Audit Report Final 09-10

8/7/2019 Audit Report Final 09-10

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RADNOR TOWNSHIP SCHOOL DISTRICTWAYNE, PENNSYLVANIA

AUDIT REPORTJUNE 30, 2010


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RADNOR TOWNSHIP SCHOOL DISTRICT

TABLE OF CONTENTS

INDEPENDENT AUDITORS REPORT

MANAGEMENT'S DISCUSSION AND ANALYSISBASIC FINANCIAL STATEMENTS

Entity-wide Financial Statements:- Statement of Net Assets- Statement of Activities

Fund Financial Statements:- Balance Sheet - Governmental Funds- Reconciliation of Balance Sheet - Governmental Funds

to Statement of Net Assets- Statement of Revenues, Expenditures and Changes in

Fund Balances - Governmental Funds- Reconciliation of Statement of Revenues, ExpendituresChanges in Fund Balances - Governmental Funds to

Statement of Activities- BUdgetary Comparison Statement - General Fund- Statement of Net Assets - Proprietary Fund- Statement of Revenues, Expenses and Changes in Fund

Net Assets - Proprietary Fund- Statement of Cash Flows - Proprietary Fund- Statement of Net Assets - Fiduciary Fund- Statement of Changes in Net Assets - Fiduciary Fund

NOTES TO FINANCIAL STATEMENTS

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RADNOR TOWNSHIP SCHOOL DISTRICT

TABLE OF CONTENTS

SINGLE AUDIT

Report on Internal Control Over Financial Reporting andon Compliance and Other Matters Based on an Auditof Financial Statements Performed in Accordance withGovernment Auditing Standards

Report on Compliance with Requirements Applicableto Each Major Program and on Internal Control OverCompliance in Accordance with OMB Circular A-133

Schedule of Findings and RecommendationsSchedule of Expenditures of Federal Awards and Certain State GrantsNotes to Schedule of Expenditures of Federal Awards and CertainState Grants

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49

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February 2011

INDEPENDENT AUDITORS' REPORT

Barbacane, Thornton & LLP200 Building3411 RoadWilmington, Delaware 19810

T 302.478.8940F302.468.4001www.btepa.eom

Board of School DirectorsRadnor Township Schoo! DistrictWayne, Pennsylvania

We have audited theaccompanying financial statementsof the governmental activities, the business-typeactivities, each major fund and the aggregate remaining fund information of Radnor Township SchoolDistrict (the IIDistrict ll), Wayne, Pennsylvania, asof and for the year ended June 30, 2010, which collectivelycomprise the District's basic financial statements as listed in the table of contents. These financialstatements are the responsibility of Radnor Township School District's management. Our responsibility is toexpress opinions on these financial statements based on our audit. The prior year information has beenderived from the District's adjusted 2009 financial statements. In our report dated June 9, 2010, weexpressed unqualified opinions'on the respective financial statements of the governmental activities, thebusiness-type activities, each major fund and the aggregate remaining fund information.We conducted our audit in accordancewith auditing standardsgenerally accepted in the United States ofAmerica and the standards applicable to financial audits contained in GovernmentAuditing Standards,issued by theComptroller General of the United States. Those standards require thatwe plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinions.In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities, the business-type activities, each major fundand the aggregate remaining fund information of Radnor Township School District, Wayne, Pennsylvania,as of June 30,2010, and the respective changes in financial position and cash flows, where applicable,thereof and the bUdgetary comparisons for the general fund for the year then ended in conformity withaccounting principles generally accepted in the United States of America.In accordance with GovernmentAuditing Standards, we havealso issued our report dated February 22,2011 on our consideration of Radnor Township School District's internal control over financial reporting andon our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreementsandother matters. The purpose of that report is to describe the scope of our testing of internal control overfinancial reporting and compliance and the results of that testing, and not to provide an opinion on theinternal control over financial reporting or on compliance. That report is an integral part of an auditperformed in accordance with GovernmentAuditing Standards and should be considered in assessingthe results of our audit.

- 1CERTIFIED PUBLIC ACCOUNTANTS


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Board of School DirectorsRadnor Township School District

The management's discussion and analysis on pages 3-10 is not a required part of the basic financialstatements but is supplementary information required by accounting principles generallyaccepted in theUnited States of America. We have applied certain limited procedures, which consisted principally ofinquiries of management regarding the methods of measurement and presentation of the requiredsupplementary information. However, we did not audit the information and express no opinion on it.Our auditwas conducted for the purpose of forming opinions on the financial statements that collectivelycomprise Radnor Township School District's basic financial statements. The accompanying schedule ofexpendituresof federal awardsand certain state grants is presented for purposes of additional analysisasrequired by the U.S. Office of Management and BUdget Circular A-133, IIAudits of States, localGovernments and Nonprofit Organizations'" and is not a required part of the basic financial statements.Such information hasbeen subjected to theauditing procedures applied in theaudit of the basic financialstatements and, in our opinion, is fairly stated in all material respects in relation to the basic financialstatements taken as a whole.

; $ ~ ~ 1 { ' 7 LLPBARBACANE, THORN;ON & COMPANY LLP ?

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RADNOR TOWNSHIP SCHOOL DISTRICTWAYNE, PENNSYlVANIAMANAGEMENT'S DISCUSSION AND (MD&A) UNAUDITED

For the Year Ended June 3D, 2010

Managements discussion and analysis ("MDM") of the financial performance of Radnor TownshipSchool District (the "DistricfU) provides an overall review of the District's financial activities for the fiscalyear ended June 30, 2010.The intent of the MD&A is to look at the District's financial performance as a whole. However, readersalso should review the financial statements and related notes to enhance their understanding of theDistrict's overall financial performance.FINANCIAL HIGHLIGHTSThe trend of prior years indicates that during the fiscal year 2009-2010, the District would experienceanother year of significant increases in the costs for contracted salaries and employee benefits. TheDistrict again budgeted at an increased rate for the employer contribution toward the PennsylvaniaState Employees' Retirement System (PSERS) to prepare for the anticipated spike in future years. TheBoard of School Directors (the "Boardll ) elected to increase the real estate tax millage by .7613 mills inorder to meet the operating cost increases in staff salaries and benefits. The 2009-2010 bUdget alsoappropriated $525,000 for nonrecurring capital improvements. The results of operations for 20092010 show that actual general fund expenditures during the year were below actual general fundrevenues realized by $4,547,471. However, the unreserved undesignated fund balance remains wellbelow the eight percent cap imposed by the Commonwealth of Pennsylvania at $5,686,510 duelargely to the Board's actions to designate $3.784 million for future PSERS pension obligationspredicted to hit over the course of the next three years and 3.455 million in capital project fundsdesigned to limit the impact of upcoming nonrecurring capital expenses on the operating bUdgetover the next several years. In addition, another $1 .29 million is designated for the long-term liabilityof early retirement incentive programs.The District's net assets increased from $7.310 million as of June 30, 2009 to $10.847 million as of June30,2010 due mainly to the results of operations, more fully explained below.Reporting the DistrIct as a WholeThe Statement ofNetAssets and statement ofActivitiesThe Statement of Net Assets and the Statement of Activities report information about the District and itsactivities as a whole. These statements include all assets and liabilities using the accrual basis ofaccounting similar to the accounting used by private sector corporations. All of the current year'srevenues and expenses are taken into consideration regardless of when cash is received or paid.These two statements report the District's net assets and changes in them. The change in net assetsprovides the reader with a tool to assist in determining whether the District's financial health'isimproving or deteriorating. The reader will need to consider other nonf inancial factors such asproperty tax base, current property tax laws, student enrollment growth and facility conditions inarriving at a conclusion regarding the overall health of the District.

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RADNOR TOWNSHIP SCHOOL DISTRICTMANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED (CONrD)

For the Year Ended June 30,2010

Entity-wide Financial AnalysisNet assets may serve over t ime as a useful indicator of a government's financial position. In the caseof the District, assets exceeded liabilities by $10.8 million at the close of fiscal year 2009-2010.A portion of the District's total net assets reflects its investment in capital assets, net of related debt.The District uses capital assets to provide services; consequently, these assets are not available forfuture spending. Although the District's investment in its capital assets is reported net of related debt, itshould be noted that the resources needed to repay this debt must be provided from other sourcessince the capital assets themselves cannot be used to liquidate these liabilities.A comparative analysis of fiscal year 2010 to 2009 follows:

Net AssetsGovernmental Activities Business-type Activities Totals2010 2009 2010 2009 2010 2009

ASSETS:Current and other assets $ 27,683,577 $ 25,006,022 $ 452,712 $ 389,107 $ 28,136.289 $ 25,395,129Capital assets, net 101,133,208 103,845,342 157,353 156,735 101,290,561 104,002,077TOTAL ASSETS $128,816,785 $128,851,364 $ 610,065 $ 545,842 $129,426,850 $129,397,206LIABILITIES:Current liabilities $ 9,452,438 $ 10,082,772 $ 91,885 $ 82,270 $ 9,544,323 $ 10,165,042Long-term debt 109,035,142 111,921,928 109,035,142 111,921,928TOTAL LIABILITIES 118,487,580 122,004,700 91,885 82,270 118,579,465 122,086,970NET ASSETS:Invested in capital assets,net of related debt (3,928,754) (2,908,261 ) 157,353 156,735 (3,771,401 ) (2,751,526)

Unrestricted 14,257,959 9,754,925 360,827 306,837 14,618,786 10,061,762TOTAL NET ASSETS 10,329,205 6,846,664 518,180 463,572 10,847,385 7,310,236TOTAL LIABILITIES ANDNET ASSETS $128,816,785 $128,851,364 $ 610,065 $ 545,842 $129,426,850 $129,397,206

The District reported increases in its unrestricted net assets as a result of current year operations TheDistrict's investment in capital assets, net of related debt, decreased as a result of the District's capitalassets being depreciated at a rate faster than debt associated with acquiring capital assets is beingretired. This trend will reverse in future periods. In addition it has been the practice of the District, whenpossible, to fund capital i tems through current revenue sources rather than incurring debt to f inancethese items.Governmental ActlymesThe Statement of Activities shows the cost of program services and the charges for services and grantsoffsetting those services. The table below reflects the cost of program services and the net cost ofthose services after taking into account the program revenues for the governmental activities.

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RADNOR TOWNSHIP SCHOOL DISTRICTMANAGEMENTS DISCUSSION AND ANALYSIS - UNAUDITED (CONTD)For the Year Ended June 30, 2010

Total and Net Cost of ServicesTotal Net Total Net

Cost of Services Cost of Services Cost of Services Cost of Services2010 2010 2009 2009Program expenses:Instruction $ 41,649,703 $ (35,870,475) $ 40,214,929 $ (34,986,395)Support Services:Instructional student support 6,987,293 (6,614,844) 7,116,889 (6,755,809)Administrative and financialsupport services 6,674,698 (6,432,073) 6,267,732 (6,048,396)Operation and maintenanceof plant services 6,898,251 (6,523,908) 8,282,333 (7,910,071)Pupil transportation 3,377,113 (2,378,367) 3,201,681 (2,210,990)Student activities 1,136,322 (1,061,810) 1,188,187 (1,118,114)Community services 92,031 834Interest and fiscal charges 4,798,852 (4,727,372) 4,808,711 (4,729,746)

TOTALS $ 71,614,263 $ (63,660,675) $ 71,081,296 $ (63,698,079)

The increase in the net costs associated with instruction is a direct result of contractual increases insalaries somewhat offset by staff reductions from the prior year. The District also experiencedsignificant decreased costs associated with the operation and maintenance of plant services asconcerted efforts were made to manage energy and fuel costs.Changes in Net Assets

Governmental Activities2010 2009 Business-type Activities2010 2009 Totals2010 2009

41,649,703 40,214,929 41,649,703 40,214,9296,987,293 7,116,889 6,987,293 7,116,8896,674,698 6,267,732 6,674,698 6,267,7326,898,251 8,282,333 6,898,251 8,282,3333,377,113 3,201,681 3,377,113 3,201,6811,136,322 1,188,187 1,136,322 1,188,18792,031 834 92,031 8344,798,852 4,808,711 4,798,852 4,808,7111,501,347 1,562,681 1,501,347 1,562,68171,614,263 71,081,296 1,501,347 1,562,681 73,115,610 72,643,977

$ 3,482,541 $ 1,432,460 $ 54,608 $ 28,652 $ 3,537,149 $ 1,461,112

REVENUESProgram revenues:Charges for servicesOperatinq qrantsTotal Program Revenues

General revenues:Property taxesOther taxesGrants and entitlementsInvestment earningsMiscellaneousTotal General RevenuesTOTAL REVENUESEXPENSESProgram expenses:InstructionInstructional student supportAdministrative and financialsupport servicesOperation and maintenance

of plant servicesPupil transportationStudent activitiesCommunity servicesDebt serviceFood service

TOTAL EXPENSESCHANGE IN NET ASSETS

$ 334,5917,618,9977,953,58862,197,3221,362,4033,061,762360,800160,92967,143,21675,096,804

$ 1,055,7236,327,4947,383,21759,068,8861,245,5373,243,157723,505849,45465,130,53972,513,756

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$ 1,341,345213,1461,554,491

1,4641,4641,555,955

$1,394,272192,6811,586,953

4,3804,3801,591,333

$ 1,675,9367,832,1439,508,07962,197,3221,362,4033,061,762362,264160,92967,144,68076,652,759

$ 2,449,9956,520,1758,970,17059,068,8861,245,5373,243,157727,885849,45465,134,91974,105,089


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RADNOR TOWNSHIP SCHOOL DISTRICTMANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED (CONrD)For the Year Ended June 30, 2010

The cost of all governmental activities in 2009-2010 was $73.115 million. The amount that taxpayersultimately financed for these activities through tax revenues was $63.560 million, or 86.93 percent. Amajority of the other costs were paid by government agencies and organizations that subsidizedfunding with intergovernmental aid and contributions ($9.555 million, or 13.07 percent).Business-typeActivitiesBusiness-type activities represent the District's food service program. The program had an increase innet assets of $55 thousand for the year ended June 30, 2010. The increase was due primarily tohigher federal meal subsidy rates in the program over the prior year.Reporting the District's Most Significant FundsGovernmental FundsMost of the District's activities are reported in governmental funds, which focus on how money flowsinto and out of those funds and the balances left at year end available for spending in future periods.These funds are reported using the modified accrual accounting method, which measures cash andother financial assets that can be readily converted to cash. The governmental fund statementsprovide a detai led short-term view of the District's general government operations and the basicservices it provides. Governmental fund information helps the reader determine whether there aremore or fewer financial resources available to spend in the near future to finance the District'sprograms. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the basicfinancial statements.Proprietary FundsProprietary funds use the accrual basis of accounting, the same as on the entity-wide statements;therefore, the statements will essentially match the business-type activities portion of the entity-widestatements.Fiduc/arv FundsThe District is the agent, or fiduciary, for funds held on behalf of students of the District. All of theDistrict's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets on page 21 .The District excludes these activities from its other financial statements because the assets cannot beutilized by the District to finance its operations.Fund Financial statementsOur analysis of the District's major funds begins on page 13 and provides detailed information aboutthe most significant funds - not the District as a whole. Some funds are required to be established byState statute, while others are established by the District to help manage money for particularpurposes and compliance with various grant provisions. The District's three types of funds,governmental, proprietary and fiduciary, use different accounting approaches as further described inthe notes to the financial statements.

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RADNOR TOWNSHIP SCHOOL DISTRICTMANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED (CONrD)For the Year Ended June 30. 2010

The District's governmental funds (as presented on the balance sheet on page 13) reported acombined fund balance of $17.2 million, which is up significantly from last year's total of $13.7 million.The schedule below indicates the fund balance and the total change in fund balances as of June 30,2010 and 2009.Changes in Fund Balance

General FundPool FundTechnology FundCapital Reserve FundCapital Projects FundTotal

Fund BalanceJune 30, 2010$ 14,215,64857,792665,686432,4011,846,857$ 17,218,384

Fund BalanceJune 30,2009$ 9,668,17752,2121,088,163623,4942,279,791$ 13,711,837

Increase(Decrease)$ 4,547,4715,580(422,477)(191,093)(432,934)$ 3,506,547

Please note that the figures listed in the General Fund balance include a combination of bothdesignated and undesignated funds. As mentioned above, only $5.687 million of the $14.216 milliongeneral fund balance was unreserved as the District ended the 2009-2010 fiscal year. All other fundslisted in the table experienced an overall decline in fund balance as funds on reserve were used tofund various projects and purchases during the course of the 2009-2010 fiscal year.In general, the District's general fund balance increase is due to the Board's decision to reserve fundsfor future pension and nonrecurring capital items, and lower than anticipated expenses in the areasof regUlar and special education instructional programs, operation and maintenance of facilities, andstudent transportation.

Revenues

Intergovernmental12%

Investmentearnings

1%

Other revenues2%

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II Property taxesill Other taxesInvestment earnings

.. IntergovernmentalOther revenues

Property taxes


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RADNOR TOWNSHIP SCHOOL DISTRICTMANAGEMENT'S DISCUSSION AND ANAlYSIS - UNAUDITED (CONT'D)For theYear Ended June 30, 2010

2010 2009 Dollar PercentRevenue Revenue Change Change

Property taxes $ 62,197,322 $ 59,068,886 $ 3,128,436 5.30%Other taxes 1,362,403 1,245,537 116,866 9.38%Investment earnings 362,264 727,885 (365,621) -50.23%Intergovernmental 9,854,782 9,535,779 319,003 3.35%Other revenue 1,289,341 1,429,947 (140,606) -9.83%Total $ 75,066,112 $ 72,008,034 $ 3,058,078 4.25%

Property tax revenue increased by a very modest $3.128 million over the prior year despite a .7613mill increase in the District's millage rate. Other taxes increased by only $116 thousand due primarilyto the economic impact of the recession. Investment earnings declined sharply due to the majordecline in interest rates. Intergovernmental revenue increased because of ARRA funding from thefederal government. The District's reliance upon tax revenues is demonstrated by the graph on thepreceding page that Indicates 85.0 percent of total revenues for government activities comes fromlocal taxes. Other revenues consist primarily of facility rental, tuition payments and miscellaneousrevenues from student projects.Expenditures

As the graph below illustrates, the largest portions of general fund expenditures are for salaries andfringe benefits. The District is a service entity and as such is labor-intensive.

20092010 Expenditures

mSalaries and wagesI I Fringe benefitsoPurchased ServicesoBooks and suppliesI I EquipmentmDebt serv/Fund Tran

Debt serv/Fund Tran,Equipment, 0.8% 11.4%

Books and supplies,3.3%

Purchased Services,12.7%

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Salaries and wages,53.8%


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RADNOR TOWNSHIP SCHOOL DISTRICTMANAGEMENT'S DISCUSSION AND ANAlVSIS - UNAUDITED (CONTD)For the Year Ended June 30, 2010

2010 2009 Dollar PercentageAmount Amount Change Change$ 37,924,857 $ 37,268,435 $ 656,422 1.76%12,704,151 12,478,775 225,376 1.81%8,981,171 9,581,575 600,404 -4.81%2,342,210 2,503,776 (161,566) -6.45%543,215 842,567 (299,352) -35.53%8,038,284 387,810$ 70,533,888otal

Salaries and wagesFringe benefitsPurchased servicesBooks and suppliesEquipmentDebt serv/Fund Tran

Expenditures increased by a very modest $208 thousand, or 0.27 percent, due largely to staffingreduction.General Fund BUdget InformationThe District's bUdget is prepared in accordance with Pennsylvania law and is based on the modifiedaccrual basis of accounting. The most significant bUdgeted fund is the General Fund.The final bUdget for expenditures reflects required changes in functional categories due to spendingpatterns.

Spending ReviewPositive PercentBudget Actual (Negative) Change

Regular programs 1100 $ 29,895,384 $ 28,265,033 $ 1,630,351 -5.45%Special programs 1200 10,545,579 10,227,435 318,144 -3.02%Vocational programs 1300 87,202 81,099 6,103 -7.00%Other instructional programs 1400 1,076,881 1,076,881 0%Pupil personnel services 2100 2,395,896 2,300,158 95,738 -4.00%Instructional staff services 2200 3,659,261 3,501,784 157,477 -4.69%Administrative services 2300 4,410,716 4,249,686 161,030 -3.65%Pupil health 2400 721,356 698,236 23,120 -3.20%Business services 2500 1,035,002 1,030,555 4,447 -.43%Operation and maintenanceof plant services 2600 6,524,066 6,127,297 396,769 -6.08%Student transportation services 2700 3,575,018 3,124,023 450,995 -12.6%Data processing services 2800 1,269,076 1,011,238 257,838 -20.3%Other support services 2900 70,562 70,562 0.00%Student activities 3200 1,156,958 1,136,322 20,636 -1.78%Community services 3300 996 995 1 0%Debt service 5110 7,649,016 7,107,584 541,432 -7.08%

Major areas of the bUdget where actual costs were significantly below the bUdgeted amounts were inthe areas of regUlar and special education, operation and maintenance of facilities, studenttransportation and data processing services. Under-spending in these areas was related to acombination of salary and benefit reductions and less than anticipated costs for fuel and utilities.

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RADNOR TOWNSHIP SCHOOL DISTRICTMANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED (CONrD)For the Year Ended June 30, 2010

Capital AssetsThe District has $101.291 million invested in capital assets, net of depreciation, with $101.133 millionnet of depreciation attributed to governmental activities. Acquisition for governmental activitiestotaled $2.054 million and depreciation was $4.766 million. The majority of the acquisitions were forreplacement of technology and improvements to buildings. Detailed information regarding capitalasset activity is included in the notes to the basic financial statements (Note 5).

At June 30, 2010, the District had $107.545 million in outstanding bonds and notes. The District paid$2.465 million in principal on outstanding debt during the fiscal year. Detailed information regardinglong-term debt is included in the notes to the basic financial statements (Note 7).Factors Expected to have an Effect on Future OperationsAs the District ended the 2009-2010 fiscal year, the labor agreement with the Radnor TownshipEducation Association (RTEA) was set to expire on August 31, 2010. At press time, (February 2011), therenewal agreement with RTEA had not yet been approved. labor agreements with all otherbargaining units representing District employees are in place at this time.Anticipated large increases in employer contributions to the Pennsylvania School EmployeeRetirement System coupled with the cost impacts associated with the teacher contract renewal andthe limits on the District's ability to raise revenues imposed by Special Session Act 1 led to decision onstaff consolidation as the District moved into the 2009-2010 school year. All Commonwealth publicschool districts are now required to bUdget within a state-wide annual inflation index or submit anybUdget over this index amount to the voters for approval (Special Session Act 1 of 2006). Althoughthis legislation is considered to be revenue-neutral in terms of total tax dollars being generated,revenues generated from gaming revenues were distributed for the first time in the summer/fall of 2008to public school districts, and passed along to taxpayers in the form of homestead exclusion taxcredits to reduce the reliance on the real estate tax. In Radnor's case this amounted to $265.95 perresidential tax parcel eligible for the credit in 2009-2010.Contacting the District Financial ManagementOur financial report is designed to provide our citizens, taxpayers, parents, students, staff, investorsand creditors with a general overview of the District's finances and to show the Board's accountabilityfor the money it receives. If you have questions about this report or wish to request additionalinformation, please contact Timothy E. Vail, Business Administrator at Radnor Township School District,135 South Wayne Avenue, Wayne, Pennsylvania 19087 (610) 688-8100.

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RADNOR TOWNSHIP SCHOOL DISTRICTSTATEMENT OF NET ASSETSJUNE 30, 2010(With Summarized Comparative Data fo r June 2009)

ASSETSCash and cash equivalentsInvestmentsTaxes receivableDue from other governmentsInternal balancesOther receivablesInventoriesIssuance costsBond discountsLandSite ImprovementsBUildings and improvementsConstruction-in-progressFurniture and equipmentTOTAL ASSETSLIABILITIES AND NET ASSETSLIABILITIES:Accounts payableAccrued salaries, payroll withholdings and benefitsAccrued interest payableDeferred revenuesOther current liabilitiesLong-term liabilitiesPortion due or payable within one year:Bonds payableAdd: Unamortized premiumLess: Deferred amount on refundingAccumulated compensated absencesl

early retirement incentivePortion due or payable after one year:Note payableBonds payableAdd: Unamortized premiumLess: Deferred amount on refundingPost-employment benefitsAccumulated compensated absences!early retirement incentiveTOTAL LIABILITIESNET ASSETS:Invested in capital assets, net of related debtUnrestrictedTOTAL NETASSETSTOTAL LIABILITIES AND NET ASSETS

GovernmentalActivities$ 20,244,1244,245,000957,095459,35413,087904,493

570,286290,1382,952,5002,162,10290,437,4465,581,160

$128,816,785

$ 1,837,1226,177,2941,298,35457,98781,681

2,550,00079,869(114,347)493,590

15,000,00089,995,0001,497,594(2,099,298)17,7041,615,030118,487,580

(3,928,754)14,257,95910,329,205$128,816,785

Business-typeActivities$ 400,365

27,210(13,087)3,88034,344

157,353$ 610,065

$ 41,825

50,060

91,885

157,353360,827518,180$ 610,065

$ 20,644,489 $ 20,966,6754,245,000 1,240,904957,095 991,461486,564 472,339908,373 786,03634,344 34,103570,286 597,665290,138 305,9462,952,500 2,952,5002,162,102 2,110,56690,437,446 92,291,637893,7215,738,513 5,753,653

$ 129,426,850 $129,397,206

$ 1,878,947 $ 2,603,8316,177,294 5,542,1041,298,354 1,219,751108,047 83,69881,681 715,658

2,550,000 2,465,00079,869 79,869(114,347) (114,347)493,590 536,092

15,000,000 15,000,00089,995,000 92,545,0001,497,594 1,577,463(2,099,298) (2,213,645)17,704 41,7081,615,030 2,004,788118,579,465 122,086,970

(3,771,401 ) (2,751,526)14,618,786 10,061,76210,847,385 7,310,236$129,426,850 $129,397,206

The accompanying notes are an integra l part of these f inancial statements.

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RADNOR TOWNSHIP SCHOOL DISTRICTSTATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2010(With Summarized Comparative Data for the Year Ended June 30, 2009)

Program Revenues Net(Expense) Revenue and Changes in NetAssetsOperating Capital Business-Charges for Grants a nd Grants a nd Governmental type Totals

Expenses Services Contributions Contributions Activities Activities 2010 2009GOVERNMENTAL ACTIVITIES:Instruction $ 41,649,703 $ 122,576 $ 5,656,652 $ - $ (35,870,475) $ - $ (35,870,475) $ (34,986,3Instructionallstudent support 6,987,293 - 372,449 - (6,614,844) - (6,614,844) (6,755,8Administratiye and financial support services 6,674,698 - 242,625 - (6,432,073) - (6,432,073) (6,048,Operation alfld maintenance of plant services 6,898,251 140,671 233,672 - (6,523,908) - (6,523,908) (7,910,0Pupil transpprtation 3,377,113 - 998,746 - (2,378,367) - (2,378,367) (2,210,9Student activities 1,136,322 31,139 43,373 - (1,061,810) - (1,061,810) (1,118,1Communityservices 92,031 40,205 - - (51,826) - (51,826) 61,4Intereston long-term debt 4,798,852 - 71,480 - (4,727,372) - (4,727,372) (4,729,7TOTAL GOVERNMENTALACTIVITIES 71,614,263 334,591 7,618,997 - _(63,660,675) - (63,660,675) (63,698,0BUSINESS-TYPE ACTIVITIES:Food service 1,501,347 1,341,345 213,146 - - 53,144 53,144 24,2TOTAL BUSINESS-TYPEACTIVITIES 1,501,347 1,341,345 213,146 - - 53,144 53,144 24,2TOTAL PRIMARYGOVERNMENT $ 73,115,610 $ 1,675,936 $ 7,832,143 $ - (63,660,675) 53,144 _(63,607,531 ) (63,673,8

GENERAL REVENUESProperty taxes levied for general purposes 62,197,322 - 62,197,322 59,068,8Taxes levied for specific purposes 1,362,403 - 1,362,403 1,245,5Grants and entitlements not restricted tospecific programs 3,061,762 - 3,061,762 3,243,1

Investment earnings 360,800 1,464 362,264 727,8Gain on sale of capital assets 130 - 130 5Miscellaneous 160,799 - 160,799 848,8TOTAL GENERAL REVENUES 67,143,216 1,464 67,144,680 65,134,9CHANGE INNET ASSETS 3,482,541 54,608 3,537,149 1,461,1NET ASSETS, BEGINNING OF YEAR 6,846,664 463,572 7,310,236 5,849,1NETASSETS, END OF YEAR $ 10,329,205 $ 518,180 $ 10,847,385 $ 7,310,2

The accomlpanying notes are an integral part of these financial statements.

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16/54

RADNOR SCHOOL SCHOOL DISTRICTBALANCE SHEET-GOVERNMENTAL FUNDS

JUNE 30, 2010(With Summarized Comparative Data fo r June 30, 2009)

ASSETSCash and[cash equivalentsInvestmentsTaxes receivableDue from other fundsDue from other governmentsOther receivablesTOTAL ASSETSLIABILITIES AND FUND BALANCESLIABILITIES:Accounts [payableDue to ott;ler governmentsDue to otmer fundsAccrued ~ a l a r i e s , payroll withholdings and benefitsA c c u m u l ~ t e d compensated absences/early retirement incentiveDeferred revenuesOther current liabilitiesTOTAL LIABILITIESFUND BA.LANCESReserved! for capital projectsUnreserved - designated for ERIPUnreserved - designated for PSERSUnreservd - designated for future capital projectsUnreserved - undesignatedTOTAL FUND BALANCESTOTAL L1A.BILITIES AND FUND BALANCES

Major Funds OtherGeneral Governmental TotalsFund Funds 2010 2009-$ 16,425,974 $ 3,818,150 $ 20,244,124 $ 20,204,254,245,000 - 4,245,000 1,080,05

957,095 - 957,095 991,4613,461 - 13,461 3,096,06459,354 - 459,354 449,23904,493 - 904,493 759,54$ 23.005.377 $ 3.818.150 $ 26.823.527 $ 26,580.60

$ 1,022,082 $ 815,040 $ 1,837,122 $ 2,537,7335,010 - 35,010 32,58374 374 2,519,796,177,294 - 6,177,294 5,542,10-493,590 - 493,590 536,091,015,082 - 1,015,082 1,017,3846,671 - 46,671 683,078,789,729 815,414 9,605,143 12,868,772,302,362 2,302,362 2,903,281,225,151 - 1,225,151 854,623,784,000 - 3,784,0003,455,000 - 3,455,0005,751,497 700,374 6,451,871 9,953,9314,215,648 3,002,736 17,218,384 - 13,711,83

$ 23,005,377 $ 3,818,150 $ 26,823,527 $ 26,580,60

The acco'illpanying notes are an integral part of these financial statements.

- 13 -


17/54

RADNOR TOWNSHIP SCHOOL DISTRICTRECONCILIATION OF BALANCE SHEET GOVERNMENTAL FUNDS TO STATEMENTOF NET ASSETS

JUNE 30,2010

TOTAL GOVERNMENTAL FUND BALANCES

Amounts reported for governmental activities in the statement of net assetsare different because:

Capital assets used in governmental activities are not financial resourcesand therefore are not reported in the funds. These assets consist of:

LandLand improvementsBuildings and improvementsFurniture and equipment

Some liabilities are not due and payable in the current period and thereforeare not reported in the funds. Those liabilities consist of:

Bonds payableNote payableAccumulated compensated absences/early retirement incentivePost-employment benefitsAccrued interest payable

Refunded debt and bond issuance costs resulted in deferred charges andcredits which will be amortized over the life of the new debt but do notrepresent current rights.

Some of the District's revenues will be collected after year end butare not available soon enough to pay for the current period's expendituresand therefore are deferred in the funds.

NET ASSETS OF GOVERNMENTAL ACTIVITIES

These accompanying notes are an integral part of these financial statements.

- 14 -

$ 17,218,384

2,952,5002,162,10290,437,4465,581,160

(92,545,000)(15,000,000)(1,615,030)

(17,704)(1,298,354)

1,496,606

957,095

$ 10,329,205


18/54

RADNOR TOWNSHIP SCHOOL DISTRICTSTATEMENTOF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2010(With Summarized Comparative Data fo r the Year Ended June 30,2009)

Major Funds OtherGeneral Governmental TotalsFund Funds 2010 2009REVENUESLocal sources $ 65,211,330 $ 49,811 $ 65,261,141 $ 62,472,2State sources 8,273,799 - 8,273,799 8,409,7Federal sources 1,580,983 - 1,580,983 1,126,0TOTAL REVENUES 75,066,112 49,811 75,115,923 72,008,0EXPENDITURESCurrent:Instruction 39,650,448 257,884 39,908,332 39,905,5Support 'services 22,113,539 22,113,539 22,404,1Operatiqn of noninstructional services 1,137,317 1,057,428 2,194,745 3,337,2Capital o u ~ l a y s - 300,423 300,423 1,748,0Debt service 7,107,584 - 7,107,584 7,227,2TOTAL EXPENDITURES ~ 0 0 8 , 8 8 8 1,615,735 71,624,623 74,622,2EXCESS (DEFICIENCY) OF REVENUES

O V E R ( ~ N D E R ) E X P E N D I T U R E S 5,057,224 (1,565,924) 3,491,300 (2,614,1OTHER FINANCING SOURCES (USES)Sale of/compensation for capital assets 130 - 130 5Refund of iprior year expenditures 15,117 - 15,117 251,1Transfers in - 525,000 525,000 250,0Transfers but (525,000) - (525,000) (250,0TOTAL OTHER FINANCING SOURCES (USES) (509,753) 525,000 15,247 251,7NET CHANGE IN FUND BALANCES 4,547,471 (1,040,924) 3,506,547 (2,362,4FUND BALANCES, BEGINNING OF YEAR 9,668,177 4,043,660 13,711,837 16,074,2FUND BALANCES, END OF YEAR $ 14,215,648 $ 3,002,736 $ 1 8,384 $ 13,711,8

The accorppanying notes are an integral part of these financial statements.

- 15-


19/54

RADNOR TOWNSHIP SCHOOL DISTRICTRECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS TO STATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2010

NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDSCapital outlays are reported in governmental funds as expenditures. However,in the statement of activities, the cost of those assets is allocated over theirestimated useful lives as depreciation expense. This is the amount by whichdepreciation ($4,766,289) exceeded capital outlays ($2,054,155) in the period.Debt proceeds are reported as financing sources in the governmental funds andthus contribute to the change in fund balance. In the statement of net assets,however, issuing debt increases long-term liabilities and does not affect thestatement of activities. Similarly, repayment of principal is an expenditure inthe governmental funds but reduces the liability in the statement of net assets.This is the amount bywhich debt payments ($2,465,000) exceeded debtissuance ($0).Governmental funds report bond issuance cost, discounts and deferred amountson refunding as expenditures and bond premiums as revenue. However, theseamounts are reported on the statement of net assets as deferred charges andcredits and are amortized over the life of the debt. This is the amount by whichnet amortization exceeded current issuance costs, discounts and deferredamounts on refunding net of bond premiums.In the statement of activities, certain operating expenses--compensatedabsences (vacations and sick leave) and special termination benefits (earlyretirement)--are measured by the amounts earned during the year. In thegovernmental funds, however, expenditures for these items are measured bythe amount of financial resources used (essentially, the amounts actually paid).This is the amount bywhich current period amounts paid exceeded currentperiod compensated absences earned.Interest on long-term debt in the statement of activities differs from the amountreported in the governmental funds b.ecause interest is recognized as anexpenditure in the funds when it is due and, thus, requires the use of currentfinancial resources. In the statement of activities, however, interest expenseis recognized as the interest accrues, regardless of when it is due.

CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES

The accompanying notes are an integral part of these financial statements.

- 16-

$ 3,506,547

(2,712,134)

2,465,000

(77,665)

413,762(34,366)

(78,603)

$ 3,482,541


20/54

RADNOR TOWNSHIP SCHOOL DISTRICTBUDGETARY COMPARISON STATEMENT GENERAL FUND

FOR THE YEAR ENDED JUNE 30, 2010

Original FinalBudgeted AmountsREVENUESLocal sourcesState sourcesFederal sourcesTOTAL REVENUESEXPENDITURESInstruction:Regular programsSpecial programsVocational programsOther instructional programsTotal InstructionSupport services:Pupil personnel servicesInstructional staff servicesAdministrative servicesPupil healthBusiness servicesOperation and maintenance of plant servicesStudent transportation servicesData processing servicesOther support servicesTotal Support ServicesOperation of noninstructional services:Student activitiesCommunity servicesTotal Operation of Noninstructional Services

Debt serviceTOTAL EXPENDITURESEXCESS (DEFICIENCY)OF REVENUES OVER(UNDER) EXPENDITURESOTHER FINANCING SOURCES (USES)Refund of prior year expendituresOperating transfers outSale of/compensation for capital assetsBudgetary reserveTOTAL OTHER FINANCING USESNET CHANGE IN FUND BALANCEFUND BALANCE, BEGINNING OF YEARFUND BALANCE, END OF YEAR

$ 66,548,5446,748,188616,74273,913,474

29,698,35810,566,88378,4901,076,88141,420,6122,409,1243,773,4524,284,451706,4581,021,1706,656,1393,589,0751,257,86468,34323,766,0761,141,4762,1001,143,5767,421,51073,751,774

161,700

(525,000)(251,700)(776,700)(615,000)9,668,177

$ 9,053,177

$ 66,612,2396,748,188623,54273,983,969

Actual(GAAP Basis)$ 65,211,3308,273,7991,580,98375,066,112

Final BudgetPositive(Negative)$(1,400,909)1,525,611957,4411,082,143

The accompanying notes are an integral partof these financial statements.

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21/54

RADNOR TOWNSHIP SCHOOL DISTRICTSTATEMENT OF NET ASSETS - PROPRIETARY FUND

JUNE 30,2010(With Comparative Data fo r June 30, 2009)

ASSETSCURRENT ASSETS:Cash and cash equivalents $ 400,365 $ 762,424Investments 160,853Due from other governments 27,210 23,109Other receivables 3,880 26,490Inventories 34,344 34,103

Total Current Assets 465,799 1,006,979PROPERTY AND EQUIPMENT:Furniture and equipment 903,582 856,285Accumulated depreciation (746,229) (699,550)

Net Property and Equipment 157,353 156,735TOTAL ASSETS $ 623,152 $ 1,163,714LIABILITIES AND NET ASSETSCURRENT LIABILITIES:Accounts payable $ 41,825 $ 24,491Due to other funds 13,087 617,872Deferred revenues 50,060 57,779

Total Liabilities 104,972 700,142NET ASSETS:Invested in capital assets, net of related debt 157,353 156,735Unrestricted 360,827 306,837

Total Net Assets 518,180 463,572TOTAL LIABILITIES AND NET ASSETS $ 623,152 $ 1,163,714


- 18 -


22/54

RADNOR TOWNSHIP SCHOOL DISTRICTSTATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDFOR THE YEAR ENDED JUNE 30, 2010

(With Comparative Data for the Year Ended June 30, 2009)

Major FundFood Service Fund

OPERATING REVENUESFood service revenues

Total Operating RevenuesOPERATING EXPENSESSalaries 407,972 417,555Em ployee benefits 124,912 165,316Purchased professional and technical services 53,931 45,500Other operating expenses 22,583 17,838Supplies 845,270 878,717Depreciation 46,679 37,755

Total Operating Expenses 1,501,347 1,562,681OPERATING LOSS (160,002) (168,409)NONOPERATING REVENUESEarnings on investments 1,464 4,380State sources 30,043 30,977Federal sources 183,103 161,704

Total Nonoperating Revenues 214,610 197,061CHANGE IN NET ASSETS 54,608 28,652NET ASSETS, BEGINNING OF YEAR 463,572 434,920NET ASSETS, END OF YEAR $ 518,180 $ 463,572


- 19-


23/54

RADNOR TOWNSHIP SCHOOL DISTRICTSTATEMENT OF CASH FLOWS PROPRIETARY FUNDFOR THE YEAR ENDED JUNE 30, 2010(With Comparative Data for the Year Ended June 2009)

2009CASH FLOWS FROM OPERATING ACTIVITIES:Cash received from customers $ 1,356,236 $ 1,410,660Payments to suppliers (844,524) (860,608)Payments to employees (1,137,669) (112,405)NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (625,957) 437,647CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:State sources 29,571 32,648Federal sources 119,307 116,351NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 148,878 148,999CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:Purchase of capital assets (47,297) (46,115)NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (47,297) (46,115)CASH FLOWS FROM INVESTING ACTIVITIES:Earnings on investments 1,464 4,380Sale of investments 160,853 (2,342)NET CASH PROVIDED BY INVESTING ACTIVITIES 162,317 2,038NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (362,059) 542,569CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 762,424 219,855CASH AND CASH EQUIVALENTS, END OF YEAR $ 400,365 $ 762,424RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED(USED) BY OPERATING ACTIVITIES:Operating loss $ (160,002) $ (168,409)Adjustments to reconcile operating loss to net cash provided (used)by operating activities:Depreciation 46,679 37,755Donated commodities 60,167 47,079(Increase) Decrease in:Accounts receivable 22,610 (21,844)Inventories (241 ) (2,602)Increase (Decrease) in:Accounts payable 17,334 24,491Due to other funds (604,785) 510,833Deferred revenue (7,719) 10,344NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (625,957) $ 437,647SUPPLEMENTAL DISCLOSURE:Noncash noncapital financing activity:USDA donated commodities $ 60,167 $ 47,079


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24/54

RADNOR TOWNSHIP SCHOOL DISTRICTSTATEMENT OF NET ASSETS .. FIDUCIARY FUND

JUNE 30,2010

Private-PurposeTrust Agency

ASSETSCash $ 141,314 $ 138,875Investments 19,182Accounts receivable 25TOTAL ASSETS $ 160,496 $ 138,900

LIABILITIES AND NET ASSETSLIABILITIESAccounts payable $ $ 138,900NET ASSETS 160,496TOTAL LIABILITIES AND NET ASSETS $ 160,496 $ 138,900


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25/54

RADNOR TOWNSHIP SCHOOL DISTRICTSTATEMENT OF CHANGES IN NET ASSETS - FIDUCIARY FUND

FOR THE YEAR ENDED JUNE 30, 2010

AgencyADDITIONSGifts and contributions 5TOTAL ADDITIONS 5DEDUCTIONSScholarships awarded 12,875TOTAL DEDUCTIONS 12,875CHANGE IN NET ASSETS (5,960)NET ASSETS, BEGINNING OF YEAR 166,456NET ASSETS, END OF YEAR $ 160,496


- 22-


26/54

NOTE 1

RADNOR TOWNSHIP SCHOOL DISTRICTNOTES TO FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESRadnor Township School District (the IIDistrictll ) operates three elementary schools, one middleschool and one senior high school to provide education and related services to the residents ofRadnor Township. The District operates under current standards prescribed by the PennsylvaniaDepartment of Education in accordancewith the provisions of theSchool laws of Pennsylvania asa school district of the third class. The District operates under a locally elected nine-memberBoard form of government.The f inancial statements of the District have been prepared in accordance with generallyaccepted accounting principles ("GAAP") as applied to governmental units. The GovernmentalAccounting Standards Board ("GASBII) is the authoritative standard-setting body for theestablishment of governmental accounting and financial reporting principles.Reporting EntityGASB Statement No. 14, "The Financial Reporting Entity," as amended by GASB Statement No. 39,established the criteria for determining the activities, organizations and functions of governmentto be included in the financial statements of the reporting entity. In evaluating the District as areporting entity, management has addressed all potential component units which mayor maynot fall within the District's financial accountability. The criteria used to evaluate component unitsfor possible inclusion as part of the District's reporting entity are financial accountability and thenature and significance of the relationship. The District is considered to be an independentreporting entity and has no component units.Basis of PresentationEntity-wide Financial statementsThe statement of net assets and the statement of activities display information about the District asa whole. These statements distinguish between activities that are governmental and those thatare considered business-type. These statements include the financial activities of the primarygovernment, except for fiduciary funds.The entity-wide financial statements are prepared using the economic resources measurementfocus and the accrual basis of accounting as further defined under proprietary funds below. Thisis the same approach used in the preparation of the proprietary fund financial statements butdiffers from the manner in which governmental fund f inancial statements are prepared.Therefore, governmental fund financial statements includea reconciliation with brief explanationsto better identify the relationship between the entity-wide statements and the statements ofgovernmental funds.The entity-wide statement of activities presents a comparison between expenses and programrevenues for each function of the business-type activities of the District and for eachgovernmental program. Expenses are those that are specifically associated with a service or

- 23 -


27/54

NOTE 1

RADNOR TOWNSHIP SCHOOL DISTRICTNOTES TO fiNANCIAL STATEMENTS

SUMMARY Of SIGNifiCANT ACCOUNTING POLICIES (cont'd)program and are, therefore, clearly identif iable to a particular function. Program revenuesinclude charges paid by the recipients of the goods or services offered by the programs, andgrants and contributions that are restricted to meeting the operational or capital requirements ofa particular function. Revenues which are not classified as program revenues are presented asgeneral revenues. The comparison of program revenues and expenses identifies the extent towhich each program is self-financing or draws from the general revenues of the District.Except for interfund activity and balances between the funds that underlie governmentalactivitiesand the funds that underlie business-type actiVities, which are reported as transfers andinternal balances, the effect of interfund activity has been removed from these statements.The entity-wide financial statements report net assets in one of three components: invested incapital assets, net of related debt, consists of capital assets, net of accumulated depreciation,and reduced by the outstanding balances of borrowings attributable to acquiring, constructingor improving those assets. Net assets are reported as restricted when constraints placed on netasset use are either externally imposed by creditors (such as through debt covenants), grantors,contributors or laws or regUlations of other governments or imposed by law through constitutionalprovisions or enabling legislation. Those restrictions affect net assets arising from the capitalprojects fund. Unrestricted net assets consist of net assets that do not meet the definit ion oflIinvested in capital assets, net of related debtll or IIrestricted.1IFund Financial StatementsDuring the school year, the District segregates transactions related to certain District functions oractivities in separate funds in order to aid financial management and to demonstrate legalcompliance. fund financial statements report detailed information about the District. The focusof governmental and enterprise fund financial statements is on majorfunds ratherthan reportingfunds by type. fiduciary fund financial statements are presented by fund type.Governmental FundsAll governmental funds are accounted for using the modified accrual basis of accounting andthe current financial resources measurement focus. Under this basis, revenues are recognized inthe accounting period in which they become measurable and available. Expenditures arerecognized in the accounting period in which the fund liabili ty is incurred, if measurable. TheDistrict reports the following major governmental fund:The General fund is the government's primary operating fund. It accounts for all f inancialresources of the general government, including the athletic fund, except those required to beaccounted for in another fund.Other governmental funds include the following:The Capital Projects Fund is used to account for the acqUisition, construction and renovation ofmajor capital facilities and their related capital assets.

- 24 -


28/54

NOTE 1


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)The Capital Reserve fund, are used to account for funds set aside for future capital needs.The Pool Fund is used to account for the activities associated with operating the pool.Revenue RecognitionIn applying the "susceptible to accrual concept" under the modified accrual basis, revenues areconsidered to be available when they are collectible within the current period or soon enoughthereafter to pay l iabilities of the current period. For this purpose, the District considers taxrevenue to be available if collected within 60 days of the end of the fiscal period. Revenue fromfederal, state and other grants designated for payment of specific District expenditures isrecognized when the related expenditures are incurred; accordingly, when such funds arereceived, they are reported as deferred revenues until earned.Other revenues, including certain other charges for services and miscellaneous revenues, arerecorded as revenue when received in cash because they generally are not measurable untilactually received.Expenditure RecognitionThe measurement focus of governmental fund accounting is on decreases in net financialresources (expenditures) rather than expenses. Most expenditures are measurable and arerecorded when the related fund liability is incurred. However, principal and interest on generallong-term debt which has not matured are recognized when paid. liabilities for compensatedabsences and special termination benefits are recognized as fund liabilities to the extent theymature each period. Allocations of costs, such as depreciation and amortization, are notrecognized in the governmental funds.ProprietaryFundsProprietary funds are accounted for using the accrual basis of accounting. These funds accountfor operations that are financed primarily by user charges. The economic resource focusconcerns determining costs as a means of maintaining the capital investmentand managementcontrol. Revenues are recognized when they are earned and expenses are recognized whenthey are incurred. Allocations of certain costs, such as depreciation, are recorded in proprietaryfunds. The District does not attempt to allocate all bUilding-wide costs to the proprietary fund.Thus, general fund expenditures which partially benefit the proprietary fund (utilities, janitorialservices, insurance, etc.) are not proportionately recognized with the proprietary fund. Similarly,the proprietary fund does not recognize a cost for the building space it occupies.These funds distinguish operating revenues and expenses from nonoperating items. Operatingrevenues and expenses generally result from prOViding services and producing and deliveringgoods in connection with the proprietary fund's principal ongoing operations. The principaloperating revenues of the District's proprietary fund are food service charges. Operatingexpenses for the District's proprietary fund include food production costs, supplies andadministrative costs. All revenues or expenses not meeting this definition are reported asnonoperating revenues and expenses.

- 25 -


29/54

NOTE 1


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)Private-sector standards of accounting and financial reporting issued prior to December 1, 1989are followed in both the entity-wide and proprietary fund financial statements to the extent thatthose standards do not conflict with or contradict the guidance of GASB. Governments also havethe option of following subsequent private-sector guidance for their business-type activities andproprietary funds, subject to this same limitation. The District has elected not to follow subsequentprivate-sector guidance.Fiduciary FundsFiduciary funds account for the assets held by the District as a trustee or agent for individuals,private organizations and/or governmental units and are, therefore, not available to support theDistrict's own programs. The District accounts for these assets in a private-purpose trust andagency fund. The private-purpose trust fund accounts for activities in various scholarshipaccounts, whose sole purpose is to provide annual scholarships to particular students asdescribed by donor stipulations. The agency fund accounts for funds held on behalf of studentsof the District. It is custodial in nature (assets equal liabilities) and does not involve measurementof results of operations.Cash and Cash EquivalentsThe District's cash and cash equivalents are considered to be cash on hand, demand depositsand short-term investments with original maturities of three months or less from the date ofacquisition.Receivables and PayablesActivity between funds that are representative of lending/borrowing arrangements outstanding atthe end of the fiscal year are referred to as either "due to/from other funds" (Le., the currentportion of interfund loans) or "advances to/from other funds" (Le., the noncurrent portion ofinterfund loans). Any residual balances outstanding between the governmental activities andbusiness-typeactivities are reported in the entity-Wide financial statementsas "internal balances."The District does not record an allowance for uncollectible taxes because it is considered to beimmaterial.Propertv TaxesTaxes are levied on July 1 and are payable in the following periods:July 1 - August 31September 1 - October 31November 1 to collectionDecember 31

- Discount period, 2% of gross levy- Face Period- Penalty Period, 10% of gross levy- Lien DateAn installment payment plan is available to residential propertyownerswho have been approvedas homestead owners by the Delaware County Board of Assessments, with three equalinstallments due as follows:August 31October 31December 31

one third of the gross levyone third of the gross levyone third of the gross levy

- 26 -


30/54

NOTE 1

RADNOR TOWNSHIP SCHOOL DISTRICTNOTES TO fiNANCIAL STATEMENTS

SUMMARY Of SIGNifiCANT ACCOUNTING POLICIES (cont'd)In order to participate in the installment payment plan, homestead owners must forego theopportunity to make payment at the two percent of gross levy discount rate.The District's taxes are billed and collected by the District. The tax on real estate for public schoolpurposes for fiscal 2009-2010 was 20.27 mills ($20.2? for $1,000 of assessed valuation) for theentire District.InventoriesAll inventories are valued at the lower of cost (first-in, first-out method) or market.Capital AssetsCapital assets, which include property, plant and equipment, are reported in the applicablegovernmental or business-type activities columns in the entity-wideand proprietary fund financialstatements. Capital assets are defined by the District as assets with an initial, individual cost ofmore than $2,000, composite assets of more than $10,000 and critical control assets as definedby District policy. Such assets are recorded at historical cost if purchased or constructed.Donated capital assets are recorded at estimated fair value at the date of donation.The costs of normal maintenance and repairs that do not add to the value of the asset ormaterially extend assets' lives are not capitalized.Major outlays for capital assets and improvements are capitalized as projects are constructed,inclusive of ancillary costs.Property, plant and equipment of the District are depreciated using the straight-line method overthe following estimated useful lives:Site ImprovementsBUildings and improvementsfurniture and fixturesVehicles and equipmentCompensated Absences

15-40 years15-40 years5-20 years5-20 years

District policies permit employees to accumulate earned but unused vacation as stipulated ineach bargaining unit's contract. The liability for these compensated absences is recorded aslong-term debt in the entity-wide financial statements. The current portion of this debt isestimated based on historical trends. In the fund financial statements, governmental funds reportthe compensated absence liability payable from expendable available financial resources.The long-term portion of compensated absences has been designated in the general fund fundbalance.

- 27 -


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NOTE 1


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont/d)long-term ObligationsIn the entity-wide financial statements and proprietary fund financial statements, long-term debtand other long-term obligations are reported as liabilities. Bond premiums and discounts aredeferred and amortized over the life of the bonds. Bond issuance costs are reported as deferredcharges and amortized over the term of the related debt. Deferred amounts on refunding arerecorded as a decrease to debt payable and amortized over the life of the old debt orthe lifeofthe new debt, whichever is shorter. All amounts are amortized using the straight-line method.In the fund financial statements, governmental fund types recognize bond premiums anddiscounts, as well as bond issuance costs, during the current period. The face amount of debtissued is reported as other financing sources. Premiums received and discounts paid on debtissuances are reported as other financing sources and uses. Issuance costs, whether or notwithheld from the actual debt proceeds received, are reported as debt service expenditures,except for refundings paid from proceeds which are reported as other financing uses.Fund EquityIn the fund financial statements, governmental funds report reservations of fund balance foramounts that are not available for appropriation orare lega lly restricted by outside parties for usefor a specific purpose. When both restricted and unrestricted resources are available for use, it isthe District's pol icy to use restricted resources first and then unrestricted resources as they areneeded.Comparative DataComparative totals for the prior year have been presented in the accompanying financialstatements in order to provide an understanding of changes in the District's financial position andoperations. Certain amounts presented in the prior year have been reclassified in order to beconsistent with the current year's presentation. However, presentation of prioryear totals by fundand activity type has not been presented in each of the statements since its inclusion wouldmake the statements unduly complex and difficult to read. Summarized comparative informationshould be read in conjunction with the District's financial statements for the year ended June 30,2009, from which the summarized information was derived.Use of Estimates in the Preparation of Financial StatementsThe preparation of financial statements in conformity with generally accepted accountingprinciples requiresmanagement to make estimates and assumptions that affect certain reportedamounts and disclosures. Accordingly, actual results could differ from those estimates.

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NOTE 2


STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITYBUdgetary InformationAn annual bUdget is adopted prior to the beginning of each year for the general fund on themodified accrual basis of accounting. The general fund is the only fund for which a bUdget islegally required, although project-length financial plans are adopted for all capital projectsfunds.The District bUdgets and expends funds according to proceduresmandated by the PennsylvaniaDepartment of Education. An annual operating bUdget is prepared by school district officials ona uniform form furnished by such Department and submitted to the board of school directors forapproval prior to the beginning of the fiscal year on Julyl.Under the Taxpayer Relief Act, the school district must adopt a preliminary bUdget proposal(which must include estimated revenues and expenditures and proposed tax rates) no later than90 days prior to the date of the election immediately preceding the fiscal year. The preliminarybUdget proposal mustbe printed and made available for public inspection at least 20dayspriorto its adoption; the board of school directorsmay hold a public hearing on the budget; and theboard must give at least 10 days' public notice of its intent to adopt such bUdget.If the adopted preliminary bUdget includes an increase in the rate ofany tax levy, the preliminarybUdget must be submitted to the Pennsylvania Department of Education f'PDE") no later than 85days prior to the date of the election immediately preceding the fiscal year. PDE is to comparethe proposed percentage increase in the rate of any taxwith the school district's Index and within10 days, but no later than 75 days, prior to the upcoming election, inform the school districtwhether the proposed percentage increase is less than or equal to the Index. If PDE determinesthat a proposed tax increasewill exceed the Index, the school district must reduce the proposedtax increase, seekvoter approval for the tax increaseat the upcoming election or seekapprovalto utilize one or more of the referendum exceptions authorized by the Taxpayer Relief Act.With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for whichPDE approval is required, the school district must publish notice of its intent to seek PDE approvalnot less than one week before SUbmitting its request for approval to PDE and, if PDE determines toschedulea public hearing on the request, a notice of the date, time and place of such hearing.PDE is required by the Taxpayer Relief Act to rule on the school district's request and inform theschool district of its decision no later than 55 days prior to the upcoming election so that, if PDEdenies the school district's request, the school districtmay submit a referendum question to thelocal election officials at least 50 days before the upcoming election, if it so chooses.To useany of the referendum exceptions for which court approval is required under the TaxpayerReliefAct, the school district must petition the court of common pleas no later than 75 days priorto the upcoming election, after giVing one week's public notice of the intent to file such petition.The court may schedule a hearing on the petition, and the school district must prove by clearand convincing evidence that it qualifies for the exception sought. The Taxpayer Relief Actrequires that the court rule on the petition and inform the school district of its decision no later

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NOTE 2

NOTE 3


STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (cont'd)than 55 days prior to the upcoming election. Such Act provides that the court, in approving thepetition, shall determine the dol lar amount for which the exception is granted, the tax rateincrease required to fund the exception and the appropriate duration of the tax increase. If thecourt denies the school district's petition, such Act permits the school district to submit areferendum question to the local election officials at least 50daysbefore the upcomingelection,if it so chooses.If the school district seeks voter approval to increase taxes at a rate higher than the applicableIndex, whether or not it first seeks approval to utilize one or more of the referendum exceptionsavailable under the Taxpayer Relief Act, and the referendum question is not approved by amajority of the voters voting on the question, the board of school directorsmay not approve anincrease in the tax rate greater than the applicable Index.The above bUdgetary procedures will not apply if the school district adopts a resolution no laterthan 110 days prior to the election immediately preceding the upcoming fiscal year declaringthat it will not increase any tax rate that exceeds the Index and that a tax increase at or belowthe rate of the Index will be sufficient to balance its bUdget. In that case, the Taxpayer Relief Actrequires only that the proposed annual bUdget be prepared at least 30 days, and madeavailable for public inspection at least 20 days, prior to its adoption, and that at least 10 days'public notice be given of the board's intent to adopt the annual bUdget. No referendumexceptions are available to a school district adopting such a resolution.legal bUdgetary control is maintained at the sub-function/major object level. The Board maymake transfers of funds appropriated to any particular item of expenditureby legislativeaction inaccordance with the Pennsylvania School Code. Management may amend the budget at thesUb-function/sub-object level without Board approval. Appropriations lapse at the end of thefiscal period. BUdgetary information reflected in the financial statements is presented at or belowthe level of budgetary control and includes the effect of approved bUdget amendments.

DEPOSITS AND INVESTMENTSDepositsCustodial Credit RiskCustodial credit risk is the risk that in the event of a bank failure, the government's deposits maynot be returned. The District does not have a policy for custodial credit risk. At June 30, 2010, thecarrying amount of the District's deposits was $20,924,678 and the bank balance was$21,701,934. Of the bank balance, $159,772 was covered by federal depository insurance, andthe District's remaining cash deposits totaling $21,542,162 are in the Pennsylvania School Districtliquid Asset Fund (UPSDLAf'l). Although not registered with the Securities and ExchangeCommission and not subject to regulatory oversight, PSDLAf acts like moneymarketmutual fundsin that its objective is to maintain a stable net asset va lue of $1 per share, it is rated by anationally recognized statistical rating organization and it is subject to an independent annualaudit.

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NOTE 3

NOTE 4

NOTE 5


DEPOSITS AND INVESTMENTS (cont'd)InvestmentsStatutes authorize the District to invest in U.S. Treasury bills, time or share accounts of institutionsinsured by the Federal Deposit Insurance Corporation in certificates of deposit when they aresecured by proper bond or collateral, repurchase agreements, State Treasurer's investmentpoolsor mutual funds.All of the District's investments are in the Pennsylvania School District l iquid Asset Fund (UPSDLAF").Although not registered with the Securities and Exchange Commission and not subject toregulatory oversight, the PSDLAF acts like money market mutual funds in that its objective is tomaintain a stable net asset value of $1 per share, it is rated by a nationally recognized statisticalrating organization and it is subject to an independent annual audit. The carrying value of theDistrict's investments at June 30, 2010 was $4,264,182.The District has an investment policy that limits its investment choices in local governmentinvestment pools only to the extent it is rated in the highest rat ing category by a nationallyrecognized rating agency. As of June 30, 2010, the PSDLAF was rated as AAA by a nationallyrecognized statistical rating organization.DEFERRED REVENUESGovernmental funds report deferred revenue in connection with receivables for revenues that arenot considered to be available to liquidate liabilities of the current period. Governmental fundsalso defer revenue recognition with resources that have been received, but for which all eligibilityrequirements have not been satisfied. At the end of the current fiscal year, deferred revenuereported in the governmental funds resulted from delinquent property taxes receivable andfederal and private grants received for which eligibility requirements have not been satisfied.Deferred revenue in the entity-Wide financial statements represents resources that have beenreceived but not yet earned.CAPITAL ASSETSCapital asset activity for the year ended June 30, 2010 was as follows:

Governmental activities:Capital assets not being depreciated:landConstruction-in-progressTotal Capital Assets Not Being DepreciatedCapital assets being depreciated:Site improvementsBUildings and improvementsFurniture and equipmentTotal Capital Assets Being Depreciated

Beginning EndingBalance Increases Decreases Balance

$ 2,952,500 $ - $ $ 2,952,500893,721 893,7213,846,221 893,721 2,952,500

4,878,284 312,445 5,190,729120,566,867 1,115,589 121,682,45617,821,259 1,519,842 19,341,101143,266,410 2,947,876 146,214,286

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NOTE 5 CAPITAL ASSETS (cont'd)Beginning EndingBalance Increases Decreases Balanceless accumulated depreciation for:

Site improvements 2,767,718 260,909 3,028,627BUildings and improvements 28,275,230 2,969,780 31,245,010Furniture and equipment 12,224,341 1,535,600 13,759,941Total accumulated depreciation 43,267,289 4,766,289 48,033,578Total Capital Assets Being Depreciated, Net 99,999,121 (1,818,413) 98,180,708Governmental Activities Assets, Net $103,845,342 $(1,818,413) $ 893,721 $101,133,208Business-type Activities:Capital assets being depreciated:Furniture and equipment $ 856,285 $ 47,297 $ $ 903,582Less accumulated depreciation 699,550 46,679 746,229Business-type Capital Assets, Net $ 156,735 $ 618 $ $ 157,353

Depreciation expense was charged to functions/programs of the District as follows:

NOTE 6

Governmental activities:InstructionInstructional student supportAdministrative and financial support servicesOperation and maintenance of plant servicesPupil transportationStudent activities

Total Depreciation Expense - Governmental ActivitiesBusiness-type Activities - Food Service

INTERNAL RECEIVABLES AND PAYABlES

$ 2,912,201487,115450,415572,432253,09091,036

$ 4,766,289$ 46,679

The composition of interfund balances as of June 30, 2010 is as follows:Receivable ToGeneral FundGeneral Fund $$

Amount13,087374

Payable FromFood Service FundPool Fund $$

Amount13,087374

Interfund balances between funds represent temporary loans recorded at year end subsequentto a final allocation of expenses. The balances generally are paid shortly after year end.

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NOTE 7


GENERAL lONG-TERM DEBTThe following summarizes the changes in the long-term liabilities of governmental activities for theyear ended June 30,2010:

Balance BalanceJune 30,2009 Additions Reductions June 30, 2010Note payable $ 15,000,000 $ $ $ 15,000,000Bonds payable 95,010,000 2,465,000 92,545,000Unamortized discount (305,946) (15,808) (290,138)Unamortized premium 1,657,332 79,869 1,577,463Deferred amount onrefunding (2,327,992) (114,347) (2,213,645)Accumulated compen-sated absences/earlyretirement incentive 2,540,880 432,260 2,108,620

TOTALS $ 111,574,274 $ $ 2,846,974 $ 108,727,300

Payments of long-term debt are expected to be funded by the general fund.GeneralObligation BondsSeries of 2004, maturing October 1, 2025, bearing interestranging from 1.15% to 4.50%, interest payable semi-annuallyon April 1 and October 1.Series A of 2005, maturing through November 152028, bearinginterest ranging from 2.50% to 5.00%, interest payable semiannually on May 15 and November 15.Series Bof 2005, maturing through February 15, 2035, bearinginterest ranging from 3.000/0 to 5.00%, interest payable semiannually on February 15 and August 15.Series C of 2005, maturing November 15, 2025, bearinginterest ranging from 3.00% to 4.75%, interest payable semiannually on May 15 and November 15.Series 2006, maturing through February 15, 2035, bearinginterest ranging from 3.50% to 4.375%, interest payable semiannually on February 15 and August 15.Series A of 2007, maturing through February 15, 2035, bearinginterest ranging from 3.75% to 5.00%, interest payable semiannually on February 15 and August 15.

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$ 20,515,000

11,705,000

33,880,000

10,700,000

9,925,000

5,820,000


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NOTE 7


GENERAL lONG-TERM DEBT (cont1d)General Obligation NoteSeries of 2000, maturing 2018 through November 15, 2029,bearing interest ranging from 3.60% to 4.05%, interest payablesemi-annually on May 15 and November 15.

TOTAL15.000,000

$107,545,000

NOTE 8

Presented below is a summary of debt service and lease requirements to maturity by years:Principal Interest TotalYear Ending June 30, Maturities Maturities Maturities

2011 $ 2,550,000 $ 4,777,359 $ 7,327,3592012 2,625,000 4,690,335 7,315,3352013 2,720,000 4,599,658 7,319,6582014 2,820,000 4,493,387 7,313,3872015 2,940,000 4,379,878 7,319,8782016-2020 16,575,000 20,032,204 36,607,2042021-2025 20,560,000 16,080,446 36,640,4462026-2030 25,565,000 10,961,671 36,526,6712031-2035 31,190,000 4,435,601 35,625,601$ 107,545,000 $ 74,450,539 $ 181,995,539

The District has pledged its full faith, credit and taxing power as security for this indebtedness. Asof June 30, 2010, the District has $20,250,000 in defeased bonds.

PENSION PLANPlan DescriptionThe District contributes to the Public School Employees' Retirement System C'PSERS II) , agovernmental cost-sharingmultiple-employer defined benefit pension plan administered by theCommonwealth of Pennsylvania Public School Employees' Retirement System. The PSERS providesretirement and disability, legislatively mandated ad hoc cost-of-living adjustments and certainhealth care insurance premium assistance to plan members and beneficiaries. The PublicSchoolEmployees' RetirementCode (Act No. 96, of October 2, 1975, as amended) provides the authorityto establish and amend benefit provisions. The PSERS issues a comprehensive annual financialreport that includes financial statements and required supplementary information for the plan. Acopy of the reportmay be obtained by writing to Public School Employees' Retirement System, P.O. Box 125, Harrisburg, PA 17108-0125.

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NOTE 9


PENSION PLAN (cont'd)Funding PolicyThe contribution policy is established in the Public School Employees' Retirement Code andrequires contributions by active members, employers and the Commonwealth. Individualemployees contribute between 5.25 and 7.5 percent of salary depending on their membershipstatus. Contributions required of employers are based upon an actuarial valuation. For fiscalyear ended June 30, 2010, the rate of employer contribution was 4.78 percent of coveredpayroll. The District's contributions to PSERS for the years ended June 30,2010,2009 and 2008were $ 1,800,291, $ 1,983,598 and $2,413,486, respectively. The Commonwealth contributes toPSERS by reimbursing the District 50 percent of its contribution each year.

OPERATING LEASESThe District currently is obligated under operating lease agreements for office equipment andmodular classrooms. These leases are considered as operating leases for accounting purposes.The following is a summary of the minimum rental costs for the remaining terms at June 30, 2010:Year Ending June 30,

2011 $ 214,6042012 214,6042013 214,6042014 214,6042015 214,604Total $ 1,073,020

Rental expense for the year ended June 30, 2010 was $214,702.

NOTE 10 JOINT VENTURESThe District participates in a joint venture with the other school districts of Delaware County,Pennsylvania in the operation of a Vocational-Technical SchoolAuthority ("DCVTSA"). The DCVTSAis governed by seven members. Each member must be a citizen of a school district where theDCVTSA leasesa project. The DCVTSA oversees acquiring, holding, constructing, improving andmaintaining the public area vocational-technical school bUildings. The financial statements ofthe Vocational-Technical School Authority are available from the DCVTSA located at 200 YaleAvenue, Morton, Pennsylvania 19070.The District also participates in a joint venture with other school districts of Delaware County,Pennsylvania to support the Delaware County Community College. The financial statements ofthe Delaware County Community College Authority ("DCCCA") are available from the DCCCAlocated at 901 South Media l ine Road, Media, Pennsylvania 19063.

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NOTE 10 JOINT VENTURES (cont'd)The District has entered into lease agreements with the DCCCA and the DCVTSA to provide rentalpayments to retire the Authority's outstanding debt obligations. The lease agreements generallyprovide that in the event the individual Authorities either retire all of their outstanding obligationswhich were issued to finance school facilities' construction or acquisition, or accumulate sufficientreserves to cover such obligations prior to the expirationof the applicable schedules, there will beno subsequently scheduled rental payments made. Inasmuch as the annual rentals includereserve funds which either are invested by Authorities or used for advance retirement ofobligations, it is anticipated that less than scheduled rentals will eventually be paid.Future Authority rental payments are:

NOTE 11

Year Ending June 30,201120122013201420152016-2033Totalless: Interest requirements

Outstanding rental payments

POST-EMPLOYMENT HEAlTHCARE PLAN

Plan Description

DCCCA$ 256,624238,615220,320228,602228,8573,111 ,5364,284,554

(l ,409,775)$ 2,874,779

$

$

DCVTSA20,09320,03219,954

60,079(2,827)57,252

Effective for the 2008-2009 fiscal year, the District implemented Governmental AccountingStandards Board Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment BenefitsOther Than Pensions," for certain post-employmenthealthcarebenefitsandlife insurance benefits provided by the District. This Statement generally provides for prospectiveimplementation - I.e., that employers set the beginning net OPEB obligation at zero as of thebeginning of the initial year. Accordingly, for financial reporting purposes, no liability is reportedfor the post-employment benefits liability at the date of transition.The District's post-employment healthcare plan is a single-employer defined benefit healthcareplan. The plan provides medical insurance benefits to eligible retirees and their spouses. TheBoard of School Directors has the authority to establish and amend benefit provisions through thecollective bargaining process with members of the professional and support staff, an agreementwith administrative employees, and individual employment contracts with certain employees.The plan does not issue any financial report and is not included in the report of any publicemployee retirement system or any other entity.

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NOTE 11


POST-EMPLOYMENT HEALTHCARE PLAN (cont'd)Funding PolicyThe contribution requirements of p lan members are established and may be amended by theBoard of School Directors. The required contribution is based on projected pay-as-you-gofinancing requirements, with any additional amount to prefund as determined annually by theBoard of School Directors. For fiscal year 2010, the District contributed $469,709 to the plan forcurrent premiums, or approximately 84 percent of total premiums. Plan members receivingbenefits contributed $88,694, or approximately 16 percent of total premiums, through theirrequired monthly contributions.Annual OPEB Cost and Net OPEB ObligationThe District's annual other post-employment benefit cost (expense) is calculated based on theannual required contribution of the employer C'ARCII), an amount actuarially determined inaccordance with the parameters of GASB Statement No. 45. The ARC represents a level offunding that, if paid on an ongoing basis, is projected to cover normal costs each year andamortize any unfunded actuarial l iabilities (or funding excess) over a period not to exceed 14years. The following table shows the components of the District's OPEB cost for the year, theamount actually contributed to the plan and changes in the District's net OPEB obligation to theplan.

$ 669,033nnual required contributionInterest on net OPEB obligationAdjustment to annual required contributionAnnual OPEB cost (expense)Contributions madeDecrease in net OPEB obligationNet OPEB obligation - beginning of yearNet OPEB obligation - end of yearFunded Status and Funding Progress

$

669,033(693,037)(24,004)41,70817,704

As of July 1,2008, the most recent actuarial valuation date, the plan was 0.00 percent funded.The actuarial accrued liability for benefits was $4,606,259, and the actuarial value of assets was$0, resulting in an unfunded actuarial accrued liability (IIUAAL II) of $4,606,259. The coveredpayroll (annual payroll of active employees covered by the plan) was $34,029,506, and the ratioof the UAAL to the covered payroll was 13.54 percent.Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts andassumptions about the probability of occurrence of events far into the future. Examples includeassumptions about future employment, mortality and healthcare cost trends. Amountsdetermined regarding the funded status of the plan and the annual required contributions of theemployer are subject to continual revision asactual results are compared with past expectationsand new estimates are made about the future.

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NOTE 11


POST-EMPLOYMENT HEAlTHCARE PLAN (cont'd)Actuarial Methods and AssumptionsProjections of benefits for financial reporting purposes are based on the substantive plan (theplan as understood by the employer and the plan members) and include the types of benefitsprovided at the t ime o f each valuation and the historical pattern of sharing of benefit costsbetween the employer and plan members to that point. The actuarial methodsand assumptionsused include techniques that are designed to reduce the effects of short-term volatility inactuarial liabilities and the actuarial value of assets, consistent with the long-term perspective ofthe calculations.In the July 1, 2008 actuarial valuation, the entry age normal, actuarial cost method was used.The actuarial assumptions included a 4.50 percent investment rate of return and an annualhealthcare cost trend rate of 8.50 percent in 2008, reduced by decrements to an ultimate rate offive percent in 2015 or later. The UAAl is being amortized based on the level dollar, 14-year openperiod. The remaining amortization period at June 30, 2010 was 12 years.

NOTE 12 VOLUNTARY RETtREMENT INCENTIVE PLANSDuring the 1998-1999, 2003-2004 and 2004-2005 fiscal years, the District offered an EarlyRetirement Incentive Plan ("ERlp l ) to qualified professional employees. The District ERIPs providefor post-retirement health care benefits to employees who retire into PSERS after 25 years ofservice credit with PSERS and a t least 10 years of professional service with the District. The ERIPplans provide for continuing payment for medical and prescription insurance for the employeeand his/her eligible dependents up to the same dol lar amount and on the same basis as theschool district provides those benefits to active employees under its contract with existingbargaining units. With respect to future increase in premium costs, the school districtwill pay thelesser of 1) the amount required under the contract with the bargaining unit, or 2) a maximumamount of 7.5 percent increase each year over the district's

Audit Report Final 09-10

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