Audit Summary June 30, 2019 Eastern Upper Peninsula Intermediate - - PowerPoint PPT Presentation

Audit Summary

June 30, 2019

Eastern Upper Peninsula Intermediate School District

June 30, 2019

Variance $ Variance % 2019 2018 2019 2018 2019 2018

Assets Current Assets

11,405,562 $ 9,537,521 $ 795,887 $ 807,232 $ 12,201,449 $ 10,344,753 $ 1,856,696 $ 15.2%

Net Capital Assets

1,599,217 1,658,145 362,719 260,073 1,961,936 1,918,218 43,718 2.2%

Total Assets

13,004,779 11,195,666 1,158,606 1,067,305 14,163,385 12,262,971 1,900,414 13.4%

Deferred Outflows of Resources

8,254,794 4,524,060 ‐ ‐ 8,254,794 4,524,060 3,730,734 45.2%

Liabilities Current Liabilities

5,003,053 4,211,303 795,834 807,179 5,798,887 5,018,482 780,405 13.5%

Long Term Liabilities

874,103 1,100,928 ‐ ‐ 874,103 1,100,928 (226,825) ‐25.9%

Net pension liability

17,555,454 14,338,832 ‐ ‐ 17,555,454 14,338,832 3,216,622 18.3%

Net pension liability

4,829,510 4,896,972 ‐ ‐ 4,829,510 4,896,972 (67,462) ‐1.4%

Total Liabilities

28,262,120 24,548,035 795,834 807,179 29,057,954 25,355,214 3,702,740 12.7%

Deferred Inflows of Resources

2,484,331 951,559 ‐ ‐ 2,484,331 951,559 1,532,772 62%

Net Position Net investment in capital assets

1,320,618 1,292,539 362,719 260,073 1,683,337 1,552,612 130,725 7.8%

Restricted

5,830,464 4,721,110 ‐ ‐ 5,830,464 4,721,110 1,109,354 19.0%

Unrestricted

(16,637,960) (15,793,517) 53 53 (16,637,907) (15,793,464) (844,443) ‐5.1%

Total Net Position

(9,486,878) $ (9,779,868) $ 362,772 $ 260,126 $ (9,124,106) $ (9,519,742) $ 395,636 $ 4.3% Governmental Activities Business‐type Activities Total

Statement of Net Position MD & A Highlights

• Eastern Upper Peninsula Intermediate School District again received an Unmodified Opinion on the District’s audited financial statements – the highest opinion an

auditor can give.

• No Significant Deficiencies or Material Weaknesses were found in the District’s internal controls.
• Eastern Upper Peninsula Intermediate School District also received an Unmodified Opinion on the District’s Federal Compliance (Single) Audit. This is especially

significant this year as findings on the Federal audit impact the risk level of the auditee and the amount of work (& dollars) required to audit the funds.

• The District increased its total Net Position by $395,636 during the 2018‐19 fiscal year to a total deficit of $9,124,106. The District's Net pension liability increased

by $3,216,622, net of deferred outflows and inflows. The District's Net OPEB liability decreased by $67,462, net of deferred outflows and inflows.

• Unrestricted Net Assets, a part of the $9.1 million deficit, decreased during 2018‐19 by $844,443 to a deficit of $16.6 million at June 30, 2019. This reflects the

District’s financial strength as a whole, beyond just the General fund.

Eastern Upper Peninsula Intermediate School District

June 30, 2019

Variance $ Variance % 2019 2018 2019 2018 2019 2018

Program Revenues Charges for services

4,844,569 $ 4,690,016 $ 775,314 $ 755,053 $ 5,619,883 $ 5,445,069 $ 174,814 $ 3.2%

Capital grand and contributions

9,568,377 8,950,846 177,407 119,588 $ 9,745,784 9,070,434 675,350 7.4%

General Revenues Property taxes

5,260,452 5,174,488 ‐ ‐ 5,260,452 5,174,488 85,964 1.7%

State school aid, unrestricted

393,456 374,616 ‐ ‐ 393,456 374,616 18,840 5.0%

Federal medicaid reimbursement

28,925 16,176 ‐ ‐ 28,925 16,176 12,749 78.8%

Investment earnings

123,898 49,956 ‐ ‐ 123,898 49,956 73,942 148.0%

Other

82,913 67,156 321,840 223,972 404,753 291,128 113,625 39.0%

Total Revenues

20,302,590 19,323,254 1,274,561 1,098,613 21,577,151 20,421,867 1,155,284 1492.9%

Expenses Instruction

6,446,185 3,163,009 ‐ ‐ 6,446,185 3,163,009 3,283,176 103.8%

Supporting services

13,100,286 15,026,675 ‐ ‐ 13,100,286 15,026,675 (1,926,389) ‐12.8%

Community services

451,120 218,012 ‐ ‐ 451,120 218,012 233,108 106.9%

Interest expense

12,008 2,950 ‐ ‐ 12,008 2,950 9,058 307.1%

Special education transportation

‐ ‐ 1,171,915 1,072,265 1,171,915 1,072,265 99,650 9.3%

Total Expenses

20,009,599 18,410,646 1,171,915 1,072,265 21,181,514 19,482,911 1,698,603 8.7%

Increase in net position

292,991 912,608 102,646 26,348 395,637 938,956 (543,319) ‐57.9%

Net Position ‐ Beginning of Year

(9,779,869) (10,692,476) 260,126 233,778 (9,519,743) (10,458,698) 938,955 9.0%

Net Position ‐ End of Year

(9,486,878) $ (9,779,868) $ 362,772 $ 260,126 $ (9,124,106) $ (9,519,742) $ 395,636 $ 4.2% Governmental Activities Business‐type Activites Total

Statement of Activities

Eastern Upper Peninsula Intermediate School District

June 30, 2019

1408225 669,417

$‐ $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000

2015 2016 2017 2018 2019

FUND BALANCE 5‐YEAR TREND

General Fund Analysis General Fund Highlights

• The District's General Fund balance increased by $119,795 to $1,111,923 at June 30, 2019.
• The General Fund fund balance now represents 19.83% of the 2019‐20 budgeted expenditures. Maintaining a fund balance of at least 10 to 20 percent of the

ensuing year’s expenditure budget is advisable for the Eastern Upper Peninsula Intermediate School District. This gives the District more stable operating funds during the year, helps to avoid or reduce the necessity of borrowing for short‐term cash flow purposes and, acts as a buffer against the uncertainty of state aid revenues accruing to the District.

• Minimal adjustments were required to adjust the District’s financial statements to those presented in the Annual Financial Report. This ensures that the

Board is receiving good financial information throughout the year to make necessary budgetary decisions.

June 30, 2019

Expenditures Budget Actual Variance ($) Variance (%) Added Needs 2,661

• 2,661

#DIV/0! Pupil services 178,263 147,516 30,747 20.84% Instructional staff services 2,939,856 2,544,359 395,497 15.54% General administrative services 437,516 423,107 14,409 3.41% Business services 444,795 419,404 25,391 6.05% Operation and maintenance services 120,911 110,317 10,594 9.60% Central services 487,371 376,230 111,141 29.54% Community services 242,958 209,716 33,242 15.85% Interdistrict 1,256,272 1,147,241 109,031 9.50% Total Expenditures: 6,110,603 5,377,890 732,713 13.62%

Eastern Upper Peninsula Intermediate School Distr

‐ 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 Added Needs Pupil services Instructional staff services General administrative services Business services Operation and maintenance services Central services Community services Interdistrict

GENERAL FUND EXPENDITURES ‐ BUDGET VS. ACTUAL

Budget Actual ‐ ‐ ‐ 100 Basic Programs

BASIC PROGRAMS BUDGET VS. ACTUAL

Budget Actual 2,661 242,958 ‐ 209,716 ‐ 50,000 100,000 150,000 200,000 250,000 300,000 Added Needs Community services

OTHER EXPENDITURES BUDGET VS. ACTUAL

Budget Actual

Eastern Upper Peninsula Intermediate School District

June 30, 2019

50% 8% 8% 2% 7% 4% 21%

General Fund 2019 Expenditures

Supporting services General Admin Services Business Services Operation and Maintenance Central services Community services Interdistrict 2% 0% 45% 8% 8% 4% 8% 2% 23%

General Fund 2018 Expenditures

Basic programs Added Needs Supporting services General Admin Services Business Services Operation and Maintenance Central services Community services Interdistrict

Eastern Upper Peninsula Intermediate School District

June 30, 2019

Property Taxes 9% Other local sources 4% Non‐ educational sources 1% State Sources 62% Federal Sources 8% Interdistrict sources 16% Property Taxes 9% Other local sources 3% Non‐educational sources… State Sources 55% Federal Sources 20% Interdistrict sources 12%

General Fund Revenue by Category YTD 2019 General Fund Revenue by Category YTD 2018

Eastern Upper Peninsula Intermediate School District

June 30, 2019

Suggestions and Recommendations from the Auditors

THE FOLLOWING COMMENTS HAVE BEEN MADE FOR ALL OUR SCHOOL DISTRICT AUDIT CLIENTS: We continue to encourage the Board of Education to support the District's business office by continuing to monitor staffing levels to ensure the highest quality of its record keeping and the safety of district funds. Segregation of duties and the independent monitoring of accounting processes are the two most important elements of a district’s internal controls, both in maintaining timeliness and accuracy of the accounting records, and in fraud prevention. Consistent with the State of Michigan requirements and the Uniform Guidance, the District should monitor and update its written procedures for federal grant administration and internal controls each year. Since the adoption of the Governmental Accounting Standards Board (GASB) Statement No. 54, we have seen increased use of the various available fund balance types. District boards should be mindful of the need for a formal board approved resolution to commit fund balances (with a subsequent resolution to release any committed funds not used for the original committed purpose). In addition, a board approved fund balance policy should clearly

• utline the designated staff member(s) authorized to assign any fund balances.

The Governmental Accounting Standards Board (GASB) issued Statement No.75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions which became effective for the 2017‐18 fiscal year audit. As a reminder, the liability is a balance sheet item rather than a note disclosure and is shown on the Statement of Net Position not in the General Fund.

Eastern Upper Peninsula Intermediate School District

June 30, 2019

Upcoming Pronouncements

The following pronouncements of the Governmental Accounting Standards Board (GASB) have been released recently and may be applicable to the District in the near future. We encourage the Board of Education to review the following information and determine which standard(s) may be applicable to the District. For the complete text of these and other GASB standards, visit www.gasb.org and click on the “Standards & Guidance” tab. We will continue to assess the degree to which these pronouncements impact the individual District. GASB 84 ‐ Fiduciary Activities Effective 12/15/2019 (your FY 2020) This standard establishes new criteria for determining how to report fiduciary activities in governmental financial statements. The focus is on whether the government is controlling the assets, and who the beneficiaries are. Under this revised standard, certain activities previously reported in agency funds may be reclassified in future periods. GASB 87 ‐ Leases Effective 12/15/2020 (your FY 2021) This standard establishes a single model for reporting all leases (including those previously classified as operating and capital). Lessees will now report

• ffsetting intangible lease assets and lease liabilities equal to the present value of future lease payments. Lessors will report offsetting lease receivables

and deferred inflows of resources. GASB 88 ‐ Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements Effective 6/15/18 (your FY 2020) This standard improves 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. It defines debt for purposes

• f disclosure in notes to financial statements as a liability that arises from a contractual obligation to pay cash (or other assets that may be used in lieu of

cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established. GASB 89 ‐ Accounting for Interest Cost Incurred Before the End of a Construction Period Effective 12/15/19 (your FY 2021) This standard (1) enhances the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and (2) simplifies accounting for interest cost incurred before the end of a construction period. Interest cost incurred before the end of a construction period must be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business‐type activity or enterprise fund.