PARAMUS BOARD OF EDUCATION COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 Paramus, New Jersey COMPREHENSIVE ANNUAL FINANCIAL REPORT of the Paramus Board of Education Paramus, New Jersey For The Fiscal Year Ended June 30, 2017 Prepared by Paramus Board of Education Business Department PARAMUS BOARD OF EDUCATION TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal I-VI Organizational Chart Vll Roster of Officials viii Consultants and Advisors IX FINANCIAL SECTION Independent Auditor's Report 1-3 REQUIRED SUPPLEMENTARY INFORMATION-PART I Management's Discussion and Analysis 4-12 Basic Financial Statements A. District-wide Financial Statements A-1 Statement of Net Position 13 A-2 Statement of Activities 14-15 B. Fund Financial Statements Governmental Funds B-1 Balance Sheet 16-17 B-2 Statement of Revenues, Expenditures, and Changes in Fund Balances 18 B-3 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances with the District-Wide Statements 19 Proprietary Funds B-4 Statement of Net Position 20 B-5 Statement of Revenues, Expenses, and Changes in Net Position 21 B-6 Statement of Cash Flows 22 Fiduciary Funds B-7 Statement of Fiduciary Net Position 23 B-8 Statement of Changes in Fiduciary Net Position 24 Notes to the Financial Statements 25-59 PARAMUS BOARD OF EDUCATION TABLE OF CONTENTS REQUIRED SUPPLEMENTARY INFORMATION -PART II C. Budgetary Comparison Schedules C-1 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund 60-67 C-2 Schedule of Revenues, Expenditures and Changes In Fund Balance- Budget (Non-GAAP) and Actual 68 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION- PART II C-3 Required Supplementary Information - Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual- Notes to the Required Supplementary Information 69 REQUIRED SUPPLEMENTARY INFORMATION- PART III L. Schedules Related to Accounting and Reporting for Pensions (GASB 68) L-1 Required Supplementary Information- Schedule of the District's Proportionate Share of the Net Pension Liability- Public Employees Retirement System 70 L-2 Required Supplementary Information- Schedule of District Contributions - Public Employees Retirement System 71 L-3 Required Supplementary Information - Schedule of the District's Proportionate Share of the Net Pension Liability- Teachers Pension and Annuity Fund 72 Notes to Required Supplementary Information 73 OTHER SUPPLEMENTARY INFORMATION D. School Level Schedules (Not Applicable) E. Special Revenue Fund E-1 Combining Schedule of Program Revenues and Expenditures Special Revenue Fund- Budgetary Basis 74-75 E-2 Preschool Education Aid Schedule of Expenditures - Budgetary Basis -Not Applicable 76 F. Capital Projects Fund F-1 Summary Schedule of Project Expenditures 77 F-2 Summary Schedule of Project Expenditures and Changes in Fund Balance - Budgetary Basis 78 F-2a­ F-2f Schedule of Project Revenues, Expenditures, Project Balance and Project Status­ Budgetary Basis 79-84 PARAMUS BOARD OF EDUCATION TABLE OF CONTENTS G. Proprietary Funds Enterprise Fund- Not Applicable Internal Service Fund- Not Applicable H. Fiduciary Funds H-1 Combining Statement of Net Position 85 H-2 Combining Statement of Changes in Net Position- Not Applicable 85 H-3 Student Activity Agency Fund Schedule of Receipts and Disbursements 86 H-4 Payroll Agency Fund Schedule of Receipts and Disbursements 87 I. Long-Term Debt I-1 Schedule of Serial Bonds Payable 88 I-2 Schedule of Capital Leases Payable- Not Applicable 89 I-3 Debt Service Fund Budgetary Comparison Schedule 90 J. STATISTICAL SECTION (Unaudited) Introduction to the Statistical Section Financial Trends J-1 Net Position by Component 91 J-2 Changes in Net Position 92 J-3 Fund Balances- Governmental Funds 93 J-4 Changes in Fund Balances- Governmental Funds 94 J-5 General Fund Other Local Revenue by Source 95 Revenue Capacity J-6 Assessed Value and Actual Value of Taxable Property 96 J-7 Property Tax Rates - Direct and Overlapping Governments 97 J-8 Principal Property Taxpayers 98 J-9 Property Tax Levies and Collections 99 Debt Capacity J-1 0 Ratios of Outstanding Debt by Type 100 J-11 Ratios of Net General Bonded Debt Outstanding 101 J-12 Computation of Direct and Overlapping Bonded Debt 102 J-13 Legal Debt Margin Information 103 Demographic and Economic Information J-14 Demographic and Economic Statistics 104 J-15 Principal Employers 105 Operating Information J-16 Full Time Equivalent District Employees by Function/Program 106 J-17 Operating Statistics 107 J-18 School Building Information 108 J-19 Schedule of Required Maintenance for School Facilities 109 J-20 Insurance Schedule 110 PARAMUS BOARD OF EDUCATION TABLE OF CONTENTS Page K. SINGLE AUDIT SECTION K-1 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 Auditor's Report 111-112 K-2 Report on Compliance for Each Major Federal and State Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance and Schedule of Expenditures of State Financial Assistance as Required by New Jersey OMB Circular 15-08- Independent Auditor's Report 113-115 K-3 Schedule of Expenditures of Federal Awards 116 K-4 Schedule of Expenditures of State Financial Assistance 117-118 K-5 Notes to the Schedules of Expenditures of Federal Awards and State Financial Assistance 119-120 K-6 Schedule of Findings and Questioned Costs- Part I- Summary of Auditor's Results 121-122 K-6 Schedule of Findings and Questioned Costs- Part 2- Schedule of Financial Statement Findings 123 K-7 Schedule of Findings and Questioned Costs- Part 3- Schedule of Federal and State Award Findings and Questioned Costs 124 K-8 Summary Schedule of Prior Year Audit Findings 125 INTRODUCTORY SECTION PARAMUS PUBLIC SCHOOLS Steven J. Cea Board Secretary/ 145 SPRING VALLEY ROAD, PARAMUS, NEW JERSEY 07652-5390 Business Administrator PHONE: 201-261-7800 www.paramus.k12.nj.us FAX: 201-576-9180 [email protected] Public Schools"-~ October 6, 2017 Honorable President and Members of the Board of Education Paramus School District County of Bergen, New Jersey Dear Board Members: State Department of Education statutes require that all School District's prepare a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and audited in accordance with auditing standards generally accepted in the United States of America by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report (CAFR) of the Paramus Board of Education for the fiscal year ended June 30, 2017. This report consists of management's representations concerning the finances of the Paramus Board of Education. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the Paramus Board of Education has established a comprehensive internal control framework that is designed both to protect the school District's assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the Paramus Board of Education's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Paramus Board of Education'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. As management, we assert that to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Paramus Board of Education's financial statements have been audited by Lerch, Vinci & Higgins, LLP, a firm of licensed certified public accountants and public school accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Paramus Board of Education for the fiscal year ended June 30, 2017, 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. The independent auditor's concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Paramus Board of Education's i financial statements for the fiscal year ended June 30, 2017 are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the Paramus Board of Education was part of a broader, mandated "Single Audit" designed to meet the special needs of federal and state grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls