Received by MLaMar December 11, 2014 December 11, 2014 District/CA Northern Humboldt Union... ·...

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT

COUNTY OF HUMBOLDT MCKINLEYVILLE, CALIFORNIA

ANNUAL FINANCIAL REPORT

JUNE 30, 2014

ROBERTSON & ASSOCIATES, CPAs A Professional Corporation

Received by MLaMar December 11, 2014Received by MLaMar December 11, 2014Received by MLaMar December 11, 2014

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT ORGANIZATION

JUNE 30, 2014

Northern Humboldt Union High School District (District) was established in 1925 and is comprised of two four-year high schools, two small continuation high schools, one charter school, one alternative high school, one mental health high school program and an adult school. There were no changes in the boundaries of the District during the year.

ADDRESS OF DISTRICT OFFICE

McKinleyville, CA 955192755 McKinleyville Avenue

Mr. Roger Macdonald

Mr. Nic Collart Principal - Six Rivers Charter 2 Years

Principal - MHS

Ms. Cindy Vickers Director of Fiscal Services 3 YearsMr. Dave Navarre Principal - Arcata High 3 Years

Mr. Chris Hartley Superintendent 2 YearsMr. Dave Lonn Executive Director 2 Years

Mr. Dan Johnson Trustee December, 2015

ADMINISTRATION

Name Title Tenure

Ms. Colleen Toste Trustee December, 2017Mr. Brian Lovell Trustee December, 2017

Office Term Expires

Mr. Dan Collen President December, 2015Ms. Dana Silvernale Clerk December, 2017

BOARD OF TRUSTEES

2 YearsMr. Sam Razo Principal - Tsurai 8 YearsMr. Jon Larson Principal - Pacific Coast 1 Year

Name

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT JUNE 30, 2014

TABLE OF CONTENTS

Page

1 - 3

4 - 16

17

18

19

20

21

22

23

24

25

26

27 - 52

53

54

55

Notes to Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION SECTION

Schedule of Other Postemployment Benefits Funding Progress

Budgetary Comparison Schedule - General Fund

Proprietary Funds

Statement of Net Position

Statement of Revenues, Expenses and Changes in Fund Net Position

Statement of Cash Flows

Fiduciary Funds

Statement of Fiduciary Net Position

Statement of Revenues, Expenditures and Changes in Fund Balances

Reconciliation of the Governmental Funds Statement of Revenues,Expenditures and Changes in Fund Balances to the Statement ofActivities

FINANCIAL SECTION

Basic Financial Statements

Government-Wide

Statement of Net Position

Statement of Activities

Governmental Funds

Notes to Required Supplementary Information

INTRODUCTORY SECTION

Title Page

Organization

Table of Contents

INDEPENDENT AUDITOR'S REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

Balance Sheet

Reconciliation of the Governmental Funds Balance Sheet to theStatement of Net Position

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT JUNE 30, 2014

TABLE OF CONTENTS

Page

56

57

58

59 - 60

61

62

63

64

65

66 - 67

68 - 69

70 - 71

72 - 74

75

76 - 78

79

80

Combining Statement of Revenues, Expenditures and Changes inFund Balances

Fiduciary Funds Financial Statements

Summary Schedule of Prior Audit Findings

Independent Auditor's Report on Compliance for Each Major FederalProgram; Report on Internal Control Over Compliance; and Report onthe Schedule of Expenditures of Federal Awards Required by OMBCircular A-133

Independent Auditor's Report on State Compliance

FINDINGS AND QUESTIONED COSTS SECTION

Schedule of Audit Findings and Questioned Costs

Corrective Action Plan

Findings and Questioned Costs

Schedule of Average Daily Attendance

Schedule of Instructional Time

Schedule of Financial Trends and Analysis

Schedule of Expenditures of Federal Awards

Reconciliation of Annual Financial and Budget Report (SACS) withAudited Financial Statements

Schedule of Charter Schools

Notes to Supplementary Information

OTHER INDEPENDENT AUDITOR'S REPORTS

Independent Auditor's Report on Internal Control Over FinancialReporting and on Compliance and Other Matters Based on an Audit ofFinancial Statements Performed in Accordance With Government Auditing Standards

SUPPLEMENTARY INFORMATION SECTION

Other Governmental Funds Financial Statements

Combining Balance Sheet

Combining Schedule of Changes

ROBERTSON & ASSOCIATES, CPAs

A PROFESSIONAL CORPORATION 55 FIRST STREET, BOX G, SUITE 306 WWW.ROBERTSONCPA.COM LAKEPORT: (707) 263-9012 FAX: (707) 263-6001 LAKEPORT, CA 95453 TOLL FREE (800) 619-4762

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INDEPENDENT AUDITOR’S REPORT

Board of Trustees Northern Humboldt Union High School District McKinleyville, California

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Northern Humboldt Union High School District (District), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the District’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 controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s 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 auditor’s 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 District’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 District’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.

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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, the business-type activities, each major fund, and the aggregate remaining fund information of the Northern Humboldt Union High School District, as of June 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information and schedule of funding progress, on pages 4 through 16 and 53 through 54, 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 District’s basic financial statements. The combining nonmajor fund financial statements and schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and the District’s introductory section are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying supplementary information as listed in the table of contents are required by the Standards and Procedures for Audits of California K-12 Local Educational Agencies 2013/2014 (published by the Education Audit Appeals Panel), are presented for purposes of additional analysis, and are not a required part of the basic financial statements.

This information, as listed in the table of contents, is the responsibility of management and was 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 combining nonmajor fund financial statements, and schedule of expenditures of federal awards and accompanying supplementary information as listed in the table of contents is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

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Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 05, 2014 on our consideration of the District'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 results 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 the District’s internal control over financial reporting and compliance.

Lakeport, California December 05, 2014

Northern Humboldt Union High School District Management’s Discussion and Analysis

June 30, 2014

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INTRODUCTION

Our discussion and analysis of Northern Humboldt Union High School District (District’s) financial performance provides an overview of the District’s financial activities for the year ended June 30, 2014. It should be read in conjunction with the District’s financial statements, which follow this section. FINANCIAL HIGHLIGHTS

Total net position was $16,503,602 at June 30, 2014. This was a decrease of $785,098 over the prior year’s restated net position. Net position was restated at June 30, 2013 for capital assets, net of accumulated depreciation and current liabilities in the amount of $1,092,353 (decrease to net position).

Overall revenues were $17,874,555, overall expenses were $18,659,653. OVERVIEW OF FINANCIAL STATEMENTS

Components of the Financials Section

Summary Detail

Management's Discussion and

Analysis

BasicFinancial

Statements

Required Supplementary

Information

Government-wideFinancial

Statements

FundFinancial

Statements

Notes to theFinancial

Statements

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This annual report consists of three parts – Management’s Discussion and Analysis (this section), the basic financial statements, and required supplementary information. The three sections together provide a comprehensive overview of the District. The basic financial statements are comprised of two kinds of statements that present financial information from different perspectives:

Government-wide financial statements, which comprise the first two statements, provide both short-term and long-term information about the District’s overall financial position.

Fund financial statements focus on reporting the individual parts of District operations in more detail. The fund financial statements comprise the remaining statements.

o Governmental fund statements tell how general government services were financed in the short term as well as what remains for future spending.

o Proprietary fund statements provide both short and long-term information about the District’s enterprise employment services fund.

o Fiduciary fund statements provide information about the financial relationships in which the District acts solely as the 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. The basic financial statements are followed by a section of required and other supplementary information that further explain and support the financial statements. 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 government’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 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 health is improving or deteriorating, respectively. The net position of the District has decreased by 5% in the past year. This is due primarily to the on-going Measure Q Bond activities. The Bond fund balance has decreased by $2,189,620.

To assess the overall health of the District, one needs to consider additional non-financial factors such as changes in enrollment, changes in the property tax base, and changes in program funding by the Federal and State governments, and condition of facilities. The District’s P-2 average daily attendance has increased by 34.29 ADA in the past year and is expected to remain stable. The District needs to be cautious regarding future state funding, which is contingent upon temporary taxes created by Proposition 30. The District has been able to make major upgrades to facilities with Measure Q funds. In addition, the District has a healthy set aside in the General Fund for Deferred Maintenance, should the need arise.

The government-wide statements of the District include all governmental activities. All of the District’s basic services are included here, such as regular education, food service, maintenance and general administration. Revenue limit funding and federal and state grants finance most of these activities.

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FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS

Fund Financial Statements

The fund financial statements provide more detailed information about the District’s most significant governmental funds, not the District as a whole. Funds are accounting devices that the District uses to keep track of specific sources of funding and spending for particular programs.

Some funds are required to be established by State law and by bond covenants.

The governing board establishes other funds to control and manage money for particular purposes or to show that the District is meeting legal responsibilities for using certain revenues.

The District has three types of funds:

Governmental funds – All 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 determine whether there are more or fewer financial resources than previously 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 following the governmental funds’ statements that explains the relationship (or differences) between them.

Proprietary funds – One type of proprietary fund, the enterprise fund, reports the business-type activities, but provides more detail and additional information, such as cash flows.

o The District’s Enterprise Fund reports activities for which a fee is charged to external users for goods or services. The Enterprise Fund of the District accounts for the financial transactions related to the services rendered to external users.

Fiduciary funds – For assets that belong to others, such as student activities funds, the District acts as the trustee, or fiduciary. 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. A separate statement of fiduciary net position, a statement of changes in fiduciary net position, or a statement of changes in agency assets and liabilities reports the District’s fiduciary activities. These activities are excluded from the government-wide financial statements, as the assets cannot be used by the District to finance its operations.

The financial performance of the District is reflected in its governmental funds as well. As the District completed the year, its governmental funds reported a combined fund balance of $13,156,952 as compared to the prior year’s ending fund balance of $15,789,973. The District’s proprietary fund reported a fund balance of $126,018 as compared to the prior year’s ending fund balance of $131,743. The District’s fiduciary funds reported an asset and a corresponding liability of $454,220 as compared to the prior year’s balances of $358,883.

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FINANCIAL ANALYSIS OF THE ENTITY AS A WHOLE Net Position The District’s combined net position was $16,503,602 at June 30, 2014.

2014 2013 Net Change

ASSETSCash and Equivalents 12,259,599$ 15,187,013$ (2,927,414)$ Other Current Assets 1,196,923 1,745,775 (548,852) Capital Assets,

Net of Accumulated Depreciation 17,426,121 15,784,629 1,641,492

TOTAL ASSETS 30,882,643$ 32,717,417$ (1,834,774)$

LIABILITIESCurrent Liabilities 328,586$ 1,249,407$ (920,821)$ Long-Term Liabilities 14,050,455 14,179,310 (128,855)

TOTAL LIABILITIES 14,379,041$ 15,428,717$ (1,049,676)$

NET POSITIONInvested in Capital Assets,

Net of Related Debt 4,641,877$ 11,405,409$ (6,763,532)$ Restricted 8,018,394 1,382,960 6,635,434 Unrestricted 3,843,331 4,500,331 (657,000)

TOTAL NET POSITION 16,503,602$ 17,288,700$ (785,098)$

Primary Government

The June 30, 2013 capital assets, net of accumulated depreciation, current liabilities and net position have been restated.

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Changes in Net Position


REVENUESProgram Revenues:

Charges for Services 229,874$ 504,560$ (274,686)$ Operating Grants and Contributions 3,150,532 3,182,109 (31,577)

General Revenues:Property Taxes 5,963,867 5,970,840 (6,973) Unrestricted Federal and State Aid 6,877,215 5,865,748 1,011,467 Miscellaneous and Other Local 1,653,067 1,197,358 455,709

TOTAL REVENUES 17,874,555 16,720,615 1,153,940

EXPENSESInstruction 10,803,274 10,209,995 593,279 Instruction-Related Services 1,694,507 1,678,143 16,364 Pupil Services 2,030,435 2,022,190 8,245 General Administration 1,447,329 1,386,826 60,503 Plant Services 1,317,618 1,392,664 (75,046) Ancillary Services 323,256 306,500 16,756 Enterprise Services 3,919 4,028 (109) Transfers Between Agencies 105,204 46,374 58,830 Interest on Long-Term Debt 537,170 512,103 25,067

Enterprise Services 396,941 408,187 (11,246)

TOTAL EXPENSES 18,659,653 17,967,010 692,643

INCREASE (DECREASE) IN NET POSITION (785,098) (1,246,395) 461,297

NET POSITION - BEGINNING 17,288,700 18,535,095 (1,246,395)

NET POSITION - ENDING 16,503,602$ 17,288,700$ (785,098)$

Primary Government

Net position has been restated at July 1, 2012.

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Governmental Activities Net cost is total cost less fees generated by the related activity. The net cost reflects amounts funded by charges for services, operating grants and capital grants and contributions. Net Cost of Services


NET COST OF SERVICESInstruction 8,053,814$ 7,694,884$ 358,930$ Instruction-Related Services 1,605,441 1,580,616 24,825 Pupil Services 1,817,655 1,145,128 672,527 General Administration 1,297,803 1,251,714 46,089 Plant Services 1,188,565 1,348,792 (160,227) Ancillary Services 323,256 306,500 16,756 Enterprise Services 3,919 4,028 (109) Transfers Between Agencies 54,683 28,389 26,294 Interest on Long-Term Debt 537,170 512,103 25,067 Business-Type Activities:

Enterprise Services 396,941 408,187 (11,246)

TOTAL NET COSTS OF SERVICES 15,279,247$ 14,280,341$ 1,010,152$

Net Cost of Services

2013/2014 Summary of Revenues for Governmental Activities

Charges for Services 1.3%

Operating Grants & Contributions 17.6%

Property Taxes 33.4%

Unrestricted Federal & State Aid 38.5%

Other General Revenues 9.2%

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2013/2014 Summary of Expenses for Governmental Activities

Instruction 57.8%

Instruction-Related Services 9.1%

Pupil Services 10.9%

General Administration 7.8%

Plant Services 7.1%

Ancillary Services 1.7%

Transfers Between Agencies 0.6%

Interest on Long-Term Debt 2.9%

Business-Type Activities 2.1%

Fund Balance Comparison The District currently maintains the following funds:


FUNDSGovernmental:

General 5,625,864$ 5,886,614$ (260,750)$ Charter Schools Special Revenue 430,258 450,528 (20,270) Cafeteria Special Revenue 26,439 19,441 6,998 Building 6,434,101 8,621,003 (2,186,902) Special Reserve Fund for Capital Outlay Projects 125,555 127,755 (2,200) Bond Interest and Redemption 514,735 684,632 (169,897)

Total Governmental 13,156,952 15,789,973 (2,633,021)

Proprietary:Enterprise:

Other Enterprise 126,018 131,743 (5,725)

Total Proprietary 126,018 131,743 (5,725)

TOTAL FUNDS 13,282,970$ 15,921,716$ (2,638,746)$

Ending Fund Balance

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General Fund The overall General Fund balance has decreased by $260,750. The most significant change in the General Fund was the implementation of the Local Control Funding Formula. $1,759,933 in state categorical revenue was shifted to the Local Control Funding Formula, formerly known as the Revenue Limit. The net change is an increase of $679,016 in “Revenue Limit” revenue. The District received $303,454 in one-time Common Core funds. The District also elected to take the Mandated Block Grant in lieu of claims, which netted the District an additional $74,706. Expenses for the District increased by $514,962 over 2012/2013. Settled negotiations increased the salary and benefit costs by $299,777. Special Education continues to adversely affect the District’s budget. The overall increase in the Special Education encroachment is $173,027. A large part of this increase is due to the growing need for mental health services for students, including placement of students out of the area facilities. The following charts graphically depict revenues and expenditures, both by major object as well as by function. 2013/2014 General Fund Revenues

Local Control State Apportionment 37.1%

Local Taxes 33.3%

Federal 9.8%

Other State 5.6%

Other Local 14.2%

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2013/2014 General Fund Expenditures by Object

Certificated Salaries 46.8%

Classified Salaries 15.3%

Employee Benefits 22.4%

Books & Supplies 4.7%

Services & Operating Expenses 9.9%

Capital Outlay 0.2%

Other Outgo 0.7%

2013/2014 General Fund Expenditures by Function

Instruction 60.2%

Instruction-Related Service 9.8%

Pupil Services 10.8%

General Administration 8.9%

Plant Services 7.6%

Ancillary Services 2.0%

Transfers Between Agencies 0.7%

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Other Governmental Funds Other governmental funds had the following activity and changes for the year ended June 30, 2014:

The Special Reserve Fund had no significant changes. Six Rivers Charter School fund balance has decreased by $22,369. This is due to increases in Salary and benefits as a result of negotiations and the agreement to pay for the full cost of Health and Welfare on a year to year basis. The Cafeteria Special Revenue Fund balance has actually increased by $6,998. In 2012/2013, the Cafeteria Program was operating at a deficit of $24,932. In 2013/2014, the deficit has been reduced to $13,465. The District made operational changes in 2013/2014 to mitigate the encroachment on the General Fund and was somewhat successful. The changes made in 2013/2014 have not yet been fully realized. The Building Fund balance has decreased by $2,189,620. The District did not sell bonds in 2013/2014. The decrease is attributed to on-going project expenditures. The District continues to monitor the project costs and cash flow closely to ensure bond projects are finished timely and within budget. The Special Reserve Fund for Capital Outlay Projects had no significant changes. The Bond Interest and Redemption Fund is maintained by the Humboldt County Treasurer’s office as the District’s paying agent. The fund balance decreased by $167,179. The Enterprise Fund, also known as the Employment Services Fund showed a decrease of $5,092. The program typically operates at a surplus. However, in 2013/2014 the program generated less revenue. The program has a large ending balance, so the loss was easily absorbed. The District will continue to monitor the program for viability, but has no real concern about the program’s sustainability and believes the loss was an anomaly. The Student Body Fund had no significant changes and continues to be a self-sustained fund for the benefit of our students.

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CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At June 30, 2014, the District had $17,426,121 invested, net of accumulated depreciation, in capital assets. Current year depreciation expense is $534,256. The Most significant changes in the Capital Assets is the Construction In Progress. This is directly connected to on-going Measure Q projects that have yet to be finalized. Most projects will be finalized in the 2014/2015 fiscal year, with the exception of the Fine Arts Facility.


CAPITAL ASSETSLand 359,816$ 359,816$ -$ Construction In Progress 5,259,661 3,112,696 2,146,965 Land Improvements 1,491,453 1,491,453 - Buildings And Improvements 23,133,732 23,133,732 - Equipment 3,022,434 2,993,651 28,783 Accumulated Depreciation (15,840,975) (15,306,719) (534,256)

NET CAPITAL ASSETS 17,426,121$ 15,784,629$ 1,641,492$

Primary Government

The June 30, 2013 capital assets have been restated.

Long-Term Debt At year end, the District had $14,050,455 in long-term debt. The District had a decrease of $262,386 in General Obligations Bonds Payable. The District did not incur any new debt for Measure Q and simply made its required annual payment. The District also showed an increase in its OPEB obligation of $146,838. The OPEB liability is the difference between the actual required contribution and the actual payment made. The calculation is based on the future obligation of the District to pay for retiree health insurance as defined in the existing contract between the district and our employment groups.


LONG-TERM DEBTGeneral Obligation Bonds Payable 12,784,244$ 13,046,630$ (262,386)$

Premium on Issuance 534,664 555,955 (21,291) Net OPEB Obligation 665,300 518,462 146,838 Compensated Absences 66,247 58,263 7,984

TOTAL LONG-TERM DEBT 14,050,455$ 14,179,310$ (128,855)$

Primary Government

The June 30, 2013 premium on issuance has been restated.

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GENERAL FUND BUDGETARY HIGHLIGHTS The difference in the original versus final budget amounts and actual versus budget amounts is primarily due to the following:

The District always takes a conservative approach to budgeting. However, the District updates the budget throughout the year, whenever significant changes can be confirmed. Typically, by the end of the year, the budget closely reflects its actuals. Revenues - The Adopted Budget is based on projections by our County Office of Education. At the time our budget is adopted by the Governing Board, the State has yet to finalize its budget. This makes it nearly impossible to have an accurate estimate. The variance between Adopted Budget and Final Budget is 3.33%. By comparison, the District actuals to final budget showed a variance of .36%. This is less than one percent and not significant. Expenses - The expense side of the budget is always impacted by negotiations, which have historically not been settled at the time of adoption. The variance between the Adopted Budget and the final Budget is 2.69%. The variance between the actual and the final budget is 1.49%. Interfund transfers in – The most significant variance is in the area of interfund transfers. The District always budgets that a transfer from the Retiree Fund will be required to pay for retiree benefits. At the end of the fiscal year, the District evaluates the need for the transfer and for the past two years has decided the transfer is not necessary. In 2013/2014, the variance between the actual and the final budget is 88.04%. A transfer of $200,319 from the Retiree Fund was not completed.

Over the course of the year, the District revises its annual budget to reflect unexpected changes in revenues and expenditures. The final amendment to the budget was approved September 9, 2014. A schedule of the District’s General Fund original and final budget amounts compared with actual revenues and expenditures is provided with the basic financial statements in the audited financial report. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES At the time these financial statements were prepared and audited, the District was aware of several circumstances that could affect its future financial health:

The District has started the year with slightly increased enrollment and is projecting increased Average Daily Attendance. This is important because attendance drives the majority of our funding. The District has successfully settled negotiations with the Certificated Bargaining Unit. Although this is an increased cost, the District is confident that the agreement can be supported by the District’s strong financial health. Negotiations are still unsettled with the Classified Bargaining unit. The District is hopeful we will be settled before the end of the calendar year. The biggest issue impacting the District is the uncertain funding generated by the Local Control Funding Formula (LCFF). There are wide differences between the Department of Finance and School Services of California’s estimates for future funding. The District is yet again budgeting with uncertainty and continues to take a conservative approach.

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The Local Control Funding comes with increased accountability in the form of the Local Control Accountability Plan (LCAP). The District is now required to tie budget expenditures to state mandated goals. There is increased emphasis placed on Economically Disadvantaged, English Learner, and Foster Youth students. The District is receiving funds that must be specifically used to benefit those students. There is a lot of uncertainty regarding how much funding we will receive and how much of that funding will be restricted to serve the above mention student groups. The District received over $303,454 in one-time Common Core funds in 2013/2014. There are no additional funds available in 2014/2015. The District will need to fund this shift to Common Core utilizing its own funds. In addition, the District has had the benefit of the THRIVE grant. 2014/2015 is the final year of the grant, which will significantly affect our Federal revenue. The District is showing significant increases in Special Education costs. There has been an increased need for Non-Public School placements. This creates an incredibly large expense attributed to only a few students. It is difficult to predict when these needs will arise, and therefore difficult to plan for financially. Lastly, a serious issue facing our District is the impact of the Affordable Care Act. Our District will be working closely with our bargaining units to ensure compliance with the new regulations. The District is participating on a committee to ensure Humboldt County Schools, including our District, are fully complying with all the required regulations. At this time the financial impact is still unknown. There will be an increased workload associated with all the tracking and reporting requirements of the Affordable Care Act. But, at this point, it is unclear if additional staffing will be required. Although our District is facing significant challenges, I am confident that our Administration, working closely with all employees, can accomplish what needs to be done in the coming years.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, parents, participants, 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 Cindy Vickers, 2755 McKinleyville Avenue, McKinleyville, CA 95519, phone 707-839-6470.

FINANCIAL SECTION

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT STATEMENT OF NET POSITION

JUNE 30, 2014

The accompanying notes are an integral part of these financial statements. - 17 -

PrimaryGovernmental Business-type Government

Activities Activities Total

ASSETSCash and equivalents 12,154,657$ 104,942$ 12,259,599$ Accounts receivable 1,166,316 30,034 1,196,350 Stores inventories 573 - 573 Capital assets:

Non-depreciable 5,619,477 - 5,619,477 Depreciable, net of accumulated depreciation 11,806,644 - 11,806,644

Total Assets 30,747,667$ 134,976$ 30,882,643$

LIABILITIESAccounts payable 164,594$ 6,050$ 170,644$ Accrued interest payable 157,942 - 157,942 Long-term debt:

Due within one year 108,959 582 109,541 Due after one year 13,938,588 2,326 13,940,914

Total Liabilities 14,370,083$ 8,958$ 14,379,041$

NET POSITIONNet Investment in capital assets 4,641,877$ -$ 4,641,877$ Restricted for:

Capital projects 6,434,101 - 6,434,101 Debt service 514,735 - 514,735 Educational programs 486,843 - 486,843 Other purposes (expendable) 456,697 - 456,697 Enterprise Activites - 126,018 126,018

Unrestricted 3,843,331 - 3,843,331

Total Net Position 16,377,584$ 126,018$ 16,503,602$

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2014


Operating PrimaryCharges for Grants and Governmental Business-type Government

Functions Expenses Services Contributions Activities Activities Total

GOVERNMENTAL ACTIVITIESInstruction 10,803,274$ 163,249$ 2,586,211$ (8,053,814)$ (8,053,814)$ Instruction-related services:

Supervision of instruction 10,932 - 2,450 (8,482) (8,482) Instructional library, media and technology 252,298 - 8,373 (243,925) (243,925) School site administration 1,431,277 - 78,243 (1,353,034) (1,353,034)

Pupil services:Home-to-school transportation 857,562 - - (857,562) (857,562) Food services 179,951 37,727 121,009 (21,215) (21,215) All other pupil services 992,922 - 54,044 (938,878) (938,878)

General administration:Data processing 36,157 - - (36,157) (36,157) All other general administration 1,411,172 - 149,526 (1,261,646) (1,261,646)

Plant services 1,317,618 - 129,053 (1,188,565) (1,188,565) Ancillary services 323,256 - - (323,256) (323,256) Enterprise services 3,919 - - (3,919) (3,919) Transfers between agencies 105,204 28,898 21,623 (54,683) (54,683) Interest on long-term debt 537,170 - - (537,170) (537,170)

Total Governmental Activities 18,262,712$ 229,874$ 3,150,532$ (14,882,306) (14,882,306)

BUSINESS-TYPE ACTIVITIESEnterprise services 396,941$ -$ -$ (396,941)$ (396,941)

Total Business-Type Activities 396,941$ -$ -$ (396,941) (396,941)

GENERAL REVENUESTaxes and subventions:

Property taxes levied for general purposes 5,232,583 - 5,232,583 Property taxes levied for debt service 731,284 - 731,284

Federal and state aid not restricted to specific purposes 6,877,215 - 6,877,215 Interest and investment earnings 46,281 666 46,947 Interagency revenues 837,911 - 837,911 Miscellaneous 377,659 390,550 768,209

Total General Revenues 14,102,933 391,216 14,494,149

Change in Net Position (779,373) (5,725) (785,098)

Net Position - Beginning 17,156,957 131,743 17,288,700

Net Position - Ending 16,377,584$ 126,018$ 16,503,602$

Program RevenuesChange in

Net Position

Net (Expense)Revenue and

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT GOVERNMENTAL FUNDS

BALANCE SHEET JUNE 30, 2014


Other TotalGeneral Building Governmental Governmental

Fund Fund Funds FundsASSETS

Cash and equivalents 4,691,923$ 6,429,240$ 1,033,494$ 12,154,657$ Accounts receivable 1,087,561 10,806 67,949 1,166,316 Stores inventories - - 573 573

Total Assets 5,779,484$ 6,440,046$ 1,102,016$ 13,321,546$

LIABILITIESAccounts payable 153,620$ 5,945$ 5,029$ 164,594$

Total Liabilities 153,620 5,945 5,029 164,594

FUND BALANCESNon spendable

Cash in revolving fund 2,500 - - 2,500 Stores inventories - - 573 573

Restricted 486,843 6,434,101 562,925 7,483,869 Assigned

Other assignments 3,053,251 - 533,489 3,586,740 Unassigned

Reserve for economic uncertainties 2,083,270 - - 2,083,270

Total Fund Balance 5,625,864 6,434,101 1,096,987 13,156,952

Total Liabilities and Fund Balance 5,779,484$ 6,440,046$ 1,102,016$ 13,321,546$

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS

BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2014


Detail Total

13,156,952$

Historical cost of capital assets 33,267,096$ Accumulated depreciation (15,840,975)

17,426,121

(665,300)

(157,942)

General obligation bonds payable (13,318,908) Compensated absences (63,339)

(13,382,247)

126,018

16,503,602$

and, therefore, are not reported as liabilities in thegovernmental funds. Long-term liabilities, net of unamortizedpremiums, discounts, and deferred charges, are included inthe Statement of Net Position.

The District uses an internal service fund to charge the costs ofcertain activities to individual funds. The assets and liabilitiesof the internal service fund are reported with governmentalactivities in the Statement of Net Position.

Total net position, governmental activities

Interest on long-term debt is not reported in the governmental

funds until the period in which it matures and is paid. In thegovernment-wide statement of activities, it is recognized inthe period that it is incurred. The additional liabilities for theunmatured interest owing at the end of the period are includedon the Statement of Net Position.

Long-term liabilities are not due and payable in the current period

Total fund balances - governmental funds

Amounts reported for governmental activities in the Statement ofNet Position differ from amounts reported in governmental fundsas follows:

Capital Assets used in governmental activities are not financialresources and, therefore, are not reported in the governmentalfunds.

The cumulative difference in the Annual Required Contributions

(ARC) and actual OPEB contributions made is reported as along-term liability in the government-wide statements on theStatement of Net Position. When the cumulative contributionsexceed the ARC, a Net OPEB Asset exists and is reported asan asset on the Statement of Net Position.

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2014


Other TotalGeneral Building Governmental Governmental

Fund Fund Funds FundsREVENUES

Local control sources:State apportionments 5,823,661$ -$ 389,229$ 6,212,890$ Local sources 5,232,583 - 276,360 5,508,943

Federal 1,544,832 - 155,067 1,699,899 Other state 875,945 - 66,369 942,314 Other local 2,231,484 49,621 838,188 3,119,293

Total Revenues 15,708,505 49,621 1,725,213 17,483,339

EXPENDITURESInstruction 9,639,128 - 671,316 10,310,444 Instruction related services:

Supervision of instruction 9,668 - - 9,668 Instructional library, media, and technology 229,550 - 8,232 237,782 School site administration 1,326,805 - 81,761 1,408,566

Pupil services:Home-to-school transportation 801,775 - - 801,775 Food services - - 172,200 172,200 All other pupil services 928,293 - 28,742 957,035

General administration:Data processing 36,157 - - 36,157 All other general administration 1,387,722 - 1,404 1,389,126

Plant services 1,212,137 92,581 12,686 1,317,404 Facility acquisition and construction - 2,143,942 3,023 2,146,965 Ancillary services 320,518 - - 320,518 Transfers between agencies 105,204 - - 105,204 Principal on long-term debt - - 285,000 285,000 Interest on long-term debt - - 618,516 618,516

Total Expenditures 15,996,957 2,236,523 1,882,880 20,116,360

Excess (deficiency) of revenues over (under) expenditures (288,452) (2,186,902) (157,667) (2,633,021)

OTHER FINANCING SOURCES (USES)Operating transfers in 48,165 - 20,463 68,628 Operating transfers out (20,463) - (48,165) (68,628)

Total Other Financing Sources (Uses) 27,702 - (27,702) -

Excess of revenues and other financing sources over (under) expenditures and other financing sources (uses) (260,750) (2,186,902) (185,369) (2,633,021)

Fund Balance - Beginning 5,886,614 8,621,003 1,282,356 15,789,973

Fund Balance - Ending 5,625,864$ 6,434,101$ 1,096,987$ 13,156,952$

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES



Detail Total

(2,633,021)$

Capital outlay 2,175,748$ Depreciation expense (534,256)

1,641,492

(22,614)

Amortization Expense 21,291

General obligation bonds payable 285,000

Contributions made during the year 168,032 Annual OPEB Cost (314,870)

(146,838)

Increases to compensated absences (7,352)

82,669

Change in net position of governmental activities (779,373)$

Increases in the liability for compensated absences are not

recorded as expenditures in governmental funds because theyare not expected to be liquidated with current financialresources. In the statement of activities, compensatedabsences are recognized as expenses when earned.

Unmatured interest on long-term debt is recognized ingovernmental funds in the period when it is due. However, inthe statement of activities, unmatured interest on long-termdebt is accrued at year end.

Debt issued at a premium or at a discount is recognized as an

Other Financing Source or Other Financing Use in the periodit is incurred in the governmental funds. In the government-wide statements, the premium or discount is amortized asinterest over the life of the debt.

Repayment of the principal of long-term debt is reported as anexpenditure in governmental funds. However, the repaymentreduces long-term liabilities in the statement of net position.

In governmental funds, contributions to a trust fund and premiumpayments for OPEB are recorded as expenditures. However,in the Statement of Activities, the annual OPEB Cost isexpensed.

Accreted interest on capital appreciation bonds is accrued aslong-term debt in the government wide financials, increasinginterest expense.

Total change in fund balances - governmental funds

Amounts reported for governmental activities differ from amounts reported in governmental funds as follows:

Capital Outlays are reported as expenditures in governmentalfunds. However, in the statement of activities, the cost ofthose assets is allocated over their estimated useful lives asdepreciation expense.

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT PROPRIETARY FUNDS

STATEMENT OF NET POSITION FOR THE YEAR ENDED JUNE 30, 2014


Business-typeActivities

Enterprise Fund

ASSETSCash and equivalents 104,942$ Accounts receivable 30,034

Total Assets 134,976$

LIABILITIESAccounts payable 6,050$ Long-term debt:

Due within one year 582 Due after one year 2,326

Total Liabilities 8,958$

NET POSITIONUnrestricted 126,018$

Total Net Position 126,018$


STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION




Enterprise FundOPERATING REVENUES

Fees and Contracts 354,105$ Other operating revenues 36,445

Total Operating Revenues 390,550

OPERATING EXPENSESClassified salaries 289,402Employee benefits 75,730Books, supplies and equipment 10,632 Services and other operating expenditures 21,177

Total Operating Expenses 396,941

Operating income (loss) (6,391)

NON-OPERATING REVENUES (EXPENSES)Interest income 666

Total Non-Operating Revenue (Expenses) 666

Change in Net Position (5,725)

Net Position - Beginning 131,743

Net Position - Ending 126,018$


STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2014



Enterprise Fund

CASH FLOWS FROM OPERATING ACTIVITIESCash received from contract services 396,851$ Cash paid for services (400,047)

Net cash provided (used) by operating activities (3,196)

CASH FLOWS FROM INVESTING ACTIVITIESInterest on investments 666

Net cash provided (used) by investing activities 666

Net increase (decrease) in cash and cash equivalents (2,530)

Cash and Cash Equivalents - Beginning 107,472

Cash and Cash Equivalents - Ending 104,942$

Reconciliation of net operating income (loss) to net cash provided (used)by operating activities:

Operating income (loss) (6,391)$ Adjustments to reconcile net operating income (loss) to net cash provided

(used) by operating activities: Changes in assets and liabilities:

Receivables 6,301 Accounts payable (3,738) Compensated absences 632

Net cash provided (used) by operating activities (3,196)$

NON CASH TRANSACTIONS There were no non-cash investing, capital, or financing activities.

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT FIDUCIARY FUNDS

STATEMENT OF FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2014


McKineleyville High School

Arcata High School

Total Fiduciary Funds

ASSETS

Cash and equivalents 165,834$ 257,758$ 423,592$

Total Assets 165,834$ 257,758$ 423,592$

LIABILITIES

Due to student groups 165,834$ 257,758$ 423,592$

Total Liabilities 165,834$ 257,758$ 423,592$

Agency Funds

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2014

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NOTE 1. SIGNIFICANT ACCOUNTING POLICIES A. General Statement

The Northern Humboldt Union High School District (District) is a public educational agency operating under the applicable laws and regulations of the State of California. It is governed by a five member Board of Trustees (Board) elected by registered voters of the District, which comprises an area in Northern Humboldt County. The District was established in 1925 and serves students in grades nine through twelve.

B. Accounting Policies

The District prepares its basic financial statements in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB) and the American Institute of Certified Public Accountants (AICPA) and complies with the policies and procedures of the Department of Education’s California School Accounting Manual.

C. Reporting Entity

The Board is elected by the public and it has the authority to make decisions, appoint administrators and managers, and significantly influence operations. It also has the primary accountability for fiscal matters. The District is therefore a financial reporting entity as defined by the GASB in its Statement No. 14, The Financial Reporting Entity, as amended by GASB 39, Determining Whether Certain Organizations Are Component Units. The District has reviewed criteria to determine whether other entities with activities that benefit the District should be included within its financial reporting entity. The criteria include, but are not limited to: whether the District exercises oversight responsibility (which includes financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations, and accountability for fiscal matters), the scope of public service, and a special financing relationship.

The District has determined that no outside entity meets the above criteria, and therefore, no agency has been included as a component unit in the District’s general-purpose financial statements. In addition, the District is not aware of any entity that would exercise such oversight responsibility that would result in the District being considered a component unit of that entity.


JUNE 30, 2014

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NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Future Implementation of New Accounting Pronouncements

The following is a summary of the upcoming GASB Statements that may have an impact on the District’s future reporting at the time of this report in order of implementation date: Statement Number Title

Effective for Periods beginning after: Description

GASB 69 Government Combinations and Disposals of Government Operations

December 15, 2013 This Statement establishes accounting and financial reportingstandards related to government combinations and disposals ofgovernment operations. As used in this Statement, the termgovernment combinations includes a variety of transactions referredto as mergers, acquisitions, and transfers of operations.

GASB 68 Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27

June 15, 2014 This Statement replaces the requirements of Statement No. 27,Accounting for Pensions by State and Local GovernmentalEmployers, as well as the requirements of Statement No. 50, PensionDisclosures, as they relate to pensions that are provided throughpension plans administered as trusts or equivalent arrangements(hereafter jointly referred to as trusts) that meet certain criteria. Therequirements of Statement Nos. 27 and 50 remain applicable forpensions that are not covered by the scope of this Statement.

This Statement and Statement No. 67 establish a definition of apension plan that reflects the primary activities associated with thepension arrangement - determining pensions, accumulating andmanaging assets dedicated for pensions, and paying benefits to planmembers as they come due.

This Statement requires single and agent employers to present inrequired supplementary information the following information,determined as of the measurement date, for each of the 10 mostrecent fiscal years.

GASB 71 Pension Transition for ContributionsMade Subsequent to the MeasurementDate – an amendment to GASBStatement No. 68.

June 15, 2014 The objective of this Statement is to address an issue regardingapplication of the transition provisions of Statement No. 68,Accounting and Financial Reporting for Pensions. The issue relatesto amounts associated with contributions, if any, made by a state orlocal government employer or nonemployer contributing entity to adefined benefit pension plan after the measurement date of thegovernment’s beginning net pension liability.

This Statement amends paragraph 137 of Statement 68 to requirethat, at transition, a government recognize a beginning deferredoutflow of resources for its pension contributions, if any, madesubsequent to the measurement date of the beginning net pensionliability. Statement 68, as amended, continues to require thatbeginning balances for other deferred outflows of resources anddeferred inflows of resources related to pensions be reported attransition only if it is practical to determine all such amounts.

The provisions of these Statements generally are required to be applied retroactively for all periods presented. Early application, if allowable, was not adopted.


JUNE 30, 2014

- 29 -

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (Continued) E. Basis of Presentation

1. Government-Wide Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the District and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The government-wide statement of activities presents a comparison between direct expenses and program revenues for each function or program of the District’s governmental activities. Direct expenses are those that are specifically associated with a service, program, or department and are therefore clearly identifiable to a particular function. The District does not allocate indirect expenses to functions in the statement of activities. Program revenues include charges paid by the recipients of goods or services offered by a program, as well as grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues which are not classified as program revenues are presented as general revenues of the District, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self-financing or draws from the general revenues of the District.

2. Fund Financial Statements

The financial transactions of the District are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures or expenses, as appropriate. The emphasis in fund financial statements is on the major funds in either the governmental or business-type activities categories. Non-major funds by category are summarized in to a single column. GASB Statement No. 34 sets forth minimum criteria (percentage of the assets, liabilities, revenues or expenditures/expenses of either fund category or the governmental and enterprise funds combined) for the determination of major funds. The non-major funds are combined in a column in the fund financial statements.


JUNE 30, 2014

- 30 -

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (Continued)

The District’s accounts are organized into major, non-major governmental, proprietary funds, and fiduciary funds as follows: a. Major Governmental Funds

The General Fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund. The Building Fund is used to account for the acquisition of major governmental capital facilities and buildings funded primarily with proceeds from the sale of bonds.

b. Non-major Governmental Funds

Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. The District maintains the following non-major special revenue funds:

The Charter School Fund is used to account for the resources committed to and expenditures incurred by the District chartered Six Rivers Charter High School. The Cafeteria Fund is used to account for revenues and expenditures associated with the District’s food service program.

Capital Projects Funds are used to account for the acquisition and construction of all major governmental capital assets. The District maintains the following non-major capital projects fund:

The Special Reserve Fund for Capital Outlay Projects is used to account for the financial resources used for the acquisition or construction of major capital projects.

Debt Service Funds are used to account for the accumulation of resources for, and the debt service payments related to, the District’s debt issuances. The District maintains the following non-major debt service fund:

The Bond Interest and Redemption Fund is maintained by the County Treasurer and is used to account for both the accumulation of resources from ad valorem tax levies and the interest payments and redemption of principal of the District’s general obligation bond issuance as discussed later in the Notes to Financial Statements.


JUNE 30, 2014

- 31 -


c. Proprietary Funds

Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. For purposes of the statement of cash flows, the District considers all highly liquid investments (including restricted assets) with a maturity when purchased of three months or less and all local government investment pools to be cash equivalents. Enterprise Funds are used to account for services provided to users on a cost-recovery basis. The District maintains the following non-major enterprise fund:

The Enterprise Fund is used to account for the District’s employment services program for which a fee is charged to external users of goods or services. The Enterprise Fund of the District accounts for financial transactions related to the services rendered to external users.

d. Agency Funds

Agency Funds are used to account for assets of others for which the District acts as an agent. The Student Body Fund is used to account for the proceeds of Board approved student activities and student body approved expenditures. The District maintains two agency funds, one for each high school’s Student Body.

F. Basis of Accounting

Basis of accounting refers to when transactions are recorded in the financial records and reported in the financial statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting.


JUNE 30, 2014

- 32 -


1. Revenues - Exchange and Non-exchange Transactions

Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded under the accrual basis when the exchange takes place. Under the modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. “Available” means the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District, “available” means collectable within the current period or with 45, 60, 90 days after year-end, depending on the revenue source. However, to achieve comparability of reporting among California Districts and so as not to distort normal revenue patterns, with specific respect to reimbursement grants and corrections to state aid apportionments, the California Department of Education has defined available as collectible within one year. Non-exchange transactions are those in which the District receives value without directly giving equal value in return, include property taxes, grants, and entitlements. Under the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and entitlements is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are to be used or the fiscal year when use is first permitted; matching requirements, in which the District must provide local resources to be used for a specific purpose; and expenditure requirements, in which the resources are provided to the District on a reimbursement basis. Under the modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized.

2. Unearned Revenue

Unearned revenue arises when assets are received before revenue recognition criteria have been satisfied. Grants and entitlements received before eligibility requirements are met are recorded as unearned revenue. On governmental fund financial statements, receivables associated with non-exchange transactions that will not be collected within the availability period have also been recorded as unearned revenue.

3. Expenses/Expenditures

Under the accrual basis of accounting, expenses are recognized at the time they are incurred. However, the measurement focus of governmental fund accounting is on decreases in the net financial resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable. Allocations of cost, such as depreciation and amortization, are not recognized on governmental fund financial statements.


JUNE 30, 2014

- 33 -

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Budgets and Budgetary Accounting

Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for all governmental funds. By state law, the District’s governing board must adopt a final budget no later than July 1. A public hearing must be conducted to receive comments prior to adoption. The District’s governing board satisfied these requirements. These budgets are revised by the District’s governing board and District superintendent during the year to give consideration to unanticipated revenue and expenditures. The original and final revised budgets for the General Fund are presented as required supplementary information in these financial statements. Formal budgetary integration was employed as a management control device during the year for all budgeted funds. The District employs budget control by minor object and by individual appropriation accounts. Expenditures cannot legally exceed appropriations by major object account.

H. Encumbrances

Encumbrance accounting is used in all budgeted funds to reserve portions of applicable appropriations for which commitments have been made. Encumbrances are recorded for purchase orders, contracts, and other commitments when they are written. Encumbrances are liquidated when the commitments are paid. All encumbrances are liquidated on June 30.

I. Assets, Liabilities, and Equity

1. Cash and Equivalents

The District considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

2. Receivables

Accounts receivable in governmental fund types consist primarily of receivables from federal, state and local governments for various programs.

3. Stores Inventories

Inventories are recorded using the purchases method, in that inventory acquisitions are initially charged as expenditures when acquired. The inventory (asset) account is adjusted to the physical count at year-end. Reported inventories are equally offset by a fund balance reserve, which indicates that these amounts are not “available for appropriation and expenditure” even though they are a component of net current assets.


JUNE 30, 2014

- 34 -


4. Prepaid Expenditures

The District has the option of reporting expenditures for prepaid items in governmental funds either when paid or during the benefiting period. The District has chosen to report the expenditure when paid and, therefore, no asset is reported.

5. Capital Assets

Capital assets are those purchased or acquired with an original cost of $5,000 or more and are reported at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend the asset’s lives are not capitalized, but are expensed as incurred. Depreciation on all capital assets is computed using a straight-line basis and an annual convention over the following estimated useful lives:

Land improvements 10 - 25Buildings and improvements 10 - 50Equipment 5 - 15

6. Compensated Absences

All vacation pay is accrued when incurred in the government-wide financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements.

Accumulated sick leave benefits are not recognized as liabilities of the District. The District’s policy is to record sick leave as an operating expense in the period taken, since such benefits do not vest, nor is payment probable; however, unused sick leave is added to the creditable service period for calculation of retirement benefits when the employee retires.

7. Other Postemployment Benefits

As provided in applicable negotiated contracts, employees meeting the established criteria may participate in the District’s postemployment group health and insurance program as described later in the Notes to Financial Statements. The cumulative difference since the implementation of GASB Statement No. 45 between the annual OPEB cost and the District’s contributions is recognized as a long-term liability in the statement of net position. If the cumulative difference of contributions exceeds costs, an asset is reported.


JUNE 30, 2014

- 35 -


1. Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities and long-term obligations are reported in the government-wide and proprietary fund financial statements. In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources are reported as obligations of the funds. The District reports long-term obligations of governmental funds at face value in the government-wide financial statements. In the fund financial statements, governmental funds recognize bond premiums and discounts as well as bond issuance costs, during the current period. The face amount of the debt issued is reported as other financing sources.

2. Fund Balance Classifications

The governmental fund financial statements present fund balances based on a classification hierarchy that depicts the extent to which the District is bound by spending constraints imposed on the use of its resources. The classifications used in the governmental fund financial statements are as follows: a. Nonspendable Fund Balance

The nonspendable fund balance classification reflects amounts that are not in spendable form. Examples include inventory and prepaid items. This classification also reflects amounts that are in spendable form but that are legally or contractually required to remain intact.

b. Restricted Fund Balance

The restricted fund balance classification reflects amounts subject to externally imposed and legally enforceable constraints. Such constraints may be imposed by creditors, grantors, contributors, or laws or regulations of other governments, or may be imposed by law through constitutional provisions or enabling legislation. These are the same restrictions used to determine restricted net position as reported in the government-wide, proprietary fund, and fiduciary trust fund statements.

c. Committed Fund Balance

The committed fund balance classification reflects amounts subject to internal constraints self-imposed by formal action of the highest level of decision-making authority. The governing board is the highest level of decision-making authority for the District. Commitments may be established, modified, or rescinded only through resolutions or other action as approved by the governing board. The District has no committed fund balances.


JUNE 30, 2014

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d. Assigned Fund Balance

The assigned fund balance classification reflects amounts that the District intends to be used for specific purposes. Assignments may be established either by the Board of Trustees or by a designee of the Board of Trustees, and are subject to neither the restricted nor committed levels of constraint. Constraints giving rise to assigned fund balance are not required to be imposed, modified, or removed by formal action of the highest level of decision-making authority. The action may be delegated to another body or official.

e. Unassigned Fund Balance and Minimum Fund Balance Policy

In the General Fund only, the unassigned fund balance classification reflects the residual balance that has not been assigned to other funds and that is not restricted, committed, or assigned to specific purposes. The Reserve for Economic Uncertainties maintained by the District pursuant to the Criteria and Standards for fiscal solvency adopted by the State Board of Education is a stabilization-like arrangement of the "minimum fund balance policy" type. The Reserve for Economic Uncertainties does not meet the criteria to be reported as either restricted or committed because it is not an externally enforceable legal requirement, and because even where the Reserve for Economic Uncertainties is established by formal action of the District’s highest level of decision-making authority, the circumstances in which the Reserve for Economic Uncertainties might be spent are by their nature neither specific nor non-routine. For this reason, the Reserve for Economic Uncertainties is reported as unassigned fund balance. The District is committed to maintaining a prudent level of financial resources to protect against the need to reduce service levels because of temporary revenue shortfalls or unpredicted expenditures. The District’s Minimum Fund Balance Policy requires a Reserve for Economic Uncertainties, consisting of unassigned amounts, equal to no less than two months of General Fund operating expenditures, or three percent (3%) of General Fund expenditures and other financing uses. The District passed a resolution May 10, 2011 to establish classification of fund balances in Governmental Funds, as required by GASB 54. The resolution delegates authorization to the Superintendent and/or designee to identify intended uses of assigned funds. The District’s policy regarding the order in which spendable fund balances are spent when more than one classification is available for a specific purpose is that they are spent in restricted, committed, assigned, and then unassigned order.


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3. Property Taxes

Secured property taxes attach as an enforceable lien on property as of January 1, and are payable in two installments on December 10 and April 10. Unsecured property taxes are payable in one installment on or before August 31. The County of Humboldt bills and collects the taxes for the District. Tax revenues are recognized by the District when received.

J. Estimates

The preparation of financial statements in conformity with 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 and reported amounts of revenues and expenditures during the reporting period. Actual amounts could differ from those estimates.

NOTE 2. CASH AND EQUIVALENTS Cash and Equivalents at June 30, 2014 are classified in the accompanying financial statements as follows:

PrimaryGovernmental Business-type Government Fiduciary

Activities Activities Total Funds

Cash and EquivalentsPooled Funds:

Cash in county treasury 12,152,157$ 104,942$ 12,257,099$ -$ Deposits:

Cash on hand and in banks - - - 423,592 Cash in revolving fund 2,500 - 2,500 -

Total Cash and Equivalents 12,154,657$ 104,942$ 12,259,599$ 423,592$

A. Cash in County Treasury

In accordance with Education Code 41001, the District maintains substantially all of its cash in the Humboldt County Treasury (the Treasury). The Treasury pools these funds with those of other districts in the County and invests the cash. The share of each fund in the pooled cash account is separately accounted for and interest earned is apportioned quarterly to funds that are legally required to receive interest based on the relationship of a fund’s daily balance to the total of pooled cash and investments.


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NOTE 2. CASH AND EQUIVALENTS (Continued)

Participants’ equity in the investment pool is determined by the dollar amount of the participant deposits, adjusted for withdrawals and distributed income. This method differs from the fair value method used to value investments in these financial statements in that unrealized gains or losses are not distributed to pool participants. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, Investments were stated at cost. The Treasury is authorized to deposit cash and invest excess funds by California Government Code Section 53648 et seq. The funds maintained by the Treasury are either secured by federal depository insurance or are collateralized. The Treasury is restricted by Government Code Section 53635, pursuant to Section 53601, to invest in time deposits; U.S. government securities; state registered warrants, notes or bonds; the State Treasurer’s investment pool; bankers’ acceptances; commercial paper; negotiable certificates of deposit; and repurchase or reverse repurchase agreements.

B. Investments Authorized by the District’s Investment Policy

The table below identifies the investment types authorized for the District by the California Government Code Section 53601. This table also identifies certain provisions of the California Government Code that address interest rate risk, credit risk, and concentration of credit risk.

Maximum MaximumMaximum Percentage of Investment in

Authorized Investment Type Maturity Portfolio One Issuer

Local Agency Bonds or Notes 5 years None NoneRegistered State Bonds, Notes, Warrants 5 years None NoneU.S. Treasury Obligations 5 years None NoneU.S. Agency Securities 5 years None NoneBankers Acceptance 180 days 40% 30%Commercial Paper 270 days 25% 10%Negotiable Certificates of Deposit 5 years 30% NoneRepurchase Agreements 1 year None NoneReverse Repurchase Agreements 92 days 20% NoneMedium-Term Corporate Notes 5 years 30% NoneMutual Funds n/a 20% 10%Mortgage Pass through Securities 5 years 20% NoneJoint Power Authority Pools 5 years 20% NoneCounty Pooled Investment Funds n/a None NoneLocal Agency Investment Funds (LAIF) n/a None None


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NOTE 2. CASH AND EQUIVALENTS (Continued) C. Interest Rate Risk

Interest rate risk is the risk that changes in market 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 values to changes in market interest rates. As of June 30, 2014, the weighted average maturity of the investments contained in the Treasury investment pool was 1,004 days.

D. Credit Risk

Generally, 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 County Treasury investment pool does not have a rating provided by a nationally recognized statistical rating organization.

E. Custodial Credit Risk – Deposits

This is the risk that in the event of a bank failure, the District’s deposits may not be returned to it. The District does not have a formal policy for custodial credit risk for deposits. Cash balances in banks and revolving funds are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. As of June 30, 2014, the District’s bank balances were fully insured.

F. Custodial Credit Risk – Investments

This is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. The California Government Code and the District’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments.


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NOTE 3. INTERFUND TRANSACTIONS AND SOURCES Interfund transactions are reported as either loans, services provided, reimbursements, or transfers. Loans are reported as interfund receivables and payables, as appropriate, and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements occur when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers among governmental and proprietary funds are netted as part of the reconciliation to the government wide financial statements. A. Interfund Transfers

Permanent reallocations of resources between funds of the reporting District are classified as interfund transfers. As of June 30, 2014, interfund transfers are as follows:

Transfers In Transfers Out Amount Purpose

General FundCharter Schools Special Revenue Fund 26,705$

To reimburse for Charter's share of Independent Study costs.

General FundCharter Schools Special Revenue Fund 21,460

To reimburse for Charter's share of indirect costs.

Cafeteria Fund General Fund 20,463 To cover the operating deficit of the cafeteria program.

Total 68,628$


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NOTE 4. CAPITAL ASSETS The changes in capital assets for the year ended June 30, 2014, are shown below:

Balance BalanceJuly 1, 2013 Additions Decreases June 30, 2014

Capital Assets Not Being Depreciated:Land 359,816$ -$ -$ 359,816$ Construction in progress 3,112,696 2,146,965 - 5,259,661

Total Capital Assets Not Being Depreciated 3,472,512 2,146,965 - 5,619,477

Capital Assets Being Depreciated:Land improvements 1,491,453 - - 1,491,453 Buildings and improvements 23,133,732 - - 23,133,732 Equipment 2,993,651 28,783 - 3,022,434

Total Capital Assets Being Depreciated 27,618,836 28,783 - 27,647,619

Less Accumulated Depreciation for:Land improvements (928,508) (52,208) - (980,716) Buildings and improvements (11,985,833) (422,369) - (12,408,202) Equipment (2,392,378) (59,679) - (2,452,057)

Total Accumulated Depreciation (15,306,719) (534,256) - (15,840,975)

Total Capital Assets Being Depreciated, Net 12,312,117 (505,473) - 11,806,644

Total Governmental Activities Capital Assets, Net 15,784,629$ 1,641,492$ -$ 17,426,121$

Depreciation expense was charged to governmental activities as follows: Instruction 409,677$ Instruction related services:

Supervision of instruction 1,263 Instructional library, media, and technology 12,308 School site administration 9,326

Pupil services:Home-to-school transportation 51,356 Food services 6,643 All other pupil services 26,278

General administration:All other general administration 8,930

Plant services 8,475

Total Depreciation Expense 534,256$


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NOTE 5. GENERAL OBLIGATION BONDS In February 2011, the District issued General Obligation Bonds in the amount of $8,000,223 for the purpose of financing the renovation, construction and improvement of school facilities in the District. The bonds were authorized pursuant to the election of the registered voters of the District held on November 2, 2010, and are payable from the ad valorem taxes to be levied annually upon all property subject to taxation by the District. The current interest and capital appreciation bonds interest rates range between 4.0% and 7.7%. The bonds are scheduled to mature through August 2036. Additionally, in February 2013, the District issued General Obligation Bonds in the amount of $5,000,000. The current interest and capital appreciation bonds interest rates range between 3.0% and 5.375%. The bonds are scheduled to mature through August 2043. The outstanding bonded debt of the District as of June 30, 2014 is as follows:

Outstanding AccretedDate Maturity Amount of Principal and Current Interest Redeemedof Interest Date Original Accreted Interest Year Current Current Balance

General Obligation Bonds Issuance Rate % August 1 Issue June 30, 2013 Additions Year Year June 30, 2014

2011 Current Interest - Series A 2011 4.00 - 6.50 2034 7,805,000$ 7,805,000$ -$ -$ 285,000$ 7,520,000$

2011 Capital Appreciation - Series A 2011 7.67 - 7.70 2036 195,223 195,223 - - - 195,223 Accreted Interest - 46,407 - 22,614 69,021

2013 Current Interest - Series B 20133.00 - 5.375 2043 5,000,000 5,000,000 - - 50,000 4,950,000

Totals 13,000,223$ 13,046,630$ -$ 22,614$ 335,000$ 12,734,244$

Future debt service requirements related to this liability will continue to be accounted for in the District’s Bond Interest and Redemption Fund and are as follows:

Principal and FutureFor the Year Ended June 30: Accreted Interest Interest Total

2015 75,000$ 623,796$ 698,796$ 2016 95,000 620,096 715,096 2017 115,000 616,046 731,046 2018 150,000 611,246 761,246 2019 175,000 605,646 780,646 2020 - 2024 1,370,000 2,871,528 4,241,528 2025 - 2029 2,420,000 2,426,606 4,846,606 2030 - 2034 3,910,000 1,587,155 5,497,155 2035 - 2039 2,384,244 2,247,713 4,631,957 2040 - 2044 2,040,000 408,082 2,448,082

Totals 12,734,244$ 12,617,914$ 25,352,158$


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NOTE 6. NET OPEB OBLIGATION A. Plan Description

The Postemployment Benefit Plan (Plan) is a single-employer defined benefit healthcare plan administered by the District. The Plan provides medical, dental, and vision insurance benefits to eligible retirees. Membership of the Plan consists of 14 retirees and beneficiaries currently receiving benefits and 145 active plan members. The unfunded portion of annual required contributions (net OPEB obligation) is presented in the statement of net position as a portion of long-term obligations.

B. Contribution Information

The contribution requirements of plan members and the District are established and may be amended by the District, the District’s bargaining units and unrepresented groups. The required contribution is based on projected pay-as-you-go financing requirements, with an additional amount to prefund benefits as determined annually through agreements between the District, the District’s bargaining units and unrepresented groups. For the year ended June 30, 2014, the District contributed $168,032 to the plan, consisting entirely of current premiums.

C. Annual OPEB Cost and Net OPEB Obligations

The District’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and the amortization of any unfunded actuarial accrued liabilities (UAAL) (or funding excess) for 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 contributed to the Plan and changes in the District’s net OPEB obligation (asset) to the Plan: Annual required contribution 288,947$ Interest on net OPEB obligation 25,923

Annual OPEB cost (expense) 314,870

Contributions made 168,032

Change in net OPEB obligation (asset) 146,838

Net OPEB obligation (asset) - beginning of year 518,462

Net OPEB obligation (asset) - end of year 665,300$


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NOTE 6. NET OPEB OBLIGATION (Continued)

The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation (asset) for 2014 and two preceding years were as follows:

Percentage of Annual OPEB Cost OPEB Cost Net OPEB

Year Ended June 30: OPEB Cost Contributed Contributed Obligation

2014 314,870$ 168,032$ 53.4% 665,300$ 2013 307,848 167,404 54.4% 518,462 2012 324,748 227,648 70.1% 378,018

D. Funded Status and Funding Progress

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of the occurrence of events far into the future. Examples include assumptions about future employment, mortality and the trend of healthcare costs. Amounts determined regarding the funded status of the Plan and the annual required contributions of the employer are subject to continuous revisions as actual results are compared with past expectation and as new estimates are made concerning future events. The schedule of funding progress presented as required supplementary information following the notes to the financial statements, presents multi-year trend information regarding whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Currently, the District is not funding the Plan in an irrevocable trust fund; however, the District has assigned $1,549,608 for the Plan in the General Fund.

E. Actuarial Methods and Assumptions

Projection of benefits for financial reporting purposes are based on the “substantive plan” (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation along with the historical pattern of the 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 actuarial valuation report dated February 9, 2012 the “projected unit credit cost” method was utilized. The actuarial assumptions include a 5.0 percent investment rate of return (net of administrative expenses). Additionally, actuarial assumptions include a 3 percent per year trend increase in healthcare costs. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at February 9, 2012 was 30 years.


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NOTE 7. COMPENSATED ABSENCES Accumulated vacation is not accrued in governmental funds. It must be paid to an employee upon termination, but it is generally applied in the year earned or a succeeding year. The District has reported an estimated liability in the amount of $66,247 relative to compensated absences earned but not used at June 30, 2014. Expenditures related to this liability are accounted for in the fund in which the related salaries are recorded. NOTE 8. GENERAL LONG-TERM DEBT – SCHEDULE OF CHANGES A schedule of changes in long-term debt for the year ended June 30, 2014 is shown below:

Balance Balance Due withinJuly 1, 2013 Additions Reductions June 30, 2014 One Year

Governmental Activities:General obligation bonds payable 13,046,630$ 22,614$ 285,000$ 12,784,244$ 75,000$

Premium on issuance 555,955 - 21,291 534,664 21,291 Net OPEB Obligation 518,462 314,870 168,032 665,300 - Compensated absences 55,987 7,352 - 63,339 12,668

Business-type ActivitiesCompensated absences 2,276 632 - 2,908 582

Totals 14,179,310$ 345,468$ 474,323$ 14,050,455$ 109,541$

General obligation bonds issued for governmental activity purposes are liquidated by the Bond Interest and Redemption Fund. California Energy commission loan, other postemployment benefit premiums and compensated absences are paid from the General Fund. NOTE 9. RESTATEMENT Net position for the year ended June 30, 2013 has been restated for a correction of and error in invested in capital assets, net of related debt. Unrestricted net position has been restated for the recognition of bond issuance costs in the period they relate to accordance with GASB 63.

June 30, 2013 July 1, 2013Net Position Reported Restatement Restated

Invested in capital assets, net of related debt 12,032,500$ (627,091)$ 11,405,409$ Restricted 1,251,217 - 1,251,217 Unrestricted 4,965,593 (465,262) 4,500,331

Totals 18,249,310$ (1,092,353)$ 17,156,957$


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NOTE 10. RESTRICTED NET POSITION The government-wide statement of net position reports $8,018,394 of restricted net position, of which $514,735 is restricted by enabling legislation. NOTE 11. ASSOCIATED STUDENT BODY The amount reported for student body funds represent the combined totals of all accounts regarding the various student body clubs and activities of all schools within the District. Individual totals, both by school and club, are maintained within the District's accounting system. The student body clubs often utilize students in off-campus revenue-generating activities that involve cash transactions. These transactions are not subject to adequate internal accounting control prior to deposits being recorded at the individual school sites. It has been determined on a cost benefit basis that providing increased internal control in this area does not justify the additional costs that would be necessary to control receipts prior to the point of deposit. NOTE 12. CHARTER SCHOOLS The District granted and approved two Charter Schools pursuant to Education Code 47605 as follows:

The Six Rivers Charter High School (Charter) was approved on April 6, 2004 to begin operation July 1, 2004. The governing board of the Charter consists of the Trustees and the Superintendent of the Northern Humboldt Union High School District, and the Director of the Charter. The Charter was formed to provide a quality education program to high risk students of Northern Humboldt Union High School District and serves as the District’s alternative education program. The initial Charter was granted through June 30, 2009. The District renewed the Charter for another five year term ending June 30, 2019 during the 2013/2014 fiscal school year. The charter may be revoked by the District for material violations of the charter, failure to meet student outcomes identified in the charter, failure to meet generally accepted standards of fiscal management, or violation of any provisions of the law. The District remains the employer of record for all Six Rivers Charter High School employees. The District maintains the financial accounting for Six Rivers Charter High School in fund nine of the District’s general ledger. The Laurel Tree Charter (Charter) was approved on March 24, 2011. The Charter is organized as a non-profit public benefit corporation and has been granted tax exempt status under I.R.C. 501(c)(3). The initial Charter was granted through June 30, 2016. The Charter is governed by an independent board of directors, provides services from Charter-owned facilities, and issues independently audited annual financial statements. The District has therefore determined that the Charter does not meet sufficient criterion for inclusion as a component unit in the financial reporting entity.


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NOTE 13. JOINT POWERS AGREEMENTS The District is exposed to various risk of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and natural disasters. During the fiscal year ending June 30, 2014, the District participated in two joint powers agreements (JPAs) to manage these risks. There were no significant reductions in coverage during the year. Settled claims have not exceeded coverage in any of the past three years. The various JPAs and the services they provide the District are as follows: The Northern California Schools Insurance Group (NCSIG) – The NCSIG arranges for and

provides workers compensation and property and liability insurance for its members: all of the Humboldt and Del Norte County School Districts and their County Offices of Education. The NCSIG is governed by a commission composed of one representative form each member agency. A nine member executive committee elected by and from the commission controls the operations of the NCSIG, including selection of management and approval of operating budgets. The NCSIG is independent of any influence the member districts beyond their representation on the commission. Each member district pays a premium commensurate with the level of coverage requested and shares surpluses and deficits proportionately to its participation in the NCSIG. Audited financial statements can be requested from NCSIG.

North Coast Schools’ Medical Insurance Group (NCSIG) – The NCSMIG arranges for and provides medical, dental and vision insurance for its members: Humboldt County Office of Education and Humboldt County School Districs. The NCSMIG is governed by a board of directors composed of representatives from member districts which have one hundred or more insured lives and one representative for those member districts with less than one hundred insured lives. The Board controls the operations of the NCSMIG including selections of management and approval of operation budgets. NCSMIG is independent of influence by the member districts beyond their representation on the Board. Each member district pays a premium commensurate with the level of coverage requested and shares surpluses and deficits proportionately to its participation in the NCSMIG. Audited financial statements can be requested from NCSMIG.


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NOTE 14. EMPLOYEE RETIREMENT SYSTEMS Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Certified employees are members of the State Teachers’ Retirement System (STRS), and classified employees are members of the California Public Employees’ Retirement System (CalPERS). A. State Teachers’ Retirement System

1. Plan Description and Provisions

The District contributes to the STRS, a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by STRS. The plan provides retirement, disability, and survivor benefits to beneficiaries. Benefit provisions are established by state statutes, as legislatively amended, within the State Teachers’ Retirement Law. STRS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the STRS annual financial report may be obtained from the STRS, 100 Waterfront Place, West Sacramento, CA 95605.

2. Funding Policy

Active plan members are required to contribute 8.0% of their salary and the District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the STRS Teachers’ Retirement Board. The required employer contribution rate for the year 2013/2014 was 8.25% of annual payroll. The contribution requirements of the plan members are established by State statute. The District’s contribution to STRS for the years ending June 30, 2014, 2013, and 2012 were $617,884, $599,857 and $600,310 respectively, and equal 100% of the required contributions for each year.

3. Plan Outlook Affecting Future Contributions

In September 2013, the California State Auditor issued an updated assessment of high-risk issues facing the California State Teacher's Retirement System (CalSTRS). In summary, the report states: The funding status of the Defined Benefit Program of the California State Teachers' Retirement System (CalSTRS) has not improved, and it remains on the high-risk list. One of the major risks to CalSTRS' funding is that its board does not have the authority to set contribution rates. The inability to adjust contributions, as well as poor investment returns due to economic recessions, have caused the funding ratio of the CalSTRS Defined Benefit Program to decrease from 98 percent in 2001 to 67 percent in 2012, well below the 80 percent considered fiscally sound. At the current contribution rate and actuarially estimated rate of return on investments, the Defined Benefit Program's funding ratio will continue to drop and assets will eventually be depleted.


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NOTE 14. EMPLOYEE RETIREMENT SYSTEMS (Continued)

4. Funding Plan

Assembly Bill 1469, signed into law by Governor Edmund G. Brown Jr., as part of the 2014-15 budget, increases member, employer and state contributions over the next several years and sets the program on a sustainable course.

Member contribution increases are as follows:

Effective DatePrior Member

Contribution Rate 2% at 60 Members 2% at 62 Members*

July 1, 2014 8.00% 8.15% 8.15%July 1, 2015 8.00% 9.20% 8.56%July 1, 2016 8.00% 10.25% 9.21%

Rate Changes Under AB 1469

Rate imposed on 2% at 62 members is based on the normal cost of benefits for the Defined Benefit Program. The contribution rate in future years assumes no change in normal cost.

Employer contribution increases are as follows:

Effective DatePrior Employer

Contribution Rate Increase Total

July 1, 2014 8.25% 1.25% 9.50%July 1, 2015 8.25% 2.85% 11.10%July 1, 2016 8.25% 4.45% 12.70%July 1, 2017 8.25% 6.05% 14.30%July 1, 2018 8.25% 7.65% 15.90%July 1, 2019 8.25% 9.25% 17.50%July 1, 2020 8.25% 10.85% 19.10%July 1, 2046 8.25%

Increases Under AB 1469

Increase from prior rate ceases in 2046-47

AB 1469 increases the state’s contribution attributable to the benefits in effect in 1990 but does not change the base rate of 2.017 percent. Thus, the state contribution rates, which in Fiscal Year 2013-14 were 3.041 percent, will increase over the next three years to a total of 6.328 percent. When contributions for purchasing power protection are included, the state’s total contribution rate in 2016-17 will be 8.828 percent.


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NOTE 14. EMPLOYEE RETIREMENT SYSTEMS (Continued) B. California Public Employees’ Retirement System

1. Plan Description and Provisions

The District contributes to the School Employer Pool under the CalPERS, a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. The plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by State statutes, as legislatively amended, within the Public Employees’ Retirement Law. CalPERS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the CalPERS’ annual financial report may be obtained from the CalPERS Executive Office, 400 Q Street, Room 1820, Sacramento, CA 95811.

2. Funding Policy

Active plan members are required to contribute 7.0% of their salary and the District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the CalPERS Board of Administration. The required employer contribution rate for year 2013/2014 was 11.442% of annual payroll. The contribution requirements of the plan members are established by State statute. The District’s contributions to CalPERS for the years ending June 30, 2014, 2013 and 2012 were $300,459, $236,272 and $252,638 respectively and equal 100% of the required contributions for each year.

3. Plan Outlook Affecting Future Contributions

In April 2013, the CalPERS board approved raising employer contribution rates up to 50 percent to fully fund the pension system's obligations in 30 years. The overhaul in the smoothing and amortization of assets will be used to set contribution rates beginning in the 2015/2016 fiscal year. CalPERS is currently estimated to be 70 percent funded, below the 80 percent considered fiscally sound.

4. Funding Plan

On March 10, 2014 CalPERS issued Circular Letter No.: 200-014-14 which projects the future employer contribution rates as follows:

2014 - 15 2015 - 16 2016 - 17 2017 - 18 2018 - 19 2019 - 20 2019 - 20

11.77% 12.60% 15.00% 16.60% 18.20% 19.90% 20.40%

Projected Future Employer Contribution Rates

C. Social Security

As established by Federal law, all public sector employees who are not members of their employer’s existing retirement system (STRS or PERS) must be covered by social security or an alternative plan. The District has elected to use Social Security.


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NOTE 14. EMPLOYEE RETIREMENT SYSTEMS (Continued) D. On Behalf Payment

The State of California makes contributions to STRS and PERS on behalf of the District. These payments consist of State General Fund contributions to STRS and contributions to PERS for the year ended June 30, 2014. Under accounting principles generally accepted in the United States of America, these amounts are to be reported as revenues and expenditures; however, guidance received from the California Department of Education advises local education agencies not to record these amounts in the Annual Financial and Budget Report. These amounts also have not been recorded in these financial statements.

NOTE 15. STATE TEACHERS’ RETIREMENT SYSTEM EARLY RETIREMENT INCENTIVE PROGRAM

The District did not enter into any early retirement incentive agreements during 2013/2014, pursuant to California Education Code, Sections 22714 and 44929, whereby the service credit to eligible employees is increased by two years. NOTE 16. COMMITMENTS AND CONTINGENCIES A. Grants

The District received financial assistance from federal and state agencies in the form of grants. The disbursement of funds received under these programs generally require compliance with terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the General Fund of other applicable funds. However, in the opinion of management, any such disallowed claims will not have a material adverse effect on the overall financial position of the District at June 30, 2014.

B. Litigation

The District is involved in various litigation arising from the normal course of business. In the opinion of management and legal counsel, the disposition of all litigation pending is not expected to have a material adverse effect on the overall financial position of the District at June 30, 2014.

C. Commitments

The District entered into the following construction contracts to be completed in the 2014/2015 fiscal year:

Demolition of fine arts facility at Arcata High estimated at $267,219. Fine arts facility at Arcata High estimated at $143,338 for Architectural Services. Media Center at Arcata High School estimated at $88,829. ADA compliant bathrooms at Arcata High School estimated at $15,659.


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NOTE 17. SUBSEQUENT EVENTS Events that occur after the balance sheet date but before the financial statements were available to be issued must be evaluated for recognition or disclosure. The effects of subsequent events that provide evidence about conditions that existed at the balance sheet date are recognized in the accompanying financial statements. Subsequent events which provide evidence about conditions that existed after the balance sheet date, require disclosure in the accompanying notes. Management evaluated the activity of the District through December 05, 2014 and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements.

REQUIRED SUPPLEMENTARY INFORMATION SECTION

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT BUDGETARY COMPARISON SCHEDULE

GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2014

See accompanying notes to required supplementary information. - 53 -

Variance withFinal Budget

Actual FavorableOriginal Final Amounts (Unfavorable)

REVENUESLocal control sources:

State apportionments 3,772,282$ 6,711,213$ 5,823,661$ (887,552)$ Local sources 5,172,446 4,251,096 5,232,583 981,487

Federal 1,780,552 1,560,865 1,544,832 (16,033) Other state 2,442,196 945,032 875,945 (69,087) Other local 1,982,330 2,186,179 2,231,484 45,305

Total Revenues 15,149,806 15,654,385 15,708,505 54,120

EXPENDITURESCertificated salaries 7,383,107 7,393,645 7,506,688 (113,043) Classified salaries 2,332,072 2,445,223 2,451,852 (6,629) Employee benefits 3,637,800 3,588,319 3,575,629 12,690 Books and supplies 714,470 883,485 744,853 138,632 Services and other operating expenditures 1,687,300 1,808,413 1,583,947 224,466 Capital outlay 7,500 24,668 28,784 (4,116) Other outgo 48,555 93,819 105,204 (11,385)

Total Expenditures 15,810,804 16,237,572 15,996,957 240,615

Excess (deficiency) of revenues over expenditures before other financing Sources (uses) (660,998) (583,187) (288,452) 294,735

OTHER FINANCING SOURCES (USES)Transfers in 50,388 46,298 48,165 1,867 Transfers out (13,292) (15,027) (20,463) (5,436)

Total Other Financing Sources (Uses) 37,096 31,271 27,702 (3,569)

Net Increase (Decrease) in Fund Balance (623,902) (551,916) (260,750) 291,166

Fund Balance - Beginning 5,886,614 5,886,614 5,886,614 -

Fund Balance - Ending 5,262,712$ 5,334,698$ 5,625,864$ 291,166$

Budgeted Amounts

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS FUNDING PROGRESS

JUNE 30, 2014

See accompanying notes to required supplementary information. - 54 -

Actuarial Valueof Assets

Actuarial Accrued Liability (AAL) -

Entry AgeUnfunded AAL

(UAAL) Funded Ratio Covered Payroll

UAAL as a Percent of

Covered Payroll(a) (b) (b - a) (a / b) (c) ([b-a] / c)

-$ 2,336,696$ 2,336,696$ 0.0% 10,782,261$ 21.7%- 2,420,338 2,420,338 0.0% 9,567,319 25.3%

Actuarial Valuation Date

May 1, 2011August 8, 2008

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION


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NOTE 1. PURPOSE OF REQUIRED SUPPLEMENTARY INFORMATION A. Budgetary Comparison Schedule

Budgetary comparison schedules are required to be presented for the General Fund and each major special revenue fund that has a legally adopted budget. The originally adopted and final revised budgets are presented for such funds. The District employs budget control by object codes and by individual appropriation accounts. Budgets are prepared on the modified accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America as prescribed by Governmental Accounting Standards Board. The budgets are revised during the year by the Board of Trustees to provide for revised priorities. Expenditures cannot legally exceed appropriations by major object code.

B. Schedule of Other Postemployment Funding Progress

The Schedule of Funding Progress presents multi-year trend information which compares, over time, the actuarially accrued liability for benefits with the actuarial value of accumulated plan assets.

NOTE 2. EXCESS OF EXPENDITURES OVER APPROPRIATIONS For the year ended June 30, 2014, expenditures exceeded appropriations by the following amounts:

ExcessAppropriations Category Expenditures

General Fund:Certificated salaries 113,043$ Classified salaries 6,629 Capital outlay 4,116 Other outgo 11,385 Transfers out 5,436

These excess expenditures were offset by unexpended appropriations in other categories.

SUPPLEMENTARY INFORMATION SECTION

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT OTHER GOVERNMENTAL FUNDS FINANCIAL STATEMENT

COMBINING BALANCE SHEET JUNE 30, 2014

See accompanying notes to supplementary information. - 56 -

Special Reserve Bond TotalCharter Fund for Interest and OtherSchools Cafeteria Capital Outlay Redemption Governmental

Fund Fund Projects Fund Funds

ASSETSCash and equivalents 393,413$ -$ 125,346$ 514,735$ 1,033,494$ Accounts receivable 41,309 26,431 209 - 67,949 Stores inventories - 573 - - 573

Total Assets 434,722$ 27,004$ 125,555$ 514,735$ 1,102,016$

LIABILITIES AND FUND BALANCE

Liabilities:Accounts payable 4,464$ 565$ -$ -$ 5,029$

Total Liabilities 4,464 565 - - 5,029

Fund Balance:Non spendable

Stores inventories - 573 - - 573 Restricted 22,324 25,866 - 514,735 562,925 Assigned

Other assignments 407,934 - 125,555 - 533,489

Total Fund Balance 430,258 26,439 125,555 514,735 1,096,987

Total Liabilities and Fund Balance 434,722$ 27,004$ 125,555$ 514,735$ 1,102,016$

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT OTHER GOVERNMENTAL FUNDS FINANCIAL STATEMENT

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES



Special Reserve Bond TotalCharter Fund for Interest and OtherSchools Cafeteria Capital Outlay Redemption Governmental

Fund Fund Projects Fund Funds

REVENUESLocal control sources:

State apportionments 389,229$ -$ -$ -$ 389,229$ Local sources 276,360 - - - 276,360

Federal 45,576 109,491 - - 155,067 Other state 56,272 10,097 - - 66,369 Other local 64,599 39,147 823 733,619 838,188

Total Revenues 832,036 158,735 823 733,619 1,725,213

EXPENDITURESCertificated salaries 482,252 - - - 482,252 Classified salaries 50,095 62,794 - - 112,889 Employee benefits 194,920 30,541 - - 225,461 Books and supplies 53,427 65,975 - - 119,402 Services and other operating expenditures 23,447 12,890 - - 36,337 Capital outlay - - 3,023 - 3,023 Debt Service:

Principal - - - 285,000 285,000 Interest - - - 618,516 618,516

Total Expenditures 804,141 172,200 3,023 903,516 1,882,880

Excess (deficiency) of revenues over expenditures before other financing sources (uses) 27,895 (13,465) (2,200) (169,897) (157,667)

OTHER FINANCING SOURCES (USES)Transfers in - 20,463 - - 20,463 Transfers out (48,165) - - - (48,165)

Total Other Financing Sources (Uses) (48,165) 20,463 - - (27,702)

Net Increase (Decrease) in Fund Balance (20,270) 6,998 (2,200) (169,897) (185,369)

Fund Balance - Beginning 450,528 19,441 127,755 684,632 1,282,356

Fund Balance - Ending 430,258$ 26,439$ 125,555$ 514,735$ 1,096,987$

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT FIDUCIARY FUNDS COMBINING SCHEDULE OF CHANGES

IN ASSETS AND LIABILITIES FOR THE YEAR ENDED JUNE 30, 2014


Balance BalanceJuly 1, 2013 Additions Deductions June 30, 2014

McKineleyville High School

ASSETS

Cash and equivalents 154,433$ 397,162$ 355,133$ 196,462$

Total Assets 154,433$ 397,162$ 355,133$ 196,462$

LIABILITIES

Due to student groups 154,433$ 397,162$ 355,133$ 196,462$

Total Liabilities 154,433$ 397,162$ 355,133$ 196,462$

Arcata High School

ASSETS


Total Assets 204,450$ 514,458$ 461,150$ 257,758$

LIABILITIES



Total Agency Funds

ASSETS


Total Assets 358,883$ 911,620$ 816,283$ 454,220$

LIABILITIES



NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT SCHEDULE OF AVERAGE DAILY ATTENDANCE



High School

Grades9 - 12 Total

Regular Average Daily Attendance 1,426 1,426

Extended Year Special Education 2 2

Special Education - Nonpublic, Nonsectarian Schools and / or Nonpublic, Nonsectarian Schools - Licensed Children's Institutions 1 1

Community Day School 5 5

Average Daily Attendance Totals 1,434 1,434

High School

Grades9 - 12 Total

Regular Average Daily Attendance 1,417 1,417

Extended Year Special Education 2 2

Special Education - Nonpublic, Nonsectarian Schools and / or Nonpublic, Nonsectarian Schools - Licensed Children's Institutions 1 1

Community Day School 6 6

Average Daily Attendance Totals 1,426 1,426

Original - Second Period Report

Original - Annual Report

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT SCHEDULE OF AVERAGE DAILY ATTENDANCE



Six Rivers Charter High School

Grades9 - 12 Total

Regular Average Daily Attendance 95 95

Classroom-based Average Daily Attendance in A-1 87 87

Average Daily Attendance Totals (Sum of A-1 through A-7 excluding Classroom-based Average Daily Attendance) 95 95



Grades9 - 12 Total

Regular Average Daily Attendance 95 95

Classroom-based Average Daily Attendance in A-1 86 86



Original - Second Period Report

Original - Annual Report

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT SCHEDULE OF INSTRUCTIONAL TIME FOR THE YEAR ENDED JUNE 30, 2014


High School

Number2013/2014 of Days

Minutes Minutes Actual Minutes Actual Traditional

Grade Level Requirement Reduced Minutes Reduced Minutes Calendar 1 Status

Grade nine 64,800 63,000 61,680 59,967 65,135 177 In Compliance

Grade ten 64,800 63,000 61,680 59,967 65,135 177 In Compliance

Grade eleven 64,800 63,000 61,680 59,967 65,135 177 In Compliance

Grade twelve 64,800 63,000 61,680 59,967 65,135 177 In Compliance

1 The District did not utilize a multitrack calendar during the 2013/2014 year.

1986-87 1982-83


Number2013/2014 of Days

Minutes Minutes Actual TraditionalGrade Level Requirement Reduced Minutes Calendar Status

Grade nine 64,800 62,949 65,290 177 In Compliance

Grade ten 64,800 62,949 65,290 177 In Compliance

Grade eleven 64,800 62,949 65,290 177 In Compliance

Grade twelve 64,800 62,949 65,290 177 In Compliance

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS



(Budgeted) * General Fund: 2014/2015 2013/2014 2012/2013 2011/2012

Revenues and Other Financing Sources 16,056,641$ 15,756,670$ 14,655,131$ 15,361,462$

Expenditures 16,932,618 15,996,957 15,481,996 15,201,000

Other Uses and Transfers Out 206,721 20,463 21,142 84,501

Total Outgo 17,139,339 16,017,420 15,503,138 15,285,501

Change in Fund Balance (1,082,698) (260,750) (848,007) 75,961

Ending Fund Balance 4,543,166$ 5,625,864$ 5,886,614$ 6,734,621$

Available Reserves 11,553,715$ 2,083,270$ 1,199,505$ 1,877,343$

Reserve for Economic Uncertainties 1,553,715$ 2,083,270$ 74,406$ 758,799$

Unassigned Fund Balance -$ -$ 1,125,099$ 118,544$

Available Reserves as a percentageof Total Outgo 9.1% 13.0% 7.7% 12.3%

Total Long-Term Debt 13,938,588$ 14,047,547$ 13,711,772$ 8,492,447$

Average Daily Attendance at P-2 1,521 1,529 1,494 1,490

The General Fund balance has decreased by $1,108,757 over the past two years. The District has incurred anoperating deficit in two of the past three years. The 2014/2015 General Fund budget projects a decrease of$1,082,698 (-19.2%).

For a District of this size, the state recommends available reserves of at least 3% of total General Fund expenditures,transfers out, and other uses (other outgo).

Total long-term debt has increased by $5,555,100 over the past two years.

Average daily attendance has increased by 39 ADA over the past two years. The ADA is anticipated to decrease 8ADA during the fiscal year 2014/2015.

* The 2014/2015 budget is included for analytical purposes only and has not been subjected to audit.

1 Available reserves consists of all unassigned fund balances and reserves for economic uncertainty that are containedwithin the governmental funds. Unassigned fund balances are typically only reported in the General Fund. However,other governmental funds may report negative unassigned fund balances and are included in the reported availablereserves.

This schedule discloses the District’s financial trends by displaying past years’ data along with current year budgetinformation. These financial trends are used to evaluate the District’s ability to continue as a going concern for areasonable period of time.

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS



Federal Pass-ThroughFederal Grantor/Pass-Through CFDA Entity Identifying FederalGrantor/Program or Cluster Title Number Number Expenditures

Federal Programs: U.S. Department of Education:

Passed through California Department of Education:NCLB: Title I - Part A - Basic Grants Low-Income and Neglected 84.010 14329 189,951$ Special Ed - IDEA Basic Local Assistance Entitlement, Part B, Sec 611 84.027 13379 287,990 Vocational Programs: Vocational and Applied Tech Secondary II C - Sec 131 84.048 13924 33,490 NCLB: Title II - Part A - Improving Teacher Quality Local Grants 84.367 14341 48,608 NCLB: Title III - Limited English Proficiency (LEP) Student Program 84.365 14346 1,227 Indian Education (From Federal Government) 84.060 10011 70,697

Direct Funding from the U.S. Department of Education:Teacher Incentive Fund (THRIVE) 84.041 10015 974,788

Total from the U.S. Department of Education 1,606,751

U.S. Department of Agriculture:Passed through California Department of Education:

Child Nutrition - School Programs 10.553 13390 109,491 Passed through the County of Humboldt:

Forest Reserve 10.665 10044 13,037

Total U.S. Department of Agriculture 122,528

Total Federal Categorical Aid Programs 1,729,279$

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT RECONCILIATION OF ANNUAL FINANCIAL AND

BUDGET REPORT (SACS) WITH AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2014


Special Reserve Special ReserveFund for Other Fund for

General Than Capital PostemploymentFund Outlay Projects * Benefits *

June 30, 2014 Annual Financial and Budget Report (SACS)Fund Balance 2,943,841$ 1,132,415$ 1,549,608$

Adjustments and Reclassifications:

Reclassification for financial statement presentation 2,682,023 (1,132,415) (1,549,608)

June 30, 2014 Audited Financial Statement Fund Balance 5,625,864$ -$ -$

* This audit reclassification is made for financial presentation purposes only, pursuant to GASB 54 which, when applied,does not recognize these funds as special revenue fund types. Therefore, the fund balances are consolidated with theGeneral Fund. However, the District is permitted under current State law to account for these funds as a special revenuefund type for interim reporting and budgeting purposes.

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT SCHEDULE OF CHARTER SCHOOLS



Included in Charter School Status Audit Report

Six Rivers Charter High School Active Yes

Laurel Tree Charter Active No

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT NOTES TO SUPPLEMENTARY INFORMATION


- 66 -

NOTE 1. PURPOSE OF SUPPLEMENTARY INFORMATION A. Other Governmental Funds Financial Statements

These statements provide information on the Northern Humboldt Union High School District’s (District) Governmental non-major funds, by object.

B. Schedule of Average Daily Attendance

Average daily attendance is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of state funds are made to the District. This schedule provides information regarding the attendance of students at various grade levels and in different programs.

C. Schedule of Instructional Time

Districts must maintain their instructional minutes at either their 1982/1983 actual minutes or the 1986/1987 standard required minutes, whichever is greater, as required by Education Code Section 46201. However, pursuant to the provisions of Education Code Section 46201.2(b), for fiscal years 2013-14 and 2014-15, the minimum instructional time is reduced by the equivalent of 5 instructional days.

The District has received incentive funding for increasing instructional time as provided by the Incentives for Longer Instructional Day. This schedule presents information on the amount of instruction time offered by the District and whether the District complied with the provisions of Education Code Sections 46201 through 46206.

D. Schedule of Financial Trends and Analysis

This schedule discloses the District’s financial trends by displaying past years' data along with current year budget information. These financial trend disclosures are used to evaluate the District’s ability to continue as a going concern for a reasonable period of time.

E. Schedule of Expenditures of Federal Awards

Office of Management and Budget (OMB) Circular A-133 requires a disclosure of the financial activities of all federally funded programs. This schedule was prepared to comply with OMB Circular A-133 and state requirements.

F. Reconciliation of Annual Financial and Budget Report (SACS) with Audited Financial Statements

This schedule provides the information necessary to reconcile the fund balances of all funds reported on the Unaudited Actual Financial Report to the audited financial statements.

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT NOTES TO SUPPLEMENTARY INFORMATION


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NOTE 1. PURPOSE OF SUPPLEMENTARY INFORMATION (Continued)

G. Schedule of Charter School

This schedule represents a complete listing of all charter schools authorized by the District and indicates whether their financial activities and balances have been included in the District’s annual audited financial statements for the year ended June 30, 2014.

NOTE 2. BASIS OF PRESENTATION A. Schedule of Expenditures of Federal Awards

The accompanying Schedule of Expenditures of Federal Awards includes the federal grants activity of the District and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.

OTHER INDEPENDENT AUDITOR’S REPORTS


A PROFESSIONAL CORPORATION 55 FIRST STREET, BOX G, SUITE 306 WWW.ROBERTSONCPA.COM LAKEPORT: (707) 263-9012 FAX: (707) 263-6001 LAKEPORT, CA 95453 TOLL FREE: (800) 619-4762

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REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS

INDEPENDENT AUDITOR’S REPORT Board of Trustees Northern Humboldt Union High School District McKinleyville, California We have audited, in accordance with the 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, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Northern Humboldt Union High School District (District) as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated December 05, 2014.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the District’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. We did identify certain deficiencies in internal control, described in the accompanying findings and questioned costs that we consider to be significant deficiencies, as items 2014-001 and 2014-002.

- 69 -

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying findings and questioned costs, as item 2014-002. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

District’s Response to Findings

The District’s responses to the findings identified in our audit are described in the accompanying findings and questioned costs. The District’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.




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REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT

ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY OMB CIRCULAR A-133

INDEPENDENT AUDITOR’S REPORT

Board of Trustees Northern Humboldt Union High School District McKinleyville, California Report on Compliance for Each Major Federal Program

We have audited Northern Humboldt Union High School District’s (District) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the District’s major federal programs for the year ended June 30, 2014. The District’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.


Our responsibility is to express an opinion on compliance for each of the District’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the District’s compliance.

Opinion on Each Major Federal Program

In our opinion, the District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2014.

Report on Internal Control Over Compliance

Management of the District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above.

- 71 -

In planning and performing our audit of compliance, we considered the District’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133

We have audited the financial statements of the District as of and for the year ended June 30, 2014, and have issued our report thereon dated December 05, 2014, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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 schedule of expenditure of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.




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INDEPENDENT AUDITOR'S REPORT ON STATE COMPLIANCE Board of Trustees Northern Humboldt Union High School District McKinleyville, California Compliance

We have audited Northern Humboldt Union High School District (District)’s compliance with the types of compliance requirements described in the Standards and Procedures for Audits of California K-12 Local Educational Agencies 2013-14, published by the Education Audit Appeals Panel, that could have a material effect on each of the District’s state programs for the year ended June 30, 2014.

Management’s Responsibility

Compliance with the applicable compliance requirements is the responsibility of the District’s management.


Our responsibility is to express an opinion on the District’s compliance with the applicable compliance requirements based on our compliance audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Standards and Procedures for Audits of California K-12 Local Educational Agencies 2013-14. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a material effect on the programs identified in the below schedule occurred. An audit includes examining, on a test basis, evidence about the District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the District’s compliance with those requirements.

In connection with the compliance audit referred to above, we selected and tested transactions and records to determine the District’s compliance with the State laws and regulations applicable to the following items:

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Proceduresin the Procedures

Description Audit Guide Performed

Local Education Agencies Other Than Charter Schools:Attendance Reporting 6 YesTeacher Certification and Misassignments 3 YesKindergarten Continuance 3 Not ApplicableIndependent Study 23 YesContinuation Education 10 YesInstructional Time:

School Districts 10 YesInstructional Materials General Requirements 8 YesRatios of Administrative Employees to Teachers 1 YesClassroom Teacher Salaries 1 YesEarly Retirement Incentive 4 Not ApplicableGann Limit Calculation 1 YesSchool Accountability Report Card 3 YesJuvenile Court Schools 8 Not Applicable

School Districts, County Office of Education and Charter Schools:Local Control Funding Formula Certification 1 YesCalifornia Clean Energy Jobs Act 3 Not ApplicableAfter School Education and Safety Program:

General Requirements 4 Not ApplicableAfter School 5 Not ApplicableBefore School 6 Not Applicable

Education Protection Account Funds 1 YesCommon Core Implementation Funds 3 YesUnduplicated Local Control Funding Formula Pupil Counts 3 Yes

Charter Schools:Contemporaneous Records of Attendance 8 YesMode of Instruction 1 YesNonclassroom-Based Instruction/Independent Study 15 No, see belowDetermination of Funding for Nonclassroom-Based Instruction 3 Not ApplicableAnnual Instructional Minutes - Classroom Based 4 YesCharter School Facility Grant Program 1 Not Applicable

We did not perform testing for Nonclassroom-Based Instruction/Independent Study because the ADA was under the level that requires testing.

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Basis for Qualified Opinion on State Compliance

As described in item 2014-002 in the accompanying schedule of findings and responses, the District did not comply with the following compliance requirement:

The District over-reported its Unduplicated Pupil Count in the area of a Free and Reduced Price Meal (FRPM) eligibility application under a federal nutrition program or an alternative household income data collection form that indicates the student was eligible for the designation that are applicable to its Unduplicated Local Control Funding Formula Pupil Counts.

Compliance with such requirements is necessary, in our opinion, for Northern Humboldt Union High School District to comply with state laws and regulations applicable to that program.

Qualified Opinion on State Programs

In our opinion, except for the noncompliance with Unduplicated Local Control Funding Formula Pupil Counts identified in the schedule of findings and questioned costs, as item 2014-002, Northern Humboldt Union High School District complied, in all material respects, with the state laws and regulations referred to above for the year ended June 30, 2014.

District’s Response to Findings

The District’s response to the finding identified in our audit is included in the accompanying schedule of findings and questioned costs. We did not audit the District’s response and, accordingly, express no opinion on the response.

Purpose of this Report

The purpose of this report on compliance is solely to describe the scope of our testing of compliance and the results of that testing based on the requirements referred to above. Accordingly, this report is not suitable for any other purpose.


FINDINGS AND QUESTIONED COSTS SECTION

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT SCHEDULE OF AUDIT FINDINGS AND QUESTIONED COSTS


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Section I - Summary of Auditor's Results

Financial Statements

Type of auditor's report issued:

Internal control over financial reporting:Material weakness identified? Yes X NoSignificant deficiencies identified that are not

considered to be material weaknesses? X Yes None

Noncompliance material to financial statements noted? Yes X No

Federal Awards

Type of auditor's report issued on compliance formajor programs:

Internal control over financial reporting:Material weakness identified? Yes X NoSignificant deficiencies identified that are not

considered to be material weaknesses? Yes X None

Any audit findings disclosed that are required to bereported in accordance with Circular A-133,Section .510(a) Yes X No

Identification of major program

Dollar threshold used to distinguish between Type Aand Type B programs:

Auditee qualified as low-risk auditee? X Yes No

State Awards

Type of auditor's report issued on compliance forstate programs:

Internal control over financial reporting:Material weakness identified? X Yes NoSignificant deficiencies identified that are not

considered to be material weaknesses? Yes X None

$ 300,000

Unmodified

Unmodified

Unmodified

CFDA Number Name of Federal Program or Cluster84.374A Teacher Incentive Fund (THRIVE)

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2014

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Section II - Financial Statement Findings 2014-001 Associated Student Body Reconciliation / State Code 30000 Condition

The book balance of the Associated Student Body Fund at Arcata High School was overstated by $30,000. Effect

The Statement of Fiduciary Net Position included in the financial statements of the District for the Associated Student Body Fund was materially misstated. Cause

In Bank reconciliations for the Associated Student Body accounts are not being reviewed timely. Criteria

Adequate internal controls over bank accounts include timely reconciliation and a review of source documents to ensure accuracy. Recommendation

The District should implement policies and procedures to ensure timely review of the Associated Student Body bank accounts. To ensure adequate separation of duties, this review should be performed by an individual who does not prepare the reconciliation, approve purchases or deposits, or listed as a signer on the account. District Response and Action Plan

Arcata High School has an investment account that has limited monthly activity. However, this year $30,000 was transferred from the Investment into the checking account. The ASB clerk showed a deposit into the checking account, but did not enter a reduction in the investment, resulting in an overstatement of $30,000. The District will require the clerk to reconcile all ASB accounts monthly or as statements are received, regardless of the level of activity. The reconciliations will be submitted to the District Office for review. Section III - Federal Award Findings and Questioned Costs There were no findings or questioned costs relative to federal awards or programs.


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Section IV - State Award Findings and Questioned Costs 2014-002 Unduplicated Pupil Count / State Code 40000 Condition

Of the pupils selected for testing, sufficient documentation was lacking, for pupils to be classified as Free and Reduced Price Meal (FRPM) eligible. Effect

The District over-reported its Unduplicated Pupil Count. Cause

Internal controls over updating California Longitudinal Pupil Achievement Data System (CALPADS) submitted data were insufficient to detect and correct the error. Criteria

Sections 14502.1, 14503, 2574(b)(3)(C), 44238.02(b)(3)(B), and 41020, Education Code. Questioned costs

Through extrapolation the total impact of the finding is calculated as follows:

Certified AuditedCount Adjustments Count

Total Enrollment 1,630 - 1,630

Unduplicated Pupil Count

FRPM eligible pupils 543 (19) 524 EL eligible pupil 23 - 23 FRPM and EL eligible pupils 10 - 10

Total Unduplicated Pupil Count 576 (19) 557

LCFF funding sources 11,675,248$ (24,996)$ 11,650,252$

Estimated Supplementat Grant 771,291$ (24,996)$ 746,296$

Estimated Supplemental Grant per Unduplicated Pupil 1,339$


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2014-002 Unduplicated Pupil Count / State Code 40000 (Continued) Recommendation

The District should develop policies and procedures to ensure CALPADS reporting is accurate. District Response and Action Plan

The District has performed an internal audit of the CALPADS reported in 2013-2014. Areas of weakness have been identified. In 2014-2015, the District provided additional training for site staff responsible for maintaining the CALPADS data. In addition, the District has met with all administration to explain the process and deadlines associated with CALPADS data. In January, the District will be doing its own internal audit of the CALPADS data to ensure that the current year data is accurate. This process will be completed in future years to ensure continued compliance with regulations tied to Local Control Funding and the Free and Reduced Price Meal Program.

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT CORRECTIVE ACTION PLAN


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A Corrective Action Plan is not available and has not been submitted with the audited financial statements. If required, the District will prepare its Corrective Action Plan and will submit it to all recipients of the audit report within sixty days of the issue date of the report.

NORTHERN HUMBOLDT UNION HIGH SCHOOL DISTRICT SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS


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CurrentStatus

District Explanation, If Not Implemented

2013-001 The totals on the Districts listing of CapitalAssets did not agree to SACS Form ASSET.The District did not account for changesrelated to Other Post-Employment Benefits(OPEB) properly on the SACS Form DEBT.We recommend the District implementpolicies and procedures to ensure properreporting for the SACS ASSET and DEBTForms. Implemented

2013-002 During our review of Associated StudentBody (ASB) funds, we noted the following: 1. Booster club fundraising proceeds weredeposited into the ASB account, and a checkwas written out of the ASB account back tothe booster club.2. $3,490 of camera equipment waspurchased out of ASB funds without anadvance purchase order.3. We noted a few instances where expensereimbursements where utilized afterexpenses were incurred, instead of issuingtravel advances. Whenever possible, issuinga travel advance is a good control feature.This allows the ASB bookkeeper andadviser to review the planned expendituresfor appropriateness and that the plannedcharges are reasonable.4. ASB Bookkeepers at McKinleyville andArcata High Schools, in some cases, arefollowing different procedures.

Implemented

Finding/Recommendation

Received by MLaMar December 11, 2014 December 11, 2014 District/CA Northern Humboldt Union... ·...

Documents

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