SAN MARINO Marino USD Audit Report 2010.pdfSan Marino Unified School District San Marino, California...

SAN MARINO UNIFIED SCHOOL DISTRICT

AUDIT REPORT

For the Fiscal Year Ended

June 30, 2010


AUDIT REPORT

For the Fiscal Year Ended June 30, 2010

Table of Contents

FINANCIAL SECTION

Page

Independent Auditor’s Report .......................................................................................................................... 1

Management’s Discussion and Analysis .......................................................................................................... 3

Financial Statements:

Government‐wide Financial Statements:

Statement of Net Assets ....................................................................................................................... 16

Statement of Activities ......................................................................................................................... 17

Governmental Fund Financial Statements:

Balance Sheet ......................................................................................................................................... 18

Reconciliation of the Governmental Funds Balance Sheet to the

Statement of Net Assets ................................................................................................................ 19

Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................ 20

Reconciliation of the Governmental Funds Statement of Revenues,

Expenditures, and Changes in Fund Balances to the Statement of Activities ....................... 21

Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Assets ...................................................................................................... 22

Notes to Financial Statements .......................................................................................................................... 23

REQUIRED SUPPLEMENTARY INFORMATION

Budgetary Comparison Schedule – General Fund ........................................................................................ 52

Budgetary Comparison Schedule – Special Revenue Fund for Other than Capital Outlay .................... 53

Schedule of Funding Progress ......................................................................................................................... 54


AUDIT REPORT


Table of Contents

SUPPLEMENTARY INFORMATION

Page

Local Educational Agency Organization Structure ...................................................................................... 55

Schedule of Average Daily Attendance ......................................................................................................... 56

Schedule of Instructional Time ........................................................................................................................ 57

Schedule of Financial Trends and Analysis ................................................................................................... 58

Schedule of Expenditures of Federal Awards ............................................................................................... 59

Reconciliation of Annual Financial and Budget Report with Audited Financial Statements ................. 60

Note to Supplementary Information .............................................................................................................. 61

OTHER INDEPENDENT AUDITOR’S REPORTS

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 ................................................................................................................... 62

Report on Compliance with Requirements that could have a Direct and Material Effect on

Each Major Program and on Internal Control over Compliance in Accordance with

OMB Circular A‐133 .................................................................................................................................... 64

Independent Auditor’s Report on State Compliance ................................................................................... 66

FINDINGS AND QUESTIONED COSTS SECTION

Schedule of Audit Findings and Questioned Costs ...................................................................................... 68

Summary Schedule of Prior Audit Findings ................................................................................................. 74

2727 Camino Del Rio South ● Suite 219 ● San Diego, CA 92108 tel. 619.270.8222 ● fax. 619.260.9085

www.cwacpa.com

Licensed by the California Board of Accountancy

1

Board of Education

San Marino Unified School District

San Marino, California

INDEPENDENT AUDITOR’S REPORT

We have audited the accompanying financial statements of the governmental activities, each major fund,

and the aggregate remaining fund information of the San Marino Unified School District, as of and for the

fiscal year ended June 30, 2010, which collectively comprise the District’s basic financial statements as

listed in the table of contents. These financial statements are the responsibility of the San Marino Unified

School Districtʹs management. 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 of

material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also includes assessing the accounting principles

used and significant estimates made by management, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the

respective financial position of the governmental activities, each major fund, and the aggregate remaining

fund information of the San Marino Unified School District, as of June 30, 2010, and the respective

changes in financial position thereof for the fiscal year then ended in conformity with accounting

principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated on our

consideration of the San Marino Unified School Districtʹs internal control over financial reporting and 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 the

internal control over financial reporting or on compliance. That report is an integral part of an audit

performed in accordance with Government Auditing Standards and should be considered in assessing the

results of our audit.

2

The management’s discussion and analysis on pages 3 through 15, the budgetary comparison schedules

on pages 52 and 53, and the schedule of funding progress on page 54 are not a required part of the basic

financial statements but are supplementary information required by accounting principles generally

accepted in the United States of America. We have applied certain limited procedures, which consisted

principally of inquiries of management regarding the methods of measurement and presentation of the

required supplementary information. However, we did not audit the information and express no opinion

on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively

comprise San Marino Unified School District’s basic financial statements. The combining and individual

non‐major fund financial statements, the schedule of financial trends and analysis, and the schedule of

expenditures of federal awards, which is required by U.S. Office of Management and Budget Circular A‐

133, Audits of States, Local Governments, and Non‐Profit Organizations, are presented for purposes of

additional analysis and are not a required part of the basic financial statements. Such information has

been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our

opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a

whole.

San Diego, California November 21, 2010

Management’s Discussion and Analysis

3


Management’s Discussion and Analysis (Unaudited)

For Fiscal Year Ended June 30, 2010

This discussion and analysis of San Marino Unified School District’s financial performance provides an

overview of the District’s financial activities for the fiscal year ended June 30, 2010. Please read it in

conjunction with the District’s financial statements, which immediately follow this section.

FINANCIAL HIGHLIGHTS

The Districtʹs financial condition was once again challenged in 2009‐10, as a result of the Stateʹs current

financial crisis. State revenues continued to decline and the demand for health and social services

increased. The State budget reduced K‐12 Education apportionment funding by $2.1 billion. Schools were

provided flexibility to reduce the academic year, reduced facility maintenance and categorical program

funding, and suspend the requirement for the adoption of instructional materials through June 30, 2013

but these options did not offset the need for budget reductions. Although the State adopted a balanced

budget, the Legislative Analyst’s Office projected that the State would face additional deficits for several

years to come.

The District’s Budget was based on the Adopted State’s Budget for K‐12 Education. It included a 4.25%

COLA, or $262 per student for 2009‐10, however, the COLA was offset by a deficit of 18.355% plus

additional cuts to state revenues, which in total far exceeded the COLA funds. As a result of the revenue

limit reduction and cuts to other State and Federal funding sources, the District faced a $5 million deficit

for 2009‐10. The District’s deficit was offset by passage of Measure E parcel tax, providing $3.5 million in

revenues through June 30, 2015. The remaining gap of $1.5 million was bridged based on adjustment of

class sizes, one‐time budget savings, and budget reductions. The District had previously negotiated a

three‐year salary and benefits agreement (2008‐2011) with the certificated and classified bargaining units.

Based on the agreement, there were no salary schedule increases and the employees’ share of benefit costs

increased. Employees pay 10% of the benefit costs for employee only coverage, and 30% of the costs for

two‐party and family coverage. The District has a Health and Benefits Savings fund whereby savings in

any given year is reserved to offset future year premium increases.

The District’s Revenue Limit average daily attendance (ADA) in 2009‐10 totaled 3,162 ADA. This was a

slight increase over the prior year with an additional 14 ADA. Student enrollment is projected to decline

in future years based on larger graduating classes and fewer students entering kindergarten.

During the fiscal year, the District Budget and cash flow expenditures were closely monitored and

expenditures were limited and/or withheld where possible, given the uncertainty of State. The District

established the Cash Flow Fund as a means of helping to bridge the State’s multiple deferrals of State

apportionment funding. According to State resources, it is anticipated that the Stateʹs fiscal condition will

continue to weaken over the next three to five years based on key economic indicators.

Beyond routine repairs, there was no major capital or building projects in 2009‐10. The District reduced its

outstanding General Obligation Bond long‐term debt by $853,059.

4




OVERVIEW OF THE FINANCIAL STATEMENTS

This annual report consists of three parts – management discussion and analysis (this section), the basic

financial statements, and required supplementary information. The basic financial statements include

two kinds of statements that present different views of the District:

The first two statements are District‐wide financial statements that provide both short‐term and long‐term

information about the District’s overall financial status. The remaining statements are fund financial

statements that focus on individual parts of the District, reporting the District’s operations in more detail

than the District‐wide statements.

The governmental funds statements tell how basic services like regular and special education were financed

in the short term as well as what remains for future spending.

Fiduciary funds statements provide information about the financial relationships in which the District acts

solely as a trustee or agent for the benefit of others to whom the resources belong.

5




The financial statements also include notes that explain some of the information in the statements and

provide more detailed data. Figure A‐1 shows how the various parts of this annual report are arranged

and related to one another.

Management’s

Discussion and

Analysis

Figure A‐1. Organization of San Marino Unified School District’s

Annual Financial Report

Basic

Financial

Information

Required

Supplementary

Information

Fund

Financial

Statements

District‐Wide

Financial

Statements

Notes to the

Financial

Statements

SUMMARY DETAIL

6




Figure A‐2 summarizes the major features of the District’s financial statements, including the portion of

the District’s activities they cover and the types of information they contain.

Figure A‐2. Major Features of the District‐wide and Fund Financial Statements

Type of Statements District‐wide Governmental Funds Fiduciary Funds

Scope Entire District, except

fiduciary activities

The activities of the

District that are not

proprietary or

fiduciary, such as

special education and

building maintenance

Instances in which the

District administers

resources on behalf of

someone else, such as

scholarship programs

and student activities

monies

Required financial

statements

Statement of Net

Assets

Statement of

Activities

Balance Sheet

Statement of

Revenues,

Expenditures &

Changes in Fund

Balances

Statement of

Fiduciary Net

Assets

Statement of

Changes in

Fiduciary Net

Assets

Accounting basis and

measurement focus

Accrual accounting and

economic resources

focus

Modified accrual

accounting and current

financial resources

focus

Accrual accounting and

economic resources

focus

Type of asset/liability

information

All assets and liabilities,

both financial and

capital, short‐term and

long‐term

Only assets expected to

be used up and

liabilities that come due

during the year or soon

thereafter; no capital

assets included

All assets and liabilities,

both short‐term and

long‐term; The

District’s funds do not

currently contain non‐

financial assets, though

they can

Type of

inflow/outflow

information

All revenues and

expenses during year,

regardless of when cash

is received or paid

Revenues for which

cash is received during

or soon after the end of

the year; expenditures

when goods or services

have been received and

payment is due during

the year or soon

thereafter

All revenues and

expenses during the

year, regardless of

when cash is received

or paid

7




The remainder of this overview section of management’s discussion and analysis highlights the structure

and contents of each of the statements.

District‐wide Statements

The District‐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 assets includes all of the District’s

assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of

activities regardless of when cash is received or paid.

The two District‐wide statements report the District’s net assets and how they have changed. Net

assets – the difference between the District’s assets and liabilities – is one way to measure the

District’s financial health or position. In the District‐wide financial statements, the District’s

activities are categorized as Governmental Activities. Most of the District’s basic services are included

here, such as regular education, special education, maintenance, construction, custodial and

administration. Property taxes and state formula aid finance most of these activities.

Fund Financial Statements

The fund financial statements provide more detailed information about the District’s most significant

funds – not the District as a whole. Funds are accounting devices the District uses to keep track of specific

sources of funding and spending on particular programs:

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

The District establishes other funds to control and manage money for particular purposes (such as

repaying its long‐term debt) or to show that it is properly using certain revenues (such as Federal

grants).

8




The District has two kinds of funds:

Governmental funds – Most of the District’s basic services are included in governmental funds, which

generally focus on (1) how cash and other financial assets that can readily be converted to cash flow

in and out and (2) the balances left at year‐end that are available for spending. Consequently, the

governmental funds statements provide a detailed short‐term view that helps you determine

whether there are more or less financial resources that can be spent in the near future to finance the

District’s programs. Because this information does not encompass the additional long‐term focus of

the District‐wide statements, we provide additional information at the bottom of the governmental

funds statements that explain the relationship (or differences) between them.

Fiduciary funds – The District is the trustee, or fiduciary, for assets that belong to others, namely, the

student body activities funds. The District is responsible for ensuring that the assets reported in

these funds are used only for their intended purposes and by those to whom the assets belong. All

of the District’s fiduciary activities are reported in a separate statement of fiduciary net assets. We

exclude these activities from the District‐wide financial statements because the District cannot use

these assets to finance its operations.

FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE

Net Assets. The District’s combined net assets as of June 30, 2010 remained nearly the same at

$22,469,439. (See Table A‐1).

Total

Percentage

Change

2009 2010 2009‐10

Current assets $ 9,966,445 $ 18,744,778 88%

Noncurrent assets 63,670,782 61,684,121 ‐3%

Total assets 73,637,227 80,428,899 9%

Current liabilities 3,156,435 10,421,607 230%

Noncurrent liabilities 48,649,033 47,537,853 ‐2%

Total liabilities 51,805,468 57,959,460 12%

Total net assets $ 21,831,759 $ 22,469,439 3%

Table A‐1

San Marino Unified School District’s Net Assets

Governmental Activities

9




FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE (continued)

Changes in net assets, governmental activities. The District’s total revenues were $35,975,477 (See Table

A‐2). This is a decrease of $164,173 due to the State deficit.

The total cost of all programs and services was $35,337,797. Approximately 59% of the District’s expenses

are related to educating and caring for students.

2009 2010 2009‐10

Revenues:

Program revenues

Charges for services $ 1,559,250 $ 1,109,538 ‐29% Operating grants and contributions 6,510,953 4,824,923 ‐26%

General revenues

Property taxes 13,018,449 17,379,657 34%

Other revenues 15,050,998 12,661,359 ‐16%

Total revenues 36,139,650 35,975,477 0%

Expenses:

Instruction‐related 20,362,552 18,380,753 ‐10%

Student support services 2,385,446 2,337,429 ‐2%

Maintenance and operations 3,689,573 3,773,788 2%

Administration 2,569,984 2,876,595 12%

Other expenses 6,524,671 7,969,232 22%

Total expenses 35,532,226 35,337,797 ‐1%

Change in net assets 607,424$ 637,680$ 5%

Table A‐2

Changes in San Marino Unified School District’s Net Assets

Total Percentage

ChangeGovernmental Activities

10




FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE (continued)


The sound financial condition of the District can be credited to the following management actions:

Conservative District philosophy, fiscal management and cash flow management. Position control procedures require budget allocation and approval prior to creation of new positions. Budget control through monthly budget adjustments, reconciliation of actual personnel costs to

budgeted costs, detailed line‐item budget, and frequent updates of multi‐year budget projections based on the most recent information received from the State.

Class sizes in all grade levels are monitored and adjusted as needed.

Table A‐3 presents the cost of five major District activities: instruction and instruction related; student support services; general administration; maintenance and operations; and other purposes. The table also shows each activity’s net cost (total cost less fees generated by the activities and inter‐governmental aid provided for specific programs). The cost of all governmental activities this year was $35,337,797. Some of the cost was paid by the users of the District’s programs ($1,109,538). The federal and state governments subsidized programs with grants and contributions ($4,824,923).

Total Cost Net Cost of

of Services Services

Instructional services $ 18,380,753 $ 14,604,259

Pupil support services 2,337,429 1,062,152

Maintenance and operations 3,773,788 3,428,418

Administration 2,876,595 2,625,480

Other expenses 7,969,232 7,683,027

Total expenses 35,337,797$ 29,403,336$

Table A‐3

Net Costs of San Marino Unified School District’s


11




FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS

The financial performance of the District as a whole is reflected in its governmental funds as well. As the

District completed this year, its governmental funds reported a combined fund balance of $11.7 million,

which is greater than last year’s ending fund balance of $8.3 million. The District’s General Fund had $1.4

million more in expenditures than operating revenues in the fiscal year 2009‐10.

General Fund Budgetary Highlights

During the fiscal year, budget revisions and appropriation transfers are presented to the Board for their

approval on a monthly basis to reflect changes to both revenues and expenditures that become known

during the year. In addition, the Board of Education approves financial projections included with the

Adopted Budget, First Interim, and Second Interim financial reports. The Unaudited Actuals reflect the

District’s financial projections and current budget based on State and local financial information.

Budget adjustments to revenues and expenditures for the year include:

Adjustments for additional revenues received from the San Marino Schools Foundation,

PTA/PTSA’s and parents for restricted purposes

Adjustments for certificated column movements

Adjustments for restricted categorical carryovers

Adjustments for changes in state and other local income

12




CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

By the end of 2009‐10 the District had invested in new capital assets due to HVAC repairs, Adobe project

environmental impact report, portable buildings, and intercom system repairs. The majority of costs were

paid for with JPA funds.

Total

Percentage

Change

2009 2010 2009‐10

Land 422,500$ 422,500$ 0%

Site improvements 7,922,065 8,273,022 4%

Buildings 74,899,077 74,993,740 0%

Furniture and equipment 1,884,252 1,932,252 3%

Construction in progress 251,605 759,448 202%

Total capital assets 85,379,499$ 86,380,962$ 1%

Table A‐4

San Marino Unified School District’s Capital Assets


13




Long‐Term Debt

At year‐end the District had $49.3 million in general obligation bonds, a decrease of 2% from last year – as

shown in Table A‐5. (More detailed information about the District’s long‐term liabilities is presented in

footnotes to the financial statements.)

Total

Percentage

Change

2009 2010 2009‐10

Compensated absences 213,530$ 232,198$ 9%

General obligation bonds 50,040,503 49,187,444 ‐2%

Postemployment benefits (94,817) (136,480) 44%

Total long‐term debt 50,159,216$ 49,283,162$ ‐2%


Table A‐5

San Marino Unified School District’s Long‐Term Debt

14




FACTORS BEARING ON THE DISTRICT’S FUTURE

The state’s budget situation continues to reflect challenging economic conditions. The 2010 State Budget

was balanced on overly optimistic state and federal revenue projections, the sale of state properties,

additional borrowings, and the suspension of the Proposition 98 minimum guarantee. A relatively slow

pace of job growth in California has presented a headwind for a more rapid rate of economic recovery.

The state’s budget challenges have adversely impacted the K‐12 education budget. As a result, unified

school districts in the state of California in 2010‐11 were reduced $25 per unit of average daily attendance

over 2009‐10 in revenue limit state funding, to an average funded revenue limit of approximately $6,386

per unit of average daily attendance. A corresponding decrease in the deficit factor offsets the loss

keeping funding levels in 2010‐11 the same as 2009‐10, however, it is anticipated that the State will either

implement mid‐year cuts, or cut school funding more in the 2011‐12 fiscal year.

Federal funding for categorical programs was given another one‐time funding boost in 2010‐11 with the

Education Jobs Act funding. In addition, the final 10% of the State Fiscal Stabilization funds, part of the

American Recovery and Reinvestment Act (ARRA), are to be paid in 2010‐11. ARRA funds must be spent

prior to the September 30, 2011. However, the State implemented additional cost deferrals greater than

the amounts received from the federal government which offset any net increase in revenues and cash

flows.

State categorical program flexibility continues for 2009‐10 and 2010‐11 with no anticipated changes.

School districts continue to be authorized to use funding from 42 Tier III categorical programs for any

purpose. K‐3 class size reduction penalties have been relaxed for two more years and school agencies

maintain the flexibility to shorten the school year until 2012‐13. Reserve requirements for economic

uncertainties, if reduced by school agencies, must be fully restored by 2011‐12.

Other Factors

Enrollment

Enrollment can fluctuate due to factors such as population growth, competition from private, parochial,

inter‐district transfers in or out, economic conditions and housing values. Losses in enrollment will cause

a school district to lose operating revenues without necessarily permitting the district to make

adjustments in fixed operating costs.

All of these factors were considered in preparing the San Marino Unified School District budget for the

2010‐11 fiscal year.

15




CONTACTING THE DISTRICTʹS FINANCIAL MANAGEMENT

This financial report is designed to provide our parents and students, community, investors and creditors

with a general overview of the Districtʹs finances and the Districtʹs management of the funds it receives.

For questions about this report or additional financial information, please contact Mrs. Julie Boucher,

Assistant Superintendent, Business Services, San Marino Unified School District, 1665 West Drive;

San Marino, California 91108, (626) 299‐7000, ext. 390, or email: [email protected]. General

information about the District and its financial reports can be accessed at its website at:

www.san‐marino.k12.ca.us.

Financial Section

The notes to financial statements are an integral part of this statement.

16


Statement of Net Assets

June 30, 2010

Discretely

Presented

Governmental

Activities

Component Unit

(Audited)

ASSETS

Current assets:

Cash and cash equivalents 15,367,110$ 5,253,965$

Accounts receivable 3,358,968 ‐

Inventories 18,700 ‐

Other current assets ‐ 875,465

Total current assets 18,744,778 6,129,430

Noncurrent assets:

Net OPEB asset 136,480 ‐

Capital assets:

Land 422,500 ‐

Site improvements 8,273,022 ‐

Buildings 74,993,740 ‐

Furniture and equipment 1,932,252 9,027

Construction in progress 759,448 ‐

Less accumulated depreciation (24,833,321) (9,027)

Total capital assets, net of depreciation 61,547,641 ‐

Total noncurrent assets 61,684,121 ‐

Total assets 80,428,899 6,129,430

LIABILITIES

Current liabilities:

Accounts payable 3,336,778 3,269,611

Deferred revenue 517,646 ‐

Other current liabilities 4,685,394 ‐

Compensated absences, current 31,789 ‐

General obligation bonds payable, current 1,850,000 ‐

Total current liabilities 10,421,607 3,269,611

Noncurrent liabilities:

Compensated absences payable, noncurrent 200,409 ‐

General obligation bonds payable, noncurrent 47,337,444 ‐

Total noncurrent liabilities 47,537,853 ‐

Total liabilities 57,959,460 3,269,611

NET ASSETS

Invested in capital assets, net of related debt 17,284,962 ‐

Restricted for:

Capital projects 738,861 ‐

Debt service 2,840,684 ‐

Educational programs 246,109 1,381,307

Unrestricted 1,358,823 1,478,512

Total net assets 22,469,439$ 2,859,819$


17


Statement of Activities


Discretely

Operating Presented

Charges for Grants and Governmental Component Unit

Expenses Services Contributions Activities (Audited)

Governmental activities:

Instructional services:

Instruction 15,905,437$ 287,030$ 3,170,051$ (12,448,356)$ ‐$

Instruction‐related services:

Supervision of instruction 481,573 ‐ 207,612 (273,961) ‐

Instructional library, media

and technology 305,694 ‐ 86,132 (219,562) ‐

School site administration 1,688,049 ‐ 25,669 (1,662,380) ‐

Pupil support services:

Home‐to‐school transportation 85,326 38,800 65,821 19,295 ‐

Food services 834,382 712,025 113,232 (9,125) ‐

All other pupil services 1,417,721 ‐ 345,399 (1,072,322) ‐

General administration services:

Data processing services 360,533 ‐ 10,000 (350,533) ‐

Other general administration 2,516,062 32,183 208,932 (2,274,947) ‐

Plant services 3,773,788 39,500 305,870 (3,428,418) ‐

Ancillary services 395,437 ‐ 94,682 (300,755) ‐

Community services 155,479 ‐ ‐ (155,479) ‐

Enterprise activities 162,890 ‐ 162,890 ‐ ‐

Interest on long‐term debt 4,072,016 ‐ ‐ (4,072,016) ‐

Other outgo 58,806 ‐ 28,633 (30,173) ‐

Depreciation (unallocated) 3,124,604 ‐ ‐ (3,124,604) ‐

Total governmental activities 35,337,797 1,109,538 4,824,923 (29,403,336) ‐

Discretely Presented

Component Unit (Audited)

San Marino Schools Foundation 4,578,801$ ‐$ 4,589,835$ ‐ 11,034

General revenues:

Taxes:

Property taxes, levied for general purposes 8,704,610 ‐

Property taxes, levied for debt service 3,592,222 ‐

Property taxes, levied for other specific purposes 5,082,825 ‐

Federal and state aid not restricted

to specific purpose 9,107,434 ‐

Interest and investment earnings 159,634 ‐

Interagency revenues 305,244 2,620

Miscellaneous 3,089,047 86,345

Total general revenues 30,041,016 88,965

Change in net assets 637,680 99,999

Net assets ‐ July 1, 2009 21,831,759 2,759,820

Net assets ‐ June 30, 2010 22,469,439$ 2,859,819$

Changes in Net Assets

Net (Expense) Revenues and

Functions/Programs

Program Revenues


18


Balance Sheet – Governmental Funds

June 30, 2010

General Fund

Special Reserve

Fund for Other

Than Capital

Outlay Fund

Bond Interest and

Redemption Fund

Non‐Major

Governmental

Funds

Total Governmental

Funds

ASSETS

Cash and cash equivalents 1,714,569$ 8,851,235$ 2,840,684$ 1,960,622$ 15,367,110$

Accounts receivable 3,296,353 22,701 ‐ 39,914 3,358,968

Due from other funds 4,728,720 ‐ ‐ ‐ 4,728,720

Inventories 2,092 ‐ ‐ 16,608 18,700

Total assets 9,741,734$ 8,873,936$ 2,840,684$ 2,017,144$ 23,473,498$

LIABILITIES AND FUND BALANCES

LIABILITIES

Accounts payable 1,759,569$ ‐$ ‐$ 84,137$ 1,843,706$

Due to other funds ‐ 4,728,720 ‐ ‐ 4,728,720

Deferred revenue 443,396 ‐ ‐ 74,250 517,646

Current loans 4,685,394 ‐ ‐ ‐ 4,685,394

Total liabilities 6,888,359 4,728,720 ‐ 158,387 11,775,466

FUND BALANCES

Reserved for:

Inventories 2,092 ‐ ‐ 16,608 18,700

Revolving cash 35,000 ‐ ‐ 612 35,612

Debt service ‐ ‐ 2,840,684 ‐ 2,840,684

Categorical programs 246,109 ‐ ‐ ‐ 246,109

Unreserved; reported in:

General fund 2,570,174 ‐ ‐ ‐ 2,570,174

Special revenue funds ‐ 4,145,216 ‐ 1,053,606 5,198,822

Capital project funds ‐ ‐ ‐ 787,931 787,931

Total fund balances 2,853,375 4,145,216 2,840,684 1,858,757 11,698,032

Total liabilities and fund balances 9,741,734$ 8,873,936$ 2,840,684$ 2,017,144$ 23,473,498$


19


Reconciliation of the Governmental Funds Balance Sheet to the Statement of

Net Assets

June 30, 2010

Total fund balances ‐ governmental funds 11,698,032$

Amounts reported for governmental activities in the statement of net assets are

different because capital assets used for governmental activities are not financial resources

and therefore are not reported as assets in governmental funds. The cost of the

capital assets is $86,380,962 and the accumulated depreciation is ($24,833,321). 61,547,641

In governmental funds, postretirement benefits costs are recognized as expenditures in the

period they are paid. In the government‐wide statements, postretirement benefits costs

are recognized in the period that they are incurred. The net OPEB asset at the end of

the period was: 136,480

In governmental funds, interest on long‐term debt is not recognized until the period in which it

matures and is paid. In the government‐wide statement of activities, it is recognized in the

period that it is incurred. The additional liability for unmatured interest owing at the end of

the period was: (1,493,072)

In governmental funds, only current liabilities are reported. In the statement of net assets, all

liabilities, including long‐term liabilities, are reported. Long‐term liabilities relating to

governmental activities consist of:

Compensated absences payable 232,198$

General obligation bonds payable 49,187,444 (49,419,642)

Total net assets ‐ governmental activities 22,469,439$


20


Statement of Revenues, Expenditures, and Changes in Fund Balances –

Governmental Funds


General Fund

Special Reserve

Fund for Other

Than Capital

Outlay Fund

Bond Interest and

Redemption Fund

Non‐Major

Governmental

Funds

Total Governmental

Funds

REVENUES

General revenues:

Property taxes 13,776,299$ ‐$ 3,603,358$ ‐$ 17,379,657$

Federal and state aid not restricted

to specific purpose 9,107,434 ‐ ‐ ‐ 9,107,434

Interest and investment earnings 79,504 45,249 17,670 17,212 159,635

Interagency revenues 305,244 ‐ ‐ ‐ 305,244

Miscellaneous 2,314,137 ‐ ‐ 774,911 3,089,048

Program revenues:

Charges for services 325,830 ‐ ‐ 783,708 1,109,538

Operating grants and contributions 4,446,028 ‐ ‐ 378,894 4,824,922

Total revenues 30,354,476 45,249 3,621,028 1,954,725 35,975,478

EXPENDITURES

Instructional services:

Instruction 15,947,100 ‐ ‐ ‐ 15,947,100

Instruction‐related services:

Supervision of instruction 481,573 ‐ ‐ ‐ 481,573

Instructional library, media and technology 305,694 ‐ ‐ ‐ 305,694

School site administration 1,688,049 ‐ ‐ ‐ 1,688,049

Pupil support services:

Home‐to‐school transportation 85,326 ‐ ‐ ‐ 85,326

Food services 15,218 ‐ ‐ 819,164 834,382

All other pupil services 1,417,721 ‐ ‐ ‐ 1,417,721

General administration services:

Data processing services 360,533 ‐ ‐ ‐ 360,533

Other general administration 2,335,092 ‐ ‐ 37,026 2,372,118

Plant services 3,498,273 ‐ ‐ 222,913 3,721,186

Facility acquisition and construction 248,919 ‐ ‐ 930,422 1,179,341

Ancillary services 395,437 ‐ ‐ ‐ 395,437

Community services 155,479 ‐ ‐ ‐ 155,479

Enterprise activities 162,890 ‐ ‐ ‐ 162,890

Other outgo:

Transfers between agencies 58,806 ‐ ‐ ‐ 58,806

Debt service ‐ principal ‐ ‐ 1,605,000 ‐ 1,605,000

Debt service ‐ interest ‐ ‐ 1,827,004 ‐ 1,827,004

Total expenditures 27,156,110 ‐ 3,432,004 2,009,525 32,597,639

Excess (deficiency) of revenues

over (under) expenditures 3,198,366 45,249 189,024 (54,800) 3,377,839

OTHER FINANCING SOURCES (USES)

Interfund transfers in 55,540 4,144,204 ‐ 490,625 4,690,369

Interfund transfers out (4,634,829) (55,540) ‐ ‐ (4,690,369)

Total other financing sources and uses (4,579,289) 4,088,664 ‐ 490,625 ‐

Net change in fund balances (1,380,923) 4,133,913 189,024 435,825 3,377,839

4,234,298 11,303 2,651,660 1,422,932 8,320,193

Fund balances, June 30, 2010 2,853,375$ 4,145,216$ 2,840,684$ 1,858,757$ 11,698,032$

Fund balances, July 1, 2009


21


Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and

Changes in Fund Balances to the Statement of Activities


Total net change in fund balances ‐ governmental funds 3,377,839$

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

Capital outlays are reported in governmental funds as expenditures. However, in the statement

of activities, the cost of those assets is allocated over their estimated useful lives as depreciation

expense. The difference between capital outlay expenditures and depreciation expense for the period is:

Expenditures for capital outlay 1,124,413

Depreciation expense (3,124,604) (2,000,191)

Debt service: In governmental funds, repayments of long‐term debt are reported as expenditures.

In the government‐wide statements, repayments of long‐term debt are reported as a reduction of

liabilities. Expenditures for repayment of the principal portion of long‐term debt were: 1,605,000

In governmental funds, postretirement benefits costs are recognized as expenditures in the

period they are paid. In the government‐wide statements, postretirement benefits costs

are recognized in the period that they are incurred. This year, the difference between OPEB costs

and actual employer contributions was: 41,663

In governmental funds, interest on long‐term debt is recognized in the period that it becomes due.

In the government‐wide statement of activities, it is recognized in the period that it is incurred.

Unmatured interest owing at the end of the period, less matured interest paid during the period but

owing from the prior period, was: (2,245,013)

In the statement of activities, compensated absences are measured by the amounts earned

during the year. In the governmental funds, however, expenditures for these items are measured

by the amount of financial resources used (essentially, the amounts actually paid ). (18,668)

Cost write‐off for canceled capital projects: If a planned capital project is canceled and will not be

completed, costs previously capitalized as work in progress must be written off to expense. Costs

written off for canceled projects were: (122,950)

Change in net assets of governmental activities 637,680$


22


Statement of Fiduciary Net Assets – Fiduciary Funds

June 30, 2010

Student Body

Funds

Payroll

Clearing Fund

Total Agency

Funds

ASSETS

Cash 1,352,058$ 188,714$ 1,540,772$

Total Assets 1,352,058$ 188,714$ 1,540,772$

LIABILITIES

Due to student groups 1,352,058$ ‐$ 1,352,058$

Due to regulatory agencies ‐ 188,714 188,714

Total Liabilities 1,352,058$ 188,714$ 1,540,772$

23


Notes to Financial Statements

June 30, 2010

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

A. Accounting Policies

San Marino Unified School District (the District) accounts for its financial transactions in accordance

with the policies and procedures of the Department of Educationʹs California School Accounting

Manual. The accounting policies of the District conform to generally accepted accounting principles

as prescribed by the Governmental Accounting Standards Board (GASB) and the American Institute

of Certified Public Accountants (AICPA).

B. Reporting Entity

The District operates under a locally elected five‐member Board form of government and provides

educational services to grades K‐12 as mandated by the State. A reporting entity is comprised of the

primary government, component units, and other organizations that are included to ensure the

financial statements are not misleading. The primary government of the District consists of all fund,

departments and agencies that are not legally separate from the District. For the District, this includes

general operations, food service, and student related activities.

Component units are legally separate organizations for which the District is financially accountable.

Component units may also include organizations that are fiscally dependent on the District in that the

District approves their budget, the issuance of their debt or the levying of their taxes. In addition,

component units are other legally separate organizations for which the District is not financially

accountable but the nature and significance of the organization’s relationship with the District is such

that exclusion would cause the District’s financial statements to be misleading or incomplete. In

addition, component units are other legally separate organizations for which the District is not

financially accountable, but the nature and significance of the organization’s relationship with the

District is such that exclusion would cause the District’s financial statements to be misleading or

incomplete. The District has one such component unit, the San Marino Schools’ Foundation.

The San Marino Schools’ Foundation (the “component unit”), although a legally separate tax‐exempt

entity, is reported in the financial statements using the discrete presentation method as the economic

resources received or held by the separate organization are entirely or almost entirely for the direct

benefit of the District, the District is entitled to, or has the ability to otherwise access, a majority of the

economic resources received or held by the separate organization, and the economic resources

received or held by an individual organization that the District is entitled to, or has the ability to

otherwise access, are significant to the District.

24



June 30, 2010

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

C. Basis of Presentation

Government‐wide Financial Statements:

The government‐wide financial statements (i.e., the statement of net assets and the statement of activities)

report information on all of the non‐fiduciary activities of the District.

The government‐wide statements are prepared using the economic resources measurement focus.

This is the same approach used in the preparation of the fiduciary fund financial statements but

differs from the manner in which governmental fund financial statements are prepared.

Governmental fund financial statements, therefore, include a reconciliation with brief explanations to

better identify the relationship between the government‐wide statements and the statements for the

governmental funds.

Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund

activities, payables, and receivables. All internal balances in the Statement of Net Assets and

Statement of Activities have been eliminated, including due to/from other funds and transfers in/out.

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 meet

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 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.

Fund Financial Statements:

Fund financial statements report detailed information about the District. The focus of governmental

fund financial statements is on major funds rather than reporting funds by type. Each major

governmental fund is presented in a separate column, and all non‐major funds are aggregated into

one column. Fiduciary funds are reported by fund type.

25



June 30, 2010


C. Basis of Presentation (continued)

The accounting and financial treatment applied to a fund is determined by its measurement focus.

All governmental funds are accounted for using a flow of current financial resources measurement

focus. With this measurement focus, only current assets and current liabilities are generally included

on the balance sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balances for

these funds present increases (i.e., revenues and other financing sources) and decreases (i.e.

expenditures and other financing uses) in net current assets.

The District applies all GASB pronouncements, as well as the Financial Accounting Standards Board

(FASB) pronouncements issued on or before November 30, 1989, unless those pronouncements

conflict with or contradict GASB pronouncements.

Fiduciary funds are reported using the economic resources measurement focus. Fiduciary funds are

excluded from the government‐wide financial statements because they do not represent resources of

the District.

26



June 30, 2010


D. Basis of Accounting

Basis of accounting refers to when revenues and expenditures are recognized in the accounts and

reported in the financial statements. Government‐wide financial statements are prepared using the

accrual basis of accounting. Governmental funds use the modified accrual basis of accounting.

Fiduciary funds use the accrual basis of accounting.

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. On a 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

and are expected to be collected soon enough thereafter to be used to pay liabilities of the current

fiscal year. For the District, “available” means collectible within the current period or within 60 days

after year‐end.

Non‐exchange transactions, 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 the 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.

27



June 30, 2010


D. Basis of Accounting (continued)

Deferred revenue:

Deferred 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

deferred revenue.

Expenses/expenditures:

On the accrual basis of accounting, expenses are recognized at the time a liability is incurred. On the

modified accrual basis of accounting, expenditures are generally recognized in the accounting period

in which the related fund liability is incurred, as under the accrual basis of accounting. However,

under the modified accrual basis of accounting, debt services expenditures, as well as expenditures

related to compensated absences and claims and judgments, are recorded only when payment is due.

Allocations of cost, such as depreciation and amortization, are not recognized in the governmental

funds.

E. Fund Accounting

The accounts of the District are organized on the basis of funds or account groups, each of which is

considered to be a separate accounting entity. The operations of each fund are accounted for with a

separate set of self‐balancing accounts that comprise its assets, liabilities, fund equity, revenues, and

expenditures. District resources are allocated to and accounted for in individual funds based upon

the purpose for which they are to be spent and the means by which spending activities are controlled.

The District’s accounts are organized into major, non‐major, and fiduciary funds, as follows:

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 Bond Interest and Redemption Fund is used to account for the accumulation of resources for,

and the repayment of, District bonds, interest, and related costs.

The Special Reserve Fund for Other than Capital Outlay Projects is primarily to provide for the

accumulation of general fund moneys for general operating purposes other than capital outlay.

28



June 30, 2010


E. Fund Accounting (continued)

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 two non‐major

special revenue funds:

1. The Cafeteria Fund is used to account for revenues and expenditures associated with the

District’s food service operations.

2. The Deferred Maintenance Fund is used for the purpose of major repair or replacement of the

District’s school facilities.

Capital Projects Funds are used to account for the purchase and/or construction of major

governmental general fixed assets. The District maintains three non‐major capital project funds:

1. The Building Fund is used to account for new construction and modernization of school

facilities and represents proceeds from the sale of general obligation bonds.

2. The Capital Facilities Fund is used to account for resources received from developer impact fees

assessed under provisions of the California Environmental Quality Act.

3. The Special Reserve for Capital Projects Fund is used to account for funds set aside for capital improvement projects.

Fiduciary Funds:

Agency Funds are used to account for assets of others for which the District acts as an agent. The

cash account within the payroll clearing fund is used to record dedicated funds for payroll and

related expenses due to regulatory agencies, such as the I.R.S. and financial institutions. The

District maintains an agency fund for the student body accounts. The District also maintains one

student body fund, which is used to account for the raising and the expending of money to

promote the general welfare, morale, and the educational experience of the student body. The

amounts reported for the student body fund represent the combined totals of all schools within

the District.

29



June 30, 2010


F. Budgets and Budgetary Accounting

Annual budgets are adopted on a basis consistent with generally accepted accounting principles for

all government funds. By state law, the Board of Education must adopt a budget no later than

July 1. A public hearing must be conducted to receive comments prior to adoption. The Board of

Education satisfied these requirements.

These budgets are revised by the Board of Education during the year to give consideration to

unanticipated income and expenditures. The original and the final revised budgets are presented for

the General Fund in the supplementary information.

Formal budgetary integration was used as a management control device during the year for all

budgeted funds. The District uses budget control by minor object and by individual appropriation

accounts.

G. 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 as of June 30.

H. Assets, Liabilities, and Equity

1. Cash and Cash Equivalents

The District’s cash and cash equivalents are considered to be cash on hand and cash held in the Los

Angeles County Treasury. Cash held in the Los Angeles County Treasury is recorded at cost, which

approximates fair value. .

2. Inventory

Inventory is recorded using the purchases method in that the cost is recorded as an expenditure at the

time the individual inventory items are requisitioned. Inventories are valued at historical cost and

consist of expendable supplies held for consumption. Reported inventories are equally offset by a fund

balance reserve, which indicates that these amounts are not “available for appropriation and

expenditure.”

30



June 30, 2010


H. Assets, Liabilities, and Equity (continued)

3. Capital Assets

The accounting and reporting treatment applied to the capital assets associated with a fund is

determined by its measurement focus. Capital assets are reported in the governmental activities

column of the government‐wide statement of net assets, but are not reported in the fund financial

statements.

Capital assets are capitalized at cost (or estimated historical cost) and updated for additions and

disposals during the year. Donated fixed assets are recorded at their fair market values as of the

date received. The District maintains a capitalization threshold of $5,000. The District does not

own any infrastructure as defined in GASB No. 34. Improvements are capitalized; the costs of

normal maintenance and repairs that do not add to the value of the asset or materially extend an

asset’s life are not capitalized.

All reported capital assets, except for land and construction in progress, are depreciated.

Improvements are depreciated over the remaining useful lives of the related capital assets.

Depreciation is computed using the straight‐line method over the following estimated useful

lives:

Description Estimated Lives

Buildings and Improvements 25‐50 years

Furniture and Equipment 15‐20 years

Vehicles 8 years

4. Deferred Revenue

Cash received for federal and state special projects and programs is recognized as revenue to the

extent that qualified expenditures have been incurred. Deferred revenue is recorded to the extent

cash received on specific projects and programs exceed qualified expenditures.

5. Compensated Absences

Accumulated unpaid vacation benefits are accrued as a liability on the government‐wide

statement of net assets as the benefits are earned. For governmental funds, unpaid compensated

absences are recognized as a fund liability only upon the occurrence of relevant events such as

employee resignations and retirements that occur prior to year end that have not yet been paid

with expendable available financial resources. These amounts are recorded as accounts payable

in the fund from which the employees who have accumulated leave are paid.

31



June 30, 2010


H. Assets, Liabilities, and Equity (continued)

5. Compensated Absences (continued)

Accumulated sick leave benefits are not recognized as liabilities of the District. The Districtʹs

policy is to record sick leave as an operating expense in the period taken because 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.

6. Long‐Term Obligations

In the government‐wide financial statements, long‐term debt and other long‐term obligations are

reported as liabilities in the Statement of Net Assets. Bond premiums and discounts as well as

issuance costs are deferred and amortized over the life of the bonds. Bonds payable are reported net

of applicable bond premium or discount. Bond issuance costs are reported as prepaid expenditures

and amortized over the term of the related debt.

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 and

any premiums or discounts are reported as other financing sources and uses.

7. Fund Balance Reserves and Designations

Reservations of the ending fund balance indicate the portions of the fund balance not

appropriable for expenditure or amounts legally segregated for a specific future use.

Designations of the ending fund balance indicate tentative plans for financial resource utilization

in a future period.

8. Net Assets

Net assets represent the difference between assets and liabilities. Net assets invested in capital

assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by

the outstanding balances of any borrowings used for the acquisition, construction or

improvements of those assets. Net assets are reported as restricted when there are limitations

imposed on their use through external restrictions imposed by donors, grantors, or laws or

regulations of other governments.

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June 30, 2010


I. Revenue Limit/Property Tax

The District’s revenue limit is received from a combination of local property taxes, state

apportionments, and other local sources. The Los Angeles County Auditor Controller’s Office is

responsible for assessing, collecting, and apportioning property taxes. Taxes are levied for each fiscal

year on taxable real and personal property in the county. The levy is based on the assessed values as

of the preceding January 1, which is also the lien date. Property taxes on the secured roll are due on

November 1 and February 1, and taxes become delinquent after December 10 and April 10,

respectively. Property taxes on the unsecured roll are due on the lien date (January 1), and become

delinquent if unpaid by August 31.

Secured property taxes are recorded as revenue when apportioned, in the fiscal year of the levy. The

county apportions secured property tax revenue in accordance with the alternative method of

distribution prescribed by Section 4706 of the California Revenue and Taxation Code. This alternate

method provides for crediting each applicable fund with its total secured taxes upon completion of

the secured tax roll – approximately October 1 of each year.

The County Auditor Controller reports the amount of the District’s allocated property tax revenue to

the California Department of Education. Property taxes are recorded as local revenue limit sources

by the District.

The California Department of Education reduces the District’s entitlement by the District’s local

property tax revenue. The balance is paid from the state General Fund, and is known as the State

Apportionment.

The District’s Base Revenue Limit is the amount of general purpose tax revenue, per average daily

attendance (ADA), that the District is entitled to by law. This amount is multiplied by the second

period ADA to derive the District’s total entitlement.

J. Use of 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 the reported amounts of revenues and expenditures during the reporting period. Actual results

could differ from those estimates.

33



June 30, 2010


K. New GASB Pronouncement

GASB Statement No. 54 – Fund Balance Reporting and Governmental Fund Type Definitions was issued in

February 2009. This statement establishes fund balance classifications that comprise a hierarchy

based primarily on the extent to which a government is bound to observe constraints imposed upon

the use of the resources reported in governmental funds. This statement is required to be

implemented in the 2010‐11 fiscal year.

NOTE 2 – CASH AND INVESTMENTS

Summary of Cash and Investments

Cash and investments as of June 30, 2010 are classified in the accompanying financial statements as

follows:

Governmental

Funds

Fiduciary

Funds

Cash in county treasury 15,235,998$ ‐$ ‐$

Cash on hand and in banks 95,500 1,352,058 5,253,965

Cash in revolving fund 35,612 ‐ ‐

Total cash and cash equivalents 15,367,110$ 1,352,058$ 5,253,965$

Discretely

Presented

Component

Unit

34



June 30, 2010

NOTE 2 – CASH AND INVESTMENTS (continued)

Policies and Practices

Governmental agencies in the state of California are authorized under California Government Code to

make direct investments in local agency bonds, notes, or warrants within the state; U.S. Treasury

instruments; registered state warrants or treasury notes; securities of the U.S. Government, or its agencies;

bankers acceptances; commercial paper; certificates of deposit placed with commercial banks or savings

and loan companies; repurchase or reverse repurchase agreements; medium term corporate notes; shares

of beneficial interest issued by diversified management companies; certificates of participation;

obligations with first priority security; and collateralized mortgage obligations. Investments of debt

proceeds held by trustees are governed by the provisions of the applicable agreements rather than the

general provisions of the California Government Code.

Cash in County Treasury – The District is considered to be an involuntary participant in an external

investment pool, as the District is required to deposit all receipts and collections of monies with its

County Treasurer (Education Code Section 41001). The fair value of the District’s investment in the pool

is disclosed in the notes to the financial statements at amounts based upon the District’s pro‐rata share of

the fair value provided by the County Treasurer for the entire portfolio in relation to the amortized cost of

that portfolio. The balance available for withdrawal is recorded on the amortized cost basis and is based

on the accounting records maintained by the County Treasurer.

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June 30, 2010


General Authorizations

Except for investments by trustees of debt proceeds, the authority to invest District funds deposited with

the county treasury is delegated to the County Treasurer and Tax Collector. Additional information

about the investment policy of the County Treasurer and Tax Collector may be obtained from its website.

The table below identifies examples of the investment types permitted in the investment policy:

Authorized

Investment Type

Maximum

Remaining

Maturity

Maximum

Percentage

of Portfolio

Maximum

Investment

in One Issuer

Local Agency Bonds, Notes, Warrants 5 years None None

Registered State Bonds, Notes, Warrants 5 years None None

U.S. Treasury Obligations 5 years None None

U.S. Agency Securities 5 years None None

Banker’s Acceptance 180 days 40% 30%

Commercial Paper 270 days 25% 10%

Negotiable Certificates of Deposit 5 years 30% None

Repurchase Agreements 1 year None None

Reverse Repurchase Agreements 92 days 20% of base None

Medium‐Term Corporate Notes 5 years 30% None

Mutual Funds N/A 20% 10%

Money Market Mutual Funds N/A 20% 10%

Mortgage Pass‐Through Securities 5 years 20% None

County Pooled Investment Funds N/A None None

Local Agency Investment Fund (LAIF) N/A None None

Joint Powers Authority Pools N/A None None

Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are described

below:

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

value to changes in market interest rates.

The District manages its exposure to interest rate risk by investing in the County Treasury. The District

maintains an investment with the Los Angeles County Investment Pool with a fair value of approximately

$15,324,695, and an amortized book value of $15,235,998. The average weighted maturity for this pool is

536.34 days.

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June 30, 2010


Credit Risk

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 investments within the Los Angeles County Investment Pool are rated at least A by

Moody’s Investors Service.

Custodial Credit Risk – Deposits

Custodial credit risk 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 policy for custodial credit risk for deposits. However, the

California Government Code requires that a financial institution secure deposits made by state or local

governmental units by pledging securities in an undivided collateral pool held by a depository regulated

under state law (unless so waived by the governmental unit). The market value of the pledged securities

in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies.

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, 2010, the District’s bank balance of $131,112 (not including the foundation) was not exposed to

custodial credit risk because it did not exceed the $250,000 threshold was covered under the FDIC

insurance limit.

Concentration of Credit Risk

The investment policy of the District contains no limitations on the amount that can be invested in any

one issuer beyond the amount stipulated by the California Government Code. District investments that

are greater than 5 percent of total investments are in either an external investment pool or mutual funds

and are therefore exempt.

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable as of June 30, 2010 consist of the following:

Governmental

Funds

Federal 922,313$

State categorical 568,567

Other 1,868,088

Total accounts receivable 3,358,968$

37



June 30, 2010

NOTE 4 – INTERFUND ACTIVITIES

Interfund activity is reported as 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, expenditures

and expenses. Reimbursements are 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 funds are netted as part of the reconciliation to the government‐wide

financial statements.

Due From/Due To Other Funds

Individual interfund receivables and payable balances as of June 30, 2010 are as follows:

Due from Other Funds

General

Fund

Special Reserve for Other than Capital Outlay Fund 4,726,720$

Due from the General Fund to the Special Reserve for Other Than

Capital Outlay Fund for TRAN pledges paid in July 2010 $ 4,726,720

38



June 30, 2010

NOTE 4 – INTERFUND ACTIVITIES (continued)

Interfund Transfers

Interfund transfers consist of operating transfers from funds receiving resources to funds through which

the resources are to be expended. Interfund transfers for the 2009‐10 fiscal year are as follows:

Special Reserve for

General for Other Than

Fund Capital Outlay Fund Total

General Fund ‐$ 55,540$ 55,540$

Special Reserve for Other than Capital Outlay Fund 4,144,204 ‐ 4,144,204

Other Governmental Funds 490,625 ‐ 490,625

Total 4,634,829$ 55,540$ 4,690,369$

$ 456,125

4,144,204

34,500

55,540

4,690,369$

Transfers to Other Funds

Transfer from the General Fund to the Deferred Maintenance Fund for deferred maintance projects

Transfer from the General Fund to the Special Reserve for Other Than Capital Outlay Fund for cash

flow reserves

Transfer from the General Fund to the Special Reserve for Capital Outlay Fund for major maitenance

on school athletic field

Transfer from the Special Reserve for Other Than Capital Outlay Fund to the General Fund for health

and welfare increases

39



June 30, 2010

NOTE 5 – FUND BALANCES

The following amounts were designated by the Board of Education for the purposes listed below:

General Fund:

Economic Uncertainties 1,546,633$

Cafeteria Fund:

Food Services Operations 69,285$

Deferred Maintenance Fund

Maintenance Projects 1,001,540$

Special Reserve for Other Than Capital Outlay Fund

Cash Flow Reserves 4,145,216$

Building Fund

Bond Projects 49,070$

Capital Facilities Fund:

Capital Facilities Projects 73,010$

Special Reserve Fund for Capital Outlay Projects:

Capital Projects 665,852$

Bond Interest and Redemption Fund

Debt Service ‐ Principal and Interest Payments 2,840,684$

40



June 30, 2010

NOTE 6 – CAPITAL ASSETS AND DEPRECIATION

Capital asset activity for the year ended June 30, 2010 is shown below:

Beginning Ending

Balance Balance

July 1, 2009 Additions Deletions June 30, 2009

Land 422,500$ ‐$ ‐$ 422,500$

Site improvements 7,922,065 350,957 ‐ 8,273,022

Buildings and improvements 74,899,077 94,663 ‐ 74,993,740

Furniture and equipment 1,884,252 48,000 1,932,252

Work in progress 251,605 759,448 251,605 759,448

Total at historical cost 85,379,499 1,253,068 251,605 86,380,962

Less accumulated depreciation

Site improvements 1,933,701 404,704 ‐ 2,338,405

Buildings and improvements 18,790,811 2,504,205 ‐ 21,295,016

Furniture and equipment 984,205 215,695 ‐ 1,199,900

Total accumulated depreciation 21,708,717 3,124,604 ‐ 24,833,321

Governmental activiites capital assets, net 63,670,782$ (1,871,536)$ 251,605$ 61,547,641$

NOTE 7 – GENERAL LONG‐TERM DEBT

A schedule of changes in long‐term debt for the year ended June 30, 2010 is shown below:

Balance

July 1, 2009 Additions Deductions

Balance

June 30, 2010

Due in

One Year

General obligations bonds 50,040,503$ 751,941$ 1,605,000$ 49,187,444$ 1,850,000$

Other post employment benefits (94,817) ‐ (41,663) (136,480) ‐

Compensated absences 213,530 18,668 ‐ 232,198 31,789

50,159,216$ 770,609$ 1,563,337$ 49,283,162$ 1,881,789$

A summary of the general obligation bonds issued and outstanding as of June 30, 2010 is shown below:

Bond Maturity Date Interest Rate Original Issue

Bonds

Outstanding

July 1, 2009

Accreted

Interest

Addition Redeemed

Bonds

Outstanding

June 30, 2010

Due in One

Year

Series 1998B Various 3.95% ‐ 5.25% 27,715,000$ 24,015,000$ ‐$ 815,000$ 23,200,000$ 915,000$

Series 2000A Various 4.50% ‐ 5.71% 17,999,808 21,330,503 751,941 525,000 21,557,444 655,000

Series 2001 Various 3.00% ‐ 5.00% 6,535,000 4,695,000 ‐ 265,000 4,430,000 280,000

50,040,503$ 751,941$ 1,605,000$ 49,187,444$ 1,850,000$

41



June 30, 2010

NOTE 7 – GENERAL LONG‐TERM DEBT (continued)

General Obligation Bonds

On May 28, 1998, the District issued Series B of the Election of 1998 General Obligation Bonds in

the amount of $27,715,000. The bonds were authorized at a regularly scheduled election of the

registered voters of the District held on June 4, 1996, whereby the voters authorized the issuance

and sale of $34.3 million of general obligation bonds to finance the construction of new school

facilities and the renovation and improvements of school buildings and classrooms. The bonds

consist of: a) serial bonds of $20,106,000 with interest rates ranging from 3.95% to 5.25% and fully

maturing on July 1, 2020, and b) term bonds of $7,610,000 with a stated interest rate of 5% due on

July 1, 2023. At June 30, 2010 the principal balance outstanding was $23,200,000.

On August 17, 2000, the District issued Series 2000A of the Election of 2000 General Obligation

Bonds in the amount of $17,999,808. The bonds were authorized at a regularly scheduled election

of the registered voters of the District. The bonds were authorized to finance the construction of

new school facilities and the renovation and improvements of existing schools. The bonds consist

of: a) current interest bonds of $9,750,000 with interest rates ranging from 4.5% to 5.5% and fully

maturing on July 1, 2016; and b) capital appreciation bonds of $8,249,808 due on July 1, 2025. At

June 30, 2010 the principal balance outstanding was $21,557,444, including $5,627,636 in accreted

interest on the capital appreciation bonds.

On April 12, 2001, the District refunded Series A of the Election of 1996 General Obligation Bonds

in the amount of $6,535,000. The bonds consist of Serial Bonds of $6,535,000 with interest rates

ranging from 3.0% to 5.0% and fully maturing on August 1, 2021. At June 30, 2010 the principal

balance outstanding was $4,430,000.

The annual requirements to amortize general obligation bonds payable are as follows:

Fiscal Year Principal*

Interest to

Maturity Total

2010‐11 1,850,000$ 1,791,685$ 3,641,685$

2011‐12 2,075,000 1,707,283 3,782,283

2012‐13 2,320,000 1,611,117 3,931,117

2013‐14 2,585,000 1,497,711 4,082,711

2014‐15 2,880,000 1,365,197 4,245,197

2015‐2020 15,249,366 8,181,747 23,431,113

2021‐2025 15,098,317 12,625,670 27,723,987

2026‐2029 1,502,125 4,577,875 6,080,000

43,559,808$ 33,358,285$ 76,918,093$

* Does not include accreted interest of $5,627,636

42



June 30, 2010

NOTE 8 – JOINT POWERS AUTHORITIES

The San Marino Unified School District participates in agreements with three joint powers authorities

(JPA) entities: the West San Gabriel Valley Schools’ Liability and Property Joint Powers Authority

(WSGLP), the West San Gabriel Valley Schools’ Workers’ Compensation Joint Powers Authority

(WSGWC), the Southern California Schools Employee Benefit Association Authority (SCSEBA) joint

powers authorities. The San Marino Unified School District pays an annual premium commensurate with

the level of coverage requested.

Each JPA is governed by a board consisting of a representative from each member district. Each

governing board controls the operations of its JPA independent of any influence by the San Marino

Unified School District beyond the District’s representation on the governing boards.

Each JPA is independently accountable for its fiscal matters. Budgets are not subject to any approval

other than that of the respective governing boards. Member districts share surpluses and deficits

proportionately to their participation in the JPA.

The relationship between the San Marino Unified School District and the JPAs are such that neither JPA is

a component unit of the District for financial reporting purposes. Condensed most readily available

financial information of the WSGLP, SCSEBA, and WSGWC JPAs are shown below.

WSGLP SCSEBA WSGWC

Audited Audited Audited

June 30, 2010 June 30, 2007 June 30, 2010

Assets 14,158,444$ 34,644,505$ 14,337,284$

Liabilities 999,891$ 6,162,783$ 424,790$

Net assets 13,158,553$ 28,481,722$ 13,912,494$

Revenues 2,970,540$ 63,574,383$ 4,589,119$

Expenses 3,692,410 56,137,218 3,136,015

Operating income (721,870) 7,437,165 1,453,104

Non‐operating income 421,193 ‐ 407,230

Change in net assets (300,677)$ 7,437,165$ 1,860,334$

43



June 30, 2010

NOTE 9 – COMMITMENTS AND CONTINGENCIES

A. State and Federal Allowances, Awards, and Grants

The District has received state and federal funds for specific purposes that are subject to review and

audit by the grantor agencies. Although such audits could generate expenditure disallowances under

terms of the grants, it is believed that any required reimbursement would not be material.

B. Construction Commitments

As of June 30, 2010, the District had no significant outstanding construction commitments.

NOTE 10 – RISK MANAGEMENT

Property and Liability

The District is exposed to various risks of loss related to torts, thefts, damage to District assets, errors and

omissions, employee injuries and natural disasters. The District participates in a public entity risk pool, as

described in Note 9, for claims in excess of insured amounts for workers’ compensation and liability

protection. The District purchases commercial insurance coverage for other types of risk. There have

been no significant reductions in insurance coverage from the prior year.

Workers’ Compensation

For fiscal year 2010, the District participated in the West San Gabriel Valley Schools’ Workers

Compensation Joint Powers Authority, and insurance purchasing pool.

Employee Health Benefits

The District has contracted with Southern California Schools Employee Benefit Association Authority

(SCSEBA) to provide employee medical, vision, dental, behavioral health and life insurance benefits.

44



June 30, 2010

NOTE 11 – EMPLOYEE RETIREMENT PLANS

Qualified employees are covered under multiple‐employer defined benefit pension plans maintained by

agencies of the State of California. Certificated employees are members of the California State Teachers’

Retirement System (CalSTRS), and classified employees are members of the California Public Employees’

Retirement System (CalPERS).

California Public Employees’ Retirement System (CalPERS)

Plan Description

The District contributes to the School Employer Pool under the California Public Employees’ Retirement

System (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 P Street; Sacramento, California 95814.

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

for fiscal year 2009‐10 was 9.709%. The contribution requirements of the plan members are established by

state statute. The District’s contributions to CalPERS for the last three fiscal years were as follows:

Contribution

Percent of Required

Contribution

2009‐10 $ 449,121 100%

2008‐09 $ 460,857 100%

2007‐08 $ 449,260 100%

45



June 30, 2010

NOTE 11 – EMPLOYEE RETIREMENT PLANS (continued)

California State Teachers’ Retirement System (CalSTRS)

Plan Description

The District contributes to the California State Teachers’ Retirement System (CalSTRS), a cost‐sharing

multiple‐employer public employee retirement system defined benefit pension plan administered by

CalSTRS. 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. CalSTRS issues a separate comprehensive annual financial report that includes financial

statements and required supplementary information. Copies of the CalSTRS annual financial report may

be obtained from CalSTRS, 7667 Folsom Boulevard; Sacramento, California 95826.

Funding Policy

Active plan members are required to contribute 8.0% of their salary. The required employer contribution

rate for fiscal year 2009‐10 was 8.25% of annual payroll. The contribution requirements of the plan

members are established by state statute. The District’s contributions to CalSTRS for the last three fiscal

years were as follows:

Contribution

Percent of Required

Contribution

2009‐10 $ 1,029,821 100%

2008‐09 $ 1,120,350 100%

2007‐08 $ 1,167,821 100%

On‐Behalf Payments

The District was the recipient of on‐behalf payments made by the State of California to CalSTRS for K‐12

education. These payments consist of state general fund contributions of approximately $532,636 to

CalSTRS (4.267% of salaries subject to CalSTRS in 2009‐10).

46



June 30, 2010

NOTE 12 – OTHER POSTEMPLOYMENT BENEFITS

San Marino Unified School District administers a single‐employer defined benefit other postemployment

benefit (OPEB) plan that provides medical, dental and vision insurance benefits to eligible retirees and

their spouses. The District implemented Governmental Accounting Standards Board Statement #45,

Accounting and Financial Reporting by Employers for Postemployment Benefit Plans Other Than Pension Plans, in

2009‐10.

Plan Descriptions and Contribution Information

Membership in the plan consisted of the following:

Retirees and beneficiaries receiving benefits 33

Active plan members 275

Total 308

Number of participating employers 1

The District offers medical, dental, vision and life insurance benefits to its employees, retirees, and their

dependents. The District does not pay for the cost of these benefits for retirees, except for one current

retiree covered under a special agreement until age 65, and six certificated retirees receiving 2 years of

retiree‐only medical, dental and vision premiums under a 2009 Early Retirement Incentive.

Both certificated and classified employees who have completed 10 years of service with the District are

eligible to retire and participate in the Districtʹs healthcare plan by paying premiums similar to those

charged for the Districtʹs active employees. For classified employees, coverage is limited to only those

retirees under age 65 at the time of retirement and only until such time as the retiree reaches age 65.

Participation is limited to classified employees who have held medical coverage during the last five (5)

years immediately preceding their retirement. Spouses, domestic partners, and eligible dependent

children of retirees may also be covered at the retireeʹs expense.

While the District does not directly contribute towards the cost of premiums for retirees (with certain

limited exceptions), the ability to obtain coverage at an active employee rate constitutes a significant

economic benefit to the retirees, called an ʺimplicit subsidyʺ under GASB 45. Covering retirees increases

the Districtʹs overall health insurance rates; it is, in part, the purpose of this valuation to determine the

amount of the subsidy.

47



June 30, 2010

NOTE 12 – OTHER POSTEMPLOYMENT BENEFITS (continued)

Plan Descriptions and Contribution Information (continued)

The ability to participate in the Districtʹs health plans by self‐paying the premiums extends for the lifetime

of the retiree; however, upon attaining the age of Medicare eligibility (65), the retiree must enter a plan

coordinated with Medicare. Standard actuarial practice assumes that Medicare supplement plans do not

generally give rise to an implicit subsidy, and while the actuary has included Medicare eligible retirees in

this valuation, their liability under GASB 45 and their annual implicit subsidy are both $0.

The District’s funding policy is to contribute financing requirements to a multi‐employer irrevocable

trust, the California School Boards Association’s GASB 45 Solutions Program. For fiscal year 2009‐10, the

District contributed $78,951 to the trust. The actuarial value of the implicit rate subsidy in 2009‐10 was

$122,031.

Annual OPEB Cost and Net OPEB Obligation/Asset

The District’s annual 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 normal cost each year and amortize any unfunded actuarial accrued liabilities (UAAL) (or funding

excess) over a period not to exceed thirty years. The following table shows the components of the

District’s annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the

District’s net OPEB obligation/asset:

Annual required contribution 78,941$

Interest on net OPEB obligation (4,741)

Adjustment to annual required contribution 6,168

Annual OPEB cost 80,368

Contributions made 122,031

Increase in net OPEB asset 41,663

Net OPEB asset ‐ July 1, 2009 94,817

Net OPEB asset ‐ June 30, 2009 136,480$

48



June 30, 2010


The annual OPEB cost and the percentage of annual OPEB cost contributed to the Plan in 2009 and 2010

were as follows:

Annual

Year Ended Required Percentage

June 30, Contribution Contributed

2009 78,941$ 100%

2010 78,941$ 100%

Funded Status and Funding Progress – OPEB Plans

As of July 1, 2008, the most recent actuarial valuation date, the District did not have a fully funded plan.

The actuarial accrued liability (AAL) for benefits was $645,181 and the unfunded actuarial accrued

liability (UAAL) was $645,181.

Actuarial

Actuarial Accrued Unfunded

Valuation Value of Liability AAL Funded

Date Assets (AAL) (UAAL) Ratio

7/1/2008 ‐$ 645,181$ 645,181$ 0%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and

assumptions about the probability of occurrence of events far into the future. Examples include

assumptions about future employment, mortality, and the healthcare cost trend. Actuarially determined

amounts are subject to continual revision as actual results are compared with past expectations and new

estimates are made about the future. The schedules of funding progress present multiyear trend

information about whether the actuarial values of plan assets are increasing or decreasing over time

relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as

understood by the employer and plan members) and include the types of benefits provided at the time of

each valuation and the historical pattern of sharing of benefit costs between the employer and plan

members to that point. The actuarial methods and assumptions used include techniques that are

designated 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.

49



June 30, 2010


Actuarial Methods and Assumptions (continued)

Additional information as of the latest actuarial valuation follows:

Valuation Date 7/1/2008

Actuarial Cost Method Projected Unit Credit

Amortization Method Level‐Dollar Basis

Remaining Amortization Period 28 years

Asset Valuation Market Value Basis

Actuarial Assumptions:

Discount rate 5.0%

Long‐term healthcare cost trend rates:

Medical/Rx 7.0%

Dental & Vision 4.0%

NOTE 13 – EARLY RETIREMENT INCENTIVE

During the 2009‐10 fiscal year, the District offered an early retirement incentive to classified and

certificated staff who were of age 55 or older on or before January 1, 2011, who were currently eligible for

health and welfare benefits, and were 100% vested in CalPERS or CalSTRS. A total of 11 certificated and

10 classifed employees took the retirement incentive, with a total cost to the District of $415,482. This

amount was paid in full in July 2010 and accrued as a current liability as of June 30, 2010.

50



June 30, 2010

NOTE 14 – PARCEL TAX

Measure E

On May 5, 2009, the District voters passed the “Preserve San Marino Schools”, (Measure “R”). This

Measure is a qualified special parcel tax of $795 per parcel (plus nominal CPI increase) to be levied by the

District each year for six years with exemptions for parcels owned and occupied by persons age 65 or

older and contiguous parcels. The revenues raised by this Measure shall be used to prevent deterioration

in the quality of public education in San Marino in the face of State cuts in funding for public schools, and

to promote continued student achievement in the core curriculum.

Measure R

On March 6, 2007, the District voters approved a $295 per parcel (plus nominal CPI increase) yearly tax to

“retain and attract the qualified teachers and counselors, support academic programs, prevent

elimination of specialist and maintain reduced class size.” The tax was collectible beginning July 1, 2007

with an exemption for eligible seniors and contiguous parcels.

NOTE 15 – EXPENDITURES IN EXCESS OF APPROPRIATIONS

Expenditures in excess of appropriation in the governmental funds for the fiscal year ended June 30, 2010

were as follows:

General Fund:

Capital outlay 173,596$

Other outgo 89,991$

51



June 30, 2010

NOTE 16 – TAX REVENUE ANTICIPATION NOTE

The District issued $4,685,000 of Tax Revenue Anticipation Notes dated July 1, 2009 through a multiple

agency agreement with the California Education Notes Program Note Participations, Series 2010A. The

notes mature on July 30, 2010 and funds will be held with the Los Angeles County Treasurer until the

District needs to draw funds out. The Tax Revenue Anticipation Notes were recorded as a current loan as

of June 30, 2010 and paid in full on July 30, 2010.

NOTE 17 – SUBSEQUENT EVENTS

Refuse to Lose Campaign

In response to budget reductions and loss of revenue to the District, the community organized the Refuse

to‐Lose campaign, which generated $4,063,586 in donations to the District. The funds were received on in

September 2010. Funds are to be spent solely on salaries for positions put on the budget reduction list.

Tax Revenue Anticipation Note New Issuance

The District issued $3,000,000 of Tax Revenue Anticipation Notes dated July 1, 2010 through a multiple

agency agreement with the California Education Notes Program Note Participations, Series 2010A. The

notes mature on July 1, 2011 and funds will be held with the Los Angeles County Treasurer until the

District needs to draw funds out. Repayment requirements are that principal amounts be pledged in a

special fund on January 31, 2011 and April 30, 2011.

Required Supplementary Information

52


Budgetary Comparison Schedule – General Fund

For The Fiscal Year Ended June 30, 2010

Actual

Variance with

Final Budget ‐

Original Final (Budgetary Basis) Pos (Neg)

REVENUES

Revenue limit sources 16,482,768$ 15,730,234$ 15,823,814$ 93,580$

Federal 910,095 1,746,458 1,660,400 (86,058)

Other state 1,844,188 2,025,332 2,190,966 165,634

Other local 8,642,476 9,892,822 10,679,296 786,474

Total revenues 27,879,527 29,394,846 30,354,476 959,630

EXPENDITURES

Certificated salaries 13,105,194 13,297,987 13,012,237 285,750

Classified salaries 5,164,062 5,415,192 5,304,258 110,934

Employee benefits 4,864,596 4,975,115 4,784,494 190,621

Books and supplies 679,395 1,334,861 829,283 505,578

Services and other operating expenditures 3,563,271 3,826,495 2,931,682 894,813

Capital outlay 20,000 98,780 272,376 (173,596)

Transfers of indirect costs 75,000 75,000 (37,026) 112,026

Other outgo (39,729) (31,185) 58,806 (89,991)

Total expenditures 27,431,789 28,992,245 27,156,110 1,836,135


over (under) expenditures 447,738 402,601 3,198,366 2,795,765

OTHER FINANCING SOURCES AND USES

Interfund transfers in ‐ ‐ 55,540 55,540

Interfund transfers out (375,540) (3,529,525) (4,634,829) (1,105,304)

Total other financing sources and uses (375,540) (3,529,525) (4,579,289) (1,049,764)

Excess (deficiency) of revenues and other

financing sources over (under)

expenditures and other financing uses 72,198 (3,126,924) (1,380,923) 1,746,001

Fund balances, July 1, 2009 4,234,298 4,234,298 4,234,298 ‐

Fund balances, June 30, 2010 4,306,496$ 1,107,374$ 2,853,375$ 1,746,001$

Budgeted Amounts

53


Budgetary Comparison Schedule – Special Reserve Fund for Other than Capital Outlay


Actual

Variance with

Final Budget ‐

Original Final (Budgetary Basis) Pos (Neg)

REVENUES

Other local ‐$ 203$ 45,249$ 45,046$

Total revenues ‐ 203 45,249 45,046


over (under) expenditures ‐ 203 45,249 45,046

OTHER FINANCING SOURCES AND USES

Interfund transfers in ‐ 3,153,985 4,144,204 990,219

Interfund transfers out ‐ ‐ (55,540) (55,540)

Total other financing sources and uses ‐ 3,153,985 4,088,664 934,679

Excess (deficiency) of revenues and other

financing sources over (under)

expenditures and other financing uses ‐ 3,154,188 4,133,913 979,725

Fund balances, July 1, 2009 11,303 11,303 11,303 ‐

Fund balances, June 30, 2010 11,303$ 3,165,491$ 4,145,216$ 979,725$

Budgeted Amounts

54


Schedule of Funding Progress


The following schedule shows the District’s actuarially determined funding progress for other

postemployment benefits.

Actuarial UAAL as a

Actuarial Accrued Unfunded Percentage of

Valuation Value of Liability AAL Funded Covered Covered

Date Assets (AAL) (UAAL) Ratio Payroll Payroll

7/1/2008 ‐$ 645,181$ 645,181$ 0% N/A N/A

Supplementary Information Section

55


Local Educational Agency Organizational Structure

June 30, 2010

The San Marino Unified School District was established in 1917. The District’s boundaries include the

City of San Marino and unincorporated areas of San Gabriel and Pasadena. The District operates two

elementary schools, one middle school, and one comprehensive high school.

GOVERNING BOARD 2008‐09

Member Office Term Expires

Dr. Jeng Yen President November 2013

Chris Norgaard Vice President November 2011

Karen Preston Clerk November 2011

C. Joseph Chang Member November 2013

Nam Jack Member November 2013

DISTRICT ADMINISTRATORS

Dr. Gary W. Woods

Superintendent

Julie Boucher,

Assistant Superintendent, Business Services

Linda de la Torre,

Assistant Superintendent, Human Resources

Billie Jean Knight,

Assistant Superintendent, Instructional Services

See accompanying note to supplementary information.

56


Schedule of Average Daily Attendance


Second Period Annual

Report Report

Elementary:

Kindergarten 154 155

Grades 1 through 3, regular classes 618 620

Grades 4 through 6, regular classes 725 723

Grades 7 and 8, regular classes 486 488

Special education 47 47

Special ed ‐ nonpublic, nonsectaria schools 5 4

Extended year special education ‐ special day class 4 4

Extended year prog ‐ nonpublic, nonsectarian schools 1 1

Total Elementary 2,040 2,042

Secondary:

Grades 9 through 12, regular classes 1,099 1,098

Special education 19 19

Total Secondary 1,118 1,117

Total Average Daily Attendance 3,158 3,159


57


Schedule of Instructional Time


1982‐83 1986‐87 1986‐87 Number of Days

1982‐83 Reduced Minutes Reduced 2009‐10 Traditional

Grade Level Actual Minutes Minutes Requirement Minutes Actual Minutes Calendar Status

Kindergarten 32,434 31,533 36,000 35,000 36,270 180 Complied

Grade 1 49,266 47,898 50,400 49,000 51,840 180 Complied

Grade 2 49,266 47,898 50,400 49,000 52,260 180 Complied

Grade 3 49,266 47,898 50,400 49,000 52,260 180 Complied

Grade 4 54,681 53,162 54,000 52,500 56,040 180 Complied

Grade 5 54,681 53,162 54,000 52,500 56,040 180 Complied

Grade 6 54,500 52,986 54,000 52,500 61,680 180 Complied

Grade 7 54,500 52,986 54,000 52,500 61,680 180 Complied

Grade 8 54,500 52,986 54,000 52,500 61,680 180 Complied

Grade 9 58,924 57,287 64,800 63,000 66,114 180 Complied

Grade 10 58,924 57,287 64,800 63,000 66,114 180 Complied

Grade 11 58,924 57,287 64,800 63,000 66,114 180 Complied

Grade 12 58,924 57,287 64,800 63,000 66,114 180 Complied


58


Schedule of Financial Trends and Analysis


(Budget)

General Fund 2011** 2010 2009 2008

Revenues and other financing sources 28,586,243$ 30,410,016$ 31,111,601$ 29,690,651$

Expenditures 27,462,475 27,156,110 29,082,555 29,924,517

Other uses and transfers out 904,369 4,634,829 6,578 151,139

Total outgo 28,366,844 31,790,939 29,089,133 30,075,656

Change in fund balance (deficit) 219,399 (1,380,923) 2,022,468 (385,005)

Ending fund balance 3,072,774$ 2,853,375$ 4,234,298$ 2,211,830$

Available reserves* 1,768,740$ 1,549,231$ 875,714$ 938,742$

Available reserves as a percentage

of total outgo 6% 5% 3.0% 3.1%

Total long‐term debt 47,401,373$ 49,283,162$ 50,159,216$ 50,972,927$

Average daily attendance at P‐2 3,162 3,158 3,143 3,135

The General Fund balance has decreased by $641,545 over the past two years. The fiscal year 2010‐11 adopted

budget projects a increase of $219,399. 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 (total outgo). ABX4 2 reduced

the 3% reserve requirement by one‐third for the 2009‐10 year. Long‐term debt has decreased $1,752,830

over the past two years.

* Available reserves consist of all undesignated fund balances and all funds designated for economic

uncertainty in the General Fund or Special Reserve Fund (Other than Capital Outlay).

** Revised Final Budget, September 2010.


59


Schedule of Expenditures of Federal Awards


Federal Pass‐Through

Federal Grantor/Pass‐Through CFDA Entity Identifying 2009‐10

Grantor/Program or Cluster Title Number Number Expenditures

Federal Programs:

U.S. Department of Agriculture:

Passed through California Dept. of Education (CDE):

National School Lunch 10.555 13523 96,369$

Fair Market Value of Commodities 10.565 13389 26,057

Total U.S. Department of Agriculture 122,426

U.S. Department of Education:

Passed through California Dept. of Education (CDE):

Individuals with Disabilities Education Act (IDEA):

IDEA Basic Local Assistance Entitlement, Part B 84.027 13379 515,213

IDEA Local Assistance, Part B, Private School ISPs 84.027 10115 1,853

IDEA Preschool Grants, Part B 84.173 13430 13,930

IDEA Preschool Local Entitlement, Part B 84.027A 13682 27,721

IDEA Preschool Staff Development, Part B 84.173A 13431 191

ARRA‐IDEA Part B, Preschool Grants 84.392 15000 22,031

ARRA‐IDEA Part B, Basic Local Assistance 84.391 15003 249,530

ARRA‐IDEA Part B, Private School ISPs 84.391 10123 1,494

ARRA‐IDEA Part B, Preschool Local Entitlement 84.391 15002 27,059

ARRA‐State Fiscal Stabilization Fund 84.394 25008 1,202,861

No Child Left Behind Act of 2001 (PL 107‐110):

Title II, Part A, Improving Teacher Quality Local Grants 84.367 14341 61,447

Title III‐ Limited English Proficiency (LEP) 84.365 10084 14,600

Title IV, Part A, Drug‐Free Schools 84.186 14347 5,951

Federal Language Assitance Program (FLAP): 84.293B N/A 221,306

Total U.S.Department of Education 2,365,187

Total Expenditures of Federal Awards 2,487,613$


60


Reconciliation of Annual Financial and Budget Report with Audited Financial Statements


There were no adjustments between the Annual Financial and Budget Report and the Audited Financial

Statements in 2009‐10.

61


Note to Supplementary Information

June 30, 2010

NOTE 1 – PURPOSE OF SCHEDULES

Schedule of Average Daily Attendance (ADA)

Average daily attendance (ADA) is a measurement of the number of pupils attending classes of the

District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which

apportionments of State funds are made to school districts. This schedule provides information regarding

the attendance of students at various grade levels and in different programs.

Schedule of Instructional Time

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 instructional time

offered by the District and whether the District complied with the provisions of Education Code Sections

46200 through 46206.

Districts must maintain their instructional minutes at either the 1982‐83 actual minutes or the 1986‐87

requirement, whichever is greater, as required by Education Code section 46201. For 2009‐10 through

2012‐13, the instructional day and minute requirements have been reduced pursuant to ode Section

46201.2.

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.

Schedule of Expenditures of Federal Awards

The accompanying schedule of expenditures of Federal awards includes the Federal grant 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 the United States Office of Management and Budget

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

financial statements.

Sub‐recipients

Of the Federal expenditures presented in the schedule, the District provided no Federal awards to sub‐

recipients.

Reconciliation of Annual Financial and Budget Report with Audited Financial Statements

This schedule provides the information necessary to reconcile the fund balance of all funds reported on

the Unaudited Actual Financial Report to the audited financial statements.

Other Independent Auditor’s Reports


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62

Board of Trustees



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

We have audited the basic financial statements of San Marino Unified School District as of and for the

fiscal year ended June 30, 2010, and have issued our report thereon dated November 21, 2010. We

conducted our audit in accordance with generally accepted auditing standards and the standards

applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller

General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered San Marino Unified School Districtʹs internal

control over financial reporting as a basis for designing our auditing procedures for the purpose of

expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on

the effectiveness of San Marino Unified School Districtʹs internal control over financial reporting.

Accordingly, we do not express an opinion on the effectiveness of San Marino Unified School Districtʹs

internal control over financial reporting.

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 entityʹs financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting 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

financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not

identify any deficiencies in internal control over financial reporting that we consider to be material

weaknesses, as defined above. However, we identified a certain deficiency in internal control over

financial reporting, described in the accompanying Schedule of Audit Findings and Questioned Costs as

Finding #2010‐2 that we consider to be a significant deficiency in internal control over financial reporting.

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.

63

Compliance and Other Matters

As part of obtaining reasonable assurance about whether San Marino Unified School Districtʹs financial

statements are free of 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 no instances of noncompliance or other matters that are

required to be reported under Government Auditing Standards.

San Marino Unified School District’s responses to the findings identified in our audit are described in the

accompanying Schedule of Audit Findings and Questioned Costs. We did not audit San Marino Unified

School District’s response and, accordingly, we express no opinion on it.

This report is intended solely for the information and use of the Board, management, others within the

entity, the California Department of Education, the California State Controller’s Office, and federal

awarding agencies and pass‐through entities and is not intended to be and should not be used by anyone

other than these specified parties.

San Diego, California

November 21, 2010


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64

Board of Trustees



REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND

MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER

COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A‐133

Independent Auditor’s Report

Compliance

We have audited San Marino Unified School District’s 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 San Marino Unified School District’s major federal programs for the year ended

June 30, 2010. San Marino Unified School District’s major federal programs are identified in the summary

of auditorʹs results section of the accompanying schedule of findings and questioned costs. Compliance

with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal

programs is the responsibility of San Marino Unified School District’s management. Our responsibility is

to express an opinion on San Marino Unified School District’s compliance based on our 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 OMB Circular A‐133. 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 San Marino Unified School 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 San Marino Unified School District’s compliance with those requirements.

In our opinion, San Marino Unified School District’s complied, in all material respects, with the

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, 2010.

65

Internal Control Over Compliance

Management of San Marino Unified School District’s is responsible for establishing and maintaining

effective internal control over compliance with the requirements of laws, regulations, contracts, and

grants applicable to federal programs. In planning and performing our audit, we considered San Marino

Unified School District’s internal control over compliance with the requirements that could have a direct

and material effect on a major federal program to determine the auditing procedures for the purpose of

expressing our opinion on compliance 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 San Marino Unified School 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.

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 deficiencies, significant deficiencies, or material weaknesses. We did not

identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as

defined above.


entity, the California Department of Education, the California State Controller’s Office, federal awarding

agencies, and pass‐through entities and is not intended to be and should not be used by anyone other

than these specified parties.


November 21, 2010


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66

Board of Education



INDEPENDENT AUDITOR’S REPORT ON STATE COMPLIANCE

We have audited the basic financial statements of the San Marino Unified School District (the District), as

of and for the year ended June 30, 2010, and have issued our report thereon dated November 21, 2010.

Our audit was made 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 2009‐10, published by the Education Audit Appeals Panel. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the

overall financial statement presentation. We believe that our audit provides a reasonable basis for our

opinions.

The Districtʹs management is responsible for the Districtʹs compliance with laws and regulations. In

connection with the audit referred to above, we selected and tested transactions and records to determine

the Districtʹs compliance with the state laws and regulations applicable to the following items:

Description

Procedures in

Audit Guide

Procedures

Performed

Attendance Accounting:

Attendance Reporting 8 Yes

Kindergarten Continuance 3 Yes

Independent Study 23 No (see below)

Continuation Education 10 Not applicable

Instructional Time:

School Districts 6 Yes

County Offices of Education 3 Not applicable

67

Description

Procedures in

Audit Guide

Procedures

Performed

Instructional Materials:

General Requirements 8 Yes

Ratios of Administrative Employees to Teachers 1 Yes

Classroom Teacher Salaries 1 Yes

Early Retirement Incentive 4 Not applicable

Gann Limit Calculation 1 Yes

School Accountability Report Card 3 Yes

Public Hearing Requirement – Receipt of Funds 1 Yes

Class Size Reduction Program:

General Requirements 7 Yes

Option One 3 Yes

Option Two 4 Not applicable

Districts with only one school serving K‐3 4 Not applicable

After School Education and Safety Program:

General Requirements 4 Not applicable

After School 4 Not applicable

Before School 5 Not applicable

Charter Schools:

Contemporaneous Records of Attendance 1 Not applicable

Mode of Instruction 1 Not applicable

Nonclassroom‐Based Instruction/Independent Study 15 Not applicable

Determination of Funding for Nonclassroom‐Based Instruction 3 Not applicable

Annual Instructional Minutes – Classroom Based 3 Not applicable

We did not perform testing for independent study because the ADA was under the level that requires

testing.

Based on our audit, we found that, for the items tested, the San Marino Unified School District complied

with the state laws and regulations referred to above, except as listed in the Schedule of Audit Findings

and Questioned Costs as Finding #2010‐3. Further, based on our audit, for items not tested, nothing came

to our attention to indicate that the San Marino Unified School District had not complied with the state

laws and regulations.


entity, the California Department of Education, the California Department of Finance, the California State

Controller’s Office, and federal awarding agencies and pass‐through entities and is not intended to be and

should not be used by anyone other than these specified parties.


November 21, 2010

Findings and Questioned Costs Section

68


Schedule of Audit Findings and Questioned Costs


Section I ‐ Summary of Auditorʹs Results

Financial Statements

Type of auditorʹs report issued Unqualified

Internal control over financial reporting:

Material weakness(es) identified? No

Significant deficiency(ies) identified not considered

to be material weaknesses? Yes

Noncompliance material to financial statements noted? No

Federal Awards

Internal control over major programs:



to be material weaknesses? No

Type of auditorʹs report issued on compliance for

major programs: Unqualified

Any audit findings disclosed that are required to be reported

in accordance with Circular A‐133, Section .510(a) No

Identification of major programs:

CFDA Numbers Name of Federal Program or Cluster

84.394 ARRA ‐ State Fiscal Stabilization Fund

84.027, 84.173, 84.027A,

84.173A, 84.391, 84.392 Special Education Cluster ‐ IDEA

Dollar threshold used to distinguish between Type A and

Type B programs: 300,000$

Auditee qualified as low‐risk auditee? Yes

State Awards

Internal control over state programs:



to be material weaknesses? Yes

Type of auditorʹs report issued on compliance for

state programs: Qualified

69




Section II – Financial Statement Findings

This section identifies the deficiencies, significant deficiencies, material weaknesses, and instances of

noncompliance related to the financial statements that are required to be reported in accordance with

Government Auditing Standards. Pursuant to Assembly Bill (AB) 3627, all audit findings must be identified

as one or more of the following categories:

Five Digit Code AB 3627 Finding Types

10000 Attendance

20000 Inventory of Equipment

30000 Internal Control

40000 State Compliance

41000 CalSTRS

50000 Federal Compliance

60000 Miscellaneous

61000 Classroom Teacher Salaries

70000 Instructional Materials

71000 Teacher Misassignments

72000 School Accountability Report Card

Finding#2010‐1: Use of One Time Funds and Cash Reserves (60000)

Condition: The District should be mindful of utilizing one time funds for ongoing expenditures. The

District has worked diligently in restoring its reserves, and maintaining adequate staffing levels, however,

the use of one time funds for these items could leave the District vulnerable to cash shortfalls in

subsequent years.

Recommendation: The District should continue to monitor its use of one time funding such as ARRA

SFSF, ARRA, and local donation programs as the continued receipt of these funds is unlikely or not

known. The District should continue to work towards restoring its reserve. The available reserve should

not only meet or exceed the required state minimum, but also allow the District the flexibility during cash

flow shortages. The District should continue to increase the fund balance of the Cash Flow Fund 17, and

move away from annual reliance on the issuance of Tax Revenue Anticipation Notes.

District Response: The Board of Education is committed t the financial stability of the District. The

District’s reserve is currently $1.5 million or 4.88% of total expenditures and transfers out. The District

also has established the Cash Flow Fund 17 and we have budgeted approximately $1.323 million in

transfers out in 2010‐11. The District is cognizant of its use of one‐time funds and the Board of Education

understands and acknowledges that budget reductions will be needed and necessary in future years in

order to balance the District’s budget.

70




Section II – Financial Statement Findings (continued)

Finding#2010‐2: Associated Student Body Internal Controls (30000)

We audited all of the District’s Associated Student Body funds. The findings by school are:

Huntington Middle School

1 out of 7 expenditures tested had no evidence of receipt including a receipt, invoice or proof

of payment in the amount of $24.95.

1 out of 5 cash receipts tested did not have adequate supporting documentation including sales

summaries or tally sheets totaling $218.15

San Marino High School

5 out of 10 cash receipts did not have adequate supporting documentation including sales

summaries, ticket logs, or tally sheets to support funds received totaling $11,916

2 out of 10 cash disbursements totaling $6,107.56 were for unallowable textbook expenditures

The student store does not perform sales analysis or use cash registers to record daily sales

activity, nor do they reconcile items sold to cash received.

The ASB bookkeeper is not submitting monthly reconciliations, bank statement, or financial

information to the District in a timely manner.

Final bank statements and reconciliations performed on the checking account for San Marino

High School ASB did not reconcile to the June 30, 2010 balance sheet. The reconciled bank

balance as of June 30, 2010 was $344,229, while the June 30, 2010 balance sheet ending balance

was $202,496, a variance of $141,733.

Recommendation: The District should have the ability to oversee all activity at decentralized locations,

including ASB funds. Bank reconciliations should be provided to the District each month, on a timely

basis, and the District should have the ability to perform “internal” audits on the ABS activity throughout

the year. Given the high volume of transactions and dollar amount that goes through the ASB, and the

inherently high risk of such activity, the District should increase efforts to oversee and monitor this

activity. This appears to be related to staffing cuts in the business office. A position normally charged

with this assignment has been eliminated, and it does not appear to be feasible to transfer this workload

onto another desk given current staffing limitations. The District should work towards filling an

additional accounting position, whose primary responsibility should be oversight of the ASBs.

71




Section II – Financial Statement Findings (continued)

Finding#2010‐2: Associated Student Body Internal Controls (30000) (continued)

District Response: Improvements have been made and are continuing in the area of ASB accounting and

oversight. Updated Board Policy and Administrative Regulations will be made and submitted to the

Board on January 11, 2011 for approval on January 25, 2011. An ASB Accounting Procedure Manual is

being prepared and will be made available on or before April 1, 2011. The Superintendent and Board of

Education are reviewing and considering filling the Accounting Specialist position in order to provide the

District with fiscal oversight over the ASBs and to conduct regular audits and internal reviews.

72




Section III – Federal Award Findings and Questioned Costs

This section identifies the audit findings required to be reported by Circular A‐133, Section .510(a) (e.g.,

deficiencies, significant deficiencies, material weaknesses, and instances of noncompliance, including

questioned costs).

There were no federal award findings or questioned costs in 2009‐10.

73




Section IV – State Award Findings and Questioned Costs

This section identifies the audit findings pertaining to noncompliance with state program rules and

regulations.

Finding #2010‐3: School Accountability Report Card (72000)

Condition: The School Accountability Report Cards (SARCs) did not contain specific reference to teacher

misassignments or vacancies, or a reference that none were noted in the William Quarterly Complaint

reports of summarized complaint data.

Context: 3 out of 3 SARCs tested for the following sites:

San Marino High School

Huntington Middle School

Carver Elementary School

Criteria: California Education Code Section 33126 subdivision (b)(5) requires information on teacher

misassignments or vacancies to be stated in the SARC.

Questioned Costs: Not applicable

Effect: Noncompliance with Education Code Section 33126 subdivision (b)(5)

Cause: Unknown

Recommendation: In order to comply with proper education code requirements, the District should

amend its standard School Accountability Report Card form to include reference to teacher

misassignments or vacancies.

District Response: The School Accountability Report Card will be amended to include reference to

teacher misassignments or vacancies on or before April 1, 2011.

74


Summary Schedule of Prior Audit Findings


There were no prior audit findings or questioned costs in 2008‐09.

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