loss on the sale of assets as reported on the statement of activities, and (2) the difference between recording an expenditure for the purchase of capital items in the governmental fund statements, and capitalization and recording of depreciation expense on those items as recorded in the statement of activities. c) Long-term debt transaction differences occur because long-term debt proceeds are recorded as revenue and both interest and principal payments are recorded as expenditures in the governmental fund statements. In the statement of activities, long-term debt proceeds are recorded as a liability; principal payments are recorded as a reduction of liabilities.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
TOTAL LONG-TERM TOTAL FOR GOVERN- LONG-TERM CAPITAL DEBT STATEMENT MENTAL REVENUES/ RELATED TRANS- OF FUNDS EXPENSES ITEMS ACTIONS ACTIVITIES REVENUES AND OTHER SOURCES LOCAL SOURCES: Property Taxes $ 28,842,792 $ 96,961 $ - $ - $ 28,939,753 Taxes levied for specific purposes 3,204,282 21,382 - - 3,225,664 Interest and investment earnings 72,893 - - - 72,893 Miscellaneous 72,973 - - - 72,973 Contributions and Donations 9,425 - - - 9,425 Charges for Services 119,899 - - - 119,899 Grants, subsidies & contributions not restricted 9,298,874 - - - 9,298,874 Transfers in - - - - - Bond Premium 306,306 (306,306) - Proceeds from Bond Issues 8,385,000 - - (8,385,000) - INTERMEDIATE SOURCES: Charges for Services - - - - - Operating grants and contributions - - - - - STATE SOURCES: Operating and Capital grants and contributions 6,502,403 - - - 6,502,403 FEDERAL SOURCES: Operating and Capital grants and contributions 1,217,537 - - - 1,217,537 SPECIAL AND EXTRAORDINARY Insurance Recoveries - - Gain or (Loss) on disposal of assets 2,500 - (2,495) - 5 TOTAL REVENUES 58,034,884 118,343 (2,495) (8,691,306) 49,459,426 ------EXPENDITURES/EXPENSES Instruction 30,400,014 130,830 (7,896) - 30,522,948 Instructional Student Support 2,663,307 12,525 1,468 - 2,677,300 Admin. & Fin'l Support Services 4,454,287 39,802 332 - 4,494,421 Oper. & Maint. of Plant Svcs. 3,233,550 412 18,132 - 3,252,094 Pupil Transportation 3,175,135 557 - - 3,175,692 Student activities 787,309 3,607 3,621 - 794,537 Community Services - - - - - Scholarships & Awards - - - - - Capital Outlay 12,772 - (12,772) - - Debt Service 11,906,614 - - (10,761,673) 1,144,941 Transfers Out - - - - - Extraordinary Iten - - - - - Depreciation - unallocated - - 1,609,632 - 1,609,632 TOTAL EXPENDITURES/EXPENSES 56,632,988 187,733 1,612,517 (10,761,673) 47,671,565
NET CHANGE FOR THE YEAR $ 1,401,896 $ (69,390) $ (1,615,012) $ 2,070,367 $ 1,787,861
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Note 4 - Stewardship, Compliance, and Accountability A. Compliance with finance related legal and contractual provisions The District has no material violations of finance related legal and contractual provisions. B. Deficit fund balance or net position of individual funds No individual fund contains a deficit fund balance or net position at June 30, 2013. C. Excess of expenditures over appropriations in individual funds No individual fund, which had a legally adopted budget, had an excess of expenditures over appropriations. D. Budgetary compliance The District's only legally adopted budget is for the General Fund. All budgetary transfers were made within the last nine months of the fiscal year. The District cancels all purchase orders open at year-end; therefore, it does not have any outstanding encumbrances at June 30, 2013. In addition, the District includes a portion of the prior year's fund balance represented by unappropriated liquid assets remaining in the fund as budgeted revenue in the succeeding year. The results of operations on a GAAP basis do not recognize the fund balance allocation as revenue as it represents prior period's excess of revenues over expenditures. Note 5 - Detailed notes on all funds and account groups Assets Cash Custodial Credit Risk - Deposits Custodial credit risk is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. The District does not have a policy for custodial credit risk. As of June 30, 2013, $7,630,962 of the District’s bank balance of $8,476,253 was exposed to custodial credit risk as follows:
Uninsured and uncollateralized $ - Collateralized with securities held by the pledging financial institution - Uninsured and collateral held by the pledging bank's trust department not in the District's name 7,630,962 TOTAL $ 7,630,962
Reconciliation to Financial Statements
Uncollateralized Amount Above $ 7,630,962 Plus: Insured Amount 845,391 Less: Outstanding Checks (29,657) Carrying Amount - Bank Balances 8,446,696 Plus: Petty Cash 1,562 Deposits in Investment Pools Considered Cash Equivalents 6,357,706 (including restricted cash) Less: Certificates of Deposit considered Investment by School Code (184,321) TOTAL CASH PER FINANCIAL STATEMENTS $ 14,621,643
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Investments Permitted investments for Pennsylvania School Districts are defined in the Public School Code of 1949 as: 1. United States Treasury Bills; 2. Short-term obligations of the United States Government or its agencies or instrumentalities; 3. Deposits in savings accounts or time deposits or share accounts of institutions insured by the F.D.I.C; and, 4. Obligations of the United States of America or any of its agencies or instrumentalities, the Commonwealth of Pennsylvania or any of its agencies or instrumentalities or any political subdivision of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities. As of June 30, 2013, the District had the following investments:
Fair Maturities Value Certificates of Deposit 1 1/2-23 Months$ 184,321 Repurchase Agreements 1,775,000 PA Local Government Investment Trust 5,227,067 PA School District Liquid Asset Fund 1,130,639 TOTAL $ 8,317,027
Interest Rate Risk The District's investment policy is to invest its funds in a manner that will mitigate investment risk and credit risk. Credit Risk The District has no investment policy that would limit its investment choices to certain credit ratings. The District's investments in the PA Local Government Investment Trust and the PA School District Liquid Asset Fund were rated AAA by Standard & Poors. Concentration of Credit Risk The District places no limit on the amount the District may invest in any one issuer. Of the General Fund investments, 19.28% is in a repurchase agreement with Univest Bank. Of the governmental activities investments, 21.34% are in repurchase agreements with Univest Bank. As for the entire entity, 12.91% of investments are in repurchase agreements with Univest Bank. More than 5% of the Fiduciary Fund’s investments are in repurchase agreement at Union National Bank and certificates of deposit at Quakertown National Bank. These investments are 60.73% and 39.27%, respectively.
Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral security that are in the possession of an outside party. The District has no investments subject to custodial credit risk.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Reconciliation to Financial Statements
Total Investments Above $ 8,317,027 Less: Deposits in Investment Pool Considered Cash Equivalents (6,357,706) Total Investments per Financial Statements $ 1,959,321
Property Taxes Property taxes are levied on July 1, on the assessed value listed, as of that date, for all taxable real property located in the District. Assessed values are established by the County Board of Assessments. All taxable real property was assessed at $1,193,022,371. In accordance with Act 1 of 2006, the District received $1,137,767 in state property tax reduction allocation for the 2012-13 fiscal year. The millage rate levied by the District for the fiscal year ended June 30, 2013, was 21.9521 mills in Montgomery County and 21.9521 mills in Berks County. The property tax calendar is: July 1 - Full year tax assessed for current year. July 1 - August 31 - Discount period during which a 2% discount is allowed. September 1 - October 31 - Face amount of tax is due November 1 - December 31 - A 10% penalty is added to all payments. January 15 - All unpaid taxes become delinquent and are turned over to the County Tax Claim Bureau for Collection.
The School District, in accordance with GAAP, recognized the delinquent and unpaid taxes receivable reduced by an allowance for uncollectible taxes as determined by the administration. A portion of the net amount estimated to be collectible, which was measurable and available within 60 days, was recognized as revenue and the balance deferred in the fund financial statements. Receivables Receivables, as of year end, for the government's individual major funds and non-major and fiduciary funds in the aggregate, including the applicable allowances for uncollectible accounts, are:
CAPITAL FOOD NON- GENERAL RESERVE SERVICE MAJOR FIDUCIARY FUND FUNDS FUND FUNDS FUNDS TOTAL RECEIVABLES: Interest$ - $ - $ - $ - $ - $ - Taxes 1,096,845 - - - - 1,096,845 Accounts 400 - 4,381 - - 4,781 Intergovernmental 755,535 - 15,784 - - 771,319 GROSS RECEIVABLES 1,852,780 - 20,165 - - 1,872,945 Less: Allowance for Uncollectibles ------NET RECEIVABLES $ 1,852,780 $ - $ 20,165 $ - $ - $ 1,872,945
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Governmental funds report deferred inflow of resources in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred inflow of resources and unearned revenue reported in the governmental funds were:
Schedule on Deferred Inflow of Resources - Unavailable and Unearned UNAVAILABLE UNEARNED Delinquent Property Taxes - General Fund$ 882,253 $ - Grant drawdowns prior to meeting eligibility requirements - - TOTAL $ 882,253 $ -
Capital Assets Capital asset balances and activity for the year ending June 30, 2013, were:
BEGINNING ENDING BALANCE INCREASES DECREASES BALANCE GOVERNMENTAL ACTIVITIES: Capital Assets not being depreciated: Land $ 1,954,546 $ - $ - $ 1,954,546 Construction in Progress - 8,704 - 8,704 Total Capital Assets not being depreciated 1,954,546 8,704 - 1,963,250 Capital Assets being depreciated: Site Improvements 2,519,574 - - 2,519,574 Buildings 38,946,887 - - 38,946,887 Building Improvements 30,125,292 - - 30,125,292 Furniture and Equipment 2,795,220 37,298 (24,945) 2,807,573 TOTAL CAPITAL ASSETS BEING DEPRECIATED 74,386,973 37,298 (24,945) 74,399,326 Less accumulated depreciation for: Site Improvements (386,504) (92,541) - (479,045) Buildings (17,416,456) (682,555) - (18,099,011) Building Improvements (2,665,660) (749,106) - (3,414,766) Furniture and Equipment (1,654,081) (134,316) 22,450 (1,765,947) TOTAL ACCUMULATED DEPRECIATION (22,122,701) (1,658,518) 22,450 (23,758,769) TOTAL CAPITAL ASSETS BEING DEPRECIATED NET OF ACCUMULATED DEPRECIATION 52,264,272 (1,621,220) (2,495) 50,640,557
GOVERNMENTAL ACTIVITIES CAPITAL ASSETS, NET OF ACCUMULATED DEPRECIATION $ 54,218,818 $ (1,612,516) $ (2,495) $ 52,603,807
BUSINESS-TYPE ACTIVITIES: Capital Assets being depreciated: Furniture and Equipment$ 604,182 $ - $ - $ 604,182 Less accumulated depreciation (405,614) (17,131) - (422,745) BUSINESS-TYPE ACTIVITIES CAPITAL ASSETS, NET OF ACCUMULATED DEPRECIATION$ 198,568 $ (17,131) $ - $ 181,437
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
*DEPRECIATION EXPENSE WAS CHARGED TO GOVERNMENTAL FUNCTIONS AS FOLLOWS: Regular Instruction $ 17,363 Special Instruction 538 Vocational Instruction - Other Instruction - Adult Instruction - Community College Instruction - Pupil Services - Instructional Staff Svcs. 1,468 Administrative Services - Health Services - Business Services 332 Operation & Maintenance of Plant Svcs. 25,564 Pupil Transportation - Central Services - Other Support Services - Student Activities 3,621 Community Services - Depreciation - unallocated 1,609,632 TOTAL DEPRECIATION FOR GOVERNMENTAL ACTIVITIES $ 1,658,518
The government activities disposed of $24,945 in obsolete equipment during the year, with $22,450, in accumulated depreciation leaving a $5 gain on disposition.
The business-type activities did not dispose of any obsolete equipment during the year. Commitments Encumbrances Any encumbrances outstanding at year-end do not represent GAAP expenditures or liabilities but represent budgetary accounting controls. The General Fund Budget is maintained on the modified accrual basis of accounting, except that budgetary basis expenditures include any encumbrances issued for goods or services not received at year-end and not terminated.
The actual results of operations are presented in accordance with GAAP and the District's accounting policies do not recognize encumbrances as expenditures until the period in which the goods or services are actually received and a liability is incurred. If budgetary encumbrances exist at year-end, they are included in the fund financial statements to reflect actual revenues and expenditures on a budgetary basis consistent with the District's legally adopted budget.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Construction Commitments: As of June 30, 2013, there were no outstanding construction commitments. Short-term debt Interfund receivables and payables The following interfund receivables and payables were in existence on June 30, 2013:
INTERFUND INTERFUND RECEIVABLES PAYABLES General Fund $ 18,868 $ 214,175 Capital Project (Capital Reserve) Fund 151,694 10,000 Enterprise (Food Service) Fund 62,481 7,941 Payroll Fund - 927 TOTAL $ 233,043 $ 233,043
Interfund Transfers The District also made the following interfund transfers during the fiscal year ended June 30, 2013:
TRANSFER IN TRANSFER OUT General Fund $ - $ 151,694 Capital Projects (Capital Reserve Fund) 151,694 - TOTAL $ 151,694 $ 151,694
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Long-term liabilities
Long-term liability balances and activity for the year ended June 30, 2013, were:
AMOUNTS BEGINNING ENDING DUE WITHIN BALANCE ADDITIONS REDUCTIONS BALANCE ONE YEAR GOVERNMENTAL ACTIVITIES General Obligation Debt: Bonds and notes payable: Capital Projects$ 32,049,266 $ 9,027,918 $ 10,745,096 $ 30,332,088 $ 1,865,000 Other than capital projects - - - - - Capital Leases - - - - - Total general obligation debt 32,049,266 9,027,918 10,745,096 30,332,088 1,865,000 Other liabilities: Vested employee benefits: Vacation pay 403,798 - 6,842 396,956 122,087 Sick pay 945,536 38,930 - 984,466 143,794 Net OPEB Obligation 166,078 179,367 345,445 - Early Retirement Benefits - - - - - Total other liabilities 1,515,412 218,297 6,842 1,726,867 265,881 TOTAL GOVERNMENTAL ACTIVITY LONG-TERM LIABILITIES $ 33,564,678 $ 9,246,215 $ 10,751,938 $ 32,058,955 $ 2,130,881
BUSINESS-TYPE ACTIVITIES Other liabilities: Vested employee benefits Sick Pay $ 19,607 $ 1,145 $ - $ 20,752 $ - Net OPEB Obligation - - - - - TOTAL BUSINESS-TYPE ACTIVITY LONG-TERM LIABILITIES$ 19,607 $ 1,145 $ - $ 20,752 $ -
Payments on bonds and notes are made by the general fund. Vested employee benefits will be liquidated by governmental and proprietary funds. The School District currently does not have any bonds or notes payable in business-type activities.
Total interest paid and accrued during the year.
GOVERNMENTAL ACTIVITIES: EXPENSE PAID General obligation debt $ 1,144,941 $ 1,162,934 Short-term borrowings - - TOTAL INTEREST FOR GOVERNMENTAL ACTIVITIES $ 1,144,941 $ 1,162,934
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
General Obligation Bonds - Series of 2007 On November 15, 2007, the District issued $10,000,000 of General Obligation Bonds – Series of 2007. The proceeds will be used for and towards: (1) capital projects that consist of planning, designing, acquiring, constructing, furnishing, and equipping alterations, additions, renovations and other improvements to Hereford Elementary, Marlborough Elementary, Middle School, and High School; (2) acquisition of land for Hereford Elementary School; (3) acquisition and construction to the Education Center; (4) technology program; and (5) paying the cost of the issuance. In accordance with the Local Governmental Unit Debt Act, a sinking fund has been established with the paying agent. The bonds mature from February 15, 2009 to February 15, 2029. Interest rates range from 3.30% to 4.30%, with total interest indebtedness of $5,341,201. On February 28, 2013, the District refunded the Series of 2007 ($8,520,000), with interest rates ranging from 3.5% to 4.3%, with new debt in the amount of $8,385,000 with interest rates ranging from 2.0% to 4.0% SOURCES Gross Proceeds of Bonds $ 8,385,000 Plus: Accrued Interest - Premium 306,306 Less: Original Issue Discount (16,176) Underwriter's Discount (45,950) TOTAL SOURCES $ 8,629,180
USES 2007 Escrow Deposit $ 8,532,504 Issuance Costs 92,509 Sinking Fund Deposits 4,167 TOTAL USES 8,629,180
DIFFERENCE IN CASH FLOW REQUIREMENTS Old Debt Service Cash Flows $ 11,857,320 Cash Flows From New Debt: New Debt Service Cash Flow $ 10,187,448 Less: Amount Deposited in Sinking Fund (4,167) Net cash Flows From New Debt 10,183,281
Net Difference in Cash Flows $ 1,674,039
ECONOMIC GAIN/LOSS Present Value of Old Debt Service Cash Flows $ 10,292,629
Present Value of New debt Service Cash Flows $ 8,780,852 Less: Amount Deposited in Sinking Fund (4,167)
TOTAL 8,776,685
ECONOMIC GAIN $ 1,515,944
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
General Obligation Bonds – Series of 2008 On December 1, 2008, the District issued $10,000,000 of General Obligation Bonds – Series of 2008. The proceeds will be used towards: (1) capital projects that consist of planning, designing, acquiring, constructing, furnishing, and equipping alterations, additions, renovations and other improvements to the School District’s existing school buildings, and facilities and paying the expenses related to such capital project’s and (2) to pay the issuance costs of the Bonds. In accordance with the Local Governmental Unit Debt Act, a sinking fund has been established with the paying agent. The bonds mature from February 15, 2010 to February 15, 2030. Interest rates range from 3.00% to 4.80%, with total interest indebtedness of $5,888,729.92. The outstanding debt service requirements at June 30, 2013, are:
FISCAL YEAR PRINCIPAL INTEREST 2013-14$ 370,000 $ 395,555 2014-15 385,000 382,790 2015-16 395,000 368,737 2016-17 415,000 353,530 2017-18 430,000 336,722 2018-23 2,445,000 1,386,428 2023-28 3,035,000 780,591 2028-30 1,415,000 102,720 SUB-TOTAL 8,890,000 $ 4,107,073 Unamortized Discount (53,680) TOTAL OUTSTANDING $ 8,836,320
General Obligation Bonds – Series of 2010 On February 18, 2010, the District issued $6,995,000 of General Obligation Bonds – Series of 2010. The proceeds will be used for and towards: (1) the current refunding of the School District’s General Obligation Bonds, Series of 2004, in the principal amount of $6,875,000 and (2) paying costs of issuing the Bonds. In accordance with the Local Governmental Unit Debt Act, a sinking fund has been established with the paying agent. The bonds mature from September 1, 2010 to September 1, 2016. Interest rates range from .3% to 2.4%, with total interest indebtedness of $532,739.17. The outstanding debt service requirements at June 30, 2013, are:
FISCAL YEAR PRINCIPAL INTEREST 2013-14$ 1,050,000 $ 76,500 2014-15 1,070,000 55,300 2015-16 1,090,000 33,700 2016-17 950,000 11,400 SUB-TOTAL 4,160,000 $ 176,900 Unamortized Discount (950) Unamortized Premium 34,531 TOTAL OUTSTANDING $ 4,193,581
General Obligation Bonds – Series of 2011 On June 16, 2011, the District issued $9,100,000 of General Obligation Bonds – Series of 2011. The proceeds will be used for and towards: (1) the current refunding of the School District’s General Obligation Bonds, Series of 2006, in the principal amount of $8,890,000 and (2) paying costs of issuing the Bonds. In accordance with the Local Governmental Unit Debt Act, a sinking fund has been established with the paying agent. The bonds mature from February 15, 2012 to February 15,
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
2028. Interest rates range from 2.0% to 4.0%, with total interest indebtedness of $3,110,900. The outstanding debt service requirements at June 30, 2013, are:
FISCAL YEAR PRINCIPAL INTEREST 2013-14$ 445,000 $ 289,639 2014-15 460,000 276,288 2015-16 480,000 257,889 2016-17 500,000 238,688 2017-18 510,000 228,190 2018-23 2,800,000 920,241 2023-28 3,355,000 401,935 SUB-TOTAL 8,550,000 $ 2,612,870 Unamortized Discount (20,164) Unamortized Premium 97,221 TOTAL OUTSTANDING $ 8,627,057
General Obligation Bonds - Series of 2013 On February 28, 2013, the District issued $8,385,000 of General Obligation Bonds-Series of 2013. The proceeds will be used for and towards: (1) the current refunding of the School District’s General Obligation Bonds, Series of 2007, currently outstanding in the principal amount of $8,520,000 and (2) paying costs of issuing the Bonds. In accordance with the Local Governmental Unit Debt Act, a sinking fund has been established with the paying agent. The bonds mature from November 15, 2014 to November 15, 2028. Interest rates range from 2.0% to 4.0% with total interest indebtedness of $1,802,448. The outstanding debt service requirements at June 30, 2013, are:
FISCAL YEAR PRINCIPAL INTEREST 2013-14 $ - $ 246,256 2014-15 145,000 201,415 2015-16 480,000 195,165 2016-17 495,000 180,465 2017-18 520,000 160,165 2018-23 2,855,000 560,375 2023-28 3,200,000 250,672 2028-29 690,000 7,935 SUB-TOTAL 8,385,000 $ 1,802,448 Unamortized Discount (16,176) Unamortized Premium 306,306 TOTAL OUTSTANDING $ 8,675,130
Lease Rental Debt On September 15, 2008, the Western Center for Technical Studies (Vocational Technical School) issued $40,000,000 in Guaranteed Lease Revenue Bonds, Series of 2008. The Bonds are authorized to be issued pursuant to the State Public School Building Authority Act of 1947, P.L. 1217, as supplemented and amended, and by a Resolution adopted by the State Public School Building Authority Act of 1947, P.L. 1217, as supplemented and amended, and by a Resolution adopted by the State Public School Building Authority Board on August 19, 2008 .
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
The Bonds are secured by the terms of a Trust Indenture, dated as of September 15, 2008, between the Authority and Wells Fargo Bank, N.A., Philadelphia, Pennsylvania, as trustee, and are payable solely from the specified rental payments by each of the Participating School Districts under the terms of a Sublease Agreement, dated as of September 15, 2008, between SPSBA, as sublessor, and the Vocational - Technical Board and each of the Participating School Districts on behalf of the Vocational - Technical School, as sublessees.
The Participating School Districts and the Vocational - Technical School Board have leased their respective interests in the Vocational - Technical School’s real estate, building and improvements to State Public School Building Authority under the terms of a Lease Agreement, dated as of September 15, 2008, in exchange for the proceeds of the Bonds.
The Western Center for Technical Studies is governed by the terms of Articles of Agreement for Continuation and Operation of the Western Montgomery County Area Vocational – Technical School, dated July 1, 1975, as amended, by and among the Pottsgrove School District, Spring-Ford Area School District and Upper Perkiomen School District, which are located in Montgomery County, Pennsylvania. The Western Center is operated, administered and managed by a Joint Operating Committee that is made up of three members from each board of school directors of the three participating School Districts, for a total of nine members of the JOC. The real estate and other property of the Vocational - Technical School is owned, or as of the date the Bonds are issued, will be owned by the Participating School Districts on behalf of the Vocational - Technical School. The Western Center currently provides a variety of educational and administrative services to a total of three school districts in central Pennsylvania.
The Authority was created by the Commonwealth of Pennsylvania in 1947 by the Authority Act. Under this Act, the Authority is considered a public corporation and an instrumentality of the Commonwealth, having perpetual existence, for the purpose of acquiring, financing, refinancing, constructing, improving, maintaining and operating public school and educational broadcasting facilities, and furnishing and equipping the same for us as part of the public school system of the Commonwealth under the jurisdiction of the Pennsylvania Department of Education.
The lease rental debt owed by the School District to the Authority is equal to the District's pro rata share of the bond principal and interest of the Authority’s revenue bonds. This debt is not considered general obligation debt of the School District. The bonds mature from February 15, 2009 to February 15, 2030, at interest rates between 3.00% and 4.625%.
The estimated debt service requirements of the Guaranteed Lease Revenue Bonds – Series of 2008, at June 30, 2013, are :
FISCAL YEAR PRINCIPAL INTEREST 2013-14$ 472,617 $ 464,009 2014-15 491,151 445,104 2015-16 515,863 420,546 2016-17 542,120 394,753 2017-18 560,654 375,779 2018-23 3,192,483 1,491,106 2023-28 3,927,664 754,728 2028-29 895,810 41,431 TOTAL OUTSTANDING $ 10,598,362 $ 4,387,456
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Combined Long-Term Debt The combined general long-term debt obligations for subsequent years, excluding compensated absences, are:
Summary of Principal Requirements
G.O.B. G.O.B. G.O.B. G.O.B. TOTAL SERIES SERIES SERIES SERIES PRINCIPAL FISCAL YEAR OF 2008 OF 2010 OF 2011 OF 2013 PAYMENTS 2013-14 $ 370,000 $ 1,050,000 $ 445,000 $ - $ 1,865,000 2014-15 385,000 1,070,000 460,000 145,000 2,060,000 2015-16 395,000 1,090,000 480,000 480,000 2,445,000 2016-17 415,000 950,000 500,000 495,000 2,360,000 2017-18 430,000 - 510,000 520,000 1,460,000 2018-23 2,445,000 - 2,800,000 2,855,000 8,100,000 2023-28 3,035,000 - 3,355,000 3,200,000 9,590,000 2028-30 1,415,000 - - 690,000 2,105,000 TOTAL 8,890,000 4,160,000 8,550,000 8,385,000 29,985,000
LESS - PAYABLE WITHIN ONE YR. 370,000 1,050,000 445,000 - 1,865,000
LONG-TERM PRINCIPAL DUE AFTER ONE YEAR$ 8,520,000 $ 3,110,000 $ 8,105,000 $ 8,385,000 $ 28,120,000
Summary of Principal and Interest Requirements
G.O.B. G.O.B. G.O.B. G.O.B. TOTAL SERIES SERIES SERIES SERIES DEBT SERVICE FISCAL YEAR OF 2008 OF 2010 OF 2011 OF 2013 PAYMENTS 2013-14 $ 765,555 $ 1,126,500 $ 734,639 $ 246,256 $ 2,872,950 2014-15 767,790 1,125,300 736,288 346,415 2,975,793 2015-16 763,737 1,123,700 737,889 675,165 3,300,491 2016-17 768,530 961,400 738,688 675,465 3,144,083 2017-18 766,722 - 738,190 680,165 2,185,077 2018-23 3,831,428 - 3,720,241 3,415,375 10,967,044 2023-28 3,815,591 - 3,756,935 3,450,672 11,023,198 2028-30 1,517,720 - - 697,935 2,215,655 TOTAL $ 12,997,073 $ 4,336,900 $ 11,162,870 $ 10,187,448 $ 38,684,291
Compensated Absences
Sick-Pay Under the District's various bargaining agreements and plans, professional and eligible support personnel accumulate unused sick days from year to year based on their classification. These accumulated sick days are non-vesting during the employee's tenure.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Upon retirement, these employees are eligible for remuneration for unused sick days based on the following bargaining agreements and the limitations therein:
1. Upper Perkiomen Education Assoc. - $47.50 per each unused sick day.
2. Special Education and Instructional Aides and Nurse Assistants - $25.00 per each unused sick day.
3. Cafeteria Personnel Assoc. - $20.00 per each unused sick day.
4. Administrative Support Personnel - $25.00 per each unused sick day.
5. Custodial & Maintenance Personnel Assoc. - $25.00 per each unused sick day.
6. Educational Assistants and Registered Nurses - $25.00 per each unused sick day
7. Administrative - Unused sick days earned prior to 6/30/97 times one half of their daily rate for 96/97.
8. Directors - $47.50 for each unused sick day.
The District maintains records of each employee's accumulated sick days that are vested with employees who are eligible to retire. In accordance with GASB Statement No. 16, a liability of $143,794, which includes FICA tax (net of reimbursement), is recorded in the General Fund for governmental fund employees that will use currently available financial resources and as the current portion of long-term debt in the governmental activities column of the government-wide statement of net position. The remaining sick leave termination benefit of $840,672, which includes FICA tax (net of reimbursement), is recorded in the government-wide statement of net position as a long-term liability in the governmental activities column. A liability of $20,752 has been recorded in the Food Service Fund, and the business-type activities column in the government-wide statement of net position at June 30, 2013.
Vacation Leave Unused vacation leave is paid upon an employee's termination. The administrators and superintendent are limited to 40 days. All other employees are limited to vacation earned in the current year. In accordance with GASB Statement No. 16, the portion of vacation pay earned at June 30, 2013, that will use currently available financial resources, is $122,087, which includes FICA tax and retirement contributions (net of reimbursement), and is recorded in the General Fund and as the current portion of long-term debt in the governmental activities column of the government-wide statement of net position. The remaining vacation pay earned at June 30, 2013, of $274,869, which includes FICA tax and retirement contributions (net of reimbursement), is recorded in the government-wide statement of net position as a long-term liability in the governmental activities column.
Defined Benefit Pension Plans
Plan Description Name of plan: The Public School Employees’ Retirement System (the System).
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Type of Plan: Governmental cost sharing multiple-employer defined benefit plan. Benefits: Retirement and disability legislatively mandated ad hoc cost-of-living adjustments, healthcare insurance premium assistance to qualifying annuitants.
Authority: The Public School Employees’ Retirement Code (Act No. 96 of October 2, 1975, as amended) (24 PA C.S. 8101-8535).
Annual Financial Report: The System issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. A copy of the report may be obtained by writing to Beth Girman, Office of Financial Management, Public School Employees’ Retirement System, 5 N. 5 th Street, Harrisburg, PA 17101-1905 or by emailing Beth at [email protected]. The report is also available in the publications section of the PSERS website at www.psers.state.pa.us. Funding Policy Authority: The contribution policy is established in the Public School Employees’ Retirement Code and requires contributions by active members, employers, and the Commonwealth. Contribution Rates Member Contributions: Active members, who joined the System prior to July 22, 1983, contributed at 5.25 percent (Membership Class TC) or at 6.50 percent (Membership Class TD) of the member's qualifying compensation. Members who joined the System on or after July 22, 1983 and who were active or inactive as of July 1, 2001, contribute at 6.25 percent (Membership Class TC) or at 7.50 percent (Membership Class TD) of the member's qualifying compensation. Members who joined the System after June 30, 2001, contribute at 7.50 percent (automatic Membership Class TD). For all new hires and for members who elected Class TD membership, the higher contribution rates began with service rendered on or after January 1, 2002. Members who joined the System after June 30, 2011, automatically contribute at the Membership Class T-E rate of 7.5% (base rate) of the member’s qualifying compensation. All new hires after June 30, 2011 who elect Class T-F membership contributes at 10.3% (base rate) of the member’s qualifying compensation. Membership Class T-E and T-F are affected by a “shared risk” provision in Act 120 of 2010 that in future fiscal years could cause the Membership Class T-E contribution rate to fluctuate between 7.5% and 9.5% and Membership Class T-F contribution rate to fluctuate between 10.3% and 12.3%.
Contributions required of employers are based upon an actuarial valuation. For fiscal year ended June 30, 2013, the rate of employer contribution was 12.36 percent of covered payroll. The 12.36 percent rate is comprised of a pension contribution rate of 11.50 percent for pension benefits and 0.86 percent for healthcare insurance premium assistance. The employer’s current year covered payroll was $22,967,662 and total payroll was $22,892,803. The total employee and employer contributions for this current year were $1,709,803 and $2,860,123 respectively. Other Post Employment Benefits Plan Description. Upper Perkiomen School District had one single-employer defined benefit plan.
1. The following is a summary of the plan provisions:
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Summary of Plan Provisions
GROUP ELIGIBILITY COVERAGE AND PREMIUM SHARING DURATION I. Admini strators
• Coverage: Medical, Prescription Drug, Dental, and Vision. A) Grandfathered N/A Already Covered for Life. Upon member reaching age 65, Superintendents and Retired • Premium Sharing: District pays full premium for member and spouse for Medical, member must pay full premium to continue Administrators (except one Prescription Drug, Dental and Vision until member reaches age 65. Upon coverage. If spouse is also older than age 65, former principal and those member reaching age 65, member must pay full premium to continue coverage. spouse must pay full premium to continue retired between July 1, 2007 and If spouse is also older than age 65, spouse must pay full premium to continue coverage. If spouse is younger than age 65, June 30, 2008 under Early coverage. If spouse is younger than age 65, District continues to pay full District continues to pay full premium for spouse for Retirement Incentive) premium for spouse for medical and Prescription Drug until spouse reaches age Medical and Prescription Drug until spouse 65; however, spouse must pay full premium for Dental. Upon reaching age 65, reaches age 65; however, Spouse must pay full spouse must pay full premium to continue coverage. premium for Dental. Upon reaching age 65, spouse must pay full premium to continue • One such retiree receives life insurance until age 70. District pays full premium coverage. for Life insurance in the amount of $200,000 on the member’s life only. • Dependents: Spouse is covered. Upon the death of a retiree, the spouse and any eligible dependents are able to continue Medical.
• Coverage: Medical, Prescription Drug, Dental, and Vision. B) Former Principal N/A Already Covered for life. After November 1, 2013, member retired • Premium Sharing: District pays full premium for Medical, Prescription Drug, can continue coverage by paying the full premium. Dental and Vision. The District subsidy will continue until November 1, 2013. After the district subsidy ceases, member can continue coverage by paying the full premium. • Dependents: Spouse is covered. Upon the death of a retiree, the spouse and any eligible dependents are able to continue Medical, Prescription Drug, Dental and Vision by paying the full premium.
• Coverage: Medical, Prescription Drug, Dental, and Vision. C) Retired between July 1, 2007 N/A – Already Covered for Life. After the District subsidy ceases, and June 30, 2008 under Early retired • Premium Sharing: Member pays full premium for Dental and Vision. If member is member can continue coverage by paying the full Retirement Incentive eligible for PSERS retirement and was fulltime employee in his or her last year premium. before retirement, District pays up to $10,000 per year (with a $50,0000 lifetime maximum) towards the premiums for Medical and Prescription Drug. The District subsidy will continue until the earlier of 6 years, all $50,000 is used, the member’s hiring by a Pennsylvania School District or the member’s death. After the District subsidy ceases, member can continue coverage by paying full premium. • If the member does not meet the requirements for the district subsidy but requirement are met for the ACT 110/43 benefit, the member and spouse may continue coverage by paying the full premium as determined for the purpose of COBRA. • Dependents: Spouse and family are covered.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Summary of Plan Provisions
GROUP ELIGIBILITY COVERAGE AND PREMIUM SHARING DURATION
• Coverage: Medical, Prescription Drug, Dental, and Vision. D) All Other Administrators Must be eligible Covered for Life. After six years, member or for PSERS • Premium Sharing: : District pays full premium for member and spouse for Medical, spouse can continue coverage by paying the Retirement Prescription Drug, Dental and Vision for six years. Member must pay any additional full premium.. premium due to coverage for any other eligible dependents. After six years, member or spouse can continue coverage by paying the full premium.. • Dependents: Spouse and family are covered. Upon the death of a retiree, the spouse and any eligible dependents are able to continue Medical, Prescription Drug, Dental, and Vision by paying the full premium.
II. TEACHERS
A) Retired between July 1, 2003, N/A – Already Covered for Life. After the District subsidy • Coverage: Medical, Prescription Drug, Dental, and Vision. and June 30, 2004 Retired ceases, member can continue coverage by • Premium Sharing: District pays up to $30,000 towards the premiums for Medical, paying the full premium. Prescription Drug, Dental and Vision. The District subsidy will continue until the earlier of 10 years, all $30,000 is used, the member’s hiring by a Pennsylvania School District or the member’s death. After the District subsidy ceases, member can continue coverage by paying the full premium. • If the member does not meet the requirements for the district subsidy but requirements are met for the ACT 110/43 benefit, the member and spouse may continue coverage by paying the full premium as determined for the purpose of COBRA. • Dependents: Spouse and family are covered..
B) Retired between July 1, 2007, N/A – Already Same as ID Same as ID and June 30, 2008 Retired
C) All other Teachers Act 110/43 Act 110/43. Covered for Life. Member pays full premium. III. ALL OTHER EMPLOYEES
• Coverage: Medical, Prescription Drug, Dental, and Vision A) Retired between July 1, 2007, N/A – Already Covered for Life. After the District subsidy and June 30, 2008 Retired • Premium Sharing: Member pays full premium for Dental and Vision. If member is ceases, member can continue coverage by eligible for PSERS retirement and was a fulltime employee in his or her last year paying the full premium. before retirement, District pays up to $5,000 per year (with a $25,000 lifetime maximum) towards the premiums for Medical and Prescription Drug. The District subsidy will continue until the earlier of 6 years, all $25,000 is used, the member’s hiring by a Pennsylvania School District or the member’s death. After the District subsidy ceases, member can continue coverage by paying the full premium.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Summary of Plan Provisions
GROUP ELIGIBILITY COVERAGE AND PREMIUM SHARING DURATION
(continued) A) Retired between July 1, 2007, N/A – Already Covered for Life. After the District subsidy • If the member does not meet the requirements for the district subsidy but and June 30, 2008 (continued) Retired ceases, member can continue coverage by requirements are met for the ACT 110/43 benefit, the member and spouse may (continued) paying the full premium. (continued) continue coverage by paying the full premium as determined for the purpose of COBRA. • Dependents: Spouse and family are covered.
B) All Other Employees Act 110/43 Act 110/43 Same as IIC.
Notes: Act 110/43: All employees are eligible for this benefit upon retirement with 30 years of PSERS service or upon superannuation retirement.
Act 110/43 Coverage and Premium Sharing: Retired employees are allowed to continue coverage for themselves and their dependents in the employer’s group health plan until the retired employee reaches Medicare age. In order to obtain coverage, retired employees must provide payment equal to the premium determined for the purpose of COBRA. PSERS Retirement:
1) For individuals who were members of PSERS prior to July 1, 2011, an employee is eligible for PSERS retirement if he (or she) is eligible for either: 1) PSERS early retirement while under 62 with 5 years of PSERS Service or 2) PSERS superannuation retirement upon reaching age 60 with 30 years of PSERS service, age 62 with 1 year of PSERS service or 35 years of PSERS service regardless of age. 2) For individuals who became members of PSERS on or after July 1, 2011, an employee is eligible for PSERS retirement if he (or she) is eligible for either: 1) PSERS early retirement while under 65 with 10 years of PSERS or 2) PSERS superannuation retirement upon reaching age 65 with 3 years of PSERS service or upon attainment of a total combination of age plus service equal to or greater than 92 with a minimum of 35 years of PSERS service. 3) All individual are eligible for a special early retirement upon reaching age 55 with 25 years of PSERS service. Coordination with Medicare benefits: Members or spouses over 65 must enroll in a Medicare Supplement Plan provided by the district with the following exceptions:
1) In Sections IA above, spouse can continue coverage in Personal Choice Plan while member is younger than age 65. In such case, the Personal Choice Plan will pay primary. Upon member reaching age 65, spouse must enroll in a Medicare Supplement Plan provided by the district to continue coverage. 2) In Sections IB, IC, ID, IIA, IIB and IIIA above, member and/or spouse can continue coverage in Personal Choice Plan if member and/or spouse reaches age 65 during the time period of the District subsidy. In such case, the Personal Choice Plan will pay primary. Upon the expiration of the District subsidy, member and/or spouse must enroll in a Medicare Supplement Plan provided by the district to continue coverage. Benefits not Included in the Calculation: Individuals who retire are eligible to defer sick day payments in order to pay for future Medical, Prescription Drug, Dental, or Vision premiums. It is assumed that these benefits are reported under the provisions of GASB 16.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Funding Policy and Annual OPEB Cost. The District’s annual other post-employment benefit (OPEB) cost (expense) for the plan is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost, each year, and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The District’s annual OPEB cost for the current year and the related information is as follows:
Contribution Rates:
OPEB Benefit Actuarially Determined Interest Rate 4.5%
Plan Members 481
Annual Required Contribution $ 664,591 Interest on net OPEB obligation 7,474 Adjustment to annual required contribution (10,196)
Annual OPEB cost 661,869 Contributions made (482,502) Increase in net OPEB obligation 179,367 Net OPEB obligation - beginning of year 166,078 Net OPEB obligation - end of year$ 345,445
The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation of the five fiscal years ending June 30th , for the benefits were as follows:
Annual Percentage Year Ended OPEB of OPEB Cost Net OPEB Cost Contributed Obligation 6/30/2013 $ 661,869 72.9%$ 345,445 6/30/2012 617,656 96.1% 166,078 6/30/2011 618,443 92.2% 141,894 6/30/2010 628,685 94.7% 93,870 6/30/2009 629,677 90.4% 60,459
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Funding Status and Funding Process. The funded status of the benefits as of June 30, 2013, was as follows:
Healthcare Benefit Governmental Activity Actuarial accrued liability (a)$ 4,950,912 Actuarial value of plan assets (b) -
Unfunded actuarial accrued liability (a) - (b)$ 4,950,912
Funded Ratio (b) / (a) 0.0% Covered payroll $ 22,393,278
(funding excess) as a percentage of covered payroll. 22.1%
Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the benefits and the annual required contributions of the employer are subject to continual revision, actual results are compared to past expectations, and new estimates are made about the future. The required schedule of funding progress, presented as required supplementary information, provides multiyear trend information that shows whether the actuarial value of plan Net Position is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions. Projections of benefits are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the district and the plan members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows:
Healthcare Benefit Actuarial Valuation Date 7/1/2012 Actuarial Cost Method Entry Age Normal Level dollar method over a 30 year Amortization Method period Remaining amortization period 26 years
Asset Valuation Method pay as you go basis
Actuarial Assumptions: Investment rate of return 4.5% Projected salary increases 4.25% to 7.25% Healthcare inflation rate 2013 7.0% 2014 6.5% 2015 6.0% 2016 + 5.5% to 4.2%
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Note 6 - Risk Management The District is subject to risk of loss from employee acts, property damage, personal injury auto accidents, theft, etc. The District covers those risks through the purchase of commercial insurance. The Upper Perkiomen School District is a participating member of a Workers' Compensation Consortium. The Consortium is comprised of 81 member School Districts which jointly self-assume their workers' compensation liabilities. Each District is required to make contributions to the Consortium based on formulae set forth in the contract. Each member School District individually retains sole liability up to a retention level, which is fixed annually by multiplying its Experience Modification Factor times the last audited fiscal year payroll of the member. The result is then multiplied by a contribution rate, which is the same for all members. Even though the member school districts contribute to a central fund, they remain individually liable for any workers' compensation claims.
Above the level of retention, the Consortium pays claims up to the level of coverage of $100,000 for the year ended June 30, 2013, provided by an excess insurance policy. Claims above the maximum coverage of excess insurance are paid by the members of the Consortium through additional assessments against members.
The members of the Consortium are required to participate in deficiencies and are subject to periodic assessments by the Executive Committee, as required.
At June 30, 2013, the most recent available financial statements, the consortium did not have a deficit, in which the ultimate responsibility to pay for a deficit belongs to the member districts.
Note 7 - Fund Balance Allocations Restricted Fund Balance
The two Capital Project Funds have restrictions on the use of the resources at year end. The Capital Reserve Fund’s $606,490 fund balance at year end is restricted because of enabling legislation under the Municipal Code in Pennsylvania. Section 1432 of this Code restricts the use of resources for limited purposes.
In addition, the debt covenant on the 2011 Bond issue restricts the proceeds shown in the Capital Project Fund for the purposes outlined in the bond resolution. As such, the $2,328,086, in fund balance at year end within this fund is considered restricted.
The General Fund has restricted $800, pertaining to a Drug Awareness program grant.
Committed Fund Balance
The governing body (Board of School Directors) has committed $100,157, of the General Fund’s year end fund balance for anticipated turf field upkeep costs.
Assigned Fund Balance
The General Fund has $3,040,433, assigned for balancing the 2013-14 general fund budget.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2013
Note 8 - Prior Period Adjustment
As a result of early implementing GASB Statement No. 65, a prior period adjustment had to be made in the governmental activities to reflect expensing the remaining unamortized bond issuance costs of $428,674. Statement No. 65 now requires expensing bond issuance costs in the year incurred, which previously were capitalized and amortized over the life of the corresponding bond issue. As such, the opening net position of the governmental activities is restated, as follows:
Net Position at June 30, 2012 (as reported) $32,839,784
Less: Unamortized Bond Issuance Costs (428,674)
Net Position at June 30, 2012 (as restated) $32,411,110
Note 9 - Restricted Net Position Net Investment in Capital Assets The components of this restriction in the governmental activities column are total capital assets of $52,603,807, unspent proceeds of $2,328,086, with related debt of $30,034,101, which includes unamortized bond discounts, premiums, and deferred refunding charges. The business-type activities column reflects $181,437 invested in capital assets with no related debt. In addition, the governmental activity has restricted $606,490 for future capital projects.
Note 10 - Contingencies Grants The School District received financial assistance from federal and state agencies in the form of grants. The expenditure of funds received under these programs generally requires compliance with terms and a condition specified in the grant agreements, and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the general fund, or other applicable funds. However, in the opinion of management any such disallowed claims will not have a material adverse effect on the overall financial position of the School District as of June 30, 2013.
Litigation The School District is party to legal proceedings. The School District is of the opinion that ultimate disposition of claims will not have a material effect, if any, on the financial condition of the School District.
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R E Q U I R E D
S U P P L E M E N T A L I N F O R M A T I O N
Upper Perkiomen School District Schedule of Funding Progress Fiscal Year Ended June 30, 2013
Healthcare Benefit Actuarial Accrued UAAL as a Actuarial Liability Unfunded Percentage of Actuarial Value of (AAL)- AAL Funded Covered Covered Valuation Assets Unit Credit (UALL) Ratio Payroll Payroll Date (a) (b) (b - a) (a / b) ( c ) ((b - a) / c) 7/1/2012$ - $ 4,950,912 $ 4,950,912 0.0%$ 22,393,278 22.11% 7/1/2010$ - $ 5,270,187 $ 5,270,187 0.0%$ 21,958,481 24.00% 7/1/2008$ - $ 5,609,764 $ 5,609,764 0.0%$ 21,385,387 26.23%
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SUPPLEMENTAL INFORMATION SECTION
Upper Perkiomen School District Combining Balance Sheet All Capital Project Funds For the Year Ended June 30, 2013
TOTAL CAPITAL CAPITAL CAPITAL RESERVE PROJECTS PROJECT FUND FUND FUNDS ASSETS Cash and cash equivalents $ 464,796 $ 2,328,411 $ 2,793,207 Restricted Cash - - - Investments - - - Other Receivables - - - Due from other funds 151,694 - 151,694 Receivables from other governments - - - Inventories - - - TOTAL ASSETS $ 616,490 $ 2,328,411 $ 2,944,901
DEFERRED OUTFLOW OF RESOURCES Deferred Charges on Refundings, net - - - TOTAL ASSETS & DEFERRED OUTFLOW OF RESOURCES$ 616,490 $ 2,328,411 $ 2,944,901
LIABILITIES Accounts Payable $ - $ 325 $ 325 Due to other funds 10,000 - 10,000 Accrued Compensated Absences - - - Payable to other governments - - - Other Retirement Benefits - - - TOTAL LIABILITIES 10,000 325 10,325 DEFERRED INFLOW OF RESOURCES Unearned Revenue - - - TOTAL LIABILITIES & DEFERRED INFLOW OF RESOURCES 10,000 325 10,325 ------FUND BALANCES: Nonspendable Fund Balance - - - Restricted Fund Balance 606,490 2,328,086 2,934,576 Committed Fund Balance - - - Assigned Fund Balance - - - TOTAL FUND BALANCES 606,490 2,328,086 2,934,576 TOTAL LIABILITIES, DEFERRED INFLOW OF RESOURCES, AND FUND BALANCES $ 616,490 $ 2,328,411 $ 2,944,901
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Upper Perkiomen School District Combining Statement of Revenues, Expenditures, and Changes in Fund Balances All Capital Project Funds For the Year Ended June 30, 2013
TOTAL CAPITAL CAPITAL CAPITAL RESERVE PROJECTS PROJECT FUND FUND FUNDS REVENUES Local Sources $ 169 $ 5,623 $ 5,792 State Sources - - - Federal Sources - - - TOTAL REVENUES 169 5,623 5,792 ------
EXPENDITURES Instruction - 260,848 260,848 Support Services - 55,903 55,903 Operation of Non-Instructional Services - - - Capital Outlay - 12,773 12,773 Debt Service - - - TOTAL EXPENDITURES - 329,524 329,524
EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 169 (323,901) (323,732)
OTHER FINANCING SOURCES (USES) Proceeds of long-term capital-related debt - - - Proceeds from Refunding Bond Issues - - - Bond Premium - - - Bond Discount - - - Payment to bond refunding escrow agent - - - Sale/Compensation for Fixed Assets - - - Transfers in 151,694 - 151,694 Transfers out - - - TOTAL OTHER FINANCING SOURCES AND USES 151,694 - 151,694
NET CHANGE IN FUND BALANCES 151,863 (323,901) (172,038)
FUND BALANCES - BEGINNING 454,627 2,651,987 3,106,614
FUND BALANCES - ENDING $ 606,490 $ 2,328,086 $ 2,934,576
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Upper Perkiomen School District Combining Statement of Fiduciary Net Position Private Purpose Trust Funds For the Year Ended June 30, 2013
BITTEN- BUCHMAN ANDY WARREN WILSON R. CAMP LIONS GULACK ROGER H. BARRY J. TERRY N. DEBORAH ANNE K. BENDER CENT. WEAVER SCHLEGAL RITTER ROCKWOOD CLUB FOUNDATION WENTLING,JR FETTERMAN FETTERMAN HODGE RAYMOND SCHOLAR. SCHOLAR. MEM. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. MEM. MEM. MEM. MEM. ASSETS & DEFERRED OUTFLOW OF RESOURCES Cash $ 7 $ 107 $ 196 $ - $ 7 $ 3,536 $ 19 $ 5,191 $ (48) $ 32 $ 2,471 $ 637 $ 11,871 Investments 56,518 - - - 4,774 - - 81,022 - - - - - Accrued Interest Receivable ------Due from Other Funds ------Deferred Outflow of Resources ------TOTAL ASSETS & DEFERRED OUTFLOW OF RESOURCES $ 56,525 $ 107 $ 196 $ - $ 4,781 $ 3,536 $ 19 $ 86,213 $ (48) $ 32 $ 2,471 $ 637 $ 11,871 ------
LIABILITIES & DEFERRED INFLOW OF RESOURCES Accounts Payable$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Interfund Payables ------Unearned Revenues ------TOTAL LIABILITIES & DEFERRED INFLOW OF RESOURCES ------
NET POSITION
Held in Trust for future recipients $ 56,525 $ 107 $ 196 $ - $ 4,781 $ 3,536 $ 19 $ 86,213 $ (48) $ 32 $ 2,471 $ 637 $ 11,871
Combining Statement of Changes in Fiduciary Net Position Private Purpose Trust Funds For the Year Ended June 30, 2013
BITTEN- BUCHMAN ANDY WARREN WILSON R. CAMP LIONS GULACK ROGER H. BARRY J. TERRY N. DEBORAH ANNE K. BENDER CENT. WEAVER SCHLEGAL RITTER ROCKWOOD CLUB FOUNDATION WENTLING,JR FETTERMAN FETTERMAN HODGE RAYMOND SCHOLAR. SCHOLAR. MEM. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. MEM. MEM. MEM. MEM. ADDITIONS: Contributions $ - $ - $ - $ - $ - $ 2,000 $ 1,000 $ 6,500 $ - $ - $ - $ - $ 2,000 Interfund Transfers In ------INVESTMENT EARNINGS: Interest and dividends 258 - - - 24 1 - 375 - - 1 - 5 TOTAL ADDITIONS 258 - - - 24 2,001 1,000 6,875 - - 1 - 2,005
DEDUCTIONS: Administrative Charges ------Interfund Transfers Out ------Signs, Tiles, Repairs ------Awards 2,000 25 - - 500 - 1,000 8,250 100 100 100 100 2,000 TOTAL DEDUCTIONS 2,000 25 - - 500 - 1,000 8,250 100 100 100 100 2,000
CHANGES IN NET POSITION (1,742) (25) - - (476) 2,001 - (1,375) (100) (100) (99) (100) 5
NET POSITION - BEG. OF THE YR 58,267 132 196 - 5,257 1,535 19 87,588 52 132 2,570 737 11,866
NET POSITION - END OF THE YR $ 56,525 $ 107 $ 196 $ - $ 4,781 $ 3,536 $ 19 $ 86,213 $ (48) $ 32 $ 2,471 $ 637 $ 11,871
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SAMANTHA SNYDER DR. KYHEIM H. MELVIN UPHS COMM. RALPH WATER HENRY ANITA BEN SAMANTHA SALLY WINFIELD COMM. TRIPP DIEHL FACULTY INS. ENGLE POLO HIGHLAND DUTTON OBERHOLTZER SNYDER WELSH SMITH MISC. FIELD SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. MEM. MEM. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. LIGHTING TOTAL
$ 1,568 $ 240 $ 165 $ - $ - $ 3,314 $ 357 $ 2,272 $ (974) $ 3,666 $ 82 $ 4,017 $ - $ 2,616 $ 41,349 ------42,007 - - - - - 184,321 ------
$ 1,568 $ 240 $ 165 $ - $ - $ 3,314 $ 357 $ 2,272 $ 41,033 $ 3,666 $ 82 $ 4,017 $ - $ 2,616 $ 225,670 ------
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ ------
------
$ 1,568 $ 240 $ 165 $ - $ - $ 3,314 $ 357 $ 2,272 $ 41,033 $ 3,666 $ 82 $ 4,017 $ - $ 2,616 $ 225,670
SAMANTHA SNYDER DR. KYHEIM H. MELVIN UPHS COMM. RALPH WATER HENRY ANITA BEN SAMANTHA SALLY WINFIELD COMM. - TRIPP DIEHL FACULTY INS. ENGLE POLO HIGHLAND DUTTON OBERHOLTZER SNYDER WELSH SMITH MISC. FIELD - SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. MEM. MEM. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. LIGHTING TOTAL
$ - $ - $ 940 $ 1,000 $ 200 $ 1,010 $ - $ - $ 7,000 $ - $ 1,000 $ 50 $ - $ - $ 22,700 ------
1 - - - - 1 1 - 159 1 - 2 - - 829 1 - 940 1,000 200 1,011 1 - 7,159 1 1,000 52 - - 23,529
------100 100 880 1,000 200 600 100 500 1,000 500 1,000 500 - - 20,655 100 100 880 1,000 200 600 100 500 1,000 500 1,000 500 - - 20,655
(99) (100) 60 - - 411 (99) (500) 6,159 (499) - (448) - - 2,874
1,667 340 105 - - 2,903 456 2,772 34,874 4,165 82 4,465 - 2,616 222,796
$ 1,568 $ 240 $ 165 $ - $ - $ 3,314 $ 357 $ 2,272 $ 41,033 $ 3,666 $ 82 $ 4,017 $ - $ 2,616 $ 225,670
Upper Perkiomen School District Combining Balance Sheet - All Agency Funds As of June 30, 2013
STUDENT ACTIVITY PAYROLL ASSETS FUND FUND TOTAL Cash $ 153,727 $ 336 $ 154,063 Investments - 285,000 285,000 Other Receivables - - - Prepaid Expenses - - -
TOTAL ASSETS $ 153,727 $ 285,336 $ 439,063
LIABILITIES Accounts Payable $ 8,427 $ - $ 8,427 Due to Other Funds - 927 927 Due to Student Clubs 145,300 - 145,300 Other Current Liabilities - 284,409 284,409
TOTAL LIABILITIES $ 153,727 $ 285,336 $ 439,063
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Upper Perkiomen School District Combining Statement of Changes in Assets and Liabilities All Agency Funds As of June 30, 2013
BALANCE BALANCE ACTIVITY FUND 07/01/12 ADDITIONS DELETIONS 06/30/13 ASSETS Cash $ 127,637 $ 192,490 $ 166,400 $ 153,727 Other Receivables - - - - TOTAL ASSETS $ 127,637 $ 192,490 $ 166,400 $ 153,727
LIABILITIES Due to Student Clubs$ 119,229 $ 184,063 $ 157,992 $ 145,300 Accounts Payable 8,408 8,427 8,408 8,427 Due to Other Funds - - - - TOTAL LIABILITIES $ 127,637 $ 192,490 $ 166,400 $ 153,727
PAYROLL FUND ASSETS Cash $ - $ 69,858,608 $ 69,858,272 $ 336 Investments 290,000 285,000 290,000 285,000 TOTAL ASSETS $ 290,000 $ 70,143,608 $ 70,148,272 $ 285,336
LIABILITIES Accounts Payable $ 5,948 $ - $ 5,948 $ - Due to General Fund 105 927 105 927 Other Current Liabilities 283,947 70,142,681 70,142,219 284,409 TOTAL LIABILITIES $ 290,000 $ 70,143,608 $ 70,148,272 $ 285,336
ALL AGENCY FUNDS ASSETS Cash $ 127,637 $ 70,051,098 $ 70,024,672 $ 154,063 Investments 290,000 285,000 290,000 285,000 Other Receivables - - - - Prepaid Expenses - - - - TOTAL ASSETS $ 417,637 $ 70,336,098 $ 70,314,672 $ 439,063
LIABILITIES Accounts Payable $ 14,356 $ 8,427 $ 14,356 $ 8,427 Due to Other Funds 105 927 105 927 Due to Student Clubs 119,229 184,063 157,992 145,300 Other Current Liabilities 283,947 70,142,681 70,142,219 284,409 $ 417,637 $ 70,336,098 $ 70,314,672 $ 439,063 TOTAL LIABILITIES
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Upper Perkiomen School District Schedule on Tax Collectors' Receipts For the Year Ended June 30, 2013
EAST UPPER CURRENT REAL ESTATE TAXES GREENVILLE GREEN LANE HEREFORD MARLBOROUGH PENNSBURG RED HILL HANOVER TOTALS Total Assessed Value$ 105,779,550$ 26,065,910$ 132,908,200$ 207,094,730$ 151,879,970$ 109,159,614$ 460,134,397$ 1,193,022,371 Less: Act 1 Deduction 4,785,638 915,122 6,146,480 7,612,853 5,550,740 4,958,161 15,044,624 45,013,618 Net Assessed Value$ 100,993,912$ 25,150,788$ 126,761,720$ 199,481,877$ 146,329,230$ 104,201,453$ 445,089,773$ 1,148,008,753 Divided by: Lowest STEB ratio 0.6514151 0.651415114151 0.65 0.6514151 0.6514151 0.6514151 0.6514151 Avg. Multiplied by School Ratio 0.75 0.75 0.75 0.75 0.75 0.75.75 Avg. 0 Multiplied by Millage Rate 0.0219521 0.0219521 0.0219521 0.0219521 0.0219521 0.0219521 0.0219521 Avg. TOTAL TAXABLE DUPLICATE 2,552,555 635,670 3,203,821 5,041,774 3,698,375 2,633,624 11,249,350 29,015,169
PLUS - Additions ------Penalties 4,538 875 11,521 8,315 11,560 6,247 19,177 62,233
TOTAL TAXES TO BE COLLECTED 2,557,093 636,545 3,215,342 5,050,089 3,709,935 2,639,871 11,268,527 29,077,402 ------LESS - Discounts 44,534 9,355 42,808 83,350 60,670 44,309 194,693 479,719 Reductions ------Refunds - - 16,172 - - 909 640 17,721 Returned to County 60,410 26,956 143,728 104,871 189,168 70,847 238,423 834,403 Outstanding ------
NET CURRENT REAL ESTATE
TAXES COLLECTED $ 2,452,149 $ 600,234 $ 3,012,634 $ 4,861,868$ 3,460,097 $ 2,523,806 $ 10,834,771$ 27,745,559
CURRENT INTERIM REAL ESTATE TAXES COLLECTED $ 1,765 $ -$ 6,177 $ 52,061 $ 9,231 $ 2,062 $ 125,989 $ 197,285
CURRENT PER CAPITA TAXES Number of Persons Assessed 2,167 343 2,276 2,498 2,462 1,864 4,915 16,525 Tax Rate $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 TAXABLE VALUATION 21,670 3,430 22,760 24,980 24,620 18,640 49,150 165,250
PLUS - Additions ------Penalties 292 25 130 143 169 101 246 1,106
TAXES TO BE COLLECTED 21,962 3,455 22,890 25,123 24,789 18,741 49,396 166,356 ------
LESS - Discounts 218 39 290 358 258 237 694 2,094 Exonerations 1,300 250 1,000 1,060 1,810 900 2,270 8,590 Refunds ------Outstanding 4,860 750 4,000 2,800 6,470 3,450 6,160 28,490 Reductions ------NET CURRENT PER CAPITA TAXES COLLECTED$ 15,584$ 2,416 $ 17,600 $ 20,905 $ 16,251 $ 14,154 $ 40,272 $ 127,182
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Upper Perkiomen School District General Fund Statement of Revenue, Expenditures, and Changes in Fund Balance For the Year Ended June 30, 2013
REVENUES LOCAL SOURCES: Current Real Estate Taxes $ 27,745,559 Interim Real Estate Taxes 197,285 Public Utility 38,917 Payment in Lieu of Taxes 27 Current Per Capita Taxes - 511 63,591 Current Per Capita Taxes - 679 63,591 Occupational Privilege Tax - Earned Income Tax 2,683,062 Occupation Taxes - Assessment - Real Estate Transfer Tax 343,664 Amusement Taxes - Delinquent Real Estate Taxes 899,948 Delinquent Per Capita Taxes - 511 5,715 Delinquent Per Capita Taxes - 679 5,715 Interest 67,100 Special Functions 3,270 Admissions 50,564 Fees 15,492 Revenue from Local Governmental Units - Revenue Received from I.S. - State 6,426 I/U Services - Federal 696,983 I/U Services - Federal ARRA 2,481 Rentals 46,817 Contributions 9,425 Regular Day School Tuition - Summer School 3,420 Receipts from Other LEA's - Education - Services Provided Other Local Gov't. Units / LEAs - Services Provided Other PA LEAs - Transp. 42,253 Revenue from Community Services Activities 4,900 Energy Efficiency Revenue 9,999 Miscellaneous 9,476 Refunds of Prior Yr. Expenditures 6,459 TOTAL LOCAL SOURCE REVENUE $ 33,022,139
STATE SOURCES: Basic Subsidy - ESBE 8,161,107 Read to Succeed - Charter Schools - School Performance - Orphan Tuition 89,810 Homebound - Vocational Education - Driver Education - Migratory Children - Special Education 1,659,191 SUB-TOTAL 9,910,108
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Upper Perkiomen School District General Fund Statement of Revenue, Expenditures, and Changes in Fund Balance For the Year Ended June 30, 2013
REVENUE (CONT'D) SUB-TOTAL (CARRIED FORWARD) $ 9,910,108 Transportation 1,563,688 Rentals 769,204 Add'l. Basic Ed. - Health Services 56,390 State Property Tax Reduction Allocation 1,137,767 PA Accountability Grants 143,068 FICA Revenue 819,580 Retirement Revenue 1,395,046 Dual Enrollment - Other State Revenue - TOTAL STATE SOURCE REVENUE $ 15,794,851
FEDERAL SOURCES: Title I 299,846 Title I - ARRA - Title VI - Title II 96,885 Education Jobs Fund - Medical Assistance 118,057 Medical Reimbursement 3,285 TOTAL FEDERAL SOURCE REVENUE 518,073 TOTAL REVENUE 49,335,063
EXPENDITURES Regular Programs - Elem./Secondary 20,786,879 Special Education - Life Skills Support - Public 260,446 Life Skills Support - PRRI - Deaf or Hearing Impaired Support - Blind or Visually Impaired Support - Speech & Language Impaired 449,266 Emotional Support - Public 939,010 Autistic Support 544,875 Learning Support - Public 3,216,188 Gifted Support 349,327 Physical Support - Multi-Handicapped Support - Early Intervention Support - Other Support 1,299,212 SUB-TOTAL 27,845,203
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Upper Perkiomen School District General Fund Statement of Revenue, Expenditures, and Changes in Fund Balance For the Year Ended June 30, 2013
SUB-TOTAL (CARRIED FORWARD) $ 27,845,203 Other Vocational Education Programs 2,193,109 Drivers' Education - Summer School - Homebound Instruction 18,905 Adjudicated/Court Placed Programs 22,258 Alternative Education Program 59,691 Additional Other Instructional Program - Other Adult Education Programs - Community College Programs - Supervision of Pupil Personnel Services - Guidance Services 891,525 Attendance Services 69,388 Psychological Services 296,539 Social Work Services - Student Accounting Services 31,859 Other Pupil Personnel Services - Support Services - Instructional Staff - Technology Support Services 20,089 Educational Television Services 3,561 Computer Assisted Instruction Services - School Library Services 512,862 Instructional & Curriculum Dev. Service 314,971 Instructional Staff Development Services - Instructional Staff Development 204,746 Instructional Staff Development - Non-certified 13,968 Other Instructional Staff Services 44,852 Board Services 80,027 Board Treasurer Services - Tax Assessment & Collection Service 312,597 Staff Relations - Legal Services 120,358 Office of the Superintendent Services 353,078 Community Relations Services 29,557 Office of the Principal Services 1,871,961 Other Administration Services - Support Services - Pupil Health 258,947 Medical Services - Dental Services - Nursing Services - Non-Public Health Services - Support Services - Business 547,377 SUB-TOTAL 36,117,428
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Upper Perkiomen School District General Fund Statement of Revenue, Expenditures, and Changes in Fund Balance For the Year Ended June 30, 2013
SUB-TOTAL (CARRIED FORWARD) $ 36,117,428 Operation and Maintenance of Plant Services 493,520 Supervision of Operation and Maint. of Plant Svcs. 653,283 Operation of Building Services 2,041,036 Vehicle Operation and Maint. Services 32,361 Security Services - Student Transportation Services 2,657,664 Non-Public Transportation 517,471 Support Services - Central 258,017 System-Wide Technology Services 585,784 Staff Services 76,231 Staff Development Services 4,191 State and Federal Agency Liaison Services - Other Support Services 34,096 Student Activities - School Sponsored Student Activities 125,717 School Sponsored Athletics 661,592 Community Services - Scholarships and Awards - Debt Service 3,357,934 Refund of Prior Yr. Receipts - TOTAL EXPENDITURES $ 47,616,325
EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,718,738
OTHER FINANCING SOURCES (USES) Proceeds from Extended Term Financing - Debt Service Fund Transfers - Transfer from Activity Funds - Sale of Fixed Assets 2,722 Refund of Prior Year Expenditures - Special Revenue Fund Transfers - Capital Projects Funds Transfers (151,694) Debt Service Fund Transfers - Food Service Fund Transfers - Activity Fund Transfers - TOTAL OTHER FINANCING SOURCES (USES) (148,972)
Special Items - Extraordinary Items - (148,972) NET CHANGE IN FUND BALANCE 1,569,766
FUND BALANCE - JULY 1, 2012 8,009,586
FUND BALANCE - JUNE 30, 2013 $ 9,579,352
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Upper Perkiomen School District Food Service Fund Statement of Revenues, Expenses, and Changes in Fund Net Position For the Year Ended June 30, 2013
REVENUES Daily Sales - Reimb. $ 787,121 Daily Sales - Non-Reimb. 85,523 Headstart sales - Special Functions 35,046 Interest 246 State Subsidies 88,058 Federal Subsidies 425,897 Donated Commodities Received 59,475 Non-Capital Contributions - Capital Contributions - Vending Machines 6,470 Gain (Loss) on Sale of Capital Assets - Miscellaneous 18,203 $ 1,506,039
COST OF GOODS SOLD Inventories - July 1, 2012 48,066 Food and Milk 651,999 Donated Commodities Received 59,474 Supplies 41,590 Inventories - June 30, 2013 (48,259) 752,870
GROSS PROFIT 753,169
EXPENSES Payroll 525,770 Social Security 39,444 Retirement 60,876 Other Benefits 52,622 Professional Services 4,121 Repairs & Maintenance 8,981 Disposal Services 6,491 Rental 4,460 Extermination Services 2,793 Other Purchase Services 900 Dry Cleaning 318 Communications 1,532 Advertising - Books & Periodicals 704 Printing & Binding 278 Travel 1,407 Uniforms 4,780 Miscellaneous 220 Uncapitalized Equipment 425 Depreciation 17,131 Dues and Fees 245 733,498 CHANGES IN FUND NET POSITION 19,671
FUND NET POSITION - BEGINNING 373,949
FUND NET POSITION - ENDING $ 393,620
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Upper Perkiomen School District Food Service Fund Statement of Fund Net Position As of June 30, 2013
ASSETS & DEFERRED OUTFLOW OF RESOURCES Cash & Cash Equivalents $ 135,530 Investments - State and Federal Subsidies Receivable 15,784 Other Receivable 4,381 Inventories 48,259 Due from Other Funds 62,481 Prepaid Expenses - Equipment, net of accum. Depreciation 181,437 Deferred Outflow of Resources - TOTAL ASSETS & DEFERRED OUTFLOW OF RESOURCES $ 447,872
LIABILITIES, DEFERRED INFLOW OF RESOURCES, & NET POSITION Accounts Payable $ 736 Due to General Fund 7,941 Accrued Salaries - Accrued Severance Pay 20,752 Net OPEB Obligation - Long-term Other Retirement Benefits - Prepayments 24,823 Deferred Inflow of Resources - Net Position 393,620
TOTAL LIABILITIES, DEFERRED INFLOW OF RESOURCES, & NET POSITION $ 447,872
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Upper Perkiomen School District Capital Reserve Fund Statement of Revenues and Expenditures For the Year Ended June 30, 2013
FUND BALANCE - JULY 1, 2012 $ 454,627
REVENUES AND OTHER FINANCING SOURCES Interest $ 169 Miscellaneous Revenue - Transfer from General Fund 151,694 TOTAL REVENUES AND OTHER FINANCING SOURCES 151,863
TOTAL FUNDS AVAILABLE 606,490
EXPENDITURES AND OTHER FINANCING USES INSTRUCTIONAL SERVICES: Repairs and Maintenance - Supplies - Software - Equipment - SUPPORT SERVICES: Professional Services - Printing - Purchased Services - Rentals - Supplies - Equipment - Dues and Fees - NON-INSTRUCTIONAL SERVICES: Professional Services - Equipment - FACILITIES, ACQUISITION, CONSTRUCTION & IMPROV. SERVICES: Professional Services - Repairs and Maintenance - Construction - Land Improvements - Advertising - Supplies - Equipment - Dues and Fees - Fees - -
FUND BALANCE - JUNE 30, 2013 $ 606,490
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Upper Perkiomen School District Community Field Lighting Fund Statement of Revenues and Expenditures For the Year Ended June 30, 2013
FUND BALANCE - JULY 1, 2012 $ 2,616
REVENUES Interest $ - Contributions - -
TOTAL FUNDS AVAILABLE 2,616
EXPENDITURES Service Charges - Signs and Tiles - Repairs - -
FUND BALANCE - JUNE 30, 2013 $ 2,616
2013 Bond Fund Statement of Revenues and Expenditures For the Year Ended June 30, 2013
FUND BALANCE - JULY 1, 2012 $ -
REVENUES AND OTHER FINANCING SOURCES Proceeds from Refunding Bond Issues $ 8,385,000 Interest - Bond Premium 306,306 TOTAL REVENUES AND OTHER FINANCING SOURCES 8,691,306
TOTAL FUNDS AVAILABLE 8,691,306
EXPENDITURES AND OTHER FINANCING USES SUPPORT SERVICES: Professional Services 136,285 Insurance - Printing 2,174 OTHER FINANCING USES: Bond Discount 16,176 Debt Service - Interest - Payment to Refunded Bonds Escrow Agent 8,532,504 8,687,139
FUND BALANCE - JUNE 30, 2013 $ 4,167
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Upper Perkiomen School District Capital Projects Fund Statement of Revenues and Expenditures For the Year Ended June 30, 2013
FUND BALANCE - JULY 1, 2012 $ 2,651,987
REVENUES AND OTHER FINANCING SOURCES Proceeds from Bond Issues $ - Interest 5,623 Refunds - TOTAL REVENUES AND OTHER FINANCING SOURCES 5,623
TOTAL FUNDS AVAILABLE 2,657,610
EXPENDITURES AND OTHER FINANCING USES INSTRUCTIONAL SERVICES: Repairs and Maintenance - Supplies 21,093 Equipment 239,755 SUPPORT SERVICES: Professional Services - Insurance - Printing - Purchased Services 13,349 Rentals - Supplies - Equipment 42,554 Technology Infrastructure - NON-INSTRUCTIONAL SERVICES: Repairs and Maintenance - Equipment Rentals - FACILITIES, ACQUISITION, CONSTRUCTION & IMPROV. SERVICES: Professional Services 8,705 Construction - Advertising - Repairs and Maintenance - Land Improvements - Equipment 4,068 Bond Discount - Dues and Fees - 329,524
FUND BALANCE - JUNE 30, 2013 $ 2,328,086
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Upper Perkiomen School District Payroll Fund Statement of Additions and Deductions For the Year Ended June 30, 2013
CASH/INVESTMENTS - JULY 1, 2012 $ 290,000
ADDITIONS Transfers In $ 69,858,608 Interest - 69,858,608
TOTAL AVAILABLE 70,148,608
DEDUCTIONS Payroll 69,863,272 Bank Charges - 69,863,272
CASH/INVESTMENTS - JUNE 30, 2013 $ 285,336
LIABILITIES AT JUNE 30, 2013 Accounts Payable $ - Bonds - Retro Retirement - Retirement 204,822 Federal Withholding - Earned Income Tax Withholding 68,953 Due To General Fund 927 Pa Unemployment Comp 4,539 Earned Income Tax Withholding 475 TSA Deductions - Miscellaneous 5,620
TOTAL $ 285,336
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Upper Perkiomen School District Schedule on General Obligation Bonds - Series of 2008 For the Year Ended June 30, 2013
INTEREST FISCAL YEAR RATE PRINCIPAL INTEREST 2013-14 3.45%$ 370,000 $ 395,555 2014-15 3.65% 385,000 382,790 2015-16 3.85% 395,000 368,737 2016-17 4.05% 415,000 353,530 2017-18 4.20% 430,000 336,722 2018-19 4.40% 450,000 318,663 2019-20 4.40% 465,000 298,862 2020-21 4.45% 490,000 278,403 2021-22 4.45% 510,000 256,597 2022-23 4.55% 530,000 233,903 2023-24 4.55% 555,000 209,788 2024-25 4.65% 580,000 184,535 2025-26 4.65% 605,000 157,566 2026-27 4.75% 635,000 129,432 2027-28 4.75% 660,000 99,270 2028-29 4.80% 690,000 67,920 2029-30 4.80% 725,000 34,800 TOTAL OUTSTANDING $ 8,890,000 $ 4,107,073
Schedule on General Obligation Bonds - Series of 2010 For the Year Ended June 30, 2013
INTEREST FISCAL YEAR RATE PRINCIPAL INTEREST 2013-14 2.00%$ 1,050,000 $ 76,500 2014-15 2.00% 1,070,000 55,300 2015-16 2.00% 1,090,000 33,700 2016-17 2.40% 950,000 11,400 TOTAL OUTSTANDING $ 4,160,000 $ 176,900
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Upper Perkiomen School District Schedule on General Obligation Bonds - Series of 2011 For the Year Ended June 30, 2013
INTEREST FISCAL YEAR RATE PRINCIPAL INTEREST 2013-14 3.000%$ 445,000 $ 289,639 2014-15 4.000% 460,000 276,288 2015-16 4.000% 480,000 257,889 2016-17 2.100% 500,000 238,688 2017-18 2.400% 510,000 228,190 2018-19 2.700% 530,000 215,948 2019-20 3.000% 540,000 201,639 2020-21 3.125% 555,000 185,438 2021-22 3.300% 575,000 168,096 2022-23 3.450% 600,000 149,120 2023-24 3.650% 620,000 128,420 2024-25 3.700% 645,000 105,790 2025-26 3.750% 670,000 81,925 2026-27 4.000% 695,000 56,800 2027-28 4.000% 725,000 29,000 TOTAL OUTSTANDING $ 8,550,000 $ 2,612,870
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Upper Perkiomen School District Schedule on General Obligation Bonds - Series of 2013 For the Year Ended June 30, 2013
INTEREST FISCAL YEAR RATE PRINCIPAL INTEREST 2013-14 $ - $ 246,256 2014-15 2.00% 145,000 201,415 2015-16 2.00% 480,000 195,165 2016-17 4.00% 495,000 180,465 2017-18 4.00% 520,000 160,165 2018-19 4.00% 540,000 138,965 2019-20 2.00% 560,000 122,565 2020-21 2.00% 570,000 111,265 2021-22 2.00% 585,000 99,715 2022-23 2.00% 600,000 87,865 2023-24 2.00% 610,000 75,765 2024-25 2.00% 625,000 63,415 2025-26 2.00% 640,000 50,765 2026-27 2.10% 655,000 37,487 2027-28 2.20% 670,000 23,240 2028-29 2.30% 690,000 7,935
TOTAL OUTSTANDING $ 8,385,000 $ 1,802,448
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SINGLE AUDIT SECTION
Upper Perkiomen School District Schedule of Expenditures of Federal Awards Fiscal Year Ended June 30, 2013
PASS ACCRUED ACCRUED THROUGH OR OR FEDERAL GRANTOR SOURCE FEDERAL GRANTOR AWARD TOTAL (DEFERRED) (DEFERRED) PROJECT TITLE CODE CFDA NO. NUMBER GRANT PERIOD AMOUNT RECEIVED 7/1/2012 REVENUE EXPEND. 6/30/2013 FOOTNOTES
U.S. DEPT. OF EDUCATION
PASSED THROUGH THE PDE 2 ESEA - TITLE I IMPROVING BASIC PROGRAMS I 84.010 013-1 20453 7/1/11-9/30/12$ 268,896 31,943 31,943 - - - ESEA - TITLE I IMPROVING BASIC PROGRAMS I 84.010 013-1 30453 7/1/12-9/30/13$ 299,846 280,934 - 299,846 299,846 18,912 TITLE I PROGRAM 312,877 31,943 299,846 299,846 18,912 ------
PASSED THROUGH THE PDE 2 ESEA - TITLE II IMPROVING TEACHER QUALITY I 84.367 020 -120453 7/1/11-9/30/12$ 95,941 (411) (411) - - - ESEA - TITLE II IMPROVING TEACHER QUALITY I 84.367 020 -130453 7/1/12-9/30/13$ 96,885 96,885 - 96,885 96,885 - TITLE IIA PROGRAM 96,474 (411) 96,885 96,885 ------
ARRA - EDUCATION JOBS FUND I 84.410 126-120453 7/1/11-6/30/12 $ 9,088 9,088 9,088 - - - 5
PASSED THROUGH THE MONTGOMERY COUNTY I.U. 2 IDEA I 84.027 N/A 7/1/11-6/30/12$ 672,255 604,884 604,884 - - - 1 IDEA I 84.027 N/A 7/1/12-6/30/13$ 690,668 495,104 - 690,668 690,668 195,564 1 IDEA SECTION 619A I 84.173 N/A 7/1/12-9/30/13$ 5,758 5,367 5,367 5,758 5,758 5,758 1 TOTAL IDEA CLUSTER 1,105,355 610,251 696,426 696,426 201,322 ------
ARRA - RACE TO THE TOP I 84.413A N/A 7/1/12-9/30/15$ 18,762 - - 2,481 2,481 2,481 5
PASSED THROUGH THE MONTGOMERY COUNTY I.U. 2 TITLE III I 84.365 N/A 7/1/11-9/30/12$ 1,841 - 109 - - 109 1 TITLE III I 84.365 N/A 7/1/12-9/30/13$ 1,290 - - 557 557 557 1 TOTAL TITLE III PROGRAM - 109 557 557 666
TOTAL U. S. DEPARTMENT OF EDUCATION 1,523,794 650,980 1,096,195 1,096,195 223,381 ------
U. S. DEPARTMENT OF HEALTH & HUMAN SERVICES PASSED THROUGH THE PA. DEPARTMENT OF PUBLIC WELFARE 2 ESEA - TITLE 19 MEDICAL REIMBURSEMENT I 93.778 N/A 10/1 /12-9/30/13 N/A 3,285 - 3,285 3,285 -
TOTAL U. S. DEPARTMENT OF HEALTH & HUMAN SERVICES 3,285 - 3,285 3,285 ------
U. S. DEPARTMENT OF AGRICULTURE PASSED THROUGH THE PDE 2 NATIONAL SCHOOL LUNCH I 10.555 N/A 7/1/11 - 6/30/12 N/A 8,925 8,925 - - - NATIONAL SCHOOL LUNCH I 10.555 N/A 7/1/12 - 6/30/13 N/A 363,107 - 375,289 375,289 12,182 REG/NDY BREAKFAST I 10.553 N/A 7/1/11 - 6/30/12 N/A 1,497 1,497 - - - REG/NDY BREAKFAST I 10.553 N/A 7/1/12 - 6/30/13 N/A 48,252 - 50,608 50,608 2,356
PASSED THROUGH THE PA DEPT. OF AGRICULTURE 2 U.S.D.A. COMMODITIES I 10.555 N/A 7/1/12 - 6/30/13 N/A 59,475 (1,462) 54,950 54,950 (5,987) 3,4 TOTAL CHILD NUTRITION CLUSTER 481,256 8,960 480,847 480,847 8,551
TOTAL U.S. DEPARTMENT OF AGRICULTURE 481,256 8,960 480,847 480,847 8,551
TOTAL FEDERAL AWARDS $ 2,008,335 $ 659,940 $ 1,580,327 $ 1,580,327 $ 231,932
SOURCE: D -DIRECT; I -INDIRECT
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Upper Perkiomen School District Notes to the Schedule of Expenditures of Federal Awards Fiscal Year Ended June 30, 2013
Note 1 - Significant Accounting Policies The accompanying Schedule of Expenditures of Federal Awards is presented on the modified accrual basis of accounting for all federal awards charged to governmental funds and on the accrual basis of accounting for all federal awards charged to proprietary funds, as contemplated by generally accepted accounting principles.
Note 2 - Organization and Scope The District recognized 2.2% of its total general fund revenue in federal awards, and 31.9% of its total enterprise fund revenue.
Note 3 - Program Disclosure – Footnotes 1. The federal awards passed through the Montgomery County Intermediate Unit, under the U.S. Department of Education heading, is part of a consortium of participating school districts. In accordance with directions from the Commonwealth of Pennsylvania, these awards are reported on the basic financial statements as local source revenue.
2. The Federal Grants were passed through the following entities in the totals below:
Total Passed through Total Awards Expenditures
PA Department of Education$ 1,196,553 $ 822,628 Montgomery County I.U. 1,390,574 699,464 PA Department of Public Welfare N/A 3,285 PA Department of Agriculture N/A 54,950 Totals $ 2,587,127 $ 1,580,327
3. The District received non-monetary assistance from the U.S. Department of Agriculture of $59,475, in the form of commodities. These commodities are valued at U.S.D.A.’s approximate costs. During the 2012-13 fiscal year, the District used $54,950 in commodities and established a year-end inventory of $5,987 at June 30, 2013.
4. The amount recognized as revenue in the Schedule of Expenditures of Federal Awards, under the U.S. Department of Agriculture heading, represents the commodities used, versus the commodities received, which are recognized as revenue in the basic financial statements.
5. The programs reporting this footnote are grants received using funds from the American Recovery and Reinvestment Act.
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Upper Perkiomen School District Notes to the Schedule of Expenditures of Federal Awards Fiscal Year Ended June 30, 2013
FINANCIAL STATEMENT RECONCILIATION
General Fund Federal Source Revenues$ 518,073 Federal Grants in Local Sources 699,464 Food Service Fund Federal Revenue 485,372
Total Federal Revenue, per financial statements 1,702,909 Less - Medical Access Reimbursement (118,057) Plus - Change in Donated Commodities (4,525) Total Federal Revenue Reported on SEFA $ 1,580,327
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Upper Perkiomen School District
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Upper Perkiomen School District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
December 9, 2013
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Upper Perkiomen School District
Opinion on Each Major Federal Program
In our opinion, Upper Perkiomen School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2013.
Report on Internal Control over Compliance
Management of Upper Perkiomen School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Upper Perkiomen School District’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Upper Perkiomen School District’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section, and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,
December 9, 2013
-97- Upper Perkiomen School District Schedule of Findings and Questioned Costs Fiscal Year Ended June 30, 2013
Section I - Summary of Auditor Results
Financial Statements Type of auditor's report issued: Unmodified
Internal control over financial reporting:
• Material weakness(es) Identified? yes no
• Significant Deficiencies identified that are not considered to be material weaknesses? yes none reported Noncompliance material to financial yes no statements noted?
Federal Awards Internal control over major programs:
• Material weakness(es) Identified? yes no
• Significant Deficiencies identified that are not considered to be material weaknesses? yes none reported
Type of auditor's report issued on compliance for major programs: Unmodified
Any audit findings disclosed that are required to be reported in accordance with section 510(a) of OMB Circular A-133? yes no
Identification of major program:
CFDA Number(s) Name of Federal Program or Cluster 84.027, 84.173 IDEA - Cluster
Percentage of programs tested to total awards 44.1%
Dollar threshold used to distinguish between type A and type B program: $ 300,000
Auditee qualified as low-risk auditee? yes no
-98- Upper Perkiomen School District Schedule of Findings and Questioned Costs Fiscal Year Ended June 30, 2013
Section II - Financial Statement Findings
There were no findings discovered, relating to the financial statements, which are required to be reported in accordance with generally accepted government auditing standards.
Section III – Findings and Questioned Costs for Federal Awards
There were no findings discovered, relating to the federal awards, which are required to be reported in accordance with OMB Circular A-133, Section 510.
Audit Follow Up Procedures
We did not perform any follow-up procedures on prior year findings, since no findings were reported in the prior year.
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