Upper Perkiomen School District, PA
NEW ISSUE—BOOK-ENTRY ONLY RATINGS: Moody’s: “Aa2” (Underlying) (See RATING 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. 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.
$9,285,000 Upper Perkiomen School District Montgomery and Berks Counties, Pennsylvania General Obligation Bonds, Series of 2019
Dated: May 21, 2019 Principal Due: November 15, as shown on inside cover Interest Due: May 15 and November 15 First Interest Payment: November 15, 2019
The General Obligation Bonds, Series of 2019 (the “Bonds”) in the aggregate principal amount of $9,285,000 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 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” or the “Issuer”), 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, 2019, 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 (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 for: providing funds for the acquisition, design, construction, furnishing and any other expenses related to the building of a new middle school, other capital project needs, and paying the costs and expenses of preparing, issuing and marketing 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 Eckert Seamans Cherin & Mellott, LLC, 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 Sweet Stevens Katz & Williams LLP of New Britain, Pennsylvania, School District Solicitor, and PFM Financial Advisors LLC, 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 May 21, 2019.
BAIRD
Official Statement Dated: April 15, 2019
$9,285,000 Upper Perkiomen School District Montgomery and Berks Counties, Pennsylvania General Obligation Bonds, Series of 2019
Dated: May 21, 2019 Principal Due: November 15, as shown below Interest Due: May 15 and November 15 First Interest Payment: November 15, 2019
PRINCIPAL MATURITIES AND AMOUNTS, INTEREST RATES AND PRICES/YIELDS
Year of Maturity Principal Interest CUSIP (November 15) Amounts Rates Yields Numbers(1) 2020 $250,000 4.000% 1.650% 916343PN0 2021 265,000 4.000 1.670 916343PP5 2022 270,000 4.000 1.700 916343PQ3 2023 280,000 4.000 1.750 916343PR1 2024 295,000 4.000 1.800* 916343PS9 2025 305,000 4.000 1.850* 916343PT7 2026 320,000 4.000 1.900* 916343PU4 2027 335,000 4.000 1.950* 916343PV2 2028 345,000 4.000 2.000* 916343PW0 2029 360,000 4.000 2.050* 916343PX8 2030 375,000 4.000 2.120* 916343PY6 2031 390,000 4.000 2.200* 916343PZ3 2032 405,000 4.000 2.250* 916343QA7 2033 425,000 4.000 2.300* 916343QB5 2034 440,000 4.000 2.350* 916343QC3 2035 460,000 4.000 2.400* 916343QD1 2036 475,000 4.000 2.450* 916343QE9 2037 495,000 4.000 2.500* 916343QF6 2038 515,000 4.000 2.550* 916343QG4 2039 535,000 4.000 2.600* 916343QH2 2040 560,000 4.000 2.650* 916343QJ8 2041 580,000 4.000 2.700* 916343QK5 2042 605,000 4.000 2.750* 916343QL3 (1) These Committee on Uniform Securities Identification Procedures numbers have been assigned by an organization not affiliated with the School District or the Underwriter, and such parties are not responsible for the selection or use of the CUSIP numbers. The CUSIP numbers are included solely for the convenience of bondholders and no representation is made as to the correctness of such CUSIP numbers. CUSIP numbers assigned to securities may be changed during the term of such securities based on a number of factors including, but not limited to, the refunding or defeasance of such issue or the use of secondary market financial products. Neither the School District nor the Underwriter have agreed to, and there is no duty or obligation to, update this Official Statement to reflect any change or correction in the CUSIP numbers set forth above.
*Yield to Optional Redemption Date: May 15, 2024
UPPER PERKIOMEN SCHOOL DISTRICT Montgomery and Berks Counties, Pennsylvania
BOARD OF SCHOOL DIRECTORS
Dr. Kerry A. Drake President Mike W. Elliot Vice-President Steven Cunningham Treasurer Sandra M. Kassel Secretary* Melanie Cunningham Member Dr. John L. Farris Member James Glackin Member Raeann B. Hofkin Member Judith S. Maginnis Member Joan T. Smith Member
*Non- Voting Member
SUPERINTENDENT DR. ALEXIS McGLOIN
BUSINESS ADMINISTRATOR SANDRA M. KASSEL
SCHOOL DISTRICT SOLICITOR SWEET STEVENS KATZ & WILLIAMS New Britain, Pennsylvania
BOND COUNSEL ECKERT SEAMANS CHERIN & MELLOTT, LLC Harrisburg, Pennsylvania
FINANCIAL ADVISOR PFM FINANCIAL ADVISORS LLC Harrisburg, Pennsylvania
UNDERWRITER ROBERT W. BAIRD & CO. INCORPORATED Milwaukee, Wisconsin
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 Official Statement, and if given or made, such other information or representations must not be relied upon. This 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 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 Debt Statement ...... 17 INTRODUCTION ...... 1 Debt Limit and Remaining Borrowing Capacity ...... 18 PURPOSE OF THE ISSUE ...... 1 Debt Service Requirements ...... 19 Future Financing ...... 20 Sources and Uses of Bond Proceeds ...... 1 LABOR RELATIONS ...... 20 THE BONDS ...... 2 School District Employees ...... 20 Description ...... 2 Pension Program ...... 20 Payment of Principal and Interest ...... 2 Transfer, Exchange and Registration of Bonds ...... 2 OTHER POST-EMPLOYMENT BENEFITS ...... 21 REDEMPTION OF BONDS ...... 3 LITIGATION ...... 21 Optional Redemption ...... 3 DEFAULTS AND REMEDIES ...... 21 Notice of Redemption ...... 3 TAX EXEMPTION AND OTHER TAX MATTERS...... 21 Manner of Redemption ...... 3 Federal Income Tax Matters ...... 21 SECURITY FOR THE BONDS...... 3 Proposed Changes in Federal Tax Laws ...... 21 Pledge of the School District’s Full Faith, Credit and Taxing Pennsylvania Tax Matters ...... 22 Power ...... 3 Federal Income Tax Interest Expense Deductions for Financial Bonds Sinking Fund ...... 4 Institutions ...... 22 Commonwealth Enforcement of Debt Service Payments...... 4 CONTINUING DISCLOSURE UNDERTAKING ...... 22 Pennsylvania Budget Adoption ...... 4 Act 85 of 2016 ...... 4 Existing Continuing Disclosure Filing History ...... 24 Future Continuing Disclosure Compliance ...... 24 BOOK-ENTRY ONLY SYSTEM ...... 5 RATING ...... 24 THE SCHOOL DISTRICT ...... 7 UNDERWRITING ...... 24 Introduction ...... 7 Administration ...... 7 LEGAL OPINION...... 25 School Facilities ...... 7 Enrollment Trends ...... 7 FINANCIAL ADVISOR ...... 25 MISCELLANEOUS ...... 25 SCHOOL DISTRICT FINANCES ...... 8 Introduction ...... 8 APPENDIX A- DEMOGRAPHIC AND ECONOMIC INFORMATION Financial Reporting ...... 8 RELATING TO THE UPPER PERKIOMEN SCHOOL DISTRICT Budgeting Process in School Districts under Act 1 (Taxpayer Relief Act) ...... 8 Introduction ...... A-1 Summary and Discussion of Financial Results ...... 9 Population ...... A-1 Revenue ...... 10 Employment ...... A-2 Income ...... A-4 TAXING POWERS AND LIMITS ...... 11 Commercial Activity ...... A-4 Educational Institutions ...... A-4 Limitations on Local Taxes – Taxpayer Relief Act (Act 1) ... 12 Medical Facilities ...... A-5 Status of the Bonds Under Act 1 ...... 12 Utilities ...... A-5 Optional Occupation Tax Elimination Act (Act 24 of 2001) . 12 Transportation ...... A-5 Limitation on Unreserved Undesignated Fund Balances ...... 13 Tax Levy Trends ...... 13 APPENDIX B- OPINION OF BOND COUNSEL Real Property Tax ...... 14 Other Taxes ...... 16 APPENDIX C- AUDITED FINANCIAL REPORT FOR JUNE 30, 2018 COMMONWEALTH AID ...... 16 APPENDIX D- CONTINUING DISCLOSURE CERTIFICATE Current Lack of State Appropriations for Debt Service Subsidies ...... 16 DEBT AND DEBT LIMITS ...... 17
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OFFICIAL STATEMENT
$9,285,000 Upper Perkiomen School District Montgomery and Berks Counties, Pennsylvania General Obligation Bonds, Series of 2019
INTRODUCTION
This 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 $9,285,000 aggregate principal amount of General Obligation Bonds, Series of 2019, dated as of May 21, 2019 (the “Bonds”). The Bonds are being issued pursuant to a Resolution of the Board of School Directors of the School District, adopted on April 11, 2019 (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 for: providing funds for the acquisition, design, construction, furnishing and any other expenses related to the building of a new middle school, other capital project needs, and paying the costs and expenses of preparing, issuing and marketing the Bonds.
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 ...... $9,285,000.00 Original Issue Premium ...... 708,238.40 Total Source of Funds ...... $9,993,238.40
Use of Funds Deposit to Construction Fund...... $9,805,850.90 Costs of Issuance(1) ...... 187,387.50 Total Use of Funds ...... $9,993,238.40
(1)Includes legal, solicitor, financial advisor, printing, rating, bond discount, CUSIP, paying agent, and miscellaneous costs.
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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 $9,285,000, and will be dated as of May 21, 2019. 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 Official Statement. Interest on the Bonds will be payable initially on November 15, 2019, 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 depository 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, 2019, in which event such Bond shall bear interest from May 21, 2019, 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.
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.
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REDEMPTION OF BONDS
Optional Redemption
The Bonds stated to mature on or after November 15, 2024 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, 2024, 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.
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).
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Bonds Sinking Fund
A sinking fund for the payment of the debt service on the Bonds, designated “Sinking Fund, General Obligation Bonds, Series of 2019” (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 depository 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.
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. But see “Pennsylvania Budget Adoption”.
Pennsylvania Budget Adoption
Over the past several years the Commonwealth of Pennsylvania has, from time to time, started its fiscal year without a fully adopted state budget. In the state’s 2015-16 fiscal year, a final budget was not enacted until 270 days following the beginning of the fiscal year on March 27, 2016 when the Governor failed to sign or veto the state budget that was adopted by the General Assembly on March 17, 2016.
For the 2016-17 fiscal year, the state budget became law, known as Act 16A of 2016, on July 12, 2016 when the Governor failed to sign or veto the state budget that was adopted by the General Assembly on July 1, 2016. On July 13, 2016, the General Assembly adopted and Governor signed into law an additional tax and revenue package, known as Act 85 of 2016, which was needed to balance the 2016-17 state budget.
For the 2017-18 fiscal year, the state budget became law, known as Act 1A of 2017, on July 11, 2017 when the Governor failed to sign or veto the state budget that was adopted by the General Assembly on June 30, 2017. Act 1A of 2017 did not have any accompanying legislation regarding the potential revenue that would be needed to fund the balance of the 2017-18 Budget at the time of its enactment. On October 25, 2017, the General Assembly adopted House Bill 542 which contained the necessary revenue to fund the balance of the previously adopted Act 1A of 2017. On October 30, 2017 the Governor approved and signed House Bill 542 and it became known as Act 43 of 2017.
For the current 2018-19 fiscal year, the state budget was adopted timely.
During a state budget impasse, school districts in Pennsylvania cannot be certain that state subsidies and revenues owed them from the Commonwealth will become available. This includes many of the major state subsidies, and overall revenues, that a Pennsylvania school district receives including basic education funding, special education funding, PlanCon reimbursements, and certain block grants, among many others. Future budget impasses may affect the timeliness or amount of payments by the Commonwealth under the withholding provisions of Section 633 of the Public School Code, however Act 85 of 2016 has attempted to address the timeliness of the withholding provisions of Section 633 of the Public School Code during any future budget impasses. See “Act 85 of 2016” hereinafter.
Act 85 of 2016
On July 13, 2016, the Governor of the Commonwealth signed into law Act No. 85 of 2016, (P.L. 664, No. 85) ("Act 85 of 2016"), an amendment to the Act of April 9, 1929 (P.L. 343, No. 176), known as the Fiscal Code ("Fiscal Code"). Act 85 of 2016 adds to the Fiscal Code Article XV1-E.4, entitled "School District Intercepts for the Payment of Debt Service During Budget Impasse", which provides for intercept of subsidy payments by PDE from a school district subject to an intercept statute or an intercept agreement in the event of a Commonwealth budget impasse in any fiscal year.
Act 85 of 2016 includes in the definition of "intercept statutes" Sections 633 of the Public School Code. The School District's general obligation bonds, including the Bonds, are subject to Section 633 of the Public School Code.
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Act 85 of 2016 provides that the amounts as may be necessary for PDE to comply with the provisions of the applicable intercept statute or intercept agreement "shall be appropriated" to PDE from the General Fund of the Commonwealth after PDE submits justification to the majority and minority chairs of the appropriations committees of the Pennsylvania Senate and House of Representatives allowing ten (10) calendar days for their review and comment, if, in any fiscal year:
(1) annual appropriations for payment of Commonwealth money to school districts have not been enacted by July 1 and continue not to be enacted when a payment is due;
(2) the conditions under which PDE is required to comply with an intercept statute or intercept agreement have occurred, thereby requiring PDE to withhold payments which would otherwise be due to school districts; and
(3) the Secretary of PDE, in consultation with the Secretary of the Budget, determines that there are no payments or allocations due to be paid to the applicable school districts from which PDE may withhold money as required by the applicable intercept statute or intercept agreement.
The necessary amounts shall be appropriated on the expiration of the tenth (10th) day following submission of the justification described above to the majority and minority chairs of the appropriations committees, who may comment on the justification but cannot prevent the effectiveness of the appropriation.
The total of all intercept payments under Article XV11-E.4 for a school district may not exceed 50% of the total nonfederal general fund subsidy payments made to that school district in the prior fiscal year.
Act 85 of 2016 requires that each school district subject to an intercept statute or intercept agreement must deliver to PDE, in such format as PDE may direct, a copy of the final Official Statement for the relevant bonds or notes or the loan documents relating to the obligations, within thirty (30) days of receipt of the proceeds of the obligations. The School District intends on submitting this information to PDE within the prescribed timeframe following the issuance of the Bonds. Act 85 of 2016 provides that any obligation for which PDE does not receive the required documents shall not be subject to the applicable intercept statute or intercept agreement in the event of a budget impasse in any fiscal year.
The provisions of Act 85 of 2016 are not part of any contract with the holders of the Bonds and may be amended or repealed by future legislation.
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 3.5 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 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 5 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.
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 Official Statement.
6
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.
Administration
The present Upper Perkiomen School District was reorganized on July 1, 1966 by reason of reorganization of 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 9, 10, 11 and 12 also attend the Western Montgomery Career and Technology Center.
TABLE 1
UPPER PERKIOMEN SCHOOL DISTRICT FACILITIES
Original Addition Rated Construction Renovation Pupil 2018-19 Building Date Date Grades Capacity Enrollment Elementary: Hereford Elementary ...... 1958 1975, 1990, 2008 K-5 1,184 840 Marlborough Elementary ...... 1990 --- K-5 1,069 721 Secondary: (1) Upper Perkiomen Middle School ...... 1959 1972, 2009 6-8 1,120 787 Upper Perkiomen High School ...... 1968 1985, 1993, 1998 9-12 1,282 998
(1)6th grades are part of secondary enrollments. Source: School District Officials.
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 2014-15 1,840 1,407 3,247 2019-20 1,830 1,575 3,405 2015-16 1,843 1,488 3,331 2020-21 1,800 1,608 3,408 2016-17 1,877 1,464 3,341 2021-22 1,801 1,638 3,439 2017-18 1,861 1,500 3,361 2022-23 1,802 1,642 3,444 2018-19 1,835 1,532 3,367 2023-24 1,808 1,640 3,448
Source: School District Officials. Enrollments do not include special education students placed outside the School District.
7
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 Official Statement, any procedure on the financial statements addressed in that report. Such auditor also has not performed any procedures relating to this 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.
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.
8
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 2018-19 budget. The budget for the 2018-19 school year, as adopted June 19, 2018, projected revenues of $59,924,754 and expenditures of $61,567,356.
TABLE 3
UPPER PERKIOMEN SCHOOL DISTRICT SUMMARY OF COMPARATIVE GENERAL FUND BALANCE SHEET (Years ending June 30)*
2017 2018 ASSETS 2014 2015 2016 Cash and Cash Equivalents ...... $9,659,227 $13,728,683 $15,743,350 $14,852,543 $14,209,433 Investments ...... 5,035,000 3,410,000 2,865,000 6,361,000 7,165,000 Taxes Receivable ...... 1,409,413 1,397,654 1,559,489 1,676,371 1,671,025 Interfund Receivables ...... 21,872 19,390 861,484 127,374 129,048 Intergovernmental Receivables ...... 1,016,774 1,357,033 2,235,960 2,472,410 2,286,507 Other Receivables ...... 0 0 42,217 66,412 761,092
Prepaid Expenses ...... 0 21,100 0 0 4,677 $17,142,286 $19,933,860 $23,307,500 $25,556,110 $26,226,782 TOTAL ASSETS ......
LIABILITIES Interfund Payables ...... $176,192 $80,950 $322,395 $476,822 $373,985 Intergovernmental Payables ...... 43,937 53,041 11,913 78,905 227,990 Accounts Payable ...... 945,649 1,317,716 1,938,515 2,820,373 2,753,247 Current Portion on Compensated Absences ..... 243,356 257,831 220,876 233,649 170,978 Accrued Salaries and Benefits ...... 2,473,407 2,489,408 5,999,587 5,636,002 5,821,561 Payroll Deductions and Withholdings ...... 1,736,004 2,136,076 0 983,828 932,316
Other Current Liabilities ...... 2,989 2,989 0 0 1,391 $5,621,534 $6,338,011 $8,493,286 $10,229,579 $10,281,468 TOTAL LIABILITIES ......
$1,486,824 $1,460,211 Deferred Inflows of Resources ...... $1,195,361 $1,198,700 $1,371,964
FUND EQUITIES $0 Nonspendable Fund Balance ...... $0 $21,100 $0 $4,677 Restricted Fund Balance...... 0 5,400 0 4,380 0 Committed Fund Balance ...... 1,060,000 1,060,000 1,060,000 5,300,000 5,300,000 Assigned Fund Balance ...... 2,312,303 1,823,342 1,595,645 1,964,356 4,442,602
Unassigned Fund Balance ...... 6,953,088 9,487,307 10,786,605 6,570,971 4,737,824 $10,325,391 $12,397,149 $13,442,250 $13,839,707 $14,485,103 TOTAL FUND EQUITIES ......
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND EQUITIES . $17,142,286 $19,933,860 $23,307,500 $25,556,110 $26,226,782
*Totals may not add due to rounding. Source: School District Annual Financial Reports.
9
TABLE 4 UPPER PERKIOMEN SCHOOL DISTRICT GENERAL FUND SUMMARY OF CHANGES IN FUND BALANCE*
Actual Budget (1) 2014 2015 2016 2017 2018 2019 Beginning Fund Balance $9,579,350 $10,325,389 $12,397,149 $13,442,250 $13,839,707 $14,485,104 Surplus (Deficit) of Revenue over Expenditures 746,039 2,071,759 1,045,101 397,457 645,397 (1,642,602) Changes in Inventory/RS Equity/Prior Year Adj. Ending General Fund Balance $10,325,391 $12,397,149 $13,442,250 $13,839,707 $14,485,104 $12,842,502
*Totals may not add due to rounding. (1)Budget, as adopted June 19, 2018. See “Summary and Discussion of Financial Results” herein. Source: School District Annual Financial Reports and Budget.
Revenue
The School District received $59,591,208 in revenue in 2017-18 and has budgeted revenue of $59,924,754 in 2018-19. Local sources have increased in amount of total revenue in the past five years, from 66.9 percent in 2013-14 to 67.3 percent in 2017-18. Revenue from Commonwealth sources contributed a decreasing share of total revenue from 32.0 percent to 31.8 percent over this period. Federal and other sources revenue decreased from 0.9 percent to 0.7 percent over this period.
TABLE 5 UPPER PERKIOMEN SCHOOL DISTRICT SUMMARY OF SCHOOL DISTRICT GENERAL FUND REVENUES* (Years Ending June 30)
REVENUE: Actual Budget (1) Local Sources: 2014 2015 2016 2017 2018 2019 Real Estate Taxes (Current) ...... $28,200,309 $29,661,602 $31,080,148 $32,426,443 $33,845,380 $34,600,106 Interim Real Estate Taxes ...... 201,534 219,234 237,173 236,935 209,147 180,000 Total Act 511 Taxes ...... 3,400,761 3,633,365 3,701,923 3,901,067 4,008,128 3,642,000 Per Capita (Sec. 679) Tax ...... 62,897 63,500 64,516 64,394 62,894 62,000 Public Utility Tax ...... 37,500 40,522 38,164 38,512 36,864 36,900 Payments in Lieu of Taxes - State & Local ...... 27 27 27 27 27 27 Delinquencies on Taxes Levied ...... 933,090 710,785 709,983 755,725 790,814 598,000 Interest Earnings ...... 93,563 84,627 103,192 168,799 381,109 200,000 Rentals ...... 35,343 27,128 35,299 41,875 39,583 25,000 Contributions and Donations from Private Sources ...... 9,641 51,695 14,751 19,160 20,021 15,000 Tuition from Patrons ...... 3,971 3,800 0 3,141 1,590 0 Receipts from other LEAS in PA – Education ...... 3,669 4,484 1,649 102,041 110,993 0 Transportation Services Provided Other Govts ...... 42,196 40,404 40,693 49,769 44,005 0 Services Provided Other Local Governmental Units .... 0 0 0 0 0 45,000 Refunds of Prior Years' Expenditures ...... 907 7,522 114,189 35,254 14,288 0 Federal IDEA Pass Through Revenue ...... 636,622 637,284 622,959 631,871 548,303 548,000 Federal ARRA IDEA Pass Through Revenue ...... 12,782 2,308 1,680 3,902 10,000 0 Other Sources ...... 107,780 84,025 82,712 18,658 37,816 108,500 Total Local Sources ...... $33,782,593 $35,272,314 $36,849,058 $38,497,572 $40,160,964 $40,060,533 State Sources: Instructional Subsidy ...... $8,323,596 $8,323,631 $8,473,529 $8,670,076 $8,771,584 $8,935,048 Rentals and Sinking Fund Payments...... 411,904 906,583 0 1,263,083 512,819 694,282 Transportation ...... 1,636,886 1,558,146 1,601,472 1,566,742 1,435,961 1,375,000 Tuition for Orphans & Children in Private Homes ...... 112,955 107,746 145,595 152,916 134,695 0 Special Education ...... 1,650,192 1,630,789 1,703,806 1,723,988 1,763,424 1,780,000 Health Services...... 55,380 57,579 46,292 56,247 59,220 52,500 Social Security ...... 827,675 833,084 849,979 873,331 872,192 921,000 Revenue for Retirement ...... 1,915,416 2,483,679 3,002,718 3,588,655 3,886,298 4,000,000 State Property Tax Reduction Allocation ...... 1,111,353 1,130,756 1,132,847 1,137,173 1,148,597 1,150,765 PA Accountability/Ready to Learn Block Grant ...... 143,068 295,519 378,374 378,374 378,374 378,374 Other Sources ...... 0 0 0 13,090 23,837 120,000 Total State Sources ...... $16,188,423 $17,327,513 $17,334,612 $19,423,676 $18,987,001 $19,406,969 Federal Sources: Total Federal Sources ...... $498,233 $426,989 $385,315 $449,599 $412,519 $457,252 Other Sources: Total Other Sources ...... $2,700 $1,803 $1,841 $2,471 $30,724 $0
TOTAL REVENUE ...... $50,471,950 $53,028,620 $54,570,826 $58,373,318 $59,591,208 $59,924,754
*Totals may not add due to rounding. (1)Budget, as adopted June 19, 2018. 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 (1) 2014 2015 2016 2017 2018 2019 EXPENDITURES: Total Instruction ...... $31,819,032 $31,800,315 $33,865,124 $34,740,141 $35,563,233 $38,281,433 Pupil Personnel...... 1,385,982 1,433,110 1,727,260 1,809,322 1,849,748 2,042,621 Instructional Staff ...... 1,203,460 1,215,136 1,284,771 1,368,140 1,494,050 1,609,254 Administration...... 2,906,945 2,915,288 2,948,963 3,445,619 3,267,315 3,719,372 Pupil Health...... 311,795 332,507 378,675 400,237 600,744 624,783 Business ...... 677,699 680,938 778,159 722,289 697,490 789,251 Operation and Maintenance ...... 3,430,987 3,494,583 3,633,919 3,685,138 3,985,382 4,153,172 Student Transportation ...... 3,079,540 3,077,522 2,956,708 2,752,563 2,875,651 3,216,868 Central Support ...... 823,307 1,098,520 1,529,493 1,275,650 1,504,196 1,629,307 Other Support ...... 34,906 35,307 35,700 35,824 35,935 37,586 Noninstructional Services ...... 812,599 848,966 838,901 968,129 991,069 1,085,309 Facilities Acquisition, Construction, & Improvement .. 0 0 76,790 0 2,220 0 Debt Service ...... 2,301,004 2,524,685 3,158,704 2,693,937 3,047,566 4,308,400 Fund Transfers ...... 938,603 1,499,983 290,415 4,078,871 3,031,213 0 Refund of Prior Year Receipts ...... 51 0 22,143 0 0 0 Budgetary Reserve ...... 0 0 0 0 0 70,000 TOTAL EXPENDITURES ...... $49,725,910 $50,956,861 $53,525,725 $57,975,860 $58,945,812 $61,567,356 SURPLUS (DEFICIT) OF REVENUES OVER EXPENDITURES ...... $746,040 $2,071,759 $1,045,101 $397,457 $645,397 ($1,642,602)
*Totals may not add due to rounding. (1)Budget, as adopted June 19, 2018. See “Summary and Discussion of Financial Results” herein. Source: School District Annual Financial Reports and Budget.
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.
11
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.
The Act 1 Index applicable to the School District in the next, current, and prior fiscal years are as follows:
Fiscal Year Index 2015-16 2.3% 2016-17 2.9% 2017-18 3.0% 2018-19 2.9% 2019-20 2.8%
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 its 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.
Act 1 also provides for gaming revenues received by the Commonwealth to be accumulated in the Property Tax Relief Reserve Fund (“Fund”). When the Fund has sufficient monies according to a formula, the Secretary of the Commonwealth announces that funds are available for distribution to school districts. The monies received by school districts from the Fund may only be used to provide a reduction in real estate taxes to qualified homestead/farmstead properties. To qualify for a homestead and/or farmstead tax reduction, the property must be owner-occupied and used for residential purposes. The monies received by the local school district from the Fund are offset on a dollar for dollar basis by reductions in the local real estate tax payments from owners of qualified homestead and farmstead properties.
Status of the Bonds Under Act 1
The Bonds described in this Official Statement are not expected to be eligible for an exception to the Index limits of Act 1.
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 12 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 $19,000,000 8.0%*
“Estimated ending unreserved undesignated fund balance” is defined in Act 2003-48 as that portion of the fund balance which is appropriable for expenditure or not legally or otherwise segregated for a specific or tentative future use, projected for the close of the school year for which a school district’s budget was adopted and held in the general fund accounts of the school district.
*Applies to the School District.
Tax Levy Trends
Table 6 shows the recent trend of tax rates levied by the School District. Table 7 shows the comparative trend of real property tax rates for the School District, three townships, four boroughs and Montgomery and Berks Counties.
TABLE 6 UPPER PERKIOMEN SCHOOL DISTRICT TAX RATES
Real Estate* Earned Real Estate Montgomery County Berks County Income Transfer Per Capita Year (mills) (mills) (%) (%) ($) 2014-15 22.3363 22.3363 0.5 0.5 10.00 2015-16 23.0622 23.0622 0.5 0.5 10.00 2016-17 23.6388 23.6388 0.5 0.5 10.00 2017-18 24.3479 24.3479 0.5 0.5 10.00 2018-19 24.5407 24.5407 0.5 0.5 10.00
*Calculated in accordance with the options permitted by Public School Code. Source: School District Officials.
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TABLE 7 UPPER PERKIOMEN SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value)
2015 2016 2017 2018 2019 School District** Berks County ...... 22.3360 23.0620 23.6390 24.3780 24.5407 Montgomery County ...... 22.3360 23.0620 23.6390 24.3780 24.5407 East Greenville Borough ...... 6.2500 6.2500 6.7500 6.2500 6.2500 Green Lane Borough ...... 2.0000 2.0000 2.0000 2.0000 2.0000 Marlborough Township ...... 2.2500 2.2500 2.2500 2.2500 2.2500 Pennsburg Borough ...... 5.4750 5.4750 5.9750 6.4750 7.2250 Upper Hanover Township ...... 1.4500 1.4500 1.4500 1.4500 1.4500 Hereford Township* ...... 0.9600 1.2000 1.2000 1.2000 1.2000 Red Hill Borough ...... 2.7000 2.7000 2.7000 2.7000 2.7000 Montgomery County ...... 2.6950 2.6950 2.6950 2.6950 2.6950 Berks County...... 7.3720 7.3720 7.3720 7.6570 7.6570
*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 33,845,380 in 2017-18, approximately 57.0 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.
TABLE 8 UPPER PERKIOMEN SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA
Market Assessed Year Value Value Ratio 2013-14 ...... $1,713,667,501 $1,199,845,711 70.02% 2014-15 ...... 1,748,934,208 1,213,120,611 69.36% 2015-16 ...... 1,768,453,904 1,226,215,941 69.34% 2016-17 ...... 1,797,639,273 1,239,011,331 68.92% 2017-18 ...... 1,815,778,668 1,250,935,721 68.89% Source: Pennsylvania State Tax Equalization Board (STEB)/ Tax Equalization Division (TED)
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TABLE 9 UPPER PERKIOMEN SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY
2016 2016 2017 2017 Market Assessed Market Assessed Value Value Value Value School District ...... $1,797,639,273 $1,239,011,331 $1,815,778,668 $1,250,935,721 East Greenville Borough ...... 142,841,866 105,496,230 142,841,866 105,496,230 Green Lane Borough ...... 42,173,936 26,311,120 42,173,936 26,311,120 Marlborough Township ...... 303,454,158 214,899,490 305,896,248 216,597,080 Pennsburg Borough ...... 221,618,868 153,123,850 221,316,238 153,013,780 Red Hill Borough ...... 152,277,907 108,954,804 152,266,865 108,938,944 Upper Hanover Township ...... 731,298,056 496,063,237 746,414,970 505,831,867 Montgomery County ...... 90,246,018,895 58,078,210,112 93,009,569,909 59,955,885,334 Hereford Township* ...... 203,974,482 134,162,600 204,868,248 134,746,700 Berks County...... 24,025,338,661 18,403,120,100 24,416,699,427 18,662,540,000
*Located in Berks County. Source: Pennsylvania State Tax Equalization Board (STEB)/ Tax Equalization Division (TED)
TABLE 10 UPPER PERKIOMEN SCHOOL DISTRICT ASSESSMENT BY LAND USE
2013 2014 2015 2016 2017 Residential ...... $938,576,334 $956,767,884 $965,994,724 $978,593,444 $990,874,664 Lots ...... 12,879,526 12,395,946 11,872,846 11,264,236 10,886,466 Industrial ...... 64,749,920 59,876,540 64,994,140 64,693,940 64,198,850 Commercial ...... 119,102,246 123,935,956 119,298,836 120,215,666 119,868,846 Agriculture ...... 59,682,455 55,660,085 60,492,765 60,788,935 61,820,755 Mineral ...... 0 104,520 104,520 0 0 Land ...... 4,855,230 4,379,680 3,458,110 3,455,110 3,286,140 Total ...... $1,199,845,711 $1,213,120,611 $1,226,215,941 $1,239,011,331 $1,250,935,721
Source: Pennsylvania State Tax Equalization Board (STEB)/ Tax Equalization Division (TED)
TABLE 11 UPPER PERKIOMEN SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA
Current Year Total Collections Collections Current as Percent Current as Percent Total Year of Total Plus of Total Flat Collections Adjusted Delinquent Adjusted Year Billing(1) (July-June) Flat Billing Collections Flat Billing 2013-14 $29,420,059 $28,200,309 95.85% $29,104,572 98.93% 2014-15 30,796,959 29,661,602 96.31% 30,349,666 98.55% 2015-16 32,367,107 31,080,148 96.02% 31,790,131 98.22% 2016-17 33,799,041 32,426,443 95.94% 33,154,663 98.09% 2017-18 35,090,893 33,845,380 96.45% 34,609,319 98.63%
(1)Flat billing plus penalties, less discounts and exonerations. Source: School District Financial Reports.
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The ten largest real property taxpayers, together with 2018-19 assessed values, are shown in Table 12. The aggregate assessed value of these ten taxpayers’ totals approximately 4.3 percent of total assessed value.
TABLE 12
UPPER PERKIOMEN SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS
2018-19 Assessed Owner Property Value Westinghouse Acquisitions (Knoll) Business Furniture $13,699,160 Walmart Real Estate Business Trust Retail Business 7,884,640 Gravel 38 LLC Multiple Businesses 5,610,000 Hereford Estates / Investment Corp Mobile Home Park 5,132,300 ET Sub-Pennsburg Manor Nursing Home 4,571,740 Red Hill Estates Inc. Mobile Home Park 4,177,440 RAF Pennsburg LP Fine Garden Ware 3,738,000 Pennsburg Square Associates LP Shopping Center 3,608,800 Blommer Chocolate Company Candy Company 3,605,760 (1) John / Joan Gehman (Butter Valley Golf ) Airport/Golf Course 2,347,860 Totals $54,375,700
(1) Appeals by the taxpayers contesting assessments for the year 2016 and thereafter are 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.
Other Taxes
Under Act 511, the School District collected $4,008,128 in other taxes in 2017-18. Among the taxes authorized by Act 511, the Real Estate Transfer Tax, Earned 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 $21,789,344.
Earned Income Tax. A tax of one half percent is levied on the earned income of residents. In 2017-18 the collected portion of this tax was $3,341,174 or 5.6 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 $62,894 in 2017-18 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 $604,059 in 2017-18 or 1.0 percent of the School District’s total revenue.
COMMONWEALTH AID
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, the basic instructional subsidy, is allocated to all school districts based on (1) the per pupil market value of assessable real property in the school district; (2) the per pupil earned income in the school district; and (3) the school district's tax effort, as compared with the tax effort of other school districts in the Commonwealth. School districts also receive subsidies for special education, pupil transportation, vocational education, health service and debt service.
Current Lack of State Appropriations for Debt Service Subsidies
Commonwealth law presently provides that the School District will receive, subject to state legislative appropriation, reimbursement from the Commonwealth for a portion of debt service paid on the Bonds following final approval by PDE. Commonwealth reimbursement is calculated based on the “Reimbursable Percentage” assigned to the Bonds by the PDE and the School District's permanent Capital Account Reimbursement Fraction (“CARF”) (40.01%) or the wealth based Market Value Aid Ratio (“MVAR”) currently (46.28%), whichever is higher. The Reimbursable Percentage is determined through a process known as the “Planning and Construction Workbook” or “PlanCon”.
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The School District estimates the Bonds will not be subject to reimbursement by the Commonwealth.
In May of 2016, the Commonwealth enacted appropriation legislation known as Act 25 (“Act 25”), which contains authorization for the Commonwealth Finance Authority (“CFA”) to issue up to $2.5 billion of debt to fund PlanCon reimbursements to school districts. Act 25 also instituted a moratorium on new projects entering the PlanCon process while an advisory committee established under Act 25 considers amendments to the PlanCon reimbursement program. This new moratorium went into effect on May 15, 2016 and expired on June 30, 2017. On November 6, 2017, House Bill 178 became law without the signature of the Governor and became known as Act 55 of 2017. Contained in Act 55 of 2017 was an extension of the PlanCon moratorium through the end of the 2017-18 fiscal year. Subsequently, the Commonwealth enacted Act 42 of 2018, which permitted PlanCon applications submitted between July 1, 2017 and November 6, 2017, and whose school district votes to proceed with construction and award bids on their construction contracts no later than July 1, 2021, to receive PlanCon funding as permitted by law.
To date, the CFA has issued $1,170,705,000, to provide for PlanCon reimbursements owed to school districts, including the issuance of its Revenue Bonds, Series A of 2016 (Federally Taxable) in the principal amount of $758,185,000 issued on October 31, 2016, as well as its Revenue Bonds, Series A of 2018 (Federally Taxable) in the total amount of $412,520,000 issued on January 18, 2018. It is expected that proceeds of these issues have been and will continue to be used to provide PlanCon reimbursement that is owed to the School District for past and current fiscal years. However, the School District cannot be certain that any future PlanCon reimbursement will be received by PDE as the ability for CFA to issue additional bonds in the future to fund future PlanCon reimbursements owed to school districts may impact the availability of PlanCon reimbursements payable to the School District. Any failure by the Commonwealth to adopt a timely budget and enact necessary spending authorizations could have a material adverse effect upon the School District’s anticipated receipt of PlanCon reimbursements.
There can be no assurances that the School District will be able to successfully apply for, be awarded, and receive sufficient PlanCon reimbursement for the costs of any current or future projects of the School District. A failure by the School District to receive such reimbursement could force the School District to apply other available funds, if any, toward the completion costs of the Project and may have a material adverse effect on the financial resources of the School District to fund other obligations, including payment of debt service on the Bonds.
Legislation has been introduced from time to time in the Pennsylvania legislature containing language that would revise or even abolish the debt service reimbursement program for Pennsylvania school districts. As of the date hereof, and except as described above, none of these proposals have been signed into law. To the extent that any future legislation contains material changes to the PlanCon program as it is structured currently, the amount of PlanCon reimbursement to the School District may be positively or negatively affected, which could materially impact the amount of local funds needed to be raised by the School District to pay debt service on its debt obligations.
DEBT AND DEBT LIMITS
Debt Statement
Table 13 shows the debt of the School District as of April 15, 2019, including the issuance of the Bonds.
TABLE 13 UPPER PERKIOMEN SCHOOL DISTRICT DEBT STATEMENT* (As of April 15, 2019)
Gross Outstanding NONELECTORAL DEBT General Obligation Bonds, Series of 2019 (last maturity 2042) ...... $9,285,000 General Obligation Bonds, Series of 2018 (last maturity 2042) ...... 26,515,000 General Obligation Bonds, Series of 2017 (last maturity 2043) ...... 9,670,000 General Obligation Bonds, Series A of 2016 (last maturity 2042) ...... 9,110,000 General Obligation Bonds, Series of 2016 (last maturity 2027) ...... 6,060,000 General Obligation Bonds, Series of 2014 (last maturity 2029) ...... 7,055,000 General Obligation Bonds, Series of 2013 (last maturity 2028) ...... 6,205,000 General Obligation Bonds, Capital Projects Series(1) ...... 4,040,000 TOTAL NONELECTORAL DEBT ...... $77,940,000
LEASE RENTAL DEBT TOTAL LEASE RENTAL DEBT ...... $0 TOTAL PRINCIPAL OF DIRECT DEBT ...... $77,940,000
*Includes the Bonds offered through this Official Statement. (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 $77,940,000. After adjustment for available funds and estimated Commonwealth Aid, the local effort of direct debt will total $70,137,251.
TABLE 14 UPPER PERKIOMEN SCHOOL DISTRICT BONDED INDEBTEDNESS AND DEBT RATIOS* (As of April 15, 2019)
Local Effort or Net of Available Funds Gross and Estimated Outstanding State Aid(1) DIRECT DEBT Nonelectoral Debt ...... $77,940,000 $70,137,251 Lease Rental Debt ...... 0 0 TOTAL DIRECT DEBT ...... $77,940,000 $70,137,251
OVERLAPPING DEBT (2) Montgomery County, General Obligations and Lease Rental Debt ...... $8,984,467 $8,984,467 (3) Berks County General Obligations and Lease Rental Debt ...... 1,561,472 1,561,472 Municipal General Obligation Debt ...... 2,821,727 2,821,727 TOTAL OVERLAPPING DEBT ...... $13,367,666 $13,367,666
TOTAL DIRECT AND OVERLAPPING DEBT ...... $91,307,666 $83,504,917
DEBT RATIOS Per Capita ...... $4,090.11 $3,740.59 Percent 2017-18 Assessed Value...... 7.30% 6.68% Percent 2017-18 Market Value ...... 5.03% 4.60%
*Includes the Bonds offered through this Official Statement. (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 2.0 percent share of $460,211,066 principal amount outstanding. (3)Pro rata 0.8 percent share of $186,100,066 principal amount outstanding.
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 2015-16 ...... $54,568,985 Total Revenues for 2016-17 ...... 57,107,763 Total Revenues for 2017-18 ...... 59,047,665 Total ...... $170,724,413
Annual Arithmetic Average (Borrowing Base) ...... $56,908,138
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 $128,043,310 $77,940,000 $50,103,310
*Includes the Bonds described 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 2019 Total Year Obligations Principal Interest Subtotal Requirements 2018-19 $4,208,399 $0 $0 $0 4,208,399 2019-20 4,927,853 0 365,210 365,210 5,293,063 2020-21 4,930,878 250,000 366,400 616,400 5,547,278 2021-22 4,931,303 265,000 356,100 621,100 5,552,403 2022-23 4,934,403 270,000 345,400 615,400 5,549,803 2023-24 4,938,728 280,000 334,400 614,400 5,553,128 2024-25 4,944,003 295,000 322,900 617,900 5,561,903 2025-26 4,938,978 305,000 310,900 615,900 5,554,878 2026-27 4,946,560 320,000 298,400 618,400 5,564,960 2027-28 4,848,394 335,000 285,300 620,300 5,468,694 2028-29 4,198,481 345,000 271,700 616,700 4,815,181 2029-30 3,504,125 360,000 257,600 617,600 4,121,725 2030-31 2,742,833 375,000 242,900 617,900 3,360,733 2031-32 2,741,638 390,000 227,600 617,600 3,359,238 2032-33 2,742,304 405,000 211,700 616,700 3,359,004 2033-34 2,750,934 425,000 195,100 620,100 3,371,034 2034-35 2,746,767 440,000 177,800 617,800 3,364,567 2035-36 2,749,778 460,000 159,800 619,800 3,369,578 2036-37 2,745,622 475,000 141,100 616,100 3,361,722 2037-38 2,756,944 495,000 121,700 616,700 3,373,644 2038-39 2,737,731 515,000 101,500 616,500 3,354,231 2039-40 2,744,894 535,000 80,500 615,500 3,360,394 2040-41 2,744,009 560,000 58,600 618,600 3,362,609 2041-42 2,739,825 580,000 35,800 615,800 3,355,625 2042-43 2,742,163 605,000 12,100 617,100 3,359,263 Total $91,937,541 $9,285,000 $5,280,510 $14,565,510 $106,503,051
*Totals may not add due to rounding.
TABLE 16 UPPER PERKIOMEN SCHOOL DISTRICT COVERAGE OF DEBT SERVICE AND LEASE RENTAL REQUIREMENTS BY COMMONWEALTH AID*
2017-18 State Aid Received ...... $18,987,001 2017-18 Debt Service Requirements ...... 3,047,566 Maximum Future Debt Service Requirements after Issuance of Bonds ...... 5,564,960 Coverage of 2017-18 Debt Service Requirements ...... 6.23 times Coverage of Maximum Future Debt Service Requirements after Issuance of Bonds ...... 3.41 times
*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 debt in the next 1-2 years.
LABOR RELATIONS
School District Employees
There are presently 419 employees of the School District, including 258 teachers and administrators, and 161 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, 2019, negotiations are currently underway. 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
Currently, all Pennsylvania school districts and intermediate units participate in a pension program administrated by the Commonwealth. The program is formally known as the Public School Employees’ Retirement System (“PSERS”), and a percentage of each eligible employee’s salary is contributed by the employee, the School District and the Commonwealth. All full-time employees, part-time employees salaried over eighty days per year and hourly employees with over five hundred hours per year participate in the program.
Contributions are required by active members, School Districts, and the Commonwealth of Pennsylvania as established by the Public School Employees’ Retirement Code. Members who enrolled prior to January 1, 2002 range from 5.28% to 7.5% of compensation, depending upon the date of commencement of employment and elections made by each employee member. Members who enrolled in the pension plan on or after January 1, 2002 and before July 1, 2011 is 7.5% of compensation. The contribution rate for PSERS members who enrolled on or after July 1, 2011 is 7.5% or 10.3%, depending upon elections made by each employee member. The PSERS Board of Trustees certified an annual employer contribution rate of 33.43% for the fiscal year 2018-19. Current financial projections indicate the possibility of increases in the contribution rate in the next five years.
The Commonwealth will reimburse the School District at the rate of 50% of its total contributions with respect to all employees who were hired prior to July 1, 1994. With respect to employees hired after July 1, 1994, and who were not previously employed by another public school system in the Commonwealth, the School District will be reimbursed by the Commonwealth at the rate of the higher of 50% of contributions made by the School District or the current Market Value/Personal Income Aid Ratio. The School District is reimbursed on a quarterly basis.
Under Act 5 of 2017 (“Act 5”) PSERS will transition from a traditional defined benefit system and begin to offer defined contribution plans as well. Beginning July 1, 2019, in addition to other transaction rules and options based on members’ classifications, certain classes of active members may choose to switch from the current defined benefit plan to one of three new retirement benefit plan options which will be available. Additionally, all active members newly hired on or after July 1, 2019 will be required to select one of those three new retirement benefit plan options and will not be eligible to participate in the current defined benefit plan. The three new plans consist of two hybrid plans, with defined benefit and defined contribution components, along with a stand-alone defined contribution plan.
In addition to its comprehensive change in available plans for active members, Act 5 also made certain changes to the PSERS Board of Trustees and administrative protocols and created the Public Pension Management and Asset Investment Review Commission to study and make recommendations to the General Assembly and the Governor regarding investment performance and strategies.
According to the Independent Fiscal Office, Act 5 is not expected to reduce school district and state contributions to PSERS over the first fifteen years. However, beginning in fiscal 2034-35 through fiscal 2049-50, employer contribution rates are expected to begin to decline due to the lower long-term employer costs of the new benefit plans and will be lower, in the aggregate, over the study period.
Annual School District contributions have been as follows:
2014-15 $4,791,481 2015-16 $5,937,855 2016-17 $7,410,434 2017-18 $7,865,195 2018-19 (budgeted) $8,534,495
On June 30, 2018, the School District reported a liability of $92,495,702 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by rolling forward the PSERS total pension liability as of June 30, 2016 to June 30, 2017. The School District’s proportion of the net pension liability was calculated utilizing its one-year reported covered payroll as it relates to the total one-year reported covered payroll of all school districts. At June 30, 2017, the School District’s proportion was 0.1883% which was an increase of 0.0076% from its proportion measured as of June 30, 2016.
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As of June 30, 2017, the PSERS plan was 56.3% funded, with an unfunded actuarial accrued liability of approximately $44.5 billion. PSERS’ rate of return for fiscal year ended June 30, 2018 was 9.27%. The Fund had plan net assets of $56.7 billion at June 30, 2018. For more information, visit the PSERS website at www.psers.pa.gov, which is not incorporated by specific reference into this Official Statement.
Source: School District Administrative Officials and PSERS.
Other Post-Employment Benefits
For a 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.
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, Eckert Seamans Cherin & Mellott, LLC, 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. 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 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.
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 that, if enacted, could alter or amend the federal 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 21 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.
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 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.
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 the 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 the Bonds to state or local taxes in the Commonwealth or otherwise imposes taxation on the Bonds may have an adverse effect on the market value or marketability of the Bonds.
Federal Income Tax Interest Expense Deductions for Financial Institutions
Under the Internal Revenue Code of 1986, as amended (the “Code”), financial institutions are disallowed 100 percent of their interest expense deductions that are allocable, by a formula, to tax-exempt obligations acquired after August 7, 1986. 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.
Each of the Bonds has been designated, or "deemed designated", as 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).
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.
CONTINUING DISCLOSURE UNDERTAKING
In accordance with the requirements of Rule 15c2-12 (the “Rule”) promulgated by the Securities and Exchange Commission (the “SEC”), the School District (being an “obligated person” with respect to the Bonds, within the meaning of the Rule), 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 270 days following the end of each fiscal year, beginning with the fiscal year ending June 30, 2018, the following financial information and operating information for the School District:
(1) financial statements for the most recent fiscal year, prepared in accordance with generally accepted accounting principles for local government units
(2) a summary of the budget for the current fiscal year (i.e. the fiscal year following the fiscal year of the financial statements being provided)
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(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; (14) appointment of a successor or additional trustee or the change of name of a trustee, if material; (15) incurrence of a financial obligation of the issuer or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the issuer or obligated person, any of which affect security holders, if material; (16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the issuer or obligated person, any of which reflect financial difficulties; 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.
Certain operating data of the School District may be inherently included in the annual filings of financial statements, the summary of the budget, contents in Official Statements of future bond issues as well as publicly available information.
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Existing Continuing Disclosure Filing History
The School District has previously entered into Continuing Disclosure Agreements with respect to each one of its previously issued bond issues that are currently outstanding. The School District’s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below.
Fiscal Year Filing Financial Statements Budget Operating Data Ending Deadline [1] Filing Date EMMA ID [2] Filing Date EMMA ID [2] Filing Date EMMA ID [2]
6/30/2014 12/27/2014 12/16/2014 EP673543 12/16/2014 EP673543 12/16/2014 EP673589
6/30/2015 12/27/2015 12/21/2015 EP714274 12/21/2015 EP714274 12/21/2015 EP714274
6/30/2016 12/27/2016 12/27/2016 ER791514 12/27/2016 ER791514 12/27/2016 ER791514
6/30/2017 12/27/2017 12/26/2017 ES842675 12/26/2017 ES842675 12/26/2017 ES842675
6/30/2018 12/27/2018 12/20/2018 ER914562 12/20/2018 ER914562 12/20/2018 ER914562
Notes [1] For these purposes, assumes the shortest filing deadline of the School District’s previous Continuing Disclosure Agreements
[2] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: http://emma.msrb.org/ContinuingDisclosureView/ContinuingDisclosureDetails.aspx?submissionId= Based on the information above, the School District’s annual financial and operating filing history over the past five (5) years can be summarized as follows:
For fiscal year ending June 30, 2014 through June 30, 2018, the School District filed the annual financial information and operating data in a timely fashion.
Future Continuing Disclosure Compliance
The School District has conducted a thorough review of its continuing disclosure obligations and submissions. Upon discovering any inadvertent omissions with respect to these filings, the School District, to the best of its knowledge, has attempted to bring its continuing disclosure filings up to date.
In an effort to augment the School District’s procedures and policies to maintain future compliance, the School District has taken additional steps intended to assure future compliance with its Continuing Disclosure Agreements. These steps include adopting a policy and administrative regulations on implementing continuing disclosure procedures and implementing the MSRB’s EMMA’s internal notification system whereby the School District will receive timely email reminders a month in advance for all of the School District’s annual disclosure filings and coordinating with the School District’s financial advisor to ensure all disclosure obligations have been made on a timely basis and in all material respects.
The Business Administrator will be responsible for ensuring ongoing continuing disclosure compliance. The Business Administrator and members of the School District’s business office will make an effort to participate in any ongoing continuing education regarding continuing disclosure undertaking if offered by local groups or affiliated organizations such as MSRB, PASBO or GFOA. The School District may communicate with its financial advisor, underwriter(s), bond counsel, or solicitor regarding any questions or concerns regarding ongoing continuing disclosure compliance. The School District may also communicate with its local auditor and advise of the School District’s need for financial statements in a timely manner. In the event audited financial statements are not available by the filing deadline, the School District will file to EMMA, if available, its State Form PDE-2057 Annual Financial Report as an interim filing until such audited financial statements are available. Some of the operating data requirements may be found contained within the School District’s financial statements or budget filing and may not be filed explicitly by themselves.
RATING
Moody’s Investor’s Service, Inc. has assigned its underlying rating of “Aa2” 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 $9,923,600.90, which includes the par value of the Bonds less an underwriter’s discount of $69,637.50, plus an original issue premium of $708,238.40.
On April 1, 2019, Baird Financial Corporation, the parent company of Baird, acquired HL Financial Services, LLC, its subsidiaries, affiliates and assigns (collectively “Hilliard Lyons”). As a result of such common control, Baird, Hilliard Lyons and Hilliard Lyons Trust Company are now affiliated. It is expected that Hilliard Lyons will merge with and into Baird later in 2019.
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LEGAL OPINION
The Bonds are offered subject to the receipt of the approving legal opinion of Eckert Seamans Cherin & Mellott, LLC, of Harrisburg, Pennsylvania, Bond Counsel to the School District. Certain legal matters will be passed upon for the School District by Sweet Stevens Katz & Williams of New Britan, Pennsylvania, School District Solicitor.
FINANCIAL ADVISOR
The School District has retained PFM Financial Advisors LLC, 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 Official Statement. PFM Financial Advisors LLC is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities.
MISCELLANEOUS
This Official Statement has been prepared under the direction of the School District by PFM Financial Advisors LLC, Harrisburg, Pennsylvania, in its capacity as Financial Advisor to the School District. The information set forth in this 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 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 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 Official Statement.
UPPER PERKIOMEN SCHOOL DISTRICT Montgomery and Berks Counties, Pennsylvania
By:/s/ Dr. Kerry A. Drake President, Board of School Directors
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APPENDIX A Demographic and Economic Information Relating to the Upper Perkiomen School District
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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, Berks County and the Commonwealth. Table A-2 shows 2015 (estimated) 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 Compound Average Annual Percentage Change 2010 2015(est.) 2010-2015 School District 22,324 22,942 0.55% Montgomery County 799,874 812,970 0.33% Berks County 411,442 413,965 0.12% Pennsylvania 12,702,379 12,779,559 0.12%
Source: U.S. Census Bureau, 2010 Census and U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates
TABLE A-2
AGE COMPOSITION
0-19 20-64 65+ Years Years Years Montgomery County ...... 24.7 59.3 16.0 Berks County ...... 26.2 58.3 15.4 Pennsylvania...... 24.2 59.4 16.3
Source: U.S. Census Bureau 2011-2015 American Community Survey 5-Year Estimates
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 November 2017.
TABLE A-3 DISTRIBUTION OF EMPLOYMENT BY INDUSTRY PA-NJ-DE-MD METROPOLITAN STATISTICAL AREA (Bucks, Chester, Delaware, Montgomery, and Philadelphia - PA counties) (New Castle - DE county, Cecil - MD county) (Salem, Burlington, Camden, and Gloucester - NJ counties) NONFARM JOBS (November 2017)
Industry Employment Net Change From:
Establishment Data Nov 2017 Oct 2017 Sept 2017 Nov 2016 Oct 2017 Nov 2016
TOTAL NONFARM 2,961,500 2,953,400 2,926,300 2,928,700 8,100 32,800 TOTAL PRIVATE 2,618,200 2,612,400 2,590,800 2,583,900 5,800 34,300 GOODS PRODUCING 295,600 297,700 298,000 294,400 -2,100 1,200 Construction, Natural Resources, and Mining 116,800 118,800 119,400 116,700 -2,000 100 Manufacturing 178,800 178,900 178,600 177,700 -100 1,100 Durable Goods 92,500 92,600 92,100 91,900 -100 600 Non-Durable Goods 86,300 86,300 86,500 85,800 0 500 SERVICE-PROVIDING 2,665,900 2,655,700 2,628,300 2,634,300 10,200 31,600 PRIVATE SERVICE-PROVIDING 2,322,600 2,314,700 2,292,800 2,289,500 7,900 33,100 Trade, Transportation, and Utilities 537,600 527,300 523,900 536,000 10,300 1,600 Wholesale Trade 120,100 120,100 119,700 120,200 0 -100 Retail Trade 305,200 297,100 294,600 309,200 8,100 -4,000 Transportation, Warehousing, and Utilities 112,300 110,100 109,600 106,600 2,200 5,700 Information 45,800 45,700 46,000 46,300 100 -500 Financial Activities 217,200 216,900 217,300 212,500 300 4,700 Finance and insurance 177,700 177,200 177,500 174,600 500 3,100 Professional and Business Services 481,100 479,800 474,400 470,900 1,300 10,200 Professional and technical services 233,400 232,500 230,700 224,300 900 9,100 Administrative and waste services 186,500 186,400 182,700 182,600 100 3,900 Education and Health Services 656,100 654,000 638,300 645,300 2,100 10,800 Health care and social assistance 511,000 510,000 503,100 503,200 1,000 7,800 Hospitals 144,900 144,800 144,400 141,900 100 3,000 Leisure and Hospitality 265,900 272,700 275,200 258,400 -6,800 7,500 Accomodation and food services 218,400 221,800 220,900 211,600 -3,400 6,800 Other Services 118,900 118,300 117,700 120,100 600 -1,200 Government 343,300 341,000 335,500 344,800 2,300 -1,500 Federal Government 51,200 51,200 51,400 51,500 0 -300 State Government 57,600 57,100 56,300 57,700 500 -100 Local Government 234,500 232,700 227,800 235,600 1,800 -1,100 Data benchmarked to March 2016 ***Data changes of 100 may be due to rounding***
Source: Pennsylvania Department of Labor and Industry – www.paworkstats.state.pa.us
A-2
Major employers located within Montgomery County include:
Employer Merck Sharpe & Dohme Corporation Abington Memorial Hospital Main Line Hospitals Inc State Government Giant Food Stores LLC SmithKline Beecham Corporation SEI Investments Company Montgomery County Federal Government Wal-Mart Associates Inc.
Source: Quarterly Census of Employment and Wages Q2 of 2017
Table A-4 shows recent trends in labor force, employment, and unemployment for Montgomery County, Berks County, and the Commonwealth.
TABLE A-4 RECENT TRENDS IN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT* (MONTGOMERY COUNTY)
Compound Average Annual % 2012 2013 2014 2015 2016 2017(1) Rate Montgomery County Civilian Labor Force (000) 435.6 435.6 436.8 441.2 447.7 446.3 0.49% Employment (000) 407.9 410.1 416.6 422.9 429.0 431.1 1.11% Unemployment (000) 27.7 25.5 20.3 18.4 18.7 15.2 -11.31% Unemployment Rate 6.40% 5.80% 4.60% 4.20% 4.20% 3.40%
Berks County Civilian Labor Force (000) 211.8 211.3 211.1 212.7 214.1 211.5 -0.03% Employment (000) 195.6 196.3 199.6 202.2 203.4 203.0 0.75% Unemployment (000) 16.2 15.1 11.6 10.5 10.7 8.6 -11.90% Unemployment Rate 7.70% 7.10% 5.50% 4.90% 5.00% 4.00%
Pennsylvania Civilian Labor Force (000) 6,466.0 6,460.0 6,378.0 6,424.0 6,472.0 6,380.0 -0.27% Employment (000) 5,954.0 5,982.0 6,009.0 6,094.0 6,120.0 6,106.0 0.51% Unemployment (000) 513.0 478.0 370.0 330.0 352.0 274.0 -11.79% Unemployment Rate 7.90% 7.40% 5.80% 5.10% 5.40% 4.30%
(1)As of November 2017 Source: paworkstats.state.pa.us website.
A-3
Income
The data on Table A-5 shows recent trends in per capita income for the School District, Montgomery County, Berks County, and the Commonwealth over the 2010-2015 period. The per capita income of the School District and Montgomery County is higher than the Commonwealth.
TABLE A-5
RECENT TRENDS IN PER CAPITA INCOME*
Compound Average Annual Percentage Change 2010 2015 (est.) 2010-2015 School District ...... $32,058 $31,456 -0.38% Montgomery County ...... 40,076 42,275 1.07% Berks County ...... 25,518 27,146 1.24% Pennsylvania...... 27,049 29,291 1.61% *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: U.S. Census Bureau, 2010 Census and U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates
Commercial Activity
Table A-6 shows 2013 through 2017 trends for retail sales in Montgomery County, Berks County, the PMSA, and Pennsylvania.
TABLE A-6
TOTAL RETAIL SALES (000)
2013 2014 2015 2016 2017 Montgomery County ...... $13,453,443 $14,129,459 $15,080,841 $15,685,831 $19,406,393 Berks County ...... 5,824,648 5,252,340 5,387,294 5,439,788 6,977,818 MSA ...... 89,309,763 91,259,939 92,944,956 96,525,422 105,082,759 Pennsylvania ...... 187,412,600 199,975,257 198,215,135 207,887,941 213,005,475
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, Pennsylvania State University Center Valley, DeSales University, and Cedar Crest College.
A-4
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, Comcast and MCI; 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.
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APPENDIX B Opinion of Bond Counsel
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May 21, 2019
Re: $9,285,000 Aggregate Principal Amount Upper Perkiomen School District, Montgomery and Berks Counties, Pennsylvania General Obligation Bonds, Series of 2019
To The Purchasers of the Within-Described Bonds:
We have served as bond counsel to the Upper Perkiomen School District, Montgomery and Berks Counties, Pennsylvania (the “School District”), in connection with the issuance by the School District of its $9,285,000 aggregate principal amount General Obligation Bonds, Series of 2019 (the “Bonds”), under the provisions of the Pennsylvania Local Government Unit Debt Act, 53 Pa. C.S. Chs. 80-82 (the “Act”), and a Resolution (the “Resolution”) adopted on April 11, 2019, by the Board of School Directors of the School District (the “Board”). The Bonds are being issued for the purpose of providing funds which will be used for the acquisition, design, construction and furnishing of a new middle school building of the School District and any other related expenses, other capital projects of the School District, and to pay the costs and expenses of issuing the Bonds.
As Bond Counsel for the School District, we have examined: (a) the relevant provisions of the Constitution of the Commonwealth of Pennsylvania (the “Commonwealth”); (b) the Act; (c) the relevant provisions of the Public School Code of 1949, as amended; (d) the Resolution and the Debt Statement of the School District filed with the Pennsylvania Department of Community and Economic Development (the “Department”); (e) the proceedings of the Board with respect to the authorization, issuance and sale of the Bonds; (f) a Certificate of Approval issued by the Department in respect of the proceedings authorizing the issuance of the Bonds; and (g) certain statements, certifications, affidavits and other documents and matters of law which we have considered relevant, including, without limitation, a certificate dated the date hereof (the “Tax Compliance Certificate”) of officials of the School District having responsibility for issuing the Bonds, given pursuant to the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”), an opinion of the Solicitor to the School District as to various matters, and the other documents, certifications and instruments listed in a closing index filed with the Paying Agent (hereinafter defined) on the date of original delivery of the Bonds. We also have examined a fully executed and authenticated Bond, or a true copy thereof, and assume all other Bonds are in such form and are similarly executed and authenticated.
The Bonds have been designated by the School District as Qualified Tax-Exempt Obligations within the meaning of Section 265(b)(3) of the Code.
In rendering the opinion set forth below, we have relied upon the genuineness, accuracy and completeness of all documents, records, certifications and other instruments we have examined, including, without limitation, the authenticity of all signatures appearing thereon. We also have relied, in the opinion set forth below, upon the opinion of the Solicitor of the School District as to all matters of fact and law set forth therein.
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To the Purchasers of the Within-Described Bonds May 21, 2019 Page 2
Except with respect to paragraph 6 below, our opinion is given only with respect to the internal laws of the Commonwealth as enacted and construed on the date hereof.
Based on the foregoing, we are of the opinion that:
1. The School District is authorized under the provisions of the Constitution and the laws of the Commonwealth to issue the Bonds for the purposes therein set forth; the School District has properly authorized the issuance thereof; and the Department has duly approved such issuance.
2. The School District has established one or more sinking funds for the Bonds (collectively, the “Sinking Fund”) with Manufacturers and Traders Trust Company, as paying agent, registrar and sinking fund depository (the “Paying Agent”), and has covenanted in the Resolution to deposit in the Sinking Fund amounts sufficient to pay the principal of and interest on the Bonds as the same becomes due and payable and to apply the amounts so deposited to the payment of such principal and interest.
3. The School District has effectively covenanted: (i) to include the amount of debt service on the Bonds in each fiscal year of the School District in which such sums are due and payable in its budget for that fiscal year; (ii) to appropriate such amounts from its general revenues for the payment of such debt service; and (iii) to duly and punctually pay, or cause to be paid, from the Sinking Fund or any other of its general revenues or funds, the principal or redemption price of and interest on the Bonds on the dates and in the places and in the manner stated in the Bonds according to the true intent and meaning thereof. For such budgeting, appropriation and payment the School District has pledged, with respect to the Bonds, its full faith, credit and taxing power, within the limits established by law.
4. The Bonds have been duly authorized, executed, authenticated, issued and delivered, and are the legal, valid and binding general obligations of the School District, payable from the general revenues of the School District from whatever source derived, within the limits established by law, and are enforceable in accordance with the terms thereof, except to the extent that enforcement thereof may be affected by bankruptcy, insolvency, reorganization, moratorium or other similar laws or legal or equitable principles affecting the enforcement of creditors’ rights.
5. Under the laws of the Commonwealth as enacted and construed on the date hereof, interest on the Bonds is exempt from Pennsylvania personal income tax and Pennsylvania corporate net income tax, and the Bonds are exempt from personal property taxes in the Commonwealth; however, under the laws of the Commonwealth as enacted and construed on the date hereof, any profits, gains or income derived from the sale, exchange or other disposition of the Bonds will be subject to Commonwealth taxes and local taxes within the Commonwealth.
6. Under existing statutes, regulations, rulings and court decisions, interest on the Bonds will not be includible in gross income of the holders thereof for federal income tax purposes, assuming continuing compliance by the School District with the requirements of the
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To the Purchasers of the Within-Described Bonds May 21, 2019 Page 3
Code. Interest on the Bonds will not be a specific preference item for purposes of computing the federal alternative minimum tax on individuals.
In rendering this opinion, we have assumed compliance by the School District with the covenants contained in the Resolution and the representations in the Tax Compliance Certificate relating to actions to be taken by the School District after the issuance of the Bonds necessary to effect or maintain the exclusion from gross income of the interest on the Bonds for federal income tax purposes. These covenants and representations relate to, among other things, the use and investment of proceeds of the Bonds, and the rebate to the United States Department of Treasury of specified arbitrage earnings, if any. Failure to comply with such covenants could result in the interest on the Bonds becoming includible in gross income for federal income tax purposes from the date of issuance of the Bonds.
We express no opinion as to any matter not set forth in the numbered paragraphs herein. This opinion is given as of the date hereof and we assume no obligation to supplement this opinion to reflect changes in law that may hereafter occur or changes in facts or circumstances that may hereafter come to our attention. Without limiting the generality of the foregoing, we express no opinion with respect to and assume no responsibility for, the accuracy, adequacy or completeness of the preliminary official statement or the official statement prepared in respect of the Bonds, and make no representation that we have independently verified the contents thereof.
Very truly yours,
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APPENDIX C Audited Financial Report for June 30, 2018
[ THIS PAGE INTENTIONALLY LEFT BLANK ] REPORT ON UPPER PERKIOMEN SCHOOL DISTRICT SINGLE AUDIT REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018
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Single Audit Report
For the Fiscal Year Ended June 30, 2018
TABLE OF CONTENTS
Page (s)
Introductory Section Transmittal Letter ...... 1
Letter to Governance/Management ...... 2 - 8
Report Distribution List ...... 9
Financial Section Independent Auditor's Report ...... 10 - 12
Management's Discussion and Analysis ...... 13 - 22
Basic Financial Statements District-wide Financial Statements:
Statement of Net Position ...... 23
Statement of Activities ...... 24
Fund Financial Statements:
Balance Sheet - Governmental Funds ...... 25
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ...... 26
Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds ...... 27
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities ...... 28 - 29
Statement of Fund Net Position - Proprietary Funds ...... 30
Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds...... 31
Statements of Cash Flows - Proprietary Funds ...... 32 - 33
Statement of Net Position - Fiduciary Funds ...... 34
Statement of Changes in Net Position - Fiduciary Funds...... 35
-i- UPPER PERKIOMEN SCHOOL DISTRICT
Single Audit Report
For the Fiscal Year Ended June 30, 2018
TABLE OF CONTENTS (continued)
Page (s) Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund ...... 36
Notes to Basic Financial Statements ...... 37 - 84
Required Supplementary Information
Schedule of District’s Proportionate Share of Net Pension Liability ...... 85
Schedule of District Contributions - Pensions ...... 86
Schedule of District’s Proportionate Share of Multiple Employer Net OPEB Liability ...... 87
Schedule of District’s Contributions – Multiple Employer OPEB Plan ...... 88
Schedule of District’s Proportionate Share of Single Employer Net OPEB Liability ...... 89
Notes to Required Supplemental Information ...... 90 - 92
Supplemental Information:
Combining Balance Sheet - All Capital Projects Fund ...... 93
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - All Capital Project Funds ...... 94
Combining Statement of Fiduciary Net Position - Private Purpose Trust Funds ...... 95
Combining Statement of Changes in Fiduciary Net Position - Private Purpose Trust Funds ...... 95
General Fund - Schedule on Tax Collectors' Receipts ...... 96
General Fund - Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget vs Actual ...... 97 - 100
Food Service Fund - Statement of Revenues, Expenses, and Changes In Fund Net Position ...... 101
Food Service Fund - Statement of Fund Net Position ...... 102
Capital Reserve Fund - Statement of Revenues and Expenditures ...... 103
Capital Projects Fund - Statement of Revenues and Expenditures ...... 104
-ii- UPPER PERKIOMEN SCHOOL DISTRICT
Single Audit Report
For the Fiscal Year Ended June 30, 2018
TABLE OF CONTENTS (continued)
Page (s) General Long-Term Debt:
Schedule on General Obligation Bonds – Series of 2013 ...... 105
Schedule on General Obligation Bonds – Series of 2014 ...... 105
Schedule on General Obligation Bonds – Series of 2016 ...... 106
Schedule on General Obligation Bonds – Series A of 2016 ...... 106
Schedule on General Obligation Bonds – Series of 2017 ...... 107
Schedule on General Obligation Bonds – Series of 2018 ...... 108
Single Audit Section Schedule of Expenditures of Federal Awards ...... 109
Notes to the Schedule of Expenditures of Federal Awards ...... 110 - 111
Independent Auditor’s Report Under Government Auditing Standards ...... 112 - 113
Independent Auditor’s Report Under Uniform Guidance ...... 114 - 115
Schedule of Findings and Questioned Costs ...... 116 - 117
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INTRODUCTORY SECTION
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Board of School Directors Upper Perkiomen School District 2229 East Buck Road, Suite 2 Pennsburg, PA 18073
We have performed the Single Audit of the Upper Perkiomen School District for the fiscal year ended June 30, 2018, and have enclosed the Single Audit reporting package.
The Single Audit was done to fulfill the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, which entailed:
1. An audit of the basic financial statements, and our opinion thereon;
2. A review of compliance and of internal control over financial reporting based on an audit of the financial statements performed in accordance with Governmental Auditing Standards, and our report thereon;
3. An examination of the Schedule of Expenditures of Federal Awards and our report thereon; and,
4. An opinion on compliance with requirements applicable to each major program, and a review of internal control over compliance in accordance with the Uniformed Guidance, explained above, and our report thereon.
As part of our report, we have enclosed our management letter.
Respectfully submitted,
November 16, 2018
-1-
Board of School Directors Dr. Alexis McGloin, Superintendent Upper Perkiomen School District 2229 East Buck Road, Suite 2 Pennsburg, PA 18073
We have audited the financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the Upper Perkiomen School District for the year ended June 30, 2018, and have issued our report thereon dated November 16, 2018.
As stated in our engagement letter, our responsibility, as described by professional standards, is to express opinions about whether your financial statements are fairly presented, in all material respects, in conformity with the U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities, including having compensating controls in place to ensure our preparation of your financial statements and note disclosures are not materially misstated.
We performed the audit according to the planned scope and timing previously communicated to you in our meeting about planning matter on July 3, 2018.
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Upper Perkiomen School District are described in the notes to the financial statements. No new accounting policies were adopted during this past year and the existing policies were properly applied. We did not discover any transactions entered into by the District that lacked authoritative guidance or consensus. In addition, there are no significant transactions affecting the financial statements that have been recognized incorrectly in the wrong year.
Accounting estimates, which are part of the significant accounting policies, are an integral part of the financial statements and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events may differ significantly from those expected. The most sensitive estimates affecting the financial statements were depreciation taken on capital assets based upon the estimated useful life of each asset and calculated on the straight-line basis of depreciation and the Actuary Reports on Other Post- Employment Benefits, and Net Pension Liability. We have evaluated the factors and assumptions used to develop these estimates and have determined these estimates to be reasonable in relation to the financial statements taken as a whole.
We wish to inform you that the disclosures in your financial statements are neutral, consistent, and clear. From time to time, certain disclosures are more sensitive than others due to their significance to financial statement users. The most sensitive disclosures involve capital assets and long-term debt.
We have requested certain representations from management that are included in the management representation letter provided to us on November 16, 2018. We advise the governing body to request this letter from management for their review. In conjunction with their representations, we wish to inform you we did not encounter any significant difficulties in dealing with management and had no disagreements with your management. To our knowledge, management did not find a need to converse with any other independent accountant on any related accounting or auditing issue.
-2- Board of School Directors Dr. Alexis McGloin, 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 2017-18 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. Alexis McGloin, 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 - Trial Balance
During our initial review of the District’s general fund pre-audit trial balance, we discovered the District’s trial balance was out of balance by $551,916.12. After further investigation with management, we discovered management did not properly finalize the 2016-17 closeout in the accounting system by not rolling forward the expenditure and revenue control accounts into fund balance. The pre-audit trial balance captured both the current and prior year’s expenditure and revenue summary accounts for double entry accounting purposes. That amount was $397,457.44.
Additionally, in the prior year, we discovered the District’s general fund trial balance was out of balance by $154,351.38 and this was the result of a glitch in the computer system. Subsequent to your prior year audit, management contacted the software provider to address and correct the issue going forward. However, during the current year we discovered the system was now out of balance by the identical amount as stated above on the pre-audit trial balance. After a significant amount of time we were able to determine not only was the issue corrected by management, but unbeknownst to management it was also corrected by the software company behind the scenes. The end result was having the software company once again correct the opening pre-audit trial balance by a one-sided adjusting entry.
Lastly, in reviewing the pre-audit trial balance we noticed the beginning accounts payable balance did not match the prior year audited financial statements by $107.30. This was a result of management posting an entry into the accounting software subsequent to adjusting the accounting records from our suggested journal entries.
In the future we advise management to make certain both the revenue and expenditure control accounts are journalized to fund balance at year end prior to year-end close in the accounting system. We also advise management to review their post audit trial balance in the accounting system to the audited financial statements in order to verify the accounting system agrees at year end.
Trial Balance – Other Funds
In addition to the General Fund pre-audit trial balance being out of balance, the Capital Reserve Fund was out of balance by $3,867,805.82, the Capital Projects Fund was out of balance by $6,066,491.25, and the Food Service Fund was out of balance by $61,245.49. After further investigation with management, we discovered management did not properly finalize the 2016-17 closeout in the accounting system by not rolling forward the expenditure and revenue control accounts into fund balance for each fund. The pre- audit trial balances captured both the current and prior year’s expenditure and revenue summary accounts for double entry accounting purposes.
In the future we advise management to make certain both the revenue and expenditure control accounts are journalized to fund balance at year end prior to year-end close in the accounting system for each fund.
-4- Board of School Directors Dr. Alexis McGloin, Superintendent
Food Service Fund – Inventory
When receiving the opening trial balance and reviewing the general ledger inventory accounts, we discovered the inventory accounts to have a negative pre audit balance. After further investigation we determined the amounts being recorded to the expense accounts do not always tie to what is being recorded in the inventory accounts. This is a result of when the District purchases food and supplies they record it directly to their inventory accounts. Management then expenses the goods via journal entry as they are used/consumed. Because of the inaccuracies between moving purchases out of the inventory accounts to expense accounts during the fiscal year, the expense accounts ended up being overstated at year end.
We recommend management record purchases of food and supplies directly to the expense accounts as incurred and perform a periodic inventory adjustment on a monthly basis in order to eliminate any overstatement or understatement of inventory and expenses during the fiscal year.
Food Service Fund - Invoice Approval
During our review over the food service fund’s significant item checks, we noticed some of the invoices were not approved by management.
We recommend that the food service director and/or the business manager oversee and approve each invoice for every check throughout the fiscal year by either initialing or signing their name.
Taxes and Taxes Receivable
During our review of the current year’s various tax revenue and taxes receivable accounts, we had to make numerous adjustments to correct the general ledger year end balances. A majority of the adjustments we suggested were due to the fact management did not back out the proper receivables against the correct revenue accounts or backed out amounts from the receivable account that were not in the receivable account to begin with.
We advise management to thoroughly review the beginning post audit taxes receivable balance to ensure proper removal of receipts during the following fiscal year. We also advise management to prepare an annual reconciliation of the ending receivable balance to make certain the amounts recorded in the receivable balance are true and accurate at year end.
Additionally, we recommend management prepare a monthly reconciliation of their various tax revenue accounts to verify the amounts being recorded in the general ledger accounts are correct throughout the fiscal year.
Accounts Payable
During our testing of accounts payable at year end, we had to make several adjustments to reconcile the balance reflected in the computer system. These adjustments included amounts set up as accounts payable that were actually 2018-19 expenditures and additions to accounts payable that were not set up as such. In addition, money owed to other governments were included in accounts payable, instead of being segregated to the intergovernmental payable account.
We suggest management reconcile these accounts to the correct balances at year end prior to our arrival for the audit.
-5- Board of School Directors Dr. Alexis McGloin, Superintendent
Federal Grants
While testing federal grants, we had to make several adjustments to the Title funds at year end. For Title I and Title IV, we had to adjust revenues to match what the District reported as expenditures for each grant. For Title III, we had to reclassify the revenue to the proper revenue function, 6831, since the District’s Title III funding was received from the I.U. as pass-through and not the Pennsylvania Department of Education (PDE). The District also received Federal ARRA – Race to the Top funding during the year, however, management recorded the expenditures in the accounting system using a state source code 390 by error. Federal ARRA – Race to the Top expenditures must be clearly identified and as such recorded to source code 998 per the PA Chart of Accounts.
We wish to remind management once the District is satisfied they have correctly recorded grant expenditures for the fiscal year, revenues should be adjusted to offset what was expended for each grant. This is necessary for all expenditure-driven grants.
Contributions and Donations
During our testing of the Capital Reserve fund, an amount of $800 was discovered in the 6920 (Contributions & Donations) account in the general ledger. This was a result of a donation from the Upper Perkiomen Basketball Booster Club for the new scoreboard. As per the PA School Code, donations are not allowable in the capital reserve fund.
We wish to remind management all donations should be deposited and recorded in the general fund’s general ledger, and then transferred, only after Board approval.
RECOMMENDATIONS
Outstanding Checks – General Univest Checking & QNB Athletic Checking
During our testing of these bank accounts, we discovered outstanding checks going back to 2015 and earlier. We wish to advise the District that these outstanding checks should be submitted as Escheat Property to the Department of State in Harrisburg, PA.
Capital Reserve Fund - Interfund Payables and Interfund Receivables/Board Transfer
During our testing of the Capital Reserve Fund, we discovered an interfund receivable account of money owed from the General Fund that has not been paid to date to the Capital Reserve Fund. This receivable pertains to a board approved transfer of $209,820 in the June 2016 board meeting.
We suggest management cut a check from the General Fund to the Capital Reserve Fund to clear the respective interfund payable and receivable in each fund.
Activity/Scholarship Funds – Pooled Cash
The District has acted upon our previous recommendation to start maintaining separate checking accounts for the Activity and Scholarship funds, however, there is still a separate savings account that has some pooled cash leftover between the two funds.
We wish to make the District aware of this fact so they can determine the amount that is attributable to each fund and payout as necessary.
-6- Board of School Directors Dr. Alexis McGloin, Superintendent
Journal Entries – All Funds
Journal entries are necessary to correct human errors in recording transactions to wrong accounts in the general ledger and to record year-end receivables or payables. During our review of 2017-18 journal entries among various funds, we were unable to determine the meaning or purpose of making these journal entries as a result of not having any proper supporting documentation. It is a fundamental aspect of accounting when adjusting records to have proper documentation and supporting explanations as to the reason for the adjustment. Without this information, the audit trail is destroyed.
We recommend management ensure all journal entries have supporting documentation and explanation in the future. In fact, we recommend management number all journal entries so they can be correlated to the accounts in the computerized general ledger.
Payroll – Accrued Salaries & Benefits
During our testing of payroll and related benefits, we discovered the balance reflected at year end for accrued salaries & benefits was not correct and required adjustments by us to record the correct balance. We suggest management reconcile these accounts to the correct balance at year end prior to our arrival for the audit.
Activity & Scholarship Account Balances
There is currently a discrepancy between our audited balances and the District’s balances between both the Activity and Scholarship fund’s account balances.
We recommend the District correct their balances to match the audited balances and adjust their bank balances accordingly. This would also correct the issue with the Pooled cash.
OTHER INFORMATION
Activity Funds
GASB Statement No. 84 on Fiduciary Activities becomes effective for the 2019-20 fiscal year. Since this date is a few years away, you might wonder why we are bringing it to your attention now. The reason is to provide the District ample time to change their recordkeeping on Student Clubs. When this Statement goes into effect, the Student Clubs will be considered Custodial Funds and there will be two financial statements: Statement of Net Position and Statement of Changes in Net Position. To make this easier think of a balance sheet and income statement.
Currently, most Districts report their disbursements as Deletions by School without breaking the disbursements into categories similar to the Food Service Fund. Receipts are reported as Additions without breaking out the categories of receipts. This new Statement will require management to separate receipts into revenue categories and disbursements into expense categories.
We wanted to give our clients ample time to revise their recordkeeping and computer systems to accommodate these changes.
Leases
The Governmental Accounting Standards Board has issued Statement No. 87 dealing with Operating and Financing Leases. Under current accounting principles, only Financing Leases are recorded on the financial statements as assets and liabilities. Operating leases are shown as rent expense. As such, we have only been interested in capital or financing leases in past years, but the new standard below will require the need to audit all leases.
-7- Board of School Directors Dr. Alexis McGloin, Superintendent
The new standard defines a lease as a contract that conveys control of the right to use another entity’s non-financial asset as specified in the contract for a period of time. As such, all leases will be recorded on the financial statements as either a tangible or intangible asset with a corresponding liability for future present value of lease payments.
The effective date of this new standard occurs in the 2020-21 fiscal year.
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,
November 16, 2018
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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 THE BUREAU OF AUDITS
ONE COPY TO: MONTGOMERY COUNTY INTERMEDIATE UNIT 1605 - B WEST MAIN ST. NORRISTOWN, PA 19403-3290
ONE COPY TO: NORTHWEST TRI-COUNTY INTERMEDIATE UNIT 5 ATTENTION: KAREN REGAN 252 WATERFORD STREET EDINBORO, PA 16412
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FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT
Board of School Directors Upper Perkiomen School District 2229 East Buck Road, Suite 2 Pennsburg, PA 18073
Report on the Financial Statements
We have audited the accompanying financial statements 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 and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to error or fraud.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
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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, 2018, 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-G to the financial statements, effective July 1, 2017, the Upper Perkiomen School District adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 75, Financial Reporting for Postemployment Benefits by Employers, Governmental Accounting Standards Board Statement No. 81, Irrevocable Split-Interest Agreements, Governmental Accounting Standards Board Statement No. 85, Omnibus, Governmental Accounting Standards Board Statement No. 86, Certain Debt Extinguishment Issues and Implementation Guide 2017-1.
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 13-22, the Schedule of the District’s Proportionate Share of Net Pension Liability, the Schedule of the District’s Contributions-Pensions, and the related statements on Multiple and Single Employer OPEB Plans, on pages 85-89, 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 Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for federal awards, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
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Upper Perkiomen School District
The combining and individual fund financial statements, schedules, and the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for 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 America. In our opinion, the combining and individual fund financial statements, schedules, and the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for 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 16, 2018, 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 16, 2018
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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, 2018
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, 2018. 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 outflows of resources, liabilities, deferred inflows 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 2018 are as follows:
Overall:
* Total net position increased $1,478,625. Net Position of governmental activities increased $1,596,516 and net position of business-type activities decreased $117,891.
* Total revenues of $61,291,605 were comprised of governmental activities revenue in the amount of $59,845,872 and business-type activities revenue in the amount of $1,445,733.
* Total program expenses were $59,812,980, $58,249,356 in governmental activities and $1,563,624 in business-type activities.
In governmental funds, total fund balance increased $28,716,537. The General Fund balance increased $645,396. The Capital Projects Fund balance increased $28,071,141, and the Non-Major governmental funds reported no change. The increase in the Capital Projects was due to planned bond issuance for our new middle school construction project.
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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 outflows of resources, liabilities, and deferred inflows 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 outflows of resources, liabilities, and deferred inflows 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 for the last 2 years, after taking into consideration a change in accounting principles in the 2014-15 fiscal year, associated with GASB Statement No. 68, which requires the District to record its proportionate share ($92,495,702) of the Net Pension Liability from the cost-sharing Pennsylvania School Employees Retirement System.
Table A-1 Fiscal Year ended June 30 Net Position
2018 2017 Governmental Business-type Governmental Business-type Activities Activities TOTAL Activities Activities TOTAL Current assets $ 66,338,134 $ 497,191 $ 66,835,325 $ 38,917,758 $ 493,665 $ 39,411,423 Non-Current assets 71,716,393 124,810 71,841,203 57,221,332 139,000 57,360,332 Deferred Outflow of Resources 16,676,007 344,950 17,020,957 16,062,066 350,746 16,412,812 Total Assets & Deferred Outflow of Resources $ 154,730,534 $ 966,951 $ 155,697,485 $ 112,201,156 $ 983,411 $ 113,184,567 ------Current and other liabilities 14,723,011 145,912 14,868,923 12,096,828 141,536 12,238,364 Long-term liabilities 163,819,851 2,108,207 165,928,058 119,683,420 1,938,168 121,621,588 Deferred Inflow of Resources 117,149 2,414 119,563 994,385 21,711 1,016,096 Total Liabilities & Deferred Inflow of Resources 178,660,011 2,256,533 180,916,544 132,774,633 2,101,415 134,876,048
Net Position Net Investment in Capital Assets 32,971,127 124,811 33,095,938 27,188,083 139,000 27,327,083 Restricted: Capital Projects 8,880,246 - 8,880,246 5,991,209 - 5,991,209 Unrestricted (65,780,850) (1,444,393) (67,225,243) (53,752,769) (1,257,004) (55,009,773) Total Net Position $ (23,929,477) $ (1,319,582) $ (25,249,059) $ (20,573,477) $ (1,118,004) $ (21,691,481)
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, 2018 and June 30, 2017.
Table A-2 Fiscal Year ended June 30 Changes in Net Position
2018 2017 Governmental Business-type Governmental Business-type Activities Activities TOTAL Activities Activities TOTAL REVENUES Program revenues: Charges for services $ 148,873 $ 653,238 $ 802,111 $ 154,951 $ 766,036 $ 920,987 Operating grants and contributions 9,533,497 759,671 10,293,168 9,438,714 781,608 10,220,322 Capital grants and contributions 512,819 - 512,819 1,263,083 - 1,263,083 General revenues: Property taxes 34,788,849 - 34,788,849 33,506,458 - 33,506,458 Other taxes 4,134,788 - 4,134,788 4,031,505 - 4,031,505 Grants, subsidies and contributions, unrestricted 9,920,181 - 9,920,181 9,807,249 - 9,807,249 Other 806,865 32,824 839,689 324,310 30,967 355,277 TOTAL REVENUES 59,845,872 1,445,733 61,291,605 58,526,270 1,578,611 60,104,881 ------
EXPENSES Instruction 37,015,151 - 37,015,151 36,572,913 - 36,572,913 Instructional student support 4,098,208 - 4,098,208 3,806,668 - 3,806,668 Administrative and financial support 6,315,662 - 6,315,662 6,009,593 - 6,009,593 Operation and maintenance of plant 3,990,853 - 3,990,853 3,869,848 - 3,869,848 Pupil transportation 2,880,087 - 2,880,087 2,759,324 - 2,759,324 Student activities 1,012,684 - 1,012,684 988,583 - 988,583 Community services ------Interest on long-term debt 1,332,591 - 1,332,591 736,735 - 736,735 Unallocated depreciation expense 1,604,120 - 1,604,120 1,551,691 - 1,551,691 Food Services - 1,563,624 1,563,624 - 1,639,857 1,639,857 TOTAL EXPENSES 58,249,356 1,563,624 59,812,980 56,295,355 1,639,857 57,935,212 - - Increase (decrease) in net position $ 1,596,516 $ (117,891) $ 1,478,625 $ 2,230,915 $ (61,246) $ 2,169,669
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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
2018 2017 Total Cost of Net Cost of Total Cost of Net Cost of Functions/Programs Services Services Services Services Instruction $ 37,015,151 $ 30,274,171 $ 36,572,913 $ 29,910,242 Instructional student support 4,098,208 3,600,659 3,806,668 3,345,056 Administrative 6,315,662 5,786,528 6,009,593 5,556,029 Operation and maintenance 3,990,853 3,751,493 3,869,848 3,645,522 Pupil transportation 2,880,087 1,389,306 2,759,324 1,125,561 Student activities 1,012,684 828,118 988,583 830,854 Community services - - - - Interest on long-term debt 1,332,591 819,772 736,735 (526,348) Unallocated depreciation expense 1,604,120 1,604,120 1,551,691 1,551,691 Total governmental activities 58,249,356 48,054,167 56,295,355 45,438,607 Less: Unrestricted grants, subsidies 9,920,181 9,807,249 Total needs from local taxes and other revenues $ 38,133,986 $ 35,631,358
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 2018 2017 2018 2017 Food Services $ 1,563,624 $ 1,639,857 $ 150,715 $ 92,213 Less: - - Investment earnings and other 32,824 30,967 Total business-type activities $ (117,891) $ (61,246)
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, 2018, the District governmental funds reported a combined fund balance of $55,939,562 which is an increase of $28,716,537. The major changes are:
General Fund Budgetary Highlights
The General Fund’s fund balance increased by $645,396. The actual expenditures were $848,163 or 1.49% under budget and the revenues were $1,667,678 or 2.88% over budget.
The special programs, pupil services, instructional staff development, business services, operation and maintenance of plant services, student transportation services, central support services, and student activities were lower than expected, with student transportation and central support services being significantly lower than expected.
The local tax revenue provides approximately 65.33% of the District’s total revenues. These revenues include the real estate, interim real estate, per capita, earned income, delinquent real estate, delinquent per capita, and real estate transfer taxes. This year the real estate, earned income, real estate transfer, delinquent real estate, and per capita taxes collected were higher than anticipated due to the economy and a slight recovery in the market. This year also included increased revenue due to the Safe Schools Grant, retirement revenue, and additional interest.
Capital Fund
The district has maintained a Capital Fund for unexpected and proposed capital projects each year. The capital fund increased by $28,071,141. The total net expenditures from this fund for year ending 2018 were $12,509,122. The major expenses for the year involved our middle school construction project
General Fund
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.
CAPITAL ASSET AND DEBT ADMINISTRATION
CAPITAL ASSETS
At June 30, 2018, the District had $62,805,980 invested in a broad range of capital assets, including land, buildings, furniture, and equipment. This amount represents a net increase (including additions, deletions and depreciation) of $10,425,526 or 19.90% from last year.
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion And Analysis
Table A-5 Governmental and Business-Type Activities Capital assets - net of depreciation
2018 2017 Land & Land Improvements $ 3,879,434 $ 3,989,762 Buildings 42,383,016 43,805,214 Furniture, Equipment, & Vehicles 1,443,594 1,309,452 Construction In Progress 15,099,936 3,276,026
DEBT ADMINISTRATION As of July 1, 2017, the District had total outstanding bond principal of $32,165,000. During the year, the District made payments against principal of $1,810,000 and borrowed an additional $36,390,000 towards construction of a new Middle School. The ending outstanding debt as of June 30, 2018, is $66,745,000.
Table A-6 Outstanding Debt
2018 2017 General Obligation Bonds: - Series of 2013 $ 6,745,000 $ 7,265,000 - Series of 2014 7,595,000 8,120,000 - Series of 2016 6,650,000 7,165,000 - Series A of 2016 9,365,000 9,615,000 - Series of 2017 9,870,000 - - Series of 2018 26,520,000 -
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 3300 students and four schools, the Upper Perkiomen School District tends to reflect the community which operates in a 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 2018-2019 year increased $2,031,949 which represents a 3.51% increase in budgeted revenues. The expenditures budgeted for the 2018-2019 year increased $1,710,195 which represents a 2.86% increase in budgeted expenditures. The district’s calculated real estate assessment increased 1.85%. The tax rate increased 0.79% and the taxes increased 2.00% for Montgomery and Berks County. The tax increase along with planned use of a portion of the fund balance supported the budget increase.
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UPPER PERKIOMEN SCHOOL DISTRICT Management’s Discussion And Analysis
Salaries and benefits for staff, increased $641,260. There was a small decrease in total salaries and significant increases in retirement costs due to the employer retirement rate increasing from 32.57% to 33.43%, and a 14.39% increase in healthcare costs, respectively.
Table A-7 BUDGETED REVENUES
2018-2019 2017-2018 Local 67.8% 67.2% State 31.5% 32.0% Federal/Other 0.7% 0.8%
BUDGETED EXPENDITURES
2018-2019 2017-2018 Instruction 62.2% 63.4% Support Services 28.9% 28.9% Non-Instruction/Community 1.8% 1.7% Fund Transfers/Debt 7.1% 6.0%
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, 2018
PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES TOTAL ASSETS Current Assets: Cash and cash equivalents $ 28,996,133 $ 320,002 $ 29,316,135 Investments 32,379,365 - 32,379,365 Receivables, net 1,671,025 - 1,671,025 Internal Balances 112,649 118,240 - (1) Due From Other Governments 2,286,507 19,422 2,305,929 Other Receivables 828,528 377 828,905 Inventories 59,250 9,150 68,400 Prepaid Expenses 4,677 - 4,677 Other Current Assets - - - Total Current Assets 66,338,134 467,191 66,574,436 ------Non-Current Assets: Restricted Cash 3,471,610 3,471,610 Long-Term Receivable 5,563,613 - 5,563,613 Land 1,954,546 - 1,954,546 Site Improvements (net of depreciation) 1,924,888 - 1,924,888 Building and Bldg. Improvements (net of depreciation) 42,383,016 - 42,383,016 Furniture and Equipment (net of depreciation) 1,318,784 124,810 1,443,594 Construction in Progress 15,099,936 - 15,099,936 Total Non-Current Assets 71,716,393 124,810 71,841,203 TOTAL ASSETS $ 138,054,527 $ 592,001 $ 138,415,639 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows of Resources - Change in Proportion to NPL 3,449,968 79,032 3,529,000 Deferred Outflows of Resources - Current Year Contributions 8,003,775 165,725 8,169,500 Deferred Outflows of Resources - Change in Assumptions 2,394,571 47,548 2,442,119 Deferred Outflows of Resources - Diff. in Projected vs Actual Contributions - - - Deferred Outflows of Resources - Diff. in Projected vs Actual Invest. Earnings 2,116,525 42,475 2,159,000 Deferred Outflows of Resources - Diff. between Expected vs Actual Experience 397,830 10,170 408,000 Deferred Outflows of Resources - Diff. btwn. Prop. Share vs Actual Pd.-POS 4,797 - 4,797 Deferred Charges on Bond Refundings, net 308,541 - 308,541 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 154,730,534 $ 936,951 $ 155,436,596
LIABILITIES Current Liabilities: Internal Balances $ 118,240 $ 112,649 $ - (1) Due to other governments 227,990 - 227,990 Accounts Payable 5,062,582 1,932 5,064,514 Current Portion of Long-Term Obligations 2,300,978 - 2,300,978 Accrued Salaries and Benefits 5,821,561 - 5,821,561 Payroll Deductions and Withholdings 932,316 - 932,316 Prepayments 1,356 - 1,356 Other Current Liabilities 257,988 31,331 289,319 Total Current Liabilities 14,723,011 145,912 14,638,034
Non-Current Liabilities: Bonds and Notes Payable 66,026,410 - 66,026,410 Lease Purchase Obligations - - - Long-Term Portion of Compensated Absences 1,306,940 17,894 1,324,834 Net Pension Liability 90,492,644 2,003,058 92,495,702 Net OPEB Liability - Single Employer Plan 2,233,878 - 2,233,878 Net OPEB Liability - Multiple Employer Plan 3,759,979 87,255 3,847,234 Other Long-Term Liabilities - - - TOTAL LIABILITIES 178,542,862 2,254,119 180,566,092 DEFERRED INFLOWS OF RESOURCES Deferred Inflows of Resources - Change in Proportion to NPL - - - Deferred Inflows of Resources - Current Year Contributions - - Deferred Inflows of Resources - Change in Assumptions - - - Deferred Inflows of Resources - Diff. in Projected vs Actual Contributions 114,144 2,414 116,558 Deferred Inflows of Resources - Diff. in Projected vs Actual Invest. Earnings - - - Deferred Inflows of Resources - Diff. between Expected vs Actual Experience - - - Deferred Inflows of Resources - Diff. btwn. Proportionate Share vs Actual Pd-POS - - - Unearned Revenue 3,005 - 3,005 TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 178,660,011 2,256,533 180,685,655 NET POSITION Net Investment in Capital Assets 32,971,127 124,811 33,095,938 Restricted For: Retirement of Long-Term Debt - - - Capital Projects 8,880,246 - 8,880,246 Other Restrictions - - - Unrestricted (deficit) (65,780,850) (1,444,393) (67,225,243) TOTAL NET POSITION (23,929,477) (1,319,582) (25,249,059) TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET $ 154,730,534 $ 936,951 $ 155,436,596 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, 2018
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 $ 37,015,151 $ 1,590 $ 6,739,390 $ - $ (30,274,171) $ - $ (30,274,171) Instructional Student Support 4,098,208 - 497,549 - (3,600,659) - (3,600,659) Admin. & Fin'l Support Services 6,315,662 - 529,134 - (5,786,528) - (5,786,528) Oper. & Maint. of Plant Svcs. 3,990,853 - 239,360 - (3,751,493) - (3,751,493) Pupil Transportation 2,880,087 44,005 1,446,776 - (1,389,306) - (1,389,306) Student activities 1,012,684 103,278 81,288 - (828,118) - (828,118) Community Services ------Scholarship & Awards ------Interest on Long-Term Debt 1,332,591 - - 512,819 (819,772) - (819,772) Unallocated Depreciation Expense 1,604,120 - - - (1,604,120) - (1,604,120) TOTAL GOVERNMENTAL ACTIVITIES 58,249,356 148,873 9,533,497 512,819 (48,054,167) - (48,054,167)
BUSINESS-TYPE ACTIVITIES: Food Services 1,563,624 653,238 759,671 - - (150,715) (150,715) Other Enterprise Funds ------
TOTAL PRIMARY GOVERNMENT $ 59,812,980 $ 802,111 $ 10,293,168 $ 512,819 $ (48,054,167) $ (150,715) $ (48,204,882)
GENERAL REVENUES: Property taxes. Levied for general purposes, net $ 34,788,849 $ - $ 34,788,849 Taxes levied for specific purposes 4,134,788 - 4,134,788 Grants, subsidies, & contributions not restricted 9,920,181 - 9,920,181 Investment Earnings 670,041 2,372 672,413 Miscellaneous Income 141,475 30,452 171,927 Special item - Gain or (Loss) on sale of capital assets (4,651) - (4,651) Extraordinary Items - Insurance Recoveries - - - Transfers - - - TOTAL GENERAL REVENUES, SPECIAL ITEMS, EXTRAORDINARY ITEMS, AND TRANSFERS 49,650,683 32,824 49,683,507
CHANGES IN NET POSITION 1,596,516 (117,891) 1,478,625
NET POSITION - BEGINNING (20,573,477) (1,118,004) (21,691,481)
Prior Period Adjustment (4,952,516) (83,687) (5,036,203)
NET POSITION - ENDING $ (23,929,477) $ (1,319,582) $ (25,249,059)
The Accompanying Notes are an integral part of these financial statements.
-24-
Upper Perkiomen School District Balance Sheet Governmental Funds As of June 30, 2018 NON-MAJOR TOTAL CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL PROJECTS FUNDS FUNDS ASSETS Cash and cash equivalents $ 14,209,433 $ 14,786,700 $ - $ 28,996,133 Restricted Cash - 3,471,610 - 3,471,610 Investments 7,165,000 25,214,365 - 32,379,365 Taxes Receivable, net 1,671,025 - - 1,671,025 Due from other funds 129,048 255,746 - 384,794 Due from Other Governments 2,286,507 - - 2,286,507 Other Receivables 761,092 50,554 - 811,646 Prepaid Expenditures 4,677 - - 4,677 Other Current Assets - - - - TOTAL ASSETS $ 26,226,782 $ 43,778,975 $ - $ 70,005,757
DEFERRED OUTFLOWS OF RESOURCES Deferred Charges on Refundings, net - - - - TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 26,226,782 $ 43,778,975 $ - $ 70,005,757
LIABILITIES Due to Other Funds $ 373,985 $ 15,180 $ - $ 389,165 Due to Other Governments 227,990 - - 227,990 Accounts Payable 2,753,247 2,309,336 - 5,062,583 Current Portion of Long-Term Debt 170,978 - - 170,978 Accrued Salaries and Benefits 5,821,561 - - 5,821,561 Payroll Deductions and Withholdings 932,316 - - 932,316 Prepayments 1,391 - - 1,391 Other Current Liabilities - - - - TOTAL LIABILITIES 10,281,468 2,324,516 - 12,605,984
DEFERRED INFLOWS OF RESOURCES Unearned / Unavailable Revenue 1,460,211 - - 1,460,211 TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 11,741,679 2,324,516 - 14,066,195 FUND BALANCES: Nonspendable Fund Balance 4,677 - - 4,677 Restricted Fund Balance - 41,454,459 - 41,454,459 Committed Fund Balance 5,300,000 - - 5,300,000 Assigned Fund Balance 4,442,602 - - 4,442,602 Unassigned Fund Balance 4,737,824 - - 4,737,824 TOTAL FUND BALANCES 14,485,103 41,454,459 - 55,939,562 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 26,226,782 $ 43,778,975 $ - $ 70,005,757
The Accompanying Notes are an integral part of these financial statements.
-25-
Upper Perkiomen School District Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position As of June 30, 2018
TOTAL FUND BALANCES - GOVERNMENTAL FUNDS $ 55,939,562
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 $94,867,978 and the accumulated depreciation is $32,186,808. 62,681,170
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. 5,579,276
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. 1,457,206
This represents deferred outflows of resources resulting in deferred charges on refunding prior bond issues. 308,541 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. 59,250
This represents deferred outflows of resources, net of deferred inflows of resources pertaining to the Net Pension/OPEB Liability. 16,253,322
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 $ (68,156,410) Accrued interest on the bonds (257,953) Compensated absences (1,306,940) Net Pension Liability (90,492,644) Net OPEB Liability - Single Employer Plan (2,233,878) Net OPEB Liability - Multiple Employer Plan (3,759,979) (166,207,804)
TOTAL NET POSITION - GOVERNMENTAL ACTIVITIES $ (23,929,477)
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 in Fund Balances Governmental Funds For the Year Ended June 30, 2018
NON-MAJOR TOTAL CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL PROJECTS FUNDS FUNDS REVENUES Local Sources $ 40,160,964 $ 284,011 $ - $ 40,444,975 State Sources 18,987,000 - - 18,987,000 Federal Sources 412,519 - - 412,519 TOTAL REVENUES 59,560,483 284,011 - 59,844,494 ------
EXPENDITURES Instruction 35,563,234 - - 35,563,234 Support Services 16,310,509 566,855 - 16,877,364 Operation of Non-Instructional Services 991,069 - - 991,069 Capital Outlay 2,220 11,942,267 - 11,944,487 Debt Service 3,047,566 - - 3,047,566 TOTAL EXPENDITURES 55,914,598 12,509,122 - 68,423,720
EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 3,645,885 (12,225,111) - (8,579,226)
OTHER FINANCING SOURCES (USES) Bond Proceeds - 36,390,000 - 36,390,000 Refunding Bond Proceeds - - - - Proceeds from Extended Term Financing - - - - Bond Premium - 875,039 - 875,039 Bond Discount - - - - Interfund Transfers In - 3,031,213 - 3,031,213 Sale/Compensation for Fixed Assets 5,334 - - 5,334 Payment to bond refunding escrow agent - - - - Operating Transfers Out (3,031,213) - - (3,031,213) TOTAL OTHER FINANCING SOURCES (USES) (3,025,879) 40,296,252 - 37,270,373
SPECIAL/EXTRAORDINARY ITEMS Special Items - - - - Extraordinary Items - Insurance Recoveries 25,390 - - 25,390
NET CHANGE IN FUND BALANCES 645,396 28,071,141 - 28,716,537
FUND BALANCES - BEGINNING 13,839,707 13,383,318 - 27,223,025
FUND BALANCES - ENDING $ 14,485,103 $ 41,454,459 $ - $ 55,939,562
The Accompanying Notes are an integral part of these financial 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, 2018
NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS $ 28,716,537
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 $ 1,800,539 less - capital outlays 12,244,905 10,444,366
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. (4,651)
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 inflows of resources increased by this amount this year. (29,618) 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. 1,810,000
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. (170,029)
SUB-TOTAL IN CHANGES BETWEEN BASIS OF ACCOUNTING 40,766,605
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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, 2018
SUB-TOTAL IN CHANGES BETWEEN BASIS OF ACCOUNTING (CONT'D) $ 40,766,605
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. (95,025)
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. 611,158
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. (37,265,039)
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. 1,554
The difference between current year pension/OPEB expense reported on the governmental activities column of the government-wide financial statements, and the pension/OPEB contributions made this past year reported as expenditures in the governmental funds. (2,422,737)
CHANGES IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ 1,596,516
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, 2018
FOOD NON-MAJOR SERVICE FUNDS TOTAL ASSETS CURRENT ASSETS: Cash and cash equivalents $ 320,002 $ - $ 320,002 Investments - - - Due from other funds 118,240 - 118,240 Due From Other Governments 19,422 - 19,422 Other Receivables 377 - 377 Inventories 9,150 - 9,150 Prepaid expenses - - - Other Current Assets - - - TOTAL CURRENT ASSETS 467,191 - 467,191 ------NON-CURRENT ASSETS: Building & Bldg. Improvements (net) - - - Machinery & Equipment (net) 124,810 - 124,810 Other Long-Term Receivables - - - TOTAL NON-CURRENT ASSETS 124,810 - 124,810 TOTAL ASSETS $ 592,001 $ - $ 592,001 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows of Resources - Change in Proportion to NPL 79,032 - 79,032 Deferred Outflows of Resources - Current Year Contributions 165,725 - 165,725 Deferred Outflows of Resources - Change in Assumptions 47,548 47,548 Deferred Outflows of Resources - Diff. in Projected vs Actual Contributions - - Deferred Outflows of Resources - Diff. in Projected vs Actual Invest. Earnings 42,475 42,475 Deferred Outflows of Resources - Diff. in Expected vs Actual Experience 10,170 - 10,170 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 936,951 $ - $ 936,951
LIABILITIES CURRENT LIABILITIES: Due to Other Funds $ 112,649 $ - $ 112,649 Due to Other Governments - - - Accounts Payable 1,932 - 1,932 Current Portion of Long-Term Debt - - - Accrued Salaries and Benefits - - - Payroll Deductions and Withholdings - - - Prepayments from Students 31,331 - 31,331 TOTAL CURRENT LIABILITIES 145,912 - 145,912 ------NON-CURRENT LIABILITIES: Long-Term Portion of Compensated Absences 17,894 - 17,894 Net Pension Liability 2,003,058 - 2,003,058 Net OPEB Liability - Multiple Employer Plan 87,255 - 87,255 TOTAL NON-CURRENT LIABILITIES 2,108,207 - 2,108,207 TOTAL LIABILITIES 2,254,119 - 2,254,119
DEFERRED INFLOWS OF RESOURCES Deferred Inflows of Resources - Change in Proportion to NPL - - - Deferred Inflows of Resources - Change in Assumptions - - - Deferred Inflows of Resources - Diff. in Projected vs Actual Contributions 2,414 2,414 Deferred Inflows of Resources - Diff. in Projected vs Actual Invest. Earnings - - - Deferred Inflows of Resources - Diff. in Expected vs Actual Experience - - - TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 2,256,533 - 2,256,533 ------FUND NET POSITION Net Investment in Capital Assets 124,811 - 124,811 Restricted for Legal Purposes - - - Unrestricted (1,444,393) - (1,444,393) TOTAL FUND NET POSITION (1,319,582) - (1,319,582)
TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND $ 936,951 $ - $ 936,951 NET POSITION
The Accompanying Notes are an integral part of these financial statements.
-30-
Upper Perkiomen School District Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30, 2018
FOOD NON-MAJOR SERVICE FUNDS TOTAL OPERATING REVENUES: Food Service Revenue $ 653,238 $ - $ 653,238 Charges for Services - - - Other Operating Revenues 30,452 - 30,452 TOTAL OPERATING REVENUES 683,690 - 683,690 ------OPERATING EXPENSES: Salaries 509,804 - 509,804 Employee Benefits 334,048 - 334,048 Purchased Professional and Technical Services 3,262 - 3,262 Purchased Property Service 14,331 - 14,331 Other Purchased Services 7,988 - 7,988 Supplies 676,210 - 676,210 Depreciation 14,189 - 14,189 Dues and Fees 1,417 - 1,417 Claims and Judgments - - - Other Operating Expenses 2,375 - 2,375 TOTAL OPERATING EXPENSES 1,563,624 - 1,563,624 OPERATING INCOME (LOSS) (879,934) - (879,934) ------NON-OPERATING REVENUES (EXPENSES) Earnings on investments 2,372 - 2,372 Contributions and Donations - - - Gain/Loss on Sale of Fixed Assets - - - State Sources 136,064 - 136,064 Federal Sources 623,607 - 623,607 Claims and Judgments - - - Interest Expenses - - - TOTAL NON-OPERATING REVENUES (EXPENSES) 762,043 - 762,043
INCOME (LOSS) BEFORE CONTRIBUTIONS (117,891) - (117,891) Capital contributions - - - Transfers in (out) - - - CHANGES IN FUND NET POSITION (117,891) - (117,891)
FUND NET POSITION - BEGINNING (1,118,004) - (1,118,004)
Prior Period Adjustment (83,687) - (83,687)
FUND NET POSITION - ENDING $ (1,319,582) $ - $ (1,319,582)
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, 2018
FOOD NON-MAJOR SERVICE FUNDS TOTAL CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Users $ 755,831 $ - $ 755,831 Cash Received from Assessments made to Other Funds - - - Cash Received from Earnings on Investments - - - Cash Received from Other Operating Revenue 30,452 - 30,452 Cash Payments to Employees for Services (771,000) - (771,000) Cash Payments for Insurance Claims - - - Cash Payments to Suppliers for Goods and Services (595,549) - (595,549) Cash Payments to Other Operating Expenses (1,417) - (1,417) NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (581,683) - (581,683) ------
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Local Sources - - - State Sources 135,766 - 135,766 Federal Sources 520,117 - 520,117 Contributions - - - Interest Paid on Notes/Loans - - - Operating Transfers In (Out) - - - NET CASH PROVIDED BY (USED FOR) NON-CAPITAL FINANCING ACTIVITIES 655,883 - 655,883 ------
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 2,372 - 2,372 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 2,372 - 2,372
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 76,572 - 76,572
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 243,430 - 243,430
CASH AND CASH EQUIVALENTS - END OF YEAR $ 320,002 $ - $ 320,002
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85 Statement of Cash Flows Proprietary Funds As of June 30, 2018
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
FOOD NON-MAJOR SERVICE FUNDS TOTAL OPERATING INCOME (LOSS) $ (879,934) $ - (879,934) ------
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Depreciation and Net Amortization 14,189 - 14,189 Provision for Uncollectible Accounts - - - Donated Commodities Used 97,886 - 97,886
CHANGE IN ASSETS AND LIABILITIES: (Increase) Decrease in Accounts Receivable (243) - (243) (Increase) Decrease in Advances to Other Funds 102,836 - 102,836 (Increase) Decrease in Inventories 6,355 - 6,355 (Increase) Decrease in Prepaid Expenses - - - (Increase) Decrease in Other Current Assets - - - (Increase) Decrease in Deferred Outflows of Resources - Change in Proportion to NPL (64,420) - (64,420) (Increase) Decrease in Deferred Outflows of Resources - Current Year Contributions (3,950) - (3,950) (Increase) Decrease in Deferred Outflows of Resources - Change in Assumptions 20,097 - 20,097 (Increase) Decrease in Deferred Outflows of Resources - Diff. in Projected vs Actual Contributions - - - (Increase) Decrease in Deferred Outflows of Resources - Diff. in Projected vs Actual Invest. Earnings 64,240 - 64,240 (Increase) Decrease in Deferred Outflows of Resources - Diff. in Expected vs Actual Experience (10,170) - (10,170) Increase (Decrease) in Accounts Payable 889 - 889 Increase (Decrease) in Accrued Salaries and Benefits 1,019 - 1,019 Increase (Decrease) in Advances from Other Funds 2,903 - 2,903 Increase (Decrease) in Prepayments from Students 584 - 584 Increase (Decrease) in Net Pension Liability 81,765 - 81,765 Increase (Decrease) in Net OPEB Liability - Multiple Employer Plan 3,568 - 3,568 Increase (Decrease) in Deferred Inflows of Resources - Change in Proportion to NPL - - - Increase (Decrease) in Deferred Inflows of Resources - Current Year Contributions - - - Increase (Decrease) in Deferred Inflows of Resources - Change in Assumptions - - - Increase (Decrease) in Deferred Inflows of Resources - Diff. in Projected vs Actual Contributions (3,290) - (3,290) Increase (Decrease) in Deferred Inflows of Resources - Diff. in Projected vs Actual Invest. Earnings - - - Increase (Decrease) in Deferred Inflows of Resources - Diff. in Expected vs Actual Experience (16,007) - (16,007) TOTAL ADJUSTMENTS 298,251 - 298,251
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ (581,683) $ - $ (581,683)
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, 2018
PENSION AND PRIVATE OTHER EMPLOYEE PURPOSE BENEFIT AGENCY TRUST TRUST FUNDS ASSETS & DEFERRED OUTFLOWS OF RESOURCES Cash and cash equivalents $ 256,669 $ - $ 137,575 Investments - - - Due from Other Funds - - - Other Receivables - - 729 Prepaid Expenses - - - Other Current Assets - - - Deferred Outflow of Resources - - - TOTAL ASSETS & DEFERRED OUTFLOWS OF RESOURCES $ 256,669 $ - $ 138,304
LIABILITIES & DEFERRED INFLOWS OF RESOURCES Accounts Payable $ 2,563 $ - $ 8,075 Due to Other Funds - - 1,220 Due to Student Clubs - - 129,009 Other Current Liabilities - - - Deferred Inflow of Resources - - - TOTAL LIABILITIES & DEFERRED INFLOWS OF RESOURCES 2,563 - 138,304
NET POSITION Restricted - - - Unrestricted 254,106 - - TOTAL NET POSITION $ 254,106 $ - $ -
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, 2018
PENSION AND PRIVATE- OTHER EMPLOYEE PURPOSE BENEFIT TRUST FUND TRUST FUNDS ADDITIONS: Contributions $ 19,857 $ - Transfers from other funds - - INVESTMENT EARNINGS: Interest and Dividends 1,693 - Net increase (decrease) in fair value of investments - - Less investment expense - - TOTAL ADDITIONS 21,550 ------
DEDUCTIONS: Transfers to other funds - - Signs & Tiles - - Administrative charges - - Scholarships 15,693 - TOTAL DEDUCTIONS 15,693 -
CHANGES IN NET POSITION 5,857 -
NET POSITION - BEGINNING OF YEAR 248,249 -
NET POSITION - END OF YEAR $ 254,106 $ -
The Accompanying Notes are an integral part of these financial statements.
-35-
Upper Perkiomen School District Statement of Revenue, Expenditures, and Changes in Fund Balance - Budget and Actual General Fund For the Year Ended June 30, 2018
VARIANCE WITH ACTUAL FINAL BUDGET BUDGET TO ACTUAL BUDGETED AMOUNTS (BUDGETARY POSITIVE GAAP AMOUNTS ORIGINAL FINAL BASIS) (NEGATIVE) DIFFERENCE GAAP BASIS REVENUES Local Sources $ 38,920,797 $ 38,920,797 $ 40,160,964 $ 1,240,167 $ - $ 40,160,964 State Sources 18,511,895 18,511,895 18,987,000 475,105 - 18,987,000 Federal Sources 460,113 460,113 412,519 (47,594) - 412,519 TOTAL REVENUES 57,892,805 57,892,805 59,560,483 1,667,678 - 59,560,483 ------EXPENDITURES Regular Instruction 26,612,609 25,002,209 25,000,655 1,554 - 25,000,655 Special Programs 8,770,232 8,112,232 8,098,620 13,612 - 8,098,620 Vocational Programs 2,420,044 2,331,044 2,330,920 124 - 2,330,920 Other Instructional Programs 115,285 134,285 127,189 7,096 - 127,189 Nonpubilc School Programs ------Higher Education Programs 6,250 6,250 5,850 400 - 5,850 Pupil Personnel Services 1,928,162 1,860,162 1,849,748 10,414 - 1,849,748 Instructional Staff Services 1,536,478 1,504,478 1,494,050 10,428 - 1,494,050 Administrative Services 3,750,036 3,274,036 3,267,314 6,722 - 3,267,314 Pupil Health 402,878 601,978 600,744 1,234 - 600,744 Business Services 765,455 716,255 697,490 18,765 - 697,490 Operation & Maintenance of Plant Services 4,202,150 3,994,250 3,985,381 8,869 - 3,985,381 Student Transportation Services 3,107,078 3,014,078 2,875,651 138,427 - 2,875,651 Central Support Services 1,546,190 1,584,190 1,504,196 79,994 - 1,504,196 Other Support Services 35,950 35,950 35,935 15 - 35,935 Student Activities 1,039,980 1,039,980 991,069 48,911 - 991,069 Community Services ------Scholarship and Awards ------Facilities, Acquisition and Construction - 3,000 2,220 780 - 2,220 Debt Service 3,548,384 3,548,384 3,047,566 500,818 - 3,047,566 TOTAL EXPENDITURES 59,787,161 56,762,761 55,914,598 848,163 - 55,914,598 Excess (deficiency) of revenues over expenditures (1,894,356) 1,130,044 3,645,885 2,515,841 - 3,645,885 ------OTHER FINANCING SOURCES (USES) Proceeds From Extended Term Financing ------Interfund Transfers In ------Sale/Compensation for Fixed Assets - - 5,334 5,334 - 5,334 Fund Transfers Out - (3,032,000) (3,031,213) 787 - (3,031,213) Budgetary Reserve (70,000) (62,400) - 62,400 - - TOTAL OTHER FINANCING SOURCES (USES) (70,000) (3,094,400) (3,025,879) 68,521 - (3,025,879) Special Items ------Extraordinary Items - Insurance Recoveries - - 25,390 25,390 - 25,390
NET CHANGE IN FUND BALANCES (1,964,356) (1,964,356) 645,396 2,609,752 - 645,396 FUND BALANCE - JULY 1, 2017 7,767,734 7,767,734 13,839,707 6,071,973 - 13,839,707
FUND BALANCE - JUNE 30, 2018 $ 5,803,378 $ 5,803,378 $ 14,485,103 $ 8,681,725 $ - $ 14,485,103 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, 2018
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, 2018
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 2017-2018 was $2,330,920.
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, 2018
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, 2018
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 outflows 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 inflows 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 outflows of resources minus the sum of liabilities and deferred inflows 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, 2018
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 this fiscal year, the fund received the proceeds from $36,390,000 of General Obligation Bonds – Series of 2017 and Series of 2018, which will be used to acquire, construct, equip, furnish, additions, and improvements to a new middle school.
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 outflows of resources, liabilities, and deferred inflows of resources associated with the operation of the School District are included on the statement of net position. Fund Financial Statements 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 outflows of resources or deferred inflows 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 outflows of resources or required deferred inflows 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, 2018 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. Governmental funds use the modified accrual basis of accounting. Proprietary and fiduciary funds 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 inflows 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.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.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Board Resolution Option
Under the Board Resolution Option, the Board shall adopt a resolution that it will not raise the rate of any tax for the following fiscal year by more than the Index. Such resolution shall be adopted no later than 110 days prior to the primary election. At least 30 days prior to adoption of the final budget the Board shall prepare a proposed budget. The proposed budget shall be available for public inspection at least 20 days prior to adoption of the budget. The Board shall give public notice of its intent to adopt at least 10 days prior to adoption of the proposed budget. The Board shall annually adopt the final budget by a majority vote of all members of the Board by June 30.
Legal budgetary control is maintained at the sub-function/major object level. The PA School Code allows the School Board to make budgetary transfers between major function and major object codes only within the last nine months of the fiscal year, unless there is a two-thirds majority of the Board approving the transfer. Appropriations lapse at the end of the fiscal period. Budgetary information reflected in the financial statements is presented at or below the level of budgetary control and includes the effect of approved budget amendments.
The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts in the PDE 2028 when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary statements reflect the amounts after all 2017-18 budget transfers.
F. 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.
G. Changes in Accounting Principles During the 2017-18 fiscal year the District implemented the following new generally accepted accounting principles:
• GASB Statement No. 75 (Accounting and Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans), which establishes new reporting requirements about postemployment benefits other than pensions included in the general purpose external financial reports of state and local governmental employers.
• GASB Statement No. 81 (Irrevocable Split-Interest Agreements). The purpose of this standard is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of this type of agreement.
• GASB Statement No. 85 (Omnibus 2017). This Statement amends previous standards associated with blending component units, goodwill, fair value measurement and application, and postemployment benefits. Specifically, blending a component unit in circumstances in which the primary government is a business-type activity, reporting amounts previously reported as goodwill and “negative” goodwill, measuring certain money market investments at amortized cost, timing of the measurement of pension or OPEB liabilities using the current resources measurement focus, recognizing on-behalf
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
payments for pensions or OPEB, presenting payroll-related measures in required supplementary information for purposes of reporting OPEB, and accounting and financial reporting for OPEB provided through certain multiple-employer defined benefit OPEB plans.
• GASB Statement No. 86 (Certain Debt Extinguishment Issues). This Statement addresses accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources are placed in an irrevocable trust for the sole purpose of extinguishing debt.
• GASB Implementation Guide 2017-1. This is the latest Implementation Guide to be utilized in answering pertinent questions about the previously issued standards.
H. Pensions For purposes of measuring the net pension liability, deferred outflows of resources, and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public School Employees’ Retirement System and additions to/deductions from the Public School Employees’ Retirement System’s fiduciary net position have been determined on the same basis as they are reported by the Public School Employees’ Retirement System. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
I. Other Postemployment Benefits Multiple Employer Cost Sharing OPEB Plan
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Public School Employees’ Retirement System (PSERS) and additions to/deductions from PSERS’s fiduciary net position have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Single Employer OPEB Plan
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information was obtained from the Actuary Report conducted by Conrad Siegel. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. The single employer plan is not funded.
J. 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.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Investments
In accordance to GASB Statement No. 72, investments generally are to be measured at fair value. An investment is defined as a security or other asset that (a) a government holds primarily for the purpose of income or profit and (b) has the present service capacity based solely on its ability to generate cash or to be sold to generate cash. Investments not measured at fair value continue to include, for example, money market investments, 2a7-like external investment pools, investments in life insurance contracts, common stock meeting the criteria for applying the equity method, unallocated insurance contracts, and synthetic guaranteed investment contracts.
A government is permitted in certain circumstances to establish the fair value of an investment that does not have a readily determinable fair value by using the net asset value per share of the investment.
This Statement requires measurement at acquisition value (an entry price) for donated capital assets, donated works of art, historical treasures, and similar assets. These assets were previously required to be measured at fair value.
Fair Value is measured using a hierarchy of inputs using valuation techniques. The hierarchy has three levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs.
The valuation techniques should be consistent with one or more of the following approaches: the market approach, the cost approach, or the income approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The cost approach reflects the amount that would be required to replace the present service capacity of an asset. The income approach converts future amounts (such as cash flows or income and expenses) to a single current (discounted) amount.
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, 2018, 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 inflows 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.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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, 2018. As a result, the governmental activities column reflects $59,250 in inventory and the business-type activities column reflects $9,150 in inventory.
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, there 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, 2018, consist of:
Supplies $ 3,469 Purchased Food 4,957 Donated Commodities 724 TOTAL $ 9,150
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 acquisition 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.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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
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 outflows 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, 2018, presentation of government- wide financial statements on the accrual basis of accounting versus the governmental fund financial statements reported on the modified accrual basis accounting.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Net Position
Net Position represents the difference between assets and deferred outflows of resources less liabilities and deferred inflows 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 outflows of resources and/or deferred inflows of resources related to such capital assets or liabilities associated with the capital assets should also be added to or deducted from the overall Net Investment in Capital Assets. The restricted component of Net Position is used when there are limitations imposed on their use either through the enabling legislation adopted by a higher governmental authority or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. The remaining component of Net Position is unrestricted.
The 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 8 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.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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 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 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 $166,207,804 difference are:
Bonds and Note Payable $ 66,745,000 Less: Issuance discount (to be amortized as interest expense) (7,349) Add: Issuance premium (to be amortized as interest expense) 1,418,759 Accrued interest payable 257,953 Compensated Absences 1,306,940 Net Pension Liability 90,492,644 Net OPEB Liability - Single Employer Plan 2,233,878 Net OPEB Liability - Multiple Employer Plan 3,759,979 Net adjustment to reduce "fund balance - total governmental funds" to arrive at "net position - governmental activities" $ 166,207,804
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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 governmental 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.
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, 2018
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 $ 34,818,466 $ (29,617) $ - $ - $ 34,788,849 Taxes levied for specific purposes 4,134,788 - - - 4,134,788 Interest and investment earnings 665,121 4,920 - - 670,041 Miscellaneous 90,728 25,392 5,334 - 121,454 Contributions and Donations 20,021 - - - 20,021 Charges for Services 148,873 - - - 148,873 Grants, subsidies & contributions not restricted 9,920,181 - - - 9,920,181 Transfers in - - - - - Bond Premium 875,039 - - (875,039) - Proceeds from Bond Issues 36,390,000 - - (36,390,000) - INTERMEDIATE SOURCES: Charges for Services - - - - - Operating grants and contributions - - - - - STATE SOURCES: Operating and Capital grants and contributions 9,066,819 - - - 9,066,819 FEDERAL SOURCES: Operating and Capital grants and contributions 979,497 - - - 979,497 SPECIAL AND EXTRAORDINARY Insurance Recoveries 25,390 (25,390) - - - Gain or (Loss) on disposal of assets 5,334 - (9,985) - (4,651) TOTAL REVENUES 97,140,257 (24,695) (4,651) (37,265,039) 59,845,872 ------EXPENDITURES/EXPENSES Instruction 35,563,234 1,449,888 2,029 - 37,015,151 Instructional Student Support 3,950,518 152,033 (4,343) - 4,098,208 Admin. & Fin'l Support Services 6,065,814 294,011 (44,163) - 6,315,662 Oper. & Maint. of Plant Svcs. 3,985,381 62,122 (56,650) - 3,990,853 Pupil Transportation 2,875,651 4,436 - - 2,880,087 Student activities 991,069 22,489 (874) - 1,012,684 Community Services - - - - - Scholarships & Awards - - - - - Capital Outlay 11,944,487 - (11,944,487) - - Debt Service 3,047,566 - - (1,714,975) 1,332,591 Transfers Out - - - - - Extraordinary Item - - - - - Depreciation - unallocated - - 1,604,120 - 1,604,120 TOTAL EXPENDITURES/EXPENSES 68,423,720 1,984,979 (10,444,368) (1,714,975) 58,249,356
NET CHANGE FOR THE YEAR $ 28,716,537 $ (2,009,674) $ 10,439,717 $ (35,550,064) $ 1,596,516
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.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
B. Deficit fund balance or net position of individual funds No individual fund contains a deficit fund balance or net position at June 30, 2018, except the governmental and business-type activities (Food Service Fund) had deficits of $23,929,477, and $1,319,582, respectively. C. Excess of expenditures over appropriations in individual funds No individual fund, which had a legally adopted budget, had an excess of expenditures over appropriations. D. Budgetary Compliance The District's only legally adopted budget is for the General Fund. All budgetary transfers were made within the last nine months of the fiscal year. The District cancels all purchase orders open at year-end; therefore, it does not have any outstanding encumbrances at June 30, 2018. In addition, the District includes a portion of the prior year's fund balance represented by unappropriated liquid assets remaining in the fund as budgeted revenue in the succeeding year. The results of operations on a GAAP basis 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, 2018, $6,173,536 of the District’s bank balance of $6,941,188 and restricted cash of $3,471,610 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 6,173,536 TOTAL $ 6,173,536
Reconciliation to Financial Statements
Uncollateralized Amount Above $ 6,173,536 Plus: Insured Amount 767,652 Less: Outstanding Checks (48,574) Carrying Amount - Bank Balances 6,892,614 Plus: Petty Cash 4,944 Restricted Cash 3,471,610 Deposits in Investment Pools Considered Cash Equivalents 24,977,821 Less: Repurchase Agreements considered Investment by School Code (2,165,000) Less: Certificates of Deposit considered Investment by School Code - TOTAL CASH PER FINANCIAL STATEMENTS $ 33,181,989
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Investments Permitted investments for Upper Perkiomen School District are defined in the Public School Code of 1949, as amended by Act 10 of 2016 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.
5. Obligations, participations or other instruments of any Federal Agency, instrumentality or United States government sponsored enterprise, including those issued or fully guaranteed as the principal and interest by Federal agencies, instrumentalities or United States government sponsored enterprises, if the debt obligations are rated at least “A” or its equivalent by at least two nationally recognized statistical ratings organizations.
6. Repurchase agreements with respect to United States Treasury bills or obligations, participations or other instruments of or guaranteed by the United States or any Federal agency, instrumentality or United States government sponsored enterprise.
7. Negotiable certificates of deposit or other evidences of deposit, with a remaining maturity of three years or less, issued by a nationally or State-chartered bank, a Federal or State savings and loan association or a State-licensed branch of a foreign bank. For obligations with a maturity of one year or less, the debt obligations of the issuing institution or its parent must be rated in the top short-term rating category by at least two nationally recognized statistical ratings organizations. For obligations with a maturity in excess of one year, the senior debt obligations of the issuing institution or its parent must be rated at least “A” or its equivalent by at least two nationally recognized statistical ratings organizations.
8. Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers’ acceptances, if the bankers’ acceptances do not exceed 180 days maturity and the accepting bank is rated in the top short-term category by at least two nationally recognized statistical ratings organizations.
9. Commercial paper issued by corporations or other business entities organized in accordance with Federal or State law, with a maturity not to exceed 270 days, if the paper is rated in the top short- term category by at least two nationally recognized statistical ratings organizations.
10. Shares of an investment company registered under the Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933 and, if all of the following conditions are met:
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
• The investments of the company are the authorized investments listed above.
• The investment company is managed in accordance with 17 CFR 270.2a-7 (related to money market funds).
• The investment company is rated in the highest category by a nationally recognized rating agency.
11. Savings or demand deposits placed in accordance with the following conditions:
• The money is initially deposited and invested through a federally insured institution having a place of business in this Commonwealth, which is selected by the public corporation or municipal authority.
• The selected institution arranges for the redeposit of the money in savings or demand deposits in one or more financial institutions insured by the Federal Deposit Insurance Corporation, for the account of the public corporation or municipal authority.
• The full amount of principal and any accrued interest of each such deposit is insured by the Federal Deposit Insurance Corporation.
• On the same date that the money is redeposited pursuant to above, the selected institution receives an amount of deposits from customers of other financial institutions equal to or greater than the amount of money initially invested through the selected institution by the public corporation or municipal authority.
As of June 30, 2018, the District had the following investments:
Fair Maturities Value Certificates of Deposit 1 1/2-23 Months $ 25,214,364 Repurchase Agreements 2,165,000 PA Local Government Investment Trust 17,827,041 PA School District Liquid Asset Fund 12,150,781 TOTAL $ 57,357,186
Interest Rate Risk The District's investment policy is to invest its funds in a manner that will mitigate investment risk and credit risk.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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. The District’s investments in US Treasury Notes were rated AA+ by S&P and Aaa by Moody’s. 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, 11.70% are in repurchase agreement with Univest Bank. Of the Capital Project Fund’s investments, 80.69% were invested in US Treasury Notes. Of the governmental activities investments, 44.19% were held in the US Treasury Notes. 43.96% of investments of the entire entity are held in US Treasury Notes.
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. Reconciliation to Financial Statements
Total Investments Above $ 57,357,186 Less: Deposits in Investment Pool Considered Cash Equivalents (24,977,821) Total Investments per Financial Statements $ 32,379,365
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 $1,252,985,231. In accordance with Act 1 of 2006, the District received $1,148,597 in state property tax reduction allocation for the 2017-18 fiscal year. The millage rate levied by the District for the fiscal year ended June 30, 2018, was 24.3479 mills in Montgomery County and 24.3479 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.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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 PROJECT SERVICE MAJOR FIDUCIARY FUND FUNDS FUND FUNDS FUNDS TOTAL RECEIVABLES: Interest $ - $ - $ - $ - $ - $ - Taxes 1,671,025 - - - - 1,671,025 Accounts 761,092 50,554 377 - 729 812,752 Intergovernmental 2,286,507 - 19,422 - - 2,305,929 GROSS RECEIVABLES 4,718,624 50,554 19,799 - 729 4,789,706 Less: Allowance for Uncollectibles ------NET RECEIVABLES $ 4,718,624 $ 50,554 $ 19,799 $ - $ 729 $ 4,789,706
Governmental funds report deferred inflows 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 inflows of resources and unearned revenue reported in the governmental funds were:
Schedule on Deferred Inflows of Resources - Unavailable and Unearned UNAVAILABLE UNEARNED Delinquent Property Taxes - General Fund $ 1,457,206 $ - Grant drawdowns prior to meeting eligibility requirements - 3,005 TOTAL $ 1,457,206 $ 3,005
Capital Assets Capital asset balances and activity for the year ending June 30, 2018, were:
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
BEGINNING ENDING BALANCE INCREASES DECREASES BALANCE GOVERNMENTAL ACTIVITIES: Capital Assets not being depreciated: Land $ 1,954,546 $ - $ - $ 1,954,546 Construction in Progress 3,276,026 11,894,291 (70,381) 15,099,936 Total Capital Assets not being depreciated 5,230,572 11,894,291 (70,381) 17,054,482 Capital Assets being depreciated: Site Improvements 2,911,856 - - 2,911,856 Buildings 39,056,287 - - 39,056,287 Building Improvements 31,847,488 - - 31,847,488 Furniture and Equipment 3,623,377 420,995 (46,507) 3,997,865 TOTAL CAPITAL ASSETS BEING DEPRECIATED 77,439,008 420,995 (46,507) 77,813,496 Less accumulated depreciation for: Site Improvements (876,640) (110,328) - (986,968) Buildings (20,720,831) (606,323) - (21,327,154) Building Improvements (6,377,730) (815,875) - (7,193,605) Furniture and Equipment (2,452,925) (268,012) 41,856 (2,679,081) TOTAL ACCUMULATED DEPRECIATION (30,428,126) (1,800,538) 41,856 (32,186,808) TOTAL CAPITAL ASSETS BEING DEPRECIATED NET OF ACCUMULATED DEPRECIATION 47,010,882 (1,379,543) (4,651) 45,626,688
GOVERNMENTAL ACTIVITIES CAPITAL ASSETS, NET OF ACCUMULATED DEPRECIATION $ 52,241,454 $ 10,514,748 $ (75,032) $ 62,681,170
BUSINESS-TYPE ACTIVITIES: Capital Assets being depreciated: Furniture and Equipment $ 627,282 $ - $ - $ 627,282 Less accumulated depreciation (488,282) (14,190) - (502,472) BUSINESS-TYPE ACTIVITIES CAPITAL ASSETS, NET OF ACCUMULATED DEPRECIATION $ 139,000 $ (14,190) $ - $ 124,810
*DEPRECIATION EXPENSE WAS CHARGED TO GOVERNMENTAL FUNCTIONS AS FOLLOWS: Regular Instruction $ 121,783 Special Instruction 1,750 Vocational Instruction - Other Instruction - Adult Instruction - Community College Instruction - Pupil Services - Instructional Staff Svcs. 5,298 Administrative Services - Health Services 362 Business Services - Operation & Maintenance of Plant Svcs. 23,884 Pupil Transportation - Central Services 37,964 Other Support Services - Student Activities 5,377 Community Services - Depreciation - unallocated 1,604,120 TOTAL DEPRECIATION FOR GOVERNMENTAL ACTIVITIES $ 1,800,538
The government activities disposed of $46,507 in equipment during the year, with accumulated depreciation of $41,856 leaving a loss of $4,651. The business-type activities did not dispose of any obsolete equipment during the year.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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.
Construction Commitments: As of June 30, 2018, the District had the following outstanding construction commitments:
CONTRACT EXPENDED OUTSTANDING AMOUNT TO 6/30/18 COMMITMENTS NEW MIDDLE SCHOOL Albarell Electric, Inc. - Electrical $ 5,145,940 $ 762,062 $ 4,383,878 Boro Developers, Inc. - General Contractor 32,874,500 8,705,914 24,168,586 Boro Developers, Inc. - HVAC 4,890,000 299,711 4,590,289 Frey Lutz Corp. - Plumbing 2,795,700 641,922 2,153,778 D'Huy Engineering - Engineers 1,147,500 407,033 740,467 Breslin Ridyard Fadero - Architects 2,764,675 2,427,714 336,961
TOTAL $ 49,618,315 $ 13,244,356 $ 36,373,959
Short-term debt Interfund receivables and payables The following interfund receivables and payables were in existence on June 30, 2018:
INTERFUND INTERFUND RECEIVABLES PAYABLES General Fund $ 129,048 $ 373,985 Capital Project (Capital Reserve) Fund 255,746 15,180 Agency (Activity) Fund - 1,220 Enterprise (Food Service) Fund 118,240 112,649 TOTAL $ 503,034 $ 503,034
Interfund Transfers
The District also made the following interfund transfers during the fiscal year ended June 30, 2018:
TRANSFER IN TRANSFER OUT General Fund $ - $ 3,031,213 Capital Projects (Capital Reserve Fund) 3,031,213 - TOTAL $ 3,031,213 $ 3,031,213
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Long-term liabilities
Long-term liability balances and activity for the year ended June 30, 2018, were:
AMOUNTS BEGINNING ENDING DUE WITHIN BALANCE ADDITIONS REDUCTIONS BALANCE ONE YEAR GOVERNMENTAL ACTIVITIES General Obligation Debt: Bonds and notes payable: Capital Projects $ 32,813,571 $ 37,266,477 $ 1,923,638 $ 68,156,410 $ 2,130,000 Other than capital projects - - - - - Capital Leases - - - - - Total general obligation debt 32,813,571 37,266,477 1,923,638 68,156,410 2,130,000 Other liabilities: Vested employee benefits: Vacation pay 479,459 65,610 - 545,069 78,864 Sick pay 876,523 56,326 - 932,849 92,114 Net OPEB Liability - Single Employer Plan 597,677 1,636,201 - 2,233,878 - Net OPEB Liability - Multiple Employer Plan 3,759,979 3,759,979 - Net Pension Liability 86,959,839 3,532,805 - 90,492,644 - Total other liabilities 88,913,498 9,050,921 - 97,964,419 170,978 TOTAL GOVERNMENTAL ACTIVITY LONG-TERM LIABILITIES $ 121,727,069 $ 46,317,398 $ 1,923,638 $ 166,120,829 $ 2,300,978
BUSINESS-TYPE ACTIVITIES Other liabilities: Vested employee benefits Sick Pay $ 16,875 $ 1,019 $ - $ 17,894 $ - Net OPEB Liability - Single Employer Plan - - - - - Net OPEB Liability - Multiple Employer Plan - 87,255 87,255 - Net Pension Liability 1,921,293 81,765 - 2,003,058 - TOTAL BUSINESS-TYPE ACTIVITY LONG-TERM LIABILITIES $ 1,938,168 $ 170,039 $ - $ 2,108,207 $ -
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 $ 1,332,591 $ 1,237,566 Short-term borrowings - - TOTAL INTEREST FOR GOVERNMENTAL ACTIVITIES $ 1,332,591 $ 1,237,566
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
General Obligation Bonds - Series of 2013 On May 19, 2016, the District issued $7,165,000 of General Obligation Bonds-Series of 2016. The proceeds will be used for and towards: (1) the current refunding of the School District’s General Obligation Bonds, Series of 2011, currently outstanding in the principal amount of $7,165,000 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, 2017 to November 15, 2027. Interest rates range from 1.5% to 4.0% with total interest indebtedness of $1,051,162. The outstanding debt service requirements at June 30, 2018, are:
FISCAL YEAR PRINCIPAL INTEREST 2018-19 $ 540,000 $ 138,965 2019-20 560,000 122,565 2020-21 570,000 111,265 2021-22 585,000 99,715 2022-23 600,000 87,865 2023-28 3,200,000 250,672 2028-30 690,000 7,935 SUB-TOTAL 6,745,000 $ 818,982 Unamortized Discount (7,350) Unamortized Premium 139,177 TOTAL OUTSTANDING $ 6,876,827
General Obligation Bonds - Series of 2014 On February 13, 2014, the District issued $9,005,000 of General Obligation Bonds-Series of 2014. The proceeds will be used for and towards: (1) the current refunding of the School District’s General Obligation Bonds, Series of 2008, currently outstanding 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 November 15, 2015 to November 15, 2029. Interest rates range from 2.0% to 3.5% with total interest indebtedness of $2,592,885.28. The outstanding debt service requirements at June 30, 2018, are:
FISCAL YEAR PRINCIPAL INTEREST 2018-19 $ 540,000 $ 225,650 2019-20 550,000 210,650 2020-21 570,000 193,850 2021-22 585,000 176,525 2022-23 600,000 158,750 2023-28 3,290,000 506,831 2028-30 1,460,000 50,731 SUB-TOTAL 7,595,000 $ 1,522,987 Unamortized Discount - Unamortized Premium 143,854 TOTAL OUTSTANDING $ 7,738,854
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
General Obligation Bonds – Series of 2016 On May 19, 2016, the District issued $7,165,000 of General Obligation Bonds-Series of 2016. The proceeds will be used for and towards: (1) the current refunding of the School District’s General Obligation Bonds, Series of 2011, currently outstanding in the principal amount of $7,165,000 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, 2017 to November 15, 2027. Interest rates range from 1.5% to 4.0% with total interest indebtedness of $1,051,162. The outstanding debt service requirements at June 30, 2018, are:
FISCAL YEAR PRINCIPAL INTEREST 2018-19 $ 590,000 $ 151,650 2019-20 610,000 127,650 2020-21 635,000 102,750 2021-22 655,000 83,500 2022-23 675,000 70,200 2023-28 3,485,000 167,325 SUB-TOTAL 6,650,000 $ 703,075 Unamortized Discount - Unamortized Premium 177,918 TOTAL OUTSTANDING $ 6,827,918
General Obligation Bonds – Series A of 2016 On December 30, 2016, the District issued $9,615,000 of General Obligation Bonds-Series A of 2016. The proceeds will be used for (1) Providing funds for the acquisitions, design, construction furnishing and any other expenses related to the building of a New Middle School 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, 2017 to November 15, 2042. Interest rates range from 1.35% to 3.75% with total interest indebtedness of $5,023,573. The outstanding debt service requirements at June 30, 2018, are:
FISCAL YEAR PRINCIPAL INTEREST 2018-19 $ 255,000 $ 305,836 2019-20 260,000 300,215 2020-21 270,000 292,265 2021-22 275,000 284,090 2022-23 280,000 275,765 2023-28 1,535,000 1,243,980 2028-33 1,805,000 980,294 2033-38 2,135,000 665,110 2038-43 2,550,000 246,562 SUB-TOTAL 9,365,000 $ 4,594,117 Unamortized Discount - Unamortized Premium 97,922 TOTAL OUTSTANDING $ 9,462,922
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
General Obligation Bonds – Series of 2017 On October 3, 2017 the District issued $9,870,000 of General Obligation Bonds – Series of 2017. The proceeds will be used for: (1) Providing funds for the acquisition, design, construction furnishing and any other expenses related to the building of a New Middle School and (2) paying the 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, 2018 to November 15, 2042. Interest rates range from 2.00% to 4.00% with total interest indebtedness of $4,199,676. The outstanding debt service requirements at June 30, 2018 are:
FISCAL YEAR PRINCIPAL INTEREST 2018-19 $ 200,000 $ 283,854 2019-20 280,000 276,253 2020-21 290,000 264,854 2021-22 305,000 252,953 2022-23 315,000 240,554 2023-28 1,710,000 1,082,534 2028-33 1,950,000 846,495 2033-38 2,245,000 564,004 2038-43 2,575,000 211,898 SUB-TOTAL 9,870,000 $ 4,023,399 Unamortized Discount - Unamortized Premium 119,838 TOTAL OUTSTANDING $ 9,989,838
General Obligation Bonds – Series of 2018 On March 8, 2018 the District issued $26,520,000 of General Obligation Bonds – Series of 2018. The proceeds will be used for: (1) providing funds for the acquisitions, design, construction furnishing and any other expenses related to the building of a new Middle School and (2) paying costs of issuing the Bond. 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, 2018 to November 15, 2042. Interest rates range from 2.00% to 5.00%, with total interest indebtedness of $13,710,970. The outstanding debt service requirement at June 30, 2018 are:
FISCAL YEAR PRINCIPAL INTEREST 2018-19 $ 5,000 $ 972,444 2019-20 675,000 955,519 2020-21 710,000 920,894 2021-22 745,000 884,519 2022-23 785,000 846,269 2023-28 4,520,000 3,625,319 2028-33 5,340,000 2,798,926 2033-38 6,285,000 1,855,927 2038-43 7,455,000 670,161 SUB-TOTAL 26,520,000 $ 13,529,978 Unamortized Discount - Unamortized Premium 740,051 TOTAL OUTSTANDING $ 27,260,051
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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. 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 subleases.
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 (JOC) 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%.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
On June 9, 2016, the Upper Perkiomen School District issued $26,315,000 in Guaranteed Lease Revenue Bonds, Series of 2016. Proceeds of the Bonds will be used for and towards the advance refunding of the State Public School Building Authority’s School Lease Revenue bonds, Series of 2008, currently outstanding in the aggregate principal amount of $26,650,000, and paying all costs of issuance of the Bonds. The bonds mature from November 15, 2017 to November 15, 2018, at interest rates 2.12% to 5.00%. The estimated debt service requirements for the District. as of June 30, 2018 are:
FISCAL YEAR PRINCIPAL INTEREST 2018-19 $ 546,620 $ 278,806 2019-20 573,800 250,796 2020-21 604,000 221,351 2021-22 634,200 190,396 2022-23 667,420 157,855 2023-24 702,150 123,616 2024-25 738,390 87,603 2025-26 764,060 61,502 2026-27 779,160 45,583 2027-28 797,280 28,335 2028-29 815,400 9,683 TOTAL OUTSTANDING $ 7,622,480 $ 1,455,526
Combined Long-Term Debt The combined long-term debt obligations for subsequent years, excluding compensated absences are:
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Summary of Principal Requirements
G.O.B. G.O.B. G.O.B. G.O.B. G.O.B. G.O.B. TOTAL SERIES SERIES SERIES SERIES A SERIES SERIES PRINCIPAL FISCAL YEAR OF 2013 OF 2014 OF 2016 OF 2016 OF 2017 OF 2018 PAYMENTS 2018-19 $ 540,000 $ 540,000 $ 590,000 $ 255,000 $ 200,000 $ 5,000 $ 2,130,000 2019-20 560,000 550,000 610,000 260,000 280,000 675,000 2,935,000 2020-21 570,000 570,000 635,000 270,000 290,000 710,000 3,045,000 2021-22 585,000 585,000 655,000 275,000 305,000 745,000 3,150,000 2022-23 600,000 600,000 675,000 280,000 315,000 785,000 3,255,000 2023-28 3,200,000 3,290,000 3,485,000 1,535,000 1,710,000 4,520,000 17,740,000 2028-33 690,000 1,460,000 - 1,805,000 1,950,000 5,340,000 11,245,000 2033-38 - - - 2,135,000 2,245,000 6,285,000 10,665,000 2038-43 - - - 2,550,000 2,575,000 7,455,000 12,580,000 TOTAL 6,745,000 7,595,000 6,650,000 9,365,000 9,870,000 26,520,000 66,745,000
LESS - PAYABLE WITHIN ONE YR. 540,000 540,000 590,000 255,000 200,000 5,000 2,130,000
LONG-TERM PRINCIPAL DUE AFTER ONE YEAR $ 6,205,000 $ 7,055,000 $ 6,060,000 $ 9,110,000 $ 9,670,000 $ 26,515,000 $ 64,615,000
Summary of Principal and Interest Requirements
G.O.B. G.O.B. G.O.B. G.O.B. G.O.B. G.O.B. TOTAL SERIES SERIES SERIES SERIES A SERIES SERIES DEBT SERVICE FISCAL YEAR OF 2013 OF 2014 OF 2016 OF 2016 OF 2017 OF 2018 PAYMENTS 2018-19 $ 678,965 $ 765,650 $ 741,650 $ 560,836 $ 483,854 $ 977,444 $ 4,208,399 2019-20 682,565 760,650 737,650 560,215 556,253 1,630,519 4,927,852 2020-21 681,265 763,850 737,750 562,265 554,854 1,630,894 4,930,878 2021-22 684,715 761,525 738,500 559,090 557,953 1,629,519 4,931,302 2022-23 687,865 758,750 745,200 555,765 555,554 1,631,269 4,934,403 2023-28 3,450,672 3,796,831 3,652,325 2,778,980 2,792,534 8,145,319 24,616,661 2028-33 697,935 1,510,731 - 2,785,294 2,796,495 8,138,926 15,929,381 2033-38 - - - 2,800,110 2,809,004 8,140,927 13,750,041 2038-43 - - - 2,796,562 2,786,898 8,125,161 13,708,621 TOTAL $ 7,563,982 $ 9,117,987 $ 7,353,075 $ 13,959,117 $ 13,893,399 $ 40,049,978 $ 91,937,538
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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.
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. - $55.00 per each unused sick day.
2. Special Education and Instructional Aides and Nurse Assistants - $30.00 per each unused sick day.
3. Cafeteria Personnel Assoc. - $30.00 per each unused sick day.
4. Administrative Support Personnel - $35.00 per each unused sick day.
5. Custodial & Maintenance Personnel Assoc. - $35.00 per each unused sick day.
6. Educational Assistants - $5.00 per unused sick hours plus the number of years of service at $30.00 per year
7. Registered Nurses - $30.00 per each unused sick day
8. Administrative - Unused sick days earned prior to 6/30/97 times one half of their daily rate for 96/97.
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 $92,114, 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 $840,735, 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 $17,894 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, 2018.
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, 2018, that will use currently available financial resources, is $78,864, 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, 2018, of $466,205, 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.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Defined Benefit Pension Plans
The Government Accounting Standards Board (GASB) requires that state and local governmental employers disclose in their notes to financial statements, certain information about the public employee retirement systems to which they contribute.
General Information about the Pension Plan
Plan Description The Public School Employees’ Retirement System (PSERS) is a governmental cost-sharing multi- employer defined benefit pension plan that provides retirement benefits.to public school employees of the Commonwealth of Pennsylvania. The members eligible to participate in the System include all full-time public school employees, part-time hourly public school employees who render at least 500 hours of service in the school year, and part-time per diem public school employees who render at least 80 days of service in the school year in any of the reporting entities in Pennsylvania. PSERS issues a publicly available financial report that can be obtained at www.psers.state.pa.us.
Benefits provided
PSERS provides retirement, disability, and death benefits. Members are eligible for monthly retirement benefits upon reaching (a) age 62 with at least 1 year of credited service; (b) age 60 with 30 or more years of credited service; or (c) 35 or more years of service regardless of age. Act 120 of 2010 (Act 120) preserves the benefits of existing members and introduced benefit reductions for individuals who become new members on or after July 1, 2011. Act 120 created two new membership classes, Membership T-E (Class T-E) and Membership Class T-F (Class T-F). To qualify for normal retirement, Class T-E and Class T-F members must work until age 65 with a minimum of 3 years of service or attain a total combination of age and service that is equal to or greater than 92 with a minimum of 35 years of service. Benefits are generally equal to 2% or 2.5%, depending upon membership class, of the member’s final average salary (as defined in the Code) multiplied by the number of years of credited service. For members whose membership started prior to July 1, 2011, after completion of five years of service, a member’s right to the defined benefits is vested and early retirement benefits may be elected. For Class T-E and T-F members, the right to benefits is vested after ten years of service. Participants are eligible for disability retirement benefits after completion of five years of credited service. Such benefits are generally equal to 2% or 2.5%, depending upon membership class, of the member’s final average salary (as defined in the Code) multiplied by the number of years of credited service, but not less than one-third of such salary nor greater than the benefit the member would have had at normal retirement age. Members over normal retirement age may apply for disability benefits. Death benefits are payable upon the death of an active member who has reached age 62 with at least one year of credited service (age 65 with at least three years of credited service for Class T-E and Class T-F members) or who has at least five years of credited service (ten years for Class T-E and Class T-F members). Such benefits are actuarially equivalent to the benefit that would have been effective if the member had retired on the day before death.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Contributions Member Contributions:
Active members, who joined the System prior to July 22, 1983, contributed at 5.25% (Membership Class T-C) or at 6.50% (Membership Class T-D) of the member's qualifying compensation.
Members who joined the System on or after July 22, 1983 and who were active or inactive as of July 1, 2001, contribute at 6.25% (Membership Class T-C) or at 7.50% (Membership Class T-D) of the member's qualifying compensation.
Members who joined the System after June 30, 2001 and before July 1, 2011, contribute at 7.50% (automatic Membership Class T-D). For all new hires and for members who elected Class T-D membership, the higher contribution rates began with service rendered on or after January 1, 2002.
Members who joined the System after June 30, 2011, automatically contribute at the Membership Class T-E rate of 7.5% (base rate) of the member’s qualifying compensation. All new hires after June 30, 2011 who elect Class T-F membership 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%.
Employer Contributions:
The school districts’ contractually required contribution rate for fiscal year ended June 30, 218 was 31.74% of covered payroll, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions to the pension plan from the District were $7,733,253 for the year ended June 30, 2018.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2018, the District reported a liability of $92,495,702 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2016, with rolling forward the System’s total pension liability as of June 30, 2017. The District’s proportion of the net pension liability was calculated utilizing the employer’s one-year reported covered payroll as it relates to the total one-year reported covered payroll. At June 30, 2017, the District’s proportion was 0.1883 percent, which was an increase of 0.0076 percent from its proportion measured as of June 30, 2016.
For the year ended June 30, 2018, the District recognized pension expense of $10,282,057. At June 30, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Deferred Outflows Deferred Inflows Sources of Resources of Resources Differences between Proportionate Share vs Actual Paid Separately Finance Liabilities $ 4,224 $ - Changes in Assumptions 2,526,000 - Net difference between projected and actual contributions made - 121,086 Net difference between projected and actual earnings on pension plan investments 2,155,000 - Difference between expected and actual experience 408,000 - Changes in proportion of the Net Pension Liability 3,389,000 - District contributions subsequent to the measurement date 7,733,253 -
Total $ 16,215,477 $ 121,086
$7,732,253 reported as deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Year ended June 30: Amount 2018 $ 1,952,000 2019 3,488,057 2020 2,533,821 2021 371,201 2022 16,059 Total $ 8,361,138
Actuarial assumptions
The total pension liability as of June 30, 2017, was determined by rolling forward the System’s total pension liability as of June 30, 2016 to June 30, 2017 using the following actuarial assumptions, applied to all periods included in the measurement:
• Actuarial cost method – Entry Age Normal – level % of pay • Investment return – 7.25%, includes inflation at 2.75% • Salary inceases – Effective average of 5.00%, which reflects an allowance for inflation of 2.75%, and 2.25% for real wage growth and for merit or seniority increases • Mortality rates were based on the RP-2014 Combined Healthy Annuitant Tables (male and female) adjusted to reflect PSERS’ experience and projected using a modified version of the MP-2015 Mortality Improvement Scale. For disabled annuitants the RP-2014 Mortality Tables for Males and Females, adjusted to reflect PSERS’ experience and projected using a modified version of the MP-2015 Mortality Improvement Scale.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.
The pension plan’s policy in regard to the allocation of invested plan assets is established and may be amended by the Board. Plan assets are managed with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the pension.
Long-Term Target Expected Real Asset Class Allocation Rate of Return Global public equity 20.0% 5.1% Fixed Income 36.0% 2.6% Commodities 8.0% 3.0% Absolute return 10.0% 3.4% Risk parity 10.0% 3.8% Infrastructure/MLPs 8.0% 4.8% Real estate 10.0% 3.6% Alternative investments 15.0% 6.2% Cash 3.0% 0.6% Financing (LIBOR) -20.0% 1.1% 100%
The above was the Board’s adopted asset allocation policy and best estimates of geometric real rates of return for each major asset class as of June 30, 2017.
For the year ended June 30, 2017, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 10.15%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.
Discount Rate
The discount rate used to measure the total pension liability was 7.25%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate and that contributions from employers will be made at contractually required rates, actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the District’s proportionate share of the net pension liability to changes in the discount rate
The following presents the District’s proportionate share of the net pension liability calculated using the discount rate of 7.25%, as well as what the District’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.25%) or 1-percentage point higher (8.25%) than the current rate, using the net pension liability reported by PSERS before adjusting for differences on projected vs contributions made.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Current 1% Decrease Disount Rate 1% Increase 6.25% 7.25% 8.25%
District's proportionate share of the net pension liability $ 114,473,000 $ 92,998,000 $ 74,868,000
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued Public School Employees’ Retirement System’s Comprehensive Annual Financial Report (CAFR) that includes financial statements and required supplementary information for the plan, which can be found at www.psers.state.pa.us.
OTHER POST-EMPLOYMENT BENEFITS
General Information about the Health Insurance Premium Assistance Program – Multiple Employer OPEB Plan
Health Insurance Premium Assistance Program
The System provides Premium Assistance which, is a governmental cost sharing, multiple-employer other postemployment benefit plan (OPEB) for all eligible retirees who qualify and elect to participate. Employer contribution rates for Premium Assistance are established to provide reserves in the Health Insurance Account that are sufficient for the payment of Premium Assistance benefits for each succeeding year. Effective January 1, 2002 under the provisions of Act 9 of 2001, participating eligible retirees are entitled to receive premium assistance payments equal to the lesser of $100 per month or their out-of- pocket monthly health insurance premium. To receive premium assistance, eligible retirees must obtain their health insurance through either their school employer or the PSERS’ Health Options Program. As of June 30, 2017 there were no assumed future benefit increases to participating eligible retirees.
Premium Assistance Eligibility Criteria
Retirees of the System can participate in the Premium Assistance program if they satisfy the following criteria:
• Have 24 ½ or more years of service, or • Are a disability retiree, or • Have 15 or more years of service and retired after reaching superannuation age, and • Participate in the HOP or employer-sponsored health insurance program.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Pension Plan description
PSERS is a governmental cost-sharing multiple-employer defined benefit pension plan that provides retirement benefits to public school employees of the Commonwealth of Pennsylvania. The members eligible to participate in the System include all full-time public school employees, part-time hourly public school employees who render at least 500 hours of service in the school year, and part-time per diem public school employees who render at least 80 days of service in the school year in any of the reporting entities in Pennsylvania. PSERS issues a publicly available financial report that can be obtained at www.psers.pa.gov.
Benefits provided
Participating eligible retirees are entitled to receive premium assistance payments equal to the lesser of $100 per month or their out-of-pocket monthly health insurance premium. To receive premium assistance, eligible retirees must obtain their health insurance through either their school employer or the PSERS’ Health Options Program. As of June 30, 2017 there were no assumed future benefit increases to participating eligible retirees.
Employer Contributions:
The school districts’ contractually required contribution rate for the fiscal year ended June 30, 2017 was 0.83% of covered payroll, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions to the OPEB plan from the District were $202,717 for the year ended June 30, 2017.
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB At June 30, 2018, the District reported a liability of $3,847,234 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2017, and the total OPEB liability used to calculate the net OPEB liability was determined by rolling forward the System’s total OPEB liability as of June 30, 2016 to June 30, 2017. The District’s proportion of the net OPEB liability was calculated utilizing the employer’s one-year reported covered payroll as it relates to the total one-year reported covered payroll. At June 30, 2017, the District’s proportion was 0.1883 percent, which was an increase of 0.0076 percent from its proportion measured as of June 30, 2016.
For the year ended June 30, 2018, the District recognized OPEB expense of $187,850. At June 30, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Deferred Outflows Deferred Inflows Sources of Resources of Resources Differences between Proportionate Share vs Actual Paid Separately Finance Liabilities $ 573 $ - Changes in Assumptions - 179,000 Net difference between projected and actual contributions made 4,528 - Net difference between projected and actual investment earnings 4,000 Difference between expected and actual experience - - Changes in proportion of the Net OPEB Liability 140,000 - District contributions subsequent to the measurement date 202,224 -
Total $ 351,325 $ 179,000
$202,224 reported as deferred outflows of resources related to OPEB resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:
Year ended June 30: Amount 2018 $ (5,000) 2019 (4,150) 2020 (4,150) 2021 (4,150) 2022 (5,150) Thereafter (7,299)
Total $ (29,899)
Actuarial Assumptions
The Total OPEB Liability as of June 30, 2017, was determined by rolling forward the System’s Total OPEB Liability as of June 30, 2016 to June 30, 2017 using the following actuarial assumptions, applied to all periods included in the measurement:
• Actuarial cost method - Entry Age Normal - level % of pay. • Investment return - 3.13% - S&P 20 Year Municipal Bond Rate. • Salary growth - Effective average of 5.00%, comprised of inflation of 2.75% and 2.25% for real wage growth and for merit or seniority increases. • Premium Assistance reimbursement is capped at $1,200 per year. • Assumed Healthcare cost trends were applied to retirees with less than $1,200 in premium assistance per year.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
• Mortality rates were based on the RP-2014 Mortality Tables for Males and Females, adjusted to reflect PSERS’ experience and projected using a modified version of the MP-2015 Mortality Improvement Scale. • Participation rate: • Eligible retirees will elect to participate Pre age 65 at 50% • Eligible retirees will elect to participate Post age 65 at 70%
The following assumptions were used to determine the contribution rate:
• The results of the actuarial valuation as of June 30, 2015 determined the employer contribution rate for fiscal year 2017. • Cost Method: Amount necessary to assure solvency of Premium Assistance through the third fiscal year after the valuation date. • Asset valuation method: Market Value. • Participation rate: 63% of eligible retirees are assumed to elect premium assistance. • Mortality rates and retirement ages were based on the RP-2000 Combined Healthy Annuitant Tables with age set back 3 for both males and females for healthy annuitants and for dependent beneficiaries. For disabled annuitants, the RP-2000 Combined Disabled Tables with age set back 7 years for males and 3 years for females for disabled annuitants. (A unisex table based on the RP-2000 Combined Healthy Annuitant Tables with age set back 3 years for both genders assuming the population consists of 25% males and 75% females is used to determine actuarial equivalent benefits.)
Investments consist primarily of short term assets designed to protect the principal of the plan assets. The expected rate of return on OPEB plan investments was determined using the OPEB asset allocation policy and best estimates of geometric real rates of return for each asset class.
The OPEB plan’s policy in regard to the allocation of invested plan assets is established and may be amended by the Board. Under the program, as defined in the retirement code employer contribution rates for Premium Assistance are established to provide reserves in the Health Insurance Account that are sufficient for the payment of Premium Assistance benefits for each succeeding year.
Long-Term Target Expected Real OPEB - Asset Class Allocation Rate of Return Cash 76.4% 0.6% Fixed Income 23.6% 1.5% 100%
The above was the Board’s adopted asset allocation policy and best estimates of geometric real rates of return for each major asset class as of June 30, 2017.
Discount rate
The discount rate used to measure the Total OPEB Liability was 3.13%. Under the plan’s funding policy, contributions are structured for short term funding of Premium Assistance. The funding policy sets contribution rates necessary to assure solvency of Premium Assistance through the third fiscal year after
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018 the actuarial valuation date. The Premium Assistance account is funded to establish reserves that are sufficient for the payment of Premium Assistance benefits for each succeeding year. Due to the short term funding policy, the OPEB plan’s fiduciary net position was not projected to be sufficient to meet projected future benefit payments, therefore the plan is considered a “pay-as-you-go” plan. A discount rate of 3.13% which represents the S&P 20 year Municipal Bond Rate at June 30, 2017, was applied to all projected benefit payments to measure the total OPEB liability.
Sensitivity of the System Net OPEB Liability to Change in Healthcare Cost Trend Rates
Healthcare cost trends were applied to retirees receiving less than $1,200 in annual Premium Assistance. As of June 30, 2017, retirees Premium Assistance benefits are not subject to future healthcare cost increases. The annual Premium Assistance reimbursement for qualifying retirees is capped at a maximum of $1,200. As of June 30, 2016, 91,797 retirees were receiving the maximum amount allowed of $1,200 per year. As of June 30, 2016, 1,354 members were receiving less than the maximum amount allowed of $1,200 per year. The actual number of retirees receiving less than the $1,200 per year cap is a small percentage of the total population and has a minimal impact on Healthcare Cost Trends as depicted below.
The following presents the System net OPEB liability for June 30,2017, calculated using current Healthcare cost trends as well as what the System net OPEB liability would be if it health cost trends were 1-percentage point lower or 1-percentage point higher than the current rate:
Current 1% Decrease Trend Rate 1% Increase (Between 4% to 7%) (Between 5% to 8%) (Between 6% to 9%) System net OPEB liability $ 3,835,000 $ 3,836,000 $ 3,837,000
Sensitivity of the District’s proportionate share of the net OPEB liability to changes in the discount rate
The following presents the net OPEB liability, calculated using the discount rate of 3.13%, as well as what the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower (2.13%) or 1-percentage-point higher (4.13%) than the current rate:
Current 1% Decrease Disount Rate 1% Increase 2.13% 3.13% 4.13%
District's proportionate share of the net OPEB liability $ 4,361,000 $ 3,836,000 $ 3,401,000
OPEB Plan Fiduciary Net Position
Detailed information about PSERS’ fiduciary net position is available in PSERS Comprehensive Annual Financial Report which can be found on the System’s website at www.psers.pa.gov.
Single Employer Plan – Health Benefit
Plan Description: 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, 2018
Summary of Plan Provisions
GROUP ELIGIBILITY COVERAGE AND PREMIUM SHARING DURATION I. Administrators
• Coverage: Medical, Prescription Drug, Dental, and Vision. A) Grandfathered N/A Already Coverage continues until the end of the six Superintendents and Retired • Premium Sharing: District pays full premium for member and spouse for Medical, years following retirement, or may continue Administrators Prescription Drug, Dental and Vision for six years. If after 6 years the member still until age 65 with retiree paying the full under age 65, the member may continue coverage until age 65 by paying the full premium. premium. If after six years the member is 65, the spouse may continue coverage by paying the full premium until the spouse is 65. • 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 under COBRA.
• Coverage: Medical, Prescription Drug, Dental, and Vision. B) All Other Administrators Must be eligible Coverage continues until age 65. for PSERS • Premium Sharing: The member and spouse may continue coverage by paying the Retirement and full premium as determined for the purpose of COBRA.. have at least 10 • Dependents: Spouse and family are covered. years of district service.
II. Teachers Act 110/43 Act 110/43 Coverage continues until age 65.
III. All Other Employees Act 110/43 Act 110/43. Coverage continues until age 65.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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.
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, 2018
Employees covered by benefit terms:
At June 30, 2017, the following employees were covered by the benefit terms:
Active Participants 370 Vested Former Participants 0 Retired Participants 23 Total 393
Total OPEB Liability
The School’s total OPEB liability under this single employer plan of $2,233,878, was measured as of June 30, 2017, and was determined by an actuarial valuation as of that date.
Actuarial Assumptions and other inputs
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:
Single Employer OPEB Healthcare Benefit Actuarial Valuation Date 7/1/2016
Actuarial Cost Method Entry Age Normal
Interest Rate 3.13%
Projected salary increases 3.75% to 6.25%
6.0% in 2017, and 5.5% in 2018 through 2023. Rate gradually decrease from 5.4% in 2024 to 3.9% in 2075 and later based on the Society of Actuaries Long-Run Healthcare inflation rate Medical Cost Trend Model.
Asset Valuation Method Healthcare inflation rate
The discount rate is based on S&P Municipal Bond 20-year high grade rate index at July 1, 2017.
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Mortality rates are assumed pre-retirement and post-retirement using the rates assumed in the PSERS defined benefit pension plan actuarial valuation. Incorporated into our retirement table are rates projected generationally by the Buck Modified 2016 projection scale to reflect mortality improvement.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study on March, 2017.
Changes in the Total OPEB Liability
Service Cost $ 132,235 Interest 54,000 Changes in Benefit Terms - Difference between expected and actual experience - Changes in assumptions 103,046 Benefit payments (200,393) Net change in total OPEB Liability 88,888 Total OPEB Liability - beginning 2,144,990 Total OPEB Liability - ending $ 2,233,878
$ 23,296,703 Covered employee payroll
Sensitivity of the total OPEB liability to changes in the discount rate
The following presents the total OPEB liability of the School’s single employer OPEB plan, as well as what the School’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower (2.13%) or 1-percentage point higher (4.13%) than the current discount rate:
Current 1% Decrease Disount Rate 1% Increase 2.13% 3.13% 4.13%
District's proportionate share of the net OPEB liability $ 2,380,966 $ 2,233,878 $ 2,095,451
Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates
The following presents the total OPEB liability of the School’s single employer OPEB plan, as well as what the School’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1- percentage point lower (5.0% decreasing to 2.9%) or 1-percentage point higher (7.0% decreasing to 4.9%) than the current healthcare cost trend rates:
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Current 1% Decrease Trend Rate 1% Increase (Between 2.9% to (Between 3.9% to (Between 4.9% to 5.0%) 6.0%) 7.0%) System net OPEB liability $ 1,997,166 $ 2,233,878 $ 2,517,824
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
For the year ended June 30, 2018, the School recognized OPEB expense of $194,162. At June 30, 2018, the School reported deferred outflows of resource and deferred inflows of resources related to this single employer OPEB plan from the following sources:
Deferred Outflows of Deferred Inflows Sources Resources of Resources Changes in Assumptions $ 95,119 $ - Net difference between projected and actual investment earnings - - Difference between expected and actual experience - - Changes in proportion of the Net OPEB Liability - - District contributions subsequent to the measurement date 234,023 -
Total $ 329,142 $ -
Amounts reported as deferred outflows of resources and deferred inflows of resources related to this single employer OPEB plan will be recognized in OPEB expense as follows:
Year ended June 30: Amount 2019 $ 7,927 2020 7,927 2021 7,927 2022 7,927 2023 7,927 Thereafter 55,484
Total $ 95,119
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Combined Deferred Outflows/Inflows on Pensions and OPEB As a result of having multiple pension and other post-employment benefit plans, the following schedule is prepared to illustrate the individual components reflected on the Statement of Net Position:
GOVERNMENTAL ACTIVITIES STATEMENT OF NET POSITION Single Employer Multiple Employer Pension & OPEB Pension - GASB 68 OPEB - GASB 75 OPEB - GASB 75 Total Governmental & Business-Type Activities Total DR OR (CR) DR OR (CR) DR OR (CR) DR OR (CR) DR OR (CR) RECONCILIATION OF NET CHANGE CURRENT YR CURRENT YR CURRENT YR CURRENT YR RECONCILIATION OF NET CHANGE CURRENT YR IN DEFERRED OUTFLOWS/INFLOWS BALANCE BALANCE BALANCE BALANCE IN DEFERRED OUTFLOWS/INFLOWS BALANCE Change in Proportion $ 3,313,143 $ - $ 136,825 $ 3,449,968 Change in Proportion $ 3,529,000 Current Year Contributions 7,571,751 234,023 198,001 8,003,775 Current Year Contributions 8,169,500 Change in Assumption 2,474,392 95,119 (174,940) 2,394,571 Change in Assumption 2,442,119 Diff in Projected Vs Actual Contributions (118,569) - 4,425 (114,144) Diff in Projected Vs Actual Contributions (116,558) Difference in Investment Earnings 2,112,616 - 3,909 2,116,525 Difference in Investment Earnings 2,159,000 Diff. between Expected vs Actual Experience 397,830 - - 397,830 Diff. between Expected vs Actual Experience 408,000 Diff. between Prop. Share vs Actual POS 4,224 - 573 4,797 Diff. between Prop. Share vs Actual POS 4,797
Net Pension Liability $ 90,492,644 $ 90,492,644 Net Pension Liability $ 92,495,702 Net OPEB Liability $ 2,233,878 $ 3,759,979 $ 5,993,857 Net OPEB Liability $ 6,081,112
BUSINESS-TYPE ACTIVITIES Single Employer Multiple Employer Pension & OPEB Pension - GASB 68 OPEB - GASB 75 OPEB - GASB 75 Total DR OR (CR) DR OR (CR) DR OR (CR) DR OR (CR) RECONCILIATION OF NET CHANGE CURRENT YR CURRENT YR CURRENT YR CURRENT YR IN DEFERRED OUTFLOWS/INFLOWS BALANCE BALANCE BALANCE BALANCE Change in Proportion $ 75,857 $ - $ 3,175 $ 79,032 Current Year Contributions 161,502 - 4,223 165,725 Change in Assumption 51,608 - (4,060) 47,548 Diff in Projected Vs Actual Contributions (2,517) - 103 (2,414) Difference in Investment Earnings 42,384 - 91 42,475 Diff. between Expected vs Actual Experience 10,170 - - 10,170 Diff. between Prop. Share vs Actual POS - - - -
Net Pension Liability $ 2,003,058 $ 2,003,058 Net OPEB Liability $ - $ 87,255 $ 87,255
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
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 83 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, 2018, 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, 2018, 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 – Prior Adjustments – General Fund/Net Position
Food Service Business-Type Governmental Fund Activities Activities Fund Balance/Net Position - June 30, 2017 (as reported) $ (1,118,004) $ (1,118,004) $ (20,573,477)
Adjustments to the fund balance: As a result of the new accounting principle GASB Statement No. 75, a prior period adjustment needed to be made pertaining to the multiple employer cost sharing OPEB plan on health assistance handled by PSERS reporting the net opeb liability at June 30, 2016. (83,687) (83,687) (3,605,596)
As a result of the new accounting principle GASB Statement No. 75, a prior period adjustment needed to be made pertaining to the the single employer OPEB plan dealing with age-adjusted vs global healthcare rates, reporting the net opeb liability at June 30, 2016. - - (1,346,920)
Fund Balance/Net Position - June 30, 2017 (restated) $ (1,201,691) $ (1,201,691) $ (25,525,993)
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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Note 8 - Fund Balance Allocations The General Fund was $4,677 in nonspendable fund balance at year end as a result of prepaid expenditures. Restricted Fund Balance
The two Capital Project Funds have restrictions on the use of the resources at year end. The Capital Reserve Fund’s $8,880,246 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 2017 Bond issue and 2018 A Bond issue restricts the proceeds shown in the Capital Project Fund for the purposes outlined in the bond resolution. As such, the $32,574,213, in fund balance at year end within this fund is considered restricted.
Committed Fund Balance
The governing body (Board of School Directors) has committed $3,300,000, of the General Fund’s year end fund balance for anticipated increase in retirement contributions, and $2,000,000 for future debt service payments.
Assigned Fund Balance
The General Fund has $1,642,602, assigned for balancing the 2018-19 general fund budget, $2,000,000 assigned for construction projects, including mold remediation, and $800,000 for future debt payments.
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 68,244,783, unspent proceeds of $32,594,213, with related debt of $67,847,869, which includes unamortized bond discounts, premiums, and deferred refunding charges. The business-type activities column reflects $124,811 invested in capital assets with no related debt. In addition, the governmental activity has restricted $8,880,246 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, 2018.
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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Upper Perkiomen School District Notes To Basic Financial Statements Fiscal Year Ended June 30, 2018
Note 11 – New Accounting Pronouncements The Governmental Accounting Standards Board (GASB) has issued the following standards, which have not yet been implemented:
• Statement No. 83, Certain Asset Retirement Obligations – This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement. Effective date: for periods beginning after June 15, 2018.
• Statement No. 84, Fiduciary Activities – This Statement is designed to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Effective date: Periods beginning after December 15, 2018.
• Statement No. 87, Leases – The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement requires certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Effective date: Periods beginning after December 15, 2019.
• Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements – The objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. This Statement defines debt for purposes of disclosure in notes to financial statements as a liability that arises from a contractual obligation to pay cash or other assets in or more payments to settle an amount that is fixed at the date the contractual obligation is established. The Statement requires additional essential information related to debt be disclosed, including unused lines of credit, assets pledged as collateral for the debt, and terms specified in debt agreements related to default events. Effective date: for periods beginning after June 15, 2018.
• Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period – The objectives of the statement are (1) to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and (2) to simplify accounting for interest cost incurred before construction ends. This standard requires expensing interest costs when incurred rather than capitalizing the costs.
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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 THE DISTRICT'S PROPORTIONATE SHARE OF NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM CUMULATIVE TEN FISCAL YEARS REPORT FOR THE YEAR ENDED JUNE 30, 2018
2017-18 2016-17 2015-16 2014-15 District's proportion of the net pension liability (asset) 0.1883% 0.1807% 0.1781% 0.1762%
District's proportionate share of the net pension liability (asset) $ 92,998,000 $ 89,549,000 $ 77,144,000 $ 69,741,000
District's covered employee payroll 24,364,377 24,423,704 23,624,601 22,922,485
District's proportionate share of the net pension liability (asset) as a percentage of its covered employee payroll 381.70% 366.65% 326.54% 304.25%
Plan fiduciary net position as a percentage of the total pension liability 51.84% 50.14% 54.36% 57.24%
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UPPER PERKIOMEN SCHOOL DISTRICT SCHEDULE OF DISTRICT CONTRIBUTIONS PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM CUMULATIVE TEN FISCAL YEARS REPORT FOR THE YEAR ENDED JUNE 30, 2018
2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 Contractually required contribution $ 7,733,253 $ 7,131,721 $ 5,906,150 $ 4,699,110 $ 3,518,160 $ 2,593,753 $ 1,812,932 $ 1,121,845 $ 905,135 $ 879,246
Contributions in relation to the contractually required contribution 7,733,253 7,131,721 5,906,150 4,699,110 3,518,160 2,593,753 1,812,932 1,121,845 905,135 879,246
Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
District's covered employee payroll $ 24,364,377 $ 24,423,704 $ 23,624,601 $ 22,922,485 $ 21,988,499 $ 22,554,374 $ 22,661,644 $ 22,436,893 $ 22,628,363 $ 21,981,155
Contributions as a percentage of covered employee payroll 31.74% 29.20% 25.00% 20.50% 16.00% 11.50% 8.00% 5.00% 4.00% 4.00%
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UPPER PERKIOMEN SCHOOL DISTRICT SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF NET OPEB LIABILITY MULTIPLE EMPLOYER TEACHERS OPEB PLAN CUMULATIVE TEN FISCAL YEARS REPORT FOR THE YEAR ENDED JUNE 30, 2018
2017-18 2016-17 District's proportion of the net OPEB liability 0.1883% 0.1807%
District's proportionate share of the net OPEB liability (asset) $ 3,836,000 $ 3,892,000
District's covered-employee payroll 24,364,377 24,423,704
District's proportionate share of the net OPEB liability (asset) as a percentage of its covered employee payroll 15.74% 15.94%
Plan fiduciary net position as a percentage of the total OPEB liability 5.73% 5.47%
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UPPER PERKIOMEN SCHOOL DISTRICT SCHEDULE OF DISTRICT CONTRIBUTIONS MULTIPLE EMPLOYER TEACHERS OPEB PLAN CUMULATIVE TEN FISCAL YEARS REPORT FOR THE YEAR ENDED JUNE 30, 2018
2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 Contractually required contribution $ 202,224 $ 202,717 $ 198,446 $ 206,303 $ 204,494 $ 193,966 $ 147,298 $ 143,597 $ 176,498 $ 167,056
Contributions in relation to the contractually required contribution 202,224 202,717 198,446 206,303 204,494 193,966 147,298 143,597 176,498 167,056
Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
District's covered employee payroll $ 24,364,377 $ 24,423,704 $ 23,624,601 $ 22,922,485 $ 21,988,499 $ 22,554,374 $ 22,661,644 $ 22,436,893 $ 22,628,363 $ 21,981,155
Contributions as a percentage of covered employee payroll 0.83% 0.83% 0.84% 0.90% 0.93% 0.86% 0.65% 0.64% 0.78% 0.76%
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UPPER PERKIOMEN SCHOOL DISTRICT SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF NET OPEB LIABILITY SINGLE EMPLOYER HEALTH INSURANCE PLAN CUMULATIVE TEN FISCAL YEARS REPORT FOR THE YEAR ENDED JUNE 30, 2018
2017-18 Total OPEB Liability
Service Cost $ 132,235 Interest 54,000 Changes in Benefit Terms - Difference between expected and actual experience - Changes in assumptions 103,046 Benefit payments (200,393) Net change in total OPEB Liability 88,888 Total OPEB Liability - beginning 2,144,990 Total OPEB Liability - ending $ 2,233,878
Covered employee payroll $ 23,296,703
Total OPEB Liability as a percentage of covered employee payroll 9.59%
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Upper Perkiomen School District Notes to Required Supplemental Information Fiscal Year Ended June 30, 2018
Public School Employees’ Retirement System
Changes of benefit terms
None
Changes in assumptions
• During this fiscal year, there were no changes in assumptions used in the prior reporting period.
Methods and assumptions used in calculations of actuarially determined contributions
The actuarially determined contributions, by PSERS, are calculated as of the June 30 preceding the fiscal year in which contributions are made. It does not include an adjustment made for the difference between projected vs actual contributions or separately financed liabilities. The following methods and assumptions were used to determine contribution rates reported:
• Investment return – 7.25%, includes inflation at 2.75%. • Salary increases – Effective average of 5.0%, which reflects an allowance for inflation of 2.75%, and 2.25% for real wage growth and merit or seniority increases. • Benefit payments – no postretirement benefit increases assumed in the future. • Multiple decrement tables – mortality, vesting, retirement age, and withdrawal estimates are based upon tables provided by the actuary.
Proportionate Share of the Net Pension Liability
The amount reported as the District’s proportionate share of the net pension liability (asset) does not include the adjustment for the difference between projected vs actual contributions made and the adjustment for the difference between proportionate share vs actual paid separately financed liabilities.
Other Post-Employment Benefits – Teachers Health Insurance Assistance
Changes of benefit terms
None
Changes in assumptions
• The discount rate used to measure the Total OPEB liability increased from 2.71% as of June 30, 2016 to 3.13% as of June 30, 2017.
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Upper Perkiomen School District Notes to Required Supplemental Information Fiscal Year Ended June 30, 2018
Methods and assumptions used in calculations of actuarially determined contributions
The actuarially determined contributions, by PSERS, are calculated as of the June 30 preceding the fiscal year in which contributions are made. It does not include an adjustment made for the difference between projected vs actual contributions or separately financed liabilities. The following methods and assumptions were used to determine contribution rates reported:
• Investment return – 3.13% - S&P 20 Year Municipal Bond Rate. • Salary increases – Effective average of 5.0%, which reflects an allowance for inflation of 2.75%, and 2.25% for real wage growth and merit or seniority increases. • Premium Assistance reimbursement is capped at $1,200 per year. • Assumed Healthcare cost trends were applied to retirees with less than $1,200 in premium assistance per year. • Mortality rates were based on the RP-2014 Mortality Tables for Males and Females, adjusted to reflect PSERS’ experience and projected using a modified version of the MP-2015 Mortality Improvement Scale. • Participation rate: o Eligible retirees will elect to participate Pre age 65 at 50% o Eligible retirees will elect to participate Post age 65 at 70%
The following assumptions were used to determine the contribution rate:
• The results of the actuarial valuation as of June 30, 2015 determined the employer contribution rate for fiscal year 2017. • Cost Method: Amount necessary to assure solvency of Premium Assistance through the third fiscal year after the valuation date. • Asset valuation method: Market Value. • Participation rate: 63% of eligible retirees are assumed to elect premium assistance. • Mortality rates and retirement ages were based on the RP-2000 Combined Healthy Annuitant Tables with age set back 3 for both males and females for healthy annuitants and for dependent beneficiaries. For disabled annuitants, the RP-2000 Combined Disabled Tables with age set back 7 years for males and 3 years for females for disabled annuitants. (A unisex table based on the RP-2000 Combined Healthy Annuitant Tables with age set back 3 years for both genders assuming the population consists of 25% males and 75% females is used to determine actuarial equivalent benefits.)
Proportionate Share of the Net OPEB Liability
The amount reported as the District’s proportionate share of the net opeb liability (asset) does not include the adjustment for the difference between projected vs actual contributions made and the adjustment for the difference between proportionate share vs actual paid separately financed liabilities.
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Upper Perkiomen School District Notes to Required Supplemental Information Fiscal Year Ended June 30, 2018
Other Post-Employment Benefits – Single Employer Healthcare Plan
Changes of benefit terms
Changes were made to the current Executive Director’s eligibility and dependent coverage, but had no effect on liability. Written notification of retirement language was added to the Administrators, Administrative Support, and Teacher groups, but had no effect on liability do to current assumptions.
Changes in assumptions
The discount rate changed from 2.49% to 3.13%. The trend assumption was updated. Assumptions for salary, mortality, withdrawal and retirement were updated based on new PSERS assumptions.
Methods and assumptions used in calculations of actuarially determined contributions
• Actuarial Cost Method – Entry Age Normal • Salary Increases – 3.50% to 5.25% • Healthcare cost trend rate – 6.0% in 2017, and 5.5% in 2018 to 2023. Rates gradually decrease from 5.4% in 2024 to 3.9% in 2075 based on the Society of Actuaries Long-Run Medical Cost Trend Model • Asset Valuation Method – Pay as you go basis • Discount Rate – The rate of 3.13% is based on S&P Municipal Bond 20-year high grade rate index at July 1, 2017.
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SUPPLEMENTAL INFORMATION SECTION
Upper Perkiomen School District Combining Balance Sheet All Capital Project Funds For the Year Ended June 30, 2018
TOTAL CAPITAL CAPITAL CAPITAL RESERVE PROJECTS PROJECT FUND FUND FUNDS ASSETS Cash and cash equivalents $ 8,660,868 $ 6,125,832 $ 14,786,700 Restricted Cash - 3,471,610 3,471,610 Investments - 25,214,365 25,214,365 Other Receivables - 50,554 50,554 Due from other funds 255,746 - 255,746 Receivables from other governments - - - Inventories - - - TOTAL ASSETS $ 8,916,614 $ 34,862,361 $ 43,778,975
DEFERRED OUTFLOWS OF RESOURCES Deferred Charges on Refundings, net - - - TOTAL ASSETS & DEFERRED OUTFLOWS OF RESOURCES $ 8,916,614 $ 34,862,361 $ 43,778,975
LIABILITIES Accounts Payable $ 21,188 $ 2,288,148 $ 2,309,336 Due to other funds 15,180 - 15,180 Accrued Compensated Absences - - - Payable to other governments - - - Other Retirement Benefits - - - TOTAL LIABILITIES 36,368 2,288,148 2,324,516 DEFERRED INFLOWS OF RESOURCES Unearned Revenue - - - TOTAL LIABILITIES & DEFERRED INFLOWS OF RESOURCES 36,368 2,288,148 2,324,516 ------FUND BALANCES: Nonspendable Fund Balance - - - Restricted Fund Balance 8,880,246 32,574,213 41,454,459 Committed Fund Balance - - - Assigned Fund Balance - - - TOTAL FUND BALANCES 8,880,246 32,574,213 41,454,459 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 8,916,614 $ 34,862,361 $ 43,778,975
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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, 2018
TOTAL CAPITAL CAPITAL CAPITAL RESERVE PROJECTS PROJECT FUND FUND FUNDS REVENUES Local Sources $ 77,009 $ 207,002 $ 284,011 State Sources - - - Federal Sources - - - TOTAL REVENUES 77,009 207,002 284,011 ------
EXPENDITURES Instruction - - - Support Services 5,976 560,879 566,855 Operation of Non-Instructional Services - - - Capital Outlay 213,209 11,729,058 11,942,267 Debt Service - - - TOTAL EXPENDITURES 219,185 12,289,937 12,509,122
EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (142,176) (12,082,935) (12,225,111)
OTHER FINANCING SOURCES (USES) Proceeds of long-term capital-related debt - 36,390,000 36,390,000 Proceeds from Refunding Bond Issues - - - Bond Premium - 875,039 875,039 Bond Discount - - - Payment to bond refunding escrow agent - - - Sale/Compensation for Fixed Assets - - - Transfers in 3,031,213 - 3,031,213 Transfers out - - - TOTAL OTHER FINANCING SOURCES AND USES 3,031,213 37,265,039 40,296,252
NET CHANGE IN FUND BALANCES 2,889,037 25,182,104 28,071,141
FUND BALANCES - BEGINNING 5,991,209 7,392,109 13,383,318
FUND BALANCES - ENDING $ 8,880,246 $ 32,574,213 $ 41,454,459
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Upper Perkiomen School District Combining Statement of Fiduciary Net Position Private Purpose Trust Funds For the Year Ended June 30, 2018
BITTEN- BUCHMAN ANDY WILSON R. CAMP LIONS GULACK BARRY J. TERRY N. DEBORAH ANNE K. KYHEIM H. MELVIN UPHS BENDER CENT. WEAVER RITTER ROCKWOOD CLUB FOUNDATIONFETTERMAN FETTERMAN HODGE RAYMOND TRIPP DIEHL FACULTY SCHOLAR. SCHOLAR. MEM. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. MEM. MEM. MEM. MEM. SCHOLAR. SCHOLAR. SCHOLAR. ASSETS & DEFERRED OUTFLOWS OF RESOURCES Cash $ 53,532 $ 7 $ 199 $ 3,356 $ 3 $ 19 $ 97,822 $ 714 $ 2,003 $ 141 $ 12,065 $ 1,086 $ (60) $ 553 Investments ------Accounts Receivable ------Due from Other Funds ------Deferred Outflow of Resources ------TOTAL ASSETS & DEFERRED OUTFLOWS OF RESOURCES $ 53,532 $ 7 $ 199 $ 3,356 $ 3 $ 19 $ 97,822 $ 714 $ 2,003 $ 141 $ 12,065 $ 1,086 $ (60) $ 553 ------
LIABILITIES & DEFERRED INFLOWS OF RESOURCES Accounts Payable $ - $ - $ - $ 500 $ - $ - $ 2,063 $ - $ - $ - $ - $ - $ - $ - Interfund Payables ------Unearned Revenues ------TOTAL LIABILITIES & DEFERRED INFLOWS OF RESOURCES - - - 500 ------
NET POSITION Held in Trust for future recipients $ 53,532 $ 7 $ 199 $ 2,856 $ 3 $ 19 $ 95,759 $ 714 $ 2,003 $ 141 $ 12,065 $ 1,086 $ (60) $ 553
Combining Statement of Changes in Fiduciary Net Position Private Purpose Trust Funds For the Year Ended June 30, 2018
BITTEN- BUCHMAN ANDY WILSON R. CAMP LIONS GULACK BARRY J. TERRY N. DEBORAH ANNE K. KYHEIM H. MELVIN UPHS BENDER CENT. WEAVER RITTER ROCKWOOD CLUB FOUNDATIONFETTERMAN FETTERMAN HODGE RAYMOND TRIPP DIEHL FACULTY SCHOLAR. SCHOLAR. MEM. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. MEM. MEM. MEM. MEM. SCHOLAR. SCHOLAR. SCHOLAR. ADDITIONS: Contributions $ - $ - $ - $ - $ - $ 1,500 $ 8,000 $ - $ - $ - $ 2,000 $ - $ - $ 860 Interfund Transfers In ------INVESTMENT EARNINGS: Interest and dividends 251 - 2 19 - - 597 3 21 2 136 12 - 7 TOTAL ADDITIONS 251 - 2 19 - 1,500 8,597 3 21 2 2,136 12 - 867
DEDUCTIONS: Administrative Charges ------Interfund Transfers Out ------Signs, Tiles, Repairs ------Awards 2,000 - - 500 - 1,500 2,063 - 100 100 2,000 100 - 800 TOTAL DEDUCTIONS 2,000 - - 500 - 1,500 2,063 - 100 100 2,000 100 - 800
CHANGES IN NET POSITION (1,749) - 2 (481) - - 6,534 3 (79) (98) 136 (88) - 67
NET POSITION - BEG. OF THE YR 55,281 7 197 3,337 3 19 89,225 711 2,082 239 11,929 1,174 (60) 486
NET POSITION - END OF THE YR $ 53,532 $ 7 $ 199 $ 2,856 $ 3 $ 19 $ 95,759 $ 714 $ 2,003 $ 141 $ 12,065 $ 1,086 $ (60) $ 553
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SAMANTHA SNYDER DR. PERKIOMEN NORMA KNIGHTS COMM. RALPH WATER HENRY ANITA BEN SAMANTHA SALLY JOAN VALLEY REICHENBACH OF WALLY INS. ENGLE POLO HIGHLAND DUTTON OBERHOLTZER SNYDER WELSH MISC. SMITH WOMEN'S NESTLER NICHOLS COLUMBUS BEILER SCHOLAR. MEM. MEM. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. TOTAL
$ - $ - $ 1,903 $ 58 $ 4 $ 45,475 $ 2,071 $ 84 $ (150) $ 509 $ 10,151 $ 21,780 $ 3,344 $ - $ - $ 256,669 ------
$ - $ - $ 1,903 $ 58 $ 4 $ 45,475 $ 2,071 $ 84 $ (150) $ 509 $ 10,151 $ 21,780 $ 3,344 $ - $ - $ 256,669 ------
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 2,563 ------
------2,563
$ - $ - $ 1,903 $ 58 $ 4 $ 45,475 $ 2,071 $ 84 $ (150) $ 509 $ 10,151 $ 21,780 $ 3,344 $ - $ - $ 254,106
SAMANTHA SNYDER DR. PERKIOMEN NORMA KNIGHTS COMM. RALPH WATER HENRY ANITA BEN SAMANTHA SALLY JOAN VALLEY REICHENBACH OF WALLY - INS. ENGLE POLO HIGHLAND DUTTON OBERHOLTZER SNYDER WELSH MISC. SMITH WOMEN'S NESTLER NICHOLS COLUMBUS BEILER - SCHOLAR. MEM. MEM. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. SCHOLAR. TOTAL
$ 1,000 $ 400 $ 837 $ - $ - $ - $ 60 $ 1,000 $ - $ - $ - $ - $ 3,800 $ 150 $ 250 $ 19,857 ------
- - 3 1 2 220 40 1 - 5 102 225 44 - - 1,693 1,000 400 840 1 2 220 100 1,001 - 5 102 225 3,844 150 250 21,550
------1,000 400 695 - 275 1,000 500 1,000 - - - 760 500 150 250 15,693 1,000 400 695 - 275 1,000 500 1,000 - - - 760 500 150 250 15,693
- - 145 1 (273) (780) (400) 1 - 5 102 (535) 3,344 - - 5,857
- - 1,758 57 277 46,255 2,471 83 (150) 504 10,049 22,315 - - - 248,249
$ - $ - $ 1,903 $ 58 $ 4 $ 45,475 $ 2,071 $ 84 $ (150) $ 509 $ 10,151 $ 21,780 $ 3,344 $ - $ - $ 254,106
Upper Perkiomen School District Schedule on Tax Collectors' Receipts For the Year Ended June 30, 2018
EAST UPPER CURRENT REAL ESTATE TAXES GREENVILLE GREEN LANE HEREFORD MARLBOROUGH PENNSBURG RED HILL HANOVER TOTALS Total Assessed Value $ 105,491,230 $ 26,311,120 $ 135,251,600 $ 216,638,310 $ 153,205,200 $ 109,019,624 $ 507,068,147 $ 1,252,985,231 Less: Act 1 Deduction 3,826,116 761,319 5,367,591 6,887,959 4,431,267 4,236,057 14,196,600 39,706,909 Net Assessed Value $ 101,665,114 $ 25,549,801 $ 129,884,009 $ 209,750,351 $ 148,773,933 $ 104,783,567 $ 492,871,547 $ 1,213,278,322 Divided by: Lowest STEB ratio 0.6313776 0.6313776 0.6313776 0.6313776 0.6313776 0.6313776 0.6313776 Avg. Multiplied by School Ratio 0.75 0.75 0.75 0.75 0.75 0.75 0.75 Avg. Multiplied by Millage Rate 0.0243479 0.0243479 0.0243479 0.0243479 0.0243479 0.0243479 0.0243479 Avg. TOTAL TAXABLE DUPLICATE 2,940,398 738,961 3,756,556 6,066,478 4,302,895 3,030,590 14,255,015 35,090,893
PLUS - Additions - - 5,093 - - 1,215 - 6,308 Penalties 6,246 553 7,314 11,012 10,991 3,203 12,895 52,214
TOTAL TAXES TO BE COLLECTED 2,946,644 739,514 3,768,963 6,077,490 4,313,886 3,035,008 14,267,910 35,149,415 ------LESS - Discounts 52,295 12,104 61,497 105,197 75,291 54,381 256,828 617,593 Reductions - - 9,135 - 10,136 1,215 12,354 32,840 Refunds ------215 215 Returned to County 35,961 61,999 119,861 86,754 103,521 63,714 181,577 653,387 Outstanding ------
NET CURRENT REAL ESTATE TAXES COLLECTED $ 2,858,388 $ 665,411 $ 3,578,470 $ 5,885,539 $ 4,124,938 $ 2,915,698 $ 13,816,936 $ 33,845,380
CURRENT INTERIM REAL ESTATE TAXES COLLECTED $ 441 $ - $ 12,401 $ 36,094 $ 699 $ 647 $ 158,865 $ 209,147 CURRENT PER CAPITA TAXES Number of Persons Assessed 2,240 334 2,114 2,531 2,488 1,871 5,634 17,212 Tax Rate $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 TAXABLE VALUATION 22,400 3,340 21,140 25,310 24,880 18,710 56,340 172,120
PLUS - Additions - - 10 - - 40 - 50 Penalties 169 9 116 123 141 91 512 1,161
TAXES TO BE COLLECTED 22,569 3,349 21,266 25,433 25,021 18,841 56,852 173,331 ------LESS - Discounts 210 36 257 365 234 230 711 2,043 Exonerations 1,330 90 1,110 780 480 1,200 4,430 9,420 Refunds ------Reductions - - 10 - - 30 - 40 Outstanding 7,300 1,050 4,070 2,920 9,670 4,020 7,010 36,040 NET CURRENT PER CAPITA TAXES COLLECTED $ 13,729 $ 2,173 $ 15,819 $ 21,368 $ 14,637 $ 13,361 $ 44,701 $ 125,788
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Upper Perkiomen School District General Fund Statement of Revenue, Expenditures, and Changes in Fund Balance - Budget vs Actual For the Year Ended June 30, 2018
6000 - Revenue from Local Sources Budget Actual Variance 6111 Current Real Estate Taxes $ 33,677,520 $ 33,845,380 $ 167,860 6112 Interim Real Estate Taxes 250,000 209,147 (40,853) 6113 Public Utility 38,750 36,864 (1,886) 6114 Payment in Lieu of Taxes 27 27 - 6120 Current Per Capita Taxes - 511 64,000 62,894 (1,106) 6141 Current Per Capita Taxes - 679 64,000 62,894 (1,106) 6151 Earned Income Tax 3,000,000 3,341,174 341,174 6153 Real Estate Transfer Tax 420,000 604,060 184,060 6411 Delinquent Real Estate Taxes 520,000 763,939 243,939 6420 Delinquent Per Capita Taxes - 511 6,000 13,438 7,438 6441 Delinquent Per Capita Taxes - 679 6,000 13,437 7,437 6510 Interest 75,000 381,110 306,110 6630 Special Functions - 960 960 6710 Admissions 33,000 37,686 4,686 6740 Fees 60,000 64,632 4,632 6831 Federal Revenue Received From Other PA Public Schools - 8,675 8,675 6832 Federal IDEA Revenued Received as Pass Through 620,000 548,303 (71,697) 6836 Federal ARRA Race to the Top - 10,000 10,000 6910 Rentals 25,000 39,583 14,583 6920 Contributions 5,000 20,021 15,021 6941 Regular Day School Tuition - 1,590 1,590 6942 Summer School Tuition - - - 6961 Services Provided Other PA LEAs - Transp. 40,000 44,005 4,005 6980 Revenue from Community Services Activities 2,500 - (2,500) 6990 Refunds and Other Miscellaneous Revenue 3,000 15,250 12,250 6991 Refunds of Prior Yr. Expenditures - 14,288 14,288 6992 Energy Efficiency Revenue 8,000 12,287 4,287 6999 Other Revenues Not Specified Above 3,000 9,320 6,320
TOTAL REVENUE FROM LOCAL SOURCES $ 38,920,797 $ 40,160,964 $ 1,240,167
7000 - Revenue from State Sources 7110 Basic Subsidy - ESBE 8,775,978 8,771,584 (4,394) 7160 Orphan Tuition 100,000 134,695 34,695 7271 Special Education 1,791,430 1,763,424 (28,006) 7299 Program revenues not listed previously in the 7200 - 183 183 7311 Transportation (Regular and Additional) 1,350,000 1,327,776 (22,224) 7312 Transportation (Nonpublic and Charter School) 100,000 108,185 8,185 7320 Rental and Sinking Fund Payments / Building Reimb 509,516 512,819 3,303 7330 Health Services 48,000 59,220 11,220 7340 State Property Tax Reduction Allocation 1,148,597 1,148,597 - 7360 Safe Schools - 19,845 19,845 7505 Ready to Learn Grant 378,374 378,374 - 7599 Other State revenue not listed elsewhere - 3,808 3,808 7810 FICA Revenue 910,000 872,192 (37,808) 7820 Retirement Revenue 3,400,000 3,886,298 486,298 7910 Educational Technology - - -
TOTAL REVENUE FROM STATE SOURCES 18,511,895 18,987,000 475,105
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Upper Perkiomen School District General Fund Statement of Revenue, Expenditures, and Changes in Fund Balance - Budget vs Actual For the Year Ended June 30, 2018
Budget Actual Variance 8000 - Revenue from Federal Sources 8514 Title I 312,165 265,193 (46,972) 8515 Title II 90,753 90,373 (380) 8516 Title III 6,195 - (6,195) 8517 Title IV - 6,995 6,995 8810 Medical Assistance Reimbursements (Access) 50,000 47,996 (2,004) 8820 Medical Assistance Reimbursment for Health-Related 1,000 1,962 962
TOTAL REVENUE FROM FEDERAL SOURCES 460,113 412,519 (47,594) 9000 - Other Financing Sources 9400 Sale of or Compensation For Loss of Fixed Assets - 5,334 5,334
TOTAL REVENUES AND OTHER FINANCING SOURCES $ 57,892,805 $ 59,565,817 $ 1,673,012
1000 - instruction 1110 Regular Programs - Elem./Secondary $ 24,665,129 $ 24,664,148 $ 981 1190 Federally Funded Regular Programs 337,080 336,507 573 1211 Life Skills Support - Public 510,194 509,101 1,093 1221 Deaf or Hearing Impaired Support 25,867 22,036 3,831 1225 Speech & Language Impaired 405,632 404,856 776 1231 Emotional Support - Public 616,030 615,778 252 1233 Autistic Support 857,004 856,050 954 1241 Learning Support - Public 3,401,296 3,400,001 1,295 1243 Gifted Support 565,240 562,208 3,032 1270 Multi-Handicapped Support 377,407 376,764 643 1290 Other Support 1,353,562 1,351,826 1,736 1390 Other Vocational Education Programs 2,331,044 2,330,920 124 1430 Homebound Instruction 9,285 8,671 614 1441 Adjudicated/Court Placed Programs 49,932 47,245 2,687 1442 Alternative Education Program 75,068 71,273 3,795 1490 Additional Other Instructional Programs - - - 1500 Nonpublic School Programs - - - 1700 Higher Education Programs 6,250 5,850 400
Total Instruction 35,586,020 35,563,234 22,786
2000 - Support Services 2111 Supervision of Student Services 78,931 77,114 1,817 2120 Guidance Services 1,179,564 1,178,614 950 2130 Attendance Services 24,773 22,284 2,489 2140 Psychological Services 388,462 387,007 1,455 2160 Social Work Services 113,212 110,598 2,614 2170 Student Accounting Services 75,220 74,131 1,089 2220 Technology Support Services 5,850 4,631 1,219 2230 Educational Television Services 115,920 113,343 2,577 2240 Computer-Assisted Instruction Suppport Services 7,000 6,995 5 2250 School Library Services 543,205 542,283 922 2260 Instructional & Curriculum Dev. Service 367,632 367,085 547 2270 Instructional Staff Professional Development Services - - - 2271 Instructional Staff Development 398,220 396,995 1,225 2272 Instructional Staff Development - Non-certified 4,433 3,514 919 2280 Nonpublic Support Services 1,747 - 1,747
Sub-Total - Support Services 3,304,169 3,284,594 19,575
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Upper Perkiomen School District General Fund Statement of Revenue, Expenditures, and Changes in Fund Balance - Budget vs Actual For the Year Ended June 30, 2018
Budget Actual Variance Sub-Total - Support Services (carried forward) 3,304,169 3,284,594 19,575 2290 Other Instructional Staff Services 60,471 59,204 1,267 2310 Board Services 100,700 99,818 882 2330 Tax Assessment & Collection Service 247,397 246,808 589 2350 Legal Services 428,260 426,923 1,337 2360 Office of the Superintendent Services 417,499 416,866 633 2370 Community Relations Services 21,700 20,287 1,413 2380 Office of the Principal Services 2,058,480 2,056,612 1,868 2400 Suport Services - Pupil Health 100 60 40 2420 Medical Services 601,878 600,684 1,194 2500 Support Services - Business 700 637 63 2511 Supervision of Fiscal Services 320,347 311,349 8,998 2513 Receiving and Disbursing Funds Services 108,135 101,565 6,570 2514 Payroll Services 126,399 124,133 2,266 2515 Financial Accounting Services 160,574 159,800 774 2519 Other Fiscal Services 100 6 94 2611 Supervision of Operation and Maint. of Plant Svcs. 326,012 323,671 2,341 2619 Supervision of Operation and Maint. of Plant Svcs. 537,938 536,703 1,235 2620 Operation of Building Services 2,791,147 2,789,655 1,492 2630 Care and Upkeep of Grounds Services 62,900 62,272 628 2640 Care and Upkeep of Equipment Services 200 97 103 2650 Vehicle Operation and Maint. Services 140,283 138,469 1,814 2660 Security Services 135,770 134,514 1,256 2700 Student Transportation Services - - - 2711 Supervision of Student Transportation Services 129,678 109,159 20,519 2720 Vehicle Operation Services 2,290,600 2,196,689 93,911 2750 Non-Public Transportation 593,800 569,803 23,997 2800 Support Services - Central 2,000 1,510 490 2818 System-Wide Technology Services 1,198,490 1,161,378 37,112 2823 Public Information Services 24,000 23,051 949 2830 Staff Services 11,000 10,522 478 2831 Supervision of Staff Services 315,550 298,352 17,198 2834 Staff Development Services - Non-Instructional, Certified 26,800 5,514 21,286 2836 Staff Development Services - Non-Instructional, Non-Certified 5,350 3,327 2,023 2839 Other Staff Services 1,000 542 458 2900 Other Support Services 35,950 35,935 15 2910 Support services not listed elsewhere in the 2000 - - -
Total Support Services 16,585,377 16,310,509 274,868
3000 - Operation of Non-Instructional Services 3210 School Sponsored Student Activities 200,182 152,833 47,349 3250 School Sponsored Athletics 839,798 838,236 1,562
Total Non-Instructional Services 1,039,980 991,069 48,911
4000 - Facilities Acquisition, Construction and Improvement Svcs. 4500 Building Acquisition and Contruction Services - Original - - - 4600 Existing Building Improvement Services 3,000 2,220 780
Total Facilities Acquisition, Construction and Improvement Services 3,000 2,220 780
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Upper Perkiomen School District General Fund Statement of Revenue, Expenditures, and Changes in Fund Balance - Budget vs Actual For the Year Ended June 30, 2018
Budget Actual Variance 5000 - Other Expenditures and Financing Uses 5110 Debt Service 3,548,384 3,047,566 500,818 5130 Refund of Prior Yr. Receipts - - - 5230 Transfer to Capital Project Funds 3,032,000 3,031,213 787 5900 Budgetary Reserve 62,400 - 62,400 Total Other Expenditures and Financing Uses 6,642,784 6,078,779 564,005
TOTAL EXPENDITURES AND OTHER FINANCING USES $ 59,857,161 $ 58,945,811 $ 911,350
TOTAL REVENUES AND OTHER FINANCING SOURCES $ 57,892,805 $ 59,565,817 $ 1,673,012
TOTAL EXPENDITURES AND OTHER FINANCING USES 59,857,161 58,945,811 911,350
NET REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (1,964,356) 620,006 2,584,362
Special Items - - - Extraordinary Items - 25,390 25,390
NET REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES AFTER SPECIAL ITEMS AND EXTRAORDINARY ITEMS (1,964,356) 645,396 2,609,752
FUND BALANCE - JULY 1, 2017 7,767,734 13,839,707 6,071,973
FUND BALANCE - JUNE 30, 2018 $ 5,803,378 $ 14,485,103 $ 8,681,725
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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, 2018
REVENUES Daily Sales - Reimb. $ 628,629 Daily Sales - Non-Reimb. 24,609 Headstart sales - Special Functions 14,437 Interest 2,372 State Subsidies 136,064 Federal Subsidies 525,464 Donated Commodities Received 98,143 Non-Capital Contributions - Capital Contributions - Vending Machines 2,235 Gain (Loss) on Sale of Capital Assets - Miscellaneous 13,780 $ 1,445,733
COST OF GOODS SOLD Inventories - July 1, 2017 15,248 Food and Milk 536,146 Donated Commodities Received 98,143 Supplies 35,823 Inventories - June 30, 2018 (9,150) 676,210
GROSS PROFIT 769,523 EXPENSES Payroll 509,804 Social Security 38,669 Retirement 237,754 Other Benefits 57,625 Professional Services 3,262 Repairs & Maintenance 4,785 Disposal Services 6,503 Rental - Extermination Services 3,043 Other Purchase Services - Communications 1,038 Advertising 418 Dry Cleaning 326 Supplies & Fees - Technology 5,545 Printing & Binding - Travel 661 Uniforms 2,375 Miscellaneous - Uncapitalized Equipment - Depreciation 14,189 Dues and Fees 1,417 887,414 CHANGES IN FUND NET POSITION (117,891)
FUND NET POSITION - BEGINNING (1,118,004)
Prior Period Adjustment (83,687)
FUND NET POSITION - ENDING $ (1,319,582)
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Upper Perkiomen School District Food Service Fund Statement of Fund Net Position As of June 30, 2018
ASSETS & DEFERRED OUTFLOWS OF RESOURCES Cash & Cash Equivalents $ 320,002 Investments - State and Federal Subsidies Receivable 19,422 Other Receivable 377 Inventories 9,150 Due from Other Funds 118,240 Prepaid Expenses - Equipment, net of accum. Depreciation 124,810 Deferred Outflows of Resources - Change in Proportion to NPL 79,032 Deferred Outflows of Resources - Current Year Contributions 165,725 Deferred Outflows of Resources - Change in Assumptions 47,548 Deferred Outflows of Resources - Diff. in Projected vs Actual Contributions - Deferred Outflows of Resources - Diff. in Projected vs Actual Invest. Earnings 42,475 Deferred Outflows of Resources - Diff. in Expected vs Actual Experience 10,170 TOTAL ASSETS & DEFERRED OUTFLOWS OF RESOURCES $ 936,951
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, & NET POSITION Accounts Payable $ 1,932 Due to General Fund 112,649 Accrued Salaries - Accrued Severance Pay 17,894 Net OPEB Liability - Multiple Employer Plan 87,255 Net Pension Liability 2,003,058 Prepayments 31,331 Deferred Inflows of Resources - Change in Proportion to NPL - Deferred Inflows of Resources - Change in Assumptions - Deferred Inflows of Resources - Diff. in Projected vs Actual Contributions 2,414 Deferred Inflows of Resources - Diff. in Projected vs Actual Invest. Earnings - Deferred Inflows of Resources - Diff. in Expected vs Actual Experience - Net Position (1,319,582)
TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, & NET POSITION $ 936,951
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Upper Perkiomen School District Capital Reserve Fund Statement of Revenues and Expenditures For the Year Ended June 30, 2018
FUND BALANCE - JULY 1, 2017 $ 5,991,209
REVENUES AND OTHER FINANCING SOURCES Interest $ 77,009 Miscellaneous Revenue - Transfer from General Fund 3,031,213 TOTAL REVENUES AND OTHER FINANCING SOURCES 3,108,222
TOTAL FUNDS AVAILABLE 9,099,431
EXPENDITURES AND OTHER FINANCING USES INSTRUCTIONAL SERVICES: Repairs and Maintenance - Supplies - Software - Equipment - SUPPORT SERVICES: Professional Services - Printing - Purchased Services - Rentals - Tech Supplies - Equipment 5,976 Technology Infrastructure - Dues and Fees - NON-INSTRUCTIONAL SERVICES: Professional Services - Equipment - FACILITIES, ACQUISITION, CONSTRUCTION & IMPROV. SERVICES: Professional Services 133,639 Repairs and Maintenance - Construction - Land Improvements - Advertising - Supplies - Equipment 79,570 Dues and Fees - Fees - 219,185
FUND BALANCE - JUNE 30, 2018 $ 8,880,246
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Upper Perkiomen School District Capital Projects Fund Statement of Revenues and Expenditures For the Year Ended June 30, 2018
FUND BALANCE - JULY 1, 2017 $ 7,392,109
REVENUES AND OTHER FINANCING SOURCES Proceeds from Bond Issues $ 36,390,000 Interest 179,731 Gain or (Loss) on Sale of Investments 27,271 Bond Premium 875,039 TOTAL REVENUES AND OTHER FINANCING SOURCES 37,472,041
TOTAL FUNDS AVAILABLE 44,864,150
EXPENDITURES AND OTHER FINANCING USES INSTRUCTIONAL SERVICES: Repairs and Maintenance - Supplies - Equipment - SUPPORT SERVICES: Professional Services - Insurance - Printing 2,400 Communication Fees 63 Rentals - Supplies - Equipment - Dues and Fees 558,416 NON-INSTRUCTIONAL SERVICES: Repairs and Maintenance - Equipment Rentals - FACILITIES, ACQUISITION, CONSTRUCTION & IMPROV. SERVICES: Professional Services 1,049,025 Construction 10,661,833 Advertising - Repairs and Maintenance - Electricity 7,357 Equipment - Bond Discount - Dues and Fees 10,843 12,289,937
FUND BALANCE - JUNE 30, 2018 $ 32,574,213
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Upper Perkiomen School District Schedule on General Obligation Bonds - Series of 2013 For the Year Ended June 30, 2018
INTEREST FISCAL YEAR RATE PRINCIPAL INTEREST 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 $ 6,745,000 $ 818,982
Schedule on General Obligation Bonds - Series of 2014 For the Year Ended June 30, 2018
INTEREST FISCAL YEAR RATE PRINCIPAL INTEREST 2018-19 2.50% $ 540,000 $ 225,650 2019-20 3.00% 550,000 210,650 2020-21 3.00% 570,000 193,850 2021-22 3.00% 585,000 176,525 2022-23 3.00% 600,000 158,750 2023-24 3.00% 620,000 140,450 2024-25 3.00% 640,000 121,550 2025-26 3.00% 655,000 102,125 2026-27 3.00% 680,000 82,100 2027-28 3.25% 695,000 60,606 2028-29 3.25% 715,000 37,694 2029-30 3.50% 745,000 13,037 TOTAL OUTSTANDING $ 7,595,000 $ 1,522,987
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Upper Perkiomen School District Schedule on General Obligation Bonds - Series of 2016 For the Year Ended June 30, 2018
INTEREST FISCAL YEAR RATE PRINCIPAL INTEREST 2018-19 4.00% $ 590,000 $ 151,650 2019-20 4.00% 610,000 127,650 2020-21 4.00% 635,000 102,750 2021-22 2.00% 655,000 83,500 2022-23 2.00% 675,000 70,200 2023-24 1.50% 690,000 58,275 2024-25 1.60% 700,000 47,500 2025-26 2.00% 715,000 34,750 2026-27 2.00% 730,000 20,300 2027-28 2.00% 650,000 6,500 TOTAL OUTSTANDING $ 6,650,000 $ 703,075
Schedule on General Obligation Bonds - Series A of 2016 For the Year Ended June 30, 2018
INTEREST FISCAL YEAR RATE PRINCIPAL INTEREST 2018-19 1.35% $ 255,000 $ 305,836 2019-20 3.00% 260,000 300,215 2020-21 3.00% 270,000 292,265 2021-22 3.00% 275,000 284,090 2022-23 3.00% 280,000 275,765 2023-24 3.00% 290,000 267,215 2024-25 3.00% 300,000 258,365 2025-26 3.00% 305,000 249,290 2026-27 3.00% 315,000 239,675 2027-28 3.20% 325,000 229,435 2028-29 3.20% 340,000 218,795 2029-30 3.20% 350,000 207,755 2030-31 3.20% 360,000 196,395 2031-32 3.20% 370,000 184,714 2032-33 3.20% 385,000 172,635 2033-34 3.20% 400,000 160,075 2034-35 3.20% 410,000 147,115 2035-36 3.20% 425,000 133,755 2036-37 3.20% 440,000 119,915 2037-38 3.75% 460,000 104,250 2038-39 3.75% 470,000 86,812 2039-40 3.75% 490,000 68,813 2040-41 3.75% 510,000 50,062 2041-42 3.75% 530,000 30,563 2042-43 3.75% 550,000 10,312 TOTAL OUTSTANDING $ 9,365,000 $ 4,594,117
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Upper Perkiomen School District Schedule on General Obligation Bonds - Series of 2017 For the Year Ended June 30, 2018
INTEREST FISCAL YEAR RATE PRINCIPAL INTEREST 2018-19 2.00% $ 200,000 $ 283,854 2019-20 4.00% 280,000 276,253 2020-21 4.00% 290,000 264,854 2021-22 4.00% 305,000 252,953 2022-23 4.00% 315,000 240,554 2023-24 2.00% 325,000 231,004 2024-25 2.00% 335,000 224,403 2025-26 2.00% 340,000 217,654 2026-27 2.70% 350,000 209,529 2027-28 2.70% 360,000 199,944 2028-29 2.70% 370,000 190,089 2029-30 2.70% 380,000 179,964 2030-31 2.70% 390,000 169,569 2031-32 2.70% 400,000 158,904 2032-33 2.70% 410,000 147,969 2033-34 2.70% 425,000 136,696 2034-35 2.70% 435,000 125,085 2035-36 2.70% 450,000 113,138 2036-37 2.70% 460,000 100,854 2037-38 2.70% 475,000 88,231 2038-39 3.125% 480,000 74,318 2039-40 3.125% 500,000 59,007 2040-41 3.125% 515,000 43,147 2041-42 3.250% 530,000 26,488 2042-43 3.250% 550,000 8,938 TOTAL OUTSTANDING $ 9,870,000 $ 4,023,399
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Upper Perkiomen School District Schedule on General Obligation Bonds - Series of 2018 For the Year Ended June 30, 2018
INTEREST FISCAL YEAR RATE PRINCIPAL INTEREST 2018-19 2.00% $ 5,000 $ 972,444 2019-20 5.00% 675,000 955,519 2020-21 5.00% 710,000 920,894 2021-22 5.00% 745,000 884,519 2022-23 5.00% 785,000 846,269 2023-24 5.00% 825,000 806,019 2024-25 5.00% 865,000 763,769 2025-26 5.00% 910,000 719,394 2026-27 3.00% 945,000 682,468 2027-28 3.00% 975,000 653,669 2028-29 3.00% 1,005,000 623,969 2029-30 3.00% 1,035,000 593,369 2030-31 3.00% 1,065,000 561,869 2031-32 3.25% 1,100,000 528,019 2032-33 3.25% 1,135,000 491,700 2033-34 3.25% 1,175,000 454,162 2034-35 3.375% 1,215,000 414,566 2035-36 3.375% 1,255,000 372,883 2036-37 3.375% 1,295,000 329,853 2037-38 3.500% 1,345,000 284,463 2038-39 3.500% 1,390,000 236,600 2039-40 3.500% 1,440,000 187,075 2040-41 3.500% 1,490,000 135,800 2041-42 3.500% 1,540,000 82,773 2042-43 3.500% 1,595,000 27,913 TOTAL OUTSTANDING $ 26,520,000 $ 13,529,978
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SINGLE AUDIT SECTION
Upper Perkiomen School District Schedule of Expenditures of Federal Awards Fiscal Year Ended June 30, 2018
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 7/1/2017 REVENUE EXPEND. 6/30/2018 FOOTNOTES
U.S. DEPT. OF EDUCATION
PASSED THROUGH THE PDE 3 TITLE IA - IMPROVING BASIC PROGRAMS I 84.010 013-16-0453 A 7/1/15-9/30/17 $ 279,260 40,933 40,933 - - - 7 TITLE IA - IMPROVING BASIC PROGRAMS I 84.010 013-17-0453 A 7/1/16-9/30/17 $ 311,472 311,471 311,471 - TITLE IA - IMPROVING BASIC PROGRAMS I 84.010 013-18-0453 A 7/1/17-9/30/18 $ 279,511 200,971 - 265,193 265,193 64,222 TOTAL TITLE I PROGRAM 553,375 352,404 265,193 265,193 64,222 ------PASSED THROUGH THE PDE 3 TITLE IIA - SUPPORTING EFFECTIVE INSTRUCTION I 84.367 020-16-0453 A 7/1/15-9/30/17 $ 91,922 19,560 19,560 - - - 8 TITLE IIA - SUPPORTING EFFECTIVE INSTRUCTION I 84.367 020-17-0453 A 7/1/16-9/30/17 $ 90,355 90,355 72,689 17,666 17,666 - TITLE IIA - SUPPORTING EFFECTIVE INSTRUCTION I 84.367 020-18-0453 A 7/1/17-9/30/18 $ 72,707 62,745 - 72,707 72,707 9,962 TOTAL TITLE II PROGRAM 172,660 92,249 90,373 90,373 9,962 ------PASSED THROUGH THE PDE 3 TITLE IVA - STUDENT SUPPORT AND ACADEMIC ENR. I 84.424 N/A N/A $ ------TITLE IVA - STUDENT SUPPORT AND ACADEMIC ENR. I 84.424 144-18-0453 A 7/1/17-9/30/18 $ 10,000 10,000 - 6,995 6,995 (3,005) TOTAL TITLE IV PROGRAM 10,000 - 6,995 6,995 (3,005) ------PASSED THROUGH THE MONTGOMERY COUNTY I.U. 3 IDEA I 84.027 N/A 7/1/16-9/30/17 $ 628,044 77,634 77,634 - - - 1 IDEA I 84.027 N/A 7/1/17-9/30/18 $ 546,584 453,498 - 546,584 546,584 93,086 1 IDEA SECTION 619A I 84.173 N/A 7/1/16-9/30/17 $ 3,827 - - - - - 1 IDEA SECTION 619A I 84.173 N/A 7/1/17-9/30/18 $ 1,719 - - 1,719 1,719 1,719 1 TOTAL IDEA CLUSTER 531,132 77,634 548,303 548,303 94,805 ------
TITLE III - LANGUAGE INSTRUCTION I 84.365 N/A 7/1/15-9/30/17 $ 6,558 5,907 - 5,907 5,907 - 1 TITLE III - LANGUAGE INSTRUCTION I 84.365 N/A 7/1/16-9/30/17 $ 1,549 1,549 - 1,549 1,549 - 1 TITLE III - LANGUAGE INSTRUCTION I 84.365 N/A 7/1/17-9/30/18 $ 1,219 141 - 1,219 1,219 1,078 1 TOTAL TITLE III PROGRAM 7,597 - 8,675 8,675 1,078 ------PASSED THROUGH THE NORTHWEST TRI-COUNTY INTERMEDIATE UNIT #5 3 ARRA - RACE TO THE TOP - EARLY LEARNING CHALLENGE I 84.412A N/A 10/1/17-5/31/18 $ 10,000 10,000 - 10,000 10,000 - 2
TOTAL U. S. DEPARTMENT OF EDUCATION 1,284,764 522,287 929,539 929,539 167,062 ------
U. S. DEPARTMENT OF HEALTH & HUMAN SERVICES PASSED THROUGH THE PA. DEPARTMENT OF PUBLIC WELFARE 3 TITLE 19 MEDICAL REIMBURSEMENT I 93.778 N/A 10/1/17-9/30/18 N/A 2,451 1,367 1,962 1,962 878
TOTAL U.S DEPARTMENT OF HEALTH & HUMAN SERVICES 2,451 1,367 1,962 1,962 878 ------U. S. DEPARTMENT OF AGRICULTURE PASSED THROUGH THE PA DEPT. OF EDUCATION: 3 NATIONAL SCHOOL LUNCH I 10.555 N/A 7/1/16 - 6/30/17 N/A 9,970 9,970 - - - NATIONAL SCHOOL LUNCH I 10.555 N/A 7/1/17 - 6/30/18 N/A 427,989 - 442,518 442,518 14,529 REG/NDY BREAKFAST I 10.553 N/A 7/1/16 - 6/30/17 N/A 2,932 2,932 - - - REG/NDY BREAKFAST I 10.553 N/A 7/1/17 - 6/30/18 N/A 79,226 - 82,946 82,946 3,720
PASSED THROUGH THE PA DEPT. OF AGRICULTURE: 3 NATIONAL SCHOOL LUNCH - USDA COMMODITIES I 10.555 N/A 7/1/17 - 6/30/18 N/A 98,143 (467) 97,886 97,886 (724) 4,5 TOTAL CHILD NUTRITION CLUSTER 618,260 12,435 623,350 623,350 17,525
TOTAL U.S. DEPARTMENT OF AGRICULTURE 618,260 12,435 623,350 623,350 17,525
TOTAL FEDERAL FINANCIAL AWARDS $ 1,905,475 $ 536,089 $ 1,554,851 $ 1,554,851 $ 185,465
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, 2018
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 1.6% of its total general fund revenue in federal awards, and 43.1% of its total enterprise fund revenue.
Note 3 – Indirect Costs
The District did not charge any indirect costs to any of their federal grants and programs during this fiscal year. As such, the District did not use the 10% de minimis cost rate.
Note 4 - 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 awards passed through the Northwest Tri-County Intermediate Unit 5, under the U.S. Department of Education heading, is part of a consortium of participating school districts. The awards passed through the IU are grants received using funds from the American Recovery and Reinvestment Act. In accordance with directions from the Commonwealth of Pennsylvania, these awards are reported on the basic financial statements as local source revenue.
3. The Federal Grants were passed through the following entities in the totals below:
Total Passed through Total Awards Expenditures
PA Department of Education $ 1,135,227 $ 888,025 Montgomery County I.U. 1,189,500 556,978 Northwest Tri-County I.U. #5 10,000 10,000 PA Department of Public Welfare N/A 1,962 PA Department of Agriculture N/A 97,886 Totals $ 2,334,727 $ 1,554,851
4. The District received non-monetary assistance from the U.S. Department of Agriculture of $98,143 in the form of commodities. These commodities are valued at U.S.D.A.’s approximate costs. During the 2017-18 fiscal year, the District used $97,886, in commodities, and established a year-end inventory of $724 at June 30, 2018.
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Upper Perkiomen School District Notes to the Schedule of Expenditures of Federal Awards Fiscal Year Ended June 30, 2018
5. 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.
6. The Medical Access grant passed though the PA Department of Education is reflected as federal source revenue on the basic financial statements; however, pursuant to instructions from the Commonwealth of PA, it is not reported as revenue on the Schedule of Expenditures of Federal Awards.
7. The District has an outstanding receivable from the fiscal year 2015-16 for the Title I program at June 30, 2017. The outstanding receivable resulted from a computer error within PDE’s Final Expenditure Report filing during the closeout of the 2015-16 Title I program. The District received payment from PDE on November 21, 2017, satisfying the outstanding receivable.
8. The District has an outstanding receivable from the fiscal year 2015-16 for the Title II program at June 30, 2017. The outstanding receivable resulted from a computer error within PDE’s Final Expenditure Report filing during the closeout of the 2015-16 Title II program. The District received payment from PDE on November 21, 2017, satisfying the outstanding receivable.
FINANCIAL STATEMENT RECONCILIATION
General Fund Federal Source Revenues $ 412,519 Federal Grants in Local Sources 566,978 Food Service Fund Federal Revenue 623,607 Total Federal Revenue, per financial statements 1,603,104 Less - Medical Access Reimbursement (47,996) Plus - Change in Donated Commodities (257) Total Federal Revenue Reported on SEFA $ 1,554,851
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INDEPENDENT AUDITOR’S REPORT UNDER GOVERNMENT AUDITING STANDARDS
Board of School Directors Upper Perkiomen School District 2229 East Buck Road, Suite 2 Pennsburg, PA 18073
We have audited, in accordance with the auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, the aggregate remaining fund information, and the budgetary comparison statement of the general fund of the Upper Perkiomen School District, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise Upper Perkiomen School District’s basic financial statements, and have issued our report thereon dated November 16, 2018. Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered Upper Perkiomen School District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Upper Perkiomen School District’s internal control. Accordingly, we do not express an opinion on the effectiveness of Upper Perkiomen School District’s internal control.
A 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 material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be a material weakness or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
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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,
November 16, 2018
-113- INDEPENDENT AUDITOR’S REPORT UNDER UNIFORM GUIDANCE
Board of School Directors Upper Perkiomen School District 2229 East Buck Road, Suite 2 Pennsburg, PA 18073
Report on Compliance for Each Major Federal Program
We have audited Upper Perkiomen School District’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Upper Perkiomen School District’s major federal programs for the year ended June 30, 2018. Upper Perkiomen School District’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of Upper Perkiomen School District’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Upper Perkiomen School District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Upper Perkiomen School District’s compliance.
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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, 2018.
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 the Uniform Guidance, 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,
November 16, 2018
-115- Upper Perkiomen School District Schedule of Findings and Questioned Costs Fiscal Year Ended June 30, 2018
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 200.516 of the Uniform Guidance? yes no
Identification of major program:
CFDA Number(s) Name of Federal Program or Cluster 10.553, 10.555 Child Nutrition Cluster
Percentage of programs tested to total awards 40.1%
Dollar threshold used to distinguish between type A and type B program: $ 750,000
Auditee qualified as low-risk auditee? yes no
-116- Upper Perkiomen School District Schedule of Findings and Questioned Costs Fiscal Year Ended June 30, 2018
Section II – Financial Statement Findings
There were no findings discovered, relating to the financial statements, which are 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 the Uniform Guidance Section 200.516.
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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APPENDIX D Continuing Disclosure Certificate
[ THIS PAGE INTENTIONALLY LEFT BLANK ] CONTINUING DISCLOSURE CERTIFICATE
Re: UPPER PERKIOMEN SCHOOL DISTRICT, Montgomery and Berks Counties, Pennsylvania $9,285,000 Aggregate Principal Amount General Obligation Bonds, Series of 2019 Dated May 21, 2019
May 21, 2019
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by Upper Perkiomen School District, Montgomery and Berks Counties, Pennsylvania (the “School District”), in connection with the issuance of its General Obligation Bonds, Series of 2019, dated May 21, 2019 (the “Bonds”). The Bonds are being issued pursuant to a resolution duly adopted by the Board of School Directors of the School District (the “Resolution”). The School District makes the following certifications and representations as an inducement to the Participating Underwriter and others to purchase the Bonds:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the School District for the benefit of the holders of the Bonds and in order to assist the Participating Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report filed by the School District pursuant to, and as described in, Section 3 of this Disclosure Certificate.
“Bondholder” shall mean any registered owner of the Bonds or any person who (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any of the Bonds (including persons holding through any nominee, securities depository, or other intermediary) or (ii) is treated as the holder of any Bonds for federal income tax purposes.
“Business Day” shall mean a day other than a Saturday, a Sunday, or a day on which the New York Stock Exchange is closed or a day on which banks located in the Commonwealth are authorized or required by law or executive order to close.
“Commonwealth” shall mean the Commonwealth of Pennsylvania.
“Financial Obligation” shall mean (i) a debt obligation; (ii) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) a guarantee of either (i) or (ii). The term Financial Obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
{L0804853.2} “Listed Events” shall mean any of the events listed in Section 5 of this Disclosure Certificate.
“MSRB” shall mean the Municipal Securities Rulemaking Board.
“Official Statement” shall mean the final official statement relating to the Bonds prepared by or on behalf of the School District and distributed in connection with the offering and sale of the Bonds by the Participating Underwriters.
“Participating Underwriters” shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with the primary offering of the Bonds.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“SEC” shall mean the United States Securities and Exchange Commission.
SECTION 3. Filing of Annual Reports. The School District will file with the MSRB:
(a) Financial Information. Annually, within 270 days following the close of each of the School District’s fiscal years, beginning with its fiscal year ending June 30, 2019, 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; and • a summary of the budget for the current fiscal year (i.e. the fiscal year following the fiscal year of the financial statements being provided).
(b) Audited Financial Statements. If not submitted as part of the annual financial information of the School District in accordance with subparagraph (a) above, then when and if available, financial statements of the School District for the most recent fiscal year audited in accordance with generally accepted auditing standards. In the event audited financial statements are not available by the filing deadline, the School District will file to EMMA, if available, its State Form PDE-2057 Annual Financial Report as an interim filing until such audited financial statements are available. Some of the operating data requirements may be found contained within the School District’s financial statements or budget filing and may not be filed explicitly by themselves.
Each Annual Report may be submitted as a single document or as separate documents comprising a package. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the School District or related public entities which have been filed with MSRB or with the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The School District shall clearly identify each other document so incorporated by reference.
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SECTION 4. Notices of Late Filing of Annual Information. If the School District has failed to file, or is unable to file, an Annual Report with the MSRB within the time set forth in Section 3 above, the School District will file, in a timely manner, a notice with the MSRB stating such fact and, if appropriate, the date by which the School District expects to file the Annual Report.
SECTION 5. Reporting of Listed Events. In a timely manner not in excess of ten (10) Business Days after the occurrence of the event, the School District will file with the MSRB notice of the occurrence of any of the following events with respect to the Bonds:
• principal and interest payment delinquencies; • non-payment related defaults, if material; • unscheduled draws on debt service reserves reflecting financial difficulties; • unscheduled draws on credit enhancements reflecting financial difficulties; • substitution of credit or liquidity providers, or their failure to perform; • 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; • modifications to rights of holders of the Bonds, if material; • bond calls, if material, and tender offers; • defeasances; • release, substitution, or sale of property securing repayment of the Bonds, if material; • rating changes; • bankruptcy, insolvency, receivership or similar event of the School District; • 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; • appointment of a successor or additional trustee, or the change of name of a trustee, if material; • incurrence of a Financial Obligation of the School District, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the School District, any of which affect security holders, if material; and • default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the School District, any of which reflect financial difficulties.
The School District may from time to time choose to provide notice of the occurrence of certain other events affecting the Bonds or the School District, in addition to those listed above, if, in the judgment of the School District, such other event is material with respect to the Bonds,
{L0804853.2} - 3 - but the School District does not undertake to commit to provide any such notice of the occurrence of any material event except those events listed above.
SECTION 6. Manner of Filing. All filings to be made with the MSRB in accordance with this Disclosure Certificate are to be filed in such electronic format as is prescribed by the MSRB and accompanied by such identifying information as is prescribed by the MSRB.
As of the date of this Disclosure Certificate, the rules of the MSRB require all such filings to be made using the MSRB’s Electronic Municipal Market Access System (“EMMA”) at http://emma.msrb.org.
SECTION 7. Dissemination Agent. The School District may, at any time and from time to time, appoint or engage another person (the “Dissemination Agent”) to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge such Dissemination Agent, with or without appointing a successor and without notice to Bondholders.
SECTION 8. Termination of Disclosure Obligation. The School District’s obligations under this Disclosure Certificate shall terminate upon the prior redemption or payment in full of all of the Bonds or if and when the School District no longer remains an “obligated person” with respect to the Bonds, within the meaning of the Rule.
SECTION 9. Certain Rights Reserved. The School District reserves the right to modify from time to time the specific types of information provided in accordance with Section 3(a) above 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 it operations or financial reporting, but the School District will agree that any such modification will be done in a manner consistent with the Rule.
SECTION 10. Default. In the event of a failure of the School District to comply with any provision of this Disclosure Certificate, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the School District to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Bonds, and the sole remedy under this Disclosure Certificate in the event of any failure of the School District to comply with this Disclosure Certificate shall be an action to compel performance.
SECTION 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the School District, the Participating Underwriters and Bondholders, and shall create no rights in any other person or entity.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the School District causes this Continuing Disclosure Certificate to be executed on its behalf by the President of the Board of School Directors and attested by its Secretary all as of the date set forth above.
UPPER PERKIOMEN SCHOOL DISTRICT, Montgomery and Berks Counties, Pennsylvania
By: ______Dr. Kerry A. Drake President of the Board of School Directors
Attest:
By: ______Sandra M. Kassel Secretary of the Board of School Directors
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