Comprehensive Financial Report - District 112 · 2016-07-12 · comprehensive annual financial...

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Comprehensive Annual Financial Report Eastern Carver County Schools Independent School District No. 112 Chaska, Minnesota Year ended June 30, 2013

Transcript of Comprehensive Financial Report - District 112 · 2016-07-12 · comprehensive annual financial...

 

Comprehensive Annual

Financial Report 

 

Eastern Carver County Schools Independent School District No. 112 

Chaska, Minnesota  

Year ended June 30, 2013 

COMPREHENSIVE ANNUALFINANCIAL REPORT

EASTERN CARVER COUNTY SCHOOLSINDEPENDENT SCHOOL DISTRICT NO. 112

CHASKA, MINNESOTA

YEAR ENDED JUNE 30, 2013

PREPARED BY THEFINANCE DEPARTMENT

DEEDEE KAHRINGDIRECTOR OF FINANCE AND OPERATIONS

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

TABLE OF CONTENTSYEAR ENDED JUNE 30, 2013

INTRODUCTORY SECTION

LETTER OF TRANSMITTAL 1

SCHOOL BOARD AND ADMINISTRATION 9

ORGANIZATIONAL CHART 10

CERTIFICATE OF EXCELLENCE IN FINANCIAL REPORTING 11

FINANCIAL SECTION

INDEPENDENT AUDITORS’ REPORT 12

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT’S DISCUSSION AND ANALYSIS 15

BASIC FINANCIAL STATEMENTS

STATEMENT OF NET POSITION 29

STATEMENT OF ACTIVITIES 30

BALANCE SHEET – GOVERNMENTAL FUNDS 31

RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION 32

STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE – GOVERNMENTAL FUNDS 33

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE – GOVERNMENTAL FUNDS TO STATEMENT OF ACTIVITIES 34

STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL – GENERAL FUND 35

STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL – FOOD SERVICE FUND 36

STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL – COMMUNITY SERVICE FUND 37

STATEMENT OF NET POSITION – PROPRIETARY FUND – INTERNAL SERVICE FUND 38

STATEMENT OF REVENUES, EXPENSES AND CHANGE IN NET POSITION – PROPRIETARY FUND – INTERNAL SERVICE FUND 39

STATEMENT OF CASH FLOWS – PROPRIETARY FUND – INTERNAL SERVICE FUND 40

STATEMENT OF FIDUCIARY NET POSITION 41

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION 41

NOTES TO BASIC FINANCIAL STATEMENTS 42

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

TABLE OF CONTENTS (CONTINUED)YEAR ENDED JUNE 30, 2013

REQUIRED SUPPLEMENTAL INFORMATION

SCHEDULE OF FUNDING PROGRESS FOR OTHER POSTEMPLOYMENT BENEFITS 70

SUPPLEMENTAL INFORMATION

GENERAL FUND

BALANCE SHEET 71

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL 72

FOOD SERVICE FUND

BALANCE SHEET 75

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL 76

COMMUNITY SERVICE FUND

BALANCE SHEET 77

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL 78

CAPITAL PROJECTS – BUILDING CONSTRUCTION FUND

BALANCE SHEET 79

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL 80

DEBT SERVICE FUND

BALANCE SHEET 81

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL 82

UNIFORM FINANCIAL ACCOUNTING AND REPORTING STANDARDS COMPLIANCE TABLE 83

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

TABLE OF CONTENTS (CONTINUED)YEAR ENDED JUNE 30, 2013

STATISTICAL SECTION (UNAUDITED)

NET POSITION BY COMPONENT 85

CHANGES IN NET POSITION 87

FUND BALANCES, GOVERNMENTAL FUNDS 89

CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS 91

ASSESSED AND ACTUAL VALUE OF TAXABLE PROPERTY 93

DIRECT AND OVERLAPPING PROPERTY TAX RATES 94

PRINCIPAL PROPERTY TAXPAYERS 96

PROPERTY TAX LEVIES AND COLLECTIONS 97

OUTSTANDING DEBT BY TYPE 99

COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT 100

LEGAL DEBT MARGIN INFORMATION 101

DEMOGRAPHIC AND ECONOMIC STATISTICS 103

PRINCIPAL EMPLOYERS 104

FULL-TIME EQUIVALENT DISTRICT EMPLOYEES BY TYPE 105

OPERATING STATISTICS 106

SCHOOL BUILDING INFORMATION 107

STANDARDIZED TESTING 109

SUMMARY OF MEALS SERVED 110

SCHEDULE OF INSURANCE COVERAGE 111

INTRODUCTORY SECTION

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November 11, 2013

To: Citizens of the School District Board of EducationEmployees of the School District

INTRODUCTION

The Comprehensive Annual Financial Report (CAFR) of Independent School District No. 112, Chaska, Minnesota (the District) for the fiscal year ended June 30, 2013 is presented for your information and review. The CAFR is intended to fully disclose the financial position of the District and the results of operations for the fiscal year. The District administration accepts total responsibility for the accuracy, completeness, and fairness in presentation of the enclosed financial reports. Questions and comments are solicited and welcome.

REPORT FORMAT

This CAFR is presented in three main sections: introductory, financial, and statistical. In addition to information contained in this letter, the introductory section includes the District’s organizational chart, and a list of the District’s principal officials. The financial section includes the independent auditor’s report, Management’s Discussion and Analysis (MD&A), basic financial statements, notes to basic financial statements, and detailed combining and individual statements and schedules. The statistical section includes selected financial and general information presented on a multi-year comparative basis. Where possible, historical data is presented for a 10-year period.

Accounting principles generally accepted in the United States of America require management to provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of an MD&A. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A of the District can be found immediately following the report of the independent auditors.

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DISTRICT ORGANIZATION

Eastern Carver County Schools serves the cities of Carver, Chaska, Chanhassen and Victoria. This suburban school district consistently performs above state averages on state tests and its schools rank among the best in Minnesota by a number of independent analyses. The 2013 Washington Post “Challenge Index” has included Chaska and Chanhassen high schools for the achievement of students taking Advanced Placement college-preparation courses. Their rankings on the “Challenge Index” put them among the top three percent of high schools nationally. Chanhassen and Chaska high schools were in Newsweek/Daily Beast’s 2013 list of the Top 1,000 high schools in the nation. Several of our elementary and middle schools have been recognized by state organizations for excellence in educational leadership. In 2007, district teachers and administration began a process to redesign the secondary curriculum to prepare students for the challenges of today and to recommit the district to higher levels of student academic achievement. That work continued through the past school year. In 2009, the district undertook a similar effort, focusing on how to improve an already excellent elementary curriculum program. The result is Inspire!, an initiative that lays the academic foundation for high achievement and college and career preparation. Teachers throughout the district focus on personalized learning to help each student succeed.

The District enrolled 9,198 students from a population of more than 51,600 residents residing in an 84.16 square mile area. During 2012-2013, the District operated 16 buildings. Our schools and programs include: 2 high schools, an arts focused alternative high school, 3 middle schools, 7 elementary schools, a Spanish immersion elementary school, a kindergarten center, atransition center, a bus garage and the District Education Center. The District buildings have an average age of 20.23 years and comprise of over 1.993 million square feet in size. The District is organized by grade level with elementary schools serving students in kindergarten through grade 5, middle schools serving grades 6-8, and the high school serving grades 9-12.

The District is guided by its mission and vision:

Mission

District 112 will prepare learners to achieve their personal best.

Vision

District 112 is dedicated to the preparation of life-long learners so each may achieve personal success and contribute to family and community.

REPORTING ENTITY

Independent School District No. 112, also known as Eastern Carver County Schools, is an instrumentality of the State of Minnesota established to function as an educational institution. The elected School Board is responsible for legislative and fiscal control of Eastern Carver County Schools. The Superintendent is appointed by the Board and is responsible for administrative control of the District.

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The District’s financial statements include all funds, departments, agencies, boards, commissions, and other component units for which the District is considered to be financially accountable. Component units are legally separate entities for which the District (primary government) is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit included whether or not the primary government appoints the voting majority of the potential component unit’s governing body, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit.

Based on these criteria, there are no organizations considered to be component units of the District.

FINANCIAL STATEMENTS

The financial statements contained in this report disclose the financial position of the District as of June 30, 2013, and the financial operations for the fiscal year then ended. The District’s financial records and reports are maintained and prepared on a modified or full accrual basis of accounting in accordance with the Uniform Financial Accounting and Reporting System for Minnesota School Districts as well as the standards of the Governmental Accounting Standards Board (GASB) and the American Institute of Certified Public Accountants. These records are audited annually by an independent certified public accountant as required by Minnesota law. The accounting firm of CliftonLarsonAllen LLP performed the audit for the 2012-13 fiscal year. Their report is included in the financial section of this report. The auditor has given an unqualified opinion on the District’s financial statements. An unqualified opinion means that, in the judgment of the auditor, the financial statements present fairly, in all material respects, the financial position of the District and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

FEDERAL SINGLE AUDIT AND STATE COMPLIANCE AUDIT

The independent audit of the financial statements of the District is part of a broader, federally mandated Single Audit designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited district’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. The District is also required to undergo an annual Minnesota State Legal Compliance Audit under Minnesota Statute §6.65. These reports are available in a separate document.

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ACCOUNTING AND BUDGETING

A major thrust of the District’s accounting system is to provide adequate internal accounting controls. These controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition, and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of internal controls should not exceed the benefits likely to be derived, and that the evaluation of the cost and benefits requires estimates and judgments by management. All internal control evaluations occur within the above framework. We believe that the District’s internal accounting controls adequately safeguard assets and provide reasonable assurance for proper recording of financial transactions.

Budgetary control is maintained through an annual budget adopted by the School Board for all funds as required by state statutes and School Board policy. The adopted budget serves as the authorizing document for all expenditures, although the School Board approves all checks issued on a monthly basis. The Superintendent and Director of Finance & Operations are authorized to make financial commitments within budgetary guidelines up to $50,000. Additional expenditure controls are maintained by the Business Office in accordance with state statutes, i.e., the District cannot incur a negative unreserved balance in the General Fund in excess of 2.5% of the preceding year’s expenditures. The budget is published annually in the District’s legal newspaper to inform residents of the District’s financial position and operating plan for the fiscal year.

The District has established a system of internal controls that provide reasonable assurance that assets are safeguarded from misuse or losses. Encumbrances, or open purchase orders, are used as a budgetary control tool and are charged against line item budgets when issued. Specific expenditure, revenue and detail transaction reports are available online or in hard copy for individuals with budget responsibilities. The reports can be viewed and printed either in the Business Office or in the administrative office in each building or department.

The budget is adopted by the School Board in the spring of each year for the following fiscal year beginning July 1. To accurately track and report financial activities with a focus on site-based accounting, approximately 22,000 accounts have been defined in the District’s chart of accounts.

SIGNIFICANT EVENTS

The District’s finances are largely dependent on student enrollment. (State funding on average is equal to about $6,000 per student.) Eastern Carver County has experienced increasing enrollment from FY04 to FY13. In that decade, 1,026 students joined the district, an increase of 12.6%. Annual enrollment increases in the initial 5 years of the last 10 averaged approximately 1.8%. In the most recent 5 years, the annual increase averaged 0.74%. This was likely the result of the nation’s economic conditions and the decline on new housing construction.

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To accommodate increasing enrollment, Clover Ridge and Victoria Elementary schools were opened in 2001 and 2005, respectively. Pioneer Ridge Middle School was opened in 2002, while Chaska High School underwent a significant expansion in 2005. Finally, a second high school – Chanhassen High School was opened in 2009. It is anticipated that another elementary school will be needed at some future point as the economy recovers and residential housing construction resumes in the district. Local city officials estimated new construction of 500 housing units in 2013.

FINANCIAL PROSPECTS FOR FUTURE YEARS

The residents of the District have repeatedly supported efforts to increase revenue through levy referenda. Since 1997, six operating referenda were brought to the voters and all were passed. Three operating referenda remain in place and provide approximately $12.4 million in operating revenue. Two of the levy referenda are up for renewal in 2013. The District also is seeking dedicated revenue for technology in 2013.

With the addition of Chanhassen High School in 2009, Eastern Carver County Schools became eligible for Alternative Facility funding which will provide funds for deferred maintenance, ADA improvements and health and safety projects. In April 2012, the School Board issued $10 million of Alternative Facility Bonds to fund school building improvements. The District refunded its 2002A and 2004A bonds during FY 2011-12 which provided annual cost savings over $400,000 for taxpayers. Most recent, the District refunded its 2007A bonds in March of 2013 for an annual cost savings of over $420,000.

ECONOMIC FACTORS

The District is located in eastern Carver County, which is part of the seven-county metro area of Minneapolis/St. Paul. Residents are typically employed in professional vocations within the metropolitan area.

The taxable market value of property within the District continued to grow until 2010. Previous growth was due to new construction and valuation increases for existing property. Market values decreased from $6,205,641,000 in 2009 to $5,219,919,900 in 2013. The communities of Carver, Chanhassen, Chaska and Victoria continue to develop areas for residential expansion and growth. Commercial development and redevelopment is clearly evident throughout all four communities.

In recent years, the State of Minnesota’s education funding has been very unpredictable. After delaying state aid payments for the past three years, the Legislation restored state aid payments to the structure from 2008-09. During this time, Easter Carver County Schools increased its fund balance and sustained the delayed state payments without engaging in short-term borrowing.

The 2013 Legislative session increased K-12 funding in Minnesota for the biennium, including a 1.5% increase in the general education formula allowance.

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COMMUNITY

Over the last ten years, the landscape of Eastern Carver County Schools has changed from rural to suburban. According to the 2010 census, Carver County’s population has 91,042 residents which make it the 11th largest county in Minnesota. Over the last decade, Carver County experienced the fifth highest rate of population growth in the state at 29.7% adding 20,837 residents. Carver County is one of the 30 wealthiest counties in the nation for median household income.

The majority of the population is in the eastern part of the county, including the cities of Chaska and Chanhassen. Residential development will continue in Chaska, Victoria and Carver. In 2011 and 2013, the City of Chanhassen was selected as Money Magazine’s top 10 places to live in the U.S.

Transportation continues to expand to communities within Eastern Carver County School District. The Highway 212 corridor is seen as the “gateway” to Carver County communities. Southwest Transit provides express bussing services to Minneapolis and St. Paul and has commuter stations in both Chanhassen and Chaska with plans to expand to Carver.

The first phase of Ridgeview’s 212 Medical Center opened in February 2011 and is located on Highways 212 and 41. Further additions are underway and when fully complete, this medical facility will house a free-standing emergency room, along with surgical suites, imaging and special medical uses. This facility has brought 105 new jobs to the community.

Carver County continues to attract commercial and industrial endeavors to the area including:

New United Health Data Center, a state of the art data center with a cost between $100-150 million broke ground in 2010 with completion in mid-2012. It created about 20 new jobs and increased the property tax base.

Retailer Fleet Farm broke ground in 2011 and open in the summer of 2012 with 100 full time and 100 part time jobs.

The City of Chaska has approximately 200 acres for future commercial and industrial development along Highway 212 with projections of future 8,000-10,000 jobs.

Eastern Carver County Schools is one of the major employers in the area. Rosemount, Inc., a national organization, employs 1,600 employees.

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INITIATIVES

The 2012-13 school year marks the fourth year of the District’s 6-12 secondary curriculum redesign initiative – providing learning that is personalized to each student. The class of 2013 was the first class required to complete a Capstone course in order to graduate. Capstone is a practical, real-world application of what students are studying in an area of interest. As part of the secondary redesign, graduation credits were modified for 21st Century learning and include a world language requirement. All coursework was reviewed with the goal of post-secondary readiness for all students. Elective offerings were revised and created around four areas of study, Arts and Communication, Global Studies, Health and Social Sciences, and STEM (Science, Technology, Engineering, and Math). Secondary schools added accelerated learning classes in physics, chemistry and English that allow students to earn full credits at a faster pace. Eight elementary schools of Eastern Carver County Schools began implementing Inspire!, the elementary curriculum redesign that began implementation in fall of 2011. Like secondary redesign, this is a personalized approach to curriculum. The strands of Inspire! include STEM (Science, Technology, Engineering and Math), cultural competence/exposure to a world language, and continuous progress in which students are not held back by grade level in reading and math. Schools operate within common expectations while recognizing the individual personality of each school community. Inspire! will be fully implemented by 2015.

A dual language Spanish/English immersion school, La Academia, opened Fall 2012 for grades K and 1. The program was popular and added another section of kindergarten for the 2013-14 school year. The district started Kinder Academy, a program for “young” 5-year old students to spend one or two years in kindergarten before “graduating” to first grade. Demand was sufficient to offer a section of Kinder Academy this fall. Next year, state law provides funding that will allow all districts to offer all-day kindergarten. Planning is underway across the district to ensure space is available for parents who choose this option.

Eastern Carver County Schools opened the Integrated Arts Academy to serve students who want an arts-infused education and those who need an alternative high school experience. Arts Academy students will earn a diploma and meet all graduation requirements while taking courses in horticultural arts, culinary arts and visual arts. The school offers opportunities for students to earn college credit, meet with community experts and earn certification to work in the culinary field.

INDEPENDENT AUDIT AND CERTIFICATE OF EXCELLENCE

State statutes require an annual audit by independent certified public accountants. The accounting firm of CliftonLarsonAllen LLP was selected by the District Board to conduct the annual audit.

This report has been prepared following the guidelines provided by the Association of School Business Officials International (ASBO) for their Certificate of Excellence in Financial Reporting Program. Achieving recognition by this program is a goal of the District’s Business Office and provides a clear indication of the District’s high standards for financial reporting. The District received ASBO’s Certificate of Excellence in Financial Reporting for its 2010-2011 and 2011-12Comprehensive Annual Financial Report (CAFR). The District plans to submit the 2012-13CAFR to the ASBO Certificate Program for consideration.

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ACKNOWLEDGMENTS

The time, effort, and attention that go into the timely preparation of a CAFR require the commitment and cooperation of many people. Special appreciation must be extended to the entire Business Office staff for their dedication and to the School Board for their encouragement and leadership.

Sincerely,

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

SCHOOL BOARD AND ADMINISTRATIONJUNE 30, 2013

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SCHOOL BOARD

NAMETERM ON BOARD

EXPIRES BOARD POSITION

Carole Baab January 5, 2015 ChairpersonLisa Anderson January 5, 2015 Vice Chairperson/ClerkTim Klein January 5, 2015 TreasurerFred Berg January 5, 2015 DirectorAmy Logue January 2, 2017 DirectorHeather Nelson January 2, 2017 DirectorJeff Ross, Ph.D. January 2, 2017 Director

ADMINISTRATION

Dr. James Bauck SuperintendentDeeDee Kahring Director of Finance & OperationsPamela Jensen Finance SupervisorLaura Pingry-Kile Director of Specialized ServicesJames O’Connell Director of Administrative ServicesDiane Bourassa Director of Information TechnologyJackie JohnstonCathy GallagherBrett Johnson

Director of Community EducationDirector of Teaching & LearningDirector of Communications & Community Relations

Darlene Miller Business AccountantDonna Quaas Business Accountant

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

ORGANIZATIONAL CHARTJUNE 30, 2013

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School Board

Carole Baab, Lisa Anderson, Tim Klein, Fred Berg, Amy Logue, Heather Nelson, Jeff Ross, Ph.D.

Superintendent

Dr. James M. Bauck

Administrative Asst.Caroline Long

Director of Administrative

Services

Dr. James O’Connell

Director of Finance &Operations

DeeDee Kahring

Director of Information

Systems

Diane Bourassa

Director of Teaching &

Learning

Cathy Gallagher

Director of Community Education

Jackie Johnston

Director of Communications &

Community Relations

Brett Johnson

Director of Specialized Ed

Services

Laura Pingry-Kile

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

CERTIFICATE OF EXCELLENCE IN FINANCIAL REPORTINGJUNE 30, 2013

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FINANCIAL SECTION

(12)An independent member of Nexia International

INDEPENDENT AUDITORS’ REPORT

School BoardEastern Carver County SchoolsIndependent School District No. 112Chaska, Minnesota

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Independent School District No. 112, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the entity’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

School BoardEastern Carver County SchoolsIndependent School District No. 112

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Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Independent School District No. 112 as of June 30, 2013, and the respective changes in financial position, the budgetary comparison for the General Fund, Food ServiceFund and Community Service Fund and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis-of-Matter Regarding a Correction of an Error

As discussed in Note 10 to the financial statements, the beginning net position of the internal service fund was restated to correct a misstatement. Our opinion is not modified with respect to this matter.

Report on Summarized Prior Year Information

We have previously audited Independent School District No. 112’s 2012 financial statements of the governmental activities, each major fund and the aggregate remaining fund information, and we expressed an unmodified opinion on those audited financial statements in our report dated October 17, 2012. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2012 is consistent, in all material respects, with the audited financial statements from which it has been derived.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and schedule of funding progress for other postemployment benefits as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Independent School District No. 112’s basic financial statements. Theintroductory section, the individual fund financial statements, the uniform financial accounting and reporting standards compliance table and the statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

School BoardEastern Carver County SchoolsIndependent School District No. 112

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The individual fund financial statements and the uniform financial accounting and reporting standards compliance table are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory and statistical section has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 11, 2013, on our consideration of the Independent School District No. 112's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Independent School District No. 112’s internal control over financial reporting and compliance.

CliftonLarsonAllen LLP

Minneapolis, MinnesotaNovember 11, 2013

REQUIRED SUPPLEMENTARY INFORMATION

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

MANAGEMENT’S DISCUSSION AND ANALYSISYEAR ENDED JUNE 30, 2013

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This section of Independent School District No. 112’s annual financial report presents its discussion and analysis of the District’s financial performance during the fiscal year ending June 30, 2013. Please read it in conjunction with the district’s financial statements, which immediately follow this letter.

The Management’s Discussion and Analysis (MD&A) is an element of Required Supplementary Information specified in the Government Accounting Standard Board’s (GASB) Statement No. 34 –Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments issued in June 1999.

Financial Highlights

Key financial highlights for the 2012-2013 fiscal year include the following:

The District’s assets exceeded its liabilities at June 30, 2013 by $44,428,038 (net position). The unrestricted portion of the District’s assets was $14,478,502. The District had $4,187,805 of net position that was available to meet its ongoing obligations, but restricted for specific uses.

The District’s total net position increased by $6,834,834 during the fiscal year ended June 30, 2013.

At June 30, 2013, the District’s governmental funds reported a combined ending fund balance of $98,311,749 an increase of $23,274,858 from the prior year. The majority of the increase was from the refunding of the 2007A bond series. Approximately 10% of this total amount, $10,977,042, is unassigned fund balance.

The District’s General Fund, its primary operating fund, closed the fiscal year with an unassigned fund balance of $10,020,646 compared, to an unassigned fund balance of $9,758,851 as of June 30, 2012. The unassigned fund balance is 11.1% of total General Fund expenditures compared to 11.3% in fiscal year 2012, indicating that the District has continued itsconservative budgeting practices.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

MANAGEMENT’S DISCUSSION AND ANALYSISYEAR ENDED JUNE 30, 2013

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Overview of the Financial Statements

The financial section of the annual report consists of four parts: Independent Auditors’ Report, Required Supplementary Information which includes MD&A (this section), the basic financial statements, single and supplemental information. The basic financial statements include several statements that present different views of the District:

The district-wide financial statements, including the Statement of Net Position and the Statement of Activities, provide both short-term and long-term information about the District’s overall financial status.

The remaining statements are fund financial statements that focus on individual parts of the District, reporting the District’s operations in more detail than the district-wide statements.

Governmental funds statements tell how basic services such as regular and special education were financed in the short term as well as what remains for future spending.

Proprietary funds statements offer short- and long-term financial information about the activities the District operates like businesses.

Fiduciary funds statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others to whom the resources belong.

The financial statements also include notes that explain some of the information in the statements and provide more detailed data.

Government-Wide Statements

The government-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the District’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid.

The two government-wide statements report the District’s net position and how they have changed. Net position – the difference between the District’s assets and liabilities – is one way to measure the District’s financial health or position.

Over time, increases or decreases in the District’s net position are an indicator of whether its financial position is improving or deteriorating, respectively.

To assess the overall health of the District you need to consider additional non-financial factors such as changes in the District’s property tax base and the condition of school buildings and other facilities.

In the government-wide financial statements the District’s activities are shown in one category:

Governmental Activities – Most of the District’s basic services are included here, such as regular and special education, transportation, administration, food services, and community education. Property taxes and state aids finance most of these activities.

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Fund Financial Statements

The fund financial statements provide more detailed information about the District’s funds – focusing on its most significant or “major” funds – not the District as a whole. Funds are accounting devices the District uses to keep track of specific sources of funding and spending on particular programs:

Some funds are required by State law and by bond covenants.

The District may establish other funds to control and manage money for particular purposes (e.g., repaying its long-term debts) or to show that it is properly using certain revenues (e.g., federal grants).

The District has three kinds of funds:

Governmental Funds – Most of the District’s basic services are included in governmental funds, which generally focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps to determine whether there are more or fewer financial resources that can be spent in the near future to finance the District’s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statements to explain the relationship (or differences) between them.

Proprietary Fund – The District maintains one type of proprietary fund. The Internal Service Fund is used as an accounting device to accumulate and allocate costs internally among the District’s various functions. The District uses its Internal Service Fund to account for its dental self-insurance and other postemployment benefit activities. These services have been included within the governmental activities in the government-wide financial statements.

Fiduciary Funds – The District is the trustee, or fiduciary, for assets that belong to others. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. All of the District’s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. We exclude these activities from the government-wide financial and governmental fund statements because the District cannot use these assets to finance its operations.

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FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE

Net Position

The District’s combined net position was $44,428,038 on June 30, 2013. This was an increase of 18.2% from the prior year (see Table A-1).

A large part of the District’s net position is the investment in capital assets (land, buildings and equipment) less depreciation and the related debt outstanding that was used to acquire the assets. The District uses the capital assets to provide educational services to students. These are not capital assets available for future spending. Even though the District’s investment in capital assets is reported net of the related debt, the resources needed to repay this debt must be provided from other sources because the capital assets cannot be used to liquidate these liabilities.

Percentage

2013 2012 Change

Current and Other Assets 145,953,548$ 121,590,993$ 20.0 %Capital and Non-Current Assets 196,292,212 200,342,703 (2.0)

Total Assets 342,245,760 321,933,696 6.3

Current Liabilities 60,229,782 58,734,957 2.5Long-Term Liabilities 237,587,940 225,605,535 5.3

Total Liabilities 297,817,722 284,340,492 4.7

Net Position:Invested in Capital Assets 25,761,731 20,696,189 24.5Restricted 4,187,805 2,778,615 50.7Unrestricted 14,478,502 14,118,400 2.6

Total Net Position 44,428,038$ 37,593,204$ 18.2

Governmental Activities

Table A-1

The District's Net Position

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Changes in Net Position

In Table A-2, Change in Net Position, operations are reported on a governmental-wide basis with no reference to funds.

Total %

2013 2012 ChangeRevenues

Program RevenuesCharges for Services 10,900,793$ 12,261,037$ (11.1)%Operating Grants and Contributions 12,114,349 11,064,246 9.5Capital Grants and Contributions 2,047,800 1,190,790 72.0

General RevenuesProperty Taxes 38,696,136 36,623,230 5.7Unrestricted State Aid 58,542,203 59,048,542 (0.9)Investment Earnings (1,245,964) 66,718 (1967.5)Other 1,866,107 991,608 88.2

Total Revenues 122,921,424 121,246,171 1.4

ExpensesAdministration 3,212,710 3,070,561 4.6District Support Services 3,890,877 3,774,333 3.1Regular Instruction 42,607,593 41,957,126 1.6Vocational Education Instruction 1,596,799 1,260,709 26.7Special Education Instruction 14,206,646 14,509,410 (2.1)Instructional Support Services 6,973,472 5,304,793 31.5Pupil Support Services 8,958,437 8,466,970 5.8Sites and Buildings 14,932,559 13,464,155 10.9Fiscal and Other Fixed Cost Programs 166,687 161,549 3.2Food Service 4,583,002 4,533,818 1.1Community Service 7,953,288 7,194,509 10.5Interest and Fiscal Charges on Long-Term Liabilities 7,004,520 7,673,615 (8.7)

Total Expenses 116,086,590 111,371,548 4.2

Increase in Net Position 6,834,834 9,874,623 Beginning Net Position 37,593,204 27,718,581 Ending Net Position 44,428,038$ 37,593,204$

Governmental Activities for theFiscal Year Ended June 30,

Table A-2

Change in Net Position

Total revenues were $122,921,424 while total expenses were $116,086,590 increasing net position by $6,834,834.

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The cost of all governmental activities this year was $116,086,590.

A portion of the cost was paid by the users of the District’s programs (Table A-2, Charges for Services, $10,900,793). The majority of this category, $8.87 million, comes from food service meal sales and community education class tuition.

The federal and state governments subsidized certain programs with grants and contributions (Table A-2, Operating and Capital Grants and Contributions, $12,114,349).

Most of the District’s costs were supported by local property taxes, unrestricted state aid, investment earnings, and other general revenues. Governmental activities were sustained by accessing $38,696,136 in property taxes, $58,542,203 of unrestricted state aid, and withinvestment earnings and other general revenues.

Charges for Services9%

Operating and Capital Grants

12%

Property Taxes31%

Unrestricted State Aid48%

All Other0%

Figure A-1Sources of District's Revenues for Fiscal 2013

Admin3%

Instruction-Related50%

Student Support Services

17%

Food & Comm Serv11%

Maint13%

Other6%

Figure A-2District Expenses for Fiscal 2013

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All governmental activities include not only funds received for the general operation of the District, which are used for classroom instruction, but also include resources from the entrepreneurial-type funds of Food Service and Community Education. Funding for the general operation of the District is controlled by the state and the District does not have the latitude to allocate money received in Food Service or Community Education or for fiscal services to enhance general operation resources. The District cannot take funds from these restricted areas and use the funds to enhance instruction-related programs.

Table A-3, seen below, presents the cost of twelve major District activities such as, instruction, pupil and instructional services, administration and business, maintenance and operations, transportation, and others. The table also shows each activity’s net cost (total cost less fees generated by the activities and intergovernmental aid provided for specific programs).

Percentage Percentage

2013 2012 Change 2013 2012 Change

Administration 3,212,710$ 3,070,561$ 4.6 % 3,196,204$ 3,068,677$ 4.2 %

District Support Services 3,890,877 3,774,333 3.1 2,954,089 3,184,007 (7.2)Regular Instruction 42,607,593 41,957,126 1.6 39,452,454 37,795,961 4.4Vocational Education Instruction 1,596,799 1,260,709 26.7 1,550,981 1,229,165 26.2

Special Education Instruction 14,206,646 14,509,410 (2.1) 5,612,579 5,983,393 (6.2)Instructional Support Services 6,973,472 5,304,793 31.5 6,704,878 5,278,316 27.0

Pupil Support Services 8,958,437 8,466,970 5.8 8,017,064 7,763,109 3.3Sites and Buildings 14,932,559 13,464,155 10.9 14,637,557 13,325,154 9.8Fiscal and Other Fixed Cost Programs 166,687 161,549 3.2 166,687 161,549 3.2

Food Service 4,583,002 4,533,818 1.1 (260,461) (164,768) 58.1

Community Service 7,953,288 7,194,509 11.0 1,987,096 1,557,297 27.6

Interest and Fiscal Charges on Long-Term Liabilities 7,004,520 7,673,615 (8.7) 7,004,520 7,673,615 (8.7) Total 116,086,590$ 111,371,548$ 4.0 91,023,648$ 86,855,475$ 4.8

Total Cost of Services Net Cost of Services

Table A-3

Change in Net Assets

The cost of all governmental activities this year was $116,086,590, an increase of $4,715,042 over the prior year. After applying program specific revenue, the net cost of all governmental activities this year was $91,023,648 or an increase of $4,168,173 over the prior year.

Financial Analysis of the District’s FundsThe financial performance of the District as a whole is reflected in its governmental funds. All of the governmental funds with the exception of the Capital Projects-Building Construction Fund: General, Food Service, Community Service, and Debt Service had more revenue than expenditures in 2013, thereby contributing to the increase in individual fund balances. The fund balance of the Capital Projects-Building Construction Fund declined as a result of expenditures on construction projects for which bonds had been issued in prior years. At the end of the 2012-13 fiscal year, the District’s governmental funds reported combined fund balances (non-spendable, restricted, committed, assigned and unassigned) of $98,311,749, a net increase in fund balances of $23,274,858. The increase is primarily in the Debt Service Fund which increased by $25,467,217 due to the net impact of significant refunding activity of previous bond series. Proceeds will be disbursed in the future.

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Revenues of $122,751,229 plus other financing sources of $72,193,769 for the District’s governmental funds totaled $194,944,998, while total expenditures and other financing uses were $171,670,140. As a result, the District completed the year with a net change in fund balances of $23,274,858.

General Fund

The General Fund is used to account for all revenues and expenditures of the school district not accounted for elsewhere. The General Fund is used to account for: K-12 educational activities; District instructional and student support programs; expenditures for the superintendent; District administration; normal operations and maintenance; pupil transportation; capital expenditures; and legal school District expenditures not specifically designated to be accounted for in any other fund.

ENROLLMENT

Enrollment is a critical factor in determining revenue with approximately 70% of General Fund revenue being determined by enrollment. While many Minnesota school districts are facing declining enrollment, during the last five years, the District has averaged a 0.74% increase in students. The following chart shows the number of students served over the past ten years.

Table A-4Average Daily Membership (ADM)

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Eastern Carver County SchoolsStudent Enrollment (in ADMs)

Elementary Secondary

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Pre-K & KH 67 63 66 79 79 83 88 92 84 82

Reg K, Pre-K & KH 574 601 630 647 571 578 625 603 564 606

Elementary 3,797 3,831 3,985 4,114 4,186 4,170 4,138 4,210 4,149 4,132 Secondary 3,735 3,857 3,967 3,979 4,027 4,124 4,196 4,219 4,379 4,378

Total Students for Aid 8,172 8,352 8,649 8,818 8,864 8,956 9,046 9,124 9,176 9,198

Percent Change 0.79% 2.20% 3.55% 1.96% 0.52% 1.03% 1.00% 0.86% 0.58% 0.23%

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The following schedule presents a summary of General Fund Revenues.

Table A-5General Fund Revenues

June 30, June 30, Increase2013 2012 (Decrease) Percent

Local Sources:Property Taxes 17,523,107$ 16,191,086$ 1,332,021$ 8.2 %Earnings on Investments 23,045 3,424 19,621 573.0Other 3,385,552 4,661,871 (1,276,319) (27.4)

State Sources 66,397,022 65,758,415 638,607 1.0Federal Sources 2,918,926 2,365,445 553,481 23.4

Total General Fund Revenue 90,247,652$ 88,980,241$ 1,267,411$ 1.4

Fund

ChangeYear Ended

General Fund revenue increased by $1,267,411 or 1.4% from the previous year.

Property Taxes increased by $1,332,021. This increase in fiscal 2013 is chiefly due to the adjustment in the property tax shift as approved the MN Legislature. This increase in fiscal 2013 was offset by a reduction of state aid of the same amount.

Other local revenue decreased by $1,276,319. This is mainly due to a change in our accounting for student activity accounts. Student activity accounts were transitioned to board reviewed rather than board controlled during the fiscal year. Extracurricular activity accounts are now run by students with supervision from an adult. A separate audit report exists for these student activity accounts.

State Sources overall increased by $638,607. This increase is comprised of a multitude of variables which increased or decreased state sources of revenue. Increases include an additional enrollment of 22 ADMs, an increase of $50 in the Minnesota state aid formula, first year of new state funding for literacy of approximately $550,000 and one-time additional compensatory funding over $1 million. A decrease in state sources occurred as the District no longer serves as the fiscal host for the Carver Scott Educational Cooperative (recent name change to South West Metro Educational Cooperative).

Federal Revenue is recorded in the year in which the related expenditure is made. Federal sources increased by $553,481. The increase is primarily due to $339,728 in one-time funding for the Early Retiree Reinsurance Program. These funds were used to keep health insurance premiums at the same rate as the previous year. In addition, our Title I entitlement increased from fiscal 2012 to 2013 by $245,439.

General Fund Revenue is received in two major categories. In summary, the two categories are:

1. State Education Finance AppropriationsA. General Education Aid – The largest share of the education finance appropriation, general

education aid, is intended to provide the basic financial support for the education program and is enrollment driven.

B. Categorical Aids – Categorical revenue formulas are used to meet costs of that program (i.e. special education) or promote certain types of programs (i.e., career and technical aid, adult basic education aid).

2. Property Tax LeviesThe largest share of the levy is from voter-approved levies: the excess operating referendum which is also enrollment driven.

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The following schedule presents a summary of General Fund Expenditures.

Table A-6General Fund Expenditures

Amount of PercentJune 30, June 30, Increase Increase

2013 2012 (Decrease) (Decrease)Salaries 55,373,560$ 52,561,863$ 2,811,697$ 5.3 %Employee Benefits 14,070,041 13,253,928 816,113 6.2Purchased Services 12,953,669 13,393,816 (440,147) (3.3)Supplies and Materials 4,101,104 4,668,229 (567,125) (12.1)Capital Expenditures 2,667,048 1,208,586 1,458,462 120.7Other Expenditures 1,002,831 1,135,019 (132,188) (11.6) Total Expenditures 90,168,253$ 86,221,441$ 3,946,812$ 4.6

Year Ended

Total General Fund expenditures increased $3,946,812 or 4.6% from the previous year.

Overall salaries increased by $2,811,697 due to a variety of reasons, including a change in our special education program by utilizing district staff rather than outsourcing services. An additional 7.1 licensed positions were added to support literacy with new state funding. Also positions were added for new programs such as La Academia, the Spanish/English immersion school; Integrated Arts Academy, the alternative learning center; and Targeted Services.

Employee benefits increased $816,113 or 6.2% over the previous year. Most of this increase was due to the additional FTEs as listed above and their corresponding benefits. Also, Teacher’s Retirement rate increased from 6.0% to 6.5%. In addition, since the District is underfunded in its irrevocable trust, the District again chose to fund post-employment benefits out of the operating funds in 2012-2013 in order to sustain the trust assets.

Purchased Services consist of expenditures for fees for service, postage, utilities, property insurance, maintenance repairs, leases, travel, telephone and tuition. Our decrease of 3.3% or $440,147 was primarily due to a decrease in purchased special education services.

Supplies and Materials consist of supplies, media resources and textbooks. Our decrease of 12.1% or $567,125 is due to a change in our accounting for student activity accounts. Student activity accounts were transitioned to board reviewed rather than board controlled during the fiscal year. Student activity account purchases no longer run through the General Fund.

Capital Expenditures increased by $1,458,462 resulting from planned technology purchases through the Power Up Grant program and vehicles purchased for transportation and maintenance.

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General Fund Budgetary Highlights

The District is required to adopt an operating budget prior to the beginning of its fiscal year (July 1) referred to as the original budget. Over the course of the year, the District revised its annual operating budget twice. The budget amendments fall into two categories:

Implementing budgets for specially funded projects, which include both federal and state grants, adjusting staffing and various instructional allocations to the schools based on actual enrollment and unspent funds carried over from fiscal year 2011-12.

Increase in appropriations for significant unbudgeted costs.

A significant change in the revenue and expenditures for the District during the fiscal year was due to no longer serving as the fiscal host for the Carver Scott Educational Cooperative as they had in prior years. The District did not adjust their budget for this change which caused a variance from budget to actual. Revenues were under budget by 2.96% and expenditures were under budget by 5.03%.

While the District anticipated that the net change in fund balance would be a decrease of $1,766,242, total fund balance increased by $257,804 resulting in a total fund balance of $14,540,493 at June 30, 2013. The unassigned portion of the fund balance in the General Fund is 11.1% of expenditures. This is within the Board policy guideline, which requires this percentage to be between 5% and 12%. The District implemented $2.3 million of budget reductions beginning in fiscal year 2012 to satisfy necessary cuts for a two-year period.

Food Service Fund

The Food Service Fund revenue for 2012-13 totaled $4,845,068 and expenditures were $4,664,837. The June 30, 2013 fund balance is $936,693, an increase of $180,231 from fiscal year 2012. Results were better than budgeted due to a number of factors: An increase in federal revenue due to an increase in the federal reimbursement rate including an additional .06 cents per meal for following Healthy Hunger-Free Kids Act guidelines. Expenditures were under budget by $190,984 due to a decrease in lunches served.

Community Service Fund

The Community Service Fund revenue for 2012-13 totaled $8,117,645 and expenditures were $7,945,233. The June 30, 2013 fund balance is $858,896, an increase of $172,412 from fiscal year 2012. Actual revenues were 2.2% over budget and expenditures were 1.5% over budget. Tuition and fee revenue was over budget by $138,506 due to larger than anticipated child care numbers as well as the new all-day Pre-Kindergarten and Dual Language program.

Capital Projects - Building Construction Fund

The Capital Projects - Building Construction Fund revenue for 2012-13 totaled $11,182 which was mostly investment earnings. In the 2011-12 year, the District sold alternative facility bonds with proceeds of $10,035,122 to fund deferred maintenance projects over three years. Expenditures in 2012-13 were $2,813,988. The June 30, 2013 fund balance is $7,600,461, a planned decrease of $2,802,806 from fiscal year 2012, all of which represents resources for Alternative Facility Projects. Expenditures were under budget by $493,468. The Alternative Facility Projects are ongoing and completion of the projects does not necessarily follow a specific fiscal year.

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Debt Service Fund

The Debt Service Fund is used to record revenues and expenditures for a school district’s outstanding bonded indebtedness, whether for building construction, other post employment benefits (OPEB) or for initial or refunding bonds. The Debt Service Fund revenue and other financing sources for 2012-13totaled $91,545,046 and expenditures and other financing uses were $66,077,829, bringing the June 30, 2013 total fund balance to $74,375,206, an increase of $25,467,217 from fiscal year 2012.

The total fund balance consists of $70,408,254 in funds restricted for bond refunding while the remainder of $3,966,952 is for debt payments related to regular and other postemployment bond sales.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

By the end of June 30, 2013, the District had invested just under $259 million in a broad range of capital assets, including school buildings, athletic facilities, computer and audio-visual equipment, and administrative offices (see Table A-7). (More detailed information about capital assets can be found in Note 4 to the financial statements.) Total depreciation expense for the year was slightly over $6 million.

Percentage

2013 2012 Change

Land 18,578,303$ 18,578,303$ - %Land Improvements 5,851,136 5,099,247 14.7Buildings and Improvements 228,308,950 228,115,309 0.1Equipment 6,110,647 4,985,261 22.6

Less: Accumulated Depreciation (62,556,824) (56,435,417) 10.8

Total 196,292,212$ 200,342,703$ (2.0)

Table A-7

The District's Capital Assets

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Long-Term Liabilities

At year-end, the District had $230,155,000 in general obligation bonds outstanding as shown in Note 5 to the financial statements. The District had $647,334 in obligations under capital leases, a decrease of $130,575. Additionally, the District had $4,005,000 in Certificates of Participation outstanding. The District also had an estimated $2,834,423 in net severance and compensated absences at June 30, 2013, a net increase of $247,721 from June 30, 2012, as well as a net OPEB asset of $4,699,041resulting from the District’s irrevocable trust.

Percentage

2013 2012 Change

General Obligation Bonds 230,155,000$ 221,350,000$ 4.0 %

Net Bond Premium and Discount 16,275,794 11,278,196 44.3Obligations Under Capital Leases 647,334 777,909 (16.8)

Certificates of Participation Payable 4,005,000 4,505,000 (11.1)Net OPEB Obligation (Asset) (4,699,041) (4,773,803) (1.6)Severance Benefits Payable 2,140,164 1,979,748 8.1

Compensated Absences Payable 694,259 606,954 14.4

Total 249,218,510$ 235,724,004$ 5.7

Long-Term Liabilities:Due Within One Year 16,334,998$ 14,892,272$

Due in More than One Year 232,883,512 220,831,732

249,218,510$ 235,724,004$

Table A-8

The District's Long-Term Liabilities

FACTORS BEARING ON THE DISTRICT’S FUTURE

Similar to other states throughout the nation, the state of Minnesota has experienced major budget shortfalls with expenditures outpacing revenues in recent years. The state’s financial difficulties have resulted delays in state aid payments and property tax recognition shifts to school districts.

With the exception of the voter-approved excess operating referendum, the District is dependent on the state of Minnesota for its revenue authority. The general education program is the method by which school districts receive the majority of their financial support. This source of funding is primarily state aid and, as such, school districts rely heavily on the state of Minnesota for educational resources.

The 2013 Legislature in the Omnibus Education Finance and Policy bill included $485 million in new spending over the next biennium. There are increases in the basic general education formula as well as funding for All Day Kindergarten, improvements in special education and other categorical aids.Additionally, recent state budget forecasts have provided a positive outlook for accelerated repayment of education aids.

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CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT

This financial report is designed to provide the District’s citizens, taxpayers, customers, and investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Business Office, Independent School District No. 112, 11 Peavey Road, Chaska, MN 55318.

BASIC FINANCIAL STATEMENTS

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STATEMENT OF NET POSITIONJUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2012)

See accompanying Notes to Basic Financial Statements.(29)

Governmental Activities2013 2012

ASSETSCash and Investments 36,609,823$ 23,063,950$ Cash and Investments Held by Trustee 70,408,254 45,416,402 Receivables:

Property Taxes 21,091,455 21,521,510 Other Governments 11,990,321 25,691,425 Other 69,135 119,815

Prepaid Items 297,809 252,797 Inventory 66,852 54,547 Loss on Refunding 5,387 - Bond Issuance Costs, Net 715,471 696,744 Net OPEB Prepaid Asset 4,699,041 4,773,803 Capital Assets:

Land 18,578,303 18,578,303 Other Capital Assets, Net of Depreciation 177,713,909 181,764,400

Total Assets 342,245,760 321,933,696

LIABILITIESSalaries and Compensated Absences Payable 9,023,169 8,480,400 Accounts and Contracts Payable 2,306,652 1,069,302 Accrued Interest Payable 2,557,727 3,424,076 Due to Other Governmental Units 643,906 865,131 Property Tax Shift Adjustment - 155 Unearned Revenue:

Property Taxes 28,847,272 29,089,034 Local Sources 516,058 914,587

Long-Term Liabilities:Portion Due Within One Year 16,334,998 14,892,272 Portion Due in More Than One Year 237,587,940 225,605,535

Total Liabilities 297,817,722 284,340,492

NET POSITIONNet Investment in Capital Assets 25,761,731 20,696,189 Restricted for:

General Fund Operating Capital Purposes 237,520 176,708 General Fund State-Mandated Reserves 529,820 434,889 Food Service 936,693 756,462 Community Service 867,651 686,484 Debt Service 1,616,121 724,072

Unrestricted 14,478,502 14,118,400

Total Net Position 44,428,038$ 37,593,204$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STATEMENT OF ACTIVITIESYEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

See accompanying Notes to Basic Financial Statements.(30)

2012

Net (Expense) Net (Expense)

Revenue and Revenue and

Changes in Changes in

Net Assets Net Assets

Operating Capital Total Total

Charges for Grants and Grants and Governmental Governmental

Functions Expenses Services Contributions Contributions Activities Activities

Governmental Activities

Administration 3,212,710$ -$ -$ 16,506$ (3,196,204)$ (3,068,677)$

District Support Services 3,890,877 - - 936,788 (2,954,089) (3,184,007)

Regular Instruction 42,607,593 1,628,820 947,231 579,088 (39,452,454) (37,795,961)

Vocational Education Instruction 1,596,799 - 35,527 10,291 (1,550,981) (1,229,165)

Special Education Instruction 14,206,646 318,409 8,275,658 - (5,612,579) (5,983,393)

Instructional Support Services 6,973,472 3,831 - 264,763 (6,704,878) (5,278,316)

Pupil Support Services 8,958,437 - 920,023 21,350 (8,017,064) (7,763,109)

Sites and Buildings 14,932,559 75,988 - 219,014 (14,637,557) (13,325,154)

Fiscal and Other Fixed Cost Programs 166,687 - - - (166,687) (161,549)

Food Service 4,583,002 3,368,464 1,474,999 - 260,461 164,768

Community Service 7,953,288 5,505,281 460,911 - (1,987,096) (1,557,297)

Interest and Fiscal Charges on

Long-Term Liabilities 7,004,520 - - - (7,004,520) (7,673,615)

Total School District 116,086,590$ 10,900,793$ 12,114,349$ 2,047,800$ (91,023,648) (86,855,475)

General Revenues

Property Taxes Levied for:

General Purposes 17,515,743 16,190,394

Community Service 1,298,456 1,331,703

Debt Service 19,881,937 18,196,133

Capital Projects - 905,000

State and Federal Aid Not Restricted to Specific Purposes 58,542,203 59,048,542 Earnings on Investments (1,245,964) 66,718 Miscellaneous 1,866,107 991,608

Total General Revenues 97,858,482 96,730,098

Change in Net Assets 6,834,834 9,874,623

Net Position - Beginning 37,593,204 27,718,581

Net Position - Ending 44,428,038$ 37,593,204$

2013

Program Revenues

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

BALANCE SHEETGOVERNMENTAL FUNDS

JUNE 30, 2013(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2012)

See accompanying Notes to Basic Financial Statements.(31)

CapitalProjects -

Food Community Building DebtGeneral Service Service Construction Service 2013 2012

ASSETSCash and Investments 12,407,832$ 1,191,773$ 1,500,029$ 8,367,568$ 12,652,516$ 36,119,718$ 22,797,384$ Cash and Investments Held by Trustee - - - - 70,408,254 70,408,254 45,416,402 Receivables:

Current Property Taxes 9,914,547 - 440,851 - 10,267,117 20,622,515 20,721,776 Delinquent Property Taxes 215,042 - 9,892 - 244,006 468,940 799,734 Due from Other Minnesota School Districts 376,208 - - - - 376,208 548,389 Due from Minnesota Department of Education 10,049,539 1,358 177,388 - 126,201 10,354,486 23,834,361 Due from Federal through Minnesota Department of Education 1,044,122 37,255 - - - 1,081,377 1,019,885 Due from Other Governmental Units 167,582 - 10,668 - - 178,250 288,790 Other Receivables 25,367 - 34,925 8,843 - 69,135 119,815

Due from Other Funds - - - - - - 1,937,157 Prepaid Items 288,083 2,527 7,199 - - 297,809 252,797 Inventory - 66,852 - - - 66,852 54,547

Total Assets 34,488,322$ 1,299,765$ 2,180,952$ 8,376,411$ 93,698,094$ 140,043,544$ 117,791,037$

LIABILITIES AND FUND BALANCE

Liabilities:Salaries and Payroll Deductions Payable 8,400,907$ 227,523$ 394,739$ -$ -$ 9,023,169$ 8,480,400$ Accounts and Contracts Payable 1,412,744 1,652 107,492 775,950 - 2,297,838 1,055,222 Due to Other Governmental Units 597,502 3,337 43,067 - - 643,906 865,131 Due to Other Funds - - - - - - 1,937,157 Property Tax Shift Adjustment - - - - - - 155 Unearned Revenue:

Property Taxes Levied for Subsequent Year 9,309,386 - 421,894 - 19,115,992 28,847,272 29,089,034 Delinquent Property Taxes 187,901 - 8,755 - 206,896 403,552 412,460 Local Sources 39,389 130,560 346,109 - - 516,058 914,587

Total Liabilities 19,947,829 363,072 1,322,056 775,950 19,322,888 41,731,795 42,754,146

Fund Balance:Nonspendable:

Prepaid Items 288,083 2,527 7,199 - - 297,809 252,797 Inventory - 66,852 - - - 66,852 54,547

Restricted for:Staff Development - - - - - - 217,015 Alternative Facilities - - - 7,600,461 - 7,600,461 10,387,104 Basic Skills Programs 273,880 - - - - 273,880 - Health and Safety 255,940 - - - - 255,940 217,874 Operating Capital 237,520 - - - - 237,520 176,708 Community Education Programs - - 752,141 - - 752,141 614,740 Early Childhood and Family Educations Programs - - 54,387 - - 54,387 60,775 Bond Refundings - - - - 70,408,254 70,408,254 44,759,841 Building Construction - - - - - - 16,163 Other Purposes - 867,314 45,169 - 3,966,952 4,879,435 4,846,134

Assigned for:Transportation 91,497 - - - - 91,497 269,902

21st Century 526,514 - - - - 526,514 526,514 Student Activities - - - - - - 951,130 Separation/Retirement Benefits 1,400,000 - - - - 1,400,000 1,170,317 Third Party Billing Med-Asst. 445,493 - - - - 445,493 319,350

Capital Maintenance - Victoria Field House 80,000 - - - - 80,000 80,000

Principal Staff Development Fund - - - - - - 56,443 Purchase of Crosby Park Building 178,405 - - - - 178,405 -

Site Carry-over 742,515 - - - - 742,515 300,686 Unassigned 10,020,646 - - - - 10,020,646 9,758,851

Total Fund Balance 14,540,493 936,693 858,896 7,600,461 74,375,206 98,311,749 75,036,891

Total Liabilities and Fund Balance 34,488,322$ 1,299,765$ 2,180,952$ 8,376,411$ 93,698,094$ 140,043,544$ 117,791,037$

Funds

Major Funds

Total Governmental

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDSTO THE STATEMENT OF NET POSITION

JUNE 30, 2013(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2012)

See accompanying Notes to Basic Financial Statements.(32)

2013 2012

Total Fund Balance for Governmental Funds 98,311,749$ 75,036,891$

Land 18,578,303 18,578,303 Land Improvements, Net of Accumulated Depreciation 3,674,061 3,210,044 Buildings and Improvements, Net of Accumulated Depreciation 171,380,829 176,710,655 Equipment, Net of Accumulated Depreciation 2,659,019 1,843,701

403,552 412,460

4,699,041 4,773,803

(2,557,727) (3,424,076)

715,471 696,744

481,291 252,486

Bonds Payable (230,155,000) (221,350,000) Unamortized Premiums (16,641,521) (11,620,518) Unamortized Discounts 365,727 342,322 Certificates of Participation Payable (4,005,000) (4,505,000) Obligations Under Capital Leases (647,334) (777,909) Severance Benefits Payable (2,140,164) (1,979,748) Compensated Absences Payable (694,259) (606,954)

Total Net Position of Governmental Activities 44,428,038$ 37,593,204$

Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due.

Total net assets reported for governmental activities in the statement of net assets is different because:

Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. Those assets consist of:

Some of the District's property taxes will be collected after year-end, but are not available soon enough to pay for the current period's expenditures and, therefore, are reported as deferred revenue in the funds.

OPEB trust assets net of the OPEB liability recognized to date, are not current financial resources and, therefore, are not reported at the fund level.

Bond issuance costs are reported as expenditures in the governmental funds.

Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and, therefore, are not reported as fund liabilities. All liabilities - both current and long-term - are reported in the statement of net assets. Balances at year-end are:

Internal service funds are used by management to charge the costs of health and dental insurance services to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. Internal service fund net assets at year-end are:

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCEGOVERNMENTAL FUNDS

YEAR ENDED JUNE 30, 2013(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

See accompanying Notes to Basic Financial Statements.(33)

Capital

Projects -

Food Community Building DebtGeneral Service Service Construction Service 2013 2012

REVENUES

Local Sources:Property Taxes 17,523,107$ -$ 1,299,049$ -$ 19,882,888$ 38,705,044$ 36,627,102$ Earnings on Investments 23,045 1,605 1,702 11,098 (1,284,112) (1,246,662) 66,321 Other 3,385,552 3,368,464 5,831,445 84 2,950 12,588,495 13,252,645

State Sources 66,397,022 143,086 985,449 - 927,956 68,453,513 67,733,367 Federal Sources 2,918,926 1,331,913 - - - 4,250,839 3,570,211

Total Revenues 90,247,652 4,845,068 8,117,645 11,182 19,529,682 122,751,229 121,249,646

EXPENDITURES

Current:Administration 3,183,911 - - - - 3,183,911 3,053,551 District Support Services 3,220,168 - - - - 3,220,168 3,441,379 Regular Instruction 41,438,470 - - - - 41,438,470 41,548,792 Vocational Education Instruction 1,595,765 - - - - 1,595,765 1,252,724 Special Education Instruction 14,173,613 - - - - 14,173,613 14,480,818 Instructional Support Services 6,685,300 - - - - 6,685,300 5,196,677 Pupil Support Services 8,902,325 - - - - 8,902,325 8,321,449 Sites and Buildings 7,313,460 - - - - 7,313,460 6,747,298 Fiscal and Other Fixed Cost Programs 166,687 - - - - 166,687 161,549 Food Service - 4,462,184 - - - 4,462,184 4,498,731 Community Service - - 7,648,954 - - 7,648,954 7,150,503

Capital Outlay 2,667,048 202,653 296,279 2,813,988 - 5,979,968 2,616,556 Debt Service:

Principal 630,575 - - - 12,675,000 13,305,575 11,248,746 Interest and Fiscal Charges 190,931 - - - 9,067,829 9,258,760 8,406,999

Total Expenditures 90,168,253 4,664,837 7,945,233 2,813,988 21,742,829 127,335,140 118,125,772

Excess (Deficiency) of Revenues Over (Under) Expenditures 79,399 180,231 172,412 (2,802,806) (2,213,147) (4,583,911) 3,123,874

OTHER FINANCING SOURCES (USES)

Capital Lease Proceeds - - - - - - 49,629 Sale of Real Property Proceeds 178,405 - - - - 178,405 - Bond Proceeds - - - - 65,815,000 65,815,000 52,360,000 Bond Premium - - - - 6,200,364 6,200,364 7,984,635 Payment to Refunded Bond Escrow Agent - - - - (44,335,000) (44,335,000) (5,340,000)

Total Other Financing Sources (Uses) 178,405 - - - 27,680,364 27,858,769 55,054,264

Net Change in Fund Balances 257,804 180,231 172,412 (2,802,806) 25,467,217 23,274,858 58,178,138

Fund Balances - Beginning 14,282,689 756,462 686,484 10,403,267 48,907,989 75,036,891 16,858,753

Fund Balances - Ending 14,540,493$ 936,693$ 858,896$ 7,600,461$ 74,375,206$ 98,311,749$ 75,036,891$

Total Governmental

Funds

Major Funds

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES AND CHANGE IN FUND BALANCE

GOVERNMENTAL FUNDS TO STATEMENT OF ACTIVITIESYEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

See accompanying Notes to Basic Financial Statements.(34)

2013 2012

Net Change in Fund Balance - Total Governmental Funds 23,274,858$ 58,178,138$

Capital Outlays 2,129,830 950,495

Gain (Loss) on Disposal of Capital Assets 178,405 (2,956)

Proceeds from sales of capital assets (178,405) -

Depreciation Expense (6,180,321) (6,087,207)

Other Financing Source - Capital Lease - (49,629)

Principal Payments - Capital Leases 130,575 113,746

(74,762) 5,271,948

General Obligation Bond Proceeds (65,815,000) (52,360,000)

Payment to Refunded Bond Escrow Agent 44,335,000 -

Bond (Premium) Discount (6,127,490) (7,984,635)

Bond Issuance Costs 185,125 307,172

Repayment of Certificates of Participation Principal 500,000 485,000

Repayment of Bond Principal 12,675,000 15,990,000

Change in Accrued Interest Expense - General Obligation Bonds 866,349 (97,891)

Amortization of Bond Issuance Costs (166,398) (57,680)

Amortization of Bond Premium 1,179,361 571,022

Amortization of Discount (49,469) (46,919)

(8,908) (3,872)

(247,721) 255,255

228,805 (5,557,364)

Change in Net Position of Governmental Activities 6,834,834$ 9,874,623$

In the statement of activities, certain operating expenses - severance benefits and compensated

absences - are measured by the amounts earned during the year. In the governmental funds,

however, expenditures for these items are measured by the amount of financial resources used

(essentially, the amounts actually paid).

Internal service funds are used by the District to charge the costs of employee health and dental

benefits to individual funds. The net revenue of the internal service funds is reported with

governmental activities.

Payment of the OPEB bond proceeds to the District's irrevocable trust are recognized as

expenditures at the fund level while the assets of the trust, minus the OPEB liability recognized to

date, represents an asset in the statement of net assets.

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

Governmental funds report capital outlays as expenditures. However, in the statement of

activities, assets with an initial, individual cost of more than $5,000 are capitalized and the cost is

allocated over their estimated useful lives and reported as depreciation expense. This is the

amount by which depreciation exceeded capital outlays in the current period.

Some capital asset additions are financed through capital leases. In governmental funds, a capital

lease arrangement is considered a source of financing, but in the statement of net assets, the

lease obligation is reported as a liability. Repayment of capital lease principal is an expenditure in

the governmental funds, but repayment reduces the lease obligation in the statement of net

assets.

The governmental funds report bond proceeds as financing sources, while repayment of bond

principal is reported as an expenditure. In the statement of net assets, however, issuing debt

increases long-term liabilities and does not affect the statement of activities and repayment of

principal reduces the liability. Also, governmental funds report the effect of issuance costs and

premiums when debt is first issued, whereas these amounts are deferred and amortized in the

statement of activities. Interest is recognized as an expenditure in the governmental funds when it

is due. In the statement of activities, however, interest expense is recognized as it accrues,

regardless of when it is due. The net effect of these differences in the treatment of general

obligation bonds and related items is as follows:

Delinquent property taxes receivable will be collected this year, but are not available soon enough

to pay for the current period’s expenditures and, therefore, are deferred in the funds.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCEBUDGET AND ACTUAL

GENERAL FUNDYEAR ENDED JUNE 30, 2013

See accompanying Notes to Basic Financial Statements.(35)

Over(Under)

Actual Final

Original Final Amounts BudgetREVENUES

Local Sources:

Property Taxes 16,382,224$ 16,382,224$ 17,523,107$ 1,140,883$ Earnings on Investments 10,000 10,000 23,045 13,045 Other 2,645,843 2,367,712 3,385,552 1,017,840

State Sources 71,668,144 71,328,416 66,397,022 (4,931,394) Federal Sources 2,475,988 3,093,847 2,918,926 (174,921)

Total Revenues 93,182,199 93,182,199 90,247,652 (2,934,547)

EXPENDITURESCurrent:

Administration 3,213,611 3,224,158 3,183,911 (40,247) District Support Services 4,370,443 4,430,427 3,220,168 (1,210,259) Elementary and Secondary Regular Instruction 42,798,522 43,300,860 41,438,470 (1,862,390)

Vocational Education Instruction 893,334 1,620,855 1,595,765 (25,090) Special Education Instruction 15,806,011 15,575,975 14,173,613 (1,402,362) Instructional Support Services 7,099,308 7,153,252 6,685,300 (467,952) Pupil Support Services 8,665,315 8,691,551 8,902,325 210,774

Sites and Buildings 7,239,127 7,274,127 7,313,460 39,333 Fiscal and Other Fixed Cost Programs 229,500 229,500 166,687 (62,813)

Capital Outlay 1,916,831 2,622,530 2,667,048 44,518

Debt Service:Principal 440,000 614,023 630,575 16,552 Interest and Fiscal Charges 385,206 211,183 190,931 (20,252)

Total Expenditures 93,057,208 94,948,441 90,168,253 (4,780,188)

Excess (Deficiency) of Revenues Over (Under) Expenditures 124,991 (1,766,242) 79,399 1,845,641

OTHER FINANCING USES

Sale of Real Property Proceeds - - 178,405 178,405

Net Change in Fund Balances 124,991$ (1,766,242)$ 257,804 2,024,046$

FUND BALANCEBeginning of Year 14,282,689

End of Year 14,540,493$

Budgeted Amounts

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCEBUDGET AND ACTUALFOOD SERVICE FUND

YEAR ENDED JUNE 30, 2013

See accompanying Notes to Basic Financial Statements.(36)

Over

(Under)

Actual Final

Original Final Amounts Budget

REVENUES

Local Sources:

Earnings on Investments 500$ 500$ 1,605$ 1,105$

Other - Primarily Meal Sales 3,444,926 3,444,926 3,368,464 (76,462)

State Sources 154,490 154,490 143,086 (11,404)

Federal Sources 1,200,110 1,200,110 1,331,913 131,803

Total Revenues 4,800,026 4,800,026 4,845,068 45,042

EXPENDITURES

Current:

Food Service 4,606,621 4,606,621 4,462,184 (144,437)

Capital Outlay 249,200 249,200 202,653 (46,547)

Total Expenditures 4,855,821 4,855,821 4,664,837 (190,984)

Excess (Deficiency) of Revenues Over (Under) Expenditures (55,795)$ (55,795)$ 180,231 236,026$

FUND BALANCE

Beginning of Year 756,462

End of Year 936,693$

Budgeted Amounts

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCEBUDGET AND ACTUAL

COMMUNITY SERVICE FUNDYEAR ENDED JUNE 30, 2013

See accompanying Notes to Basic Financial Statements.(37)

Over

(Under)

Actual Final

Original Final Amounts Budget

REVENUES

Local Sources:

Property Taxes 1,282,781$ 1,282,781$ 1,299,049$ 16,268$

Earnings on Investments 15,000 15,000 1,702 (13,298)

Other - Primarily Tuition and Fees 5,422,027 5,692,939 5,831,445 138,506

State Sources 1,091,141 954,930 985,449 30,519

Total Revenues 7,810,949 7,945,650 8,117,645 171,995

EXPENDITURES

Current:

Community Service 7,662,369 7,542,777 7,648,954 106,177

Capital Outlay 33,859 288,152 296,279 8,127

Total Expenditures 7,696,228 7,830,929 7,945,233 114,304

Excess of Revenues Over Expenditures 114,721$ 114,721$ 172,412 57,691$

FUND BALANCE

Beginning of Year 686,484

End of Year 858,896$

Budgeted Amounts

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STATEMENT OF NET POSITIONPROPRIETARY FUND

INTERNAL SERVICE FUNDAS OF JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2012)

See accompanying Notes to Basic Financial Statements.(38)

2013 2012

ASSETSCurrent Assets:

Cash and Investments 490,105$ 266,566$

LIABILITIESCurrent Liabilities:

Accounts Payable 8,814$ 14,080$

NET ASSETSUnrestricted 481,291 252,486

Total Liabilities and Net Assets 490,105$ 266,566$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STATEMENT OF REVENUES, EXPENSES, AND CHANGE IN NET POSITIONPROPRIETARY FUND

INTERNAL SERVICE FUNDYEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

See accompanying Notes to Basic Financial Statements.(39)

2013 2012

OPERATING REVENUES

Dental Insurance Premiums 551,110$ 449,524$

OPERATING EXPENSES

Dental Insurance Claim Payments 511,045 521,839

Operating Income (Loss) 40,065 (72,315)

NONOPERATING INCOMEEarnings on Investments 698 397

Income (Loss) Before Transfers 40,763 (71,918)

Transfer Out to Other Funds - (5,485,446)

Change in Net Assets 40,763 (5,557,364)

Total Net Position - Beginning, as Previously Reported 252,486 5,809,850

Prior Period Adjustment 188,042 -

Total Net Position - Beginning 440,528 5,809,850

Total Net Position - Ending 481,291$ 252,486$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STATEMENT OF CASH FLOWSPROPRIETARY FUND

INTERNAL SERVICE FUNDYEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

See accompanying Notes to Basic Financial Statements.(40)

2013 2012

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from Interfund Services Provided 739,152$ 449,524$ Payments for Medical Fees and Insurance Claims (516,311) (519,615) Payments for Retirement Benefits - (675,582) Transfers to Other Funds - (5,485,446)

Net Cash Provided (Used) by Operating Activities 222,841 (6,231,119)

CASH FLOWS FROM INVESTING ACTIVITIESInterest Received 698 49,309

Net Increase (Decrease) in Cash and Cash Equivalents 223,539 (6,181,810)

Cash and Cash Equivalents - Beginning 266,566 6,448,376

Cash and Cash Equivalents - Ending 490,105$ 266,566$

Displayed on Statements of Fund Net Position as:Cash and Investments 490,105$ 266,566$

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH

PROVIDED (USED) BY OPERATING ACTIVITIESOperating Income (Loss) 40,065$ (72,315)$ Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities:

Transfer to Other Funds - (5,485,446) Prior Period Adjustment 188,042 - Increase in Accounts Payable (5,266) 2,224 Increase (Decrease) in Due to Other Funds - (675,582)

Total Adjustments 182,776 (6,158,804)

Net Cash Provided (Used) by Operating Activities 222,841$ (6,231,119)$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STATEMENT OF FIDUCIARY NET POSITIONJUNE 30, 2013

See accompanying Notes to Basic Financial Statements.(41)

Employee Scholarship OPEBBenefit Private-Purpose IrrevocableTrust Trust Trust

ASSETSCash and Investments 308,808$ 53,181$ 6,304,081$

LIABILITIESAccounts and Contracts Payable 92,886 52,681 -

NET POSITIONUnrestricted 215,922$ 500$ 6,304,081$

STATEMENT OF CHANGES IN FIDUCIARY NET POSITIONYEAR ENDED JUNE 30, 2013

Employee Scholarship OPEBBenefit Private-Purpose IrrevocableTrust Trust Trust

ADDITIONSPlan Member Contributions 885,925$ -$ -$ Earnings on Investments 780 - 596,663Contributions - 52,062 -

Transfer In - - - Total Additions 886,705 52,062 596,663

DEDUCTIONSBenefits Paid to Plan Members 837,191 - - Scholarships Awarded - 51,562 - Miscellaneous - - 28,668

Total Deductions 837,191 51,562 28,668

Change in Net Position 49,514 500 567,995

Net Position - Beginning of Year 166,408 - 5,736,086

Net Position - End of Year 215,922$ 500$ 6,304,081$

NOTES TO BASIC FINANCIAL STATEMENTS

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

(42)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Basis of Presentation

The financial statements of Independent School District No. 112 have been prepared inconformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles.

B. Financial Reporting Entity

Independent School District No. 112 (the District) is an instrumentality of the State of Minnesota established to function as an educational institution. The elected School Board (Board) is responsible for legislative and fiscal control of the District. A Superintendent is appointed by the Board and is responsible for administrative control of the District.

U.S. Generally Accepted Accounting Principles (GAAP) require that the District's financial statements include all funds, departments, agencies, boards, commissions, and other organizations which are not legally separated from the District. In addition, the District's financial statements are to include all component units - entities for which the District is financially accountable.

Financial accountability includes such aspects as appointing a voting majority of the organization's governing body, significantly influencing the programs, projects, activities or level of services performed or provided by the organization or receiving specific financial benefits from, or imposing specific financial burden on, the organization. There are no other entities for which the District is financially accountable.

Student activities are determined primarily by student participants under the guidance of an adult and are generally conducted outside school hours. In accordance with Minnesota Statutes, the District’s School Board can elect to either control or not control extracurricular activities. The District’s School Board elected to control the extracurricular activities; therefore, the extracurricular student activity accounts were included in the District’s General Fund through November 29, 2012, at which time the account balances were transferred to a separate account which are not under the control of the School Board.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

(43)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. Basic Financial Statement Presentation

The government-wide financial statements (i.e. the statement of net position and the statement of activities) display information about the reporting government as a whole. These statements include all the financial activities of the District, except for the fiduciary funds. The Fiduciary Funds are only reported in the statements of Fiduciary Net Positionat the fund financial statement level.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

The District applies restricted resources first when an expense is incurred for purpose for which both restricted and unrestricted net position is available. Depreciation expense that can be specifically identified by function is included in the direct expenses of each function. Interest on long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. Generally, the effect of material interfund activity has been removed from the government-wide financial statements.

Separate fund financial statements are provided for governmental, proprietary, and fiduciary funds. Major individual governmental funds are reported as separate columns in the fund financial statements. The proprietary (internal service) fund is presented in the proprietary fund financial statements. Because the principal users of the internal services are the District’s governmental activities, the financial statement of the proprietary (internal service) fund is consolidated into the governmental activities in the government-wide financial statements. Fiduciary funds are presented in the fiduciary fund financial statements by type: pension (or other employee benefit) trust, private purpose trust and agency. Since, by definition, fiduciary fund assets are being held for the benefit of a third party and cannot be used for activities or obligations of the District, these funds are excluded from the government-wide statements.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. Measurement Focus and Basis of Accounting

The accounting and financial reporting treatment applied is determined by its measurement focus and basis of accounting. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are generally recognized as revenues in the fiscal year for which they are levied, except for amounts advance recognized in accordance with a statutory “tax shift” described later in these notes. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting transactions are recorded in the following manner:

1. Revenue Recognition

Revenue is recognized when it becomes measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Property tax revenue is generally considered as available if collected within 60 days after year-end. State revenue is recognized in the year to which it applies according to Minnesota Statutes and U.S. generally accepted accounting principles. Minnesota Statutes include state aid funding formulas for specific fiscal years. Federal revenue is recorded in the year in which the related expenditure is made. Food service sales, community education tuition, and other miscellaneous revenue (except investment earnings) are recorded as revenues when received because they are generally not measurable until then.Investment earnings are recorded when earned because they are measurable and available. A six-month availability period is generally used for other fund revenue.

2. Recording of Expenditures

Expenditures are generally recorded when a liability is incurred. However, expenditures are recorded as prepaid for approved disbursements or liabilities incurred in advance of the year in which the item is to be used. Principal and interest on long-term debt issues are recognized on their due dates.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. Measurement Focus and Basis of Accounting (Continued)

The District reports unearned revenue on its statement of net position and balance sheet. Unearned revenues arise when a potential revenue does not meet both the “measurable” and “available” criteria for recognition in the current period. Unearnedrevenues also arise when resources are received by the District before it has a legal claim to them, as when grant monies are received prior to incurring the qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the District has a legal claim to the resources, the liability for deferred revenue is removed and revenue is recognized.

Description of Funds

The existence of the various District funds has been established by the State of Minnesota, Department of Education. The accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. A description of the funds included in this report is as follows:

Major Governmental Funds

General Fund

The General Fund is used to account for all financial resources except those required to be accounted for in another fund. It includes the general operations and pupil transportation activities of the District, as well as the capital related activities such as maintenance of facilities equipment purchases, health and safety projects, and disabled accessibility projects.

Food Service Special Revenue Fund

The Food Service Fund is used to account for food service revenues and expenditures.

Community Service Special Revenue Fund

The Community Service Fund is used to account for services provided to residents in the areas of recreation, civic activities, nonpublic pupils, adult or early childhood programs,or other similar services.

Capital Projects Fund – Building Construction Fund

The Capital Projects Fund is used to account for financial resources used for theacquisition or construction of major capital facilities.

Debt Service Fund

The Debt Service Fund is used to account for the accumulation of resources for, and payment of, general obligation bond principal, interest, and related costs.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. Measurement Focus and Basis of Accounting (Continued)

Proprietary Fund

Internal Service Fund

The Internal Service Fund is used to account for the financial resources used for the District’s self-insurance of the employee dental insurance program. The District also established a revocable trust to account for cash and other assets held by the District for the payment of Other Postemployment Benefits, which was accounted for as an internal service fund. The assets of the revocable trust were subsequently transferred to an irrevocable trust.

Fiduciary Funds

Employee Benefit Trust Fund

The Employee Benefit Trust Fund is used to administer resources received and held by the District as the trustee for employees participating in the District’s flexible benefit plan (Internal Revenue Code § 125 Cafeteria Plan).

Scholarship Private-Purpose Trust Fund

The Scholarship Private-Purpose Trust Fund is used to account for resources held in trust to be used by various other third parties to award scholarships to students.

Other Postemployment Benefit Trust

The Other Postemployment Benefit Trust Fund is used to account for resources setaside and held in an irrevocable trust arrangement for postemployment benefits.

E. Budgeting

Budgets presented in this report for comparison to actual amounts are presented in accordance with U.S. generally accepted accounting principles. Each June, the School Board adopts an annual budget for the following fiscal year for the General, Food Service, Community Service, Capital Projects, and Debt Service Funds. The approved budget is published in summary form in the District's legal newspaper. Reported budget amounts represent the amended budget as adopted by the School Board. Legal budgetary control is at the fund level. Budgeted expenditure appropriations lapse at year-end.

Procedurally, in establishing the budgetary data reflected in these financial statements, the Superintendent submits to the School Board prior to July 1, a proposed operating budget for the fiscal year commencing July 1. The operating budget includes proposed expenditures and the means to finance them. The budget is legally enacted by School Board action. Revisions to budgeted amounts must be approved by the School Board.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

E. Budgeting (Continued)

Total fund expenditures in excess of the budget require approval of the School Board. Spending control is established by the amount of expenditures budgeted for the fund, but management control is exercised at line item levels.

Budgeted amounts include mid-year budget amendments that amended revenue and expenditure budgets as follows:

Original Amended

Revenues Budget Amendments BudgetSpecial Revenue Fund:

Community Service Fund 7,810,949$ 134,701$ 7,945,650$ Capital Projects Fund 225,600 (200,600) 25,000 Debt Service Fund 21,376,103 73,214,581 94,590,684

ExpendituresGeneral Fund 93,057,208$ 1,891,233$ 94,948,441$ Special Revenue Fund:

Community Service Fund 7,696,228 134,701 7,830,929 Debt Service Fund 63,675,422 1,606,811 65,282,233

Budgeted amounts include mid-year budget amendments that amended other financing sources and uses as follows:

Original Amended

Other Financing Sources Budget Amendments Budget

Debt Service Fund -$ 72,700,041$ 72,700,041$

Other Financing Uses

Debt Service Fund 44,190,000$ -$ 44,190,000$

Budget provisions for the Debt Service Fund are set by state law governing required debt service levels.

At the end of each fiscal year, if the General Fund has a net unassigned deficit fund balance, calculated in accordance with the uniform financial accounting and reporting standards for Minnesota school districts which excludes certain restricted balancesspecified in Minnesota Statutes, exceeding 2.5% of expenditures, a condition referred to as "statutory operating debt" exists. That debt requires retirement through the accumulation of subsequent operating surpluses in accordance with a "special operating plan" approved by the Commissioner of the Department of Education.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

F. Cash and Investments

Cash balances from all funds are combined and invested to the extent available in various securities as authorized by Minnesota Statutes. Earnings from the pooled investments are allocated to the respective funds on the basis of applicable cash balance participation by each fund.

Cash and investments held by trustee include balances held in segregated accounts that are established for specific purposes. In the Debt Service Fund, the refunding bond escrow account held by trustee can be used only to retire refunded bond issues and to pay interest on refunding bond issues until the crossover refunding dates. Interest earned on these investments is allocated directly to the escrow account.

Investments are stated at their fair value as determined by quoted market prices, except for money market investments and participating interest-earning investment contracts that have a remaining maturity at time of purchase of one year or less which are recorded at amortized cost, provided that the fair value of those investments is not significantly affected by the impairment of the credit standing of the issuer or by other factors. Money market investments are short-term, highly liquid debt instruments including commercial paper, banker's acceptances, and U.S. Treasury and agency obligations. Investments in external investment pools operated in a manner consistent with the SEC's Rule 2a7 of the Investment Act of 1940 are valued at the pool's share price.

G. Accounts Receivable

Represents amounts receivable from individuals, firms, and corporations for goods and services furnished by the District. No substantial losses are anticipated from present receivable balances, therefore, no allowance for uncollectible accounts is deemed necessary.

H. Inventories

Inventories are recorded using the consumption method of accounting and consist of purchased food, supplies, and surplus commodities received from the federal government. Food and supply purchases are recorded at invoice cost, computed on a first-in, first-out method, and surplus commodities are stated at standardized cost, as determined by the Department of Agriculture.

I. Prepaid Items

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepayments. Prepaid items are reported using the consumption method and recorded as an expense or expenditure at the time of consumption.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

J. Property Taxes

Property tax levies are established by the School Board in December each year and are certified to the County for collection the following calendar year. In Minnesota, counties act as collection agents for all property taxes and are responsible for spreading all levies over taxable property. Such taxes become a lien on January 1. Taxes are generally due on May 15 and October 15 and counties generally remit taxes to the Districts at periodic intervals as they are collected. A portion of property taxes levied is paid through state credits which are included in revenue from state sources in the financial statements.

Generally, tax revenue is recognized in the fiscal year ending June 30, following the calendar year in which the tax levy is collectible, while the current calendar year tax levy is recorded as deferred revenue (property taxes levied for subsequent year). The majority of District revenue in the General and Special Revenue Funds is determined annually by statutory funding formulas. The total revenue allowed by these formulas is then allocated between taxes and state aids by the Legislature based on education funding priorities. Changes in this allocation are periodically accompanied by a change in property tax revenue recognition referred to as the “tax shift.”

In accordance with State law, the current tax shift consists of an amount equal to 31% of the District's 2000 Pay 2001 operating referendum levy (frozen at $1,809,945) advance recognized as revenue in fiscal 2013 with no corresponding state aid adjustment.Starting in fiscal year 2011, the tax shift was expanded to include all other General and Community Service Fund levies (net of credits). In fiscal year 2013, the tax shift was increased by $698,381 for the General Fund and increased by $20,852 in the Community Service Fund. Since advance collections of Pay 2013 levy amounts at June 30, 2013, were sufficient to cover the amounts required to be advance recognized as revenue in fiscal 2013, the amount advance recognized is tax revenue. To the extent advance collections would have been insufficient to cover the amount to be advance recognized, state statute requires that fiscal 2014 general education aid be recognized. Certain other portions of the District’s 2012 pay 2013 levy, normally revenue for the 2013-14 fiscal year, are also advance recognized as June 30, 2013, as required by state statute to match revenue with the same fiscal year as the related expenditures.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

J. Property Taxes (Continued)

Taxes that remain unpaid are classified as delinquent taxes receivable. Revenue from these delinquent property taxes that is not collected within 60 days of year-end isdeferred because it is not known to be available to finance the operations of the District in the current year. No allowance for uncollectible taxes has been provided as such amounts are not expected to be material. Current levies of local taxes, less the amount recognized as revenue in the current period, including portions assumed by the state which will be recognized as revenue in the next fiscal year beginning July 1, 2013, are included in the Property Taxes Levied for Subsequent Year account to indicate that, while they are current assets, they will not be recognized as revenue until the following year.

K. Capital Assets

Capital assets are capitalized at historical cost, or estimated historical cost for assets where actual historical cost is not available. Donated assets are recorded as capital assets at their estimated fair market value at the date of donation. The District maintains a capital asset threshold level of $5,000 or more and an estimated useful life in excess of one year. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Capital assets are recorded in the Government-wide financial statement, but are not reported in the Fund financial statements. Capital assets are depreciated using the straight-line method over their estimated useful lives. Since surplus assets are sold for an immaterial amount when declared as no longer needed for public school purpose by the District, no salvage value is taken into consideration for depreciation purposes.Useful lives vary from 20 to 50 years for land improvements and buildings, and 5 to 15years for equipment.

Capital assets not being depreciated include land and construction in process.

The District does not possess any material amounts of infrastructure capital assets. Items such as sidewalks and other land improvements are considered to be part of the cost of buildings or other improvable property.

L. Long-Term Obligations

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs, if material, are reported as deferred charges and amortized over the term of the related debt.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

L. Long-Term Obligations (Continued)

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

M. Accrued Employee Benefits

Vacation Pay

Under the terms of union contracts, certain employees accrue vacation at varying rates, portions of which are carried over to future years. Employees are reimbursed for any unused, accrued vacation upon termination. Vacation pay is accrued when incurred as compensated absences payable in the government-wide financial statements. Vacation pay is accrued in the governmental fund financial statements only when used or matured due to employee termination or similar circumstances.

Sick Pay

Substantially all District employees are entitled to sick leave at various rates. For certain employees, unused sick leave enters into the calculation of severance pay upon termination.

Severance or Retirement Pay

Members of certain district employee groups, including teachers, may become eligible to receive lump sum severance or retirement pay benefits. Teachers who began teaching full-time after July 1, 1991 are not eligible for early retirement incentive payments, but are eligible for deferred compensation matching programs. Eligibility for these benefits is based on years of service and/or minimum age requirements. The amount of the severance or retirement benefit is calculated by converting a portion of unused accumulated sick leave. No employee can receive severance or retirement benefits that exceed one year’s salary. Retirement benefits for certain eligible employees are paid into a post-employment tax sheltered annuity account. For all other employees, severance benefits are paid out directly to the employee.

Postemployment Health Care Benefits

Under the terms of certain collectively bargained employment contracts, including the teachers’ contract, the District is required to pay the health insurance premiums for retired employees until they reach age 65. For employees meeting certain length of service experience requirements, the amount to be paid is equal to the same insurance premium benefit as a full-time employee. See Note 9 for further information.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

N. Restricted Assets

Restricted assets are cash and cash equivalents whose use is limited by legal requirements such as a bond indenture. Restricted assets in these financial statements are labeled "Cash and Investments Held by Trustee”.

O. Fund Balance

In the fund financial statements, governmental funds report fund balances in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows:

Nonspendable – portions of fund balance related to prepaids, inventories, long term receivables, and corpus on any permanent fund.

Restricted – funds are constrained from outside parties (statute, grantors, bond agreements, etc.).

Committed – funds are established and modified by a resolution approved by the Board of Education.

Assigned – consists of internally imposed constraints. The Board of Education passed a resolution authorizing the Superintendent and Finance and Operations Director to assign fund balances and their intended uses.

Unassigned – is the residual classification for the General Fund and also reflects negative residual amounts in other funds.

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, it is the District’s policy to use restricted first, then unrestricted fund balance.

When an expenditure is incurred for purposes for which committed, assigned, and unassigned amounts are available, it is the District’s policy to use committed first, then assigned, and finally unassigned amounts.

The District formally adopted a fund balance policy for the General Fund. The policy establishes a year-end minimum unassigned fund balance target of 5% of the annual operating budget.

P. Risk Management

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; natural disasters and workers compensation. The District purchases commercial insurance coverage for such risks.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

P. Risk Management (Continued)

There has been no significant reduction in insurance coverage from the previous year in any of the District’s policies. Settled claims resulting from these risks have not exceeded insurance coverage in any of the past three fiscal years.

Q. Net Position

Net position represents the difference between assets and liabilities in the government-wide and Fiduciary Fund financial statements. Net position invested in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any long-term debt used to build or acquire the capital assets. Net position isreported as restricted in the government-wide financial statement when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, laws or regulations of other governments.

R. Use of Estimates

The preparation of financial statement in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenditures/expense during the reporting period. Actual results could differ from those estimates.

S. Comparative Data

The basic financial statements include certain prior-year summarized comparative information in total but not at the level of detail required for a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the District’s financial statements for the year ended June 30, 2012, from which the summarized information was derived.

NOTE 2 STEWARDSHIP AND ACCOUNTABILITY

Excess of Expenditures Over Budget

Expenditures exceeded budgeted amounts in the following fund during the year endedJune 30, 2013:

Budget Expenditures Excess

Special Revenue Fund: Community Service Fund 7,830,929$ 7,945,233$ 114,304$ Debt Service Fund 21,092,233 21,742,829 650,596

The overages were considered by District management to be the result of necessary expenditures critical to operations and were approved by the Board.

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NOTE 3 DEPOSITS AND INVESTMENTS

A. Deposits

The District maintains a cash and investment pool that is available for use by all funds. Each fund type’s portion of this pool is displayed on the statement of net position and the balance sheet as “Cash and Investments.” In accordance with Minnesota Statutes, the District maintains deposits at financial institutions which are authorized by the School District’s Board.

Custodial Credit Risk – Custodial credit risk for deposits is the risk that in the event of a bank failure, the School District’s deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk and follows Minnesota Statutes for deposits. Minnesota Statutes require that all deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or corporate surety bonds. Authorized collateral include: U.S. government treasury bills, notes, or bonds; issues of a U.S. government agency; general obligations of a state or local government rated “A” or better; revenue obligations of a state or local government rated “AA” or better; irrevocable standby letter of credit issued by a Federal Home Loan Bank; and time deposits insured by a federal agency. Minnesota Statutes require securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or at an account at a trust departments of a commercial bank or other financial institution not owned or controlled by the depository.

The carrying value and bank balance of the District’s deposits in banks at June 30, 2013is $12,200,911 and $13,515,053, respectively, and were entirely covered by federal depository insurance or by surety bonds and collateral in accordance with Minnesota Statutes.

At June 30, 2013, the District’s petty cash fund totaled $4,100.

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NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED)

B. Investments

The District may also invest idle funds as authorized by Minnesota Statutes as follows:

Direct obligations or obligations guaranteed by the United States or its agencies Shares of investment companies registered under the Federal Investment

Company Act of 1940 and received the highest credit rating, is rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of thirteen months or less

General obligations rated “A” or better; revenue obligations rated “AA” or better General obligations of the Minnesota Housing Finance Agency rate “A” or better Bankers acceptances of United States banks eligible for purchase by the Federal

Reserve System Commercial paper issued by United States banks corporations or their Canadian

subsidiaries, of highest quality category by a least two nationally recognized rating agencies, and maturing in 270 days or less

Guaranteed investment contracts guaranteed by United States commercial banks or domestic branches of foreign banks or United States insurance companies if similar debt obligations of the issuer or the collateral pledged by the issuer is in the top two rating categories

Repurchase or reverse purchase agreement and securities lending agreements financial institutions qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers

Investments related to the OPEB Revocable Trust Fund may be invested in accordance with Minnesota statute 356A.06.

At June 30, 2013, the District’s investment balances were as follows:

MN Trust Investment Shares 1,483,548$ MN Trust TERM Series 6,550,000 Negotiable CDs 5,732,868 Commercial Paper 10,995,090 MSDLAF+ Liquid Class 5,293

Total 24,766,799$

The MSDLAF+ is an external investment pool and its investments are valued at amortized cost, which approximates fair value in accordance with Rule 2a-7 of the Investment Company Act of 1940. The amortized cost method of valuation values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of instruments.

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NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED)

B. Investments (Continued)

Investments Held in Other Postemployment Benefit Trust –The following investments are held within the other postemployment benefit trust. The funds are invested in accordance with the investment policy adopted by the District for the OPEB Trust. State statute does not limit the allowable investments for OPEB trust assets.

Mutual Funds - Equity 3,342,415 Mutual Funds - Fixed Income 2,959,797 Money Market Fund 1,869

Total 6,304,081$

Cash and Investments Held by Trustee –Cash and investments held by trustee are held by an escrow agent in accordance with the escrow agreements established with the 2013A refunding bond proceeds. The following shows a breakdown of investments held with trustee:

Federal National Mortgage Association 68,374,569$ Federal Home Loan Bank 489,701 US Treasury Notes 1,543,984

Total Investments Held with Broker 70,408,254$

Credit RiskGenerally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The credit ratings for the District’s investments are as follows:

CreditType Quality Rating Amount

MN Trust Investment Shares Portfolio AAAm $ 1,483,548

MN Trust Term Series N/A 6,550,000

Commercial Paper A-1 10,995,090

MSDLAF+ Liquid Class AAAm 5,293

Total 19,033,931$

The credit ratings for the Refunding Escrow are as follows:

Type Quality Rating Amount

Federal National Mortgage Association AA $ 68,374,569

Federal Home Loan Bank AA 489,701

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NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED)

C. Investments (Continued)

Custodial Credit Risk – For an investment, custodial risk is the risk that, in the event of failure of the counterparty, the School District will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. The School District’s investment policy requires that brokers provide insurance to cover balances held in each investment account. As of June 30, 2013, the investment balances were fully covered by insurance for each brokerage firm.

Interest Rate Risk

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The District’s investment policies do not limit the maturities of investments; however, when purchasing investments the District considers such things as interest rates and cash flow needs.

Maturities of the District’s investments are as follows:

Less than

Type 1 year 1 -2 years 2 - 5 years

MN Trust Term Series 6,550,000$ -$ -$

Negotiable CDs 5,732,868 - -

Commercial Paper 10,995,090 - - Total 23,277,958$ -$ -$

The average duration of the OPEB Trust assets are as follows:

Less than

Type 1 year 1 -2 years 2 - 5 years Over 5 years

Mutual Funds - Fixed Income -$ -$ 1,353,645$ 1,606,152$

Money Market Mutual Fund 1,869 - - - Total 1,869$ -$ 1,353,645$ 1,606,152$

Maturities of the Refunding Escrow are as follows:

Less than

Type 1 year 1 -2 years 2 - 5 years

Federal National Mortgage Association -$ 410,588$ 67,963,981$

Federal Home Loan Bank 489,701$

US Treasury Notes 1,039,128 504,856 - Total 1,039,128$ 1,405,145$ 67,963,981$

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NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED)

B. Investments (Continued)

Concentration of Credit Risk

The District places no limit on the amount that the District may invest in any one issuer. Currently the Refunding trust had investments in the following issuer which individually comprised more than 5% of total investments:

Type Amount Percentage

Federal National Mortgage Association 68,374,569$ 67%

The deposits and investments are presented in the financial statements as follows:

Statement of Net Assets:

Cash and Temporary Investments 36,609,823$

Cash and Investments - Held by Trustee 70,408,254

Statement of Fiduciary Net Assets:

Cash and Temporary Investments 6,666,070

Total Cash and Investments 113,684,147$

NOTE 4 CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2013 was as follows:

Beginning EndingBalance Increases Decreases Balance

Governmental ActivitiesCapital Assets, Not Being Depreciated:

Land 18,578,303$ -$ -$ 18,578,303$

Capital Assets, Being Depreciated:Land Improvements 5,099,247 751,889 - 5,851,136 Buildings and Improvements 228,115,309 193,641 - 228,308,950 Equipment 4,985,261 1,184,300 (58,914) 6,110,647

Total Capital Assets, Being Depreciated 238,199,817 2,129,830 (58,914) 240,270,733

Accumulated Depreciation for:Land Improvements (1,889,203) (287,872) - (2,177,075) Buildings and Improvements (51,432,485) (5,495,636) - (56,928,121) Equipment (3,113,729) (396,813) 58,914 (3,451,628)

Total Accumulated Depreciation (56,435,417) (6,180,321) 58,914 (62,556,824)

Total Capital Assets, Being Depreciated, Net 181,764,400 (4,050,491) - 177,713,909

Governmental Activities Capital Assets, Net 200,342,703$ (4,050,491)$ -$ 196,292,212$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 4 CAPITAL ASSETS (CONTINUED)

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

Governmental ActivitiesRegular Instruction 106,026$ Instructional Support Services 158,739 Pupil Support Services 25,423 Sites and Buildings 5,859,335 Food Service 30,798

Total Depreciation Expense, Governmental Activities 6,180,321$

NOTE 5 LONG-TERM LIABILITIES

A. Components of General Long-Term Debt

Net Due

Interest Original Final Within

Issue Rate Issue Maturity One Year Total

2005A Refunding Bonds 3.25% - 4.00% 15,870,000$ 2020 1,370,000$ 10,760,000$

2006A Refunding Bonds 3.75% - 4.10% 5,375,000 2021 10,000 5,350,000

2007A Building Bonds 4.00% - 5.00% 93,375,000 2028 3,450,000 79,370,000

2008A Taxable OPEB Bonds 3.95% - 5.75% 7,010,000 2017 595,000 2,570,000

2009A GO Refunding Bonds 3.00% - 5.00% 28,110,000 2019 3,020,000 17,020,000

2011A GO Building Refunding Bonds 3.70% - 4.00% 4,530,000 2014 2,295,000 2,295,000

2012A Alt. Facilities and Refunding Bonds 2.00% - 5.00% 47,830,000 2025 2,130,000 46,975,000

2013A GO Building Refunding Bonds 3.00% - 4.00% 65,815,000 2028 - 65,815,000

Total General Obligation Bonds 12,870,000 230,155,000

Bond Premium - Net - 16,641,521

Bond Discounts - Net - (149,770)

Loss on Refunding - Net - (215,957)

Capital Lease Payable 130,575 647,334

Certificates of Participation 500,000 4,005,000

Severance Benefits Payable 2,140,164 2,140,164

Compensated Absences Payable 694,259 694,259

16,334,998$ 253,917,551$

Principal Outstanding

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 5 LONG-TERM LIABILITIES (CONTINUED)

B. Descriptions of Long-Term Liabilities

General Obligation Bonds Payable

These bonds were issued to finance acquisitions, improvements, and/or construction of capital facilities or to refinance (refund) prior bond issues. Assets of the Debt Service Fund, together with scheduled future ad valorem tax revenue, are dedicated for the retirement of these obligations. The annual future debt service levies authorized are equal to 105% of the principal and interest due each year. These levies are subject to reduction if fund balance amounts exceed limitations imposed by Minnesota law.

In March 2005, the District issued $15,780,000 of General Obligation Building Refunding Bonds, Series 2005A. The proceeds of this issue were used to refund the 2000A School Building Bonds and had net present value debt service savings of $1,448,822.

In April 2006, the District issued $5,375,000 of General Obligation Refunding Bonds, Series 2006A. The proceeds of this issue were used to refund the 2001A bonds and had net present value debt service savings of $192,948.

In February 2007, the District issued $93,375,000 of General Obligation School Building Bonds, Series 2007A. The proceeds of this issue were used to finance the acquisition and betterment of school sites and facilities in the District.

In December 2008, the District issued $7,010,000 of General Obligation Taxable OPEB Bonds, Series 2008A. The proceeds from this issue were used to finance the District’s Net OPEB Obligation under GASB 45 (see Note 9 for information on the District’s OPEB Obligation).

In November 2009, the District issued $28,110,000 of General Obligation Refunding Bonds, Series 2009A. The proceeds of this issue were used to refund the 1998A, 2001A and 2003A issuances and had net present value debt service savings of $3,040,466.

In December 2011, the District issued $4,530,000 of General Obligation School Building Refunding Bonds, Series 2011A. The proceeds of this issue were used to refund the 2002A Building Bonds and had net present value debt service savings of $196,191.

In May 2012, the District issued $47,830,000 of General Obligation Alternative Facilities and Refunding Bonds, Series 2012A. A portion of the proceeds will be used to refund the 2004A Bond and had net present value debt service savings of $5,489,499. The remaining portion of the proceeds will be used to fund various future projects as part of the District’s capital improvement plan.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 5 LONG-TERM LIABILITIES (CONTINUED)

B. Descriptions of Long-Term Liabilities (Continued)

General Obligation Bonds Payable (Continued)

In March 2013, the District issued $65,815,000 of General Obligation School Building Refunding Bonds, Series 2013A. The proceeds will be used to refund the 2007A Bonds for a net present value debt service savings of $4,113,037.

Certificates of Participation

In November of 2009, the District issued $5,445,000 of Refunding Certificates of Participation, Series 2009B. The proceeds of this issue were used to refund, in advance of its stated maturity, Series 1999A School Facilities Lease Revenue Bonds maturing in 2019. The proceeds of the 2009 bond issue were placed in an escrow account pending the December 1, 2009, call date of the refunded issue. Until the call date, the District continued to make all rental payments on the 1999A bonds from proceeds in the escrow accounts. On December 1, 2010, the escrow account was used to call these bonds. The advance refunding was undertaken to reduce total debt service payments by $1,060,917. Although these transactions did not result in an accounting gain or loss, it resulted in an economic gain (difference between present value of debt service payments of the refunded and refunding bonds) of $909,944.

Capital Leases

In June of 2002, the District entered into a lease-purchase agreement with the Lease Finance Group, Inc. to finance the purchase of an existing bus garage site capitalized at $1,600,000. The lease bears an interest rate of 6.5% and a final maturity of July 1, 2017. The District makes semi-annual payments through the General Fund. Accumulated depreciation as of June 30, 2013 was $1,245,333.

In September 2011, the District entered into a lease-purchase agreement to finance the purchase of a 2012 Thomas 051MS school bus capitalized at $49,629. The lease bears an interest rate of 3.1% and a final maturity of August 1, 2015. The District makes annual payments through the General Fund. Accumulated depreciation as of June 30, 2013 was $37,739.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 5 LONG-TERM LIABILITIES (CONTINUED)

C. Minimum Debt Payments

Minimum annual principal and interest payments required to retire long-term debt, not including severance and health benefits payable are as follows:

Year Ending June 30, Principal Interest Principal Interest Principal Interest

2014 12,870,000$ 8,802,720$ 136,548$ 28,080$ 515,000$ 142,025$

2015 13,455,000 8,887,278 142,796 21,831 530,000 126,350

2016 13,980,000 8,372,833 150,780 15,294 545,000 107,500

2017 11,635,000 7,826,375 143,137 8,455 570,000 85,200

2018 15,505,000 7,210,486 74,074 1,722 590,000 62,000

2019 - 2023 79,595,000 26,685,418 - - 1,255,000 50,700

2024 - 2028 83,115,000 9,749,563 - - - -

Total 230,155,000$ 77,534,673$ 647,335$ 75,382$ 4,005,000$ 573,775$

General Obligation

Bonds Payable

Capital Lease

Payable

Certificates of Participation

Payable

D. Changes in Long-Term Debt

June 30, Net June 30,

2012 Additions Retirements 2013

Bonds Payable 221,350,000$ 65,815,000$ 57,010,000$ 230,155,000$

Bond Premium 11,620,518 6,200,364 1,179,361 16,641,521

Bond Discounts (342,322) 82,283 (44,082) (215,957)

Loss on Refunding - (155,158) (5,387) (149,770)

Lease Purchase Obligations 777,909 - 130,575 647,334

Certificates of Participation 4,505,000 - 500,000 4,005,000

Severance Benefits Payable 1,979,748 2,140,164 1,979,748 2,140,164

Compensated Absences

Payable - Net 606,954 694,259 606,954 694,259

240,497,807$ 74,776,912$ 61,357,169$ 253,917,551$

Governmental compensated absences, severance benefits, and other postemployment benefits are typically liquidated (paid) by the operating funds.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 6 FUND BALANCES

Certain portions of fund balance are restricted based on state requirements to track special program funding, to provide for funding on certain long-term liabilities, or as required by other outside parties. A description of deficit balance reserves is included herein since the District has specific statutory authority to levy taxes for such deficits.

Restricted and Assigned fund balances at year-end are as follows:

Restricted for Staff Development – Represents available resources dedicated exclusively for staff development in accordance with state statute.

Restricted for Alternative Facilities Program – Represents available resources from the capital projects levy to be used for deferred maintenance.

Restricted for Basic Skills Program – Represents available resources to be used for basic skills programs as specified by state statute.

Restricted for Health and Safety – Represents available resources to be used exclusively for capital expenditure health and safety projects. Revenues are derived from tax levies and expenditures are for necessary corrections for fire and life safety hazards, asbestos removal and related repairs and cleanup, removal, disposal and repairs related to storing heating fuel or transportation fuel.

Restricted for Operating Capital – The District levies taxes and receives state aid to be used for the purchase of equipment, books and vehicles and to purchase, rent, improve and repair school facilities as allowed by state statute. The cumulative excess of such revenues over equipment and facilities expenditures is reported as a restriction of fund balance in the General Fund.

Restricted for Community Education Programs – Represents accumulated resources available to provide general community education programming.

Restricted for Early Childhood and Family Education Programs – Represents accumulated resources available to provide services for early childhood and family education programming.

Restricted for Bond Refundings – Represents available resources dedicated for refunding bond payments.

Restricted for Building Construction – Represents available resources dedicated exclusively for building construction projects.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 6 FUND BALANCES (CONTINUED)

Restricted for Other Purposes – Represents amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation.

Assigned for Transportation – Represents amounts that are assigned for transportation costs.

Assigned for 21st Century – Represents dollars assigned for the District’s 21st Century program.

Assigned for Student Activities – Represents dollars assigned for carryover of student activity balances.

Assigned for Separation/Retirement Benefits – Represents amounts assigned for retirement benefits, including compensated absences, pension, other postemployment benefits and termination benefits.

Assigned for Third Party Billing Med-Asst. – Represents dollars assigned related to third-party/medical assistance.

Assigned for Capital Maintenance – Victoria Field House – Represents dollars assigned for the capital maintenance of the Victoria Field House.

Assigned for Principal Staff Development Fund – Represents dollars assigned for contractual obligation for the staff development of principals.

Assigned for Purchase of Crosby Park Building – Represents dollars assigned for the purchase of a building.

Assigned for Site Carryover – Represents dollars assigned for unspent site supply allocations.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 7 RETIREMENT PLANS

Substantially all employees of the District are required by state law to belong to pension plans administered by Teachers’ Retirement Association (TRA) or Public Employees’ Retirement Association (PERA), all of which are administered on a statewide basis. Disclosures relating to these plans follows:

A. Teacher’s Retirement Association (TRA)

1. Plan Description

All teachers employed by the District are covered by a cost sharing, multiple employer defined benefit pension plan administered by the State of Minnesota Teachers Retirement Association (TRA). TRA members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security and Basic members are not. All Basic members were first hired prior to July 1, 1989. All new members must participate in the Coordinated Plan. These plans are established and administered in accordance with Minnesota Statutes, Chapters 354 and 356.

TRA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by Minnesota statute and vest after three years of service credit. The defined retirement benefits are based on a member’s highest average salary for any five consecutive years of allowable service, age, and a formula multiplier based on years of credit at termination of service.

TRA publicly issues a Comprehensive Annual Financial Report (CAFR) presenting financial statements, supplemental information on funding levels, investment performance, and further information on benefits provisions. The report may be accessed at the TRA website at www.tra.state.mn.us. Alternatively, a copy of the report may be obtained by writing TRA at Teachers Retirement Association, 60 Empire Drive Suite 400, St. Paul, MN 55103-1855 or by calling (651) 296-6449 or1-800-657-3853.

2. Funding Policy

Minnesota Statutes Chapter 354 sets the rates for the employee and employer contributions. These statutes are established and amended by the state legislature. Coordinated and Basic Plan members are required to contribute 6.5% and 10.0%, respectively, of their annual covered salary while the District is required to contribute at an actuarially determined rate.

The District is required to contribute the following percentages of annual covered payroll: 6.5% for Coordinated Plan members and 10.0% for Basic Plan members. The contribution requirements of plan members and the District are established and may be amended by state statute. The District contributions for the years ended June 30, 2013, 2012, and 2011 were $2,855,541, $2,446,000, and $2,359,958,respectively, equal to the required contributions for each year as set by state statute.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 7 RETIREMENT PLANS (CONTINUED)

A. Teacher’s Retirement Association (TRA) (Continued)

2. Funding Policy (Continued)

The 2010 Legislature approved employee and employer contribution rate increases to be phased-in over a four-year period beginning July 1, 2011. Employee and employer contribution rates will rise 0.5% each year of the four-year period. Beginning July 1, 2014, TRA Coordinated employee and employer contribution rates will each be 7.5%.

B. Public Employees’ Retirement Association (PERA)

1. Plan Description

All full-time and certain part-time employees of the District (other than teachers) are covered by a defined benefit plan administered by the Public Employees’ Retirement Association of Minnesota (PERA). PERA administers the General Employees’ Retirement Fund (GERF) which is a cost-sharing, multiple-employer retirement plan. This plan is established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan.

PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by state statute and vest after three years of credited service. The defined retirement benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF. That report may be obtained on the Internet at www.mnpera.org, by writing to PERA at 60 Empire Drive #200, St. Paul, MN 55103-2088, or by calling (651) 296-7460 or 1-800-652-9026.

2. Funding Policy

Minnesota Statutes Chapter 353 sets the rates for the employer and employee contributions. These statutes are established and amended by the state legislature. The District makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.10% and 6.25%, respectively, of their annual covered salary in 2012.

The District is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan GERF members and 7.25% for Coordinated Plan members. The District contributions for the years ended June 30, 2013, 2012, and 2011 were $1,117,471, $1,071,124, and $1,046,146, respectively, equal to the required contributions for each year as set by state statute.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 8 COMMITMENTS AND CONTINGENCIES

A. Federal and State Programs

Amounts received or receivable from federal and state agencies are subject to agency audit and adjustment. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable fund. The amount, if any, of funds which may be disallowed by the agencies cannot be determined at this time although the District expects such amounts, if any, to be immaterial.

B. Contingencies

The District is subject to legal proceedings and claims which arise in the ordinary course of business. As of the date of these financial statements, it is not determinable what the outcome of this issue will be or the potential liability, if any, to the District.

NOTE 9 OTHER POSTEMPLOYMENT BENEFITS PAYABLE

At June 30, 2009, the District adopted Governmental Accounting Standards Board (GASB) Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. The District engaged an actuary to determine the District’s liability for postemployment healthcare benefits other than pensions as of July 1, 2011.

A. Plan Description

The District operates a single-employer retiree benefit plan (the Plan) that provides health insurance to eligible employees and their spouses through the District’s health insurance plan. There are 893 active participants and 82 retired participants. Benefit and eligibility provisions are established through individual contracts and negotiations between the District and various unions representing District employees and are renegotiated each two-year bargaining period. The Plan does not issue a publicly available financial report.

B. Funding Policy

Contribution requirements are also negotiated between the District and union representatives. The eligibility for, amount of, duration of, and District's contribution to the cost of the benefits provided varies by contract and date of retirement. For fiscal year 2013, the District contributed $538,768 to the plan.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 9 OTHER POSTEMPLOYMENT BENEFITS PAYABLE (CONTINUED)

C. Annual OPEB Cost and Net OPEB Obligation

The District’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any un-funded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the District’s annual OPEB cost for the year, the amount actually paid from the plan, and changes in the District’s net OPEB obligation.

Annual Required Contribution 526,528$ Interest on Net OPEB Obligation (167,083) Adjustment to Annual Required Contribution 254,085

Annual OPEB Cost (Expense) 613,530 Contributions Made (538,768)

Increase in Net OPEB Obligation 74,762 Net OPEB Obligation - Beginning of Year (4,773,803)

Net OPEB Obligation(Asset) - End of Year (4,699,041)$

The District’s annual OPEB cost, the percentage of the annual OPEB cost contributed to the plan, and the net OPEB obligation for 2013:

Percentage NetFiscal Annual of Annual OPEBYear OPEB OPEB Cost Obligation

Ended Cost Contributed (Asset)6/30/2013 613,530$ 87.8% (4,699,041)$ 6/30/2012 811,260 749.8% (4,773,803) 6/30/2011 832,368 81.2% 498,145

D. Funded Status and Funding Progress

In November 2011, the OPEB Trust was changed from a Revocable Trust to an Irrevocable Trust. As of July 1, 2011, the value of plan assets in the irrevocable trust totaled $5,736,086, which is 86.5% of the actuarially accrued liability. The annual payroll for active employees covered by the plan in the actuarial valuation was $47,107,851 for a ratio of UAAL to covered payroll of 1.9%.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NOTES TO BASIC FINANCIAL STATEMENTSJUNE 30, 2013

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NOTE 9 OTHER POSTEMPLOYMENT BENEFITS PAYABLE (CONTINUED)

D. Funded Status and Funding Progress (Continued)

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

E. Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the July 1, 2011 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 3.5% discount rate which is a blended rate of the expected long-term investment returns on plan assets and on the employer’s own investments calculated based on the funded level of the plan at the valuation date. The initial healthcare trend rate was 8%, reduced by decrements to an ultimate rate of 5% after six years. The UAAL is being amortized as a level percentage of projected payrolls on an open basis. The amortization period at June 30, 2013 was not to exceed 28 years.

NOTE 10 PRIOR PERIOD ADJUSTMENT

A total of $188,042 of dental COBRA receipts were inadvertently deposited into the General Fund during prior years while the expenses were paid from the self-insurance internal service fund. This was corrected in fiscal 2013. The effect of this adjustment increased the internal service fund beginning net position, and reduced current year internal service fund revenue by $188,042.

NOTE 11 SUBSEQUENT EVENT

Effective July 1, 2013, the District established a self-insured health care plan for its employees.

REQUIRED SUPPLEMENTAL INFORMATION

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

SCHEDULE OF FUNDING PROGRESS FOR OTHER POSTEMPLOYMENT BENEFITSJUNE 30, 2013

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Actuarial UAAL as aActuarial Accrued Percentage

Actuarial Value of Liability Unfunded Funded Covered of CoveredValuation Assets (AAL) AAL Ratio Payroll Payroll

Date (a) (b) (b-a) (a/b) (c ) ((b-a)/c)7/1/2011 5,736,086$ 6,629,716$ 893,630$ 86.5% 47,107,851$ 1.9%7/1/2009 - 7,348,381 7,348,381 - 44,876,204 16.4%7/1/2007 - 6,920,698 6,920,698 - 43,081,389 16.1%

SUPPLEMENTAL INFORMATION

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

GENERAL FUNDBALANCE SHEET

JUNE 30, 2013(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2012)

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2013 2012

ASSETSCash and Temporary Investments 12,407,832$ -$

Receivables:

Current Taxes 9,914,547 9,381,267

Delinquent Taxes 215,042 380,043

Accounts and Interest Receivable 25,367 3,007

Due from Other Minnesota School Districts 376,208 548,389

Due from Minnesota Department of Education 10,049,539 23,241,138

Due from Federal through the Minnesota Department of

Education 1,044,122 871,062

Due from Other Governmental Units 167,582 239,643

Prepaid Items 288,083 237,899

Total Assets 34,488,322$ 34,902,448$

LIABILITIES AND FUND BALANCELiabilities:

Salaries and Payroll Deductions Payable 8,400,907$ 7,929,929$

Accounts and Contracts Payable 1,412,744 696,331

Due to Other Minnesota School Districts 202,315 339,755

Due to Other Funds - 1,937,157

Due to Other Governmental Units 395,187 442,918

Property Tax Shift Adjustment - 155

Property Taxes Levied for Subsequent Year 9,309,386 8,590,536

Unearned Revenue - Delinquent Taxes 187,901 195,265

Unearned Revenue 39,389 487,713

Total Liabilities 19,947,829 20,619,759

Fund Balance:

Nonspendable:

Prepaid Items 288,083 237,899

Restricted for:

Staff Development - 217,015 Basic Skills Programs 273,880 - Health and Safety 255,940 217,874 Operating Capital 237,520 176,708

Assigned for:Transportation 91,497 269,902 21st Century 526,514 526,514 Student Activities - 951,130 Separation/Retirement Benefits 1,400,000 1,170,317 Third Party Billing Med-Asst. 445,493 319,350 Capital Maintenance - Victoria Field House 80,000 80,000

Principal Staff Development Fund - 56,443 Purchase of Crosby Park Building 178,405 - Site Carry-over 742,515 300,686

Unassigned 10,020,646 9,758,851

Total Fund Balance 14,540,493 14,282,689

Total Liabilities and Fund Balance 34,488,322$ 34,902,448$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

GENERAL FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE

BUDGET AND ACTUALYEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

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2013 2012Over

(Under)Final Actual Final Actual

Budget Amounts Budget Amounts

REVENUESLocal Sources:

Property Taxes 16,382,224$ 17,523,107$ 1,140,883$ 16,191,086$ Earnings on Investments 10,000 23,045 13,045 3,424 Other 2,367,712 3,385,552 1,017,840 4,661,871

State Sources 71,328,416 66,397,022 (4,931,394) 65,758,415 Federal Sources 3,093,847 2,918,926 (174,921) 2,365,445

Total Revenues 93,182,199 90,247,652 (2,934,547) 88,980,241

EXPENDITURESCurrent:

Administration:Salaries 2,382,036 2,402,529 20,493 2,298,341 Employee Benefits 602,623 631,579 28,956 590,764 Purchased Services 88,907 76,293 (12,614) 73,227 Supplies and Materials 86,267 29,617 (56,650) 51,317 Capital Expenditures 2,737 20,955 18,218 14,327

Other Expenditures 64,325 43,893 (20,432) 39,902

Total Administration 3,226,895 3,204,866 (22,029) 3,067,878

District Support Services:Salaries 2,151,041 1,636,516 (514,525) 1,651,774 Employee Benefits 1,243,340 536,302 (707,038) 526,658 Purchased Services 972,272 961,319 (10,953) 1,219,884 Supplies and Materials 144,188 187,878 43,690 129,789 Capital Expenditures 843,431 665,343 (178,088) 331,117

Other Expenditures (80,414) (101,847) (21,433) (86,726)

Total District Support

Services 5,273,858 3,885,511 (1,388,347) 3,772,496

Elementary and Secondary Regular Instruction:

Salaries 30,053,366 29,523,780 (529,586) 28,328,417 Employee Benefits 7,404,588 7,474,789 70,201 7,072,851 Purchased Services 2,568,751 1,987,730 (581,021) 2,936,691 Supplies and Materials 3,254,595 2,435,577 (819,018) 3,189,840 Capital Expenditures 952,914 1,091,398 138,484 490,432

Other Expenditures 19,560 16,594 (2,966) 20,993

Total Elementary and Secondary Regular

Instruction 44,253,774 42,529,868 (1,723,906) 42,039,224

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

GENERAL FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE

BUDGET AND ACTUAL (CONTINUED)YEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

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2013 2012

Over

(Under)

Final Actual Final Actual

Budget Amounts Budget Amounts

EXPENDITURES (CONTINUED)Current (Continued):

Vocational Education Instruction:Salaries 853,797$ 842,795$ (11,002)$ 636,050$ Employee Benefits 230,885 216,167 (14,718) 156,411 Purchased Services 529,648 533,758 4,110 455,944 Supplies and Materials 3,750 795 (2,955) 2,349 Capital Expenditures - - - 7,633

Other Expenditures 2,775 2,250 (525) 1,970

Total Vocational

Education Instruction 1,620,855 1,595,765 (25,090) 1,260,357

Special Education Instruction:Salaries 11,099,312 10,588,694 (510,618) 10,583,275 Employee Benefits 2,963,888 2,561,579 (402,309) 2,587,481 Purchased Services 1,023,307 642,335 (380,972) 945,340 Supplies and Materials 262,434 188,657 (73,777) 183,222 Capital Expenditures 170,082 - (170,082) 17,300

Other Expenditures 227,034 192,348 (34,686) 181,500

Total Special Education

Instruction 15,746,057 14,173,613 (1,572,444) 14,498,118

Instructional Support Services:Salaries 4,719,643 4,713,071 (6,572) 3,746,106 Employee Benefits 1,254,197 1,098,889 (155,308) 875,470 Purchased Services 649,548 390,298 (259,250) 204,204 Supplies and Materials 507,114 477,755 (29,359) 364,984 Capital Expenditures 347,358 335,013 (12,345) 62,718

Other Expenditures 22,750 5,287 (17,463) 5,913

Total Instructional

Support Services 7,500,610 7,020,313 (480,297) 5,259,395

Pupil Support Services:Salaries 2,625,334 2,684,149 58,815 2,432,772 Employee Benefits 702,384 666,703 (35,681) 594,716 Purchased Services 5,098,725 5,277,193 178,468 4,996,338 Supplies and Materials 262,908 273,682 10,774 297,398 Capital Expenditures 126,008 126,264 256 136,384

Other Expenditures 2,200 598 (1,602) 225

Total Pupil Support

Services 8,817,559 9,028,589 211,030 8,457,833

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

GENERAL FUNDSCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE

BUDGET AND ACTUAL (CONTINUED)YEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

(74)

2013 2012

Over

(Under)

Final Actual Final Actual

Budget Amounts Budget Amounts

EXPENDITURES (CONTINUED)Current (Continued):

Sites and Buildings:

Salaries 3,078,339$ 2,982,026$ (96,313)$ 2,885,128$ Employee Benefits 944,345 884,033 (60,312) 849,577 Purchased Services 2,793,943 2,918,056 124,113 2,400,639 Supplies and Materials 454,700 507,143 52,443 449,330 Capital Expenditures 180,000 428,075 248,075 148,675

Other Expenditures 2,800 22,202 19,402 162,624

Total Sites and Buildings 7,454,127 7,741,535 287,408 6,895,973

Fiscal and Other Fixed Cost

Programs:

Purchased Services 229,500 166,687 (62,813) 161,549

Debt Service:

Principal 614,023 630,575 16,552 598,746

Interest and Fiscal Charges 211,183 190,931 (20,252) 209,872

Total Debt Service 825,206 821,506 (3,700) 808,618

Total Expenditures 94,948,441 90,168,253 (4,780,188) 86,221,441

Excess (Deficiency) of Revenues

Over (Under) Expenditures (1,766,242) 79,399 1,845,641 2,758,800

OTHER FINANCING USESCapital Lease Proceeds - - - 49,629

Net Change in Fund Balance (1,766,242)$ 257,804 2,024,046$ 2,808,429

FUND BALANCE

Beginning of Year 14,282,689 11,474,260

End of Year 14,540,493$ 14,282,689$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

FOOD SERVICE FUNDBALANCE SHEET

JUNE 30, 2013(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2012)

(75)

2013 2012

Cash and Temporary Investments 1,191,773$ 863,703$

Due from Minnesota Department of Education 1,358 21,270

Due from Federal through the Minnesota Department of Education 37,255 148,823

Inventory 66,852 54,547

Prepaid Items 2,527 3,929

Total Assets 1,299,765$ 1,092,272$

Liabilities:

Salaries and Payroll Deductions Payable 227,523$ 204,416$

Accounts and Contracts Payable 1,652 4,909

Due to Other Minnesota School Districts 3,337 9,304

Unearned Revenue 130,560 117,181

Total Liabilities 363,072 335,810

Fund Balance:

Nonspendable:

Prepaid Items 2,527 3,929

Inventory 66,852 54,547

Restricted for Fund Purposes 867,314 697,986

Total Fund Balance 936,693 756,462

Total Liabilities and Fund Balance 1,299,765$ 1,092,272$

ASSETS

LIABILITIES AND FUND BALANCE

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

FOOD SERVICE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE

BUDGET AND ACTUALYEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

(76)

2012

Over(Under)

Final Actual Final ActualBudget Amounts Budget Amounts

REVENUESLocal Sources:

Earnings on Investments 500$ 1,605$ 1,105$ 709$ Other - Primarily Meal Sales 3,444,926 3,368,464 (76,462) 3,345,854

State Sources 154,490 143,086 (11,404) 147,966 Federal Sources 1,200,110 1,331,913 131,803 1,204,766

Total Revenues 4,800,026 4,845,068 45,042 4,699,295

EXPENDITURESCurrent:

Salaries 1,419,813 1,405,706 (14,107) 1,354,452 Employee Benefits 342,620 322,181 (20,439) 299,686 Purchased Services 240,169 230,230 (9,939) 392,676 Supplies and Materials 2,603,719 2,503,718 (100,001) 2,451,882 Other Expenditures 300 349 49 35

Capital Outlay 249,200 202,653 (46,547) 61,013

Total Expenditures 4,855,821 4,664,837 (190,984) 4,559,744

Excess (Deficiency) of Revenues

Over (Under) Expenditures (55,795)$ 180,231 236,026$ 139,551

FUND BALANCEBeginning of Year 756,462 616,911

End of Year 936,693$ 756,462$

2013

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

COMMUNITY SERVICE FUNDBALANCE SHEET

JUNE 30, 2013(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2012)

(77)

2013 2012

ASSETSCash and Temporary Investments 1,500,029$ 1,037,011$

Receivables:

Current Taxes 440,851 423,055

Delinquent Taxes 9,892 17,825

Accounts and Interest Receivable 34,925 116,808

Due from Minnesota Department of Education 177,388 279,272

Due from Other Governmental Units 10,668 49,147

Prepaid Items 7,199 10,969

Total Assets 2,180,952$ 1,934,087$

LIABILITIES AND FUND EQUITYLiabilities:

Salaries and Payroll Deductions Payable 394,739$ 346,055$

Accounts and Contracts Payable 107,492 108,618

Due to Other School Districts - 25,591

Due to Other Governmental Units 43,067 47,563

Property Taxes Levied for Subsequent Year 421,894 400,735

Unearned Revenue - Delinquent Taxes 8,755 9,348

Unearned Revenue 346,109 309,693

Total Liabilities 1,322,056 1,247,603

Fund Balance:

Nonspendable:

Prepaid Items 7,199 10,969

Restricted for Community Education Programs 752,141 614,740

Restricted for Early Childhood and

Family Education 54,387 60,775

Restricted for Other Purposes 45,169 -

Total Fund Balance 858,896 686,484

Total Liabilities and Fund Balance 2,180,952$ 1,934,087$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

COMMUNITY SERVICE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE

BUDGET AND ACTUALYEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

(78)

2012

Over(Under)

Final Actual Final ActualBudget Amounts Budget Amounts

REVENUESLocal Sources:

Property Taxes 1,282,781$ 1,299,049$ 16,268$ 1,332,096$ Earnings on Investments 15,000 1,702 (13,298) 369 Other - Primarily Tuition and Fees 5,692,939 5,831,445 138,506 5,244,724

State Sources 954,930 985,449 30,519 1,007,148

Total Revenues 7,945,650 8,117,645 171,995 7,584,337

EXPENDITURESCurrent:

Salaries 4,238,060 4,334,604 96,544 3,930,098 Employee Benefits 1,071,124 971,364 (99,760) 861,345 Purchased Services 1,552,715 1,625,091 72,376 1,548,704 Supplies and Materials 572,948 621,052 48,104 749,905 Other Expenditures 107,930 96,843 (11,087) 60,451

Capital Outlay 288,152 296,279 8,127 41,258

Total Expenditures 7,830,929 7,945,233 114,304 7,191,761

Net Change in Fund Balance 114,721$ 172,412 57,691$ 392,576

FUND BALANCEBeginning of Year 686,484 293,908

End of Year 858,896$ 686,484$

2013

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

CAPITAL PROJECTS – BUILDING CONSTRUCTION FUNDBALANCE SHEET

JUNE 30, 2013(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2012)

(79)

2013 2012

ASSETSCash and Temporary Investments 8,367,568$ 10,633,231$

Accounts and Interest Receivable 8,843 -

Total Assets 8,376,411$ 10,633,231$

LIABILITIES AND FUND BALANCELiabilities:

Accounts and Contracts Payable 775,950$ 229,964$

Fund Balance:

Restricted for Alternative Facility Program 7,600,461 10,387,104

Restricted for Building Construction - 16,163

Total Fund Balance 7,600,461 10,403,267

Total Liabilities and Fund Balance 8,376,411$ 10,633,231$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

CAPITAL PROJECTS – BUILDING CONSTRUCTION FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE

BUDGET AND ACTUALYEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

(80)

2012

Over

Final (Under)Budgeted Actual Final Actual

Amounts Amounts Budget Amounts

REVENUESLocal Sources:

Property Taxes -$ -$ -$ 905,000$

Earnings on Investments 25,000 11,098 (13,902) 2,233 Other - 84 84 196

Total Revenues 25,000 11,182 (13,818) 907,429

EXPENDITURESCurrent:

Salaries 60,002 60,853 851 29,996 Employee Benefits 17,455 16,529 (926) 9,466

Purchased Services 931,857 596,004 (335,853) 1,253,211 Supplies and Materials - 7,156 7,156 3,201

Other Expenditures 800 - (800) - Other Debt Service Costs - - - 34,733

Capital Outlay 2,297,342 2,133,446 (163,896) 9,825

Total Expenditures 3,307,456 2,813,988 (493,468) 1,340,432

Excess (Deficiency) of Revenues Over (Under) Expenditures (3,282,456) (2,802,806) 479,650 (433,003)

OTHER FINANCING SOURCESSale of Bonds Proceeds - - - 10,035,122

Net Change in Fund Balance (3,282,456)$ (2,802,806) 479,650$ 9,602,119

Fund Balance - Beginning 10,403,267 801,148

Fund Balance - Ending 7,600,461$ 10,403,267$

2013

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

DEBT SERVICE FUNDBALANCE SHEET

JUNE 30, 2013(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2012)

(81)

Regular Other

Debt Postemployment

Service Benefits 2013 2012

Cash and Temporary Investments 12,198,381$ 454,135$ 12,652,516$ 10,263,439$

Cash and Investments Held by Trustee 70,408,254 - 70,408,254 45,416,402

Receivables:

Current Taxes 9,882,644 384,473 10,267,117 10,917,454

Delinquent Taxes 233,780 10,226 244,006 401,866

Due from Other Funds - - - 1,937,157

Due from Minnesota Department of Education 126,068 133 126,201 292,681

Total Assets 92,849,127$ 848,967$ 93,698,094$ 69,228,999$

Liabilities:

Accounts and Contracts Payable -$ -$ -$ 15,400$

Property Taxes Levied for Subsequent Year 18,400,155 715,837 19,115,992 20,097,763

Unearned Revenue - Delinquent Taxes 197,345 9,551 206,896 207,847

Total Liabilities 18,597,500 725,388 19,322,888 20,321,010

Fund Balance:

Restricted for Bond Refunding 70,408,254 - 70,408,254 44,759,841

Restricted for Debt Service 3,843,373 123,579 3,966,952 4,148,148

Total Fund Balance 74,251,627 123,579 74,375,206 48,907,989

Total Liabilities and Fund Balance 92,849,127$ 848,967$ 93,698,094$ 69,228,999$

ASSETS

LIABILITIES AND FUND BALANCE

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

DEBT SERVICE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE

BUDGET AND ACTUALYEAR ENDED JUNE 30, 2013

(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2012)

(82)

2013 2012

Actual Over

Final Regular Other (Under)

Budgeted Debt Postemployment Actual Final Actual

Amounts Service Benefits Amounts Budget Amounts

REVENUES

Local Sources:

Property Tax 20,126,243$ 19,198,981$ 683,907$ 19,882,888$ (243,355)$ 18,198,920$ Earnings on Investments 853,040 (1,284,679) 567 (1,284,112) (2,137,152) 59,586 Other - 2,950 - 2,950 2,950 -

State Sources 911,360 926,972 984 927,956 16,596 819,838

Total Revenues 21,890,643 18,844,224 685,458 19,529,682 (2,360,961) 19,078,344

EXPENDITURES

Debt Service:Bond Principal 12,675,000 12,110,000 565,000 12,675,000 - 10,650,000Bond Interest 8,221,360 8,637,897 164,823 8,802,720 581,360 7,892,985Paying Agent Fees and other 195,873 265,109 - 265,109 69,236 269,409

Total Expenditures 21,092,233 21,013,006 729,823 21,742,829 650,596 18,812,394

Excess (Deficiency) of Revenues Over (Under) Expenditures 798,410 (2,168,782) (44,365) (2,213,147) (3,011,557) 265,950

OTHER FINANCING SOURCES (USES)

Sale of Bonds Proceeds 72,700,041 65,815,000 - 65,815,000 (6,885,041) 43,435,000

Bond Premium - 6,200,364 - 6,200,364 6,200,364 6,874,513

Payment to Refunded Bond Escrow Agent (44,190,000) (44,335,000) - (44,335,000) (145,000) (5,340,000)

Total Other Financing Sources (Uses) 28,510,041 27,680,364 - 27,680,364 (829,677) 44,969,513

Net Change in Fund Balances 29,308,451$ 25,511,582 (44,365) 25,467,217 (3,841,234)$ 45,235,463

Fund Balance - Beginning 48,740,045 167,944 48,907,989 3,672,526

Fund Balance - Ending 74,251,627$ 123,579$ 74,375,206$ 48,907,989$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

UNIFORM FINANCIAL ACCOUNTING AND REPORTING STANDARDSCOMPLIANCE TABLE

YEAR ENDED JUNE 30, 2013

(83)

AUDIT UFARS AUDIT-UFARS

01 GENERAL FUNDTotal Revenue 90,247,652$ 90,247,652$ -$ Total Expenditures 90,168,253$ 90,168,252$ 1$ Nonspendable

460 Nonspendable Fund Balance 288,083$ 288,083$ -$ Restricted/Reserved:

403 Staff Development -$ -$ -$ 405 Deferred Maintenance -$ -$ -$ 406 Health & Safety 255,940$ 255,940$ -$ 407 Capital Project Levy -$ -$ -$ 408 Cooperative Programs -$ -$ -$ 411 Severance Pay413 Project Funded by COP -$ -$ -$ 414 Operating Debt -$ -$ -$ 416 Levy Reduction -$ -$ -$ 417 Taconite Building Maint -$ -$ -$ 423 Certain Teacher Programs -$ -$ -$ 424 Operating Capital 237,520$ 237,520$ -$ 426 $25 Taconite -$ -$ -$ 427 Disabled Accessibility -$ -$ -$ 428 Learning & Development -$ -$ -$ 434 Area Learning Center -$ -$ -$ 435 Contracted Alt. Programs -$ -$ -$ 436 State Approved Alt. Program -$ -$ -$ 438 Gifted & Talented -$ -$ -$ 441 Basic Skills Programs 273,880$ 273,880$ -$ 445 Career and Technical Programs -$ -$ -$ 446 First Grade Preparedness -$ -$ -$ 449 Safe Schools Crime -$ -$ -$ 450 Prekindergarten -$ -$ -$ 451 QZAB Payments -$ -$ -$ 452 OPEB Liab Not In Trust -$ -$ -$ 453 Unfunded Sev & Retirement Levy -$ -$ -$

Restricted:464 Restricted Fund Balance -$ -$ -$

Committed:418 Committed for Separation461 Committed Fund Balance -$ -$ -$

Assigned:462 Assigned Fund Balance 3,464,424$ 3,464,424$ -$

Unassigned:422 Unassigned Fund Balance 10,020,646$ 10,020,647$ (1)$

02 FOOD SERVICETotal Revenue 4,845,068$ 4,845,068$ -$ Total Expenditures 4,664,837$ 4,664,836$ 1$ Nonspendable:

460 Nonspendable 69,379$ 69,379$ -$ Restricted:

452 OPEB Liab Not In Trust -$ -$ -$ 464 Restricted Fund Balance 867,314$ 867,313$ 1$

Unassigned:463 Unassigned Fund Balance -$ -$ -$

04 COMMUNITY SERVICETotal Revenue 8,117,645$ 8,117,645$ -$ Total Expenditures 7,945,233$ 7,945,233$ -$ Nonspendable:

460 Nonspendable 7,199$ 7,199$ -$ Restricted/Reserved:

426 $25 Taconite -$ -$ -$ 431 Community Education 752,141$ 752,141$ -$ 432 E.C.F.E. 54,387$ 54,387$ -$ 444 School Readiness -$ -$ -$ 447 Adult Basic Education -$ -$ -$ 452 OPEB Liab Not In Trust -$ -$ -$

Restricted:464 Restricted Fund Balance 45,169$ 45,169$ -$

Unassigned:463 Unassigned Fund Balance -$ -$ -$

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

UNIFORM FINANCIAL ACCOUNTING AND REPORTING STANDARDSCOMPLIANCE TABLE (CONTINUED)

YEAR ENDED JUNE 30, 2013

(84)

AUDIT UFARS AUDIT-UFARS

06 BUILDING CONSTRUCTIONTotal Revenue 11,182$ 11,182$ -$ Total Expenditures 2,813,988$ 2,813,987$ 1$ Nonspendable:

460 Nonspendable Fund Balance -$ -$ -$ Restricted/Reserved:

407 Capital Projects Levy -$ -$ -$ 409 Alternative Facility Program 7,600,461$ 7,600,461$ -$ 413 Project Funded by COP -$ -$ -$

Restricted:464 Restricted Fund Balance -$ -$ -$

Unassigned:463 Unassigned Fund Balance -$ -$ -$

07 DEBT SERVICETotal Revenue 18,844,224$ 18,844,224$ -$ Total Expenditures 20,922,063$ 20,922,063$ -$ Nonspendable:

460 Nonspendable Fund Balance -$ -$ -$ Restricted/Reserved:

425 Bond Refundings 70,408,254$ 70,408,254$ -$ 451 QZAB Payments -$ -$ -$

Restricted:464 Restricted Fund Balance 3,843,373$ 3,843,373$ -$

Unassigned:463 Unassigned Fund Balance -$ -$ -$

08 TRUSTTotal Revenue 938,767$ 938,766$ 1$ Total Expenditures 888,753$ 888,752$ 1$

422 Net Assets 216,422$ 216,422$ -$

20 INTERNAL SERVICETotal Revenue 739,850$ 739,850$ -$ Total Expenditures 511,045$ 511,046$ (1)$

422 Net Assets 481,291$ 481,291$ -$

25 OPEB REVOCABLE TRUSTTotal Revenue -$ -$ -$ Total Expenditures -$ -$ -$

422 Net Assets -$ -$ -$

45 OPEB IRREVOCABLE TRUSTTotal Revenue 596,663$ 596,663$ -$ Total Expenditures 28,668$ 28,668$ -$

422 Net Assets 6,304,081$ 6,304,081$ -$

47 OPEB DEBT SERVICETotal Revenue 685,458$ 685,458$ -$ Total Expenditures 729,823$ 729,823$ -$ Nonspendable:

460 Nonspendable -$ -$ -$ Restricted:

425 Bond Refundings -$ -$ -$ 464 Restricted Fund Balance 123,579$ 123,579$ -$

Unassigned:463 Unassigned Fund Balance -$ -$ -$

STATISTICAL SECTION (UNAUDITED)

This part of Independent School District No. 112’ comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District’s overall financial health.

Contents Page

Financial Trends

These schedules contain trend information to help the reader understandhow the District’s financial performance and well-being have changed over time. 85

Revenue Capacity

These schedules contain information to help the reader assess the District’s mostsignificant local revenue source, the property tax. 93

Debt Capacity

These schedules present information to help the reader assess the affordability ofthe District’s current levels of outstanding debt and the District’s ability to issueadditional debt in the future. 99

Demographic and Economic Information

These schedules offer demographic and economic indicators to help the readerunderstand the environment within which the District’s financial activities take place. 103

Operating Information

These schedules contain service and infrastructure data to help the readerunderstand how the information in the District’s financial report relates to servicesthe District provides and the activities it performs. 106

Sources: Unless otherwise noted, the information in these tables is derived from the comprehensive financial reports for the relevant year.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

NET POSITION BY COMPONENTLAST TEN FISCAL YEARS

(ACCRUAL BASIS OF ACCOUNTING)(UNAUDITED)

(85)

2004 2005 2006 2007

Governmental Activities

Net Investment in Capital Assets (4,861,555)$ (315,572)$ 1,685,464$ 6,234,466$

Restricted 1,834,564 2,005,181 1,420,162 2,066,645

Unrestricted (2,852,344) (1,173,346) (757,487) (1,437,089)

Total Governmental Activities Net Position (5,879,335)$ 516,263$ 2,348,139$ 6,864,022$

Fiscal Year

(86)

2008 2009 2010 2011 2012 2013

9,831,206$ 12,651,529$ 11,406,161$ 11,653,829$ 20,696,189$ 25,761,731$

5,324,503 3,875,775 1,018,598 1,624,690 2,778,615 4,187,805

(286,454) 7,935,597 10,937,587 14,440,062 14,118,400 14,478,502

14,869,255$ 24,462,901$ 23,362,346$ 27,718,581$ 37,593,204$ 44,428,038$

Fiscal Year

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

CHANGES IN NET POSITIONLAST TEN FISCAL YEARS

(ACCRUAL BASIS OF ACCOUNTING)(UNAUDITED)

(87)

2004 2005 2006 2007 2008

Expenses

Governmental Activities:

Administration 3,163,453$ 3,425,075$ 3,208,324$ 3,579,896$ 3,768,839$

District Support Services 2,328,901 2,110,877 2,179,022 2,575,897 2,524,034

Regular Instruction 29,467,416 30,507,872 34,772,549 35,468,106 38,753,240

Vocational Education Instruction 639,601 509,223 446,597 589,174 1,075,912

Special Education Instruction 11,126,564 12,003,067 13,276,842 14,243,787 15,888,211

Instructional Support Services 6,105,787 6,143,172 5,293,492 6,551,986 6,850,493

Pupil Support Services 6,045,390 6,153,116 6,923,021 7,400,869 8,137,015

Sites and Buildings 5,429,718 4,537,642 8,925,021 6,760,580 6,411,282

Fiscal and Other Fixed Cost Programs 210,122 215,252 184,084 211,439 166,701

Food Service 2,930,229 3,413,711 3,658,808 4,091,057 4,273,592

Community Service 3,637,086 3,680,026 4,145,199 4,594,081 5,083,408

Depreciation Not Allocated to Other Functions 2,096,178 2,115,662 3,067,974 3,260,935 3,312,637

Interest and Fiscal Charges on Long-Term Debt 7,411,724 8,567,272 8,589,837 8,466,233 10,778,996

Total Governmental Activities Expenses 80,592,169 83,381,967 94,670,770 97,794,040 107,024,360

Program Revenues

Governmental Activities:

Charges for Services:

Administration 1,650 19,614 59,794 54,414 4,182

District Support Services 158,421 138,157 172,283 175,923 198,359

Regular Instruction 2,026,425 2,094,977 2,110,238 2,125,275 2,235,613

Special Education Instruction 175,055 193,606 148,743 302,230 263,772

Instructional Support Services - - - - -

Pupil Support Services 106,485 81,970 - - -

Sites and Buildings 47,697 36,398 87,803 98,226 91,505

Food Service 2,535,061 2,706,702 2,966,720 3,012,892 3,155,227

Community Service 1,969,725 2,112,960 2,611,487 2,983,287 3,438,793

Operating Grants and Contributions 11,003,045 10,909,547 10,761,745 11,745,071 13,509,823

Capital Grants and Contributions - - 402,600 - -

Total Governmental Activities Program Revenues 18,027,850 18,293,931 19,321,413 20,497,318 22,897,274

General Revenues and Other Changes in Net Position

Governmental Activities:

Property Taxes:

General Purpose 8,744,773 9,276,738 6,914,840 11,012,301 15,093,313

Community Service 740,784 763,873 356,933 714,489 751,830

Debt Service 8,680,443 10,276,040 11,653,989 12,201,437 15,726,061

Capital Projects - - - - 671,299

Unrestricted State Aid 46,044,682 48,071,293 55,498,830 53,994,742 55,883,044

Unrestricted Investment Earnings 1,674,818 2,389,196 2,485,986 3,651,018 5,113,670

Miscellaneous 180,670 298,244 270,655 238,618 302,866

Total Governmental Activities 66,066,170 71,075,384 77,181,233 81,812,605 93,542,083

Change in Net Position 3,501,851 5,987,348 1,831,876 4,515,883 9,414,997

Net Position - Beginning, as Previously Stated (9,381,186) (5,879,335) 516,263 2,348,139 6,864,022

Prior Period Adjustment - 408,250 - - (1,409,764)

Net Position - Beginning, as Restated (9,381,186) (5,471,085) 516,263 2,348,139 5,454,258

Net Position - Ending (5,879,335)$ 516,263$ 2,348,139$ 6,864,022$ 14,869,255$

Fiscal Year

(88)

2009 2010 2011 2012 2013

2,942,016$ 3,037,287$ 3,103,027$ 3,070,561$ 3,212,710$

3,804,102 4,418,312 4,017,516 3,774,333 3,890,877

41,232,692 43,154,663 42,561,001 41,957,126 42,607,593

1,046,155 987,545 1,026,580 1,260,709 1,596,799

13,993,772 13,777,038 14,262,502 14,509,410 14,206,646

5,503,487 5,873,527 5,630,860 5,304,793 6,973,472

8,319,981 8,342,322 8,606,176 8,466,970 8,958,437

13,446,611 17,671,492 12,592,160 13,464,155 14,932,559

160,797 179,712 185,888 161,549 166,687

4,257,252 4,580,418 4,300,678 4,533,818 4,583,002

5,845,857 7,025,204 7,055,801 7,194,509 7,953,288

- - - -

10,466,454 9,041,537 7,968,970 7,673,615 7,004,520

111,019,176 118,089,057 111,311,159 111,371,548 116,086,590

9,692 - - - -

196,407 - - - -

2,345,617 2,406,352 3,082,121 3,102,695 1,628,820

724,694 259,894 461,505 638,505 318,409

- - - - 3,831

- - - - -

55,087 54,995 48,750 65,461 75,988

3,100,983 3,153,699 3,263,367 3,345,854 3,368,464

3,785,820 4,409,348 4,538,786 5,108,522 5,505,281

13,085,070 17,514,837 15,590,593 11,064,246 12,114,349

2,005,127 1,986,262 1,294,958 1,190,790 2,047,800

25,308,497 29,785,387 28,280,080 24,516,073 25,062,942

16,053,885 15,711,947 22,194,745 16,190,394 17,515,743

682,199 1,052,095 1,215,708 1,331,703 1,298,456

17,497,159 17,990,537 17,351,246 18,196,133 19,881,937

364,246 379,198 1,043,202 905,000 -

54,613,832 49,652,210 49,113,665 59,048,542 58,542,203

2,551,162 606,286 175,242 66,718 (1,245,964)

1,268,922 1,810,842 1,316,352 991,608 1,866,107

93,031,405 87,203,115 92,410,160 96,730,098 97,858,482

7,320,726 (1,100,555) 9,379,081 9,874,623 6,834,834

14,869,255 24,462,901 23,362,346 27,718,581 37,593,204

2,272,920 - (5,022,846) - -

17,142,175 24,462,901 18,339,500 27,718,581 37,593,204

24,462,901$ 23,362,346$ 27,718,581$ 37,593,204$ 44,428,038$

Fiscal Year

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

FUND BALANCES, GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS

(ACCRUAL BASIS OF ACCOUNTING)(UNAUDITED)

(89)

2004 2005 2006 2007

General Fund

Nonspendable -$ -$ -$ -$

Restricted (Formerly Reserved) 1,371,849 987,022 753,269 1,471,229

Assigned (Formerly Designated) 549,339 565,174 639,401 788,177

Unassigned (Formerly Unreserved) 2,831,137 3,589,747 4,032,667 3,835,697

Total General Fund 4,752,325$ 5,141,943$ 5,425,337$ 6,095,103$

All Other Governmental Funds

Nonspendable:

Food Service -$ -$ -$ -$

Community Service Fund - - - -

Restricted:

Food Service Fund 519,627 625,211 804,060 834,858

Community Service Fund 475,731 481,538 469,792 670,170

Capital Project Funds 44,080,313 11,576,315 3,143,991 86,797,094

Debt Service Funds 30,590,445 47,288,390 23,597,115 27,412,353

Unassigned Reported in:

Community Service Fund (12,775) - - -

Total All Other Governmental Funds 75,653,341$ 59,971,454$ 28,014,958$ 115,714,475$

Total All Funds 80,405,666$ 65,113,397$ 33,440,295$ 121,809,578$

The District adopted the provisions of Government Accounting Standards Board Statement No. 54, Fund Balance Reporting

and Governmental Fund Type Definitions , as of and for the year ended June 30, 2011. The fiscal 2004 through fiscal 2010

fund balances were restated with new fund balance categories.

Fiscal Year

(90)

2008 2009 2010 2011 2012 2013

-$ -$ 181,247$ 244,879$ 237,899$ 288,083$

2,214,225 3,049,284 266,388 367,530 611,597 767,340

2,491,078 1,698,253 2,817,303 3,610,007 3,674,342 3,464,424

1,881,018 3,802,254 4,210,425 7,251,844 9,758,851 10,020,646

6,586,321$ 8,549,791$ 7,475,363$ 11,474,260$ 14,282,689$ 14,540,493$

-$ -$ 59,285$ 58,982$ 58,476$ 69,379$

- - 223,848 226,752 10,969 7,199

728,554 575,425 319,733 557,929 697,986 867,314

692,080 499,521 107,241 67,156 675,515 851,697

52,740,661 11,569,933 465,366 801,148 10,403,267 7,600,461

28,210,024 9,287,183 3,744,144 3,672,526 48,907,989 74,375,206

- - - - - -

82,371,319$ 21,932,062$ 4,919,617$ 5,384,493$ 60,754,202$ 83,771,256$

88,957,640$ 30,481,853$ 12,394,980$ 16,858,753$ 75,036,891$ 98,311,749$

Fiscal Year

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS

(MODIFIED ACCRUAL BASIS OF ACCOUNTING)(UNAUDITED)

(91)

2004 2005 2006 2007

Revenues

Local Sources:

Property Taxes 18,217,857$ 20,387,006$ 18,827,746$ 24,009,711$

Earnings on Investments 1,674,818 2,389,196 2,485,986 3,651,018

Other 7,205,475 7,682,628 8,427,723 8,990,865

State Sources 54,391,924 56,045,849 63,737,267 62,649,915

Federal Sources 2,655,803 2,934,991 2,523,308 3,089,898

Total Revenues 84,145,877 89,439,670 96,002,030 102,391,407

Expenditures

Current:

Administration 3,163,453 3,415,964 3,188,406 3,511,179

District Support Services 2,328,901 2,176,276 2,210,323 2,634,477

Regular Instruction 29,300,779 31,053,481 35,071,785 35,902,041

Vocational Education Instruction 639,601 509,223 446,597 589,174

Special Education Instruction 11,125,380 12,067,550 13,307,094 14,301,585

Instructional Support Services 6,087,101 6,156,877 5,286,258 6,468,768

Pupil Support Services 6,045,390 6,153,116 6,923,021 7,400,869

Sites and Buildings 4,891,297 5,699,114 5,348,523 5,514,352

Fiscal and Other Fixed Cost Programs 210,122 215,252 184,084 211,439

Food Service 2,868,294 3,293,371 3,566,520 4,038,398

Community Service 3,625,070 3,671,690 4,127,748 4,569,629

Capital Outlay 13,297,262 33,135,437 8,852,970 11,536,316

Debt Service:

Principal 4,893,285 4,881,083 7,926,329 6,675,389

Interest and Fiscal Charges 6,853,341 8,395,164 8,926,547 7,099,845

Total Expenditures 95,329,276 120,823,598 105,366,205 110,453,461

Excess (Deficiency) of Revenues

Over (Under) Expenditures (11,183,399) (31,383,928) (9,364,175) (8,062,054)

Other Financing Sources (Uses)

Proceeds from Sale of Equipment - - - -

Proceeds from Insurance Recovery - - - -

Bond Proceeds 62,390,000 15,870,000 5,375,000 93,375,000

Bond Premium (86,371) - 16,073 3,056,337

Bond Discount - 221,659 - -

Capital Lease Proceeds - - - -

Payment to Refunded Bond Escrow Agent (7,640,000) - (27,700,000) -

Transfer In - - - -

Transfer Out - - - -

Total Other Financing Sources (Uses) 54,663,629 16,091,659 (22,308,927) 96,431,337

Prior Period Adjustment - - - -

Net Change in Fund Balances 43,480,230$ (15,292,269)$ (31,673,102)$ 88,369,283$

Debt Service as a Percentage of

Noncapital Expenditures 14.3% 15.1% 17.5% 13.9%

Fiscal Year

(92)

2008 2009 2010 2011 2012 2013

32,061,531$ 34,467,275$ 34,881,925$ 42,105,756$ 36,627,102$ 38,705,044$

5,944,626 2,462,882 374,366 10,881 66,321 (1,246,662)

9,607,607 11,487,222 12,095,130 12,709,791 13,252,645 12,588,495

66,452,372 66,448,805 59,746,652 59,857,513 67,733,367 68,453,513

2,940,495 3,255,224 9,406,657 6,141,703 3,570,211 4,250,839

117,006,631 118,121,408 116,504,730 120,825,644 121,249,646 122,751,229

3,741,334 3,091,027 3,016,436 2,989,686 3,053,551 3,183,911

2,560,329 3,269,034 3,483,678 3,575,930 3,441,379 3,220,168

38,413,456 45,408,259 41,239,964 41,723,907 41,548,792 41,438,470

1,075,912 1,109,565 995,847 1,022,997 1,252,724 1,595,765

15,853,386 14,791,619 13,994,736 14,064,526 14,480,818 14,173,613

6,951,417 7,038,406 6,035,646 5,494,400 5,196,677 6,685,300

8,179,516 8,471,806 8,405,971 8,551,977 8,321,449 8,902,325

5,855,840 6,317,579 6,039,797 6,695,546 6,747,298 7,313,460

166,701 160,797 179,712 185,888 161,549 166,687

4,206,052 4,299,516 4,547,429 4,249,397 4,498,731 4,462,184

5,012,959 6,009,447 6,972,413 7,005,956 7,150,503 7,648,954

39,127,846 44,897,528 14,023,907 1,893,340 2,616,556 5,979,968

6,606,555 12,144,093 9,888,755 10,193,636 11,248,746 13,305,575

10,780,212 10,634,160 10,947,682 8,715,775 8,406,999 9,258,760

148,531,515 167,642,836 129,771,973 116,362,961 118,125,772 127,335,140

(31,524,884) (49,521,428) (13,267,243) 4,462,683 3,123,874 (4,583,911)

82,710 - - - - -

- - - 1,090 - -

- 7,010,000 33,555,000 - 52,360,000 65,815,000

- - 2,463,455 - 7,984,635 6,200,364

- (44,359) - - - -

- - - - 49,629 178,405

- (15,920,000) (40,838,085) - (5,340,000) (44,335,000)

- 19,358 255,211 401,753 - -

- (19,358) (255,211) (401,753) - -

82,710 (8,954,359) (4,819,630) 1,090 55,054,264 27,858,769

(1,409,764) - - - - -

(32,851,938)$ (58,475,787)$ (18,086,873)$ 4,463,773$ 58,178,138$ 23,274,858$

15.9% 18.6% 18.0% 16.5% 17.0% 18.6%

Fiscal Year

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

ASSESSED AND ACTUAL VALUE OF TAXABLE PROPERTYLAST TEN FISCAL YEARS

(UNAUDITED)

(93)

(1) (2) Total Total Direct

Payable Residential Commercial Assessed School

Year Property Property Value Tax Rate

2004 3,224,899,800$ 538,540,800$ 3,763,440,600$ 37.524%

2005 3,811,726,367 548,180,033 4,359,906,400 33.299%

2006 4,398,254,933 585,894,567 4,984,149,500 32.808%

2007 4,906,938,433 698,998,667 5,605,937,100 35.831%

2008 5,280,787,233 777,946,767 6,058,734,000 35.970%

2009 5,387,436,767 818,204,233 6,205,641,000 35.505%

2010 5,334,932,400 879,165,700 6,214,098,100 35.839%

2011 5,047,737,600 835,594,000 5,883,331,600 40.235%

2012 4,652,809,233 794,184,667 5,446,993,900 44.383%

2013 4,423,059,433 796,860,467 5,219,919,900 45.319%

Notes:

(1) Residential includes single family homes, townhomes and condominiums, and

all other property including vacant land, farm, utilities, personal property and

railroad property.

(2) Commercial property above includes both commercial and industrial property.

Source: Carver County Department of Property Tax and Public Records

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

DIRECT AND OVERLAPPING PROPERTY TAX RATESLAST TEN FISCAL YEARS

(UNAUDITED)

(94)

Fiscal Year

Ended

June 30,

General Fund Basic

Rate

Community

Service

General Obligation

Debt Service OPEB

Total Direct School

Tax Rate

City of

Carver

City of

Chanhassen

City of

Chaska

2004 6.451 1.077 29.996 - 37.524 52.159 32.922 19.233

2005 4.996 1.488 26.815 - 33.299 44.323 28.118 19.877

2006 5.837 1.489 25.482 - 32.808 41.745 26.638 19.821

2007 6.232 1.349 28.250 - 35.831 42.119 23.788 19.475

2008 6.173 1.116 28.681 35.970 42.913 23.713 19.423

2009 5.696 1.230 24.484 4.095 35.505 45.215 22.993 20.434

2010 6.771 1.311 25.462 2.295 35.839 46.527 25.183 21.886

2011 7.374 1.387 30.268 1.206 40.235 47.958 26.603 23.484

2012 7.081 1.392 34.673 1.237 44.383 52.247 28.532 25.785

2013 8.738 1.506 33.762 1.313 45.319 57.320 28.428 28.075

Notes:

(1) Overlapping rates are those of local and county governments that apply to property owners within the District.

Not all overlapping rates apply to all of the District's property owners (e.g., the rates for special districts apply only

to the proportion of the District's property owners whose property is located within the geographic boundaries of the

special district).

(2) Special Districts includes Mosquito Control, Watershed Districts, Carver County CDA, Chaska City HRA,

NYA City EDA, Watertown City EDA, Carver County Rail Authority

Sources: Overlapping Rate Data provided by the District's financial advisor, Springsted Incorporated

ISD No. 112 Direct Rate Overlapping Rates

(95)

City of Victoria

Dahlgren Township

Laketown Township

San

Francisco Township

Metro Council

Metro Transit

Special Districts

Carver County

Total Directand

Overlapping

Tax Rate City of Chaska

(2)

41.085 12.539 15.314 8.367 1.228 1.710 8.654 48.443 116.792

40.977 11.126 16.573 7.792 0.944 1.249 10.384 44.107 109.860

37.398 9.635 15.873 6.977 0.915 1.623 9.125 40.836 105.128

37.512 8.314 14.257 9.529 0.884 1.285 10.551 37.802 105.828

37.445 9.323 13.028 12.116 0.847 1.267 11.853 37.563 106.923

37.409 10.651 13.352 12.641 0.824 1.255 13.154 38.033 109.205

37.443 10.986 13.411 13.472 0.838 1.406 14.569 39.509 114.047

37.422 15.483 15.722 14.272 0.851 1.546 14.728 41.752 122.596

39.554 16.128 16.398 17.780 0.979 1.669 11.208 43.562 127.586

39.574 16.694 18.765 15.863 1.025 1.728 11.564 46.115 133.826

Overlapping Rates

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

PRINCIPAL PROPERTY TAXPAYERSCURRENT YEAR AND NINE YEARS AGO

(UNAUDITED)

(96)

2013

Percentage Percentage

of Total of Total

Tax Tax Tax Tax

Taxpayer Capacity Rank Capacity Capacity Rank Capacity

Target Corp 435,126$ 1 0.77% 258,074$ 6 0.72%

United Healthcare Services Inc 434,586 2 0.77%

Centerpoint Energy Minnegasco 411,709 3 0.73% 209,020 7 0.58%

Ameriprise Financial Inc (formerly IDS) 397,387 4 0.70% 495,974 1 1.38%

Iret Properties 367,250 5 0.65% 257,924 5 0.72%

Istar Minnesota LLC 349,042 6 0.62% 261,428 4 0.73%

Aurora Investments LLC 321,514 7 0.57% 222,927 9 0.62%

Rosemount Inc 309,044 8 0.55% 276,802 3 0.77%

Hazeltine National Golf Club 284,463 9 0.50%

Northern States Power 250,713 10 0.44%

Fluoroware Inc - - 305,655 2 0.85%

McGlynn Bakeries 207,488 8 0.58%

Lifecore Biomedical Inc - - 209,930 10 0.58%

Total 3,560,834$ 6.30% 2,705,222$ 7.53%

Source: Carver County Department of Property Tax and Public Records

2004

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

PROPERTY TAX LEVIES AND COLLECTIONSLAST TEN FISCAL YEARS

(UNAUDITED)

(97)

Fiscal General Fund General Fund General Fund Community Debt Service Total TaxYear RMV Voter RMV Other Basic Levy Service Levy Fund Levy OPEB Levy Levy (1)

2004 6,195,958$ 457,269$ 2,211,725$ 369,244$ 10,284,028$ -$ 19,518,224$ (2)2005 6,572,712 537,705 2,164,953 644,823 11,620,076 - 21,540,269 (2)2006 6,967,106 771,718 2,801,734 714,689 12,231,172 - 23,486,418 (2)2007 10,788,633 884,124 3,471,733 751,481 15,737,437 - 31,633,409 (2)2008 11,338,743 1,044,958 3,767,525 681,117 17,504,723 - 34,337,067 (2)2009 11,248,253 955,529 3,596,349 776,606 15,459,021 2,585,534 34,621,294 (2)2010 11,222,686 1,205,641 4,276,479 828,186 16,081,026 1,449,197 35,063,215 (2)2011 12,040,766 1,147,462 4,307,964 810,546 17,682,731 704,879 36,694,348 (2)2012 12,245,015 1,024,083 3,958,435 777,901 19,383,223 691,470 38,080,127 (2)2013 12,687,407 1,026,502 4,762,166 820,806 18,400,154 715,837 38,412,872 (2)

Notes:(1) State credits are included in the operating levy

(2) Original Gross Levy

(3) Collections are through 6/5/2013

Source: Carver County Department of Property Tax and Public Records

Taxes Levied for the Fiscal Year

(98)

Collected within theFiscal Year of Levy Total Collections to Date

Current Percentage Collections Total Percentage Outstanding PercentageTax of in Subsequent Tax of Delinquent of Levy

Collection Levy Years Collection Levy Taxes Outstanding

19,343,150$ 99.1% 175,074$ 19,518,224$ 100.00% -$ 0.00%21,303,063 98.9% 237,206 21,540,269 100.00% - 0.00%23,234,604 98.9% 232,016 23,466,620 99.92% 19,798 0.08%31,127,831 98.4% 483,454 31,611,285 99.93% 22,124 0.07%33,673,093 98.1% 631,525 34,304,618 99.91% 32,449 0.09%33,736,336 97.4% 848,661 34,584,997 99.90% 36,297 0.10%34,509,242 98.4% 544,323 35,053,565 99.97% 9,650 0.03%35,823,215 97.6% 837,741 36,660,956 97.63% 33,392 0.09%37,561,301 98.6% 203,596 37,764,897 98.64% 315,230 0.83%17,790,358 46.3% - 17,790,358 (3) 46.31% - 0.00%

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS

(UNAUDITED)

(99)

Governmental Activities

General Capital Certificates Total Percentage

Fiscal Obligation Leases of Primary of Personal Per

Year Bonds Payable Participation Government Income Capita

(1)

2004 169,335,000$ 8,755,951$ 310,000$ 178,400,951$ - 3,973$

2005 180,905,000 8,484,868 - 189,389,868 - 3,746

2006 151,020,000 8,118,539 - 159,138,539 - 2,994

2007 238,095,000 7,743,150 - 245,838,150 - 4,409

2008 231,890,000 7,341,595 - 239,231,595 - 4,272

2009 211,355,000 6,822,500 - 218,177,500 - 3,896

2010 194,610,000 950,662 5,445,000 201,005,662 - 3,891

2011 184,980,000 842,026 4,990,000 190,812,026 - 3,693

2012 221,350,000 777,909 4,505,000 226,632,909 - 4,387

2013 230,155,000 647,334 4,005,000 234,807,334 - 4,545

Notes: Details regarding the District's outstanding debt can be found in the notes to the financial statements.

(1) = Personal income information for residents living within the District is not available.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBTJUNE 30, 2013

(UNAUDITED)

(100)

2012/13 EstimatedAdjusted Estimated Share of

Taxable Net Debt Percentage OverlappingTax Capacity Outstanding Applicable Debt

Overlapping:Carver County 99,492,723$ 24,070,000$ 54.88% 13,210,400$

Cities:Carver 3,302,592 - 100.00% -

Chanhassen 34,303,795 - 65.21% - Chaska 18,362,108 4,145,000 100.00% 4,145,000

Victoria 10,086,599 - 77.77% -

Townships:Dahlgren 2,098,990 - 71.57% - Laketown 2,529,302 231,509 28.24% 65,377

San Francisco 1,151,867 - 44.19% -

Metropolitan Council 99,492,723 257,390,000 54.88% 141,264,013 Minnehaha Creek Watershed 17,862,298 - 49.44% -

Total Overlapping 158,684,790

Direct:Eastern Carver County Schools ISD No. 112 54,604,846 230,155,000 100.00% 230,155,000

Total Direct and Overlapping Bonded Debt: 388,839,790$

Sources: Taxable value data used to estimate applicable percentages and Debt outstanding data provided by Carver County

Taxpayer Services Department

Notes: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the district. This

schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the district. This process recognizes that, when considering the district's ability to issue and repay long-term debt,

the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLSLEGAL DEBT MARGIN INFORMATION

LAST TEN FISCAL YEARS(UNAUDITED)

(101)

2004 2005 2006 2007 2008

Debt Limit (1) 723,738,577$ 831,084,123$ 902,097,356$ 981,202,526$ 1,000,892,226$

Total Net Debt Applicable to Limit (2) 178,400,951 189,389,868 159,138,539 245,838,150 239,231,595

Legal Debt Margin 545,337,626$ 641,694,255$ 742,958,817$ 735,364,376$ 761,660,631$

Total Net Debt Applicable to the Limit

as a Percentage of Debt Limit 24.65% 22.79% 17.64% 25.05% 23.90%

Note: Under state finance law, the District's outstanding general obligation debt should not exceed 15 percent of total market property value.

By law, the general obligation debt subject to the limitation may be offset by amounts set aside for the repayment of general obligation bonds.

Source:

(1) Carver County Department of Property Tax and Public Records

(2) Net debt applicable to limit is based on District records

Fiscal Year

(102)

Legal Debt Margin Calculation for Fiscal Year 2013

Indicated Market Value 4,697,927,910$

Debt Limit (15% of Indicated Market Value) 704,689,187

Debt Applicable to Limit 234,807,334

Legal Debt Margin 469,881,853$

2009 2010 2011 2012 2013

1,018,431,236$ 978,084,696$ 883,383,123$ 817,866,952$ 704,689,187$

218,177,500 201,005,662 190,812,026 226,632,909 234,807,334

800,253,736$ 777,079,034$ 692,571,097$ 591,234,043$ 469,881,853$

21.42% 20.55% 21.60% 27.71% 33.32%

Fiscal Year

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

DEMOGRAPHIC AND ECONOMIC STATISTICSLAST TEN FISCAL YEARS

(UNAUDITED)

(103)

Personal PerIncome Capita Carver Co.

Fiscal (thousands Personal UnemploymentYear Population of dollars) Income Enrollment Rate

(1) (2) (2) (3) (4)2004 44,906 -$ -$ 8,285 3.9%2005 50,555 - - 8,352 3.4%2006 53,161 - - 8,649 3.2%2007 55,754 - - 8,818 3.8%2008 56,000 - - 8,864 4.7%2009 56,000 - - 8,955 8.2%2010 51,662 - - 9,045 6.7%2011 51,662 - - 9,123 6.2%2012 51,662 - - 9,175 5.3%2013 51,662 - - 9,198 4.6%

Sources:

(1) Carver County Levy Documentation(2) Not available(3) MN Department of Education(4) MN Department of Employment and Economic Development (month of June each year)

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

PRINCIPAL EMPLOYERSCURRENT YEAR AND NINE YEARS AGO

(UNAUDITED)

(104)

2013 2004

Employer Employees Rank Employees Rank

Rosemount, Inc. 1,600 1

ISD #112 1,356 2 1,060 1

Beckman Coulter, Inc. 900 3 633 5

Carver County 776 4 618 6

Lake Region Manufacturing 753 5 710 4

Entergris 550 6 718 3

City of Chaska 475 7 358 7

Super Target 300 8 300 10

Lifetime Fitness 200 9

FSI International, Inc. 175 10 850 2

Mammoth 350 8

Mrs. Smith Bakeries Inc 300 9

Total 7,085 5,897

Source:

(1)

Note: Total employment for the area served by Eastern Carver County Schools - ISD No. 112 is not available and, therefore, a percentage of total employment for each of the employers listed above is not included.

(1) (1)

2013 information provided by district's financial advisor Springsted Incorporated

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

FULL-TIME EQUIVALENT DISTRICT EMPLOYEE BY TYPELAST TEN FISCAL YEARS

(UNAUDITED)

(105)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Administrative StaffSuperintendent 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0

Principals 11.0 11.5 13.5 12.0 10.5 11.0 13.0 12.0 12.0 12.2

Administrative Assistants (Asst. Principals & Asst. Superintendent) 5.0 4.0 3.0 7.0 8.5 10.0 8.0 9.0 9.0 9.8Supervisory Coordinator 4.0 4.0 4.0 4.8 5.0 5.0 3.7 4.0 3.0 4.0Total Administrative Staff 21.0 20.5 21.5 24.8 25.0 27.0 25.7 26.0 25.0 27.0Support Service StaffOther Non-Instructional StaffCounselors/Deans 15.0 17.0 18.0 17.4 18.5 21.0 22.0 23.0 25.0 28.0Media/Librarian 9.5 10.0 9.7 11.4 12.0 12.0 13.8 14.0 12.5 12.5Nurse 1.0 1.0 1.0 1.0 0.0 0.0 14.0 14.0 16.3 15.8Social Worker 4.8 4.2 5.4 6.0 6.0 6.0 8 8.0 7.5 7.5Psychologists 0.8 1.0 1.8 2.8 3.7 1.8 4.0 5.8 8.5 7.6Teacher on Sp Assignment 3.3 1.1 3.1 1.8 8.8 9.0 12.0 11.7 12.1 10.3District-Wide Sp Ed Coordinators 2.0 3.0 2.0 2.0 3.0 3.0 6.0 5.0 0.0 0.0District-Wide Development Support 1.7 1.4 1.1 1.0 0.0 0.0 4.7 2.0 3.0 2.7

Total Support Service Staff 38.0 38.7 42.0 43.4 52.0 52.8 84.5 83.47 84.9 84.4Special Education TeachersSpeech Language 13.3 14.4 14.0 13.0 16.2 15.2 17.0 18.0 17.3 17.4Other Special Education Teachers 57.0 55.8 60.8 68.7 75.5 78.0 85.2 88.7 86.1 84.2

Total Special Education Teachers 70.3 70.2 74.8 81.7 91.7 93.2 102.2 106.7 103.4 101.6Classroom TeachersK-12 Teacher 397.8 407.0 426.0 437.5 443.0 461.0 444.6 455.02 433.0 445.7Vocational Education Teacher 4.3 4.8 3.4 3.3 4.0 4.0 3.0 3.7 5.3 5.8Pre-K, ECFE, and Other Teacher 2.0 2.0 2.0 3.4 9.8 9.1 9.0 9.0 8.4 11.1

Total Classroom Teachers 404.1 413.8 431.4 444.2 456.8 474.1 456.64 467.7 446.8 462.6

Total 533.38 543.15 569.72 594.1 625.5 647.0 669.00 683.9 660.0 675.6

Source: Minnesota Department of Education STARS data and District records for Licensed Staff.

Full-Time-Equivalent Employees as of June 30

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

OPERATING STATISTICSLAST TEN FISCAL YEARS

(UNAUDITED)

(106)

Total

Governmental Cost Pupil–

Fiscal Fund per Teaching Teacher

Year Enrollment Expenditures Pupil Staff Ratio

2004 8,285 95,329,276$ 11,506$ 7.38% 474.4 17.5

2005 8,352 120,823,598 14,466 25.73% 484.0 17.3

2006 8,649 105,366,205 12,182 -15.79% 506.2 17.1

2007 8,818 110,453,461 12,526 2.82% 525.9 16.8

2008 8,864 148,531,515 16,757 33.78% 548.5 16.2

2009 8,955 167,642,836 18,721 11.72% 567.3 15.8

2010 9,045 129,771,973 14,347 -23.36% 558.8 16.2

2011 9,123 116,362,961 12,755 -11.10% 574.4 15.9

2012 9,175 118,125,772 12,875 -10.26% 550.2 16.7

2013 9,198 127,335,140 13,844 8.54% 564.2 16.3

Percentage

Change

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

SCHOOL BUILDING INFORMATIONLAST TEN FISCAL YEARS

(UNAUDITED)

(107)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

School

Elementary

Chaska Elementary

Square feet 64,015 64,015 64,015 64,015 64,015 64,015 64,015 64,015 64,015 64,015

Capacity 576 576 576 576 576 576 576 576 576 576

Enrollment (1) 520 513 570 593 587 563 550 488 486 465

Chanhassen Elementary

Square feet 66,508 66,508 66,508 66,508 66,508 66,508 66,508 66,508 66,508 66,508

Capacity 605 605 605 605 605 605 605 605 605 605

Enrollment (1) 605 569 560 566 530 515 544 520 490 456

East Union Elementary

Square feet 22,608 22,608 22,608 22,608 22,608 22,608 22,608 22,608 22,608 22,608

Capacity 168 168 168 168 168 168 168 168 168 168

Enrollment (1) 188 204 155 159 154 174 191 187 201 203

Early Childhood Center K.C.

Square feet 58,061 58,061 58,061 58,061 58,061 58,061 58,061 58,061 58,061 45,571

Capacity 660 660 660 660 660 660 660 660 660 518

Enrollment (1) 593 620 590 569 511 373 418 418 367 356

Bluff Creek Elementary

Square feet 112,549 112,549 112,549 112,549 112,549 112,549 112,549 112,549 112,549 112,549

Capacity 605 605 605 605 605 605 605 605 605 605

Enrollment (1) 620 618 558 538 530 539 536 537 526 535

Clover Ridge Elementary

Square feet 90,497 90,497 90,497 90,497 90,497 90,497 90,497 90,497 90,497 90,497

Capacity 605 605 605 605 605 605 605 605 605 605

Enrollment (1) 611 696 543 580 629 673 669 683 704 703

Victoria Elementary

Square feet - - 94,600 94,600 94,600 94,600 94,600 94,600 94,600 94,600

Capacity - - 605 605 605 605 605 605 605 605

Enrollment (1) - - 501.28 546 591 667 653 698 693 667

Jonathan Elementary

Square feet 85,100 85,100 85,100 85,100 85,100 85,100 85,100 85,100 85,100 85,100

Capacity 605 605 605 605 605 605 605 605 605 605

Enrollment (1) 610 591 554 568 539 566 535 559 552 542

La Academia (2)

Square feet - - - - - - - - - 12,490

Capacity - - - - - - - - - 142

Enrollment (1) - - - - - - - - - 90

Middle

Chaska Middle East

Square feet 158,563 158,563 158,563 158,563 158,563 158,563 158,563 158,563 158,563 158,563

Capacity 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000

Enrollment (1) 965 949 984 971 975 988 700 690 686 735

Chaska Middle West

Square feet 155,352 155,352 155,352 155,352 155,352 155,352 155,352 155,352 155,352 155,352

Capacity 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000

Enrollment (1) 888 902 885 937 1,000 1,065 702 740 763 779

Pioneer Ridge Middle

Square feet 128,970 128,970 128,970 128,970 128,970 128,970 128,970 128,970 128,970 128,970

Capacity 700 700 700 700 700 700 700 700 700 700

Enrollment (1) 614 646 599 660 658 639 709 714 700 678

Fiscal Year

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

SCHOOL BUILDING INFORMATION (CONTINUED)LAST TEN FISCAL YEARS

(UNAUDITED)

(108)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

High

Chaska High School

Square feet 295,000 295,000 410,336 410,336 410,336 410,336 410,336 410,336 410,336 410,336

Capacity 1,500 1,500 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Enrollment (1) 1,610 1,710 1,846 1,811 1,847 1,873 1,450 1,121 1,174 1,229

Chanhassen High School

Square feet - - - - - - 405,000 405,000 405,000 405,000

Capacity - - - - - - 2,000 2,000 2,000 2,000

Enrollment (1) - - - - - - 1,084 1,482 1,571 1,540

Integrated Arts Academy (ALC) (3)

Square feet - - - - - - - - - 16,505

Capacity - - - - - - - - - 100

Enrollment (1) - - - - - - - - - 72

Other

District Education Center

Square feet 54,153 54,153 54,153 54,153 54,153 54,153 54,153 54,153 54,153 37,648

Enrollment (1) 47 44 49 62 62 59 63 70 58 71

District Transportation Center

Square feet 45,800 45,800 45,800 45,800 45,800 45,800 45,800 45,800 45,800 45,800

Victoria Field House

Square feet - - - - - 36,798 36,798 36,798 36,798 36,798

Total

Square feet 1,337,176 1,431,776 1,547,112 1,547,112 1,547,112 1,583,910 1,988,910 1,988,910 1,988,910 1,959,915

Capacity 8,024 8,629 9,129 9,129 9,129 9,129 11,129 11,129 11,129 10,987

Enrollment 7,966 8,251 8,584 8,577 8,670 8,139 8,831 8,840 8,970 9,122

Athletics

Football fields 1 1 1 1 1 1 2 2 2 2

Soccer fields (include other use of fields) 7 7 7 7 7 7 8 8 8 8

Running tracks 2 2 2 2 2 2 3 3 3 3

Baseball/softball 12 12 12 12 12 12 16 16 16 16

Tennis courts 5 5 5 5 5 5 7 7 7 7

Multi-practice fields (lacrosse, football) 4 4 4 4 4 4 7 7 7 7

Swimming pools 1 1 1 1 1 1 1 1 1 1

Playgrounds 8 8 9 9 9 9 9 9 9 9

Notes:

(1) Enrollment reflects average daily membership served by site. Resident students served under tuition agreements are excluded from this enrollment data.

(2) Portion of KC is now used for La Academia program (78.5% sq. ft. is allotted toward the Kindergarten program and 21.5% toward La Academia)

(3) Portion of DEC is now used for the Integrated Arts Academy (most of second floor)

Fiscal Year

Source: Square footage, capacity and athletic statistics are derived from District records. Enrollment was obtained from a combination of District records and "School Average Daily Membership" reports

available on the Minnesota Department of Education website.

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

STANDARDIZED TESTINGLAST TEN FISCAL YEARS

(UNAUDITED)

(109)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Standardized Tests

MCA Reading (See Note 1) Grade 3 78.0% 87.0% 91.4% 89.3% 87.5% 86.5% 88.5% 88.5% 89.6% 69.9%

Grade 5 82.0% 89.0% 87.6% 83.2% 83.4% 83.7% 89.9% 87.1% 84.4% 73.0% Grade 7 76.0% 89.0% 83.2% 77.3% 77.4% 76.5% 77.6% 79.9% 82.6% 69.7%

Grade 10 90.7% 90.8% 75.7% 76.9% 86.5% 86.3% 86.8% 88.8% 87.0% 77.1%

MCA Math (See Note 1) Grade 3 83.00% 85.00% 87.30% 88.40% 90.40% 88.10% 91.10% 76.3% 80.0% 81.6% Grade 5 84.00% 90.00% 73.40% 71.30% 75.60% 75.50% 77.20% 55.9% 65.3% 67.1% Grade 7 74.0% 91.00% 77.30% 75.80% 80.10% 79.10% 76.20% 66.6% 70.9% 62.9%

Grade 11 76.40% 81.20% 32.50% 40.60% 54.60% 54.80% 56.70% 58.5% 60.2% 66.5%

MCA Science (See Note 1) Grade 5 N/A N/A N/A N/A 57.5% 67.3% 67.8% 65.7% 71.6% 70.6% Grade 8 N/A N/A N/A N/A 46.1% 62.0% 58.7% 54.0% 55.9% 57.7%

Grade HS N/A N/A N/A N/A 55.9% 57.8% 67.0% 75.0% 75.1% 72.0%

ACT

ISD #112 Average Composite Score N/A N/A 22.4% 22.4% 22.8% 23.7% 23.7% 23.8% 23.4% 24.1%

State Average Composite Score N/A N/A 22.3% 22.5% 22.6% 22.7% 22.9% 22.9% 22.8% 23.0%

N/A - Not Available

Note 1: Percent of students scoring at or above proficiency on the Minnesota Comprehensive Assessment Test

Fiscal Year

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

SUMMARY OF MEALS SERVEDLAST TEN FISCAL YEARS

(UNAUDITED)

(110)

Non- Total

Program Meals Regular Free ReducedYear Ended Adult Served Price Meals Price Meals

June 30 Meals Students Meals Served Served

2004 18,212 773,975 634,748 103,273 35,954

2005 21,916 826,096 669,849 117,149 39,098

2006 21,939 877,368 712,482 121,375 43,511

2007 20,615 950,788 764,503 140,967 45,318

2008 21,043 960,431 767,810 150,749 41,872

2009 20,966 918,171 742,642 131,887 43,642

2010 23,240 1,019,177 815,715 151,939 51,523

2011 24,546 1,077,064 840,808 173,201 63,055

2012 25,993 1,082,420 840,566 179,192 62,662

2013 28,132 1,055,425 805,564 187,565 62,296

Year Ended

June 30 Elementary Middle High School (1)

2004 1.85$ 2.00$ 2.20$

2005 1.90 2.05 2.25

2006 1.95 2.10 2.30

2007 2.00 2.15 2.35

2008 2.00 2.15 2.35

2009 2.05 2.20 2.40

2010 2.10 2.25 2.45

2011 2.15 2.30 2.50

2012 2.20 2.35 2.55

2013 2.30 2.45 2.75

(1) Includes standard lunch menu and various lunch choices.

Source: District Food Service Department

Student Regular Lunch Prices

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLSSCHEDULE OF INSURANCE COVERAGE

JUNE 30, 2013(UNAUDITED)

(111)

Amount of

Coverage

Property Coverage:

Real and Personal Property (Blanketed) $ 309,200,907

Historical School House 92,600

Business Income 5,000,000

Equipment Breakdown 100,000,000

Included in Real and Personal:

Debris Removal (Additional Limit) 250,000

Fire Dept Service Charge 50,000

Fire Protective Device Recharge 25,000

Pollutant Cleanup and Removal - Aggregate 100,000

Property Off Premises 100,000

Property in Transit 100,000

Outdoor Property: Mast, Antennae or Towers 50,000

Outdoor Property: Trees, Shrubs, Plants 50,000

Outdoor Property: Detached Signs 50,000

Outdoor Property: Fences 50,000

Outdoor items $10,000 per item, limit up to $50,000 per loss

Newly Acquired Property: Building 1,000,000

Newly Acquired Property: Business Property 1,000,000

Valuable Papers and Records 250,000

Money and Securities: Inside / Outside 10,000

Off-Premises Service Interruption 100,000

Accounts Receivables 250,000

Personal Effects & Property of Others 50,000

Loss Reduction Rewards 25,000

Computers, Printers, Communication Equip.. 100,000

Computer Equipment $100,000 per loss with $500 deductible

Laboratory Animals 100,000

Lock Replacement 25,000

Broadened Water Direct Damage 100,000

Fine Arts / Historic Works 100,000

$5,000 per item, limit up to $100,000 per loss

Athletic Equipment and Uniforms 100,000

Musical Instruments & Band Uniforms 100,000

Electronic Data - Aggregate 50,000

Rented, Borrowed, Leased Equipment 100,000

Included in Equipment Breakdown Coverages:

Limit 100,000,000

Expediting Expense 500,000

Business Income & Extra Expense 1,500,000

Data Restoration 100,000

Utility Interruption 250,000

Increased Cost of Construction 2,000,000

Demolition 2,000,000

Spoilage 500,000

Hazardous Substance 250,000

Newly Acquired Locations 1,000,000

Inland Marine Coverage:

Camera & Audio Visual Equipment 414,009

Athletic Equipment 100,000

Musical Instruments 100,000

Blanket Unscheduled Equipment 430,868

Fiber Optic Cables (above and below grd) 1,470,160

Type of Coverage

INDEPENDENT SCHOOL DISTRICT NO. 112EASTERN CARVER COUNTY SCHOOLS

SCHEDULE OF INSURANCE COVERAGE (CONTINUED)JUNE 30, 2013

(UNAUDITED)

(112)

Liability Coverages:

General:

Each Occurrence 1,000,000

Fire Legal Liability 500,000

General Aggregate Limit (per location) 2,000,000

Medical Expense Limit - Any One Person 5,000

Personal & Adv Injury 1,000,000

Products - Comp/Op Aggregate 2,000,000

Employee Benefits - Ea Occurrence 1,000,000

Employee Benefits - Aggregate 3,000,000

Professional Liability :

Sexual Misconduct: Ea Occurrence 1,000,000

Sexual Misconduct: Aggregate 1,000,000

Innocent Party Defense Coverage 300,000

School Leaders Errors / Omissions: Ea Claim 1,000,000

School Leaders Errors / Omissions: Aggregate 1,000,000

Non-Monetary Relief Defense Coverage 100,000

Law Enforcement Liability 1,000,000

Adverse Event Response Coverage - Aggregate 300,000

Adverse Event Response Coverage - Ea Person 50,000

Business Automobile Coverage:

Combined Single Limit (Ea Accident) 1,000,000

Personal Injury Protection (Basic) 40,000

Uninsured Motorists 1,000,000

Underinsured Motorists 1,000,000

Workers Compensation

Ea Accident 1,000,000

By Disease - Ea Employee 1,000,000

By Disease - Policy Limit 1,000,000

Foreign / International Coverage

Commercial Liability 1,000,000

Automobile (Contingent) 1,000,000

Employers Liability (Contingent) 1,000,000

Employee Travel Assist, Medical Evacuation, 1,000,000

& Repatriation Expense

AD&D Principal Sum - Employee 25,000

AD&D Principal Sum - Student/Chaperone 25,000

Kidnap & Extortion Coverage - Ea Loss 100,000

Umbrella Liability:

Each Occurrence 5,000,000

Aggregate 5,000,000

Crime Coverage:

Employee Dishonesty 100,000

Forgery or Alteration 100,000

Computer Fraud 50,000

Funds Transfer Fraud 50,000

Theft, Disappearance, and Destruction Inside 10,000

Theft, Disappearance, and Destruction Outside 10,000

Source: District's Insurance Agent - Arthur J. Gallagher Risk Management Services, Inc.