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Home My WebLink AboutKC HIGH SCHOOL AUDIT KERN HIGH SCHOOL DISTRICT COUNTY OF KERN BAKERSFIELD, CALIFORNIA AUDIT REPORT JUNE 3O, 1994 I I I I I I I I I ..~ I I I I I KERN HIGH SCHOOL DISTRICT TABLE OF CONTENTS FINANCIAL SECTION Independent Auditor's Report ..................... Financial Statements: Combined Financial Statements Combined Balance Sheet - Ail Fund Types and Account Groups ............................... Combined Statement of Revenues, Expenses, Capital Outlay and Changes in Fund Balances - Ail Governmental Fund Types ............. ~ ......... Combined Statement of Revenues, Expenses, Capital Outlay and Changes in Fund Balances - Budget and Actual - Ail Governmental Fund Types ................ Notes to Financial Statements ..................... Combining Financial Statements Special Revenue Funds Combining Balance Sheet ........................ Combining Statement of Revenues, Expenses, Capital Outlay and Changes in Fund Balances ................. Combining Statement of Revenues, Expenses, Capital Outlay and Changes in Fund Balances - Budget and Actual ................................ Capital Pro~ect Funds Combining Balance Sheet ........................ Combining Statement of Revenues, Expenses, Capital Outlay and Changes in Fund Balances ................. Combining Statement of Revenues, Expenses, Capital Outlay and Changes in Fund Balances Budget and Actual .............................. Trust and Agency Funds Combining Statement of Changes in Assets and Liabilities ............................. Page 24 25 26 30 31 32 34 i I I I I I I ! I I ,I I I I I I I I I Pa~e Supplementary Information: Independent Auditor's Report on Supplementary Information ....... 35 Organization ............................. 36 Schedule of Average Daily Attendance ..... f ............ 37 Schedule of Federal and State Financial Assistance .......... 38 Reconciliation of Annual Financial and Budget Report (J-200 Series) with Audited Financial Statements ........... 40 Schedule of Financial Trends and Analysis ................ 41 Notes to Supplementary Information .................. 42 Other Reports: Independent Auditor's Report on Internal Control Structure Based on an Audit of Financial Statements Performed in Accordance with "Government Auditing Standards" ........... 43 Independent Auditor's Report on Internal Control Structure Used in Administrating Federal Financial Assistance Programs .... 46 Independent Auditor*s Report on State Compliance ........... 49 Independent Auditor's Report on Compliance With Laws and Regulations Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Issued by the GAO .............................. 50 Independent Auditor's Report on Compliance With the General Requirements Applicable to Federal Financial Assistance Programs ........................ ' ....... 51 Independent Auditor's Report on Compliance With Specific Requirements Applicable to Major Federal Financial Assistance Programs ............................... 52 Independent Auditor*s Report on Compliance With Requirements Applicable to Nonmajor Federal Financial Assistance Program Transactions ......................... 53 Findings and Recommendations: Findings and Recommendations ..................... 54 I I .I I I BROWN ARMSTRONG. RANDALL ~ REYES CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT Board of Trustees Kern High School~District Bakersfield, California Peter C. Brown, CPA Burton H. Armstrong, CPA 'Jerry E. Randall, CPA Benjamin P. Reyes, CPA Andrew J. Paulden, CPA Cathy J. Brown, CPA Grant C. Cornell, CPA Lynn R. Krausse, CPA David W. Evans, CPA Richard R. Carmona, CPA - Richard A. Teubne~' CPA Janet C. Smith . we' have audited the combined financial statements of' the .Kern High School District (the'district) as of and for the year ended June 30, 1994, as listed in the table of contents. These financial statements are the responsibility of the district"s management. Our responsibility is to express an opinion on these · financial statements based on our audit. · We conducted our audi~ in accordance with g~nerally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting princiPles used and significant estimates made by management, as well as ,evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The Kern High School District's'financial statements do not disclose the fixed asset group of accounts. in our opinion, except for the omission of the fixed asset group of accounts, the combined financial.statements referred to above present fairly, in all material respects, the financial pOsition of the Kern High School District at June 30, 1994, and the results of its operations for the year then ended, in conformity with generally accepted accounting princiPles. Our audit .was made 'for the. purpose of forming an opinion on the combined financial statements taken as. a whole. The combining financial statements, listed in the table' of contents, are presented for purposes 'of" additional analysis andare not a.reqUired part of the financial statements of the Kern High School District. 'These'combining financial statements, have been'subjected'to the auditing procedures applied in the audit of the combined financial statements and, in our. opinion, are fairly 'stated in all materiaI respects in relation to the combined financial statements taken as a whole. BROWN ARMSTRONG RANDALL & REyES ACCOUNTANCY CORPORATION Bakersfield, California October 28, 1994 · 1 An Accountancy Corporatipn 4200 Truxtun Avenue, Suite 300, BakerSfield, California 93309 · (805) 324-4971 · FAX (805) 324-4997 MEMBER of SEC Practice Section of The American Institute of Certified Public Accountants ASSETS --~ash Investments Accounts Receivable Due from Other Funds Amount Available In Debt Service Amount to be Provided for Retirement of Long-Term Debt Inventory Prepa£ds TOTAL ASSETS LIABILITIES AND FUND EQUITY ~IABILITIES Accounts Payable Due to Other Funds Deferred Revenue Tax an~ Revenue Anticipat£on Notes Deferred Compensation Payable Due ~o Student Groups Accumulated Vacation Benef[=s Bonds and Notes Payable TOTAL LIABILITIES FUND EQUITY Reserve for Revolving Cash Reserve for Inventories Reserve for Prepaids Reserve for Debt Service Designated TOTAL FUND EQUITY TOTAL LIABILITIES AND FUND EQUITY KERN HIGH SCHOOL DISTRICT COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30, 1994 (IN THOUSANDS) General Governmental Fund T~es Special Debt Capital Revenue Service Project Ftductary Account Fund Group T e ~ Totals ~ Long-Term (Memorandum Agency Debt Only} 16,531 $ 52,262 $ 6,467 $ 27,586 7,846 4,592 16,731 3,743 1,963 - 3,125 12,004 - 17,987 $ 2,768 400 218 - 255 - 32,678 ~ ~ ~ 65~429 ~ 21768 $ 7,006 $ 1,676 $ 27,011 1,756 - 15,486 - - $ $ $ 105,614 - 29,169 8,831 - 29,991 12,969 12,969 108,165 108,165 - 618 - 255 24,248 28,687 121,134 $295.612 62 $ - $ - $ 8,744 2,980 - - 29,991 - - 1,756 3,630 - - 19,116 1,006 - 1,006 1,762 - 1,762 - 2,294 2,294 - 118t840 1181840 6,672 21768 1211134 1831509 178 - · - 400 218 - 255 - - 1,910 7t852 331384 111059 561847 8~430 331857 11t059 58t757 32,678 ~ 62,544 ~ 11,059 $ 65,429 - 178 - 618 255 - 1,910 1091142 - 1121103 The accompanying notes are an integral part of these 2 financial statements. I I I I I I I I KERN HIGH SCHOOL DISTRICT COMBINED STATEMENT OF REVENUES. EXPENSES, CAPITAL OUTLAY AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 1994 (IN THOUSANDS) REVENUES Revenue Limit-State Revenue Limit-Local Federal Revenues Other State Revenues Other Local Revenues TOTAL REVENUES EXPENDITURES Certificated Salaries Classified Salaries Employee Benefits Books & Supplies Services, Other OperatinE Capital Outlay Other Outgo Direct Support/Indirect Costs Debt Service, Principal Debt Service, Interest TOTAL EXPENDITURES Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Other Sources Transfers In Transfers Out Other Uses TOTAL OTHER FINANCING SOURCES (USES) Excess (deficiency) of revenues over expenditures and other sources (uses) Fund Balances at be~inning of year Fund Balances at end of year Special Debt Capital Totals General Revenue Service Project (Memorandum Fund Funds Funds Funds Only) $ 35,115 $ §,596 $ $ $ 40,711 49,913 - 49,913 6,886 1,615 8,501 15,212 1,413 154 16,779 2,651 5,124 10,196 3,163 21~134 109,777 13,748 10,350 3,163 137,038 51,265 3,482 54,747 22,118 3,153 25,271 20,010 2,026 22,036 3,935 1,713 - 5,648 10,210 1,591 416 342 12,559 3,208 2,599 - 22,389 28,196 1,824 164 - 1,988 (462) 462 - - - - 3,179 100 3,279 - - 5,049 933 5,982 1121108 15,190 8,644 23,764 159,706 (2,331) (1,442) 1,706 (20,601) (22,668) 4,261 2,540 5,010 13,553 25,364 6,025 2,472 - 8,836 17,333 (2,472) (6,025) - (8,836) (17,333) (3,064) - (4,371) (4,944) (12,379) 4,750 (1,013) 639 8,609 12,985 2,419 (2,455) 2,345 (11,992) (9,683) 6,011 36,312 8,714 70,749 121,786 $ 8,430 $ 331857 $ 111059 $ 581757 $ 112,103 The accompanying notes are an integral part of these financial statements. 3 KERN HIGH SCHOOL DISTRICT COMBINED STATEHENT OF REVENUES, EXPENSES, CAPITAL OUTLAY AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL .~?.T. GOVERNM~ FUND TYPES YEAR ENDED JUNE 30, 1994 I I AEVEFUES Revenue Limit-State Revenue Limit-Local Federal Revenues Other State Revenues Other Local Revenues TOTAL REVENUES EXPENDITURES Certificated Salaries Classified Salaries Employee Benefits Books & Supplies Services, Other Operatin6 Capital Outlay Other Out&o Direct Support/Indirect Costs Debt Service, Principal Debt Service, Interest TOTAL EXPENDITURES Excess (deficiency) of revenues over ex"penditures OTHER FINANCING SOURCES (USES) Other Sources Transfers In Transfers Out Other Uses TOTAL OTHER FINANCING SOURCES (USES) Excess (deficiency) of revenues over expenditures and other sources (uses) Fund Balances at besinnin& of year Fund Balances at end of year Budset General Fund Variance Favorable Actual (Unfavorable,) 35,841 S 35.115 S (726) 48,848 49,913 1,065 8,004 6,886 (1,118) 15,713 15,212 (501) 1,996 2,651 655 110,402 109,777 Special Revenue Funds Mariance Favorable I Budset Actual (Unfavorable) 352 S 5,2&4 S 5,596 1,406 1,615 1,899 1,413 &,411 5,124 (625) 12,760 13,748 51.434 51.265 169 3.651 3.482 22.27§ 22.118 157 3.300 3.153 20.287 20.010 277 2.048 2.026 6,006 3,935 2,071 2,118 1,713 14.663 10.210 4.453 2.033 1.591 3.921 3.208 713 2.709 2.599 1,887 1,824 63 164 164 (369) (462) 93 467 462 7,996 16,490 15,190 120,104 112,108 209 (286) 713 988 169 147 22 4o5 I 442 110 1,300 I (9,702) (2,331) 7,371 (3,730) (1,442) 4.261 4.261 6.025 6.025 (2.472) (2.472) ~3r064) (3,064) 4,750 4,750 2,540 2,540 2,472 2,472 (6.025) (6.025) (1,013) (1,013) 2~288 I (4.952) 2.419 6,011 6,011 1,059 $ 8.430 7.371 (4.743) (2.455) - 36,312 36,312 7,371 $ 31,569 S 33,857 2,288 4 I I I I I I I I I ! I I I I i I I ! Debt Service Funds Budget Actual Capital Pro~ect Funds Totals (Memorandum Only) Yarlanoe Yarlance Variance Favorable Favorable Favorable (Unfavorable) Budget Actual (Unfavorable) Bud~e~ Actual (Unfavorable) S - S - $ $ S S 41,085 $ 40,711 $ (374) - ~ 48,848 49,913 1,06§ - - 9,410 8,501 (909) 154 154 - - - 17,566 16,779 (787) 10~196 10,196 - 3~704 3~163 (541) 20r307 21,134 827 10~350 10,350 - 3r704 3,163 (541) 137,216 137~038 (178) ..... 55,085 54,747 ..... 25,575 25,271 ..... 22,335 22,036 ..... 8,124 5,648 416 416 - 342 342 - 17,454 12,559 - - 35,991 22,389 13,602 42,621 28,196 ..... 2,051 1,988 ..... 98 - 3,179 3,179 - 100 100 - 3,279 3,279 5,049 5~049 - 933 933 - 5,982 5,982 8,644 8,644 - 37,366 23,764 13,602 182,604 159,706 1,706 1,706 - (33,662) ~20~601) 13~061 (45,388) (221668) 5,010 5,010 - 13,553 13,553 - 25,364 25,364 ' - 8,836 8,836 - 17,333 17,333 - - (8,836) (8,836) - (17,333) (17,333) ~4,371) (4,371) - (4,944) (4,944) - (12,379) (12,379) 639 639 - 8~609 8~609 - 12,985 12~985 338 304 299 2,476 4,895 14,425 63 98 22,898 22,720 2,345 2,345 - (25,053) (11,992) 13,061 (32,403) (9,683) 22,720 8,714 8,714 70,749 70,749 - 121,786 121,786 11~059 $ 11,059 $ $ 45,696 $ 58,757 $ 13,061 S 89~383 $ 112~103 $ 22,720 The accompanying notes are an integral part of these financial statements. 5 ! ! KERN HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 1994 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES A. Accounting Policies 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. B. Reporting Entity The Kern High School District (the district) and the Kern High School District Public Facilities Financing Corporation (the Corporation) have a financial and operational relationship which meets the reporting entity definition criteria of the GASB Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, for inclusion of the Corporation as a component unit of the district. Accordingly, the financial activities of the Corporation have been included in the financial statements of the district. The following are those aspects of the relationship between the district and the Corporation which satisfy GASB Codification Section 2100 criteria. Manifestation of Oversight The Corporation's Board of Directors were appointed by the district's Board of Trustees. The Corporation has no employees. The district's superintendent and business manager function as agents of the Corporation. Neither individual receives additional compensation for work performed in this capacity. The district exercises significant influence over operations of the Corporation as it is anticipated that the district will be the sole lessee of all facilities owned by the Corporation. Accountability for Fiscal Matters Ail major financing arrangements, contracts, and other transactions of the Corporation must have the consent of the district. Any deficits incurred by the Corporation will be reflected in the lease payments of the district. Any surpluses of the Corporation revert to the district at the end of the lease period. It is anticipated that the district's lease payments will be the sole revenue source of the Corporation. The district has assumed a "moral obligation" and potentially a legal obligation, for any debt incurred by the Corporation. NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) Scope of Public Service The Corporation was created for the sole purpose of financially assisting the district. The Corporation is a nonprofit, public benefit corporation incorporated under the laws of the State of California and recorded by the Secretary of State on August 10, 1985. The Corporation was formed to provide financing assistance to the district for construction and acquisition of major capital facilities. Upon completion the district intends to occupy all Corporation facilities under a lease-purchase agreement effective through the year 2005. At the end of the lease term, title of all Corporation property will pass to the district for no additional consideration. The Corporation's financial activity is presented in the financial statements as the Corporation Building Fund and the Debt Service Fund. Certificates of Participation issued by the Corporation are included in the General Long-Term Debt Account Group. The Kern High School District (the district) and the Golden Empire Schools Financing Authority (the authority) have a financial and operational relationship which meets the reporting entity definition criteria of the GASB Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, for inclusion of the authority as a component unit of the district. Accordingly, the financial activities of the authority have been included in the financial statements of the district. The following are those aspects of the relationship between the district and the authority which satisfy GASB codification Section 2100 criteria. Manifestation of Oversight The members of the Board of Trustees of the district constitute the Board of Directors of the authority. ! ! The authority has no employees. The district's associate superintendent, business, is designated as the treasurer of the authority. The assistant superintendent of business, does not receive additional compensation for work performed in this capacity. The district exercises significant influence over operations of the authority. Accountability for Fiscal Matters Ail major financing arrangements, contracts, and other transactions of the authority must have the consent of the board. Scope of Public Service The authority was created for the sole purpose of financially assisting the district. The authority is a joint powers agency under the joint exercise of powers law of the State of California and recorded by the Secretary of the State on July 6, 1988. The authority was formed to provide financing assistance for construction of school facilities. NOTE 1 - SIGNIFICANT AGGOUNTING POLICIES (Continued) Scope of Public Service (Continued) The authority's financial activity is presented in the financial statements as the Authority Building Fund. Bonds issued by the authority are included in the general long-term debt account group. C. Fund Accounting The accounts of the district are organized on the basis of funds or account roups, each of which is considered to be a separate accounting entity. e operations of each fund are accounted for with a separate set of self- balancing accounts that comprise its assets, liabilities, fund equity (or retained earnings), revenues, and expenses as appropriate. District resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The district's accounts are organized into three broad categories which in aggregate include five fund types, and one account group as follows: Governmental Funds: General Fund is the general operating fund of the district. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. The district maintains eight special revenue funds: Special Reserve Fund is used to account for specific revenues earmarked to finance particular programs and activities. Capital (School) Facilities Fund is used to account for resources received from developer impact fees assessed under provisions of the California Environmental Quality Act (CEQA). Asbestos Abatement Fund is used to account for resources committed for the containment or removal of asbestos materials. Deferred Maintenance Fund is used for the purpose of major repair or replacement of district property. Cafeteria Fund is used to account for resources committed to finance child nutrition programs and activities. o Child Development Fund is used to account for resources committed to child development programs maintained by the district. Adult Education Fund is used to account for resources committed to adult education programs maintained by the district. Self-Insurance Fund is used to account for the assets and associated liabilities of the district's health insurance plan. Debt Service Fund is used to account for the accumulation of resources for, and the payment of general long-term debt principal, interest and related costs. Capital Pro~ects Funds are used to account for the acquisition and/or construction of all major governmental general fixed assets. The district maintains four capital projects funds: NOTE 1 - SIGNIFIGANT AGGOUNTING POLIGIES (Continued) o Golden Empire Schools Financing Authority is used to account for the construction and acquisition of major capital improvements by the Golden Empire Schools Financing Authority. Lease Purchase Fund is used to account for state and district matching funds used for new construction and modernization projects. Building Fund is used to account for the construction and acquisition of major capital improvements financed by general obligation bonds issued by the district. Fiduciary Funds: Agency Funds are used to account for assets of the Associated Student Body Funds and the Employee Deferred Compensation Plan for which the district acts as an agent. Account Group: The accounting and reporting treatment applied to the long-term liabilities associated with a fund are determined by its measurement focus. Ail governmental funds are accounted for on a spending or "financial flow," measurement focus. This means that only current assets and current liabilities are generally included on their balance sheet. Their reported fund balance is considered a measure of "available spendable resources". Thus, the long-term liabilities associated with governmental funds are accounted for in the account group of the district. General Long-Term Debt Account Group accounts for long-term liabilities expected to be financed from governmental funds. Basis of Accounting Basis of accounting refers to when revenues and expenses or capital outlay are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of measurement made, regardless of the measurement focus applied. Governmental funds are generally accounted for using the modified accrual basis of accounting. Their revenues are recognized in the accounting period in which they become both measurable and available to finance expenses and capital outlay of the current fiscal period. Expenses and capital outlay are recognized in the accounting period in which the liability is incurred (when goods are received or services rendered). Trust and agency fund assets and liabilities are also accounted for on the modified accrual basis. Budgets and Budgetary Accounting By state law, the district's governing board must approve a final budget no later than July 1. A public hearing must be conducted to receive comments prior to adoption. The district's governing board satisfied these requirements. These budgets are revised by the district's governing board and district superintendent during the year to give consideration to unanticipated income and expenses. It is this final revised budget that is presented in the financial statements. Formal budgetary integration was employed as a management control device during the year for all budgeted funds. The district employs budget control by minor object and by individual appropriation accounts. Expenses and capital outlay cannot legally exceed appropriations by major object account. NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) The Corporation uses an informal budget based on the intended use of funds received from Certificates of Participation (see Note 6). Such intentions are included in official statements made by the Corporation in connection with the issuance of Certificates of Participation. The capital outlay budget is developed during the process of bidding and approval of contracts. The debt service budget is based on the amortization of principal and interest of the respective certificates. Fo Encumbrances Encumbrance accounting is used in all budgeted funds to reserve portions of applicable appropriations for which commitments have been made. Encumbrances are recorded for purchase orders, contracts, and other commitments when they are written. Encumbrances are liquidated when the commitments are paid. Ail encumbrances are liquidated at June 30. Ho Inventories Inventory is recorded using the purchase method in that the cost is recorded as an expense at the time individual inventory items are purchased. Inventory is valued at average cost and consists of expendable supplies held for consumption. Reported inventories are equally offset by a fund balance reserve which indicates that these amounts are not "available for appropriation and expense" even though they are a component of net current assets. Accumulated Vacation and Sick Leave Accumulated unpaid employee vacation benefits are recognized as liabilities of the district. The noncurrent portion of the liabilities are recognized in the general long-term debt account group. Sick leave benefits are accumulated without limit for each employee. The employees do not gain a vested right to accumulated sick leave. Accumulated employee sick leave benefits are not recognized as liabilities of the district since payment of such benefits is not probable. Therefore, sick leave benefits are recorded as expenses in the period that sick leaves are taken. Jo Ko Fund Balance Reserves and Designations Reservations of the ending fund balance indicate the portions of fund balance not appropriable for expenses or amounts legally segregated for a specific future use. The Reserve for Prepaids and Reserve for Inventory reflect the portions of fund balance represented by prepaid expenses and inventory, respectively. These amounts are not available for appropriation and expense at the balance sheet date. Property Tax Secured property taxes attach as an enforceable lien on p~operty as of March 1. Taxes are payable in two installments on November 15 and March 15. Unsecured property taxes are payable in one installment on or before August 31. The County of Kern bills and collects the taxes for the district. Tax revenues are recognized by the district when received. Total Columns on Combined Statements Total columns on the combined statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. 10 NOTE 2 - CASH AND INVESTMENTS Cash at June 30, 1994 consisted of the following (in thousands): Deposits: Cash on Hand and with Fiscal Agents Cash in Deferred Compensation $ 14,115 1,006 Pooled Funds: 15,121 Cash in LAIF Cash in County Treasury Cash on Deposit with SISK III 5,755 79,705 5,033 90,493 Total Cash $ 105,614 Cash balances held in banks and in revolving funds are insured up to $100,000 by the Federal Depository Insurance Corporation. Ail cash held by the financial institutions is fully insured or collateralized. In accordance with Education Code Section 41001, the district maintains substantially all of its cash in the Kern County Treasury. The county pools these funds with those of other districts in the county and invests the cash. These pooled funds are carried at cost which approximates market value. Interest earned is deposited quarterly into participating funds. Any investment losses are proportionately shared by all funds in the pool. Investments at June 30, 1994, held on behalf of the Kern High School District, the Kern High School District Public Facilities Financing Corporation, and the Golden Empire Schools Financing Authority are presented below, categorized separately to give an indication of the level of risk associated with each investment: Category * Carrying Market 1 2 3 Amount Value (in thousands) (in thousands) U.S. Government Securities $ 22,302 $ $ - $ 22,302 $ 22,567 Corporate Bonds 6,017 - 6,017 6,017 Money Markets 850 - 850 849 Total Investments $ 29,169 $ - $ - $ 29,169 $ 29,433 * Category 1 - insured or registered, or securities held by the district or its agent in the district's name. Category2 - uninsured and unregistered, with securities held by the agent in the district's name. Category 3 - uninsured and unregistered, with securities held by agent but not in the district's name. 11 ,I I I I I ! I i I I NOTE 3 - REGEIVABLES Receivables at June 30, 1994 consist of the following (in thousands): Special Capital General Revenue Projects Fund Fund Fund Totals Federal Government Categorical Aid Programs $ 2,210 $ 411 $ - Totals 2,210 411 - $ 2,621 2,621 State Government Lottery 600 Categorical Aid Programs 247 769 Deferred Maintenance - 210 Leroy Greene Totals 847 979 Interest 408 409 2,701 2,701 424 600 1,O16 210 2,701 4,527 1,241 Miscellaneous Other Grand Totals 278 164 - 442 $ 3,743 $ 1,963 $ 3,125 $ 8,831 NOTE 4 - INTERFUND TRANSAGTIONS Interfund Receivables/Payables (Due To/Due From) Individual fund interfund receivable and payable balances at June 30, 1994 are as follows (in thousands): Fund General Fund $ Special Reserve Fund Capital Facilities Fund Asbestos Abatement Fund Lease-Purchase Fund Deferred Maintenance Fund Building Fund Cafeteria Fund Golden Empire Schools Financing Authority Child Development Fund Adult Education Fund Totals $ Interfund Interfund Receivables Payables 12,004 $ - - 14,630 - 1,005 - 231 - 2,702 - 1,353 17,987 - 835 29,991 278 951 8,006 $ 29,991 12 I I I I I I I I I I I I I I I I I I I NOTE 4 - INTERFUND TRANSACTIONS (Continued) Interfund Transfers Interfund transfers consist of operating transfers from funds receiving revenue to funds through which the resources are to be expended. Interfund transfers for the 1993-94 fiscal year were as follows (in thousands): Transfer from the General Fund to Deferred Maintenance Fund for authorized transfer $ 633 Transfer from the General Fund to the Cafeteria Fund for authorized transfer 1,839 Transfer from the Special Reserve Fund to the General Fund for authorized transfer 6,025 Transfer from the Building Fund to the Lease Purchase Fund for authorized transfer 8,836 Total $ 17,333 NOTE 5 - OTHER SOURCES (USES} Other sources/(uses) for the 1993-94 fiscal year were as follows (in thousands): Other Other Sources Uses General Fund: Transfer from Golden Empire Schools Financing Authorit~ - Capital Projects Fund to the General Fund for reimbursement of expenditures Other miscellaneous sources $ 4,096 $ - 165 3,064 Special Revenue Fund: Other miscellaneous sources 2,540 Debt Service Fund: Proceeds from issuance of bonds 5,010 Proceeds from issuance of bonds used to defease bonds outstanding 4,371 Capital Projects: Transfer to the Lease Purchase Fund from the Golden Empire Schools Financing Authority Capital Projects Fund Transfer from the Golden Empire Schools Financing Authorit~ - Capital Projects Fund to the Lease Purchase Fund 848 848 13 NOTE 5 - OTHER SOURCES (USES) (Continued) Other Sources Other Uses Transfer to the General Fund from Golden Empire Schools Financing Authority - Capital Projects Fund for reimbursement of expenditures 4,096 State funds received to fund construction and reconstruction projects 12,705 Total ~ $ 12,379 NOTE 6 OTHER INTERFUND TRANSACTIONS The district's General Fund charged the Adult Education Fund and the Child Development Fund the following for the year ended June 30, 1994 (in thousands): Direct and Indirect Costs: Adult Education Fund Child Development Fund $ 430 32 Total Direct and Indirect Costs $ 462 NOTE 7 BONDED DEBT The outstanding bonded debt of the Kern High School District at June 30, 1994 is (in thousands): Amount of Redeemed Interest Maturity Original Outstanding Current Date of Issue Rate % Date Issue Jul~ 1, 1993 Year June 28, 1990 6.75% - 9.752 2014 $ 15,000 $ 14,980 30 May 8, 1991 6.20% - 9.20% 2015 $ 15,000 $ 15,000 Z0 May 13, 1992 6.00% - 8.75% 2016 $ 15,000 S 15,000 - June 1, 1993 5.20% - 7.00% 2017 $ 15,000 $ 30,000 - Outstanding June 30, 1994 $ 14,950 14,980 15,000 30,000 $ 74,930 The annual requirements to amortize bonded debt outstanding as of June 30, 1994 are as follows (in thousands): Year Ended June 30, Principal Interest Total 1995 $ 100 $ 4,768 $ 4,868 1996 200 4,756 4,956 1997 285 4,738 5,023 1998 425 4,713 5,138 1999 595 4,674 5,269 Thereafter 73,325 56,489 129,814 Totals $ 74,930 $ 80,138 $ 155,068 14 NOTE 8 - CERTIFICATES OF PARTICIPATION The Kern High School District's Public Facilities Financing Corporation and the Golden Empire Schools Financing Authority have issued the following Certificates of Participation (in thousands): Outstandin& Issued Redeemed Outstanding Interest Original June 30, Current Current June 30, Date of Issue Rate Maturity Date Amount 1993 Year Year 1994 Public Facilities Financin~ Corporation November 21, 1985 Variable, not to exceed 122 2003 S 27,900 S ' 20,100 S April 9, 1987 4.80Z - 6.70Z 1997 S 8,160 S 6.400 S October 1, 1993 3.00Z - 3.60Z 1996 $ 5,010 $ - $ Golden Empire Schools Flnancins Authorit~ November 21, 1989 Variable not to exceed 15~ 2019 S December 18, 1990 Variable not to exceed 15~ 2020 S June 16, 1992 Variable not to exceed 15Z 2022 $ December 17, 1992 Variable not to exceed 152 2022 $ S 1,100 $ 19,000 $ 6,400 - 5,010 $ - 5,010 5,000 $ 5,000 $ $ 100 4,900 5,000 $ 5,000 S $ - 5,000 5.000 $ 5,000 $ S - 5.000 5,000 8 5,000 $ 8 - 5,000 S 43,910 The future annual requirements to amortize all Certificates of Participation at June 30, 1994 are as follows (in thousands): Year Ending June 30, Principal Interest Total 1995 $ 2,855 $ 2,051 $ 4,906 1996 3,200 1,924 5,124 1997 3,955 1,771 5,726 1998 2,300 1,627 3,927 1999 2,600 1,504 4,104 Thereafter 29,000 14,956 43,956 Totals $ 43,910 $ 23,833 $ 67,743 NOTE 9 - TAX AND REVENUE ANTICIPATION NOTES The district issued $15,000,000 of Tax and Revenue Anticipation Notes dated July 22, 1993. The notes matured on July 21, 1994. The notes were sold by the district to supplement its cash flow. Repayment requirements are that the principal amount of the note, together with the interest thereon, shall be payable from the proceeds from taxes and other revenues received by the district's General Fund. The notes are secured by the district's pledge of certain unrestricted revenues which are received by the district for the General Fund and are attributable to the 1994-95 fiscal year. As of June 30, 1994, all required deposits had been made with the County Treasurer on a timely basis. As the notes do not mature until July 21, 1994, they were still outstanding at June 30, 1994 and accordingly have been shown as a liability on the balance sheet. The Golden Empire Schools Financing Authority issued $15,320,000 of Revenue Anticipation Notes dated September 1, 1991. The notes mature August 1, 1994 and yield 6.8% interest. The notes are callable, otherwise the principal plus accrued interest is all due at maturity. Below are the future annual requirements to amortize the debt: GESFA Revenue Notes Dated September 1, 1991 (in thousands) Year Ending June 30, Principal Interest Total 1995 $ 3,630 $ 123 $ 3,753 $ 3,630 123 $ 3,753 15 I I I I I I I I I I I I ! I I I I I NOTE 10 - DEFEASANCE OF DEBT On October 1, 1993, the district defeased certain Certificates of Participation by placing the proceeds of the new Certificates in an irrevocable trust to provide for all future debt service payments of the old certificates. Accordingly, the trust account assets and the liability for the defeased certificates are not included in the district's financial statements. At June 30, 1994, $6,400,000 of certificates are considered defeased. This defeasance was undertaken to reduce total debt service payments by $283,777 and to obtain an economic gain (difference between the present value of the debt service payments of the refunded and the refunding Certificates of Participation) of $229,095. NOTE 11 - GENERAL LONG-TERM DEBT - SCHEDULE OF CHANGES A schedule of changes in long-termdebt for the year ended June 30, 1994 is shown below (in thousands): Balance June 1, 1993 Addition Balance Deductions June 30, 1994 General Obligation Bonds Certificates of Participation Accrued Vacation 74,980 $ $ 50 $ 74,930 46,500 5,010 7,600 43,910 2,126 168 2,294 Totals $ 123,606 $ 5,178 $ 7,650 $ 121,134 NOTE 12 - JOINT VENTURES (Joint Powers AKreements) Self Insured Schools of Kern (SISK) SISK arranges for and provides health (SISK III), workers' compensation (SISK I), and property and liability (SISK II) insurance for its member school districts in Kern County, Santa Barbara and other counties. SISK is governed by a board consisting of representatives from member districts. The board controls the operations of SISK, including selection of management and approval of operating budgets, independent of any influence by the member districts beyond their representation on the board. Each member district pays a premium commensurate with the level of coverage requested and shares surpluses and deficits proportionate to their participation in SISK. Although the district transfers risk to the pool for SISK I and SISK II, the district retains the risk for SISK III. As a result, SISK III is acting only as a claims administrator and reinsurer for the district. The district must repay excess claims and administrative costs over premiums. At June 30, 1993 excess claims and administrative costs did not exceed premiums paid. Condensed combined financial information of SISK, by type, for the most current year available is as follows: September 30, June 30, 1993 1993 SISK I SISK II SISK III Total Assets Total Liabilities $ 14,607,964 $ 12,734,367 $ 49,651,672 17,989,178 9,226,683 18,401,769 Fund Balance $ (3,381,214) $ 3,507,684 $ 31,249,903 Total Revenues Total Expenditures $ 7,586,748 $ 7,775,918 $ 103,091,147 11,131,262 8,206,917 100,476,259 Net Increase/(Decrease) in Fund Balance $ (3,544,514) $ (430,999) $ 2,614,888 16 ',1 I I I I I I I I ! I I ! ! I I I I ! .. NOTE 12 - JOINT VENTURES (Joint Powers AKreements) (Continued) The entity did not have long-term debt outstanding at June 30, 1993. The district's share of year-end assets, liabilities, or fund equity has not been calculated by SISK as of June 30, 1993. Partner in Nutrition Cooperative (PINCO) - PINCO coordinates the acquisition, storage and distribution of commodities and other related food stuffs to member districts in California. PINCO is governed byan advisory committee consisting of representatives from member districts.The advisory committee controls the operations of PINCO including the review of performance of the lead district; review the projected and actual number of staff needed by the lead district; and review and approve the monthly service fee to be paid by the member districts to the lead district. The advisory committee functions independent of any influence by the member districts beyond their representation on the committee. Each member district establishes a revolving fund approximately equal to 2.5 times the average monthly purchases plus some additional expenses. Condensed financial information for PINCO for the year ended June 30, 1994 is as follows: (most current information available) Total Assets Total Liabilities $ 1,414,516 197,607 Fund Equity $ 1,216,909 Total Revenue Total Expenditures $ 8,080,101 8,939,608 Net Decrease in Fund Equity $ (859,507) The entity did not have long-term debt outstanding at June 30, 1994. The districts share of year-end assets, liabilities, or fund equity has not been calculated by PINCO as of June 30, 1994. NOTE 13 GOLDEN EMPIRE SGHOOLS FINANGING AUTHORITY (GESFA) GESFA is a JPA created on June 6, 1988 between Taft High School District (THSD) and Kern High School District (KHSD) for the following purpose: financing public capital improvements and working capital requirements operating public facilities providing miscellaneous services as approved by its Board of Directors. The above activities can be entered into for the sole benefit of either THSD or KHSD or both. In connection with the above purposes, KHSD transferred certain attendance areas to THSD and THSD agreed to contribute to GESFA certain real property and lease back such real property from GESFA. Under this lease agreement, THSD agrees, among other things, to make annual lease payments over a term of 30 years. The annual lease payment will be a specified portion of property taxes THSD collects from the transferred attendance areas and this amount is further defined in the lease agreement as "Belridge Net Revenues". The size of the annual payment may fluctuate dramatically depending on the assessed value of oil, changes in the THSD revenue, and other changes in the structure of school finance in California. Therefore, it is not possible to compute or estimate minimum future lease revenue for GESFA. The relationship between KHSD and GESFA is such that GESFA is a component unit of the district for financial reporting purposes. (see Note 1-B.2) 17 NOTE 13 - GOLDEN EMPIRE SCHOOLS FINANCING AUTHORITY (GESFA) (Continued) The annual lease payment for the year ending June 30, 1994amounted to $1,206,000 and is included as "other local revenue" in the Golden Empire Schools Financing Authority Capital Projects Fund. NOTE 14 - COMMITMENTS AND CONTINGENCIES A. State and Federal Allowances, Award, and Grants The district has received state and federal funds for specific purposes that are subject to review and audit by the grantor agencies. Although such audits could generate expenditure disallowances under terms of the grants, it is believed that any required reimbursement will not be material. B. Litigation Property Taxes In previous years the County of Kern and its related municipal entities have been subjected to continuing taxpayer litigation suits asserting over assessments of property taxes. The Auditor-Controller of Kern County has advised the district that it would be prudent to impound funds in anticipation of possibly adverse findings by the courts. The district authorized the Auditor-Controller of the County of Kern to impound approximately $9,950,532 of its property tax entitlements in order to meet its contingent property tax liability at June 30, 1994. The contingent property tax liability at June 30, 1994 had not been calculated prior to the date of our audit report. C. Construction and Reconstruction At June 30, 1994 the district had various commitments to purchase services and properties related to construction and reconstruction of various school sites. These commitments are expected to be financed 50% by State Leroy Greene funds, and 50% by district issued bonds and other district sources. These commitments total $13,000,000 at June 30, 1994. NOTE 15 - DEFERRED COMPENSATION The deferred compensation plan is available to all employees of the district. Under the plan, employees may elect to defer a portion of their salaries and avoid paying taxes on the deferred portion until the withdrawal date. The deferred compensation amount is not available for withdrawal by employees until termination, retirement, death or unforeseeable emergency. The deferred compensation plan is administered by an unrelated financial institute. Under the terms of an IRC Section 457 deferred compensation plan, all deferred compensation and income attributable to the investment of the deferred compensation amounts held by the financial institution, until paid or made available to the employees or beneficiaries, are the property of the district subject only to the claims of the district's general creditors. In addition, the participants in the plan have rights equal to those of the general creditors of the district, and each participant's rights are equal to his or her share of the fair market value of the plan assets. The district believes that it is unlikely that plan assets will be needed to satisfy claims of general creditors that might arise. 18 NOTE 16 SUBSEQUENT EVENTS Tax and Revenue Anticipation Notes The district retired $15,000,000 of Tax and Revenue Anticipation Notes on July 21, 1994. These notes were issued on or about July 22, 1993. The district issued $20,000,000 of Tax and Revenue Anticipation Notes dated August 11, 1994. The notes mature on August 10, 1995 and yield 4.15 percent interest. The notes were sold by the district to supplement its cash flow. The district retired $3,630,000 of Golden Empire Schools Financing Authority Revenue Anticipation Notes on August 1, 1994. These Notes were issued on or about August 22, 1991. NOTE 17 - EMPLOYEE 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, and classified employees are members of the Public Employees' Retirement System. Plan Description and Provisions State Teachers' Retirement System (STRS) Ail full-time certificated employees participate in STRS, a cost-sharing multiple-employer contributory public employee retirement system. At June 30, 1994, the district employed 1,362 certificated employees with a total payroll of $54,747,000. Employees attaining the age of 60 with 5 years of credited California Service (service) are eligible for normal retirement and are entitled to a monthly benefit of 2 percent of their final compensation for each year of service. Final compensation is defined as the average salary earnable for the highest three consecutive years of service. The plan permits early retirement options at age 55 or as early as age 50 with 30 years of service. Disability benefits of up to 90 percent of final compensation are available to members with 5 years of service. A family benefit is available if the deceased member had at least one year of service. After 5 years of credited service members become 100 percent vested in retirement benefits earned to date. If a member's employment is terminated, the accumulated member contributions are refundable. The current rate of interest credited to members' accounts is 5.5 percent per annum. Benefit provisions for STRS are established by the State Teachers' Retirement Law (Part 13 of the California Education Code, Section 22000 et seq.). California Public Employees Retirement System (PERS) Ail full-time classified employees participate in PERS, an agent 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. The Kern High School 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. At June 30, 1994, the district employed 1,330 classified employees with a total payroll of $25,271,000. Employees are eligible for retirement at the age of 60 and are entitled to a monthly benefit of 2 percent of final compensation for each year of service credit. Retirement compensation is reduced if the plan is coordinated with Social Security. Retirement may begin at age 50 with a reduced benefit rate, or after age 60 to 63 with an increased rate. The plan also provides death and disability benefits. Retirement benefits fully vest after 5 years of credited service. Upon separation from the district, members' accumulated contributions are refundable with interest credited through the date of separation. 19 NOTE 17 - EMPLOYEE RETIREMENT SYSTEMS (Continued) Benefit provisions for PERS are established by the Public Employees Retirement Law (Part 3 of the California Government Code, Section 20000 et seq.). The district is required to contribute the remaining amounts necessary to fund the benefits for its members, using the actuarial basis recommended by the PERS actuaries and actuarial consultants and adopted by the Board of Administration. Funding Status and Progress of the Retirement Plans The "pension benefit obligation" reported below is a standardized disclosure of the present value of pension benefits adjusted for the effects of projected salary increases and any step-rate benefits estimated to be payable in the future as a result of employee service to date. The measure is the actuarial present value of credited projected benefits and is intended to help users assess the retirement plans' funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among retirement systems and employers. The measure is independent of the funding method used to determine contributions to the retirement systems. The pension benefit obligation for STRS was computed as part of the actuarial valuation performed June 30, 1993. The assumed long-term investment yield is 8.5 percent, and the assumed long-term salary increase assumption for inflation is 6.5 percent. Under current law the pension benefit obligation for STRS is not the responsibility of the district. The State of California makes annual contributions to STRS toward the unfunded obligation. The pension benefit obligation for STRS is included in the financial statements for STRS and the State of California. The pension benefit obligation for PERS was computed as part of an actuarial valuation performed June 30, 1993. Significant actuarial assumptions used to compute the PERS pension benefit obligation include an actuarial interest rate of 8.75 percent per annum and projected salary increases of 7.0 percent consisting of 4.5 percent for inflation and 2.5 percent for merit and longevity. PERS does not make separate measurements of assets and pension benefit obligations for individual school districts or county offices. The total unfunded pension benefit obligation for local education agencies as a whole, as of June 30, 1993, is as follows: Pension Benefit Obligation PERS (000) Retirees and Beneficiaries Currently Receiving Benefits and Terminated Employees Not Yet Receiving Benefits $ 5,528,980 Current Employees: Accumulated Employee Contributions Including Allocated Investment Earnings 3,025,936 Employer-Financed Vested 3,651,638 Employer-Financed Nonvested 226,296 Total Pension Benefit Obligation 12,432,850 Net Assets Available for Benefits at Cost (Market Value $15,345,854) 12,580,682 Unfunded Pension Benefit Obligation $ (147,832) 2O NOTE 17 - EMPLOYEE RETIREMENT SYSTEMS (Continued) Contributions Required and Contributions Made The district is required by statute to contribute 8.25 percent and 7.00 percent of gross salary expenditures to STRS and PERS, respectively. Participants are required to contribute 8 percent to STRS and 7.0 percent (adjusted for FICA contribution) to PERS of gross salary. The district contribution information for the year ended June 30, 1994 is as follows: Employee Employer District's Contributions Contributions Total Total Current- as a as a Number of Employee Employer Year Percentage Percentage Employees Contri- Contri- Covered of Covered of Covered Covered butions butions Payroll Payroll Payroll STRS 1,092 $3,947,141 $4,072,859 $49,367,988 8.0% 8.25% PERS 1,109 $1,430,924 $1,552,620 $21,049,620 6.8% 7.38% The district's contribution represented less than one percent of the total contributions required of all participating employers in STRS and PERS, respectively. The district's employer contributions to STRS met the required contribution rate established by law. Although the actuarially determined contribution rate exceeds the employer rate set in law, the district has no obligation for the deficit. PERS uses the Entry Age Normal Actuarial Cost Method which is a projected benefit cost method. That is, it takes into account those benefits that are expected to be earned in the future as well as those already accrued. According to this cost method, the normal cost for an employee is the level amount which would fund the projected benefit if it were paid annually from date of employment until retirement. PERS uses a modification of the Entry Age Cost Method in which the employer's total normal cost is expressed as a level percentage of payroll. PERS also uses the level percentage of payroll method to amortize any unfunded actuarial liabilities. The amortization period of the unfunded actuarial liability ends on 2011. The significant actuarial assumptions used to compute the actuarially determined contribution requirement are the same as those used to compute the pension benefit obligation, as previously described. The contribution to PERS for 1993-1994 of $1,552,620 was made in accordance with actuarially determined requirements computed through an actuarial valuation performed as of July 1, 1991. The contribution consisted of (a) $1,382,960 normal cost (6.57 percent of current covered payroll) and (b) $169,660 amortization of the unfunded actuarial accrued liability (.81 percent of current covered payroll). Trend Information Trend information gives an indication of the STRS' and PERS' progress in accumulating sufficient assets to pay benefits when due. This information is presented in the State Teachers' Retirement System's Comprehensive Annual Financial Report for the year ended June 30, 1993 and the California Public Employee's Retirement System's Annual Report for the ended June 30, 1993. Up to ten years of information will be provided in future years as this information becomes available. 21 NOTE 17 - EMPLOYEE RETIREMENT SYSTEMS (Continued) The three-year employer trend information that is required to be reported for PERS is taken from other sections of the current and previous years' disclosure statements and is as follows: PERS 1993 1992 1991 Net Assets Available for Benefits as Percentages of the Pension Benefit Obligation 101.2% 96.9% 95.0% Unfunded Pension Benefit Obligation as Percentages of Annual Covered Payroll (3.7)% 9.0% 10.8% Employer Contributions Made In Accordance With Actuarially Determined Requirements, As Percentages of Annual Covered Payroll 7.38% 8.498% 8.498% Other Information Under STRS law, certain early retirement incentives require the employer to pay the present value of the additional benefit which may be paid on either a current or deferred basis. The district's obligations to STRS for early retirement incentives granted to terminated employees is not available. NOTE 18 POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS In addition to the pension benefit described in Note 12, the district provides postretirement health care benefits to all employees who retire from the district on or after attaining age 55, with at least 10 years of service. Coverage for retirees is until age 65. On June 30, 1994 approximately 172 employees met the eligibility requirements. An expense for postretirement health care benefits is recognized as retirees report claims. During the fiscal year ended June 30, 1994, claims of $881,553 were expensed for postretirement health care. ' NOTE 19 - PRIOR PERIOD ADJUSTMENT The Capital Facilities Fund, Special Revenue Fund Type, and the Golden Empire Schools Financing Authority Fund, Capital Projects Fund Type, fund balances have been adjusted to correctly recognize the use of developer fees in prior years as the source of funding for certain construction projects of the district. The construction was original expensed in the Golden Empire Schools Financing Authority Fund. The adjustment to beginning fund balance was an increase of $3,078,000 in the Golden Empire Schools Financing Authority Fund and a decrease of $3,078,000 in the Capital Facilities Fund. The Golden Empire Schools Financing Authority activity has been accounted for in the debt service fund type and the capital projects fund type in previous years. For the year ended June 30, 1994 all activity of the Golden Empire Schools Financing Authority has been accounted for in the Capital Projects Fund Type. As a result of this change the beginning fund balance in the Debt Service Fund Type has decreased $1,070,000 and the Golden Empire Schools Financing Authority, Capital Projects Fund Type, fund balance has increased $1,070,000. The Golden Empire Schools Financing Authority, Capital Projects Fund Type, fund balance at June 30, 1993 has been adjusted to reverse the effects of an accrual which was recorded in the prior period. The net adjustment to beginning fund balance for this accrual was an increase of $491,000. 22 NOTE 19 - PRIOR PERIOD ADJUSTMENT (Continued) The Lease Purchase Fund, Capital Projects Fund Type, fund balance at June 30, 1993 had a ending fund balance of $5,509,000. This balance has been adjusted out of the Lease Purchase Fund and into the Building Fund, Capital Projects Fund Type. The adjustment was made to return funds to .the Building Fund which were transferred to the Lease Purchase Fund to fund construction projects of the district in previous years. The Building Fund, Capital Projects Fund Type, fund balance at June 30, 1993 has been adjusted to correct prior year accruals. The net adjustment to the beginning fund balance for these accruals was $1,389,000. 23 COMBINING FINANCIAL STATEMENTS KERN HIGH SCHOOL DISTRICT COMBINING BALANCE SHEET SPEGIALREVENUE FUNDS JUNE 30, 1994 (IN THOUSANDS) ASSETS Investments Accounts Rece£vable Inventory Prepatds TOTAL ASSETS LIABILITIES AND FUND BALANCE LIABILITIES Accounts Payable Due to Other Funds TOTAL LIABILITIES FUND BALANCE Reserve for Inventories Reserve for Prepatds Destsnated TOTAL FUND BALANCE TOTAL LIABILITIES AND FUND BALANCE SpecLal Cap£tat Asbestos Deferred ChLld Adult Self- Reserve Facll~tLes Abatement Maintenance Cafeter£a Development Education Insurance Fund Fund Fund Fund Fund Fund Fund Fund $ 26,34, $ 10,182 $ 799 $ 7,846 - - 179 135 8 1,721 $ 250 $ 932 $ 7,001 $ 5,033 $ 228 185 22 1,206 - 193 - 25 - 255 - - Total $ - $ - $ 14~630 1~005 231 141630 11005 231 52,262 7,846 1,963 218 255 954 ~ 8,232 ~ 5,033 ~ 62,5'' - $ ,8 $ 3 $ 168 $ 1,,57 $ 1,676 lr353 835 951 8r006 27~011 lr353 883 954 8~17' 1~'57 28f687 807 ~ 1,949 ~ 883 ~ 954 ~ 8,232 ~ 5,033 19f739 9r312 576 596 19f739 9~312 576 596 3',369 ~ 10,317 ~ 193 - 25 218 255 - 255 (448) - 33 3f576 33f38& - 58 3f576 33~857 62f5'4 KEKN HIGH SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENSES, CAPITAL OUTLAY AND CHANGES IN FUND BALANCES SPEGIALREVENUE FUNDS YEAR ENDED JUNE 30, 1994 (IN THOUSANDS) REVENUES Revenue Limit-State Federal Revenues Other State Revenues Other Local Revenues TOTAL REVENUES EXPENDITURES Certificated SaLaries Employee Benefits Books G Supplies Services, Other Operatin~ Capital Outlay Other Oucso Direct Support/Indirec= Costs TOTAL EXPENDITURES Excess (defLolency) of revenues over expendi=ures Special Capital Asbestos Deferred Child Adult Self- Reserve Fac£11ties Abatement NainCen~nce Cafeteria Development Education Tnsu~ance Fund Fund Fund Fund Fund Fund Fund Fund 8 $ - $ - 8 $ $ 5,596 $ - - - 1,065 550 - - 145 78 444 746 - lfll0 2,157 80 5 1~532 240 - 1,110 2t157 80 150 2,675 4&4 7~132 - .... 181 3,301 - - - 1,881 91 1,181 - - 767 95 1,164 - - - 1,349 31 333 - 162 925 226 5 273 2,043 - 196 4 356 - 95 5 64 - - 32 430 2~043 162 925 4t514 444 7t102 lfllO 114 (82) (775) (1,839) 30 OTHER FINANCING SOURCES (USES) Other Sources - Transfers In - Transfers Ouc (6~025) TOTAL OTHER FINANCING SOURCES (USES) (6,025) Excess (deficiency) of revenues over expenditures and other sources (uses) (4,915) Fund Balances at beslnnin8 of year 24~654 Fund Balances at end of year ~ 191739 114 9t198 9r312 633 1,839 2,540 633 1,839 - 2r$40 (82) (142) - - 30 2,540 658 738 - - 28 1,036 576 ~ 596 ~ -, ~ - ~ 58 ~ 3,576 Total $ 5,596 1,615 1,413 5~12& 13f748 3,~82 3,153 2,026 1,713 1,591 2,599 164 ~62 15r190 2,540 2,~72 (6r025) {1~013) (2,455) 36f312 331857 25 I ! I 'i I I I i I i I I i I I I I I I KERN HIGH SCHOOL DISTRICT COHBINING STATEMENT OF REVENUES, EXPENSES, CAPITAL OUTLAY AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL SPEGIALREVENUE FUNDS YEAR ENDED JUNE 30, 1994 (IN THOUSANDS) REVENUES Revenue Limit-State Federal Revenues Other State Revenues Other Local Revenues TOTAL REVENUES EXPENDITURES Certificated Salaries Classified Salaries Employee Benefits Books & Supplies Services, Other Operating Capital Outlay Other Outgo Direct Support/Indirect Costs TOTAL EXPENDITURES Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Other Sources Transfers In Transfers Out TOTAL OTHER FINANCING SOURCES (USES) Excess (deficiency) of revenues over expenditures and other sources (uses) Fund Balances at beginning of year Fund Balances at end of year Special Reserve Fund Variance Favorable Budget Actual (Unfavorable) - S S 500 1:110 610 500 1:110 610 500 lfllO 610 (6:025) (6,025) - (6:025) (6,025) - (5,525) (4,915) 610 24:654 24,654 - 19~129 S 19,739 S 610 Capital Facilities Fund Budget $ 2:160 2:160 Actual Favorable (Unfavorable) - $ 2:157 (3) 2~157 (3) 2,045 2,045 115 2,043 2,043 114 115 114 (1) 9:198 9:198 9,313 $ 9,312 $ (1) 26 Asbestos Abatement Fund Budget Actual $ - $ - 80 - 8O Favorable (Unfavorable) 100 - 100 558 162 396 658 162 (858) (82) (658) (82) 858 858 $ $ 578 Deferred Maintenance Fund Favorable Budget Actual (Unfavorable) 496 576 576 S 576 $ s $ 300 145 (155) 80 300 150 (150) 963 925 38 963 925 38 (663) (775) (112) 633 633 633 633 (30) (142) (112) 738 738 $ 708 S 596 $ (112) Budget Cafeteria Fund Varzance Favorable Actual (Unfavorable) 1,126 1,065 (61) 77 78 1 1,501 1,532 31 2,704 2,675 (29) 1,978 1,881 97 787 787 20 1,651 1,349 302 231 228 5 300 196 104 95 95 - 5,042 4,514 528 (2,338) (1,839) 499 1,839 1,839 - 1,839 1,839 - (499) - 499 (499) S - $ 499 27 KERN HIGH SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENSES, CAPITAL OUTLAY AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (Continued) SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 1994 (IN THOUSANDS) REVENUES Revenue Limit-Skate Federal Revenues Other State Revenues Other Local Revenues TOTAL R~'VENIJES EXPENDITURES Certificated Salaries Classified Salaries Employee Benefits Books & Supplies Services, Other Operatin& Capital Outlay Other Out&o Direct Support/Indirect Costs TOTAL EXPENDITURES Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Other Sources Transfers In Transfers OUt TOTAL OTHER FINANCING SOURCES (USES) Excess (deficiency) of revenues over expenditures and other sources (uses) Fund Balances at be~innin& of year Fund Balances a~ end of year Child Development Fund Adult Education Fund Varzance Favorable Budget Actual (Unfavorable) Budget Actual - $ - $ - S §,244 $ §,596 - - - 280 550 447 444 (3) 875 746 - - - 25O 240 447 444 {3) 6~649 7~132 184 181 3 3,467 3,301 g2 gl 1 1,230 1,181 95 95 - 1,166 1,164 31 31 - 336 333 5 5 - 276 273 4 4 - 360 356 5 5 - 64 64 32 32 - 435 430 448 444 4 7,334 7f102 (1) - 1 (685) 30 (1) - 1 (685) 30 - - - 28 28 (1) $ - $ I S (657) $ 58 Varlance Favorable (Unfavorable) $ 352 270 (129) (10) 483 166 49 2 3 3 4 5 232 715 715 $ 715 I I I I 28 Self-Insurance Fund Variance Favorable Budp:et Actual. (Unfavorable) 2,540 2,540 2,540 2,540 2,540 2,540 1,036 1,036 3,576 $ 3r§76 Totals Budget Actual Variance Favorable (Unfavorable) §,244 S 5,596 $ 352 1,406 1,61§ 209 1,699 1,413 (286) 4,411 5~124 713 12,760 13~748 988 3,651 3,482 3,300 3,153 2,048 2,026 2,118 1,713 2,033 1.591 2.709 2.599 164 164 467 462 16,490 15,190 (3,730) (1,442) 2,540 2.540 2.472 2.472 (6,025) (6~025) (1,013) (1,013) (4.743) (2.455) 36,312 36,312 31,569 $ 33r857 169 147 22 405 442 110 1,300 2~288 2.288 S 2,288 29 I I I I I I ! I ! I I I I I I I I I ASSETS --'-'~sh ~nves~ments Accounts Receivab~e Due from Other Funds TOTAL ASSETS LIABILITIES AND FUND BALANCE LIABILITIES Accounts Payable Due to Other Funds Tax and Revenue Anticipation Notes TOTAL LIABILITIES FUND BALANCE Reserve for Debt Service Desi&na~ed TOTAL FUND BALANCE TOTAL LIABILITIES AND FUND BALANCE KERN HIGH SCHOOL DISTRICT COMBINING BALANCE SHEET CAPITAL PROJECT FUNDS JUNE 30, 1994 (I~ ~OUSA~mS) Golden S~cire Lease ooLs Purchase Financ inS Fund $ 14,143 $ 1 16,731 - 285 2,701 .S 31,159 $ 2,702 $ 62 $ - 278 2,702 3,630 - 3,970 2,702 Buildin& Fund 13,442 139 17,987 31,568 1,glO - - 25,279 - 31,568 27,189 - 31,568 $ 31,159 $ 2,702 $ 31,568 3O Total 27,586 16,731 3,125 17,987 65,429 62 2,980 3,630 6,672 1,910 56,847 58,757 65,429 KERN HIGH SCHOOL DISTRICT COHBINING STATEHENT OF REVENUES, EXPENSES, CAPITAL OUTLAY AND CHANGES IN FUND BALANCES CAPITAL PROJECT FUNDS YEAR ENDED JUNE 30. 1994 (IN T~OUSANDS) REVENUES Other Local Revenues TOTAL REVENUES EXPENDITURES Services, Other OperatinB Capital Outlay Principal, Debt Service Interest, Debt Service TOTAL EXPENDITURES Excess (deficiency) of revenues over expenditures OTHER FINANCING ~OURCES (USES) Other Sources Transfers In Transfers Out Other Uses TOTAL OTHER FINANCING SOURCES (USES) Excess (deficiency) of revenues over expenditures and other sources (uses) Fund Balances at beBinnin8 of year Fund Balances at end of year Golden S~cire Lease ools Purchase Buildin& Financ£ns Fund Fund Total S 2,110 $ - S 1,053 S 3,163 2,110 - 1,053 3,163 342 - 342 - 22,389 - 22,369 100 - 100 933 - 933 1,375 22,389 - 23,764 735 (22,389) 1,053 (20,601) - 13,553 13,553 - 8,836 8,836 - - (8,836) (8,836) (4,944) - (4,944) (4,944) 22,389 (8m836) 8,609 (4,209) - (7,783) (11,992) 31,398 3g,351 70,749 S 27,189 S______~_- S 31 568 S 58,757 31 KERN HIGH SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENSES, CAPITAL OUTLAY AND GRANGES IN FUND BALANCES - BUDGET AND ACTUAL CAPITAL PROJECT FUNDS YEAR ENDED JUNE 30, 1994 (IN THOUSANDS) REVENUES Other Local Revenues TOTAL REVENUES EXPENDITURES Services, Other Operating Capital Outlay Principal, Debt Service Interest, Debt Service TOTAL EXPENDITURES Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Other Sources Transfers In Transfers Out Other Uses TOTAL OTHER FINANCING SOURCES (USES) Excess (deficiency) of revenues over expenditures and other sources (uses) Fund Balances at beginning of year Fund Balances at end of year Golden Empire Schools Financinz Lease Purchase Fund Variance Variance Favorable Favorable. Budget Actual (~nfavorable) Budget Actual (Unfavorable) 3,004 S Z,110 3,004 2,110 $ (894) S $ - S - (894) - - - 33,957 22,389 11,$68 - 33,957 22,389 11,568 ~894) (33,9§7) (22,389) 11,568 342 342 I00 100 933 933 1,375 1,375 1,629 735 (4,944) (4,944) (4,944) {4,944) (3,315) (4,209) 31,398 31,398 28,083 S 27,18g 13,553 13,553 8,836 8,836 - 22,389 22,389 (894) (11,568) - 11,568 S (894) S (11,568) S - $ 11,568 32 I I I I I I I I I i I I I I I ! ! il I Budget Buildin~ Fund Yarlance Favorable Actual (.Unfavorable) $ 700 $ 700 1,053 8 353 1,053 353 2,034 - 2,034 2~034 - 2,034 (1,334) 1~053 2,387 (8,836) (8,838) (8,836) (10,170) 39,351 S 29,181 (8,836) - (7,783) 2,387 3g~3§1 - S 31,568 S 2,387 Totals Budget Actual $ 3,704 $ 3,163 3,704 3,163 342 342 35,991 22,389 100 100 933 933 37,366 23~764 (33,662) (20,601) 13,553 13,553 8,836 8,836 (8,836) (8,836) 8,609 8,609 (25,053) (11,g92) 70~749 70,749 S 45,696 S 58 757 33 Variance Favorable (Unfavorable) S (541) (541) 13,602 13,602 13,061 13,061 $ 13,061 I I I I I I ! ! I I i I I I I I I i KERN HIGH SCHOOL DISTRICT COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES TRUST AND AGENCY FUNDS YEAR ENDED JUNE 30, 1994 (IN THOUSANDS) ASSETS Cash Cash in Deferred Compensation Plan Total Assets LIABILITIES Due to Student Groups Deferred Compensation Payable Total Liabilities Balance July 1, 1993 Addition~ Deductions $ 1,640 $ 6,297 $ 6,175 969 121 84 $ 2,609 $ 6,418 $ 6,259 $ i,640 $ 6,297 $ 6,175 969 121 84 $ 2,609 ~ $ 6,259 34 Balance June 30, 1994 $ 1,762 1,006 $ 2,768 $ 1,762 1,006 $ 2,768 SUPPLEMENTARY INFORMATION BROWN ARMSTRONG RANDALL ~t REYES CERTIFIED PUBLIC AC.COUNTANTS Peter C. Brown, CPA Burton H. Armstrong, CPA Jer~y E. Randall, CPA ~ Benjamin P. Reyes, CPA Andrew J. Paulden, CPA · Cathy J. Brown, CPA Grant C. Comell, CPA Lynn R. Krausse, CPA David W. Evans, CPA Richard R. Carmona, CPA INDEPENDENT AUDITOR'S KEPORT ON SUPPLEHENTARY INFORMATION Richard A. Teubner, CPA Janet C. Smith Board of Trustees Kern High School District Bakersfield, California We have audited the combined and combining financial statements of the Kern High School District (the district) as Of and for the fiscal year ended June 30, 1994, and have issued our report thereon dated October 28, 1994. These financial statements' are the responsibility ,of .the district's management. Our responsibility was to express an opinion.on these financial statements based on our audit. We conductedouraudit in accordance with'generally accepted auditing Standards;, the standards for financial and compliance audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States; and 'Standards and Procedures 'for Audits of California K-12 Local Educational Agencies, prescribed by the State Controller. Those standards' require'that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of mater-iai misstatement. An audit includes .examining, on a test basis,.evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a. reasonable basis for our opinion. Our a~dit was made for the purpose of forming an opinion on the financial statements'of the Kern HighSchool Districti taken as a whole. The supplementary financial and statistical information listedin the. table of contents., including the Schedule of Federal and State Financial Assistance, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects in,relation to the financial statements taken as a whole. BROWN ARMSTRONG RANDALL & REYES ACCOUNTANCY CORPORATION Bakersfield, California October 28, 1994 35 An Accountancy Corporation 4200 Truxtun Avenue, Suite 300, Bakersfield, California 93309 · (805) 324-4971 · FAX (805) 324-499~ MEMBER of SEC Practice Section of The American Institute of Certified Public Accountants KERN HIGH SCHOOL DISTRICT ORGANIZATION JUNE 30, 1994 ORGANIZATION The Kern High School District (formerly Kern Joint Union High School District) was formed in 1916 and serves the County of Kern. During the year ended June 30, 1994, the district operated 13 comprehensive high schools with a grade span of 9 through 12, and 6 continuation schools. GOVERNING BOARD Name Office Term Expires Kenneth E. Secor President 1994 Fred L. Starrh Vice-President 1994 David Crenshaw Clerk 1996 Earle J. Gibbons Member 1994 Sandra V. Serrano Member 1994 ADMINISTRATION Dr. Thomas N. Jones Superintendent Warner Brooks Associate Superintendent, Instruction Dr. James R. Fillbrandt Associate Superintendent, Personnel Dr. Neal W. Olsen Associate Superintendent, Business David Chalupa Director, Fiscal Services 36 KERN HIGH SCHOOL DISTRICT SCHEDULE OF AVERAGE DAILY ATTENDANCE FOR THE FISCAL YEAR ENDED JUNE 30, 1994 Regular High School Home or Hospital Regular Classes Compulsory Continuing Education Special Education Opportunity schools Classes for Adults Currently Enrolled Not Currently Enrolled Adults in Correctional Facilities Independent Study Extended Year Special Education Regional Occupation Program Total Second Period Report 26 19,521 955 482 2OO 21,184 662 2,558 589 179 3,988 73 1,085 26,330 Summer School High School Hours of Attendance 459,636 Revised Annual Report 3O 19,079 978 482 256 20,825 623 2,498 587 191 3,899 73 1,019 25,816 See accompanying notes to supplementary information. 37 KERN HIGH SCHOOL DISTRICT SCHEDULE OF FEDERAL AND STATE FINANCIAL ASSISTANCE FOR THE FISCAL YEAR ENDED JUNE 30, 1994 (IN THOUSANDS) ProKram Entitlements Federal Prior Catalog Current Year Number Year Carryover Federal: ESEA - Eisenhower Program *ECIA, Chapter 1 ECIA, Chapter 2 *J.T.P.A. Home Economics *Tech Prep Education S ingle Parent- Homemaker *Secondary Education Carl Perkins *National School Lunch Program *Special Education (UDC) *Migrant Education Drug Free Schools State Legalization Impact Assistance Grants R.O.T.C. Adult Basic Education Other 84.164 84.010 84.151 17 246-50 84 049 84 243 84 048 84 048A 84 253 10 555 84 027 84 011 84186 13.786 N/A 84.002 N/A 60 $ 94 1,820 138 118 47 3,512 28 365 76 46 5 762 - - 7 1,065 - 572 - 300 - 116 31 1 - 56 135 155 85 9, in $ 4s3 State: Economic Impact Aid School Improvement Program Tenth Grade Counseling Mentor Teacher Program Tobacco Preschool Staff Development PACE GATE Correctional Nutrition Ed. Tech. Transportation Special Education R.O.P. Instructional Material Re s t ruc tut lng Other $ 621 $ 126 126 263 84 139 213 307 131 746 75 1,637 4,102 2,673 407 598 616 64 215 16 276 38 131 36 776 *Indicates major Federal financial assistance program. Total $ 154 1,958 165 3,512 28 441 51 762 7 1,065 572 3OO 147 1 56 135 240 $ 9,594 $ 685 126 126 478 100 139 489 307 131 746 75 38 1,637 4,102 2,673 407 729 652 $ 13,640 38 I ! I !, i ! I I ! I I I I I I I I Program Revenues Cash Accounts Accounts Deferred Received Receivable Payable Income Prior Year Revenue Revenues Expenditures $ 60 $ $ - 1,820 - 118 - 2,337 1,174 - 21 7 - 79 286 - 35 12 1 572 191 136 909 156 - 288 284 - 79 222 - 93 23 1 - 40 16 - 135 - 40 115 4 $ 6,492 $ 2,62! $ $ 38 $ 94 628 138 64 47 80 76 9 5 7 8 31 142 85 141 $ 969 $ 483 116 $ 116 1,330 1,330 101 101 3,511 3,511 28 28 361 361 42 42 627 627 7 7 1,065 1,065 572 572 301 301 139 139 1 1 56 56 135 135 94 94 $ 8,486 $ 8,486 $ 621 $ 126 126 257 84 139 213 294 131 64 1,585 4,103 2,628 407 598 473 $ 11,849 $ 13 746 11 52 45 143 - $ 167 $ 64 - 172 215 - 301 276 2 12 38 32 131 7 72 36 $ 518 $ 126 126 126 126 306 306 99 99 139 139 188 188 305 305 131 131 746 746 75 75 26 26 1,637 1,637 4,102 4,102 2,673 2,673 407 407 697 697 573 573 1,016 822 $74.5 $ 776 $ 12,874 $ 12,874 See accompanying notes to supplementary information. 39 I I I ! il i i ! I ! I I ! I I I i I KERN HIGH SGHOOL DISTRIGT RECONGILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT (J-200 SERIES) WITH AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 1994 (IN THOUSANDS) June 30, 1994 Annual Financial and Budget Report (Form J-200 Series) Fund Balances Adjustments and reclassifications: Deposit with SISK III Equity of Component Units included in accordance with NCGA 3 (Note lB) June 30, 1994 Audited Financial Statements Fund Balances Special Debt Capital General Revenue Service Project Fund Funds Funds Funds $ 8,430 $ 30,281 $ 5,656 $31,568 3,576 5,403 27,189 $ 8,430 $ 33,857 $11,059 $58,757 See accompanying notes to supplementary information. 4O KERN HIGH SGHOOL DISTRIGT SGHEDULE OF FINANGIAL TRENDS AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 1994 (IN THOUSANDS) General Fund Revenues and Other Financial Sources Expenditures Other Uses and Transfers Out Total Outgo Change in Fund Balance Ending Fund Balance Available Reserves Available Reserves as a Percentage of Total Outgo Total Long-Term Debt Average Daily Attendance at P-2 (Budget) 1995 1994 $122,928 $120,063 121,195 112,108 2,594 5,536 123,789 117,644 (861) 2,419 ~ 7,570 $8,430 $ 7,570 $ 7,852 1992 1991 $ 115,327 $110,572 109,516 111,895 4,804 2,548 114,320 114,443 1,007 (3,871) $6.011 $ 6,042 $ 5,431 $ 6,042 6.8% 6.7% 4.7% 5.3% $120,000 $121,134 $ 123,606 $ 90,683 25,205 26,330 26,151 25,766 The general fund balance has increased by $2,388 over the past two years. The fiscal year 1994-95 budget projects an decrease of $860, 10.2%. For a district this size, the state recommends available reserves of at least 3 percent of total general fund expenditures, transfers out, and other uses (total outgo). The district has incurred operating deficits in one of the past three years, and anticipates an operating deficit during the 1994-95 fiscal year. Total long-term debt has increased by $30,451 over the past two years. Average daily attendance has increased by 2.2% over the past two years. decline in growth of 4.3% is anticipated during fiscal year 1994-95. A 41 KERN HIGH SCHOOL DISTRICT NOTES TO SUPPLEMENTARY INFORMATION JUNE 30, 1994 NOTE 1 - PURPOSE OF SCHEDULES A. Schedule of Average Daily Attendance Average daily attendance 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. B. Schedule of Federal and State Financial Assistance OMB Circular A-128, requires a disclosure of the financial activities of all federally funded programs. This schedule was prepared to comply with A-128 and state requirements. Co Reconciliation of Annual Financial and Budget Report with Audited Financial Statements This schedule provides the information necessary to reconcile the fund balances of all funds reported on the Form J-200 Series to the audited financial statements. D. Schedule of Financial Trends and Analysis This schedule disclosed 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. 42 OTHER REPORTS BRowN 'ARMSTRONG RANDALL ~ REYES CERTIFII~D I~UBLIC A:c COUN'TANT S INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL STRUCTURE BASED ON'AN AUDIT OF FINANCIAL STATEMENTS--PERFORMED IN ACCORDANCE WITH "GOVERNMENT AUDITING' STANDARDS" Peter C. Brown, CPA Burton H. Armstrong, CPA Jerry E..Randall, CPA Benjamin P. Reyes, CPA Andrew J. Paulden, CPA cathy J. Brown, CPA Grant C. Cornell, CPA Lynn R. Krausse, CPA D.avid W. Evans, CPA Richard R. Carmona, CPA Richard A. Teubner, CPA Janet C. Smith Board of Trustees Kern High School District . Bakersfield, Calffornia We have audited the Combined ~and combining financial statements of the Kern High School District (the. district) as of and fox. the .year ended June 30, 1994, and have issued our report thereon dated October 28, 1994. . We have' conducted our audit in accordance 'with generally accepted auditing standards, GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States, and.the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments." Those'standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. In planning and performing our audit of the financial statements for the year ended June 30, 1994, we considered its internal control structure in order to determine'our auditing procedures for the purpose Of expressing'.our opinion on the financial statements and not to.provide assurance on the i.nternal control' structure. 'The management of the district is responsible for establishing and maintaining an internal'control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess'the expected benefits~and related costs.of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, .assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance ~with management'.s auth6rization and recorded.properly to permit the preparation of financial statements in accordance with.generally accepted accounting principles. Because of inherent limitations-in any internal control structure, errors or irregularities may nevertheless occur and not. be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk'that procedures may'become inadequate because of changes in conditions or that the effectiveness of the design and operation of, policies and procedures ~may deteriorate. For the pUrpose of. this report, we have classified'the significant internal control structure policies and procedures in the following categories: 43 An Accountancy Corporation 4200 Truxtun Avenue, Suite 300, Bakersfield, California 93309 · (805) 324-4971 · FAX (805) 324-4997 MEMBER of SEC Practice Section of The American Institute of Certified Public Accountants I I I I I I I Accounting Applications Billings Receivables Cash Receipts Purchasing and Receiving Accounts Payable Cash Disbursements Payroll Inventory~Contro1 Property and Equipment General Ledger Attendance General Requirements~ Political Activity · DaVis-Bacon Act Civil~Rights Cash Managemen~ Relocation Assistance and Real Property Management Federal Financial Reports " ~Allowable Costs/Cost Principles Drug-Free Workplace Administration Requirements Specific Requirements,' Types of serVices Eligibility Matching, Level of Effort, or. Earmarking · Reporting ~ Cost Allocation Special Requirements, if any Claims for'Advances and Reimbursements Amounts Claimed or Used for Matching For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and whether they'have been placed in operation, and we assessed 'control ~risk. We noted certain matters involving the internal, control structure and~its operation- that we ~ Consider to be reportable conditions under standards establishedby the American Institute of CertifiedPublic Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, 'could adversely affect the district's ability to record, process, s,,m~arize, and report financial data consistent with the assertions'of management in the financial Statements. The reportable ~onditions identified are included'in the findings 'and recommendations section of this report. A'mater'ial weakness is a reportable condition~in which the design or operation~ of one or more of the internal control structure ~elements does not reduce to a relatively low level the risk that errors or. irregularities ina mounts that would be material in relation to the financial statements being audited may occur and' not be detected within a t,imely period by employees in the normal course of performing their assigned functions. 44 I i I I I i ! I I ! i i I I I ! .I I Our consideration of 'the internal control structure-would not necessarily disclose all matters in the internal control structure that might be reportable conditions .and, accordingly,' would not necessarily disclose all reportable conditions that are.also considered to be material weaknesses as defined above. However~ we believe none of the repoTtabl~ conditions described above is a material weakness. ." ' This report is intended for the information of the audit committee, management, the State Department of 'Education, and the state Gontroller's Office. This restriction is not'intended to limit the distribution 0f'this report, which'is a matter of public record. J BROWN ARMSTRONG RANDALL & REYES ACCOUNTANCY CORPORATION .Bakersfield, California October ~28, 1994 45 BRowN ,ARMSTRONG RANDALL & REYES CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOr'S KEpO~T ONTHE INTEKNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERALFINANCIAL ASSISTANCE PROGRAMS Board of Trustees Kern High School District, Bakersfield, California Peter C. 'Brown, CPA Burton H. Armstrong, CPA Jerry E. Randall, CPA Benjamin P. Reyes, CPA . Andrew J. Paulderi, CPA . Cathy J. Brown, CPA Grant'C. Cornell, CPA Lynn R. Krausse, CPA David W. Evans, CPA Richard R. Carmona, CPA Richard A. Teubner, CPA Janet C. Smith We hav~ audited' ~he financial statements of the Kern HighSchool District'(the district) for the year ended June 30, 1994, and have issued our report thereon dated October 28, 1994..We have also audited the compliance of the district with requirements applicable to major federal financial assistance.programs and have issued our report, thereon dated October"28, 1994. Weconducted our audits in acc0rdancewith~generally accepted auditing standards; GOVERNMENT AUDITING STANDARDS,. issued by the Comptroller General of the United States; and Officeof Managementand Budget (OMB) Circular A-128.1 AUDITS OF STATE AND LOCAL GOVERNMENTS. Those standards and OMB Circular A-128 require that we plan 'and perform the audit to obtain reasonable assurance about whether the~ financial statements are free of material misstatement and whether the district, complied with laws and regulations, noncompliance with which would'be material to a major federal financial assistance program. In Planning and performing our audits for the year ended June 30, 1994, we considered the internal control structure of the Kern High School District, in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements'of the district, and on the compliance o~ the district with requirements applicable to major programs and to report On.the internal control structure in accordance with OMB Circular A-128. This report addresses our consideration of internal control'structure policies and procedures relevant, to compliance with requirements' applicable .to federal financial assistance programs. We have addressed internal control structure policies and ,procedures'relevant to our audit of the financial statements in a separate report dated October. 28, 1994. · The management-of the Kern High School District is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and .judgments by management are required to assess the expected ben, fits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but nOt absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that federal financial assistance programsare managed in compliance with applicable laws .and regulations. Because 'of inherent limitations in any internal control structure, errors, irregularities,' or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the'effectiveness of the design and operation of policies and procedures may deteriorate. 46 An Accountancy Corporation 4200. Truxtun.Avenue, Suite 300, Bakersfield, California'93309 · (805) 324-4971 · FAX (805) 324-4997 M~MBER of SEC Practice Section of The American Institute' of Certified Public Accountants For the .purpose of this .report, we have classifte~ the'significant internal control structure policies and procedures used in,administering federal financial assistance.programs in the .f011owing categories Accounting Applications Billings Receivables Cash Receipts Purchasing and Receiving Accounts.Payable Cash Disbursements Payroll. Inventory ContrOl Property and-Equipment General Ledger Attendance General Requirements Political Activity Davis-Bacon Act 'Cash Management RelocAtion'Assistance'and Real Property Management' Federal Financial Assistance Reports Allowable Cos.ts/Cqst Principles Drug-Free Workplace ~ Administration .Requirements Specific Requirements Types of Services . . . Eligibility - ~' Matching, Level of Effort, or Earmarking Reporting Cost Allocation Special Requirements,'if any' Claims for Advances and ReimburSements Amounts Claimed or'Used for Matching' For all of the internal control structure categories listed above, we obtained an understanding of the-design of relevant poticzesand procedures and determined 'whether they have been placed in operation,'and We assessed control risk. During' the year ended June 30, 1994,' 'the district, .expended 92% of its to~al federal financial assistance under major federal financial assistance programs. We~ performed tests of controls, as required'by OMB Circular A-128, to evaluate' the effectiveness of the design and operation of internal control structure policies, and procedures that'we considered releyant to preventing or detecting material noncompliance .with specific requirements, general requirements', and requirements governing'claims for advances and reimbursements and amOunts cIaimed or used.for matching that are applicable to.each of-the district"s major'federal financial assistance programs, which are identified in the accompanying Schedule ,of Federal Financial Assistance..Our procedures-were less in scope than would be necessary to render an opinion on. these internal control structure policies and. procedures. Accordingly, we do not express such an 6pinion. 47 I ! ! I I ! I I I I ! I I I ! ,! ! ! i We noted certain matters inVOlving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of.Certified PUblic AccOuntants. Reportable conditions involve matters coming to our attention relating to si§nificant deficiencies in the design or,operation of the'internal control structure that, in our judgment, could adversely affect the district's ability to administer federal financial assistance programs in accordance with applicable laws and regulations. ~ The reportable conditions identified are included, in'the findings and 'recommendations section of this report. ~A material weakness'is a reportable condition in which the design or operation of one or more of the' internal control structure elements does not .reduce 'to a relatively,low 'level the risk that noncompliance.with laws and regulations that would be material to a federal financial assistance programmay occur and not be. detected withina timely period'by employees in the normal cQurse of performing their'assigned functions. Our consideration of the internal control structure policies and procedures Used in administering federal financial assistance would not necessarilydisclose all · matters in the internal control structure that might be reportable conditions. and, accordingly, would not necessarily disclose all reportable conditions that are .alSo-considered to be material weaknesses .as defined above. However, we believe none of the reportable conditions.described above is amaterial weakness. This report is intended fo= the information of the audit committee, management,. the state Department of Education and the State Controller's Office. This restriction is not intended to limit the distribution of this report, which is a matter of public record. BROWN ARMSTRONG RANDALL &. REYES ACCOUNTANCY CORPORATION Bakersfield, California .October 28', 1994 _ 48 ! I I I ! ! I ! I I I I I BROWN ARMsTRoNG RANDALL ~t REYES CERTIFIED P'UBLIC .AccOUNTANTS ~' INDEPENDENT AUDITOR'S REPORT ON STAT~.' COMPLIANCE Board of Trustees Kern High School District Bakersfield, California '' Peter C Brown, CPA Burt,~n H. Armstrong, CPA Jerry E. Randall, CPA Benjamin-P. Reyes, CPA Andrew J. Paulden, CPA Cathy J. Brown, CPA Grant C. Comell, CPA Lynn R. Krausse CPA David W. Evans,-CPA G.E Trent, CNE Janet C. Smith We have audited the combined and combining financial statements'of the Kern~High· SchoolDistrict (the district), as of and for;the year ended June 30, 1994, and -have issued' our .report thereon dated October.28, 1994. Our.audit. was made. in accordance with generally 'accepted auditing standards; the standards for ',financial and 'compliance audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States; .and the, State Controller's Standards and Procedures for Addits of 'California K-12 Local Educational Agencies. Thosestandards require that we plan and.performtheaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on'a test basis/evidence supporting the amounts.and.disclosures in the financial statements. An audit' also includes assessing the accounting pr%nciples used and significant estimates made by management, as well as evaluating the overall financial statement 'Pr?s~ntation. We believe that our audit provides a reasonable basis for our oplnlon.. . The district'smanagement is responsible for the district's compliance withlaws 'and regulations% 'In connection with'the audit referred to above, we selectedand tested transactions and records to 'determine thedistrict's compliance With the ' state.laws and regulations applicable to the following: Attendance Accounting Gann Limit Calculation · Categorical Programs Mega-item School Improvement Program. Economic Impact Aid State Residency Based· on 'our audit we found that, for 'the items tested, the Kern High School '.District complied, with the'laws and regulati'ons of the state programsreferred to above, except as described in the Findings and Recommendations section of this. report.' Further, based .on our examination,, for items ndt tested,· nothing came' to our attention to indicate that the Kern High School District had not. complied with the state laws and. regulation's, pxcep~ as described, in the Findings and Recommendations section of this report. BROWN-ARMSTRONG RANDALL & REyEs ACCOUNTANCY CORPORATION Bakersfield, CalifOrnia · October 28, 199~ 49 An A~countancy Corporation · 4200 Truxtun Avenue, Suite 300, Bakersfield, California 93309 · (805) 324-4971 · FAX i805) 324-4997 MEMBER of SEC Practice Section of The American Institute of Certified Public Accountants ! I I I i I ! BROWN ARMSTRONG RANDALL ~ 'REYES CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH LAWS AND BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN WITH GOVERNMENT AUDITING STANDARDS ISSUED BY THE GAO Board of TruStees Kern High School District Bakersfield, California Peter C Brown, CPA Burton H. Armstrong, CPA Jerry E. Randall, CPA Benjamin P. Reyes, CPA , Andrew J. PauMen, CPA Cathy J. Brown, CPA REGU T Grant C. Cornel1, CPA LA IO~qn R. Krausse, CPA AGCORDANCI!bavid w. Evans, CPA G.P. Trent, CNE Janet C. Smith We have. audited the combined and combining financial statements ofthe Kern Hi~ School District (the district)' as of and for the year ended June 30, 1994, and have issued our report thereon dated October 28,~1994. We conducted our audit in accordance'with generally accepted auditing standards and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of.the United States and the provisions of Office Of*Management and Budget Circular A- 128, !'Audits of State and 'Local Gover~ents". ~ose standards require that. we .plan and perfo~ the .audit to obtain reasonable.assurance about whether the general purpos~ financial s~atements are free.of'material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the district is the responsibility of the district's management. As part of obtaining~reasonable assurance about whether the financial statements are free of 'material misstatement,, we perfo~ed tests of ,the district's compliance with certain provisions.of laws, regulations, contracts, and grants. However, the objective of our audit of the financial statements was not'to'provide anopinion on overall compliance with such provisions. Accordingly, we do not express.such an opinion. -:. The results of our tests indicate that, with 'respect to the items tested, Kern High School District complied, in all material respects, .with the. PrOvisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the dist'rict had no~ complied~ 'in all material respects, with· those provisions. This report is intended for the info~ation, of the audit' comittee, management, the California of Education, and the State Controller's Office. his Department restriction is not intended to limit the distribution of this report, which is a matter of public record. ' '. ARMSTRONG RANDALL & R~ES BRO~ ACCO~T~ CORPO~TION . Bakersfield, California october 28, 1994 I I I 5O An Accountancy Corporation 4200 Truxtun Avenue, Suite 300, Bakersfield, California 93309 · (805) 324-4971 · FAX' (805) 324-4997 MEMBER of SEC Practice Section of The American Institute of Certified Public Ad:ountants BROwN ARMSTRONG RANDALL & REYES CERTIFIED 'PUBLIC A~CCou'NTANTS Peter C BrOwn, CPA Burton H. Armstrong, CPA Jerry E. Randall, CPA Benjamin E Reyes, CPA. Andrew I. Paulden, CPA Cathy J. ·Brown, C~PA Grant C. Cornell, CPA ~ NERAL ' Krausse CPA INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH THE E REQUIRE~NT~.~. _ '__. APPLICABLE TO FEDERAL FI'NANGIAL ASSISTANCE 'PROGRAMS . uavla w. evans, cea I I I I I I ! · : G.E Rent, CNE Janet C. Smith Board of Trustees Kern High School District Bakersfield, California We have audfted the combined and combining financial statements of the"Kern High School District (the district), as of and for the year ended June 30, 1994, and have issued our report thereon dated October 28, 1994'; We have applied procedures to test the district's'compliance with the following requirements applicable'.to its federal financial assistanceprograms, which are identified in the schedule of federal and state financial assistance, for the year ended June 30, 1994: ,. General Requirements Political Activity Davis-Bacon Act Cash Management Relocation Assistance and Real Property Acquisition Federal Financial Reports Allowable Costs/Cost Principles Drug Free' Workplace Administrative .Requirements Our procedures were limited to the applicable procedures described in the Office of Management'and Budget's "Compliance. Supplement for Single Audits of State and Local Governments". Our procedures weresubStantially less in scope than an audit, the objective of which .is the eXpression of an opinion on the district's compliance with the requirements listed in the:preceding paragraph. Accordingly, we do not express such an opinion. · With respect to the items tested, the results:Of those procedures disclosed no material, instances of noncompliance with.the requirements listed in the second paragraph of this report. With respect to'items not'tested, nothing came,to our attention that caused us to believe that.the Kern High School District had' not complied, in all material respects, with those requirements. However, the results of' our p~ocedures disclosed.immaterial instances of noncompliance with these requirements, which are described in' the Findings-and Recommendations section of this report. This report is intended for.the information of the'audit.committee, management, the California Department of Education and the State Controller's Office...This restriction, is not intended t° limit the distribution of this report; ·which is a matter of public record. Bakersfield, October'28, California 1994 BROWN ARMSTRONG RANDALL & REYES ACCOUNTANCY CORPORATION 'An Accountancy Corporation 4200.Truxtun_Avenue; Suite 300, Bakersfield, California 93309 · (805) 324-4971 · FAX (805) 324-4997 MEMBER of SEC Practice Section of The American Institute of Ce/tiffed Public Accountants ' - R^ D^n & Re¥ s CERTIFIED PUBLIC ACCOUNTANTS Peter C Brown, CPA Burton H. Armstrong, CPA Jerry E. Randall, CPA Benjamin P. Reyes, CPA Andrew J. Paulden, CPA ' Cathy J. Brown, CPA INDEPENDENT AUDITOR' S REPORT ON' COMPLIANCE WITH spEcIFICREQUIREME~SGrantR.C'Krauss'e,C°rnell' CPACPA APPLIGABLE TO MAJOR FEDERAL FINANCIAL. ASSISTANGE PROGRAMS David W. Evans, CPA I I ! I I I G.E ~ent, CNE Board of Trustees . Janet C. Smith Kern High School District Bakersfield, California We have audited the'Combined and combining'financial statements of the Kern High School'DiStrict (the distric;), as of and for the year ended June 30, 1994, and have issued our report thereon dated OctOber 28, 1994. We have'also audited the district's ~ompliance with the requirements governing' types of services allowed or not allowed; eligibilSty;'matching, level of effort, or earmarking; reporting; claims for advances and reimbursements; and amounts claimed or.used for matching that are applicable to each of its ma]or federal financialassistance programs, which are identified in the accompanying~schedule of federal and state, financial assistance, for the year ended June 30, 1994. The management of the district is .responsible for the district's.compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit. · We conducted our audit inaccordance with generally accepted auditing .standards, GOVERNMENT AUDITING STANDARDS, issuedby the Comptroller General of the United States, and Office of Management and Budget Circular A-128, "Audits of State and Local Governments." Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about, whether material noncompliance with the requirements, referred to above occurred. An audit includes examining, on a test basis, evidence about the' district's compliance with those' requirements' We believe that our audit provides a reasonable basis for ouropinion. The results of our audit procedures disclosed no ins'tances of noncompliance'with the requirements referred to above. In Our opinion, the KernHigh Sc~oo! District complied, in a~l material, respects, with the requirements governing types of services allowed or unallowed; eligibility; matching, level of-effort, or earmarkiDg; reporting; claims .for advances and reimbursements; and amounts claimed or used for matching.that are, applicable to each of its major federal financial assistance programs for the year ended'June 30, 1994. This report is intended for the information of the audit committee, management, the California Department ofEducation, 'and the State Controller's Office. This' restriction is not intended to limit the, distribution of this report, Which is a matter of public record. BROWN ARMSTRONG RANDALL & REYES ACCOUNTANCY CORPORATION Bakersfield, California October' 28, 1994 52 · An Accountancy Corporation 4200 Truxtun .Avenue, Suite 300, Bakersfield, California 93309 · (805) 324-4971 · FAX (805) 324-4997 MEMBER of SEC Practice Section of The American Institute of Certified Public Accountants I I I I I I I I ! I I ! I I BROWN ARMSTRONG RANDALL & REYES CERTIFIED ~P'UBL ic ACCOUNTANTS. · - Cathy J. Brown, Gran~ C. ComelL INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICAR~%Rr~ausse, NONMAJOR FEDERAL FINANGIAL ASSISTANCE PROGRAM TRANSAGTIONS Davtd W. Evans, Peter c. Brown, CPA Burton H. Armstrong, CPA Jeny E. Randall, CPA Benjamin P. Reyes, CPA Andrew J. Paulden, CPA Richard R. Carmona, Richard A. Teubner, Board of Trustees Kern High School District Bakersfield, California .. We have audited the-combined and combining'financial statements of the Kern High School District (the district) as of and for the year ended June 30, 1994, and have issued our report thereon dated October 28, 1994. ~' In connectio'n with our 'audit of the 1994 financial~ statements of the Kern High School District, and with our consideration of.the district's control structure used to administer federal financial assistance programs, as'required by the Office of Management and Budget(OMB)Gircular A-128, "Audits of state and Local Governments," we selected certain transactions applicable to'.certain nonmajor federal financial assistance programs for the year ended June 30, 1994. As required by OMB circular A-128, we have performed·auditing procedures to test compliance with the requirements governing types of services allowed or not · allowed; and eligibility that are applicable to those transactions. Our procedures were substantiallyless inscope than an audit, the objective of which is the expression of an opinion on the district's compliance with·.these requirements. Accordingly, we do.not express such an opinion. With respect to. the items tested, the results of those procedures disclosed no material instances of noncomPliancewith therequirements listed in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Kern High School District had not complied, in all material respects, with'those.requirements. Also, the results ofour procedures did not disclose any immaterial instances of noncompliance with those requirements. This report is intended for-the information of the aUditcommittee, management,- the California'Department of Education, and the Stare'Controller's Office. This restriction is not intended to limit the distribution of this report, which is a matter of public record. '. BROWN ARMSTRONG RANDALL & REyEs ACCOUNTANCY CORPORATION Bakersfield, California October..28, 1994 CPA CPA CPA CPA CPA CPA Ja, net c. S'mith 53. · An Accountancy Corporation 4200 Truxtun Avenue, Suite 300, Bakersfield, California 93309 · (805) 324-4971 · FAX' (805) 324-4997 MEMBER of SEC Practice Section of The American Institute of Certified Public Accountants i I '1 I I I I I I I ! I I I I I I I I FINDINGS AND RECOMMENDATIONS KERN HIGH SCHOOL DISTRIGT S~Y OF FINDINGS AND REGOMMENDATIONS FOR THE FISCAL YEAR ENDED JUNE 30, 1994 STATE GOMPLIANCE Attendance During our testing of attendance at Bakersfield High School we noted several instances in which excused absence documentation was not dated as required by Title 5 of the California Code of Regulations, sections 16025 and 16026. Additionally, we tested ten absences at four school sites. Documentation for one absence could not be located at Bakersfield High School. Documentation for one absence could not be located at Centennial High School. Eight of ten absences sampled at Vista could not be documented. District policies are being followed in most cases at Bakersfield High and Centennial. At Vista the secretary was not maintaining a record of absences which are cleared by telephone. Title 5, sections 16025 and 16026, requires that documentation such as parental notes, logs of phone calls, etc. be retained for a minimum of three years. The combined effect of these exceptions is a potential disallowance of $161. Recommendation Attendance secretaries should be reminded that the verification date must be included in the excused absence documentation. Additionally, school secretaries should receive on-going training to insure that proper documentation for excused absences is being maintained. District Response The district will remind attendance secretaries that established policies and procedures must be followed. Attendance Education Code, Section 46010, states that an absence may be excused for only one day if a funeral for an immediate family member is within the state, but up to three days are allowed if the funeral is out of state. Documentation for one absence at Bakersfield High School indicated that the student was absent due to a funeral. The excused absence was for two days. The documentation did not indicate if the funeral was in or out of state. This exception results in the potential disallowance of $23. Recommendation Excused absence documentation should indicate if the funeral was in or out of state. Attendance secretaries should be reminded that no more than the maximum number of days allowed are reported for A.D.A. apportionment purposes. District Response The district will remind attendance secretaries that established policies and procedures must be followed. 54 I I I I I :1 Adult Education Attendance for Adult Education classes is recorded on scantron computer forms. The scantron forms are read by the district's computer system and used to summarize attendance for apportionment purposes. During our testing of the Adult Education attendance system, we noted an instance where the scantron did not agree to attendance reported by the district's computer. Due to this error, attendance was overreported by four hours which results in the potential disallowance of $32. Recommendation Procedures should be established to verify the accuracy of the attendance information captured by the district's computer system. District Response The district contends that this error was caused by stray marks on the scantron form and is an isolated occurrence. The district, however, will review this finding and assess the need for additional review procedures to ensure the accuracy of the attendance information. ROP/C Attendance at the ROP/C center is taken manually on a daily basis. The attendance information is entered into the ROP/C's attendance computer system periodically. Once the attendance information is entered for an entire month, an attendance summary is ran. This summary is maintained at the ROP/C center. Subsequent to the completion of the monthly summary the system is adjusted to begin the new month. As absences for the prior month are cleared, the system is adjusted, however, the system does not allow for verification of these adjustments. As a result, we were not able to test the ROP/C attendance system as required by the State Department of Education. We were unable to determine the potential dollars which may be disallowed as a result of this finding. Recommendation and Gurrent Status The district has modified the attendance system at the ROP/C center to eliminate this problem in the future. STATUS OF PRIOR YEAR FINDINGS Inventory The district maintains inventory consisting of operational supplies, food, and maintenance supplies. The district currently uses the periodic method of accounting for inventory. Under this method, an annual count and valuation of the inventory is performed at or near the balance sheet date. Due to weaknesses in the count and valuation process, the district resorts to estimating the inventory value using a relatively conservative amount. Recommendation The district should implement the perpetual method of accounting for inventory. Under this method, inventory is adjusted as inventory is acquired and/or consumed. Implementing this method will benefit the district in three ways. First, an accurate count and valuation will be reflected in the financial statements. Second, inventory errors or irregularities, if any, will be easier to identify by employees in the normal course of performing their assigned functions. Third, the district will be able to better monitor inventory quantities and consequently avoid occurrences of excessive or deficient quantities. 55 I I I I I ,I II I I I I I I ! I I I I I Client ~esponse The district will investigate the feasibility of implementing a perpetual system. Cost versus benefit will be the major factor in determining feasibility. Current Status The district has taken steps to improve their system of accounting for inventory at year-end, however, a perpetual system of inventory has not been implemented. ROP/C Attendance Records During our tests of attendance reporting for the ROP/C program we noted the monthly reports for February1993 and March 1993 were missing. Attempts made by the district to re-run or re-print these reports were not successful. Data processing indicated that once these reports are printed and the data is merged with the cumulative data files it is not possible to reprint the reports. Recommendation ROP/C attendance reports should be maintained for at least three years. A system should be implemented to insure that reports are not mis-placed and/or mistakenly discarded. The current attendance accounting system should be modified so that monthly data is not lost when merged with other reports. Client Response The district is researching this matter and intends to implement this recommendation. Current Status Similar findings were noted in the current year. As of the completion of our fieldwork, October 28, 1994, the district had taken the appropriate steps to eliminate the potential for a similar finding in the future.