Comprehensive Annual Financial Report ofthe Borough ofMiddlesex School District in the County ofMiddlesex New Jersey for the Fiscal Year Ended June 30, 2015 Comprehensive Annual Financial Report of the Borough of Middlesex Board of Education County of Middlesex Middlesex, New Jersey For the Fiscal Year Ended June 30, 2015 Prepared by Borough of Middlesex, Board of Education Finance Department TABLE OF CONTENTS INTRODUCTORY SECTION Page Letter of Transmittal 1-5 Roster of Officials 6 Consultants and Advisors 7 Organizational Chart 8 FINANCIAL SECTION Independent Auditor's Report 9-11 REQUIRED SUPPLEMENTARY INFORMATION-Part I 12 Management's Discussion and Analysis (Unaudited) 13-22 BASIC FINANCIAL STATEMENTS 23 A. District-Wide Financial Statements: 24 A-1 Statement of Net Position 25 A-2 Statement of Activities 26 B. Major Fund Financial Statements: 27 Governmental Funds: 8-1 Balance Sheet 28-29 8-2 Statement of Revenues, Expenditures, and Changes in Fund Balance 30 8-3 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 31 Other Funds: 32 Propriety Funds: 8-4 Statement of Net Position 33 B-5 Statement of Revenues, Expenses, and Changes in Fund Net Position 34 8-6 Statement of Cash Flows 35 Fiduciary Funds: 8-7 Statement of Fiduciary Net Position 36 B-8 Statement of Changes in Fiduciary Net Position 37 Notes to the Financial Statements 38-77 TABLE OF CONTENTS (Continued) Page REQUIRED SUPPLEMENTARY INFORMATION- Part II 78 C. Budgetary Comparison Schedules: 79 C-1 General Fund 80-89 C-1A General Fund - Education Jobs N/A C-2 Special Revenue Fund 90 C-3 Budget to GAAP Reconciliation 91 REQUIRED SUPPLEMENTARY INFORMATION· Part Ill 92 L. Schedules Related to Accounting and Reporting for Pension (GASS 68) 93 L-1 Schedule of the District's Proportionate Share of the Net Pension Liability - Public Employees Retirement System - Last Ten Years 94 L-2 Schedule of the District's Contributions - Public Employees Retirement System - Last Ten Years 95 L-3 Schedule of the District's Proportionate Share of the Net Pension Liability Teachers Pension and Annuity Fund - Last Ten Years 96 L-4 Schedules Related to Accounting and Reporting for Pension (GASS 68) Note to RSI Ill for the Fiscal Year Ended June 30, 2015 97 OTHER SUPPLEMENTARY INFORMATION 98 D. School Level Schedules N/A E. Special Revenue Fund: 99 E-1 Combining Schedule of Revenues and Expenditures - Budgetary Basis 100-101 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 F. Capital Projects Fund 102 F-1 Summary Statement of Project Expenditures - Budgetary Basis 103 F-2 Summary Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budgetary Basis 104 F-2A Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - High School Windows 105 F-28 Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - Hazelwood Roof and Windows 106 F-2C Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - Energy Saving Improvement Projects 107 F-2D Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - Parker School Windows and Security Upgrades 108 F-2E Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - High School Locker Rooms 109 TABLE OF CONTENTS (Continued) Page F. Capital Projects Fund (Continued) F-2F Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - Von E. Mauger Security Upgrades 110 F-2G Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - High School Roof and HVAC 111 F-2H Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - Hazelwood Security Upgrades 112 F-21 Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - High School Security Upgrades 113 F-2J Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - Watchung Security Upgrades 114 G. Proprietary Funds 115 Enterprise Fund: G-1 Combining Statement of Net Position 116 G-2 Combining Statement of Revenues, Expenses and Changes in Fund Net Position 117 G-3 Combining Statement of Cash Flows 118 H. Fiduciary Fund 119 H-1 Combining Statement of Fiduciary Net Position 120 H-2 Combining Statement of Changes in Fiduciary Net Position 121 H-3 Student Activity Fund Schedule of Receipts and Disbursements 122 H-4 Payroll Agency Fund Schedule of Receipts and Disbursements 123 H-5 Other Agency Funds Schedule of Receipt and Disbursements N/A I. Long Term Debt 124 1-1 Schedule of Serial Bonds 125 1-2 Schedule of Obligations Under Capital Lease Purchase Agreement 126 1-3 Debt Service Fund Budgetary Comparison Schedule 127 STATISTICAL SECTION (UNAUDITED) J-1 Net Position by Component 128 J-2 Changes in Net Position 129-130 J-3 Fund Balances - Governmental Funds 131 J-4 Changes in Fund Balances - Governmental Funds 132-133 J-5 General Fund Other Local Revenue by Source 134 J-6 Assessed Value and Actual Value of Taxable Property 135 J-7 Direct and Overlapping Property Tax Rates 136 J-8 Principal Property Tax Payers - Current and Nine Years Ago 137 J-9 Property Tax Levies and Collections 138 J-10 Ratios of Outstanding Debt by Type 139 J-11 Ratio of Net Bonded Debt Outstanding 140 J-12 Direct and Overlapping Governmental Activities Debt 141 TABLE OF CONTENTS (Continued) Page STATISTICAL SECTION (UNAUDITED) (continued) J-13 Legal Debt Margin Information 142 J-14 Demographic and Economic Statistics 143 J-15 Principal Employers - Current Year and Nine Years Ago 144 J-16 Full-Time Equivalent District Employees by Function/Program 145 J-17 Operating Statistics 146 J-18 School Building Information 147 J-19 Schedule of Required Maintenance 148 J-20 Insurance Schedule 149 SINGLE AUDIT SECTION K-1 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Basic Financial Statements Performed in Accordance with Government Auditing Standards 150-151 K-2 Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Federal and State Financial Assistance Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and New Jersey OMS Circular 04-04 152-153 K-3 Schedule of Expenditures of Federal Awards, Schedule A 154 K-4 Schedule of Expenditures of State Financial Assistance, Schedule B 155 K-5 Notes to the Schedules of Expenditures of Federal Awards and State Financial Assistance 156-157 K-6 Schedule of Findings and Questioned Costs 158-161 K-7 Schedule of Prior Audit Findings 162 INTRODUCTORY SECTION BOROUGH OF MIDDLESEX SCHOOL DISTRICT 300 JOHN F. KENNEDY DRIVE MIDDLESEX, NJ 08846 Linda A. Madison, Ed.D. Michele A. Previte Superintendent of Schools Business Administrator/ Board Secretary December 2, 2015 Honorable President and Members of the Board of Education Borough of Middlesex School District 300 John F. Kennedy Drive Middlesex, NJ 08846 Dear Members of the Middlesex Board of Education: The comprehensive annual financial report of the Middlesex Borough School District (the ''District") for the fiscal year ended June 30, 2015 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 Middlesex Board of Education. 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 and account groups 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 five sections: introductory, financial, basic financial statements, required supplementary information, and other supplementary information. The introductory section includes this transmittal letter, the roster of officials, consultants and advisors, and the District's organizational chart. The financial section includes the independent auditor's report and the management's discussion and analysis. The basic financial statements include the district~wide financial statements, fund financial statements, and notes to the financial statements. The required supplementary information reports on budget comparisons for the general and special revenue funds. The other supplementary information consists of various financial statements, statistical information and single audit. The District is required to undergo an annual single audit in conformity with the provisions of the Single Audit Amendment of 1996 and the U.S. Office of Management and Budget (OMB) Circular A-133, "Audits of State, and Local Governments, and Non-Profit Organizations", and the State Treasury Circular Letter 04-04 OMB, "Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid Payments". Information related to this single audit, including the auditor's report on the internal control structure and compliance with applicable laws and regulations and findings and recommendations, are included in the single audit section