School District of the Borough of Butler County of Morris, New Jersey

SCHOOL DISTRICT OF THE BOROUGH OF BUTLER COUNTY OF MORRIS, NEW JERSEY COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 THIS PAGE INTENTIONALLY LEFT BLANK COMPREHENSIVE ANNUAL FINANCIAL REPORT of the Borough of Butler School District Board of Education Butler, New Jersey For the Fiscal Year Ended June 30, 2017 Prepared by Borough of Butler School District Board of Education Finance Office THIS PAGE INTENTIONALLY LEFT BLANK COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE BOROUGH OF BUTLER SCHOOL DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS INTRODUCTORY SECTION Page Letter of Transmittal 1 - 5 Organizational Chart 6 Roster of Officials 7 Consultants and Advisors 8 FINANCIAL SECTION Independent Auditor's Report 9 - 12 Required Supplementary Information - Part I Management's Discussion and Analysis 13 - 21 Basic Financial Statements A. District-wide Financial Statements: A-1 Statement of Net Position 22 A-2 Statement of Activities 23 B. Fund Financial Statements: Governmental Funds: B-1 Balance Sheet 24 B-2 Statement of Revenues, Expenditures, and Changes in Fund Balance 25 B-3 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 26 Proprietary Funds: B-4 Statement of Net Position 27 B-5 Statement of Revenues, Expenses, and Changes in Fund Net Position 28 B-6 Statement of Cash Flows 29 Fiduciary Funds: B-7 Statement of Fiduciary Net Position 30 B-8 Statement of Changes in Fiduciary Net Position 31 Notes to the Basic Financial Statements 32 - 69 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE BUTLER BOROUGH SCHOOL DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS (Continued) FINANCIAL SECTION (Continued) Page Required Supplementary Information - Part II C. Budgetary Comparison Schedule C-1 Budgetary Comparison Schedule - General Fund 70 - 75 C-2 Budgetary Comparison Schedule - Special Revenue Fund 76' Notes to the Required Supplementary Information - Part II C-3 Budgetary Comparison Schedule - Budget-to-GAAP Reconciliation 77 Required Supplementary Information - Part III L. Schedules Related to Accounting and Reporting for Pensions (GASB 68) L-1 Schedule of District's Proportionate Share of Net Pension Liability - PERS 78 L-2 Schedule of District Contributions - PERS 79 L-3 Schedule of the District's Proportionate Share of Net Pension Liability - TPAF 80 Notes to the Required Supplementary Information - Part III L-4 Note to Required Schedules of Supplementary Information 81 Other Supplementary Information D. School Based Budget Schedules (if applicable): D-1 Combining Balance Sheet N/A D-2 Blended Resource Fund - Schedule of Expenditures Allocated by Resource Type - Actual N/A D-3 Blended Resource Fund - Schedule of Blended Expenditures - Budget and Actual N/A E. Special Revenue Fund: E-1 Combining Schedule of Program Revenues and Expenditures Special Revenue Fund - Budgetary Basis 82 E-la Combining Schedule of Program Revenues and Expenditures Special Revenue Fund - Budgetary Basis 83 E-lb Combining Schedule of Program Revenues and Expenditures Special Revenue Fund - Budgetary Basis 84 E-2 Demonstrably Effective Program Aid Schedule of Expenditures - Budgetary Basis N/A E-3 Early Childhood Program Aid Schedule of Expenditures - Budgetary Basis N/A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE BUTLER BOROUGH SCHOOL DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS (Continued) Other Supplementary Information (Continued) Page E. Special Revenue Fund:(continued) E-4 Distance Learning Network Aid Schedule of Expenditures - Budgetary Basis N/A E-5 Instructional Supplemental Aid - Schedule of Expenditures - Budgetary Basis N/A F. Capital Projects Fund: F-1 Summary Schedule of Revenues, Expenditures and Changes in Fund Balance 85 F-la Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - Installation of New Fire Escapes and Renovation of Restrooms - Butler High School 86 F-lb Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - Renovation of High School Auditorium, ADS Boiler Replacement and District-Wide Asbestos Abatement 87 F-2 Summary Schedule of Projected Expenditures 88 G. Proprietary Funds: Enterprise Fund: G-1 Statement of Net Position 89 G-2 Statement of Revenues, Expenses and Changes in Fund Net Position 90 G-3 Statement of Cash Flows 91 Internal Service Fund: G-4 Statement of Net Position 92 G-5 Statement of Revenues, Expenses and Changes in Fund Net Position 93 G-6 Statement of Cash Flows 94 H. Fiduciary Funds: H-1 Combining Statement of Fiduciary Net Position 95 H-2 Combining Statement of Changes in Fiduciary Net Position 96 H-3 Schedule of Receipts and Disbursements - Student Activity Agency Fund 97 H-4 Schedule of Receipts and Disbursements - Payroll Agency Fund 98 I. Long-Term Debt: I-1 Statement of Serial Bonds 99 1-2 Schedule of Obligations under Capital Leases 100 1-3 Budgetary Comparison Schedule - Debt Service Fund 101 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE BUTLER BOROUGH SCHOOL DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS (Continued) STATISTICAL SECTION (Unaudited) Page Outline of NJ DOE Statistical Tables Section (GASB 44) 102 Financial Trends J-1 Net Position by Component 103 J-2 Changes in Net Position 104 - 105 J-3 Fund Balances - Governmental Funds 106 J-4 Changes in Fund Balances - Governmental Funds 107 J-5 General Fund - Other Local Revenue by Source 108 Revenue Capacity J-6 Assessed Value and Estimated Actual Value of Taxable Property 109 J-7 Direct and Overlapping Property Tax Rates 110 J-8 Principal Property Taxpayers 111 J-9 Property Tax Levies and Collections 112 Debt Capacity J-10 Ratios of Outstanding Debt by Type 113 J-11 Ratios of Net General Bonded Debt Outstanding 114 J-12 Direct and Overlapping Governmental Activities Debt 115 J-13 Legal Debt Margin Information 116 Demographic and Economic Information J-14 Demographic and Economic Statistics 117 J-15 Principal Employers 118 Operating Information J-16 Full-time Equivalent District Employees by Function/Program 119 J-17 Operating Statistics 120 J-18 School Building Information 121 J-19 Schedule of Allowable Maintenance Expenditures by School Facility 122 J-20 Insurance Schedule 123 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE BUTLER BOROUGH SCHOOL DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS (Continued) SINGLE AUDIT SECTION Page K-1 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 124 - 125 K-2 Independent Auditor's Report on Compliance for Each Major Program and Report on Internal Control Over Compliance Required by the Uniform Guidance and New Jersey's OMB Circular 15-08 126 - 128 K-3 Schedule of Expenditures of Federal Awards 129 K-4 Schedule of Expenditures of State Financial Assistance 130 K-5 Notes to Schedules of Expenditures of Federal and State Awards 131 - 132 K-6 Schedule of Findings and Questioned Costs 133 - 134 K-7 Schedule of Financial, Federal and State Findings 135 K-8 Summary Schedule of Prior Year Audit Findings 136 INTRODUCTORY SECTION BOARD OF EDUCATION BUTLER PUBLIC SCHOOLS HIGH SCHOOL ANNEX BUILDING BUTLER, NEW JERSEY 07405 Phone: (973) 492-2025 Fax: (973) 492-1016 Mario D. Cardinale Barbara J. Murphy Superintendent Business Administrator/Board Secretary The Honorable President, Members November 9, 2017 Of the School District and Citizens of Butler Borough Butler Public Schools County of Morris Butler, New Jersey 07405 Dear Board Members: The comprehensive annual financial report of the Butler Borough School District (District) for the fiscal year ended June 30, 2017, is hereby submitted. Responsibility for both the accuracy of the data and completeness and fairness of the presentation, including all disclosures, rests with the management of the Butler Public Schools. To the best of our knowledge and belief, the data presented in this report is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the District. All disclosures necessary to enable the reader to gain an understanding of the District's financial activities have been included. The comprehensive annual financial report is presented in four sections: introductory, financial, statistical and single audit. The introductory section includes this transmittal letter, the District's organizational chart and a list of principal officials. The financial section includes the Independent Auditor's Report, Management's Discussion and Analysis and basic financial statements including the government-wide financial statements presented in accordance with the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 34, "Basic Financial Statements — and Management Discussion and Analysis — for State and Local Governments". The basic financial statements also include individual fund financial statements, Notes to the Financial Statements and Required Supplementary Information (RSI). The statistical section includes selected financial and demographic information, generally presented on a multiyear basis. The District is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act and the U.S. Office of Management and Budget Circular A-133, "Audits

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