Comprehensive Annual Financial Report

COMMITTED TO EXCELLENCE S I N C E 1 9 2 0 Grossmont Union High School District

1100 Murray Drive, El Cajon, CA 92020

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For Fiscal Year Ended June 30, 2019

Grossmont · El Cajon Valley · Mt. Miguel · El Capitan · Granite Hills · Monte Vista · Santana · Valhalla · West Hills · Chaparral · IDEA (This page intentionally left blank) GROSSMONT UNION HIGH SCHOOL DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2019

GOVERNING BOARD

Mr. Robert Shield President

Mr. Chris Fite Vice-President

Ms. Elva Salinas Clerk

Mr. Jim Kelly Member

Dr. Gary Woods Member

Dr. Tim Glover Superintendent

Mr. Scott Patterson Deputy Superintendent, Business Services

Ms. Theresa Kemper Assistant Superintendent, Educational Services

Ms. Julia Mottershaw Assistant Superintendent, Human Resources

Issued by: Business Services Division Grossmont Union High School District 1100 Murray Drive, El Cajon, CA 92020 GROSSMONT UNION HIGH SCHOOL DISTRICT Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2019 Table of Contents

I. INTRODUCTORY SECTION Page

Letter of Transmittal i GFOA Certificate of Achievement xii Organizational Chart xiii

II. FINANCIAL SECTION

INDEPENDENT AUDITOR'S REPORT 1 MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) 3

BASIC FINANCIAL STATEMENTS: Government-Wide Financial Statements: Statement of Net Position 10 Statement of Activities 11 Fund Financial Statements: Governmental Funds - Balance Sheet 12 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 13 Governmental Funds - Statement of Revenues, Expenditures and Changes in Fund Balances 14 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 15 Proprietary Funds - Statement of Net Position 17 Proprietary Funds - Statement of Revenues, Expenses, and Changes in Net Position 18 Proprietary Funds - Statement of Cash Flows 19 Fiduciary Funds - Statement of Net Position 20 Fiduciary Funds - Statement of Changes in Net Position 21 Notes to Financial Statements 22

REQUIRED SUPPLEMENTARY INFORMATION

General Fund - Budgetary Comparison Schedule 59 Schedule of Changes in Net OPEB Liability and Related Ratios - District Plan 60 Schedule of Changes in Net OPEB Liability and Related Ratios - MPP Program 61 Schedule of the District's Proportionate Share of the Net Pension Liability - CalSTRS 62 Schedule of the District's Proportionate Share of the Net Pension Liability - CalPERS 63 Schedule of District Contributions - CalSTRS 64 Schedule of District Contributions - CalPERS 65 Notes to Required Supplementary Information 66 GROSSMONT UNION HIGH SCHOOL DISTRICT Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2019 Table of Contents

Page SUPPLEMENTARY INFORMATION

Schedule of Expenditures of Federal Awards 68 Schedule of Average Daily Attendance (ADA) 69 Schedule of Instructional Time 70 Schedule of Financial Trends and Analysis 71 Reconciliation of Annual Financial and Budget Report with Audited Financial Statements 72 Schedule of Charter Schools 73 Combining Statements - Non-Major Governmental Funds Combining Balance Sheet 74 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 75 Adult Education Fund - Budgetary Comparison Schedule 76 Cafeteria Fund - Budgetary Comparison Schedule 77 Building Fund - Budgetary Comparison Schedule 78 Capital Facilities Fund - Budgetary Comparison Schedule 79 County School Facilities Fund - Budgetary Comparison Schedule 80 Special Reserve for Capital Outlay Fund - Budgetary Comparison Schedule 81 Bond Interest and Redemption Fund - Budgetary Comparison Schedule 82 Internal Service Fund - Budgetary Comparison Schedule 83 Local Education Agency Organization Structure 84 Notes to Supplementary Information 85

OTHER INDEPENDENT AUDITORS' REPORTS

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 87 Report on Compliance For Each Major Federal Program; and Report on Internal Control Over Compliance Required by the Uniform Guidance 89 Report on State Compliance 91

SCHEDULE OF AUDIT FINDINGS AND QUESTIONED COSTS

Summary of Auditor's Results 94 Financial Statement Findings 95 Federal Award Findings and Questioned Costs 96 State Award Findings and Questioned Costs 97 Summary Schedule of Prior Audit Findings 98 Management Letter 99 GROSSMONT UNION HIGH SCHOOL DISTRICT Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2019 Table of Contents

III. STATISTICAL SECTION Page

Financial Trends: Net Position by Component S2 Changes in Net Position S3 Fund Balances - Governmental Funds S5 Changes in Fund Balances of Governmental Funds S6

Revenue Capacity: Assessed Valuations S7 Property Tax Levies and Collections S7.1

Debt Capacity: Direct and Overlapping Tax and Assessment Debt S8 Bonding Issuance Capacity S9 Principal Property Taxpayers S10 Outstanding Debt by Type S11

Demographic and Economic Information: County-Wide Demographic and Economic Statistics S12 Principal Employers S13

Operating Information: Operating Statistics S14 Full-Time Equivalent District Employees by Type S15 Capital Assets Information S16 (This page intentionally left blank) Grossmont Union High School District  1100 Murray Drive, El Cajon, CA 92020

COMPREHENSIVE ANNUAL FINANCIAL REPORT for Fiscal Year Ended June 30, 2019

Monte Vista Boys Tennis win CIF Title Introductory Section

Grossmont · El Cajon Valley · Mt. Miguel · El Capitan · Granite Hills Monte Vista · Santana · Valhalla · West Hills · Chaparral · IDEA

COMMITTED TO EXCELLENCE S I N C E 1 9 2 0 • GOVERNING BOARD MEMBERS

CHRIS FITE

JIM KELLY

ELVA SALINAS

ROBERT SHIELD

DR. GARY C. WOODS

• SUPERINTENDENT

COMMITTED TO EXCELLENCE S I N C E 1 9 2 0 DR. TIM GLOVER

December 17, 2019

Governing Board Grossmont Union High School District 1100 Murray Drive El Cajon, CA 92020

We are pleased to present the Comprehensive Annual Financial Report (CAFR) for the Grossmont Union High School District for the year ended June 30, 2019. State law mandates that school districts publish a complete set of financial statements prepared in conformity with generally accepted accounting principles and audited in accordance with auditing standards generally accepted in the United States of America by a certified public accounting firm licensed in the State of California. This requirement is satisfied through the publication of our audited financial statements. The CAFR goes beyond this basic requirement by providing additional descriptive and statistical information.

This report consists of management’s representations concerning the finances of the District. Consequently, management assumes full responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures. To provide a reasonable basis for making these representations, management of the District has established a comprehensive internal control framework that is designed both to protect the District’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the District’s financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, the District’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations of the various funds of the School District. All disclosures necessary to enable the reader to gain an understanding of the District’s financial activity have been included.

Christy White Associates, a certified public accounting firm, has audited the District’s financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2019, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. Based

Comprehensive Annual Financial Report December 17, 2019 Page Two upon the audit, Christy White Associates concluded that there was a reasonable basis for rendering an unmodified opinion on the District’s financial statements for the fiscal year ended June 30, 2019. The independent auditors’ report is presented as the first component of the financial section of this report.

The District is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act Amendments of 1996 and U. S. Uniform Guidance for Federal Awards. The schedule of expenditures of federal awards required by the Single Audit Act, along with the auditors’ report on the internal control and compliance with applicable laws and regulations are included at the end of this report.

This letter of transmittal is designed to introduce and transmit the Comprehensive Annual Financial Report as well as to complement the Management’s Discussion and Analysis (MD&A). The MD&A provides users of the basic financial statements with a narrative introduction, overview, and analysis of the financial statements, and should be read in conjunction with the letter of transmittal. The District’s MD&A can be found in the Financial Section of the report immediately following the Independent Auditor’s Report.

PROFILE OF THE DISTRICT

Grossmont Union High School District is a public education high school district that provides instruction for students in grades 9-12. It was established in 1920. The District is located in the eastern portion of San Diego County and encompasses a territory of about 465 square miles, including all of the Cities of El Cajon, Lemon Grove, and Santee, most of the City of La Mesa, a very small portion of the city of San Diego, the unincorporated communities of Alpine, Dulzura, Jamul, Lakeside and Spring Valley, and adjacent unincorporated areas of the County. The District currently operates nine comprehensive high schools, one continuation high school, two alternative education sites, three special education facilities, a middle college high school program, a Career Technical Education program (“CTE”), and an adult education program. The District also sponsors two charter high schools within its district during fiscal year 2018-19.

Enrollment District-wide in the 2018-19 school year was 16,691 students, excluding the charter schools. The District employed approximately 890 certificated employees, 775 classified employees, and 90 management, supervisory, and confidential personnel (full-time equivalents) during the 2018-19 fiscal year. Approximately 48 percent of the high school students are white (including students from the Middle East) and 55 percent come from Latino, African-American, Asian, Filipino, Pacific Islander, and Native American backgrounds.

The District is governed by a five-member Governing Board of Trustees (the “Board”). Trustees are elected by geographic areas for a term of four years. Elections for positions to the Board are held every two years, alternating between two and three available positions. Members of the 2018-19 Board, together with their offices, Trustee area, and the dates their terms expire, are listed below:

Board Members Trustee Area Office Term Expires Robert Shield Area 4 President November 2022 Chris Fite Area 1 VP November 2020 Jim Kelly Area 5 Member November 2022 Elva Salinas Area 2 Clerk November 2020 Dr. Gary Woods Area 3 Member November 2022 ii

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The Governing Board’s powers and duties include, but are not limited to, the acquisition, maintenance and disposition of school property; the development and adoption of a school curriculum; and establishment, organization and operation of the schools. The Board also has broad financial responsibilities, including approval of the annual expenditure budget, and the establishment of a system of accounting and budgetary controls. Management of the District is independent of other state or local governments. The County Treasurer collects taxes for the District, but exercises no control over its expenditures/expenses.

In 2018-19, the administrative staff of the District included Dr. Tim Glover, Superintendent; Scott Patterson, Deputy Superintendent, Business Services; Theresa Kemper, Assistant Superintendent, Educational Services; and Julie Mottershaw, Assistant Superintendent, Human Resources.

Grossmont Union High School District employees enjoy the friendliness of small communities plus the convenience and opportunities of living in a large metropolitan area. The San Diego East County communities of La Mesa, Lemon Grove, Spring Valley, El Cajon, Santee, Lakeside, and Alpine offer housing of all sizes, types, and price ranges. Each community has its own business district and shopping centers. Churches, synagogues, fine arts schools, modern hospitals and clinics, and community libraries further enhance the quality of life in East County.

A mild climate allows 12 months of outdoor fun in San Diego County. Beaches, deserts, the Laguna Mountains, Mexico, Balboa Park with its world-famous zoo, Sea World Aquatic Park, and Old Town State Historic Park are some of the many popular attractions available in San Diego. There are many recreational facilities available in the area for golfing, hiking, waterskiing, boating, and fresh-water and deep-sea fishing. Sports fans can also enjoy major league baseball. San Diego has six major colleges and universities which provide postgraduate level courses in all academic areas.

San Diego is the southern-most county in California, enjoying 70 miles of Pacific Ocean coastline, and sharing its southern border with the country of Mexico. With an estimated 2019 population of 3.35 million, San Diego County ranks as the second most-populated county in California. By the year 2020, the county’s population is projected to exceed 3.5 million.1

San Diego County’s unemployment rate decreased during the year, from 3.2 percent in September 2018 to 2.7 percent in September 2019. San Diego’s unemployment rate still proves to be better than California’s statewide unemployment rate, which was 4.0 percent for September 2019, and has posted consistently lower unemployment rates than the statewide average over the past fourteen years. Nine of eleven job categories posted gains over the year, adding 320,000 jobs statewide. Professional and business services posted the largest gain over the year adding 83,700 jobs. Education and Health Services jobs had the second largest gain with an increase of 83,300 jobs.2

1 State of California, Department of Finance, E-4 & E-1 Population Estimates for Cities, Counties and the State, 2011-2018 with 2010 Census Benchmark. 2 California Employment Development Department, Unemployment Rates September 2019. iii

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DISTRICT ACHIEVEMENTS AND IMPROVEMENTS

District Vision Statement. Grossmont Union High School District is dedicated to providing a safe and collaborative learning environment which supports academic achievement and social development for all students. The Grossmont District operates on the premise that success for every student is dependent upon all groups in the organization including teachers, administrators, parents, staff, students, and the community working together to support all students in their development as life-long learners, thinkers, and successful contributors to the community.

Achievements and Initiatives. The District provides a quality educational program for its students and has a reputation for excellence in education throughout the state. Over the past several years, District high schools have received several "Golden Bell" awards from the California School Boards Association exemplifying outstanding curricular programs. Five of the district's high schools have been recognized as a California Distinguished School by the California Department of Education. They are Valhalla, Helix Charter, Grossmont, Grossmont Middle College, and Granite Hills High Schools. Valhalla and Helix Charter have won the prestigious award twice, and Grossmont has won the award three times. Granite Hills High School was awarded the silver medal for the 2017 Best High Schools by the U.S. News.

The District's superintendent revised the district's vision and goals and objectives in 2017. In addition, the District aligned all initiatives and programs with the three major goals-- to provide safe, supportive and collaborative school environments that welcome all students, and create and support an exceptional and innovative learning environment that prepares all students to be college and career ready. The goals and objectives include specific and measurable outcomes as achievement targets with the vision and goals forming the basis of the plans that are made to achieve those targets. The Local Control and Accountability Plan (LCAP) describes how the district will achieve the goals and aligns with all state priorities.

Academic improvement is the catalyst for the numerous initiatives the District has put into practice. Professional development is defined by a strong commitment to Professional Learning Communities, core curriculum directly connected to the standards, the setting of goals that are specific, measurable, results-oriented and time-bound, and a consistent assessment program to inform instruction and intervention. Other curricular initiatives include a focus on Literacy and the needs of English Learners, a new science program connected to business and industry, character education and a visual and performing arts initiative.

The District maintains a robust College and Career Technical Education program to ensure expanded post-secondary opportunities for all students and to prepare them to be College and Career ready upon graduation. Both of these readiness areas of emphasis involve efforts to increase the number of under- represented college-bound students. The District and the Grossmont Cuyamaca Community College District continued to refine their East County Education Alliance with a focus on improving alignment, articulation, and a successful transition for high school students. The Grossmont Cuyamaca College Promise was created to support and create enrollment incentives for Grossmont Union High School students who choose to attend Grossmont or Cuyamaca College by providing them free college for their first 30 credits of enrollment.

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The Career Technical Education program consists of CTE pathways with strong business and community organization partnerships. The goal is for every student to graduate with the academic, technical, and work-ready skills needed for their success post-high school. Career Technical Education (CTE) continues to be a cornerstone of our College and Career Readiness efforts.

Beginning in 2004, the district has passed three general obligation bond measures; one for $274 million (Proposition H) in March 2004, one for $417 million (Proposition U) in November 2008 and one for $128 million (Measure BB) in November 2016. These bond measures were needed to support the district’s instructional programs by renovating classrooms at our schools with the newest technology, building state-of-the-art science buildings, and providing technical equipment for Career Technical Education. Proposition H bond work was completed during 2015-16. A portion of the Proposition U and/or Measure BB bond funds may be spent to build a new district high school (“12th High School”) in the Alpine area if certain demographic conditions are met. The District currently owns the land needed for the project.

Together with state matching and other District capital funds, the total estimated revenue available for the combined Propositions H & U and Measure BB programs is $1.058 billion. The combined tax rate for all outstanding bonds in 2018-19 was $64.82 per $100,000 of assessed valuation, which represents a decrease of $1.31 from the prior year. In October 2018, the District issued $43 million of Measure BB general obligation bonds. In addition, the District issued $15.4 million of Proposition U refunding bonds resulting in interest cost savings of $2.3 million. In all, the District has accomplished General Obligation bond refundings on its outstanding Proposition H and Proposition U bonds six times for a total of $37.8 million in interest cost savings.

In 2018-19, completed construction projects include the Helix Charter High School Gym Modernization, El Cajon Valley High School Food Service Building, the Mount Miguel High School Student Support Building and New Events Center, the Santana High School New Events Center, and the campus wide security camera project.

The Grossmont Union High School District was honored by San Diego Gas & Electric as a 2019 Energy Champion for leading the way in energy and sustainability innovations. In the five years since the District launched efforts to reduce the consumption of energy and water at its 12 high schools and adult school facilities – implementing a number of energy and resource management strategies from sweeping solar installations to battery storage to high-efficiency heating, ventilation and air conditioning units (HVAC) – the District has cut electricity and gas utility costs by nearly $2 million annually, and is on track to save more than $70 million over the next 25 years.

Recent Enrollment Trends. Since 2010, the District has experienced a total enrollment drop by approximately 3,300. However, there was a slight increase in enrollment during 2018/19. The District has taken steps to increase the percentage of ADA that we are paid on. Along with student attendance incentives at the sites, several sites have changed the communication to home of an absence from the end of the school day to after the second period of a school day. The California Department of Education allows a district to claim a day’s worth of attendance (ADA) for a student if they attend any part of the school day. By calling before the end of the day, parents were able to get their child to school that same day.

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We also continue to expand the alternative education and options programs to accommodate increased efforts in recovering students who have left the District. The District has ten Learning Centers to address the needs of those students who need an alternative to the classroom setting for learning as well as 5th year seniors that need to complete courses in order to graduate. Our home schooling/home choice program has also been expanded to address this need in East County.

DISTRICT FINANCIAL INFORMATION

Accounting Practices. The accounting practices of the District conform to generally accepted accounting principles in accordance with policies and procedures of the California School Accounting Manual. This manual, according to Section 41010 of the California Education Code, is to be followed by all California school districts.

In addition, the Governmental Accounting Standards Board (“GASB”) released Statement No. 34, which made certain changes in the annual financial statements for all governmental agencies in the United States who report in accordance with GASB, especially in recording of fixed assets and their depreciation and in the way the report itself is formatted. These requirements became effective on June 15, 2001 for the District, as well as for any other governmental agency reporting in accordance with GASB with annual revenues of $100 million or more in the first fiscal year ending after June 15, 1999.

The District's accounting is organized on the basis of fund groups, with each group consisting of a separate set of self-balancing accounts containing assets, liabilities, fund balances, revenues and expenditures. The major fund classification is the General Fund which accounts for all financial resources not requiring a special type of fund. The District's fiscal year begins on July 1 and ends on June 30.

Financial Statements. The District's general fund finances the legally authorized activities of the District for which restricted funds are not provided. General fund revenues are derived from such sources as State school fund apportionments, property taxes, other state revenue and aid from other governmental agencies. Audited financial statements for the District for the fiscal year ended June 30, 2018 and prior fiscal years are on file with the District and available for public inspection at the office of the Deputy Superintendent, Business Services, of the District, 1100 Murray Drive, El Cajon, California 92020-5664, telephone number (619) 644-8000. They may also be obtained from the District’s website: http://www.guhsd.net.

Budget Process. The District is required by provisions of the State Education Code to maintain a balanced budget each year, in which expenditures cannot exceed the sum of revenues and the carry- over fund balance from the previous year. The State Department of Education imposes a uniform budgeting and accounting format for school districts. The budget process for school districts was substantially amended by Assembly Bill 1200 (“AB 1200”), which became State law on October 14, 1991. Portions of AB 1200 are summarized below.

School districts must adopt a budget on or before July 1 of each year. The budget must be submitted to the county superintendent within five days of adoption or by July 1, whichever occurs first. A district may be on either a dual or single budget cycle. The dual budget option requires a revised and readopted budget by September 1 that is subject to State-mandated standards and criteria. The revised budget

Comprehensive Annual Financial Report December 17, 2019 Page Seven must reflect changes in projected income and expenses subsequent to July 1. The single budget is only readopted if it is disapproved by the County Office of Education, or as needed. The District is on a single budget-adoption cycle and adopts its budget on or before July 1.

For both dual and single budgets submitted on July 1, the County Superintendent will examine the adopted budget for compliance with the standards and criteria adopted by the State Board of Education and identify technical corrections necessary to bring the budget into compliance, will determine if the budget allows the district to meet its current obligations and will determine if the budget is consistent with a financial plan that will enable the district to meet its multi-year financial commitments. On or before August 15, the county superintendent will approve or disapprove the adopted budget for each school district. Budgets will be disapproved if they fail the above standards. The district board must be notified by August 15 of the County Superintendent's recommendations for revision and reasons for the recommendations. The County Superintendent may assign a fiscal advisor or appoint a committee to examine and comment on the Superintendent's recommendations. The committee must report its findings no later than August 20. Any recommendations made by the County Superintendent must be made available by the district for public inspection. The law does not provide for conditional approvals; budgets must be either approved or disapproved. No later than September 22, the County Superintendent must notify the Superintendent of Public Instruction of all school districts whose budget may be disapproved.

For all dual budget options and for single and dual budget option districts whose budgets have been disapproved, the district must revise and readopt its budget by September 8, reflecting changes in projected income and expense since July 1, including responding to the County Superintendent’s recommendations. The County Superintendent must determine if the budget conforms with the standards and criteria applicable to final district budgets and not later than October 8, will approve or disapprove the revised budgets. If the budget is disapproved, the County Superintendent will call for the formation of a budget review committee pursuant to Education Code Section 42127.1. Until a district’s budget is approved, the district will operate on the lesser of its proposed budget for the current fiscal year or the last budget adopted and reviewed for the prior fiscal year.

Under the provisions of A.B. 1200, each school district is required to file interim certifications with the County Office of Education as to its ability to meet its financial obligations for the remainder of the then- current fiscal year and, based on current forecasts, for the subsequent two fiscal years. The County Office of Education reviews the certification and issues either a positive, negative or qualified certification. A positive certification is assigned to any school district that will meet its financial obligations for the current fiscal year and subsequent two fiscal years. A qualified certification is assigned to any school district that may not meet its financial obligations for the current fiscal year or subsequent two fiscal years. A negative certification is assigned to any school district that will be unable to meet its financial obligations for the remainder of the fiscal year or subsequent two fiscal years. During 2017- 18, the District was certified as “Positive” for its First and Second Interim Financial Reports.

REVENUE SOURCES

State Funding of Education. Most California school districts receive a significant portion of their funding from State appropriations consisting of three primary components: a portion funded from the State’s general fund, a portion funded from the State’s Education Protection Account, and a local portion vii

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derived from the District’s share of the 1% local ad valorem property tax authorized by the State Constitution. The District receives approximately 43% of its revenue from State funds. As a result, decreases in State revenues, or in State legislative appropriations made to fund education, may significantly affect District operations.

In November 2012, California voters passed Proposition 30, The Schools and Local Public Safety Protection Act. This is a temporary tax measure which is to be used for the investment in education and public safety. The tax measure increases personal income tax rates on the State’s highest income taxpayers by up to three percent for a period of seven years beginning with the 2012 tax year, and increased the sales tax rate by one-quarter percent for a period of four years beginning on January 1, 2013. The revenue generated provided an increase of approximately $1,045 per student in funding over 2011-12 levels for kindergarten through twelfth grade (“K-12”) education.

In November 2016, California voters passed Proposition 55, California Extension of the Proposition 30 Income Tax Increase Initiative, extending the personal income tax rate increases through 2030. The sales tax increases expired as planned at the end of 2016.

Prior to the 2013-14 State Budget, annual State apportionments to school districts were computed based on a revenue limit per unit of average daily attendance (“ADA.”). However, the 2013-14 State Budget contained a new formula for funding schools called the Local Control Funding Formula or “LCFF.” LCFF is designed to increase local control and flexibility, reduce State bureaucracy and better allocate resources based on student needs. The new funding formula replaced the prior revenue limit funding system and most categorical programs.

The District categorizes its revenues into four sources: (1) LCFF, (2) federal revenues, (3) other State revenues and (4) other local revenues. Each of these revenue sources is described below.

Local Control Funding Formula: In 2013-14, LCFF replaced the revenue limit funding system and most categorical programs, and distributed combined resources to school districts through a base funding grant (“Base Grant”) per unit of ADA with additional supplemental funding allocated to local educational agencies (LEA) based on their proportion of English language learners, students from low- income families and foster youth. LCFF has an eight year implementation program to incrementally close the gap between actual funding and the target level of funding, as described below. LCFF includes the following components:

● A Base Grant of each LEA, equivalent to $9,034 per unit of ADA for fiscal year 2018-19. ● Grade Span Adjustments for grades 9-12 for Career Technical Education of $235 per ADA. ● A 20% supplemental grant for the unduplicated number of English learners, students from low- income families and foster youth to reflect increased costs associated with educating those students. ● An additional concentration grant of up to 50% of a LEA’s Base Grant, based on the number of English learners, students from low-income families and foster youth served by the LEA that comprise more than 55% of enrollment.

viii

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● An Economic Recovery Target (the “ERT”) that is intended to ensure that almost every LEA receives at least their pre-recession funding level (i.e., the fiscal year 2007-08 revenue limit per unit of ADA), adjusted for inflation, at full implementation of the LCFF.

Federal Revenues. The federal government provides funding for several District programs, including special education programs, programs under the Elementary and Secondary Education Act, specialized programs such as Drug Free Schools, and the free and reduced lunch program.

Other State Revenues. In addition to apportionment revenue, the District receives substantial other State revenues. Some of these other State revenues are restricted revenues funding items such as Special Education, among others. Certain funds that were formerly restricted have been deemed “flexible” by the State and available as unrestricted funds. These “flexible” funds became part of the LCFF funding in 2013-14.

Other State revenues include the California State Lottery (the "Lottery"), which was established by a constitutional amendment approved in the November 1984 general election. Lottery revenues must be used for the education of students and cannot be used for non-instructional purposes such as real property acquisition, facility construction, or the financing of research. Moreover, State Proposition 20 approved in March 2000 requires that 50 percent of the increase in Lottery revenues over 1997-98 levels must be restricted for use on instructional materials.

Other Local Revenues. In addition to property taxes, the District receives additional local revenues from items such as leases and rentals, interest earnings, developer fees, redevelopment funds, interagency services, transportation fees, and other local sources.

SUPPLEMENTAL INFORMATION

Employee Relations. The District has three recognized bargaining units which represent its employees. The Grossmont Education Association (GEA), an affiliate of the California Teachers Association, represents teachers. The California School Employees Association (CSEA) Chapter No. 443 represents most classified employees. The Service Employees International Union (SEIU) represents classified custodial and grounds employees. Bargaining unit contracts for CSEA and SEIU expired on June 30, 2018. The bargaining unit contract for GEA expired on June 30, 2017. The District is in negotiations with the bargaining units.

District Retirement Systems. Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Certificated employees are members of the State Teachers’ Retirement System (STRS) and classified employees are members of the Public Employees’ Retirement System (PERS).

All full-time certificated employees participate in STRS, a cost-sharing, multiple-employer contributory public employee retirement system. STRS provides retirement and disability benefits and survivor benefits to beneficiaries. Benefit provisions are established by State statutes, as legislatively amended, within the State Teachers’ Retirement Law. ix

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All full-time and some part-time classified employees participate in PERS, a cost-sharing multiple- employer contributory public employee retirement system that acts as a common investment and administrative agent for participating public entities within the State of California. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by State statutes, as legislatively amended, within the Public Employees’ Retirement Laws. The District is part of a "cost-sharing" pool within PERS. One actuarial valuation is performed for those employers participating in the pool, and the same contribution rate applies to each. During the fiscal year 2018-19, the District was required by statute to contribute 16.28 percent of gross salary expenditures to STRS for all employees participating in STRS, and 18.062 percent of gross salary expenditures to PERS for all employees participating in PERS. Participants are required to contribute 10.25 percent (10.205 percent for new members) and 7 percent of applicable gross salary to STRS and PERS, respectively. The District's employer contributions to STRS and to PERS met the required contribution rates established by law.

The District also provides the Accumulation Program for Part-time and Limited-Service Employees (“APPLE”), which is a defined contribution pension plan. A defined contribution pension plan provides pension benefits in return for services rendered, provides an individual account for each participant, and specifies how contributions to the individual’s account are to be determined instead of specifying the amount of benefits the individual is to receive. Under a defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the participant’s account, the returns earned on investments of those contributions, and forfeitures of other participants’ benefits that may be allocated to such participant’s account.

As established by Federal law, all public sector employees who are not members of their employer’s existing retirement system (STRS or PERS) must be covered by social security or an alternative plan. The District has elected to use APPLE as its alternative plan. Contributions made by the District and an employee vest immediately. The District does not contribute to the plan. An employee is required to contribute 7.5 percent of his or her gross earnings to the pension plan.

Joint Powers Agreements. The District participates in joint ventures under joint powers agreements (“JPAs”) with the San Diego Risk Management Authority (the “Risk Pool”) and the San Diego County Educational Facilities Authority No. 1 (the “Facilities Authority”). The relationship between the District and the JPA is such that the JPAs are not component units of the District for financial reporting purposes.

The Risk Pool arranges for and provides workers’ compensation, property, and liability insurance and other programs for various school districts in the County. The governing board of the Risk Pool is comprised of a representative from each member school district. The Risk Pool has budgeting and financial reporting requirements independent of the participating school districts.

The Facilities Authority is a JPA of the District and the San Diego County Board of Education (the “County Board”) that was established to provide funding for a joint use educational facility (the “Joint Use Facility”). The governing board of the Facilities Authority is comprised of two representatives from each of the two participants. In July 1995, The Facilities Authority sold $4,620,000 in lease

Comprehensive Annual Financial Report December 17, 2019 Page Eleven

revenue bonds (the “1995 Lease Revenue Bonds”) for the funding of the Joint Use Facility, known as the East County Regional Education Center and located in the District in the city of El Cajon. In November 2003, the 1995 Lease Revenue Bonds were refunded to achieve debt service savings. The repayment of the $4,155,000 principal amount of refunding bonds (the “2003 Lease Revenue Bonds”) is shared equally by the District and the County Board. The bonds were paid off in full effective January 15, 2017.

The District is a member of the K-12 Public Schools and Community Colleges Facilities Joint Powers Authority. This JPA provides support for the District Industrial Stormwater Permit and the Municipal Stormwater Permit.

AWARDS AND ACKNOWLEDGEMENT

Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Grossmont Union High School District for its comprehensive annual financial report for the fiscal year ended June 30, 2018. This was the ninth consecutive year that the District has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report (CAFR). This report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

Acknowledgements. The preparation of the comprehensive annual financial report on a timely basis was made possible by the dedicated service of the entire staff of the Business Services, Fiscal Services, and Internal Audit departments. Sincere appreciation is expressed for the contributions made by those departments in the preparation of this report.

In closing, without the leadership and support of the Governing Board of the District, preparation of this report would not have been possible.

Respectfully submitted,

Dr. Tim Glover Scott H. Patterson Superintendent Deputy Superintendent, Business Services

Grossmont Union High School District  1100 Murray Drive, El Cajon, CA 92020

COMPREHENSIVE ANNUAL FINANCIAL REPORT for Fiscal Year Ended June 30, 2019

Mt. Miguel Army JROTC Performs Memorial Day ceremony Financial Section

Grossmont · El Cajon Valley · Mt. Miguel · El Capitan · Granite Hills Monte Vista · Santana · Valhalla · West Hills · Chaparral · IDEA

COMMITTED TO EXCELLENCE S I N C E 1 9 2 0 GROSSMONT UNION HIGH SCHOOL DISTRICT

AUDIT REPORT JUNE 30, 2019

GROSSMONT UNION HIGH SCHOOL DISTRICT TABLE OF CONTENTS JUNE 30, 2019

FINANCIAL SECTION

Independent Auditors’ Report ...... 1 Management’s Discussion and Analysis ...... 3 Basic Financial Statements Government-wide Financial Statements Statement of Net Position ...... 10 Statement of Activities ...... 11 Fund Financial Statements Governmental Funds – Balance Sheet ...... 12 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ...... 13 Governmental Funds – Statement of Revenues, Expenditures, and Changes in Fund Balances ...... 14 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities ...... 15 Proprietary Funds – Statement of Net Position ...... 17 Proprietary Funds – Statement of Revenues, Expenses, and Changes in Net Position ...... 18 Proprietary Funds – Statement of Cash Flows ...... 19 Fiduciary Funds – Statement of Net Position ...... 20 Fiduciary Funds – Statement of Changes in Net Position ...... 21 Notes to Financial Statements ...... 22

REQUIRED SUPPLEMENTARY INFORMATION

General Fund – Budgetary Comparison Schedule ...... 59 Schedule of Changes in Net OPEB Liability and Related Ratios – District Plan ...... 60 Schedule of Changes in Net OPEB Liability and Related Ratios – MPP Program ...... 61 Schedule of the District’s Proportionate Share of the Net Pension Liability - CalSTRS ...... 62 Schedule of the District’s Proportionate Share of the Net Pension Liability - CalPERS ...... 63 Schedule of District Contributions - CalSTRS ...... 64 Schedule of District Contributions - CalPERS ...... 65 Notes to Required Supplementary Information ...... 66

GROSSMONT UNION HIGH SCHOOL DISTRICT TABLE OF CONTENTS (continued) JUNE 30, 2019

SUPPLEMENTARY INFORMATION

Schedule of Expenditures of Federal Awards ...... 68 Schedule of Average Daily Attendance (ADA) ...... 69 Schedule of Instructional Time ...... 70 Schedule of Financial Trends and Analysis ...... 71 Reconciliation of Annual Financial and Budget Report with Audited Financial Statements ...... 72 Schedule of Charter Schools ...... 73 Combining Statements – Non-Major Governmental Funds Combining Balance Sheet ...... 74 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ...... 75 Adult Education Fund – Budgetary Comparison Schedule ...... 76 Cafeteria Fund – Budgetary Comparison Schedule ...... 77 Building Fund – Budgetary Comparison Schedule ...... 78 Capital Facilities Fund – Budgetary Comparison Schedule ...... 79 County School Facilities Fund – Budgetary Comparison Schedule ...... 80 Special Reserve for Capital Outlay Fund – Budgetary Comparison Schedule ...... 81 Bond Interest and Redemption Fund– Budgetary Comparison Schedule ...... 82 Internal Service Fund – Budgetary Comparison Schedule ...... 83 Local Education Agency Organization Structure ...... 84 Notes to Supplementary Information ...... 85

OTHER INDEPENDENT AUDITORS’ REPORTS

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...... 87 Report on Compliance For Each Major Federal Program; and Report on Internal Control Over Compliance Required by the Uniform Guidance ...... 89 Report on State Compliance ...... 91

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

Summary of Auditors’ Results ...... 94 Financial Statement Findings ...... 95 Federal Award Findings and Questioned Costs ...... 96 State Award Findings and Questioned Costs ...... 97 Summary Schedule of Prior Audit Findings ...... 98 Management Letter ...... 99

FINANCIAL SECTION

Certified Public Accountants serving K-12 School Districts and Charter Schools throughout California

INDEPENDENT AUDITORS’ REPORT

Governing Board Grossmont Union High School District El Cajon, California

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Grossmont Union High School District, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the Grossmont Union High School District’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Grossmont Union High School District, as of June 30, 2019, 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. 348 Olive Street O: 619-270-8222 San Diego, CA F: 619-260-9085 92103 christywhite.com 1

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the required supplementary information, such as management’s discussion and analysis, budgetary comparison information, schedules of changes in net OPEB liability and related ratios, schedules of proportionate share of net pension liability, and schedules of District contributions for pensions be presented to supplement the basic financial statements. Such information, although not 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 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 Grossmont Union High School District’s basic financial statements. The supplementary information listed in the table of contents, including the schedule of expenditures of Federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the basic financial statements.

The supplementary information listed in the table of contents is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is 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 November 4, 2019 on our consideration of Grossmont Union High 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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Grossmont Union High School District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Grossmont Union High School District’s internal control over financial reporting and compliance.

San Diego, California November 4, 2019

GROSSMONT UNION HIGH SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS

INTRODUCTION

Our discussion and analysis of Grossmont Union High School District’s (District) financial performance provides an overview of the District’s financial activities for the fiscal year ended June 30, 2019. It should be read in conjunction with the District’s financial statements, which follow this section.

FINANCIAL HIGHLIGHTS

 The District’s total net position was $49,053,251 at June 30, 2019. This was an increase of $5,831,161 from the prior year.  Overall revenues were $311,901,935 which exceeded expenses of $306,070,774.

OVERVIEW OF FINANCIAL STATEMENTS

Components of the Financials Section

Management's Required Basic Financial Discussion & Supplementary Statements Analysis Information

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

Summary Detail

GROSSMONT UNION HIGH SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS, continued FOR THE YEAR ENDED JUNE 30, 2019

This annual report consists of three parts – Management’s Discussion and Analysis (this section), the basic financial statements, and required supplementary information. The three sections together provide a comprehensive overview of the District. The basic financial statements are comprised of two kinds of statements that present financial information from different perspectives:

 Government-wide financial statements, which comprise the first two statements, provide both short-term and long-term information about the entity’s overall financial position.

 Fund financial statements focus on reporting the individual parts of District operations in more detail. The fund financial statements comprise the remaining statements.

 Governmental Funds provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District’s programs.

 Proprietary Funds report services for which the District charges customers a fee. Like the government-wide statements, they provide both long- and short-term financial information.

 Fiduciary Funds report balances for which the District is a custodian or trustee of the funds, such as Associated Student Bodies and pension funds.

The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The basic financial statements are followed by a section of required and other supplementary information that further explain and support the 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 and liabilities. 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 it has changed. Net position is one way to measure the District’s financial health. Over time, increases or decreases in the District’s net position are an indicator of whether its financial health is improving or deteriorating, respectively.

The government-wide financial statements of the District include governmental activities. All of the District’s basic services are included here, such as regular education, food service, maintenance and general administration. Local control formula funding and federal and state grants finance most of these activities.

GROSSMONT UNION HIGH SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS, continued FOR THE YEAR ENDED JUNE 30, 2019

FINANCIAL ANALYSIS OF THE ENTITY AS A WHOLE

Net Position

The District’s net position was $49,053,251 at June 30, 2019, as reflected in the table below. Of this amount, $(308,046,188) was unrestricted. Restricted net position is reported separately to show legal constraints from debt covenants and enabling legislation that limit the Governing Board’s ability to use that net position for day-to-day operations.

Governmental Activities 2019 2018 Net Change ASSETS Current and other assets $ 221,431,747 $ 205,171,900 $ 16,259,847 Capital assets 793,200,416 743,519,962 49,680,454 Total Assets 1,014,632,163 948,691,862 65,940,301

DEFERRED OUTFLOWS OF RESOURCES 88,581,806 96,346,451 (7,764,645)

LIABILITIES Current liabilities 62,102,491 47,208,263 14,894,228 Long-term liabilities 969,411,074 934,065,314 35,345,760 Total Liabilities 1,031,513,565 981,273,577 50,239,988

DEFERRED INFLOWS OF RESOURCES 22,647,153 20,542,646 2,104,507

NET POSITION Net investment in capital assets 258,091,135 239,617,380 18,473,755 Restricted 99,008,304 79,413,937 19,594,367 Unrestricted (308,046,188) (275,809,227) (32,236,961) Total Net Position $ 49,053,251 $ 43,222,090 $ 5,831,161

GROSSMONT UNION HIGH SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS, continued FOR THE YEAR ENDED JUNE 30, 2019

FINANCIAL ANALYSIS OF THE ENTITY AS A WHOLE (continued)

Changes in Net Position

The results of this year’s operations for the District as a whole are reported in the Statement of Activities. The table below takes the information from the Statement and rearranges it slightly, so you can see our total revenues and expenses for the year.

Governmental Activities 2019 2018 Net Change REVENUES Program revenues Charges for services $ 3,548,977 $ 2,368,167 $ 1,180,810 Operating grants and contributions 56,525,496 51,596,854 4,928,642 Capital grants and contributions 16,275,472 3,257,183 13,018,289 General revenues Property taxes 153,653,884 144,692,763 8,961,121 Unrestricted federal and state aid 62,781,903 60,728,002 2,053,901 Other 19,116,203 16,944,416 2,171,787 Total Revenues 311,901,935 279,587,385 32,314,550 EXPENSES Instruction 136,255,690 133,635,586 2,620,104 Instruction-related services 34,647,344 33,919,871 727,473 Pupil services 32,665,015 29,392,038 3,272,977 General administration 15,800,705 14,540,541 1,260,164 Plant services 24,646,971 26,123,757 (1,476,786) Ancillary and community services 2,200,560 1,983,022 217,538 Debt service 28,825,783 29,177,954 (352,171) Other outgo 1,110,995 375,913 735,082 Depreciation 28,896,932 40,709,795 (11,812,863) Enterprise activities 1,020,779 (2,177,377) 3,198,156 Total Expenses 306,070,774 307,681,100 (1,610,326) Change in net position 5,831,161 (28,093,715) 33,924,876 Net Position - Beginning 43,222,090 71,315,805 (28,093,715) Net Position - Ending $ 49,053,251 $ 43,222,090 $ 5,831,161

The cost of all our governmental activities this year was $306,070,774 (refer to the table above). The amount received through property taxes was $153,653,884.

GROSSMONT UNION HIGH SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS, continued FOR THE YEAR ENDED JUNE 30, 2019

FINANCIAL ANALYSIS OF THE ENTITY AS A WHOLE (continued)

Changes in Net Position (continued)

In the table below, we have presented the net cost of each of the District’s functions. Net cost is the total expenses net of program revenues. Providing this information allows our citizens to consider the cost of each function in comparison to the benefits they believe are provided by that function.

Net Cost of Services 2019 2018 Instruction $ 85,807,587 $ 103,950,522 Instruction-related services 27,680,611 26,924,373 Pupil services 19,224,489 18,172,722 General administration 13,844,337 13,048,735 Plant services 21,324,263 18,634,889 Ancillary and community services 2,176,069 1,984,361 Debt service 28,825,783 29,177,954 Transfers to other agencies 919,979 32,922 Depreciation 28,896,932 40,709,795 Enterprise activities 1,020,779 (2,177,377) Total Expenses $ 229,720,829 $ 250,458,896

FINANCIAL ANALYSIS OF THE DISTRICT’S MAJOR FUNDS

The financial performance of the District as a whole is reflected in its governmental funds as well. As the District completed this year, its governmental funds reported a combined fund balance of $179,626,046, which is more than last year’s ending fund balance of $176,372,032. The District’s General Fund had $3,777,573 more in operating revenues than expenditures for the year ended June 30, 2019. The Building Fund balance decreased $24,450,615 due to ongoing construction under Proposition U and Measure BB. The County School Facilities Fund had $15,334,152 more in operating revenues than expenditures for the year ended June 30, 2019. The Bond Interest and Redemption Fund had $3,010,329 more in operating revenues than expenditures for the year ended June 30, 2019.

CURRENT YEAR BUDGET 2018-2019

During the fiscal year, budget revisions and appropriation transfers are presented to the Board for their approval on a regular basis to reflect changes to both revenues and expenditures that become known during the year. In addition, the Governing Board approves financial projections included with the Adopted Budget, First Interim, and Second Interim financial reports. The Unaudited Actuals reflect the District’s financial projections and current budget based on State and local financial information.

GROSSMONT UNION HIGH SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS, continued FOR THE YEAR ENDED JUNE 30, 2019

CAPITAL ASSETS AND LONG-TERM LIABILITIES

Capital Assets

By the end of 2018-2019 the District had invested $793,200,416 in capital assets, net of accumulated depreciation.

Governmental Activities 2019 2018 Net Change CAPITAL ASSETS Land $ 39,069,840 $ 39,069,840 $ - Construction in progress 128,834,776 53,049,408 75,785,368 Land improvements 153,333,101 152,927,133 405,968 Buildings & improvements 771,111,763 771,133,403 (21,640) Furniture & equipment 27,143,791 26,904,512 239,279 Accumulated depreciation (326,292,855) (299,564,334) (26,728,521) Total Capital Assets $ 793,200,416 $ 743,519,962 $ 49,680,454

Long-Term Liabilities

At year-end, the District had $969,411,074 in long-term liabilities, an increase of 3.78% from last year – as shown in the table below. (More detailed information about the District’s long-term liabilities is presented in footnotes to the financial statements.)

Governmental Activities 2019 2018 Net Change LONG-TERM LIABILITIES Total general obligation bonds $ 695,385,787 $ 655,739,214 $ 39,646,573 Capital leases 2,170,262 2,177,888 (7,626) Compensated absences 2,462,793 2,529,726 (66,933) Net OPEB liability 59,647,257 58,126,265 1,520,992 Net pension liability 232,937,245 235,168,297 (2,231,052) Less: current portion of long-term liabilities (23,192,270) (19,676,076) (3,516,194) Total Long-term Liabilities $ 969,411,074 $ 934,065,314 $ 35,345,760

GROSSMONT UNION HIGH SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS, continued FOR THE YEAR ENDED JUNE 30, 2019

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

At the time these financial statements were prepared and audited, the District was aware of several circumstances that could affect its future financial health.

The US economy continues to grow slowly, but the State economic growth is slowing down due to low levels of available employees. However, the State is still experiencing overall economic prosperity. The State Budget for Education contained an increase of 3.26% in fiscal year 2019-20, plus $3.15 billion in non-Proposition 98 funding for school employer pension relief.

The fiscal policy for the funding of public education changes annually, based on fluctuations in State revenues. The UCLA Anderson Forecast (June 2019) noted that the risk of recession is about 50% within the next 5-8 quarters depending on the model, the biggest economic threat being from the escalating trade war with China and Mexico. If a recession were to happen, State revenues for public education would be negatively impacted.

Landmark legislation passed in Year 2013 reformed California school district finance by creating the Local Control Funding Formula (LCFF). The LCFF is designed to provide a flexible funding mechanism that links student achievement to state funding levels. The LCFF provides a per pupil base grant amount, by grade span, that is augmented by supplemental funding for targeted student groups in low income brackets, those that are English language learners and foster youth.

Factors related to LCFF that the District is monitoring include: (1) estimates of funding in the next budget year and beyond; (2) the Local Control and Accountability Plan (LCAP) that aims to link student accountability measurements to funding allocations; (3) ensuring the integrity of reporting student data through the California Longitudinal Pupil Achievement Data System (CALPADs); and, (4) meeting annual compliance and audit requirements.

The District participates in state employee pensions plans, PERS and STRS, and both are underfunded. The District’s proportionate share of the liability is reported in the Statement of Net Position as of June 30, 2019. The amount of the liability is material to the financial position of the District. To address the underfunding issues, the pension plans received a one-time funding allocation from the 2019-20 State Budget and continue to raise employer rates in future years. The projected increased pension costs to school employers remain a significant fiscal factor.

Enrollment can fluctuate due to factors such as population growth, competition from private, parochial, inter-district transfers in or out, economic conditions and housing values. Losses in enrollment will cause a school district to lose operating revenues without necessarily permitting the district to make adjustments in fixed operating costs.

All of these factors were considered in preparing the District’s budget for the 2019-20 fiscal year.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with a general overview of the District’s finances and to show the District’s accountability for the money it receives. If you have questions about this report or need any additional financial information, contact the Business Office at (619) 644- 8000.

GROSSMONT UNION HIGH SCHOOL DISTRICT STATEMENT OF NET POSITION JUNE 30, 2019

Governmental Activities ASSETS Cash and investments $ 201,326,021 Accounts receivable 17,418,631 Inventory 356,217 Prepaid expenses 265,878 Other current assets 2,065,000 Capital assets, not depreciated 167,904,616 Capital assets, net of accumulated depreciation 625,295,800 Total Assets 1,014,632,163

DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pensions 60,692,306 Deferred outflows related to OPEB 2,503,495 Deferred amount on refunding 25,386,005 Total Deferred Outflows of Resources 88,581,806

LIABILITIES Accrued liabilities 38,708,238 Unearned revenue 201,983 Long-term liabilities, current portion 23,192,270 Long-term liabilities, non-current portion 969,411,074 Total Liabilities 1,031,513,565

DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions 22,186,674 Deferred inflows related to OPEB 460,479 Total Deferred Inflows of Resources 22,647,153

NET POSITION Net investment in capital assets 258,091,135 Restricted: Capital projects 45,230,223 Debt service 44,920,609 Educational programs 6,904,556 All others 1,952,916 Unrestricted (308,046,188) Total Net Position $ 49,053,251

The accompanying notes are an integral part of these financial statements. 10

GROSSMONT UNION HIGH SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2019

Net (Expenses) Revenues and Changes in Program Revenues Net Position Operating Capital Charges for Grants and Grants and Governmental Function/Programs Expenses Services Contributions Contributions Activities GOVERNMENTAL ACTIVITIES Instruction $ 136,255,690 $ 64,445 $ 34,108,186 $ 16,275,472 $ (85,807,587) Instruction-related services Instructional supervision and administration 10,821,497 17,419 2,763,660 - (8,040,418) Instructional library, media, and technology 3,238,294 - 108,849 - (3,129,445) School site administration 20,587,553 4,475 4,072,330 - (16,510,748) Pupil services Home-to-school transportation 7,880,390 584 1,836,205 - (6,043,601) Food services 7,953,963 1,827,597 5,794,697 - (331,669) All other pupil services 16,830,662 4,141 3,977,302 - (12,849,219) General administration Centralized data processing 5,128,302 - 165,575 - (4,962,727) All other general administration 10,672,403 105,419 1,685,374 - (8,881,610) Plant services 24,646,971 1,524,727 1,797,981 - (21,324,263) Ancillary services 1,693,421 - 23,565 - (1,669,856) Community services 507,139 - 926 - (506,213) Enterprise activities 1,020,779 - - - (1,020,779) Interest on long-term debt 28,825,783 - - - (28,825,783) Other outgo 1,110,995 170 190,846 - (919,979) Depreciation (unallocated) 28,896,932 - - - (28,896,932) Total Governmental Activities $ 306,070,774 $ 3,548,977 $ 56,525,496 $ 16,275,472 (229,720,829) General revenues Taxes and subventions Property taxes, levied for general purposes 116,290,883 Property taxes, levied for debt service 35,446,762 Property taxes, levied for other specific purposes 1,916,239 Federal and state aid not restricted for specific purposes 62,781,903 Interest and investment earnings 2,034,971 Interagency revenues 9,031,288 Miscellaneous 8,049,944 Subtotal, General Revenue 235,551,990 CHANGE IN NET POSITION 5,831,161 Net Position - Beginning 43,222,090 Net Position - Ending $ 49,053,251

The accompanying notes are an integral part of these financial statements. 11

GROSSMONT UNION HIGH SCHOOL DISTRICT GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2019

Non-Major Total County School Bond Interest & Governmental Governmental General Fund Building Fund Facilities Fund Redemption Fund Funds Funds ASSETS Cash and investments $ 26,713,212 $ 62,242,461 $ 34,524,904 $ 51,786,723 $ 16,144,967 $ 191,412,267 Accounts receivable 13,160,168 1,030,742 262,925 - 2,907,782 17,361,617 Due from other funds 894,408 16,368 - - 780,253 1,691,029 Stores inventory 213,209 - - - 143,008 356,217 Prepaid expenditures 12,044 - - - 180,141 192,185 Other current assets 1,800,000 - - - - 1,800,000 Total Assets $ 42,793,041 $ 63,289,571 $ 34,787,829 $ 51,786,723 $ 20,156,151 $ 212,813,315

LIABILITIES Accrued liabilities $ 11,700,009 $ 15,616,485 $ - $ - $ 3,974,959 $ 31,291,453 Due to other funds 792,034 36,611 - - 865,188 1,693,833 Unearned revenue 129,086 - - - 72,897 201,983 Total Liabilities 12,621,129 15,653,096 - - 4,913,044 33,187,269

FUND BALANCES Nonspendable 285,253 - - - 327,140 612,393 Restricted 4,383,899 47,636,475 34,787,829 51,786,723 14,915,967 153,510,893 Assigned 15,034,661 - - - - 15,034,661 Unassigned 10,468,099 - - - - 10,468,099 Total Fund Balances 30,171,912 47,636,475 34,787,829 51,786,723 15,243,107 179,626,046 Total Liabilities and Fund Balances $ 42,793,041 $ 63,289,571 $ 34,787,829 $ 51,786,723 $ 20,156,151 $ 212,813,315

The accompanying notes are an integral part of these financial statements. 12

GROSSMONT UNION HIGH SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2019

Total Fund Balance - Governmental Funds $ 179,626,046

Amounts reported for assets and liabilities for governmental activities in the statement of net position are different from amounts reported in governmental funds because:

Capital assets: In governmental funds, only current assets are reported. In the statement of net position, all assets are reported, including capital assets and accumulated depreciation: Capital assets $ 1,119,493,271 Accumulated depreciation (326,292,855) 793,200,416

Deferred amount on refunding: In governmental funds, the net effect of refunding bonds is recognized when debt is issued, whereas this amount is deferred and amortized in the government-wide financial statements: 25,386,005

Unmatured interest on long-term debt: In governmental funds, interest on long-term debt is not recognized until the period in which it matures and is paid. In the government-wide statement of activities, it is recognized in the period that it is incurred. The additional liability for unmatured interest owing at the end of the period was: (6,866,114)

Long-term liabilities: In governmental funds, only current liabilities are reported. In the statement of net position, all liabilities, including long-term liabilities, are reported. Long-term liabilities relating to governmental activities consist of: Total general obligation bonds $ 695,385,787 Capital leases 2,170,262 Compensated absences 2,462,793 Net pension liability 232,937,245 (932,956,087)

Deferred outflows and inflows of resources relating to pensions: In governmental funds, deferred outflows and inflows of resources relating to pensions are not reported because they are applicable to future periods. In the statement of net position, deferred outflows and inflows of resources relating to pensions are reported. Deferred outflows of resources related to pensions $ 60,692,306 Deferred inflows of resources related to pensions (22,186,674) 38,505,632

Internal service funds: Internal service funds are used to conduct certain activities for which costs are charged to other funds on a full cost-recovery basis. Because internal service funds are presumed to operate for the benefit of governmental activities, assets, deferred outflows of resources, liabilities, and deferred inflows of resources of internal service funds are reported with governmental activities in the statement of net position. Net position for internal service funds is: (47,842,647)

Total Net Position - Governmental Activities $ 49,053,251

The accompanying notes are an integral part of these financial statements. 13

GROSSMONT UNION HIGH SCHOOL DISTRICT GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2019

Non-Major Total County School Bond Interest & Governmental Governmental General Fund Building Fund Facilities Fund Redemption Fund Funds Funds REVENUES LCFF sources $ 168,214,004 $ - $ - $ - $ - $ 168,214,004 Federal sources 12,148,702 - - 915,917 7,264,846 20,329,465 Other state sources 28,949,753 33,022 15,792,294 329,060 13,270,247 58,374,376 Other local sources 27,089,520 1,932,634 483,178 35,684,548 10,228,180 75,418,060 Total Revenues 236,401,979 1,965,656 16,275,472 36,929,525 30,763,273 322,335,905

EXPENDITURES Current Instruction 137,269,682 - - - 6,190,507 143,460,189 Instruction-related services Instructional supervision and administration 10,388,697 - - - 730,982 11,119,679 Instructional library, media, and technology 3,259,494 - - - - 3,259,494 School site administration 14,040,961 - - - 6,703,854 20,744,815 Pupil services Home-to-school transportation 8,286,184 - - - - 8,286,184 Food services 3,570 - - - 8,069,520 8,073,090 All other pupil services 17,108,994 - - - - 17,108,994 General administration Centralized data processing 4,873,373 - - - - 4,873,373 All other general administration 9,393,634 - - - 1,041,807 10,435,441 Plant services 22,413,804 1,019,707 - - 1,531,710 24,965,221 Facilities acquisition and maintenance 1,454,675 68,396,564 941,320 - 5,159,788 75,952,347 Ancillary services 1,713,500 - - - - 1,713,500 Community services 514,482 - - - - 514,482 Transfers to other agencies 357,771 - - - - 357,771 Debt service Principal 764,308 - - 16,383,162 - 17,147,470 Interest and other 781,277 - - 17,536,034 - 18,317,311 Total Expenditures 232,624,406 69,416,271 941,320 33,919,196 29,428,168 366,329,361 Excess (Deficiency) of Revenues Over Expenditures 3,777,573 (67,450,615) 15,334,152 3,010,329 1,335,105 (43,993,456) Other Financing Sources (Uses) Transfers in 35,824 - - - - 35,824 Other sources 756,682 43,000,000 - 3,490,788 - 47,247,470 Transfers out - - - - (35,824) (35,824) Net Financing Sources (Uses) 792,506 43,000,000 - 3,490,788 (35,824) 47,247,470

NET CHANGE IN FUND BALANCE 4,570,079 (24,450,615) 15,334,152 6,501,117 1,299,281 3,254,014 Fund Balance - Beginning 25,601,833 72,087,090 19,453,677 45,285,606 13,943,826 176,372,032 Fund Balance - Ending $ 30,171,912 $ 47,636,475 $ 34,787,829 $ 51,786,723 $ 15,243,107 $ 179,626,046

The accompanying notes are an integral part of these financial statements. 14

GROSSMONT UNION HIGH 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, 2019

Net Change in Fund Balances - Governmental Funds $ 3,254,014

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

Capital outlay: In governmental funds, the costs of capital assets are reported as expenditures in the period when the assets are acquired. In the statement of activities, costs of capital assets are allocated over their estimated useful lives as depreciation expense. The difference between capital outlay expenditures and depreciation expense for the period is: Expenditures for capital outlay: $ 78,606,500 Depreciation expense: (28,896,932) 49,709,568

Debt service: In governmental funds, repayments of long-term debt are reported as expenditures. In the government-wide statements, repayments of long-term debt are reported as reductions of liabilities. Expenditures for repayment of the principal portion of long- term debt were: 17,194,308

Debt proceeds: In governmental funds, proceeds from debt are recognized as Other Financing Sources. In the government-wide statements, proceeds from debt are reported as increases to liabilities. Amounts recognized in governmental funds as proceeds from debt, net of issue premium or discount, were: (47,247,470)

Deferred amounts on refunding: In governmental funds, deferred amounts on refunding are recognized in the period they are incurred. In the government-wide statements, the deferred amounts on refunding are amortized over the life of the debt. The net effect of the deferred amounts on refunding during the period was: (1,838,095)

Gain or loss from the disposal of capital assets: In governmental funds, the entire proceeds from disposal of capital assets are reported as revenue. In the statement of activities, only the resulting gain or loss is reported. The difference between the proceeds from disposal of capital assets and the resulting gain or loss is: (29,114)

Unmatured interest on long-term debt: In governmental funds, interest on long-term debt is recognized in the period that it becomes due. In the government-wide statement of activities, it is recognized in the period it is incurred. Unmatured interest owing at the end of the period, less matured interest paid during the period but owing from the prior period, was: 115,346

(Continued on the following page)

The accompanying notes are an integral part of these financial statements. 15

GROSSMONT UNION HIGH SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES, continued FOR THE YEAR ENDED JUNE 30, 2019

Accreted interest on long-term debt: In governmental funds, accreted interest on capital appreciation bonds is not recorded as an expenditure from current sources. In the government-wide statement of activities, however, this is recorded as interest expense for the period. (11,899,472)

Compensated absences: In governmental funds, compensated absences are measured by the amounts paid during the period. In the statement of activities, compensated absences are measured by the amount earned. The difference between compensated absences paid and compensated absences earned, was: 66,933

Pensions: In governmental funds, pension costs are recognized when employer contributions are made, in the government-wide statement of activities, pension costs are recognized on the accrual basis. This year, the difference between accrual-basis pension costs and employer contributions was: (4,787,765)

Amortization of debt issuance premium or discount: In governmental funds, if debt is issued at a premium or at a discount, the premium or discount is recognized as an Other Financing Source or an Other Financing Use in the period it is incurred. In the government-wide statements, the premium or discount is amortized over the life of the debt. Amortization of premium or discount for the period is: 2,313,687

Internal Service Funds: Internal service funds are used to conduct certain activities for which costs are charged to other funds on a full cost-recovery basis. Because internal service funds are presumed to benefit governmental activities, internal service activities are reported as governmental in the statement of activities. The net increase or decrease in internal service funds was: (1,020,779)

Change in Net Position of Governmental Activities $ 5,831,161

The accompanying notes are an integral part of these financial statements. 16

GROSSMONT UNION HIGH SCHOOL DISTRICT PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2019

Governmental Activities Internal Service Fund ASSETS Current assets Cash and investments $ 9,913,754 Accounts receivable 57,014 Due from other funds 2,804 Prepaid expenses 73,693 Other assets 265,000 Total current assets 10,312,265 Total Assets 10,312,265

DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to OPEB 2,503,495 Total Deferred Outflows 2,503,495

LIABILITIES Current liabilities Accrued liabilities 550,671 Total current liabilities 550,671 Non-current liabilities Net OPEB liability 59,647,257 Total non-current liabilities 59,647,257 Total Liabilities 60,197,928

DEFERRED INFLOWS OF RESOURCES Deferred inflows related to OPEB 460,479 Total Deferred Inflows 460,479

NET POSITION Restricted (47,842,647) Total Net Position $ (47,842,647)

The accompanying notes are an integral part of these financial statements. 17

GROSSMONT UNION HIGH SCHOOL DISTRICT PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FOR THE YEAR ENDED JUNE 30, 2019

Governmental Activities Internal Service Fund OPERATING REVENUE Charges for services $ 4,677,590 Other local revenues 614,371 Total operating revenues 5,291,961

OPERATING EXPENSE Professional services 6,815,251 Total operating expenses 6,815,251 Operating income/(loss) (1,523,290)

NON-OPERATING REVENUES Interest income 502,511 Total non-operating revenues/(expenses) 502,511

CHANGE IN NET POSITION (1,020,779) Net Position - Beginning (46,821,868) Net Position - Ending $ (47,842,647)

The accompanying notes are an integral part of these financial statements. 18

GROSSMONT UNION HIGH SCHOOL DISTRICT PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2019

Governmental Activities Internal Service Fund Cash flows from operating activities Cash received from user charges $ 5,835,292 Cash payments for payroll, insurance, and operating costs (4,868,112) Net cash provided by (used for) operating activities 967,180 Cash flows from investing activities Interest received 502,511 Net cash provided by (used for) investing activities 502,511 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,469,691

CASH AND CASH EQUIVALENTS Beginning of year 8,444,063 End of year $ 9,913,754

Reconciliation of operating income (loss) to cash provided by (used for) operating activities Operating income/(loss) $ (1,523,290) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Changes in assets and liabilities: (Increase) decrease in accounts receivables (13,955) (Increase) decrease in prepaid expenses (10,598) (Increase) decrease in due from other funds (2,804) (Increase) decrease in deferred outflows of resources 570,688 Increase (decrease) in accounts payable (15,239) Increase (decrease) in due to other funds (166) Increase (decrease) in deferred inflows of resources 441,552 Increase (decrease) in net OPEB liability 1,520,992 Net cash provided by (used for) operating activities $ 967,180

The accompanying notes are an integral part of these financial statements. 19

GROSSMONT UNION HIGH SCHOOL DISTRICT FIDUCIARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2019

Trust Funds Agency Funds Private-Purpose Student Body Trust Fund Fund ASSETS Cash and investments $ 578,674 $ 2,942,840 Accounts receivable 3,157 19,228 Total Assets 581,831 $ 2,962,068

LIABILITIES Accrued liabilities 12,500 $ - Due to student groups - 2,962,068 Total Liabilities 12,500 $ 2,962,068

NET POSITION Restricted 569,331 Total Net Position $ 569,331

The accompanying notes are an integral part of these financial statements. 20

GROSSMONT UNION HIGH SCHOOL DISTRICT FIDUCIARY FUNDS STATEMENT OF CHANGES IN NET POSITION FOR THE YEAR ENDED JUNE 30, 2019

Trust Funds Private-Purpose Trust Fund ADDITIONS Investment earnings $ 12,578 Other 10,000 Total Additions 22,578

DEDUCTIONS Other trust activities 39,327 Total Deductions 39,327

CHANGE IN NET POSITION (16,749) Net Position - Beginning 586,080 Net Position - Ending $ 569,331

The accompanying notes are an integral part of these financial statements. 21

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Financial Reporting Entity

The Grossmont Union High School District (the “District”) accounts for its financial transactions in accordance with the policies and procedures of the Department of Education's California School Accounting Manual. The accounting policies of the District conform to generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB) and the American Institute of Certified Public Accountants (AICPA).

The District operates under a locally elected Board form of government and provides educational services to grades 9-12 as mandated by the state. A reporting entity is comprised of the primary government, component units, and other organizations that are included to ensure the financial statements are not misleading. The primary government of the District consists of all funds, departments and agencies that are not legally separate from the District. For the District, this includes general operations, food service, and student-related activities.

B. Component Units

Component units are legally separate organizations for which the District is financially accountable. Component units may also include organizations that are fiscally dependent on the District in that the District approves their budget, the issuance of their debt or the levying of their taxes. In addition, component units are other legally separate organizations for which the District is not financially accountable but the nature and significance of the organization’s relationship with the District is such that exclusion would cause the District’s financial statements to be misleading or incomplete. The District has no such component units.

C. Basis of Presentation

Government-Wide Statements. The statement of net position and the statement of activities display information about the primary government (the District). These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double-counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenue, and other non-exchange transactions.

The statement of activities presents a comparison between direct expenses and program revenue for each function of the District’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reserved for the statement of activities. Program revenues include charges paid by the recipients of the goods or services offered by the programs and grants and contributions that are restricted to meeting of operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. The comparison of program revenues and expenses identifies the extent to which each program or business segment is self-financing or draws from the general revenues of the District.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

C. Basis of Presentation (continued)

Fund Financial Statements. The fund financial statements provide information about the District’s funds, including its proprietary and fiduciary funds. Separate statements for each fund category – governmental, proprietary and fiduciary – are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as non-major funds.

Governmental funds are used to account for activities that are governmental in nature. Governmental activities are typically tax-supported and include education of pupils, operation of food service and child development programs, construction and maintenance of school facilities, and repayment of long-term debt.

Proprietary funds are used to account for activities that are more business-like than government-like in nature. Business-type activities include those for which a fee is charged to external users or to other organizational units of the District, normally on a full cost-recovery basis. Proprietary funds are generally intended to be self- supporting.

Fiduciary funds are used to account for assets held by the District in a trustee or agency capacity for others that cannot be used to support the District's own programs.

Major Governmental Funds

General Fund: The General Fund is the main operating fund of the District. It is used to account for all activities except those that are required to be accounted for in another fund. In keeping with the minimum number of funds principle, all of the District's activities are reported in the General Fund unless there is a compelling reason to account for an activity in another fund. A District may have only one General Fund.

Building Fund: This fund exists primarily to account separately for proceeds from the sale of bonds (Education Code Section 15146) and may not be used for any purposes other than those for which the bonds were issued. Other authorized revenues to the Building Fund are proceeds from the sale or lease-with-option-to-purchase of real property (Education Code Section 17462) and revenue from rentals and leases of real property specifically authorized for deposit into the fund by the governing board (Education Code Section 41003).

County School Facilities Fund: This fund is established pursuant to Education Code Section 17070.43 to receive apportionments from the 1998 State School Facilities Fund (Proposition 1A), the 2002 State School Facilities Fund (Proposition 47), or the 2004 State School Facilities Fund (Proposition 55) authorized by the State Allocation Board for new school facility construction, modernization projects, and facility hardship grants, as provided in the Leroy F. Greene School Facilities Act of 1998 (Education Code Section 17070 et seq.).

Bond Interest and Redemption Fund: This fund is used for the repayment of bonds issued for the District (Education Code Sections 15125–15262). The board of supervisors of the county issues the bonds. The proceeds from the sale of the bonds are deposited in the county treasury to the Building Fund of the District. Any premiums or accrued interest received from the sale of the bonds must be deposited in the Bond Interest and Redemption Fund of the District. The county auditor maintains control over the District's Bond Interest and Redemption Fund. The principal and interest on the bonds must be paid by the county treasurer from taxes levied by the county auditor-controller.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

C. Basis of Presentation (continued)

Non-Major Governmental Funds

Special Revenue Funds: Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. The District maintains the following special revenue funds:

Adult Education Fund: This fund is used to account separately for federal, state, and local revenues for adult education programs. Money in this fund shall be expended for adult education purposes only. Moneys received for programs other than adult education shall not be expended for adult education (Education Code Sections 52616[b] and 52501.5[a]).

Cafeteria Fund: This fund is used to account separately for federal, state, and local resources to operate the food service program (Education Code Sections 38090–38093). The Cafeteria Fund shall be used only for those expenditures authorized by the governing board as necessary for the operation of the District's food service program (Education Code Sections 38091 and 38100).

Capital Project Funds: Capital project funds are established to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds).

Capital Facilities Fund: This fund is used primarily to account separately for moneys received from fees levied on developers or other agencies as a condition of approving a development (Education Code Sections 17620–17626). The authority for these levies may be county/city ordinances (Government Code Sections 65970–65981) or private agreements between the District and the developer. Interest earned in the Capital Facilities Fund is restricted to that fund (Government Code Section 66006).

Special Reserve Fund for Capital Outlay Projects: This fund exists primarily to provide for the accumulation of General Fund moneys for capital outlay purposes (Education Code Section 42840).

Proprietary Funds

Internal Service Funds: Internal service funds are created principally to render services to other organizational units of the District on a cost-reimbursement basis. These funds are designed to be self-supporting with the intent of full recovery of costs, including some measure of the cost of capital assets, through user fees and charges.

Self-Insurance Fund: Self-insurance funds are used to separate moneys received for self-insurance activities from other operating funds of the District. Separate funds may be established for each type of self- insurance activity, such as workers' compensation, health and welfare, and deductible property loss (Education Code Section 17566).

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

C. Basis of Presentation (continued)

Fiduciary Funds

Trust and Agency Funds: Trust and agency funds are used to account for assets held in a trustee or agent capacity for others that cannot be used to support the District's own programs. The key distinction between trust and agency funds is that trust funds are subject to a trust agreement that affects the degree of management involvement and the length of time that the resources are held.

Private-Purpose Trust Fund: This fund is used to account separately for gifts or bequests per Education Code Section 41031 that benefit individuals, private organizations, or other governments and under which neither principal nor income may be used for purposes that support the District's own programs.

Student Body Fund: The Student Body Fund is an agency fund and, therefore, consists only of accounts such as cash and balancing liability accounts, such as due to student groups. The student body itself maintains its own general fund, which accounts for the transactions of that entity in raising and expending money to promote the general welfare, morale, and educational experiences of the student body (Education Code Sections 48930–48938).

D. Basis of Accounting – Measurement Focus

Government-Wide, Proprietary, and Fiduciary Financial Statements The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus. The government-wide, proprietary, and fiduciary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Net Position equals assets and deferred outflows of resources minus liabilities and deferred inflows of resources. Net investment in capital assets consists 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. The net position should be reported as restricted when constraints placed on its use are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. The net position restricted for other activities results from special revenue funds and the restrictions on their use.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the internal service fund are charges to other funds for self-insurance costs. Operating expenses for internal service funds include the costs of insurance premiums and claims related to self-insurance.

Governmental Funds Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Governmental funds use the modified accrual basis of accounting.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

D. Basis of Accounting – Measurement Focus (continued)

Revenues – Exchange and Non-Exchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded under 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 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. Generally, “available” means collectible within the current period or within 60 days after year-end. However, to achieve comparability of reporting among California school districts and so as not to distort normal revenue patterns, with specific respect to reimbursement grants and corrections to State-aid apportionments, the California Department of Education has defined available for school districts as collectible within one year.

Non-exchange transactions, in which the District receives value without directly giving equal value in return, include property taxes, grants, and entitlements. Under the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from the grants and entitlements 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 to be used or the fiscal year when use is first permitted; matching requirements, in which the District must provide local resources to be used for a specific purpose; and expenditure requirements, in which the resources are provided to the District on a reimbursement basis. Under the modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized.

Unearned Revenue Unearned revenue arises when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period or when resources are received by the District prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the District has a legal claim to the resources, the liability for unearned revenue is removed from the balance sheet and revenue is recognized.

Certain grants received that have not met eligibility requirements are recorded as unearned revenue. On the governmental fund financial statements, receivables that will not be collected within the available period are also recorded as unearned revenue.

Expenses/Expenditures On the accrual basis of accounting, expenses are recognized at the time a liability is incurred. On the modified accrual basis of accounting, expenditures are generally recognized in the accounting period in which the related fund liability is incurred, as under the accrual basis of accounting. However, under the modified accrual basis of accounting, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Allocations of cost, such as depreciation and amortization, are not recognized in the governmental funds. When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, then unrestricted resources as they are needed.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Fund Balance and Net Position

Cash and Cash Equivalents The District’s cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Cash equivalents also include cash with county treasury balances for purposes of the statement of cash flows.

Investments Investments with original maturities greater than one year are stated at fair value. Fair value is estimated based on quoted market prices at year-end. All investments not required to be reported at fair value are stated at cost or amortized cost. Fair values of investments in county and State investment pools are determined by the program sponsor.

Inventories Inventories are recorded using the purchases method in that the cost is recorded as an expenditure at the time the individual inventory items are requisitioned. Inventories are valued at historical cost and consist of expendable supplies held for consumption.

Capital Assets The accounting and reporting treatment applied to the capital assets associated with a fund is determined by its measurement focus. Capital 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 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 value as of the date received. The District maintains a capitalization threshold of $5,000. The District does not own any infrastructure as defined in GASB Statement No. 34. 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 capitalized. All reported capital assets, except for land and construction in progress, are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following estimated useful lives:

Asset Class Estimated Useful Life Buildings and Improvements 5-50 years Furniture and Equipment 2-15 years Vehicles 8 years

Interfund Balances On fund financial statements, receivables and payables resulting from short-term interfund loans are classified as "Due from other funds/Due to other funds.” These amounts are eliminated in the governmental activities columns of the statement of net position.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Fund Balance and Net Position (continued)

Compensated Absences Accumulated unpaid employee vacation benefits are accrued as a liability as the benefits are earned. The entire compensated absence liability is reported on the government-wide financial statements. For governmental funds, the current portion of unpaid compensated absences is recognized upon the occurrence of relevant events such as employee resignations and retirements that occur prior to year-end that have not yet been paid with expendable available financial resource. These amounts are recorded in the fund from which the employees who have accumulated leave are paid.

Accumulated sick leave benefits are not recognized as liabilities of the District. The District's policy is to record sick leave as an operating expense in the period taken because such benefits do not vest, nor is payment probable; however, unused sick leave is added to the creditable service period for calculation of retirement benefits when the employee retires.

Accrued Liabilities and Long-Term Obligations All payables, accrued liabilities, and long-term obligations are reported in the government-wide and proprietary fund financial statements. In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources are reported as obligations of the funds.

Postemployment Benefits Other Than Pensions (OPEB) For purposes of measuring the net OPEB liability, deferred outflows of resources related to OPEB and deferred inflows of resources related to OPEB, and OPEB expense have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.

Generally accepted accounting principles require the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2017 Measurement Date June 30, 2018 Measurement Period June 30, 2017 - June 30, 2018

Gains and losses related to changes in net OPEB liability are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on the source of gain or loss. The difference between projected and actual earnings is amortized on a straight-line basis over five years. All other amounts are amortized on a straight-line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Fund Balance and Net Position (continued)

Premiums and Discounts In the government-wide and proprietary fund financial statements, long-term obligations are reported as liabilities in the applicable governmental activities or proprietary fund statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method.

Deferred Outflows/Deferred Inflows of Resources In addition to assets, the District will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the District will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time.

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 defined benefit pension plans (the Plans) of the California State Teachers’ Retirement System (CalSTRS) and the California Public Employees’ Retirement System (CalPERS) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by the Plans. 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.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Fund Balance and Net Position (continued)

Fund Balance Fund balance is divided into five classifications based primarily on the extent to which the District is bound to observe constraints imposed upon the use of the resources in the governmental funds. The classifications are as follows:

Nonspendable - The nonspendable fund balance classification reflects amounts that are not in spendable form. Examples include inventory, prepaid items, the long-term portion of loans receivable, and nonfinancial assets held for resale. This classification also reflects amounts that are in spendable form but that are legally or contractually required to remain intact, such as the principal of a permanent endowment.

Restricted - The restricted fund balance classification reflects amounts subject to externally imposed and legally enforceable constraints. Such constraints may be imposed by creditors, grantors, contributors, or laws or regulations of other governments, or may be imposed by law through constitutional provisions or enabling legislation.

Committed - The committed fund balance classification reflects amounts subject to internal constraints self- imposed by formal action of the Governing Board. The constraints giving rise to committed fund balance must be imposed no later than the end of the reporting period. The actual amounts may be determined subsequent to that date but prior to the issuance of the financial statements. In contrast to restricted fund balance, committed fund balance may be redirected by the government to other purposes as long as the original constraints are removed or modified in the same manner in which they were imposed, that is, by the same formal action of the Governing Board.

Assigned - The assigned fund balance classification reflects amounts that the government intends to be used for specific purposes. Assignments may be established either by the Governing Board or by a designee of the governing body and are subject to neither the restricted nor committed levels of constraint. In contrast to the constraints giving rise to committed fund balance, constraints giving rise to assigned fund balance are not required to be imposed, modified, or removed by formal action of the Governing Board. The action does not require the same level of formality and may be delegated to another body or official. Additionally, the assignment need not be made before the end of the reporting period, but rather may be made any time prior to the issuance of the financial statements.

Unassigned - In the General Fund only, the unassigned fund balance classification reflects the residual balance that has not been assigned to other funds and that is not restricted, committed, or assigned to specific purposes. However, deficits in any fund, including the General Fund that cannot be eliminated by reducing or eliminating amounts assigned to other purposes are reported as negative unassigned fund balance.

The District applies restricted resources first when expenditures are incurred for purposes for which either restricted or unrestricted (committed, assigned and unassigned) amounts are available. Similarly, within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

F. Interfund Activity

Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after non-operating revenues/expenses in proprietary funds. Repayments from funds responsible for particular expenditures/expenses to the funds that initially paid for them are not presented in the financial statements. Interfund transfers are eliminated in the governmental activities columns of the statement of activities.

G. Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

H. Budgetary Data

The budgetary process is prescribed by provisions of the California Education Code and requires the governing board to hold a public hearing and adopt an operating budget no later than July 1 of each year. The District governing board satisfied these requirements. The adopted budget is subject to amendment throughout the year to give consideration to unanticipated revenue and expenditures primarily resulting from events unknown at the time of budget adoption with the legal restriction that expenditures cannot exceed appropriations by major object account.

The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary statements reflect the amounts after all budget amendments have been accounted for. For purposes of the budget, on-behalf payments have not been included as revenue and expenditures as required under generally accepted accounting principles.

I. Property Tax

Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in two installments on November 1 and February 1 and become delinquent on December 10 and April 10, respectively. Unsecured property taxes are payable in one installment on or before August 31. The County Auditor-Controller bills and collects the taxes on behalf of the District. Local property tax revenues are recorded when received.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

J. New Accounting Pronouncements

GASB Statement No. 84 – In January 2017, GASB issued Statement No. 84, Fiduciary Activities. This standard’s primary objective is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The statement is effective for periods beginning after December 15, 2018. The District has not yet determined the impact on the financial statements.

GASB Statement No. 87 – In June 2017, GASB issued Statement No. 87, Leases. This standard’s primary objective is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. The statement is effective for periods beginning after December 15, 2019. The District has not determined the impact on the financial statements.

GASB Statement No. 88 – In April 2018, GASB issued Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. This standard’s primary objective is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. The statement is effective for periods beginning after June 15, 2018. The District has implemented GASB Statement No. 88 for the year ended June 30, 2019.

NOTE 2 – CASH AND INVESTMENTS

A. Summary of Cash and Investments

Governmental Internal Service Governmental Fiduciary Funds Funds Activities Funds Investment in county treasury $ 189,041,802 $ 3,742,946 $ 192,784,748 $ 270,571 Cash on hand and in banks 2,306,474 222,926 2,529,400 3,250,943 Cash with fiscal agent - 5,947,882 5,947,882 - Cash in revolving fund 63,991 - 63,991 - Total cash and investments $ 191,412,267 $ 9,913,754 $ 201,326,021 $ 3,521,514

B. Policies and Practices

The District is authorized under California Government Code to make direct investments in local agency bonds, notes, or warrants within the state; U.S. Treasury instruments; registered state warrants or treasury notes; securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of deposit placed with commercial banks and/or savings and loan companies; repurchase or reverse repurchase agreements; medium term corporate notes; shares of beneficial interest issued by diversified management companies, certificates of participation, obligations with first priority security; collateralized mortgage obligations; and the County Investment Pool.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 2 – CASH AND INVESTMENTS (continued)

B. Policies and Practices (continued)

Investment in County Treasury – The District maintains substantially all of its cash in the County Treasury in accordance with Education Code Section 41001. The San Diego County Treasurer’s pooled investments are managed by the County Treasurer who reports on a monthly basis to the board of supervisors. In addition, the function of the County Treasury Oversight Committee is to review and monitor the County’s investment policy. The committee membership includes the Treasurer and Tax Collector, the Auditor-Controller, Chief Administrative Officer, Superintendent of Schools Representative, and a public member. The fair value of the District's investment in the pool is based upon the District's pro-rata share of the fair value provided by the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by the County Treasurer, which is recorded on the amortized cost basis.

C. General Authorizations

Except for investments by trustees of debt proceeds, the authority to invest District funds deposited with the county treasury is delegated to the County Treasurer and Tax Collector. Additional information about the investment policy of the County Treasurer and Tax Collector may be obtained from its website. The table below identifies the investment types permitted by California Government Code.

Maximum Maximum Maximum Remaining Percentage of Investment in Authorized Investment Type Maturity Portfolio One Issuer Local Agency Bonds, Notes, Warrants 5 years None None Registered State Bonds, Notes, Warrants 5 years None None U. S. Treasury Obligations 5 years None None U. S. Agency Securities 5 years None None Banker’s Acceptance 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% None Repurchase Agreements 1 year None None Reverse Repurchase Agreements 92 days 20% of base None Medium-Term Corporate Notes 5 years 30% None Mutual Funds N/A 20% 10% Money Market Mutual Funds N/A 20% 10% Mortgage Pass-Through Securities 5 years 20% None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A None None Joint Powers Authority Pools N/A None None

D. Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The District manages its exposure to interest rate risk by investing in the County Treasury. The District maintains a pooled investment with the County Treasury with a fair value of approximately $193,518,880 and an amortized book value of $193,055,880. The average weighted maturity for this pool is 528 days.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 2 – CASH AND INVESTMENTS (continued)

E. Credit Risk

Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The investments in the County Treasury are not required to be rated. As of June 30, 2019, the pooled investments in the County Treasury were rated at least A.

F. Custodial Credit Risk – Deposits

This is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District does not have a policy for custodial credit risk for deposits. However, the California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law. The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. As of June 30, 2019, the District's bank balance was exposed to custodial credit risk amounting to $5,594,334 because it was uninsured and collateralized with securities held by the pledging financial institution's trust department or agency, but not in the name of the District.

G. Fair Value

The District categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy is based on the valuation inputs used to measure an asset's fair value. The following provides a summary of the hierarchy used to measure fair value:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, or other inputs that are observable, either directly or indirectly.

Level 3 - Unobservable inputs should be developed using the best information available under the circumstances, which might include the District's own data. The District should adjust that data if reasonable available information indicates that other market participants would use different data or certain circumstances specific to the District are not available to other market participants.

Uncategorized - Investments in the San Diego County Treasury Investment Pool are not measured using the input levels above because the District's transactions are based on a stable net asset value per share. All contributions and redemptions are transacted at $1.00 net asset value per share.

The District's fair value measurements at June 30, 2019 were as follows:

Uncategorized Investment in county treasury $ 193,518,880

Total fair market value of investments $ 193,518,880

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable at June 30, 2019 consisted of the following:

Non-Major County School Governmental Internal Service Governmental General Fund Building Fund Facilities Fund Funds Funds Activities Fiducary Funds Federal Government Categorical aid $ 4,651,263 $ - $ - $ 1,605,533 $ - $ 6,256,796 $ - State Government Apportionment 3,849,431 - - 230,364 - 4,079,795 - Lottery 821,786 - - - - 821,786 - Local Government Other local sources 3,837,688 1,030,742 262,925 1,071,885 57,014 6,260,254 22,385 Total $ 13,160,168 $ 1,030,742 $ 262,925 $ 2,907,782 $ 57,014 $ 17,418,631 $ 22,385

NOTE 4 – CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2019 was as follows:

Balance Balance July 01, 2018 Additions Deletions June 30, 2019 Governmental Activities Capital assets not being depreciated Land $ 39,069,840 $ - $ - $ 39,069,840 Construction in progress 53,049,408 75,785,368 - 128,834,776 Total Capital Assets not Being Depreciated 92,119,248 75,785,368 - 167,904,616 Capital assets being depreciated Land improvements 152,927,133 405,968 - 153,333,101 Buildings & improvements 771,133,403 318,798 340,438 771,111,763 Furniture & equipment 26,904,512 2,096,366 1,857,087 27,143,791 Total Capital Assets Being Depreciated 950,965,048 2,821,132 2,197,525 951,588,655 Less Accumulated Depreciation Land improvements 82,812,224 7,102,839 - 89,915,063 Buildings & improvements 199,352,454 20,144,731 323,320 219,173,865 Furniture & equipment 17,399,656 1,649,362 1,845,091 17,203,927 Total Accumulated Depreciation 299,564,334 28,896,932 2,168,411 326,292,855 Governmental Activities Capital Assets, net $ 743,519,962 $ 49,709,568 $ 29,114 $ 793,200,416

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 5 – INTERFUND TRANSACTIONS

A. Interfund Receivables/Payables (Due From/Due To)

Individual interfund receivable and payable balances at June 30, 2019 were as follows:

Due From Other Funds Non-Major Governmental Internal Service Due To Other Funds General Fund Building Fund Funds Funds Total General Fund $ - $ 16,367 $ 772,863 $ 2,804 $ 792,034 Building Fund 29,221 - 7,390 - 36,611 Non-Major Governmental Funds 865,187 1 - - 865,188 Total Due From Other Funds $ 894,408 $ 16,368 $ 780,253 $ 2,804 $ 1,693,833

Due from the General Fund to the Adult Education Fund for program revenue. $ 711,544 Due from the Adult Education Fund to the General Fund for indirect costs, payroll and other expenditures. 642,767 Due from the Cafeteria Special Revenue Fund to the General Fund for indirect costs, payroll and other expenditures. 176,339 Due from the General Fund to the Cafeteria Special Revenue Fund for catering, salary adjustments, and negative student balance write-offs. 61,019 Due from the Building Fund to the General Fund for expenditures. 29,221 Due from the Capital Facilities Fund to the General Fund for expenditures. 24,231 Due from the Special Reserve Fund for Capital Outlay Projects to the General Fund for expenditures. 21,850 Due from the General Fund to the Building Fund for construction expenditures. 16,367 Due from the Building Fund to the Special Reserve Fund for Capital Outlay Projects for construction expenditures. 7,390 Due from the General Fund to the Internal Service Fund for medical insurance. 2,804 Due from the General Fund to the Special Reserve Fund for Capital Outlay Projects for expenditures. 300 Due from the Capital Facilities Fund to the Building Fund to balance construction project. 1 Total $ 1,693,833

B. Operating Transfers

Interfund transfers for the year ended June 30, 2019 consisted of a $35,824 transfer to the General Fund from the Special Reserve Fund for Capital Outlay Projects for moving costs.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 6 – ACCRUED LIABILITIES

Accrued liabilities at June 30, 2019 consisted of the following:

Non-Major Governmental Internal Service Governmental General Fund Building Fund Funds Funds District-Wide Activities Fiduciary Funds Payroll $ 4,168,196 $ 7,320 $ 490,921 $ 357,361 $ - $ 5,023,798 $ - Construction - 15,609,165 - - - 15,609,165 - Vendors payable 6,942,021 - 3,484,038 193,310 - 10,619,369 12,500 Unmatured interest - - - - 6,866,114 6,866,114 - Due to grantor government 589,792 - - - - 589,792 - Total $ 11,700,009 $ 15,616,485 $ 3,974,959 $ 550,671 $ 6,866,114 $ 38,708,238 $ 12,500

NOTE 7 – UNEARNED REVENUE

Unearned revenue at June 30, 2019 consisted of the following:

Non-Major Governmental Governmental General Fund Funds Activities Federal sources $ - $ 31,373 $ 31,373 State categorical sources 38,986 - 38,986 Local sources 90,100 41,524 131,624 Total $ 129,086 $ 72,897 $ 201,983

NOTE 8 – TAX AND REVENUE ANTICIPATION NOTES (TRANS)

On August 28, 2018, the District issued $21,000,000 of Tax and Revenue Anticipation Notes bearing interest at 4.0% percent. The notes were issued to supplement cash flows. Interest and principal were due and payable on June 28, 2019. The District has repaid the notes in full.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 9 – LONG-TERM LIABILITIES

A schedule of changes in long-term liabilities for the year ended June 30, 2019 consisted of the following:

Balance Balance Balance Due July 01, 2018 Additions Deductions June 30, 2019 In One Year Governmental Activities General obligation bonds $ 550,714,538 $ 43,000,000 $ 16,383,162 $ 577,331,376 $ 20,083,461 Unamortized premium 27,453,022 3,490,788 2,313,687 28,630,123 2,359,686 Accreted interest 77,571,654 11,899,472 46,838 89,424,288 91,539 Total general obligation bonds 655,739,214 58,390,260 18,743,687 695,385,787 22,534,686 Capital leases 2,177,888 756,682 764,308 2,170,262 657,584 Compensated absences 2,529,726 - 66,933 2,462,793 - Net OPEB liability 58,126,265 1,520,992 - 59,647,257 - Net pension liability 235,168,297 - 2,231,052 232,937,245 - Total $ 953,741,390 $ 60,667,934 $ 21,805,980 $ 992,603,344 $ 23,192,270

• Payments for general obligation bonds are made in the Bond Interest and Redemption Fund. • Payments for capital lease obligations are made in the General Fund. • Payments for compensated absences are typically liquidated in the General Fund and the Non-Major Governmental Funds.

A. General Obligation Bonds

Bonds Bonds Issue Maturity Interest Original Outstanding Outstanding Series Date Date Rate Issue July 01, 2018 Additions Deductions June 30, 2019 Measure H (2004) Series 2004 6/17/2004 8/1/2029 3.0%-5.375% $ 60,841,197 $ 14,521,197 $ - $ - $ 14,521,197 Series 2006 6/21/2006 6/1/2031 4.0%-5.0% 124,999,225 41,454,224 - - 41,454,224 Series 2008 8/5/2008 8/1/2033 2.0%-5.0% 88,159,578 31,869,674 - 2,165,000 29,704,674 Series 2011A 11/22/2011 8/1/2020 4.0%-5.0% 10,260,000 10,260,000 - 3,075,000 7,185,000 Measure U (2008) Series A 4/15/2009 8/1/2033 0.095%-5.5% 60,000,000 1,090,000 - 440,000 650,000 Series D 5/25/2011 8/1/2025 5.48% 25,000,000 24,990,000 - - 24,990,000 Series E 11/13/2013 8/1/2043 2.0%-5.0% 40,000,000 38,205,000 - - 38,205,000 Series F 6/4/2015 6/1/2040 3.82%-6.00% 68,746,678 67,829,443 - 228,162 67,601,281 Series G-2 3/1/2017 8/1/2034 2.0%-5.0% 16,250,000 16,250,000 - 490,000 15,760,000 Series H-1 9/26/2017 8/1/2018 1.40% 285,000 285,000 - 285,000 - Series H-2 9/26/2017 8/1/2040 3.0%-5.0% 9,715,000 9,715,000 - - 9,715,000 Measure BB (2016) Series A-2 3/1/2017 8/1/2042 2.0%-5.0% 41,290,000 41,290,000 - 3,060,000 38,230,000 Series B-1 10/24/2018 8/1/2019 2.62% 4,510,000 - 4,510,000 - 4,510,000 Series B-2 10/24/2018 8/1/2043 5.00% 38,490,000 - 38,490,000 - 38,490,000 Refunding Bonds Series 2012 5/17/2012 8/1/2023 2.0%-5.0% 54,515,000 48,220,000 - 6,060,000 42,160,000 Series 2015 12/23/2015 8/1/2033 1.3%-5.0% 50,770,000 49,520,000 - 100,000 49,420,000 Series 2016 4/13/2016 8/1/2033 1.0%-5.0% 51,490,000 50,460,000 - 340,000 50,120,000 Series 2016B 10/19/2016 8/1/2045 2.0%-4.0% 90,435,000 89,305,000 - - 89,305,000 Series 2017 9/26/2017 8/1/2036 3.0%-5.0% 15,450,000 15,450,000 - 140,000 15,310,000 $ 550,714,538 $ 43,000,000 $ 16,383,162 $ 577,331,376

Accreted Interest 2004, Series 2004 $ 17,073,212 $ 1,850,628 $ - $ 18,923,840 2004, Series 2006 32,195,926 3,720,362 - 35,916,288 2004, Series 2008 19,077,118 2,667,892 - 21,745,010 2008, Series F 9,225,398 3,660,590 46,838 12,839,150 $ 77,571,654 $ 11,899,472 $ 46,838 $ 89,424,288 38

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 9 – LONG-TERM LIABILITIES (continued)

A. General Obligation Bonds (continued)

Election 2004 ‐ Proposition H On March 3, 2004, the voters of the District approved Proposition H authorizing the District to issue up to $274 million general obligation bonds to repair aging high schools, improve student safety, and qualify for state matching funds.

Election 2011 ‐ Proposition U On November 4, 2008, the voters of the District approved Proposition U by authorizing the District to issue up to $417 million general obligation bonds for upgrading educational technology, constructing science labs, replacing deteriorating portables, rehabilitating aging classrooms, and improving safety/energy efficiency. The bonds represent an obligation of the District payable solely from ad valorem property taxes levied and collected by the County of San Diego.

On September 26, 2017, the District issued $285,000 of General Obligation Bonds, Series H‐1 (Federally Taxable) and $9,715,000 of General Obligation Bonds, Series H‐2. The Series H‐1 bonds bear a fixed interest rate of 1.4% and matured on August 1, 2018. The Series H‐2 bonds bear fixed interest rates ranging between 3.0% and 5.0% with annual maturities from August 1, 2019 through August 1, 2040. The Series H Bonds are the ninth and tenth series of bonds issued under Proposition U, after which $99,943,322 of the bonding authority will remain.

Election 2016 – Measure BB On November 8, 2016, the voters of the District approved Measure BB authorizing the District to issue up to $128 million general obligation bonds to upgrade East County high school classrooms, labs and facilities, repair aging roofs, plumbing and electrical systems, modernize technology infrastructure, improve student safety and security, replace deteriorated portables, construct new school facilities to accommodate growth, and renovate career‐ training facilities for instruction in science, technology, engineering, math and skilled trades.

March 1, 2017, the District issued $1,710,000 of General Obligation Bonds, Series A‐1 (Federally Taxable) and $41,290,000 of General Obligation Bonds, Series A‐2. The Series A‐1 bonds bear a fixed interest rate of 1.0% and matured on August 1, 2017. The Series A‐2 bonds bear fixed interest rates ranging between 2.0% and 5.0 with annual maturities from August 1, 2018 through August 1, 2042.

October 24, 2018, the District issued $4,510,000 of General Obligation Bonds, Series B‐1 (Federally Taxable) and $38,490,000 of General Obligation Bonds, Series B‐2. The Series B‐1 bonds bear a fixed interest rate of 2.62% and mature on August 1, 2019. The Series B‐2 bonds bear fixed interest rates ranging between 3.0% and 5.0 with annual maturities from August 1, 2023 through August 1, 2043. The Series B Bonds are the second series of bonds issued under Proposition BB, after which $42,000,000 of the bonding authority will remain.

2017 General Obligation Refunding Bonds On September 26, 2017, the District issued $15,450,000 of General Obligation Refunding Bonds, Series 2017. The bonds bear fixed interest rates ranging between 3.0% and 5.0% with annual maturities from August 1, 2018, through August 1, 2036. The net proceeds of $17,084,504 (after premiums and issuance costs) were used to advance refund the District’s outstanding Election of 2008 Series C General Obligation Bonds.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 9 – LONG-TERM LIABILITIES (continued)

A. General Obligation Bonds (continued)

The annual requirements to amortize general obligation bonds outstanding at June 30, 2019, is as follows:

Year Ended June 30, Principal Interest Total 2020 $ 20,083,461 $ 17,414,935 $ 37,498,396 2021 16,417,749 17,118,552 33,536,301 2022 16,075,725 19,203,221 35,278,946 2023 18,040,852 17,002,238 35,043,090 2024 20,314,744 16,814,971 37,129,715 2025 - 2029 109,546,598 143,093,092 252,639,690 2030 - 2034 142,641,939 152,768,523 295,410,462 2035 - 2039 79,646,858 87,670,689 167,317,547 2040 - 2044 130,753,450 46,636,028 177,389,478 2045 - 2046 23,810,000 728,550 24,538,550 Accretion 89,424,288 (89,424,288) - Total $ 666,755,664 $ 429,026,511 $ 1,095,782,175

B. Capital Leases

The District has leases for buses under agreements with options to purchase. The annual requirements on these capital leases outstanding as of June 30, 2019, are as follows:

Year Ended June 30, Lease Payment 2020 $ 704,617 2021 704,617 2022 704,617 2023 159,512 Total minimum lease payments 2,273,363 Less amount representing interest (103,101) Present value of minimum lease payments $ 2,170,262

C. Compensated Absences

Total unpaid employee compensated absences as of June 30, 2019 amounted to $2,462,793. This amount is included as part of long-term liabilities in the government-wide financial statements.

D. Other Postemployment Benefits

The District’s beginning net OPEB liability was $58,126,265 and increased by $1,520,992 during the year ended June 30, 2019. The ending net OPEB liability at June 30, 2019 was $59,647,257. See Note 11 for additional information regarding the net/total OPEB liability.

E. Net Pension Liability

The District’s beginning net pension liability was $235,168,297 and decreased by $2,231,052 during the year ended June 30, 2019. The ending net pension liability at June 30, 2019 was $232,937,245. See Note 12 for additional information regarding the net pension liability.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 10 – FUND BALANCES

Fund balances were composed of the following elements at June 30, 2019:

Non-Major Total County School Bond Interest & Governmental Governmental General Fund Building Fund Facilities Fund Redemption Fund Funds Funds Non-spendable Revolving cash $ 60,000 $ - $ - $ - $ 3,991 $ 63,991 Stores inventory 213,209 - - - 143,008 356,217 Prepaid expenditures 12,044 - - - 180,141 192,185 Total non-spendable 285,253 - - - 327,140 612,393 Restricted Educational programs 4,383,899 - - - 2,520,657 6,904,556 Capital projects - 47,636,475 34,787,829 - 10,442,394 92,866,698 Debt service - - - 51,786,723 - 51,786,723 All others - - - - 1,952,916 1,952,916 Total restricted 4,383,899 47,636,475 34,787,829 51,786,723 14,915,967 153,510,893 Assigned School Site Carryovers 1,226,491 - - - - 1,226,491 Department Carryovers 981,893 - - - - 981,893 NOC Refresh Reserve 1,600,000 - - - - 1,600,000 2019/20 CTE Potential State Revenue 1,990,837 - - - - 1,990,837 Special Education Growth Reserve 1,300,000 - - - - 1,300,000 Budget Reduction Mitigation Reserve 7,935,440 - - - - 7,935,440 Total assigned 15,034,661 - - - - 15,034,661 Unassigned Reserve for economic uncertainties 10,468,099 - - - - 10,468,099 Total unassigned 10,468,099 - - - - 10,468,099 Total $ 30,171,912 $ 47,636,475 $ 34,787,829 $ 51,786,723 $ 15,243,107 $ 179,626,046

The District is committed to maintaining a prudent level of financial resources to protect against the need to reduce service levels because of temporary revenue shortfalls or unpredicted expenditures. The District’s Minimum Fund Balance Policy requires a Reserve for Economic Uncertainties, consisting of unassigned amounts, equal to no less than 4.5 percent of General Fund expenditures and other financing uses.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 11 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB)

A. Plan Description

The Grossmont Union High School District’s defined benefit OPEB plan (“The Plan”), Grossmont Union High School District Retiree Benefit Plan (the Plan) is described below. The Plan is a single-employer defined benefit plan administered by the District. The District is a participant in the California Employer’s Retiree Benefit Trust (CERBT), an agent multiple-employer defined benefit post-employment healthcare plan administered by CalPERS.”

Medicare Premium Payment (MPP) Program The Medicare Premium Payment Program is a cost‐sharing multiple‐employer other postemployment benefit plan established pursuant to Chapter 1032, Statutes of 2000 (SB 1435). CalSTRS administers the MPP Program, through the Teachers’ Health Benefit Fund. The MPP Program pays Medicare Part A premiums and Medicare Parts A and B late enrollment surcharges for eligible members of the Defined Benefit Program who were retired or began receiving a disability allowance prior to July 1, 2012, and were not eligible for premium free Medicare Part A. The payments are made directly to the Centers for Medicare and Medicaid Services on a monthly basis.

B. OPEB Plan Fiduciary Net Position

Detailed information about the Plan’s fiduciary net position is available in the separately-issued Plan Annual Financial Report that includes financial statements and required supplementary information. That report may be obtained by contacting the District.

C. Benefits Provided

The eligibility requirements and benefits provided by the Plan are described below.

The District provides health coverage for the retiree and any eligible dependent until the retiree reaches age 65 or Medicare eligibility. To be eligible to receive retiree health coverage, the employee must retire on or after age 54 (prior valuation was 55 for Management, Confidential, and Supervisory employees) and have at least 10 years of District eligible service at retirement. District paid benefits cease upon reaching age 65 (Medicare eligibility) or at the death of the retiree, if earlier. Spouse coverage ceases upon the earlier of the death of the retiree, the death of the spouse or when the retiree reaches age 65.

Covered benefits include a choice between the Kaiser HMO Plan, the Anthem Select HMO, the Anthem Select Plus HMO and the Anthem Full Network HMO Plan (in 2018, the Kaiser HMO Plan, the United Healthcare (UHC) Network 1, 2 and 3 HMO Plans and the Alliance HMO Plan) for medical coverage, the Delta PPO Plan for dental coverage and the Vision Service Plan for vision coverage. In 2017, the District funded 100% of the cost of coverage for the retiree only coverage for any of the medical plans selected by the retiree except for the Anthem Full Network HMO Plan (the employee pays the difference between the Anthem Full Network Plan and the Anthem Select Network HMO). For employees electing dependent coverage, the District paid 80% of the costs for the Kaiser HMO Plan and the Anthem Select HMO Plan. For employees electing dependent coverage in the Anthem Full Network HMO and the Anthem Select Plus HMO, the employee paid the difference between the cost of the plan and the Anthem Select Network HMO Plan. In 2018, the District funds 100% of the cost of coverage for the retiree only coverage for the Kaiser, UHC Network 1 and Alliance HMO plans and 80% of the cost for employees electing dependent coverage. For all other plans costing more the District’s cost is limited to the UHC Network 1 HMO plan. Out‐of‐state employees receive an annual dollar amount equal to the lowest price plan. The District also funds 100% of the cost of dental coverage. Grandfathered retirees electing to waive medical coverage receive an annual dollar amount equal to $1,200.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 11 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) (continued)

D. Contributions

The District funds the plan on a pay‐as‐you‐go basis and maintains reserves with the Classified Employees Retiree Benefits Trust (CERBT) administered by CalPERS. The CERBT was established by Chapter 331 of the 1988 California Statutes, and employers elect to participate in the CERBT to pre‐fund health, dental, and other non‐ pension postemployment benefits for their retirees and survivors. The CERBT has pooled administrative and investment functions, while separate employer accounts are maintained to prefund and pay for health care or other postemployment benefits in accordance with the terms of the participating employers’ plans.

The contribution requirements of Plan members and the Grossmont Union High School District are established and may be amended by the Grossmont Union High School District and its applicable bargaining units. For fiscal year 2018-19, the District contributed $3,074,183 to the Plan, all of which was used for current premiums.

E. Plan Membership

Membership of the Plan consisted of the following:

Number of participants Inactive employees receiving benefits 250 Inactive employees entitled to but not receiving benefits* - Participating active employees 1,860 Total number of participants** 2,110

*Information not provided **As of the June 30, 2017 valuation date

F. Net OPEB Liability

The components of the net OPEB liability of the District at June 30, 2019, were as follows:

Total OPEB liability $ 62,213,555 Plan fiduciary net position 3,518,609 District's Plan net OPEB liability $ 58,694,946 District's Proportionate Share of the Net MPP OPEB Liability $ 952,311

District's total recorded net OPEB liability $ 59,647,257

Plan fiduciary net position as a percentage of total OPEB liability 5.66%

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 11 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) (continued)

G. Actuarial Assumptions and Other Inputs

The District’s proportionate share of the net MPP Program OPEB liability was measured as of June 30, 2018 and was determined by an actuarial valuation as of June 30, 2017.

The net OPEB liability as of June 30, 2019 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2018:

District Plan Economic assumptions: Inflation 2.75% Salary increases 3.00% Discount rate 3.50% Investment rate of return 6.00%

Non-economic assumptions: Mortality Rates Mortality rates are based on the most recent rates used by CalPERS and CalSTRS for the pension valuations.

The discount rate is a blended rate, rounded to 5 basis points, between the rate of return at 6.00% and 3.50%, the resulting rate using the average of 3 20-year municipal bond rate indices: S&P Municipal Bond 20 Year High Grade Rate Index, Bond Buyer 20-Bond GO index, Fidelity GO AA 20 Year Bond Index.

MPP Program Economic assumptions: Inflation 2.75% Investment Yield 7.00% Discount rate 3.58%

Non-economic assumptions: Mortality Rates CalSTRS changed the mortality assumptions based on the July 1, 2010, through June 30, 2015, experience study adopted by the board in February 2017. CalSTRS uses a generational mortality assumption, which involves the use of a base mortality table and projection scales to reflect expected annual reductions in mortality rates at each age, resulting in increases in life expectancies each year into the future. The base mortality tables are CalSTRS custom tables derived to best fi t the patterns of mortality among our members. The projection scale was set equal to 110 percent of the ultimate improvement factor from the Mortality Improvement Scale (MP‐2016) table, issued by the Society of Actuaries.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 11 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) (continued)

H. Changes in Net OPEB Liability

June 30, 2019 Total OPEB Liability Service Cost $ 3,266,643 Interest on total OPEB liability 2,112,126 Changes of assumptions (482,832) Benefits payments (3,074,183) Net change in total OPEB liability 1,821,754 Total OPEB liability - beginning 60,391,801 Total OPEB liability - ending (a) $ 62,213,555

Plan fiduciary net position Contributions - employer $ 3,074,183 Net investment income 158,159 Benefit payments (3,074,183) Administrative expenses (6,203) Net change in plan fiduciary net position 151,956 Plan fiduciary net position - beginning 3,366,653 Plan fiduciary net position - ending (b) $ 3,518,609

District's Plan net OPEB liability - ending (a) - (b) $ 58,694,946

District's Proportionate Share of the Net MPP OPEB Liability (c) $ 952,311

District's total recorded net OPEB liability - ending (a) - (b) + (c) $ 59,647,257

Plan fiduciary net position as a percentage of the Plan's total OPEB liability 5.7%

Covered-employee payroll $ 138,484,996

District's Plan net OPEB liability as a percentage of covered- employee payroll 42.38%

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 11 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) (continued)

I. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate

The following presents the net OPEB liability of the District, as well as what the District’s net OPEB liability would be if it were calculated using a discount rate that is one percentage‐point lower or one percentage‐point higher than the current discount rate:

1% Decrease Discount Rate 1% Increase (2.5%) (3.5%) (4.5%) Net OPEB liability - District Plan $ 63,695,904 $ 58,694,946 $ 54,079,206

1% Decrease Discount Rate 1% Increase (2.87%) (3.87%) (4.87%) Net OPEB liability - MPP Program $ 1,054,171 $ 952,311 $ 861,831

J. Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate

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

Healthcare Cost 1% Decrease Trend Rate 1% Increase (5.50%HMO/5.50%PPO (6.50%HMO/6.50%PPO (7.50%HMO/7.50%PPO decreasing to decreasing to decreasing to 4.00%HMO/4.00%PPO) 5.00%HMO/5.00%PPO) 6.00%HMO/6.00%PPO) Net OPEB liability - District Plan $ 52,159,305 $ 58,694,946 $ 66,324,618

Medicare Costs 1% Decrease Trend Rate 1% Increase (2.7% Part A and (3.7% Part A and (4.7% Part A and 3.1% Part B) 4.1% Part B) 5.1% Part B) Net OPEB liability - MPP Program $ 869,127 $ 952,311 $ 1,043,402

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 11 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) (continued)

K. OPEB Expense and Deferred Outflows and Deferred Inflows of Resources Related to OPEB

For the year ended June 30, 2019, the Grossmont Union High School District recognized OPEB expense of $5,118,182. At June 30, 2019, the Grossmont Union High School District reported deferred outflows of resources related to OPEB and deferred inflows of resources related to OPEB from the following sources:

District Plan MPP Program Deferred Outflows Deferred Inflows Deferred Inflows of Resources of Resources of Resources Differences between projected and actual earnings on plan investments $ 20,728 $ - $ - Differences between expected and actual experience - - - Changes in assumptions - 413,856 - Changes in proportion and differences between District contributions and proportionate share of contributions - - 46,623 District contributions subsequent to the measurement date 2,482,767 - - $ 2,503,495 $ 413,856 $ 46,623

The $2,482,767 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 OPEB liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

District Plan MPP Program Deferred Outflows Deferred Inflows Deferred Inflows Year Ended June 30, of Resources of Resources of Resources 2020 $ 3,999 $ 68,976 $ 7,771 2021 3,999 68,976 7,771 2022 3,999 68,976 7,771 2023 8,731 68,976 7,771 2024 - 68,976 7,771 2025 - 68,976 7,768 $ 20,728 $ 413,856 $ 46,623

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 12 – PENSION PLANS

Qualified employees are covered under multiple-employer contributory retirement plans maintained by agencies of the State of California. Certificated employees are members of the California State Teachers' Retirement System (CalSTRS), and classified employees are members of the California Public Employees' Retirement System (CalPERS). The District reported its proportionate share of the net pension liabilities, pension expense, deferred outflow of resources, and deferred inflow of resources for each of the above plans as follows:

Deferred Deferred inflows Net pension outflows related related to liability to pensions pensions Pension expense STRS Pension $ 145,407,559 $ 37,395,375 $ 18,021,631 $ 14,916,811 PERS Pension 87,529,686 23,296,931 4,165,043 12,328,173 Total $ 232,937,245 $ 60,692,306 $ 22,186,674 $ 27,244,984

A. California State Teachers’ Retirement System (CalSTRS)

Plan Description The District contributes to the California State Teachers' Retirement System (CalSTRS); a cost-sharing multiple employer public employee retirement system defined benefit pension plan administered by CalSTRS. The plan provides retirement and disability benefits and survivor benefits to beneficiaries. Benefit provisions are established by state statutes, as legislatively amended, within the State Teachers' Retirement Law. CalSTRS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the CalSTRS annual financial report may be obtained from CalSTRS, 7919 Folsom Blvd., Sacramento, CA 95826.

Benefits Provided The CalSTRS defined benefit plan has two benefit formulas:

1. CalSTRS 2% at 60: Members first hired on or before December 31, 2012, to perform service that could be creditable to CalSTRS. CalSTRS 2% at 60 members are eligible for normal retirement at age 60, with a minimum of five years of credited service. The normal retirement benefit is equal to 2.0 percent of final compensation for each year of credited service. Early retirement options are available at age 55 with five years of credited service or as early as age 50 with 30 years of credited service. The age factor for retirements after age 60 increases with each quarter year of age to 2.4 percent at age 63 or older. Members who have 30 years or more of credited service receive an additional increase of up to 0.2 percent to the age factor, known as the career factor. The maximum benefit with the career factor is 2.4 percent of final compensation.

2. CalSTRS 2% at 62: Members first hired on or after January 1, 2013, to perform service that could be creditable to CalSTRS. CalSTRS 2% at 62 members are eligible for normal retirement at age 62, with a minimum of five years of credited service. The normal retirement benefit is equal to 2.0 percent of final compensation for each year of credited service. An early retirement option is available at age 55. The age factor for retirement after age 62 increases with each quarter year of age to 2.4 percent at age 65 or older.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 12 – PENSION PLANS (continued)

A. California State Teachers’ Retirement System (CalSTRS) (continued)

Contributions Active plan CalSTRS 2% at 60 and 2% at 62 members are required to contribute 10.25% and 10.205% of their salary for fiscal year 2019, respectively, and the District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by CalSTRS Teachers' Retirement Board. The required employer contribution rate for fiscal year 2019 was 16.28% of annual payroll. The contribution requirements of the plan members are established by state statute. Contributions to the plan from the District were $14,355,807 for the year ended June 30, 2019.

On-Behalf Payments The District was the recipient of on-behalf payments made by the State of California to CalSTRS for K-12 education. These payments consist of state general fund contributions of approximately $13,272,873 to CalSTRS, which included a supplemental contribution for fiscal year 2019 due to California Senate Bill No. 90.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2019, the District reported a liability for its proportionate share of the net pension liability that reflected a reduction for State pension support provided to the District. The amount recognized by the District as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability that was associated with the District were as follows:

District's proportionate share of the net pension liability $ 145,407,559 State's proportionate share of the net pension liability associated with the District 83,253,035 Total $ 228,660,594

The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by applying update procedures to an actuarial valuation as of June 30, 2017 and rolling forward the total pension liability to June 30, 2018. The District’s proportion of the net pension liability was based on a projection of the District’s long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts, actuarially determined. At June 30, 2018, the District’s proportion was 0.158 percent, which was a decrease of 0.006 percent from its proportion measured as of June 30, 2017.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 12 – PENSION PLANS (continued)

A. California State Teachers’ Retirement System (CalSTRS) (continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued) For the year ended June 30, 2019, the District recognized pension expense of $14,916,811. In addition, the District recognized pension expense and revenue of $2,838,903 for support provided by the State. At June 30, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources

Differences between projected and actual earnings on plan investments $ - $ 5,599,109 Differences between expected and actual experience 450,903 2,112,126 Changes in assumptions 22,588,665 Changes in proportion and differences between District contributions and proportionate share of contributions - 10,310,396 District contributions subsequent to the measurement date 14,355,807 - $ 37,395,375 $ 18,021,631

The $14,355,807 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, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Deferred Outflows Deferred Inflows Year Ended June 30, of Resources of Resources 2020 $ 4,607,914 $ 1,544,044 2021 4,607,914 3,645,964 2022 4,607,914 7,465,388 2023 4,607,914 3,669,799 2024 4,607,912 1,020,305 2025 - 676,131 $ 23,039,568 $ 18,021,631

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 12 – PENSION PLANS (continued)

A. California State Teachers’ Retirement System (CalSTRS) (continued)

Actuarial Assumptions The total pension liability was determined by applying update procedures to an actuarial valuation as of June 30, 2017, and rolling forward the total pension liability to June 30, 2018 using the following actuarial assumptions, applied to all periods included in the measurement:

Consumer Price Inflation 2.75% Investment Rate of Return* 7.10% Wage Inflation 3.50%

* Net of investment expenses, but gross of administrative expenses.

CalSTRS uses custom mortality tables to best fit the patterns of mortality among its members. These custom tables are based on MP-2016 series tables adjusted to fit CalSTRS experience.

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2010−June 30, 2015.

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. The best-estimate ranges were developed using capital market assumptions from CalSTRS general investment consultant (Pension Consulting Alliance–PCA) as an input to the process. The actuarial investment rate of return assumption was adopted by the board in February 2017 in conjunction with the most recent experience study. For each future valuation, CalSTRS consulting actuary (Milliman) reviews the return assumption for reasonableness based on the most current capital market assumptions. Best estimates of 20-year geometrically-linked real rates of return and the assumed asset allocation for each major asset class for the year ended June 30, 2018, are summarized in the following table:

Assumed Asset Long-Term Expected Asset Class Allocation Real Rate of Return* Global Equity 47% 6.30% Fixed Income 12% 0.30% Real Estate 13% 5.20% Private Equity 13% 9.30% Risk Mitigating Strategies 9% 2.90% Inflation Sensitive 4% 3.80% Cash/Liquidity 2% -1.00% 100% *20-year geometric average

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 12 – PENSION PLANS (continued)

A. California State Teachers’ Retirement System (CalSTRS) (continued)

Discount Rate The discount rate used to measure the total pension liability was 7.10 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at statutory contribution rates in accordance with the rate increases per AB 1469. Projected inflows from investment earnings were calculated using the long-term assumed investment rate of return (7.10 percent) and assuming that contributions, benefit payments, and administrative expense occur midyear. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return 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 7.10 percent, 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 (6.10 percent) or 1-percentage-point higher (8.10 percent) than the current rate:

1% Current 1% Decrease Discount Rate Increase (6.10%) (7.10%) (8.10%) District's proportionate share of the net pension liability $ 213,005,058 $ 145,407,559 $ 89,362,672

Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalSTRS financial report.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 12 – PENSION PLANS (continued)

B. California Public Employees’ Retirement System (CalPERS)

Plan Description The District contributes to the School Employer Pool under the California Public Employees' Retirement System (CalPERS); a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. The plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by state statutes, as legislatively amended, within the Public Employees' Retirement Laws. CalPERS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the CalPERS annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, CA 95811.

Benefits Provided The benefits for the defined benefit plan are based on members’ years of service, age, final compensation, and benefit formula. Benefits are provided for disability, death, and survivors of eligible members or beneficiaries. Members become fully vested in their retirement benefits earned to date after five years of credited service.

Contributions Active plan members who entered into the plan prior to January 1, 2013, are required to contribute 7.0% of their salary. The California Public Employees’ Pension Reform Act (PEPRA) specifies that new members entering into the plan on or after January 1, 2013, shall pay the higher of fifty percent of normal costs or 7.0% of their salary. Additionally, for new members entering the plan on or after January 1, 2013, the employer is prohibited from paying any of the employee contribution to CalPERS unless the employer payment of the member’s contribution is specified in an employment agreement or collective bargaining agreement that expires after January 1, 2013.

The District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the CalPERS Board of Administration. The required employer contribution rate for fiscal year 2019 was 18.062% of annual payroll. Contributions to the plan from the District were $8,101,412 for the year ended June 30, 2019.

On-Behalf Payments The District was the recipient of on-behalf payments made by the State of California to CalPERS for K-12 education. These payments consisted of state general fund contributions of approximately $2,967,653 to CalPERS for fiscal year 2019 due to California Senate Bill No. 90.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2019, the District reported a liability of $87,529,686 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by applying update procedures to an actuarial valuation as of June 30, 2017 and rolling forward the total pension liability to June 30, 2018. The District’s proportion of the net pension liability was based on a projection of the District’s long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts, actuarially determined. At June 30, 2018, the District’s proportion was 0.328 percent, which was a decrease of 0.020 percent from its proportion measured as of June 30, 2017.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 12 – PENSION PLANS (continued)

B. California Public Employees’ Retirement System (CalPERS) (continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued) For the year ended June 30, 2019, the District recognized pension expense of $12,328,173. At June 30, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources

Differences between projected and actual earnings on plan investments $ 717,940 $ - Differences between expected and actual experience 5,738,126 - Changes in assumptions 8,739,453 - Changes in proportion and differences between District contributions and proportionate share of contributions - 4,165,043 District contributions subsequent to the measurement date 8,101,412 - $ 23,296,931 $ 4,165,043

The $8,101,412 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, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Deferred Outflows Deferred Inflows Year Ended June 30, of Resources of Resources 2020 $ 9,056,626 $ 2,397,801 2021 6,766,687 930,127 2022 (111,156) 837,115 2023 (516,638) - $ 15,195,519 $ 4,165,043

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 12 – PENSION PLANS (continued)

B. California Public Employees’ Retirement System (CalPERS) (continued)

Inflation 2.50% Discount Rate 7.15% Salary Increases Varies by Entry Age and Service

CalPERS uses custom mortality tables to best fit the patterns of mortality among its members. These custom tables are derived using CalPERS’ membership data for all funds. The table includes 15 years of mortality improvements using the Society of Actuaries Scale 90% of scale MP 2016.

The actuarial assumptions used in the June 30, 2017, valuation were based on the results of an actuarial experience study for the period from 1997 to 2015.

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. In determining the long-term expected rate of return, both short-term and long-term market return expectations as well as the expected pension fund cash flows were taken into account. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short- term (first 10 years) and the long-term (11-60 years) using a building block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 12 – PENSION PLANS (continued)

B. California Public Employees’ Retirement System (CalPERS) (continued)

Actuarial Assumptions (continued) The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses.

Assumed Asset Real Return Real Asset Class Allocation Years 1 – 10* Return Years 11+** Global Equity 50.0% 4.80% 5.98% Fixed Income 28.0% 1.00% 2.62% Inflation Assets 0.0% 0.77% 1.81% Private Equity 8.0% 6.30% 7.23% Real Estate 13.0% 3.75% 4.93% Liquidity 1.0% 0.0% -0.92% 100.0%

*An expected inflation of 2.00% used for this period. **An expected inflation of 2.92% used for this period.

Discount Rate The discount rate used to measure the total pension liability was 7.15 percent. A projection of the expected benefit payments and contributions was performed to determine if assets would run out. The test revealed the assets would not run out. 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 for the Schools Pool. The results of the crossover testing for the Schools Pool are presented in a detailed report that can be obtained at CalPERS’ website.

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 7.15 percent, 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 (6.15 percent) or 1-percentage-point higher (8.15 percent) than the current rate:

1% Current 1% Decrease Discount Rate Increase (6.15%) (7.15%) (8.15%) District's proportionate share of the net pension liability $ 127,439,038 $ 87,529,686 $ 54,419,166

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 12 – PENSION PLANS (continued)

B. California Public Employees’ Retirement System (CalPERS) (continued)

Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial report.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

A. Grants

The District received financial assistance from federal and state agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are 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 District at June 30, 2019.

B. Litigation

The District is involved in various litigation arising from the normal course of business. In the opinion of management and legal counsel, the disposition of all litigation pending is not expected to have a material adverse effect on the overall financial position of the District at June 30, 2019.

C. Construction Commitments

As of June 30, 2019, the District had commitments with respect to unfinished capital projects of $55,034,270.

NOTE 14 – PARTICIPATION IN JOINT POWERS AUTHORITIES

The District participates in two joint ventures under joint powers authorities (JPAs), the San Diego County School Risk Management JPA and the San Diego County Office of Education. The relationships between the District and the JPAs are such that the JPAs are not component units of the District for financial reporting purposes.

The JPAs provide property and liability insurance coverage for their member school districts. The JPAs are governed by a board consisting of a representative from each member district. The governing board controls the operations of its JPAs independent of any influence by the member districts beyond their representation on the governing board. Each member district pays a premium commensurate with the level of coverage requested and shares surpluses and deficits proportionately to its participation in the JPAs. Financial information for the most recently audited period is available directly from the JPA.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS, continued JUNE 30, 2019

NOTE 15 – DEFERRED OUTFLOWS/INFLOWS OF RESOURCES

A. Refunded Debt

Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognized deferred outflows or inflows of resources in the District-wide financial statements. The deferred outflow of resources pertains to the difference in the carrying value of the refunded debt and its reacquisition price (deferred amount on refunding). Previous financial reporting standards require this to be presented as part of the District’s long-term debt. This deferred outflow of resources is recognized as a component of interest expense in a systematic and rational manner over the remaining life of the old debt or the new debt, whichever is shorter. At June 30, 2019, the deferred amount on refunding was $25,386,005

B. Pension Plans

Pursuant to GASB Statement No. 68, Accounting and Financial Reporting for Pensions, the District recognized deferred outflows of resources related to pensions and deferred inflows of resources related to pensions in the District-wide financial statements. Further information regarding the deferred outflows of resources and deferred inflows of resources can be found at Note 12. At June 30, 2019, total deferred outflows related to pensions was $60,692,306 and total deferred inflows related to pensions was $22,186,674.

C. Other Postemployment Benefits

Pursuant to GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, the District recognized deferred outflows of resources related to other postemployment benefits and deferred inflows of resources related to other postemployment benefits in the District-wide financial statements. Further information regarding the deferred outflows of resources and deferred inflows of resources can be found at Note 11. At June 30, 2019, total deferred outflows related to other postemployment benefits was $2,517,690 and total deferred inflows related to other postemployment benefits was $474,674.

NOTE 16 – SUBSEQUENT EVENTS

A. Tax and Revenue Anticipation Notes (TRANS)

On August 28, 2018, the District issued $18,975,000 in Tax and Revenue Anticipation Notes through the County of San Diego and San Diego County School Districts Tax and Revenue Anticipation Notes Program bearing interest at 4.0%. The notes were issued to finance cash shortfalls occurring in 2019-20. Interest and principal are due and payable on June 28, 2019. The District will be required to make two deposits of pledged revenues into a repayment fund in January and April of 2020.

B. General Obligation Bonds

On October 23, 2019, the District issued $42,000,000 of General Obligation Bonds, Election of 2016, Series C. and $15,000,000 of General Obligation Bonds, Election of 2008, Series I.

REQUIRED SUPPLEMENTARY INFORMATION

GROSSMONT UNION HIGH SCHOOL DISTRICT GENERAL FUND – BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2019

Budgeted Amounts Actual* Variances - Original Final (Budgetary Basis) Final to Actual REVENUES LCFF sources $ 166,268,164 $ 168,412,087 $ 168,214,004 $ (198,083) Federal sources 12,064,737 12,837,253 12,148,702 (688,551) Other state sources 18,585,363 19,798,931 28,949,753 9,150,822 Other local sources 22,900,126 24,948,264 27,088,938 2,140,674 Total Revenues 219,818,390 225,996,535 236,401,397 10,404,862

EXPENDITURES Certificated salaries 90,717,187 89,677,331 88,744,690 932,641 Classified salaries 40,877,610 41,096,097 40,542,767 553,330 Employee benefits 57,448,158 57,242,293 64,854,962 (7,612,669) Books and supplies 6,798,156 7,969,557 8,334,754 (365,197) Services and other operating expenditures 26,469,112 28,687,249 27,316,741 1,370,508 Capital outlay 293,030 1,872,148 2,686,320 (814,172) Other outgo Excluding transfers of indirect costs 1,157,319 1,157,319 1,150,132 7,187 Transfers of indirect costs (1,224,382) (1,126,274) (1,005,960) (120,314) Total Expenditures 222,536,190 226,575,720 232,624,406 (6,048,686) Excess (Deficiency) of Revenues Over Expenditures (2,717,800) (579,185) 3,776,991 4,356,176 Other Financing Sources (Uses) Transfers in 25,000 930,729 931,537 808 Other sources - 756,682 756,682 - Net Financing Sources (Uses) 25,000 1,687,411 1,688,219 808

NET CHANGE IN FUND BALANCE (2,692,800) 1,108,226 5,465,210 4,356,984 Fund Balance - Beginning 20,132,613 24,706,702 24,706,702 - Fund Balance - Ending $ 17,439,813 $ 25,814,928 $ 30,171,912 $ 4,356,984

* The actual amounts reported on this schedule do not agree with the amounts reported on the Statement of Revenues, Expenditures, and Changes in Fund Balance for the following reasons:

• Actual amounts reported in this schedule are for the General Fund only, and do not agree with the amounts reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances because the amounts on that schedule include the financial activity of the Special Reserve Fund for Other Than Capital Outlay Projects, in accordance with the fund type definitions promulgated by GASB Statement No. 54.

See accompanying note to required supplementary information. 59

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS – DISTRICT PLAN FOR THE YEAR ENDED JUNE 30, 2019

June 30, 2019 June 30, 2018 Total OPEB Liability Service Cost $ 3,266,643 $ 3,159,229 Interest on total OPEB liability 2,112,126 2,039,395 Changes of assumptions (482,832) - Benefits payments (3,074,183) (3,259,615) Net change in total OPEB liability 1,821,754 1,939,009 Total OPEB liability - beginning 60,391,801 58,452,792 Total OPEB liability - ending (a) $ 62,213,555 $ 60,391,801

Plan fiduciary net position Contributions - employer $ 3,074,183 $ 3,259,615 Net investment income 158,159 133,611 Benefit payments (3,074,183) (3,259,615) Administrative expenses (6,203) (1,679) Net change in plan fiduciary net position 151,956 131,932 Plan fiduciary net position - beginning 3,366,653 3,234,721 Plan fiduciary net position - ending (b) $ 3,518,609 $ 3,366,653

District's net OPEB liability - ending (a) - (b) $ 58,694,946 $ 57,025,148

Plan fiduciary net position as a percentage of the total OPEB liability 5.66% 5.57%

Covered-employee payroll $ 138,484,996 $ 128,923,000

District's Plan net OPEB liability as a percentage of covered-employee payroll 42.38% 44.23%

See accompanying note to required supplementary information. 60

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS – MPP PROGRAM FOR THE YEAR ENDED JUNE 30, 2019

(Dollars in Thousands, except for District's proportionate share)

June 30, 2019 June 30, 2018 Total OPEB Liability Interest on total OPEB liability $ 14,567 $ 12,928 Difference between expected and actual experience (15,759) (41) Changes of assumptions (10,293) (31,240) Benefits payments (28,036) (28,929) Net change in total OPEB liability (39,521) (47,282) Total OPEB liability - beginning 420,749 468,031 Total OPEB liability - ending 381,228 420,749

Plan fiduciary net position Contributions - employer $ 28,218 $ 29,117 Net investment income 18 11 Benefit payments (28,036) (28,929) Administrative expenses (578) (168) Net change in plan fiduciary net position (378) 31 Plan fiduciary net position - beginning 41 10 Adjustment for application of new GASB statement (1,205) - Plan fiduciary net position - ending $ (1,542) $ 41

MPP Program Net OPEB liability $ 382,770 $ 420,708

District's proportionate share of net OPEB liability $ 952,311 $ 1,107,117

Plan fiduciary net position as a percentage of the total OPEB liability -0.40% 0.01%

Covered-employee payroll* * *

District's net OPEB liability (asset) as a percentage of covered-employee payroll * *

*As of June 30, 2012, active members are no longer eligible for future enrollment in the MPP Program; therefore, the covered payroll disclosure is not applicable.

See accompanying note to required supplementary information. 61

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF THE DISTRICT’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY - CALSTRS FOR THE YEAR ENDED JUNE 30, 2019

June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015

District's proportion of the net pension liability 0.158% 0.164% 0.168% 0.177% 0.176%

District's proportionate share of the net pension liability $ 145,407,559 $ 152,078,945 $ 135,880,080 $ 119,163,480 $ 102,849,120

State's proportionate share of the net pension liability associated with the District 83,253,035 35,516,307 77,365,494 63,024,176 62,105,363 Total $ 228,660,594 $ 187,595,252 $ 213,245,574 $ 182,187,656 $ 164,954,483

District's covered payroll $ 86,433,389 $ 88,481,463 $ 85,504,958 $ 81,779,313 $ 79,314,812

District's proportionate share of the net pension liability as a percentage of its covered payroll 168.2% 171.9% 158.9% 145.7% 129.7%

Plan fiduciary net position as a percentage of the total pension liability 71.0% 69.5% 70.0% 74.0% 76.5%

The amounts presented for each fiscal year were determined as of the year-end that occurred one year prior.

See accompanying note to required supplementary information. 62

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF THE DISTRICT’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY - CALPERS FOR THE YEAR ENDED JUNE 30, 2019

June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015

District's proportion of the net pension liability 0.328% 0.348% 0.364% 0.372% 0.378%

District's proportionate share of the net pension liability $ 87,529,686 $ 83,089,352 $ 71,890,225 $ 54,788,946 $ 42,878,146

District's covered payroll $ 44,114,661 $ 44,354,443 $ 43,585,667 $ 41,247,524 $ 39,731,834

District's proportionate share of the net pension liability as a percentage of its covered payroll 198.4% 187.3% 164.9% 132.8% 107.9%

Plan fiduciary net position as a percentage of the total pension liability 70.8% 71.9% 73.9% 79.4% 83.4%

The amounts presented for each fiscal year were determined as of the year-end that occurred one year prior.

See accompanying note to required supplementary information. 63

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF DISTRICT CONTRIBUTIONS - CALSTRS FOR THE YEAR ENDED JUNE 30, 2019

June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015

Contractually required contribution $ 14,355,807 $ 12,472,338 $ 11,130,968 $ 9,174,682 $ 7,262,003

Contributions in relation to the contractually required contribution* (14,355,807) (12,472,338) (11,130,968) (9,174,682) (7,262,003)

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

District's covered payroll $ 87,201,153 $ 86,433,389 $ 88,481,463 $ 85,504,958 $ 81,779,313

Contributions as a percentage of covered payroll 16.46% 14.43% 12.58% 10.73% 8.88%

*Amounts do not include on-behalf contributions

See accompanying note to required supplementary information. 64

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF DISTRICT CONTRIBUTIONS - CALPERS FOR THE YEAR ENDED JUNE 30, 2019

June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015

Contractually required contribution $ 8,101,412 $ 6,851,448 $ 6,159,945 $ 5,163,594 $ 4,855,246

Contributions in relation to the contractually required contribution (8,101,412) (6,851,448) (6,159,945) (5,163,594) (4,855,246)

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

District's covered payroll $ 44,812,570 $ 44,114,661 $ 44,354,443 $ 43,585,667 $ 41,247,524

Contributions as a percentage of covered payroll 18.08% 15.53% 13.89% 11.85% 11.77%

See accompanying note to required supplementary information. 65

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2019

NOTE 1 – PURPOSE OF SCHEDULES

Budgetary Comparison Schedule This schedule is required by GASB Statement No. 34 as required supplementary information (RSI) for the General Fund and for each major special revenue fund that has a legally adopted annual budget. The budgetary comparison schedule presents both (a) the original and (b) the final appropriated budgets for the reporting period as well as (c) actual inflows, outflows, and balances, stated on the District’s budgetary basis. A separate column to report the variance between the final budget and actual amounts is also presented, although not required.

Schedule of Changes in Net OPEB Liability and Related Ratios – District Plan This 10-year schedule is required by GASB Statement No. 75 for all sole and agent employers that provide other postemployment benefits (OPEB). Until a full 10-year trend is compiled, the schedule will only show those years under which GASB Statement No. 75 was applicable. The schedule presents the sources of change in the net OPEB liability, and the components of the net OPEB liability and related ratios, including the OPEB plan’s fiduciary net position as a percentage of the total OPEB liability, and the net OPEB liability as a percentage of covered-employee payroll.

Changes in Benefit Terms There were no changes in benefit terms since the previous valuations.

Changes in Assumptions The discount rate has changed since the prior measurement date from 3.40% to 3.50%.

Schedule of Changes in Net OPEB Liability and Related Ratios – MPP Program This 10-year schedule is required by GASB Statement No. 75 for all sole and agent employers that provide other postemployment benefits (OPEB). Until a full 10-year trend is compiled, the schedule will only show those years under which GASB Statement No. 75 was applicable. The schedule presents the sources of change in the net OPEB liability, and the components of the net OPEB liability and related ratios, including the OPEB plan’s fiduciary net position as a percentage of the total OPEB liability.

Changes in Benefit Terms There were no changes in benefit terms since the previous valuations.

Changes in Assumptions On February 1, 2017, the board lowered the discount rate from 7.50 percent to 7.00 percent using a phased in approach. The June 30, 2016, actuarial valuation used a discount rate of 7.25 percent. For the June 30, 2017 actuarial valuation the discount rate was reduced to 7.00 percent. The discount rate used for 2018 financial reporting was 3.87 percent, an increase of 0.29 percent from 3.58 percent used for 2017 financial reporting.

Schedule of the District’s Proportionate Share of the Net Pension Liability This 10-year schedule is required by GASB Statement No. 68 for each cost-sharing pension plan. Until a full 10-year trend is compiled, the schedule will only show those years under which GASB Statement No. 68 was applicable. The schedule presents the District’s proportion (percentage) of the collective net pension liability, the District’s proportionate share (amount) of the collective net pension liability, the District’s covered payroll, the District’s proportionate share (amount) of the collective net pension liability as a percentage of the employer’s covered payroll, and the pension plan’s fiduciary net position as a percentage of the total pension liability.

Changes in Benefit Terms There were no changes in benefit terms since the previous valuations for CalSTRS and CalPERS.

Changes in Assumptions There were no changes in economic assumptions since the previous valuations for CalSTRS and CalPERS.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO SUPPLEMENTARY INFORMATION, continued JUNE 30, 2019

NOTE 1 – PURPOSE OF SCHEDULES (continued)

Schedule of District Contributions This 10-year schedule is required by GASB Statement No. 68 for each cost-sharing pension plan. Until a full 10-year trend is compiled, the schedule will only show those years under which GASB Statement No. 68 was applicable. The schedule presents the District’s statutorily or contractually required employer contribution, the amount of contributions recognized by the pension plan in relation to the statutorily or contractually required employer contribution, the difference between the statutorily or contractually required employer contribution and the amount of contributions recognized by the pension plan in relation to the statutorily or contractually required employer contribution, the District’s covered payroll, and the amount of contributions recognized by the pension plan in relation to the statutorily or contractually required employer contribution as a percentage of the District’s covered payroll.

NOTE 2 – EXCESS OF EXPENDITURES OVER APPROPRIATIONS

For the year ended June 30, 2019, the District incurred an excess of expenditures over appropriations in individual major funds presented in the Budgetary Comparison Schedule by major object code as follows:

Expenditures and Other Uses Budget Actual Excess General Fund Employee benefits $ 57,242,293 $ 64,854,962 $ 7,612,669 Books and supplies $ 7,969,557 $ 8,334,754 $ 365,197 Capital outlay $ 1,872,148 $ 2,686,320 $ 814,172

SUPPLEMENTARY INFORMATION

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2019

CFDA Pass-Through Entity Federal Federal Grantor/Pass-Through Grantor/Program or Cluster Number Identifying Number Expenditures U. S. DEPARTMENT OF EDUCATION: Passed through California Department of Education: Title I, Part A Title I, Part A, Basic Grants Low-Income and Neglected 84.010 14329 $ 4,476,380 ESSA School Improvement (CSI) Funding for LEAs 84.010 15438 51,570 Subtotal Title I, Part A 4,527,950 Adult Education Adult Education: Adult Basic Education & ESL 84.002A 14508 429,650 Adult Education: Adult Secondary Education 84.002 13978 248,600 Adult Education: English Literacy and Civics Education 84.002A 14109 84,322 Adult Education: Institutionalized Adults (Section 225) 84.002 13971 104,853 Subtotal Adult Education 867,425 Title II, Part A, Supporting Effective Instruction Local Grants 84.367 14341 686,589 Title III Title III, English Learner Student Program 84.365 14346 212,358 Title III, Immigrant Education Program 84.365 15146 68,550 Subtotal Title III 280,908 Title IV, Part A, Student Support and Academic Enrichment Grants 84.424 15396 318,477 Department of Rehabilitation: Workability II, Transitions Partnership Program 84.126 10006 356,833 Special Education Cluster IDEA Basic Local Assistance Entitlement, Part B, Sec 611 84.027 13379 3,053,115 IDEA Mental Health Average Daily‐ Attendance (ADA) Allocation, Part B, Sec 611 84.027A 15197 605,231 Subtotal Special Education Cluster 3,658,346 Career and Techincal Education Basic Grants to States Cluster: Carl D. Perkins Career and Technical Education:‐ Secondary, Section 131 84.048 14894 551,830 Carl D. Perkins Career and Technical Education: Adult, Section 132 84.048 14893 167,084 Subtotal Career and Technical‐ Education Basic Grants to States Cluster 718,914 Title IV, Part B ‐ Title IV, Part B, 21st CCLC High School ASSETs 84.287 14535 715,055 Title IV, Part B, 21st CCLC ASSETs Equitable Access 84.287 14603 57,928 Subtotal Title IV, Part B 772,983 Total U. S. Department of Education 12,188,425

U. S. DEPARTMENT OF AGRICULTURE: Passed through California Department of Education: Child Nutrition Cluster [1] School Breakfast Program - Needy 10.553 13526 1,388,812 National School Lunch Program 10.555 13391 3,120,399 USDA Commodities [2] 10.555 * 373,086 Summer Food Service Program for Children 10.559 13004 416,183 Subtotal Child Nutrition Cluster 5,298,480 CACFP Claims - Centers and Family Day Care [1] 10.558 13393 883,857 Total U. S. Department of Agriculture 6,182,337

U. S. DEPARTMENT OF LABOR: Passed through California Department of Education: Workforce Innovation and Opportunity Act (WIOA) - Youth Program 17.259 10055 48,000 Total U. S. Department of Labor 48,000

U. S. DEPARTMENT OF HEALTH AND HUMAN SERVICES: Passed through California Department of Health Services: Medicaid Medi-Cal Billing Option 93.778 10013 157,082 Medi-Cal Administrative Activities 93.778 10060 62,808 Subtotal Medicaid 219,890 Total U. S. Department of Health & Human Services 219,890 Total Federal Expenditures $ 18,638,652

[1] - Major Program [2] - In-Kind Contribution * - Pass-Through Entity Identifying Number not available or not applicable

See accompanying note to supplementary information. 68

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF AVERAGE DAILY ATTENDANCE (ADA) FOR THE YEAR ENDED JUNE 30, 2019

Second Period Annual Report Report Certificate No. Certificate No. 5748B080 9CC6E03A SCHOOL DISTRICT Ninth through Twelfth Regular ADA 15,437.56 15,287.37 Extended Year Special Education 54.38 54.38 Special Education - Nonpublic Schools 64.64 64.89 Extended Year Special Education - Nonpublic Schools 6.18 6.18 Total Ninth through Twelfth 15,562.76 15,412.82 TOTAL SCHOOL DISTRICT 15,562.76 15,412.82

See accompanying note to supplementary information. 69

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF INSTRUCTIONAL TIME FOR THE YEAR ENDED JUNE 30, 2019

2018-19 Minutes Actual Number Grade Level Requirement Minutes of Days Status Grade 9 64,800 65,314 180 Complied Grade 10 64,800 65,314 180 Complied Grade 11 64,800 65,314 180 Complied Grade 12 64,800 65,314 180 Complied

See accompanying note to supplementary information. 70

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2019

2020 (Budget) 2019 2018 2017 General Fund - Budgetary Basis** Revenues And Other Financing Sources $ 228,540,665 $ 238,089,617 $ 218,857,237 $ 216,555,235 Expenditures And Other Financing Uses 229,041,698 232,624,406 217,745,527 215,247,814 Net change in Fund Balance $ (501,033) $ 5,465,211 $ 1,111,710 $ 1,307,421

Ending Fund Balance $ 29,680,879 $ 30,171,913 $ 24,706,702 $ 23,595,742

Available Reserves* $ 10,306,877 $ 10,468,099 $ 9,798,548 $ 9,686,186 Available Reserves As A Percentage Of Outgo 4.50% 4.50% 4.50% 4.50%

Long-term Liabilities $ 969,411,074 $ 992,603,344 $ 953,741,390 $ 883,304,592 Average Daily Attendance At P-2 15,602 15,563 15,610 15,842

The General Fund ending fund balance has increased by $6,576,171 over the past two years. The fiscal year 2019- 20 budget projects a decrease of $501,033. For a District this size, the State recommends available reserves of at least 3% of General Fund expenditures, transfers out, and other uses (total outgo). However, The District’s Minimum Fund Balance Policy requires a Reserve for Economic Uncertainties, consisting of unassigned amounts, equal to no less than 4.5 percent of General Fund expenditures and other financing uses.

The District has incurred operating surpluses in each of the past three years but anticipates incurring an operating deficit during the 2019-20 fiscal year. Total long-term obligations have increased by $109,298,752 over the past two years.

Average daily attendance has decreased by 279 ADA over the past two years. However, ADA is anticipated to increase by 39 during the 2019-20 fiscal year.

*Available reserves consist of all unassigned fund balance within the General Fund.

**The actual amounts reported in this schedule are for the General Fund only, and do not agree with the amounts reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances because the amounts on that schedule include the financial activity of the Special Reserve Fund for Other Than Capital Outlay Projects, in accordance with the fund type definitions promulgated by GASB Statement No. 54.

See accompanying note to supplementary information. 71

GROSSMONT UNION HIGH SCHOOL DISTRICT RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT WITH AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019

Internal Service Fund June 30, 2019, annual financial and budget report fund balance $ (49,885,662) Adjustments and reclassifications: Increase (decrease) in total fund balances: Deferred Outflows and Inflows related to OPEB 2,043,015 Net adjustments and reclassifications 2,043,015 June 30, 2019, audited financial statement fund balance $ (47,842,647)

See accompanying note to supplementary information. 72

GROSSMONT UNION HIGH SCHOOL DISTRICT SCHEDULE OF CHARTER SCHOOLS FOR THE YEAR ENDED JUNE 30, 2019

Included in Charter # Charter School Status Audit Report 0150 Helix Charter High School Active No 0893 Steele Canyon Charter High School Active No 2039 The Learning Choice Academy - East County* Active No

*The year ended June 30, 2020 will be the first year of operation for this charter school.

See accompanying note to supplementary information. 73

GROSSMONT UNION HIGH SCHOOL DISTRICT COMBINING BALANCE SHEET JUNE 30, 2019

Special Reserve Non-Major Adult Education Capital Facilities Fund for Capital Governmental Fund Cafeteria Fund Fund Outlay Projects Funds ASSETS Cash and investments $ 2,623,890 $ 1,658,167 $ 2,938,453 $ 8,924,457 $ 16,144,967 Accounts receivable 1,641,817 1,001,891 168,214 95,860 2,907,782 Due from other funds 711,544 61,019 - 7,690 780,253 Stores inventory - 143,008 - - 143,008 Prepaid expenditures 127,478 52,663 - - 180,141 Total Assets $ 5,104,729 $ 2,916,748 $ 3,106,667 $ 9,028,007 $ 20,156,151

LIABILITIES Accrued liabilities $ 1,771,303 $ 557,458 $ 1,366,875 $ 279,323 $ 3,974,959 Due to other funds 642,767 176,339 24,232 21,850 865,188 Unearned revenue 41,524 31,373 - - 72,897 Total Liabilities 2,455,594 765,170 1,391,107 301,173 4,913,044

FUND BALANCES Non-spendable 128,478 198,662 - - 327,140 Restricted 2,520,657 1,952,916 1,715,560 8,726,834 14,915,967 Total Fund Balances 2,649,135 2,151,578 1,715,560 8,726,834 15,243,107 Total Liabilities and Fund Balance $ 5,104,729 $ 2,916,748 $ 3,106,667 $ 9,028,007 $ 20,156,151

See accompanying note to supplementary information. 74

GROSSMONT UNION HIGH SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2019

Special Reserve Non-Major Adult Education Capital Facilities Fund for Capital Governmental Fund Cafeteria Fund Fund Outlay Projects Funds REVENUES Federal sources $ 1,082,509 $ 6,182,337 $ - $ - $ 7,264,846 Other state sources 12,710,914 554,700 1,556 3,077 13,270,247 Other local sources 2,726,278 2,091,491 1,143,082 4,267,329 10,228,180 Total Revenues 16,519,701 8,828,528 1,144,638 4,270,406 30,763,273 EXPENDITURES Current Instruction 6,190,507 - - - 6,190,507 Instruction-related services Instructional supervision and administration 730,982 - - - 730,982 School site administration 6,703,854 - - - 6,703,854 Pupil services Food services - 8,069,520 - - 8,069,520 General administration All other general administration 590,758 415,202 35,847 - 1,041,807 Plant services 829,666 447,008 - 255,036 1,531,710 Facilities acquisition and maintenance 63,457 360,052 3,431,821 1,304,458 5,159,788 Total Expenditures 15,109,224 9,291,782 3,467,668 1,559,494 29,428,168 Excess (Deficiency) of Revenues Over Expenditures 1,410,477 (463,254) (2,323,030) 2,710,912 1,335,105 Other Financing Sources (Uses) Transfers out - - - (35,824) (35,824) Net Financing Sources (Uses) - - - (35,824) (35,824) NET CHANGE IN FUND BALANCE 1,410,477 (463,254) (2,323,030) 2,675,088 1,299,281 Fund Balance - Beginning 1,238,658 2,614,832 4,038,590 6,051,746 13,943,826 Fund Balance - Ending $ 2,649,135 $ 2,151,578 $ 1,715,560 $ 8,726,834 $ 15,243,107

See accompanying note to supplementary information. 75

GROSSMONT UNION HIGH SCHOOL DISTRICT ADULT EDUCATION FUND – BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2019

Budgeted Amounts Actual Variances - Original Final (Budgetary Basis) Final to Actual REVENUES Federal sources $ 1,041,514 $ 1,188,856 $ 1,082,509 $ (106,347) Other state sources 10,876,169 12,913,249 12,710,914 (202,335) Other local sources 3,149,934 3,161,234 2,726,278 (434,956) Total Revenues 15,067,617 17,263,339 16,519,701 (743,638)

EXPENDITURES Certificated salaries 5,793,660 6,192,450 5,415,628 776,822 Classified salaries 1,873,475 1,831,344 1,802,271 29,073 Employee benefits 3,432,839 3,305,389 3,249,176 56,213 Books and supplies 638,454 1,052,572 618,824 433,748 Services and other operating expenditures 2,516,508 4,242,100 3,311,471 930,629 Capital outlay 9,000 338,102 121,096 217,006 Other outgo Transfers of indirect costs 803,681 685,298 590,758 94,540 Total Expenditures 15,067,617 17,647,255 15,109,224 2,538,031 NET CHANGE IN FUND BALANCE - (383,916) 1,410,477 1,794,393 Fund Balance - Beginning 1,238,658 1,238,658 1,238,658 - Fund Balance - Ending $ 1,238,658 $ 854,742 $ 2,649,135 $ 1,794,393

See accompanying note to supplementary information. 76

GROSSMONT UNION HIGH SCHOOL DISTRICT CAFETERIA FUND – BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2019

Budgeted Amounts Actual Variances - Original Final (Budgetary Basis) Final to Actual REVENUES Federal sources $ 5,694,605 $ 5,737,605 $ 6,182,337 $ 444,732 Other state sources 405,208 403,508 554,700 151,192 Other local sources 2,024,181 2,071,198 2,091,491 20,293 Total Revenues 8,123,994 8,212,311 8,828,528 616,217

EXPENDITURES Classified salaries 3,369,330 3,407,925 3,182,217 225,708 Employee benefits 1,352,292 1,370,455 1,368,089 2,366 Books and supplies 2,626,511 2,950,624 3,263,991 (313,367) Services and other operating expenditures 419,392 424,952 387,134 37,818 Capital outlay 1,000,000 260,262 675,149 (414,887) Other outgo Transfers of indirect costs 420,701 440,976 415,202 25,774 Total Expenditures 9,188,226 8,855,194 9,291,782 (436,588) NET CHANGE IN FUND BALANCE (1,064,232) (642,883) (463,254) 179,629 Fund Balance - Beginning 2,391,891 2,614,832 2,614,832 - Fund Balance - Ending $ 1,327,659 $ 1,971,949 $ 2,151,578 $ 179,629

See accompanying note to supplementary information. 77

GROSSMONT UNION HIGH SCHOOL DISTRICT BUILDING FUND – BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2019

Budgeted Amounts Actual Variances - Original Final (Budgetary Basis) Final to Actual REVENUES Other state sources $ - $ - $ 33,022 $ 33,022 Other local sources 550,000 1,879,368 1,932,634 53,266 Total Revenues 550,000 1,879,368 1,965,656 86,288

EXPENDITURES Classified salaries 571,818 571,818 480,918 90,900 Employee benefits 238,469 238,469 234,590 3,879 Books and supplies 172,569 675,625 1,004,551 (328,926) Services and other operating expenditures 13,940 239,895 333,725 (93,830) Capital outlay 69,388,466 57,730,262 67,362,487 (9,632,225) Total Expenditures 70,385,262 59,456,069 69,416,271 (9,960,202) Excess (Deficiency) of Revenues Over Expenditures (69,835,262) (57,576,701) (67,450,615) (9,873,914) Other Financing Sources (Uses): Other sources - 43,000,000 43,000,000 - Net Financing Sources (Uses) - 43,000,000 43,000,000 - NET CHANGE IN FUND BALANCE (69,835,262) (14,576,701) (24,450,615) (9,873,914) Fund Balance - Beginning 76,091,716 72,087,090 72,087,090 - Fund Balance - Ending $ 6,256,454 $ 57,510,389 $ 47,636,475 $ (9,873,914)

See accompanying note to supplementary information. 78

GROSSMONT UNION HIGH SCHOOL DISTRICT CAPITAL FACILITIES FUND – BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2019

Budgeted Amounts Actual Variances - Original Final (Budgetary Basis) Final to Actual REVENUES Other state sources $ - $ - $ 1,556 $ 1,556 Other local sources 751,000 856,000 1,143,082 287,082 Total Revenues 751,000 856,000 1,144,638 288,638

EXPENDITURES Classified salaries 9,156 9,156 23,513 (14,357) Employee benefits 4,166 4,166 12,334 (8,168) Books and supplies - - 199,594 (199,594) Services and other operating expenditures - - 7,801 (7,801) Capital outlay 3,698,329 3,775,477 3,224,426 551,051 Total Expenditures 3,711,651 3,788,799 3,467,668 321,131 NET CHANGE IN FUND BALANCE (2,960,651) (2,932,799) (2,323,030) 609,769 Fund Balance - Beginning 3,426,041 4,038,590 4,038,590 - Fund Balance - Ending $ 465,390 $ 1,105,791 $ 1,715,560 $ 609,769

See accompanying note to supplementary information. 79

GROSSMONT UNION HIGH SCHOOL DISTRICT COUNTY SCHOOL FACILITIES FUND – BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2019

Budgeted Amounts Actual Variances - Original Final (Budgetary Basis) Final to Actual REVENUES Other state sources $ - $ 15,792,294 $ 15,792,294 $ - Other local sources 270,000 457,000 483,178 26,178 Total Revenues 270,000 16,249,294 16,275,472 26,178

EXPENDITURES Services and other operating expenditures 351 - - - Capital outlay 15,216,090 945,000 941,320 3,680 Total Expenditures 15,216,441 945,000 941,320 3,680 NET CHANGE IN FUND BALANCE (14,946,441) 15,304,294 15,334,152 29,858 Fund Balance - Beginning 19,428,890 19,453,677 19,453,677 - Fund Balance - Ending $ 4,482,449 $ 34,757,971 $ 34,787,829 $ 29,858

See accompanying note to supplementary information. 80

GROSSMONT UNION HIGH SCHOOL DISTRICT SPECIAL RESERVE FOR CAPITAL OUTLAY FUND – BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2019

Budgeted Amounts Actual Variances - Original Final (Budgetary Basis) Final to Actual REVENUES Other state sources $ - $ - $ 3,077 3,077 Other local sources 1,943,689 3,464,565 4,267,329 802,764 Total Revenues 1,943,689 3,464,565 4,270,406 805,841

EXPENDITURES Classified salaries 3,121 3,121 70,728 (67,607) Employee benefits 879 879 34,661 (33,782) Books and supplies - 7,889 97,759 (89,870) Services and other operating expenditures 177,800 257,063 144,218 112,845 Capital outlay 1,611,866 2,067,574 1,212,128 855,446 Total Expenditures 1,793,666 2,336,526 1,559,494 777,032 Excess (Deficiency) of Revenues Over Expenditures 150,023 1,128,039 2,710,912 1,582,873 Other Financing Sources (Uses): Transfers out (25,000) (35,016) (35,824) (808) Net Financing Sources (Uses) (25,000) (35,016) (35,824) (808) NET CHANGE IN FUND BALANCE 125,023 1,093,023 2,675,088 1,582,065 Fund Balance - Beginning 5,839,557 6,051,746 6,051,746 - Fund Balance - Ending $ 5,964,580 $ 7,144,769 $ 8,726,834 $ 1,582,065

See accompanying note to supplementary information. 81

GROSSMONT UNION HIGH SCHOOL DISTRICT BOND INTEREST AND REDEMPTION FUND – BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2019

Budgeted Amounts Actual Variances - Original Final (Budgetary Basis) Final to Actual REVENUES Federal sources $ 1,172,149 $ 1,172,149 $ 915,917 $ (256,232) Other state sources - - 329,060 329,060 Other local sources 31,846,191 31,846,191 35,684,548 3,838,357 Total Revenues 33,018,340 33,018,340 36,929,525 3,911,185

EXPENDITURES Other outgo Excluding transfers of indirect costs 33,493,950 33,493,950 33,919,196 (425,246) Total Expenditures 33,493,950 33,493,950 33,919,196 (425,246) Excess (Deficiency) of Revenues Over Expenditures (475,610) (475,610) 3,010,329 3,485,939 Other Financing Sources (Uses): Other sources - - 3,490,788 3,490,788 Net Financing Sources (Uses) - - 3,490,788 3,490,788 NET CHANGE IN FUND BALANCE (475,610) (475,610) 6,501,117 6,976,727 Fund Balance - Beginning 40,423,006 45,285,606 45,285,606 - Fund Balance - Ending $ 39,947,396 $ 44,809,996 $ 51,786,723 $ 6,976,727

See accompanying note to supplementary information. 82

GROSSMONT UNION HIGH SCHOOL DISTRICT INTERNAL SERVICE FUND – BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2019

Budgeted Amounts Actual* Variances - Original Final (Budgetary Basis) Final to Actual REVENUES Other local sources $ 4,762,405 $ 4,810,357 $ 5,794,472 $ 984,115 Total Revenues 4,762,405 4,810,357 5,794,472 984,115

EXPENDITURES Services and other operating expenditures 7,500,363 6,469,155 6,815,251 (346,096) Total Expenditures 7,500,363 6,469,155 6,815,251 (346,096) NET CHANGE IN FUND BALANCE (2,737,958) (1,658,798) (1,020,779) 638,019 Fund Balance - Beginning (20,178,255) (49,877,124) (49,877,124) - Fund Balance - Ending $ (22,916,213) $ (51,535,922) $ (50,897,903) $ 638,019

*The beginning and ending fund balances reported in this schedule do not agree with the amounts reported in the proprietary funds statement of revenues, expenses and changes in net position due adjustments made to deferred outflows and deferred inflows of resources.

See accompanying note to supplementary information. 83

GROSSMONT UNION HIGH SCHOOL DISTRICT LOCAL EDUCATION AGENCY ORGANIZATION STRUCTURE JUNE 30, 2019

The District is located in the eastern portion of San Diego County and encompasses a territory of about 465 square miles, including all of the Cities of El Cajon, Santee, and Lemon Grove, nearly all of the city of La Mesa, a very small portion of the city of San Diego, and the unincorporated communities of Alpine, Dulzura, Lakeside, Jamul and Spring Valley. The District is a high school district providing public education for students in grades 9‐12. The District was formed in 1920. The District is currently operating nine high schools, one continuation school, two alternative education sites, four special education facilities, a middle college high school program, a Career Technical Education (CTE) program, and an adult education program. Two charter schools also operate under the sponsorship of the District.

GOVERNING BOARD Member Office Term Expires

Robert Shield President 2022

Chris Fite Vice-President 2020

Elva Salinas Clerk 2020

Dr. Gary Woods Member 2022

Jim Kelly Member 2022

DISTRICT ADMINISTRATORS

Dr. Timothy Glover Superintendent

Scott H. Patterson Deputy Superintendent, Business Services

Theresa Kemper Assistant Superintendent, Educational Services

Ernest Anastos Assistant Superintendent, Human Resources*

*Julie Mottershaw was Assistant Superintendent, Human Resources, until her death on February 27, 2019. Ernest Anastos was hired as Interim Assistant Superintendent March 13, 2019 – June 14, 2019. Dr. Terry Stanfill was hired to fill the Assistant Superintendent, Human Resources position on July 1, 2019.

See accompanying note to supplementary information. 84

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO SUPPLEMENTARY INFORMATION JUNE 30, 2019

NOTE 1 – PURPOSE OF SCHEDULES

Schedule of Expenditures of Federal Awards The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant activity of the District and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the 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). Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements.

The following schedule provides reconciliation between revenues reported on the Statement of Revenue, Expenditures, and Changes in Fund Balance, and the related expenditures reported on the Schedule of Expenditures of Federal Awards. The reconciling amounts represent Federal funds that have been recorded as revenues in a prior year that have been expended by June 30, 2019 or Federal funds that have been recorded as revenues in the current year and were not expended by June 30, 2019.

CFDA Number Amount Total Federal Revenues reported in the Statement of Revenues, Expenditures, and Changes in Fund Balance $ 20,329,465 Federal Interest Subsidies * (915,917) Medi-Cal Billing Option 93.778 (176,010) Medi-Cal Administrative Activities 93.778 (598,886) Total Expenditures reported in the Schedule of Expenditures of Federal Awards $18,638,652

The District has not elected to use the 10 percent de minimis indirect cost rate.

Schedule of Average Daily Attendance (ADA) Average daily attendance (ADA) is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of state funds are made to school districts. This schedule provides information regarding the attendance of students at various grade levels and in different programs.

Schedule of Instructional Time This schedule presents information on the amount of instructional time offered by the District and whether the District complied with the provisions of Education Code Sections 46200 through 46208. During the year ended June 30, 2019, the District participated in the Longer Day incentive funding program. As of June 30, 2019, the District had met its target funding.

Schedule of Financial Trends and Analysis This schedule discloses the District's financial trends by displaying past years' data along with current year budget information. These financial trend disclosures are used to evaluate the District's ability to continue as a going concern for a reasonable period of time.

GROSSMONT UNION HIGH SCHOOL DISTRICT NOTES TO SUPPLEMENTARY INFORMATION, continued JUNE 30, 2019

NOTE 1 – PURPOSE OF SCHEDULES (continued)

Reconciliation of Annual Financial and Budget Report with Audited Financial Statements This schedule provides the information necessary to reconcile the fund balance of all funds reported on the Annual Financial and Budget Report Unaudited Actuals to the audited financial statements.

Schedule of Charter Schools This schedule lists all Charter Schools chartered by the District and displays information for each Charter School on whether or not the Charter School is included in the District audit.

Combining Statements – Non-Major Funds These statements provide information on the District’s non‐major funds.

Budgetary Comparison Schedules The budgetary comparison schedules present both the original and final appropriated budgets for the reporting period as well as actual inflows, outflows, and balances, stated on the District’s budgetary basis.

Local Education Agency Organization Structure This schedule provides information about the District's boundaries and schools operated, members of the governing board, and members of the administration.

OTHER INDEPENDENT AUDITORS’ REPORTS

Certified Public Accountants serving K-12 School Districts and Charter Schools throughout California

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Independent Auditors’ Report

Governing Board Grossmont Union High School District El Cajon, California

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, each major fund, and the aggregate remaining fund information of Grossmont Union High School District, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the Grossmont Union High School District’s basic financial statements, and have issued our report thereon dated November 4, 2019.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered Grossmont Union High 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 Grossmont Union High School District’s internal control. Accordingly, we do not express an opinion on the effectiveness of Grossmont Union High 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 material weaknesses 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.

348 Olive Street O: 619-270-8222 San Diego, CA F: 619-260-9085 92103 christywhite.com 87

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Grossmont Union High 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.

San Diego, California November 4, 2019

88 Certified Public Accountants serving K-12 School Districts and Charter Schools throughout California

REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

Independent Auditors’ Report

Governing Board Grossmont Union High School District El Cajon, California

Report on Compliance for Each Major Federal Program

We have audited Grossmont Union High 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 Grossmont Union High School District’s major federal programs for the year ended June 30, 2019. Grossmont Union High 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 federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Grossmont Union High 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 Grossmont Union High 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 Grossmont Union High School District's compliance.

348 Olive Street O: 619-270-8222 San Diego, CA F: 619-260-9085 92103 christywhite.com 89

Opinion on Each Major Federal Program

In our opinion, Grossmont Union High 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, 2019.

Report on Internal Control Over Compliance

Management of Grossmont Union High 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 Grossmont Union High 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 Grossmont Union High 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.

San Diego, California November 4, 2019

90 Certified Public Accountants serving K-12 School Districts and Charter Schools throughout California

REPORT ON STATE COMPLIANCE

Independent Auditors’ Report

Governing Board Grossmont Union High School District El Cajon, California

Report on State Compliance

We have audited Grossmont Union High School District’s compliance with the types of compliance requirements described in the 2018-2019 Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting, issued by the California Education Audit Appeals Panel that could have a direct and material effect on each of Grossmont Union High School District’s state programs for the fiscal year ended June 30, 2019, as identified below.

Management’s Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its state programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Grossmont Union High School District's state 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 2018-2019 Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting, issued by the California Education Audit Appeals Panel as regulations. Those standards 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 the state programs noted below occurred. An audit includes examining, on a test basis, evidence about Grossmont Union High 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 with the requirements referred to above. However, our audit does not provide a legal determination of Grossmont Union High School District's compliance with those requirements.

Opinion on State Compliance

In our opinion, Grossmont Union High School District complied, in all material respects, with the types of compliance requirements referred to above that are applicable to the state programs noted in the table below for the year ended June 30, 2019.

348 Olive Street O: 619-270-8222 San Diego, CA F: 619-260-9085 92103 christywhite.com 91 Procedures Performed

In connection with the audit referred to above, we selected and tested transactions and records to determine Grossmont Union High School District's compliance with the state laws and regulations applicable to the following items:

PROCEDURES PROGRAM NAME PERFORMED Attendance Yes Teacher Certification and Misassignments Yes Kindergarten Continuance Not Applicable Independent Study Yes Continuation Education No Instructional Time Yes Instructional Materials Yes Ratios of Administrative Employees to Teachers Yes Classroom Teacher Salaries Yes Early Retirement Incentive Not Applicable Gann Limit Calculation Yes School Accountability Report Card Yes Juvenile Court Schools Not Applicable Middle or Early College High Schools No K-3 Grade Span Adjustment Not Applicable Transportation Maintenance of Effort Yes Apprenticeship: Related and Supplemental Instruction Yes Comprehensive School Safety Plan Yes District of Choice Not Applicable California Clean Energy Jobs Act Yes

92 Procedures Performed (continued)

PROCEDURES PROGRAM NAME PERFORMED After/Before School Education and Safety Program Not Applicable Proper Expenditure of Education Protection Account Funds Yes Unduplicated Local Control Funding Formula Pupil Counts Yes Local Control and Accountability Plan Yes Independent Study-Course Based Not Applicable Attendance; for charter schools Not Applicable Mode of Instruction; for charter schools Not Applicable Nonclassroom-Based Instruction/Independent Study; for charter schools Not Applicable Determination of Funding for Nonclassroom-Based Instruction; for charter schools Not Applicable Annual Instructional Minutes – Classroom Based; for charter schools Not Applicable Charter School Facility Grant Program Not Applicable

We did not perform testing for continuation education because the ADA was under the level that requires testing.

We did not perform testing for middle or early college high schools because the ADA was under the level that requires testing.

San Diego, California November 4, 2019

93 SCHEDULE OF FINDINGS AND QUESTIONED COSTS GROSSMONT UNION HIGH SCHOOL DISTRICT SUMMARY OF AUDITORS’ RESULTS FOR THE YEAR ENDED JUNE 30, 2019

FINANCIAL STATEMENTS Type of auditors' report issued: Unmodified Internal control over financial reporting: Material weakness(es) identified? No Significant deficiency(ies) identified? None Reported Non-compliance material to financial statements noted? No

FEDERAL AWARDS Internal control over major program: Material weakness(es) identified? No Significant deficiency(ies) identified? None Reported Type of auditors' report issued: Unmodified Any audit findings disclosed that are required to be reported in accordance with Uniform Guidance 2 CFR 200.516(a)? No Identification of major programs:

CFDA Number(s) Name of Federal Program or Cluster 10.553, 10.555, 10.559 Child Nutrition Cluster 10.558 CACFP Claims - Centers and Family Day Care Dollar threshold used to distinguish between Type A and Type B programs: $ 750,000 Auditee qualified as low-risk auditee? Yes

STATE AWARDS Internal control over state programs: Material weaknesses identified? No Significant deficiency(ies) identified? None Reported Type of auditors' report issued on compliance for state programs: Unmodified

94 GROSSMONT UNION HIGH SCHOOL DISTRICT FINANCIAL STATEMENT FINDINGS FOR THE YEAR ENDED JUNE 30, 2019

FIVE DIGIT CODE AB 3627 FINDING TYPE 20000 Inventory of Equipment 30000 Internal Control

There were no financial statement findings for the year ended June 30, 2019.

95 GROSSMONT UNION HIGH SCHOOL DISTRICT FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2019

FIVE DIGIT CODE AB 3627 FINDING TYPE 50000 Federal Compliance

There were no federal award findings or questioned costs for the year ended June 30, 2019.

96 GROSSMONT UNION HIGH SCHOOL DISTRICT STATE AWARD FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2019

FIVE DIGIT CODE AB 3627 FINDING TYPE 10000 Attendance 40000 State Compliance 42000 Charter School Facilities Programs 43000 Apprenticeship: Related and Supplemental Instruction 60000 Miscellaneous 61000 Classroom Teacher Salaries 62000 Local Control Accountability Plan 70000 Instructional Materials 71000 Teacher Misassignments 72000 School Accountability Report Card

There were no state award findings or questioned costs for the year ended June 30, 2019.

97 GROSSMONT UNION HIGH SCHOOL DISTRICT SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2019

There were no prior year findings or questioned costs.

98 Certified Public Accountants serving K-12 School Districts and Charter Schools throughout California

MANAGEMENT LETTER

Governing Board Grossmont Union High School District El Cajon, California

In planning and performing our audit of the basic financial statements of Grossmont Union High School District for the year ended June 30, 2019, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the basic financial statements and not to provide assurance on the internal control structure.

However, during our audit we noted matters that are an opportunity for strengthening internal controls and operating efficiency. The following items represent conditions noted by our audit that we consider important enough to bring to your attention. This letter does not affect our report dated November 4, 2019, on the financial statements of Grossmont Union High School District.

Associated Student Body (ASB) Funds

Observation: During our cash receipts testing at El Capitan High School and Grossmont High School we noted that deposits were lacking sufficient supporting documentation for fundraising and other event proceeds such as sales activity reports, sales receipts and control sheets. Additionally, it was noted that event proceeds are not required to be counted by two individuals prior to submission to the ASB office at Grossmont High School.

Recommendation: We recommend that appropriate supporting documentation be prepared for all major fund‐raising activities.

We will review the status of the comment above during our next audit engagement.

San Diego, California November 4, 2019

348 Olive Street O: 619-270-8222 San Diego, CA F: 619-260-9085 92103 christywhite.com 99 Grossmont Union High School District  1100 Murray Drive, El Cajon, CA 92020

COMPREHENSIVE ANNUAL FINANCIAL REPORT for Fiscal Year Ended June 30, 2019

Monte Vista Event Center Groundbreaking Statistical Section

Grossmont · El Cajon Valley · Mt. Miguel · El Capitan · Granite Hills Monte Vista · Santana · Valhalla · West Hills · Chaparral · IDEA

COMMITTED TO EXCELLENCE STATISTICAL SECTION

The statistical section presents financial statement trends as well as detailed financial and operational information not available elsewhere in the report. The statistical section is intended to enhance the reader's understanding of the information presented in the financial statements, notes to the financial statements, and other supplementary information presented in this report. The statistical section is comprised of the five categories of statistical information presented below.

Contents

Financial Trends These schedules contain information on financial trends to help the reader understand how the District's financial position and financial activities have changed over time.

Revenue Capacity These schedules contain information to help the reader assess the factors affecting the District's ability to generate revenue.

Debt Capacity These schedules present information to help the reader evaluate the District’s current levels of outstanding debt as well as assess the District's ability to make debt payments and/or issue additional debt in the future.

Demographic and Economic Information These schedules offer economic and demographic indicators to help the reader understand the environment within which the District's financial activities take place and to provide information that facilitates comparisons of financial information over time and among other school districts.

Operating Information These schedules contain information about the District’s operations and various resources to help the reader draw conclusions as to how the District's financial information relates to the services provided by the District. GROSSMONT UNION HIGH SCHOOL DISTRICT NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting)

Fiscal Year Ended June 30 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Governmental activities Net investment in capital assets $ 258,091,135 $ 239,617,380 $ 256,178,711 $ 263,752,986 $ 231,423,751 $ 209,200,930 $ 206,469,620 $ 158,115,339 $ 185,993,956 $ 179,490,192 Restricted 99,008,304 79,413,937 74,526,589 74,712,731 87,473,697 111,513,451 81,269,258 109,143,404 92,042,133 29,522,102 Unrestricted (308,046,188) (275,809,227) (227,706,617) (207,241,964) (226,926,587) (40,818,197) (21,124,494) 14,773,140 2,974,653 7,179,171 Total governmental activities net position $ 49,053,251 $ 43,222,090 $ 102,998,683 $ 131,223,753 $ 91,970,861 $ 279,896,184 $ 266,614,384 $ 282,031,883 $ 281,010,742 $ 216,191,465

Business-type activities Net investment in capital assets - - - 825,071 726,155 727,403 388,747 340,256 324,316 335,559 Restricted ------Unrestricted - - - 2,073,036 2,581,038 2,437,751 2,406,069 1,605,068 1,290,855 657,425 Total business-type activities net position - - - $ 2,898,107 $ 3,307,193 $ 3,165,154 $ 2,794,816 $ 1,945,324 $ 1,615,171 $ 992,984

Primary Government Net investment in capital assets $ 258,091,135 239,617,380 256,178,711 264,578,057 232,149,906 209,928,333 206,858,367 158,455,595 186,318,272 179,825,751 Restricted 99,008,304 79,413,937 74,526,589 74,712,731 87,473,697 111,513,451 81,269,258 109,143,404 92,042,133 29,522,102 Unrestricted (308,046,188) (275,809,227) (227,706,617) (205,168,928) (224,345,549) (38,380,446) (18,718,425) 16,378,208 4,265,508 7,836,596 Total primary government net position $ 49,053,251 $ 43,222,090 $ 102,998,683 $ 134,121,860 $ 95,278,054 $ 283,061,338 $ 269,409,200 $ 283,977,207 $ 282,625,913 $ 217,184,449

Source : The source of this information is the District's financial records.

$300,000,000

$200,000,000

$100,000,000

$- 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

$(100,000,000)

$(200,000,000)

$(300,000,000)

$(400,000,000)

Net Investment in Capital Assets Restricted Unrestricted

S2 GROSSMONT UNION HIGH SCHOOL DISTRICT CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting)

Fiscal Year Ended June 30 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Expenses Governmental activities: Instruction $ 136,255,690 $ 133,635,586 $ 137,709,163 $ 129,671,722 $ 124,254,428 $ 116,493,603 $ 118,229,110 $ 117,769,258 $ 119,841,756 $ 121,253,735 Instruction-related activities 34,647,344 33,919,871 33,624,254 30,794,641 28,514,702 26,387,159 26,133,116 28,352,067 29,981,983 27,962,644 Pupil Services 32,665,015 29,392,038 27,977,601 19,702,386 18,104,537 17,230,978 17,120,183 18,068,105 17,930,085 16,896,069 General administration 15,800,705 14,540,541 17,286,857 14,100,696 11,578,309 11,813,330 9,340,579 4,969,318 8,877,072 7,876,116 Plant services 24,646,971 26,123,757 25,391,465 23,755,347 22,534,893 22,767,501 24,471,512 25,264,076 18,660,532 30,478,488 Interest & other activities 62,055,049 70,069,307 51,926,535 37,401,277 44,566,980 42,612,811 46,031,488 41,003,742 38,750,496 39,214,977 Total governmental activities expenses 306,070,774 307,681,100 293,915,875 255,426,069 249,553,849 237,305,382 241,325,988 235,426,566 234,041,924 243,682,029 Business-type activities: Food services - - - 8,282,378 8,055,693 7,778,992 7,122,171 7,442,083 6,734,166 6,011,060 Total business-type activities expenses - - - 8,282,378 8,055,693 7,778,992 7,122,171 7,442,083 6,734,166 6,011,060 Total primary government expenses $ 306,070,774 $ 307,681,100 $ 293,915,875 $ 263,708,447 $ 257,609,542 $ 245,084,374 $ 248,448,159 $ 242,868,649 $ 240,776,090 $ 249,693,089

Program Revenues Governmental activities: Charges for services and sales: Instruction 64,445 69,599 56,517 548,948 332,061 13,377 22,970 65,084 6,804,668 6,236,625 Instructional related activities 21,894 17,525 47,435 190,434 49,126 5,789 11,892 1,336 161,669 115,800 Pupil services 1,832,322 1,764,722 1,998,488 55,872 33,720 510 65,386 2,676,599 548,463 151,890 General administration 105,419 100,505 9,432 23,752 9,471 769 101,175 125,625 661,655 579,607 Plant services 1,524,727 405,808 650,122 824,029 381,862 140,465 328,436 108,871 - - Interest & other activities 170 10,008 (1,079) 3,140 2,451 - 5,533 73,991 21,967 209,361 Operating grants and contributions 56,525,496 51,596,854 59,725,937 50,847,442 42,273,693 39,395,247 41,512,371 48,493,603 47,514,138 42,479,008 Capital grants and contributions 16,275,472 3,257,183 227,263 24,567,915 4,275,958 28,968,019 9,518,125 16,786,738 62,777,375 69,830 Total governmental activities program revenue 76,349,945 57,222,204 62,714,115 77,061,532 47,358,342 68,524,176 51,565,888 68,331,847 118,489,935 49,842,121 Business-type activities: Food services Charges for services and sales - - - 2,112,818 2,425,739 2,701,885 2,199,270 2,806,830 2,810,595 2,726,628 Operating grants and contributions - - - 5,728,316 5,751,203 5,414,796 4,859,191 4,965,406 4,545,758 3,986,459 Capital grants and contributions ------Total business-type activities program revenue - - - 7,841,134 8,176,942 8,116,681 7,058,461 7,772,236 7,356,353 6,713,087 Total primary government program revenues $ 76,349,945 $ 57,222,204 $ 62,714,115 $ 84,902,666 $ 55,535,284 $ 76,640,857 $ 58,624,349 $ 76,104,083 $ 125,846,288 $ 56,555,208

Net (expense)/revenue Governmental activities (229,720,829) (250,458,896) (231,201,760) (178,364,537) (202,195,507) (168,781,206) (189,760,100) (167,094,719) (115,551,989) (193,839,908) Business-type activities - - - (441,244) 121,249 337,689 (63,710) 330,153 622,187 702,027 Total primary government net expense $ (229,720,829) $ (250,458,896) $ (231,201,760) $ (178,805,781) $ (202,074,258) $ (168,443,517) $ (189,823,810) $ (166,764,566) $ (114,929,802) $ (193,137,881)

Source : The source of this information is the District's financial records.

S3 GROSSMONT UNION HIGH SCHOOL DISTRICT CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting)

Fiscal Year Ended June 30 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Net (expense)/revenue Governmental activities (229,720,829) (250,458,896) (231,201,760) (178,364,537) (202,195,507) (168,781,206) (189,760,100) (167,094,719) (115,551,989) (193,839,908) Business-type activities - - - (441,244) 121,249 337,689 (63,710) 330,153 622,187 702,027 Total primary government net expense $ (229,720,829) $ (250,458,896) $ (231,201,760) $ (178,805,781) $ (202,074,258) $ (168,443,517) $ (189,823,810) $ (166,764,566) $ (114,929,802) $ (193,137,881)

General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes, levied for general purposes $ 116,290,883 $ 109,105,168 $ 103,035,654 $ 94,530,183 $ 84,080,917 $ 78,215,670 $ 79,679,633 $ 71,469,980 $ 70,063,514 $ 73,501,199 Property taxes, levied for debt service 35,446,762 33,827,646 27,851,816 27,705,688 26,289,804 24,834,172 23,840,411 23,400,913 22,257,906 21,875,889 Taxes levied for other specific purposes 1,916,239 1,759,949 1,593,172 1,519,110 1,415,228 1,382,251 1,355,405 1,780,006 1,436,094 1,466,043 Federal and State aid not restricted to specific purposes 62,781,903 60,728,002 65,340,474 77,119,723 64,467,804 63,014,563 62,711,349 68,594,119 77,038,347 60,200,459 Interest and investment earnings 2,034,971 1,414,895 911,682 630,936 535,921 393,963 370,509 523,361 618,714 405,842 Special and extraordinary items ------Interagency revenues 9,031,288 8,437,915 7,614,284 7,307,149 6,953,116 6,738,079 5,445,475 5,819,678 4,681,417 1,960,542 Miscellaneous 8,049,944 8,805,360 6,338,411 5,684,211 939,819 (3,470,097) 4,275,274 4,375,333 Transfers - 7,091,606 7,901,139 - - (2,100) - 509,442 Total governmental activities 235,551,990 222,365,181 214,248,221 217,618,149 190,081,201 180,262,909 174,342,601 168,115,860 180,371,266 164,294,749 Business-type activities: Interest and investment earnings - - - 4,770 Miscellaneous - - - 1,461 246 379 913,202 - - - Transfers - - - 25,927 20,544 32,270 - - - (480,500) Total business-type activities - - - 32,158 20,790 32,649 913,202 - - (480,500) Total primary government $ 222,365,181 $ 222,365,181 $ 214,248,221 $ 217,650,307 $ 190,101,991 $ 180,295,558 $ 175,255,803 $ 168,115,860 $ 180,371,266 $ 163,814,249

Changes in Net Position Governmental activities $ 5,831,161 $ (28,093,715) $ (16,953,539) $ 39,253,612 $ (12,114,306) $ 11,481,703 $ (15,417,499) $ 1,021,141 $ 64,819,277 $ (29,545,159) Business-type activities - - - (409,086) 142,039 370,338 849,492 330,153 622,187 221,527 Total primary government $ 5,831,161 $ (28,093,715) $ (16,953,539) $ 38,844,526 $ (11,972,267) $ 11,852,041 $ (14,568,007) $ 1,351,294 $ 65,441,464 $ (29,323,632)

Source : The source of this information is the District's financial records.

S4 GROSSMONT UNION HIGH SCHOOL DISTRICT FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting)

Fiscal Year Ended June 30 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

General fund Reserved1 $ 19,703,813 $ 15,803,285 $ 14,790,543 $ 13,766,249 $ 6,623,021 $ 10,351,788 $ 14,462,323 $ 20,444,453 $ 24,509,887 $ 460,829 Nonspendable 285,253 274,500 1,865,782 178,591 314,483 294,956 284,302 510,930 1,229,525 - Restricted 4,383,899 3,830,078 6,222,699 3,597,201 3,063,802 3,679,638 5,538,058 5,331,382 7,803,846 - Committed ------Assigned 15,034,661 11,698,707 6,702,062 9,990,457 3,244,736 6,377,194 8,639,963 14,602,141 15,476,516 - Unassigned 10,468,099 9,798,548 9,686,186 9,394,841 7,255,595 8,268,643 7,958,549 8,373,855 11,783,862 22,265,174 Total general fund $ 30,171,912 $ 25,601,833 $ 24,476,729 $ 23,161,090 $ 13,878,616 $ 18,620,431 $ 22,420,872 $ 28,818,308 $ 36,293,749 $ 22,726,003

All other governmental funds2 Nonspendable $ 327,140 $ 184,824 $ 123,186 $ 8,000 Restricted (formerly Reserved) 149,126,994 147,487,125 156,987,238 $ 114,247,049 139,596,798 $ 109,863,000 $ 82,759,999 $ 118,729,376 $ 199,012,717 $ 16,060,431 Committed - - - - 557,223 456,488 1,712,400 322,865 2,216,915 - Assigned - 3,098,250 4,101,273 3,388,046 2,214,078 - 8,635,310 16,449,793 8,765,594 - Unassigned (formerly Unreserved) ------407,371 - Designated ------Undesignated, reported in: ------Special reserve funds ------8,783,143 Debt service funds ------Capital projects funds ------66,253,708 Total all other governmental funds $ 149,454,134 $ 150,770,199 $ 161,211,697 $ 117,635,095 $ 142,376,099 $ 110,319,488 $ 93,107,709 $ 135,502,034 $ 210,402,597 $ 91,097,282

Fund Balance of the General Fund

$30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Reserved Unassigned

Source : The source of this information is the District's financial records. 1 Per GASB Stmt 54, fund balances were reclassified from restricted and unrestricted to nonspendable, restricted, committed, assigned, and unassigned effective 2010/11. "Reserved" for 2011, 12, & 13 is a total of nonspendable, restricted, committed, and assigned for purposes of illustration in the chart. 2 Kept prior years' designations for historical reporting purposes

S5 GROSSMONT UNION HIGH SCHOOL DISTRICT CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting)

Fiscal Year Ended June 30 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Revenues LCFF sources $ 168,214,004 $ 160,385,973 $ 158,305,393 $ 154,814,682 $ 141,919,035 $ 134,876,297 $ 108,422,328 $ 112,914,145 $ 116,638,153 $ 110,493,535 Federal sources 20,329,465 22,248,571 22,232,132 16,826,557 15,949,536 15,529,126 15,079,987 16,747,738 24,184,330 21,055,984 Other state sources 58,374,376 34,104,135 34,260,474 61,843,008 20,085,703 42,644,086 49,975,662 53,207,078 101,582,770 31,937,671 Other local sources 75,418,060 68,916,703 61,965,264 61,847,714 58,535,249 55,737,575 52,430,512 53,749,711 56,455,979 50,140,240 Total revenue sources 322,335,905 285,655,382 276,763,263 295,331,961 236,489,523 248,787,084 225,908,489 236,618,672 298,861,232 213,627,430 Expenditures Current Instruction 143,460,189 134,793,563 135,258,949 131,239,743 122,872,828 116,448,451 115,827,612 115,187,587 118,698,668 119,199,781 Instruction-related activities: Supervision of instruction 11,119,679 10,500,999 10,438,228 9,658,484 8,877,704 7,298,796 7,176,351 8,346,690 10,385,718 8,411,043 Instructional library, media, technology 3,259,494 2,933,816 2,827,406 2,731,028 2,475,250 2,364,111 2,328,843 2,605,991 2,522,587 2,519,851 School site administration 20,744,815 19,627,782 19,450,429 18,730,116 17,110,992 16,813,288 16,732,502 17,511,024 17,074,583 17,178,626 Pupil services: Home-to-school transportation 8,286,184 9,645,316 6,742,302 6,894,353 6,079,338 5,660,094 5,893,021 6,330,056 6,215,640 5,894,535 Food services 8,073,090 7,243,721 7,170,400 - - 7,165 - 24,572 All other pupil services 17,108,994 14,337,420 13,722,899 13,227,166 11,927,930 11,577,497 11,499,424 11,841,180 11,606,093 11,001,534 General administration: Data processing 4,873,373 4,191,089 4,822,988 5,955,666 4,052,950 3,030,145 2,759,754 3,146,073 3,290,799 3,085,398 All other general administration 10,435,441 9,727,528 10,058,683 8,687,872 7,983,407 7,576,900 6,663,979 6,394,800 6,718,826 4,931,776 Plant services 24,965,221 26,145,060 25,734,457 29,068,677 25,768,219 23,756,907 23,933,267 25,399,483 26,391,968 32,073,542 Facilities acquisition & maintenance 75,952,347 34,226,685 32,830,705 58,858,383 43,298,273 57,370,504 57,837,707 96,614,527 58,828,850 95,252,847 Ancillary services 1,713,500 1,519,926 1,578,318 1,253,600 984,420 901,804 352,921 322,388 337,121 346,987 Community services 514,482 547,701 460,301 474,008 515,647 600,753 563,747 548,355 446,036 434,657 Other outgo 357,771 375,913 327,682 (173,058) (194,967) (45,920) 1,073,418 1,290,253 1,046,928 1,307,349 Debt service Issuance Cost - 909,738 1,737,854 1,099,091 1,255,609 637,686 Principal 17,147,470 15,400,566 13,633,948 8,426,065 8,442,411 6,315,291 6,660,244 7,333,173 9,748,270 4,117,827 Interest and other 18,317,311 16,561,698 14,392,670 15,758,388 17,300,520 16,179,499 15,395,460 20,906,440 13,037,589 10,452,806 Total expenditures 366,329,361 308,688,521 301,188,219 311,889,582 278,750,531 276,485,806 274,698,250 323,785,185 286,349,676 316,233,131 Excess (deficiency) of revenues over expenditures (43,993,456) (23,033,139) (24,424,956) (16,557,621) (42,261,008) (27,698,722) (48,789,761) (87,166,513) 12,511,556 (102,605,701) Other financing sources (uses) Transfers in 35,824 14,433 63,335 587,993 48,041 30,628 97,117 6,429,747 8,051,508 10,423,792 Other sources- bond issuance 47,247,470 30,801,249 160,040,550 111,994,914 69,575,804 41,110,060 - 87,551,900 120,364,255 276,966 Transfers out (35,824) (14,433) (63,335) (587,993) (48,041) (30,628) (99,117) (6,431,847) (8,054,258) (9,947,792) Other uses - bond issuance - - - - - (82,759,291) - - Transfers to escrow agent for defeased debt - (17,084,504) (93,056,304) (110,895,823) Total other financing sources (uses) 47,247,470 13,716,745 66,984,246 1,099,091 69,575,804 41,110,060 (2,000) 4,790,509 120,361,505 752,966

Net change in fund balances $ 3,254,014 $ (9,316,394) $ 42,559,290 $ (15,458,530) $ 27,314,796 $ 13,411,338 $ (48,791,761) $ (82,376,004) $ 132,873,061 $ (101,852,735)

Capital Outlay 78,606,500 38,604,235 34,363,359 66,811,067 47,451,028 59,279,687 58,028,426 101,783,498 68,698,857 97,185,938 Debt service as a percentage of noncapital expenditures 12.3% 11.8% 10.5% 9.9% 11.1% 10.4% 10.2% 12.7% 10.5% 6.7%

400,000,000 350,000,000 300,000,000 Revenue Sources 250,000,000 200,000,000 150,000,000 Total Expenditures 100,000,000 50,000,000 - 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Source: The District's financial records. S6 GROSSMONT UNION HIGH SCHOOL DISTRICT ASSESSED VALUATIONS LAST TEN FISCAL YEARS

Fiscal Year Ended June 30 Local Secured 1 Utility Unsecured Total 2018-19 $ 48,524,504,817 $ 346,890 $ 1,118,340,630 $ 49,643,192,337 2017-18 45,826,857,685 1,493,034 1,055,353,603 46,883,704,322 2016-17 43,096,356,484 1,206,275 1,044,534,035 44,142,096,794 2015-16 40,996,282,516 1,493,034 1,011,104,565 42,008,880,115 2014-15 38,851,430,952 1,493,034 995,245,520 39,848,169,506 2013-14 37,069,315,490 1,380,926 996,572,702 38,067,269,118 2012-13 36,040,846,457 1,444,353 1,008,416,103 37,050,706,913 2011-12 35,927,641,031 1,444,353 1,054,248,404 36,983,333,788 2010-11 35,724,829,843 1,444,353 1,092,460,473 36,818,734,669 2009-10 36,226,604,233 1,444,353 1,151,172,293 37,379,220,879

Secured Tax Charges and Delinquencies Fiscal Year Ended June 30 Secured Tax Amt. Del. June Charge 2 30 3 % Del. June 30 2018-19 $ 100,835,844 $ 55,781 0.0553% 2017-18 95,458,845 216,196 0.2265% 2016-17 90,283,902 57,422 0.0636% 2015-16 85,669,499 34,761 0.0406% 2014-15 81,061,234 56,755 0.0700% 2013-14 77,448,709 83,524 0.1078% 2012-13 75,177,713 143,391 0.1907% 2011-12 74,619,344 139,512 0.1870% 2010-11 74,399,856 171,790 0.2309% 2009-10 75,811,899 381,973 0.5038%

Typical Tax Rates

Unincorporated City of El Cajon City of La Mesa San Diego County 2018-19 1.21886 1.17803 1.15603 2017-18 1.22747 1.18533 1.16233 2016-17 1.20225 1.17013 1.14713 2015-16 1.23144 1.17957 1.15657 2014-15 1.21417 1.17869 1.15569 2013-14 1.21908 1.18106 1.15806 2012-13 1.17905 1.16522 1.14222 2011-12 1.17662 1.16434 1.14134 2010-11 1.15807 1.15350 1.13050 2009-10 1.15634 1.15076 1.12776

1 Local Secured Assessed Valuation: excluding tax-exempt property 2 1% General Fund apportionment of the District's share of secured tax revenue from property in the District 3 San Diego County utilizes the Teeter Plan for assessment levy and distribution. This method guarantees distribution of 100% of the assessments levied to the taxing entity, with the County retaining all penalties and interest.

Source : County of San Diego Auditor and Controller

S7 GROSSMONT UNION HIGH SCHOOL DISTRICT PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS

Collected within the Fiscal Taxes Levied Year of the Levy Collections In Total Collections to Date for the Fiscal Percentage Subsequent Percentage of Fiscal Year Year Amount of the Levy Years Amount Levy 2018-19 $ 100,835,844 $ 100,692,195 99.86% - 100,692,195 99.86% 2017-18 95,458,845 95,104,002 99.63% 87,869 95,191,871 99.72% 2016-17 90,283,902 90,081,558 99.78% 138,646 90,220,204 99.93% 2015-16 85,789,875 85,422,318 99.57% 144,922 85,567,240 99.74% 2014-15 81,061,234 80,845,550 99.73% 89,238 80,934,788 99.84% 2013-14 77,448,709 77,181,029 99.65% 103,818 77,284,847 99.79% 2012-13 75,177,713 74,943,420 99.69% 184,156 75,127,576 99.93% 2011-12 74,619,344 74,195,678 99.43% 75,066 74,270,744 99.53% 2010-111 74,399,856 N/A N/A N/A N/A N/A 2009-101 75,811,899 N/A N/A N/A N/A N/A

1 Data is not available for fiscal years 2010-11 and 2009-2010. Source : County of San Diego Auditor and Controller

S7.1 GROSSMONT UNION HIGH SCHOOL DISTRICT DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT For the Fiscal Year Ended June 30, 2019

2018-19 Assessed Valuation: $49,643,192,337

Total Debt District's Direct District's DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable 6/30/19 Debt Overlapping Debt Metropolitan Water District 1.666 % $ 60,600,000 $ 1,009,596 Grossmont-Cuyamaca Community College District 97.577 324,470,377 316,608,460 Grossmont Union High School District 100.000 697,556,049 1 697,556,049 Alpine Union School District 100.000 4,630,408 4,036,097 Cajon Valley Union School District 100.000 173,396,012 182,097,755 Dehesa School District 100.000 4,586,069 4,561,806 Jamul-Dulzura Union School District 100.000 6,379,297 6,192,671 La Mesa-Spring Valley School District 100.000 24,489,849 21,209,849 Lakeside Union School District 100.000 40,406,358 36,463,179 Lemon Grove School District 100.000 28,906,828 28,671,711 Santee School District 100.000 53,035,308 51,817,505 City of La Mesa 99.939 20,040,000 20,027,776 Grossmont Health Care District 91.144 258,388,329 235,505,459 City of La Mesa 1915 Act Bonds 100.000 2,575,000 2,575,000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ 1,699,459,885 697,556,049 910,776,864

DIRECT AND OVERLAPPING GENERAL FUND DEBT: San Diego County General Fund Obligations 9.453 % 273,220,004 $ 25,827,487 San Diego County Pension Obligations 9.453 508,764,995 48,093,555 San Diego County Superintendent of Schools Obligations 9.453 10,784,999 1,019,506 Grossmont-Cuyamaca Community College District General Fund Obligations 97.577 610,000 595,220 Alpine Union High School District Certificates of Participation 100.000 3,085,000 3,085,000 Cajon Valley Union School District Certificates of Participation 100.000 20,284,000 20,284,000 La Mesa-Spring Valley School District General Fund Obligations 100.000 12,185,321 12,185,321 Santee School District Certificates of Participation 100.000 29,929,849 29,929,849 City of La Mesa Parking Authority 99.939 2,985,000 2,983,179 City of San Diego General Fund Obligations 0.203 550,774,877 1,118,073 City of Santee General Fund Obligations 99.997 190,000 189,994 Fire Protection District Certificates of Participation 98.910-100 8,504,018 8,412,940 TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 1,421,318,064 $ - $ 153,724,124

TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 153,724,124

OVERLAPPING TAX INCREMENT DEBT 0.462-100.00 % $ 130,181,946

GROSS COMBINED TOTAL DEBT $ 1,892,238,983 2

Subtotal of District's Direct and Overlapping Tax and Assessment Debt $ 697,556,049 Subtotal of District's Direct and Overlapping General Fund Debt $ 1,064,500,988 Total of District's Direct and Overlapping Debt $ 1,762,057,037

Ratios to 2017-18 Assessed Valuation: Direct Debt ($534331376) 1.08% Total Direct and Overlapping Tax and Assessment Debt 2.91% Combined Total Debt 3.48%

Ratios to Redevelopment Incremental Valuation ($4,772,231,379): Total Overlapping Tax Increment Debt 2.73%

The first column in the table names each public agency which had outstanding debt as of September 1, 2019, and whose territory overlaps the District in whole or in part. The second column shows the percentage of each overlapping agency's assessed value located within the boundaries of the District. This percentage, multiplied by the total outstanding debt of each overlapping agency, produces the amount shown in the fourth column, which is the apportionment of each overlapping agency's outstanding debt to taxable property in the District.

1 Excludes the bonds. 2 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source : California Municipal Statistics, Inc.

S8 GROSSMONT UNION HIGH SCHOOL DISTRICT BONDING ISSUANCE CAPACITY LAST TEN FISCAL YEARS

Fiscal Year Ended June 30 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Gross Assessed Valuation $ 49,643,192,337 $ 46,883,704,322 $ 44,142,096,794 $ 42,008,880,115 $ 39,848,169,506 $ 38,067,269,118 $ 37,050,706,913 $ 36,983,333,788 $ 36,818,734,669 $ 37,379,220,879 Bonding Capacity Ratio 0.0125 0.0125 0.0125 0.0125 0.0125 0.0125 0.0125 0.0125 0.0125 0.0125 Gross Bonding Capacity 620,539,904 586,046,304 551,776,210 525,111,001 498,102,119 475,840,864 463,133,836 462,291,672 460,234,183 467,240,261 Less: Outstanding General Obligation Bonds 1 $ 695,385,787 $ 655,739,214 $ 554,893,365 $ 496,541,773 500,541,773 440,000,095 406,100,095 439,531,711 441,241,587 325,242,624 Net Bonding Capacity (74,845,883) (69,692,910) (3,117,155) 28,569,228 (2,439,654) 35,840,769 57,033,741 22,759,961 18,992,596 141,997,637

1 Prior to 2013, Outstanding General Obligation Bonds included accreted interest.

Source : California Municipal Statistics, Inc. and District records.

S9 GROSSMONT UNION HIGH SCHOOL DISTRICT PRINCIPAL PROPERTY TAXPAYERS CURRENT FISCAL YEAR AND TEN YEARS AGO

2018-2019 2009-2010 Percentage of Percentage of District's Net District's Net Assessed Assessed Assessed Assessed Taxpayer Valuation Rank Valuation1 Valuation Valuation Conrad Prebys, Trust $ 368,540,042 1 0.76% $ 92,413,586 4 0.26% Star-West Parkway Mall LP 233,170,403 2 0.48% 202,192,321 1 0.57% Villa Marina Del LLC 163,550,880 3 0.34% Fairfield Grossmont Trolley LLC 110,183,834 4 0.23% 57,213,535 9 0.16% Rainbow Investment Co. 105,928,797 5 0.22% 94,300,027 3 0.26% BRE Paragon MF Alvista Baltimore CA 72,047,700 6 0.15% Wal-Mart Real Estate Business Trust 71,751,125 7 0.15% 66,334,067 8 0.18% Waring Gardens LP 70,941,000 8 0.15% SP Lavida Real Estate Business Trust 68,890,456 9 0.14% 81,334,891 5 0.22% GKN Aerospace Chem-Tronics Inc. 62,393,566 10 0.13% 43,249,892 16 0.12% Kaiser Foundation Health Plan Inc. 60,498,295 11 0.12% 43,731,396 15 0.12% Forest Park Fee Owner LLC 59,144,146 12 0.12% VSCRE Holdings LLC 57,949,396 13 0.12% 51,202,245 12 0.14% Essex JMS Acquisition LP 57,575,572 14 0.12% Parc One LP 57,453,540 15 0.12% FRG Corona Pointe LLC 55,969,383 16 0.12% Lysinger 1999 Trust 53,846,829 17 0.11% MMGER 53,390,470 18 0.11% Vestar Kimco Santee LP 50,226,410 19 0.10% 44,324,386 14 0.12% Home Depot 48,038,429 20 0.10% 42,610,871 17 0.12% San Diego Family Housing LLC 101,822,747 2 0.28% JMS Acquisition LLC 75,505,562 6 0.21% Sycuan Tribal Development Corp 68,682,554 7 0.19% Conam San Diego Residential Properties 53,322,007 10 0.15% Baltimore Owner LLC 53,315,000 11 0.15% FW CA Rancho San Diego Village LLC 45,150,720 13 0.12% Cumberland Club Apartments LP 39,764,121 18 0.11% ASN La Mesa LLC 37,423,503 19 0.10% Sears Roebuck & Co 36,548,667 20 0.10% $ 1,881,490,273 3.88% $ 1,330,442,098 3.68%

12018-19 local secured assessed valuation excluding tax-exempt property: $48,524,504,817 Source : California Municipal Statistics, Inc. $ 48,524,504,817

S10 GROSSMONT UNION HIGH SCHOOL DISTRICT OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS

General Obligation Bonds Other Governmental Activities Debt Ratio of General Obligation Fiscal Bonds to General Supplemental Year General Taxable Bonded Certificates Early Percentage of Ended Estimated Taxable Assessed Obligation Assessed Debt per of Retirement Capital Personal Per June 30 Population1 Valuation Bonds Valuation Capita Notes Participation Loans Program Leases Total Debt Income 3 Capita 2019 N/A $ 49,643,192,337 $ 695,385,787 1.40% N/A - - - - 2,170,262 697,556,049 N/A N/A 2018 N/A 46,883,704,322 655,739,214 1.40% N/A - - - - 2,177,888 657,917,102 321.55% N/A 2017 N/A 44,142,096,794 554,893,365 1.26% N/A - - - - 331,020 555,224,385 289.69% N/A 2016 N/A 42,008,880,115 496,541,773 1.18% N/A - - - - 571,560 497,113,333 271.60% N/A 2015 N/A 39,848,169,506 500,541,773 1.26% N/A - - - - 807,625 501,349,398 282.37% N/A 2014 N/A 2 38,067,269,118 440,000,095 1.16% N/A - - - - 1,045,036 441,045,131 263.10% N/A 2013 465,073 37,050,706,913 406,100,095 1.10% 873 - - - - 1,260,327 407,360,422 246.87% 876 2012 459,657 36,983,333,788 439,531,711 1.19% 956 - - - - 285,029 439,816,740 273.32% 957 2011 454,668 36,818,734,669 441,241,587 1.20% 970 - - - - 511,079 441,752,666 291.65% 972 2010 476,527 37,379,220,879 325,242,624 0.87% 715 - - - - 2,071,848 327,314,472 231.74% 687

1 Estimated Population figures have been updated based on Census.gov data for the District. 2 2013 was the last data available for population. 3 Personal income for this calculation is from the Countywide Demographics & Economic Statistics table on S12.

Source : The source of this information is the District's financial records, San Diego County Tax Assessor, and U.S. Census Bureau.

S11 GROSSMONT UNION HIGH SCHOOL DISTRICT COUNTY-WIDE DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS

San Diego California Personal Per Capita Unemployment Unemployment Year Population Income Income Rate Rate 2019 N/A N/A N/A 2.8% 3.9% 2018 3,333,128 204,607,395 61,386 3.3% 4.1% 2017 3,309,509 191,663,594 57,913 4.7% 5.1% 2016 3,317,749 183,032,418 55,168 4.8% 5.5% 2015 3,290,245 177,551,892 53,963 4.6% 5.9% 2014 3,258,856 167,633,842 51,439 5.8% 7.3% 2013 3,211,252 165,008,428 51,384 7.0% 8.3% 2012 3,176,138 160,914,306 50,664 8.6% 9.8% 2011 3,138,550 151,466,837 48,260 9.7% 11.7% 2010 3,104,182 141,243,429 45,501 10.2% 12.0%

N/A: Data not available Sources: "Personal Income," "Per Capita," and Population information is from the Bureau of Economic Analysis. "Population" data for 2010-2018 is the State of California, Dept. of Finance, E-4 Population Estimates for Counties and States, 2011-2018, with 2010 Benchmark. "Unemployment Rate" information is the State of California, Employment Development Department.

S12 GROSSMONT UNION HIGH SCHOOL DISTRICT PRINCIPAL EMPLOYERS LAST TEN YEARS

2018-2019 2009-2010 Percentage Percentage of Total of Total Employer Service Employees Employment Employer Service Employees Employment Sharp Grossmont Hospital Health Care Services 3,600 3.21 % Sharp Grossmont Hospital Health Care Services 3,923 3.49 % Barona Valley Ranch Resort & Casino Casino/Resort 3,000 2.67 Grossmont/Cuyamaca Comm College District Education 3,680 3.28 Grossmont Union High School District Education 1,800 1.60 Barona Valley Ranch Resort & Casino Casino/Resort 3,015 2.69 La Mesa/Spring Valley School District Education 1,800 1.60 Grossmont Union High School District Education 3,000 2.67 Cajon Valley Union School District Education 1,632 1.45 Sycuan Casino & Golf Resorts Casino/Resort 2,400 2.14 GKN Chem-tronics, Inc. Manufacturer 909 0.81 Cajon Valley Union School District Education 1,895 1.69 Wal-Mart, Inc. Retailer 791 0.70 La Mesa/Spring Valley School District Education 1,600 1.42 Grossmont/Cuyamaca Comm College District Education 769 0.68 Alvarado Medical Center Health Care Services 1,158 1.03 Taylor Guitars Manufacturer 440 0.39 Wal-Mart, Inc. Retailer 733 0.65 Country Hills Healthcare Inc. Health Care Services 380 0.34 Senior Aerospace Flexonics Manufacturer 670 0.60 City of El Cajon Local Government 379 0.34 GKN Chem-tronics, Inc. Manufacturer 600 0.53 Home Depot Retailer 357 0.32 City of El Cajon Local Government 578 0.51 Kaiser Permanente Health Care Services 317 0.28 Taylor Guitars Manufacturer 575 0.51 Automobile Club of Southern California Auto Insurance 315 0.28 Veridiam Manufacturer 500 0.45 Costco Retailer 314 0.28 Automobile Club of Southern California Auto Insurance 347 0.31 City of La Mesa Local Government 310 0.28 Drew Auto Center Automobile Sales & Repair 314 0.28 Grossmont Gardens Retirement Center Senior Living Facility 272 0.24 Costco Retailer 310 0.28 Alvarado Parkway Institute Health Care Services 260 0.23 City of La Mesa Local Government 250 0.22 Senior Aerospace Ketema Manufacturer 260 0.23 Chase Care Center Health Care Services 250 0.22 Target Stores Retailer 220 0.20 Home Depot Retailer 250 0.22 Total 18,125 16.14 % Total 26,048 23.20 %

Total employment 112,283 Total employment 112,283

Source : The source of the "Principal Employers" is East County Chamber of Commerce for the Cities of El Cajon and La Mesa The source of the "Total Employment" is San Diego Association of Governments East County employment estimates 2016.

S13 GROSSMONT UNION HIGH SCHOOL DISTRICT OPERATING STATISTICS LAST TEN FISCAL YEARS

Fiscal Year Cost Pupil- Percentage of Ended Annual Operating Cost Per Percentage Total per Percentage Teaching Teacher Free/Reduced June 30 Enrollment1 Expenditures Pupil Change Expenditures Pupil Change Staff Ratio Students 2019 16,691 $ 254,912,233 15,272 0.06 % $ 306,070,774 18,337 (0.00) % 870.4 19.18 47% 2018 16,754 242,499,572 14,474 0.02 307,681,100 18,365 0.06 882.3 18.99 47% 2017 16,959 240,330,896 14,171 0.06 293,915,875 17,331 0.16 915.0 18.53 44% 2016 17,133 228,846,746 13,357 0.12 255,426,789 14,908 0.05 908.4 18.86 44% 2015 17,580 209,709,327 11,929 0.09 249,553,849 14,195 0.07 935.3 18.80 43% 2014 17,908 196,620,512 10,979 0.03 237,305,382 13,251 0.01 967.4 18.51 43% 2013 18,325 194,804,839 10,631 0.00 241,325,988 13,169 0.05 973.9 18.82 41% 2012 18,792 198,931,045 10,586 0.01 235,426,566 12,528 0.05 1004.4 18.71 37% 2011 19,530 204,734,967 10,483 0.04 234,041,924 11,984 0.01 1024.7 19.06 36% 2010 20,538 206,409,651 10,050 (0.02) 243,682,029 11,865 0.01 1046.2 19.63 36% 2009 20,026 204,589,277 10,216 (0.02) 235,624,984 11,766 0.02 1102.4 18.17 32%

1 Annual Enrollment excludes the charter schools' enrollment since they are not included in the District's financial statements.

Source: The source of this information is the District's financial records. Note: Operating expenditures are total expenditures less debt service and facility acquisition and construction.

S14 GROSSMONT UNION HIGH SCHOOL DISTRICT FULL-TIME EQUIVALENT DISTRICT EMPLOYEES BY TYPE LAST TEN FISCAL YEARS

Full-Time Equivalent Employees of June 30 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Supervisory Superintendent 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Assistant Supt-Instruction 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Assistant Supt-District 2.0 2.0 2.0 Principals 10.0 10.0 10.0 10.0 10.0 9.0 9.0 10.0 11.0 12.0 Assistant Principals 31.0 32.0 32.0 32.0 28.0 28.0 32.1 31.0 30.0 35.0 Directors/Coordinators- Instructional 17.0 16.0 16.0 16.0 13.0 18.0 14.0 15.0 15.0 15.0 Directors/Coordinators-Adult Ed 3.0 3.0 3.0 4.0 5.0 5.0 6.0 4.0 4.5 6.0 Total Supervisory 65.0 65.0 65.0 64.0 58.0 62.0 63.1 62.0 62.5 70.0

Instruction Teachers 760.0 759.9 791.0 755.2 784.3 798.1 805.1 836.8 869.1 899.2 Other Teachers-Adult Ed Hourly 106.0 119.0 124.0 140.8 139.0 155.3 158.3 156.7 144.8 135.4 ROP Hourly 4.4 3.4 4.0 12.4 12.0 14.0 10.6 10.8 10.8 11.6 Employer Intervention rep 2.0 2.0 2.0 0.0 2.0 2.0 2.0 2.0 2.0 2.0 Instructional aides 0.5 0.5 1.0 1.0 6.5 8.3 7.6 8.7 7.1 11.8 Interpreter for the Deaf 1.4 1.4 2.0 6.0 6.3 6.3 5.5 6.3 5.5 3.0 Occupational therapist 1.8 1.5 2.0 1.3 1.4 0.6 0.6 0.6 0.6 0.6 Parent facilitator 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.9 0.9 0.9 Youth Dev Specialist 0.0 0.9 1.0 1.0 1.0 1.0 1.0 1.0 2.0 1.0 Library Tech 3.8 3.8 4.0 3.7 0.0 4.0 5.0 9.0 9.0 9.0 Special ed aides 168.1 193.0 175.0 174.1 172.4 154.2 144.9 143.8 143.8 139.5 spec ed oper 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 Sr into deaf 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Classified-Instructional Support 192.6 230.2 210.0 211.0 212.4 194.4 188.4 194.6 196.3 197.4 Total Instruction 1063.0 1112.5 1129.0 1119.4 1147.7 1161.9 1162.3 1199.0 1220.9 1243.6

Instruction-Related Classified Instructional-Related 146.7 139.3 144.0 149.3 151.1 158.5 161.5 156.4 165.4 183.1 Total Instruction-Related 146.7 139.3 144.0 149.3 151.1 158.5 161.5 156.4 165.4 183.1

Pupil Services Counselors 60.7 42.3 43.6 56.2 54.3 41.8 43.2 42.6 48.8 52.7 Program specialists 4.0 4.0 4.0 4.0 4.0 4.6 4.8 7.0 3.7 4.0 Librarians 9.0 9.0 9.0 5.0 4.0 8.0 7.0 9.0 7.0 9.0 Nurses 2.0 2.0 2.0 2.0 1.0 2.0 2.0 2.0 3.0 4.0 Psychologists 19.2 15.8 16.0 15.0 16.2 14.4 14.8 14.4 14.2 13.6 Speech Therapist 10.6 8.2 9.0 6.2 9.0 9.6 9.2 10.1 8.9 12.4 Pupil Transportation 38.0 30.2 32.4 36.8 38.8 54.0 52.8 51.3 61.0 61.0 Food Services 39.8 47.5 64.0 58.8 63.9 67.6 64.3 63.6 63.1 64.4 Classified-other 32.7 44.8 46.0 26.2 31.7 48.7 49.6 57.5 64.9 73.5 Total Pupil Services 216.0 203.8 226.0 210.2 222.9 250.7 247.6 257.5 274.5 294.6

Support and Administration Management/Supervisory 22.0 20.7 22.0 17.0 16.0 16.0 16.0 16.0 16.0 16.0 Classified-Other 64.5 31.2 125.5 65.1 59.2 68.4 70.8 74.0 76.0 75.9 Plant Services 180.0 180.4 186.0 193.8 179.3 178.7 184.4 188.1 199.8 208.3 Total Support and Administration 266.5 285.3 333.5 275.9 254.5 263.1 271.2 278.1 291.9 300.2

Total 1757.2 1805.9 1897.5 1818.8 1834.2 1896.1 1905.8 1952.9 2015.2 2091.5

Source : District's payroll records

S15 GROSSMONT UNION HIGH SCHOOL DISTRICT CAPITAL ASSETS INFORMATION LAST TEN FISCAL YEARS

Fiscal Year Ended June 30 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Schools High 12 12 12 12 12 12 12 12 12 12 Buildings/classrooms 809 816 805 804 808 757 816 814 795 782 Square feet 2,440,459 2,448,172 2,414,252 2,409,004 2,414,931 2,142,649 2,560,579 2,577,241 2,491,353 2,448,821 Capacity 29,178 29,388 28,980 28,944 29,088 28,766 31,008 30,932 30,210 29,716 Enrollment / CBEDS1 21,342 21,492 21,709 21,860 22,220 22,555 22,965 23,677 24,224 25,466

Administrative Buildings Square feet 154,530 143,970 159,130 153,264 147,337 117,471 124,365 124,365 124,265 124,265

Transportation Garages 1 1 1 1 1 1 1 1 1 1 Buses 74 74 72 70 69 71 70 71 66 66

Athletics Football fields 11 11 11 11 11 11 11 11 11 11 Baseball/softball 41 41 41 41 41 41 41 41 41 41 Playgrounds 2 2 2 2 2 2 2 2 2 2

1 Enrollment figure includes the Charter schools since the buildings belong to the District Source : The source of this information is the District's facilities records.

S16