THE DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDA rpts/2014 hernando... · 2019-11-03 ·...

COMPREHENSIVE ANNUAL FINANCIAL REPORT

OF

THE DISTRICT SCHOOL BOARD

OF HERNANDO COUNTY, FLORIDA

FOR THE FISCAL YEAR ENDED JUNE 30, 2014

COMPREHENSIVE ANNUAL FINANCIAL REPORT

OF

THE DISTRICT SCHOOL BOARD

OF HERNANDO COUNTY, FLORIDA

FOR THE FISCAL YEAR ENDED JUNE 30, 2014

PREPARED BY: FINANCE DEPARTMENT

District School Board of Hernando County, Florida Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2014

TABLE OF CONTENTS

i

Page INTRODUCTORY SECTION

Letter of Transmittal ............................................................................................. 1 List of Principal Officials ....................................................................................... 7 Organizational Chart ............................................................................................ 8 GFOA Certificate of Achievement ........................................................................ 9

Page FINANCIAL SECTION

Independent Auditor’s Report on Financial Statements ....................................... 10 Management’s Discussion and Analysis .............................................................. 13 Basic Financial Statements:

Government-Wide Financial Statements: Statement of Net Assets ........................................................................... 24 Statement of Activities ............................................................................... 25

Fund Financial Statements: Balance Sheet - Governmental Funds ...................................................... 27 Reconciliation of the Governmental Funds Balance Sheet to the

Statement of Net Assets ....................................................................... 29 Statement of Revenues, Expenditures, and Changes in Fund

Balances - Governmental Funds ........................................................... 30 Reconciliation of the Governmental Funds Statement of

Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities ........................................................................... 32

Statement of Fiduciary Net Assets - Fiduciary Funds ............................... 33 Statement of Changes in Fiduciary Net Assets - Fiduciary Fund .............. 34

Notes to Financial Statements ........................................................................ 35 Other Required Supplementary Information:

Budgetary Comparison Schedule - General Fund .......................................... 67 Budgetary Comparison Schedule – Other Federal Programs ………………. 70 Budgetary Comparison Schedule – Federal Economic Stimulus

Programs Fund ........................................................................................... 72 Schedule of Funding Progress – Other Postemployment Benefits Plan ......... 74 Notes to Required Supplementary Information .............................................. 75

Other Supplementary Information: Combining and Individual Fund Statements:

Combining Balance Sheet - Nonmajor Governmental Funds .................... 78 Combining Statement of Revenues, Expenditures, and Changes in

Fund Balances - Nonmajor Governmental Funds ................................. 80 Statement of Changes in Assets and Liabilities - Agency Funds .............. 82

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Page Other Supplementary Information - Budgetary Comparison Schedules:

Special Revenue Funds: Food Service ......................................................................................... 83

Debt Service Funds: SBE/COBI Bonds .................................................................................. 84 Special Act Bonds ................................................................................. 85 Other Debt Service ................................................................................ 86

Capital Projects Funds: State Board of Education Bonds ........................................................... 87 Public Education Capital Outlay ............................................................ 88 Capital Outlay and Debt Service ........................................................... 89 Local Capital Improvement ................................................................... 90 Other ..................................................................................................... 91

Component Units: Combining Schedule of Net Assets - Nonmajor Component Units ........ 93 Combining Schedule of Activities - Nonmajor Component Units ........... 95

Table Page

STATISTICAL SECTION Financial Trend Information:

Net Assets by Component – Government-Wide .................................... 1 98 Changes in Net Assets – Government-Wide ......................................... 2 100 Governmental Activities Tax Revenues by Source ................................ 3 102 Fund Balances of Governmental Funds ................................................ 4 104 Summary of Revenues, Expenditures, and Changes in Fund

Balances of Governmental Funds .................................................... 5 106 Revenue Capacity Information:

General Governmental Activities Tax Revenues by Source .................. 6 108 Fair Market Value, Assessed Value, and Taxable Value of Property .... 7 109 Property Tax Rates - Direct and Overlapping Governments ................. 8 110 Principal Property Taxpayers................................................................. 9 112 Property Tax Levies and Collections ..................................................... 10 113

Debt Capacity Information: Ratios of Outstanding Debt by Type ...................................................... 11 114 Direct and Overlapping Governmental Activities Debt ........................... 12 115 Calculation of Legal Debt Margin ........................................................... 13 116 Ratio of Net General Bonded Debt Outstanding .................................... 14 118 Ratio of Annual Debt Service Expenditures for General Obligation

Bonded Debt to Total General Government Expenditures ............... 15 119 Anticipated Capital Outlay Millage Levy Required to Cover

Certificates of Participation Payments .............................................. 16 120 Anticipated Sales Tax Revenue Collections Required to Cover

Sales Tax Revenue Bond Payments ................................................ 17 121

iii

Table Page Demographic and Economic Information:

County-wide Demographic Statistics ..................................................... 18 122 Principal Employers ............................................................................... 19 124

Operating Information: School Building Information and Student Enrollment Data .................... 20 125 Number of Personnel ............................................................................. 21 127 Average Teacher Salaries ..................................................................... 22 128 Operating Statistics ............................................................................... 23 129

Page

COMPLIANCE SECTION Schedule of Expenditures of Federal Awards………………………………………. 131

Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards ………………………………………………………………………… 132 Independent Auditor’s 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……….. 134 Schedule of Findings and Questioned Costs……………………………….……. 136 Management Letter ………………………………………………………………... 138 Management Letter Comments ………………………………………………….. 140 District Response ………………………………………………………………….. 142

iv

(THIS PAGE INTENTIONALLY LEFT BLANK)

INTRODUCTORY SECTION

District School Board of Hernando County, Florida

List of Principal Officials

7

Principal Officials – Elected

Mark Johnson Matthew A. Foreman District 1 District 2 Elected Nov 2014 Member since Nov 2011 Term expires Nov 2016

Beth Narverud Gus Guadagnino Susan Duval District 3 District 4 District 5 Elected Nov 2014 Member since Nov 2012 Elected Nov 2014 Term expires Nov 2016

Former Board Members – Terms expired November 2014

Cynthia J. Moore John Sweeney Diane Bonfield District 5 District 1 District 3

Principal Officials - Appointed

Dr. Lori M. Romano, Ph.D., Superintendent of Schools Ms. Sonya L. Jackson, Assistant Superintendent

Mr. Alan Cox, Assistant Superintendent

Organizational Chart

CITIZENS OF HERNANDO COUNTY

SECRETARY

Iris McNeal

SECRETARY

SCHOOL BOARD OF HERNANDO COUNTY

SUPERINTENDENT OF SCHOOLS Dr. Lori Romano

GENERAL COUNSEL Alfonso/Meeker

SECRETARY

Linda Campbell

PRINCIPALS

TEACHING, LEARNING

AND TECHNOLOGY

PROFESSIONAL

DEVELOPMENT

ASSESSMENT AND

ACCOUNTABILITY

COMMUNITY EDUCATION

AND

VOLUNTEERS

EDUCATION

FOUNDATION

PUBLIC RELATIONS

VIDEO PRODUCTION

HUMAN RESOURCES

FOOD AND

NUTRITION SERVICES

TRANSPORTATION

FACILITIES,

MAINTENANCE,

AND SECURITY

EQUITY, POLICY,

INVESTIGATION, &

COMPLIANCE

BUDGET

FINANCE

PURCHASING

ASST SUPER/OPERATIONS

Sonya Jackson

PUBLIC INFORMATION OFFICER

Eric Williams

CHIEF FINANCIAL OFFICER

George Gall

ASST SUPER/ACADEMIC SERVICES Alan Cox

8

FINANCIAL SECTION

10

INDEPENDENT AUDITORS’ REPORT Hernando County District School Board and Superintendent of Schools Brooksville, Florida Reports on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Hernando County District School Board (the District) as of and for the fiscal year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principle generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the three Charter Schools listed with the aggregate discretely presented component units, nor did we audit the Fiduciary Funds. The Charter Schools represent 70% of the assets, 63% of the net position, and 91% of the revenues of the discretely presently component units; and the Fiduciary Funds represent 1% of the assets of the aggregate remaining fund information (see Note 1). Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the aggregate discretely presented component units and Fiduciary Funds, is based solely on the report of the other auditors. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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Hernando County District School Board and Superintendent of Schools Brooksville, Florida

INDEPENDENT AUDITORS’ REPORT (Continued)

Auditors’ Responsibility (Concluded) We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the District as of June 30, 2014, and the respective changes in financial position thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As described in the notes to the financial statements, in 2014, the District adopted new accounting guidance, Governmental Accounting Standard Board Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of funding progress for other postemployment benefit plans, and major fund budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the management’s discussion and analysis and schedule of funding progress for other postemployment benefit plans, in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the management’s discussion and analysis and schedule of funding progress for other postemployment benefit plans because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The major fund budgetary comparison information is the responsibility of management, and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the major fund budgetary comparison information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

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INDEPENDENT AUDITORS’ REPORT (Concluded)

Other Matters (Concluded) Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, other budgetary comparison schedules, and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are the responsibility of management were derived from, and relate directly to, the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2014, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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 in considering the District’s internal control over financial reporting and compliance. December 16, 2014 Ocala, Florida

District School Board of Hernando County, Florida

MANAGEMENT’S DISCUSSION AND ANALYSIS

13

The management of the Hernando County District School Board (District) has prepared the following discussion and analysis of financial activities for the fiscal year ended June 30, 2014. The intent of this discussion and analysis is to (a) assist the reader in focusing on significant financial issues; (b) provide an overview of the District’s financial activities; (c) identify changes in the District’s financial position; (d) identify material deviations from the approved budget; and (e) highlight significant issues in individual funds. Because the information contained in the Management’s Discussion and Analysis (MD&A) is intended to highlight significant transactions, events, and conditions, it should be considered in conjunction with the District’s financial statements and notes to financial statements. FINANCIAL HIGHLIGHTS Key financial highlights for the 2013-2014 fiscal year are as follows:

The assets of the District exceeded its liabilities at the close of the most recent fiscal year by $280,264,558.

The District’s total net position decreased by $6,909,289, which represents a 2.39 percent decrease from the 2012-2013 fiscal year.

General Fund revenues increased $9,626,099, 6.30 percent to $152,848,319; General Fund expenditures increased $8,773,495, 5.56 percent to $157,733,532.

At the end of the current fiscal year, the unassigned fund balance of the General Fund was $6,483,492, or 4.23 percent of total General Fund revenues.

The District refunded $28,600,000 of Certificates of Participation debt at an interest rate of 2.08%. The reduction in debt service over the next ten years is $4,013,176.

OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements. The District’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplemental information in addition to the basic financial statements themselves. Government-Wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the District’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or declining.

14

The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in the future fiscal periods (e.g., uncollected taxes and earned but unused vacation and sick leave). Both of the government-wide financial statements distinguish functions of the District that are principally supported by taxes and intergovernmental revenues (governmental activities). The government activities of the District include such functions as instruction, pupil personnel services, administration, pupil transportation, maintenance, and other items. The government-wide financial statements include not only the District itself (known as the primary government), but also the Hernando County Education Direct Support Organization, Inc., for which the District is financially accountable, Brooksville Engineering, Science & Technology, Inc., Gulf Coast Middle School, Inc. and Gulf Coast Academy of Science and Technology, Inc., all Charter Schools, which the District is required to report as component units. Financial information for the component units is reported separately from the financial information presented for the primary government itself. The government-wide financial statements can be found on pages 24 though 26 of this report. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be classified under two categories: governmental funds and fiduciary funds.

Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financial decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains 13 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Federal Economic Stimulus Programs Funds, Special Revenue – Federal Fund, Capital Improvement Section 1011.71 Project Fund and Other Capital Projects Fund all of which are considered to be major funds. Data from the other eight governmental funds are combined into a single, aggregated presentation.

15

The District adopts an annual appropriated budget for its governmental funds. A budgetary comparison schedule has been provided for all the major funds to demonstrate compliance with this budget. The basic governmental fund financial statements and the budgetary comparison schedules presented as required supplementary information can be found on pages 27 through 32 and 67 through 73 of this report.

Fiduciary Funds. Fiduciary funds are used to report assets held in a trustee or fiduciary capacity for the benefit of external parties, such as student activity funds. Fiduciary funds are not reflected in the government-wide statements because the resources are not available to support the District’s own programs. In its fiduciary capacity, the District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes. The District uses private-purpose trust funds to account for scholarship funds established by private donors. The District uses agency funds to account for resources held for student activities and groups. The basic fiduciary funds financial statements can be found on pages 33 through 34 of this report.

Notes to Financial Statements. The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements. The notes to financial statements can be found on pages 35 through 66 of this report. Other Supplementary Information. In addition to this management’s discussion and analysis, this report also presents certain required supplementary information concerning the District’s progress in funding its obligations to provide postemployment benefits other than pensions to its employees. The schedule of funding progress, other postemployment benefits plan, required supplementary information can be found on page 74 of this report. The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the Required Supplementary. Combining and individual fund statements and other schedules can be found on pages 78 through 91 of this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS The following is a summary of the District’s net position as of June 30, 2014, compared to net position as of June 30, 2013:

16

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the District, assets exceeded liabilities by $280,264,558 at the close of the most recent fiscal year. By far the largest portion of the District’s net position, $252,232,149 reflects its investment in capital assets (e.g., land, buildings, furniture and equipment) less any related debt used to acquire those assets that is still outstanding. The District uses these capital assets to educate the students of Hernando County, Florida; consequently, these assets are not available for future spending. Although the District’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the District’s net position, $31,149,082 represents resources that are subject to external restrictions on how they may be used. At the end of the current fiscal year, the District is able to report positive balance in all categories of net position. The remaining balance of unrestricted net position may be used to meet the District’s ongoing obligations to citizens and creditors. The key elements of the changes in the District’s net position for the fiscal years ended June 30, 2014, and June 30, 2013, are as follows:

June 30, June 30, 2014 2013

Current and Other Assets 61,727,118 $ 65,870,616 $ Capital Assets 391,260,133 405,269,538

Total Assets 452,987,251 471,140,154

Long-Term Liabilities 170,848,185 180,139,173 Other Liabilities 1,874,508 2,378,863

Total Liabilities 172,722,693 182,518,036

Net Position: Net Investment in Capital Assets 252,232,149 246,772,905 Restricted 31,149,082 24,608,615 Unrestricted -3,116,673 17,240,607

Total Net Position 280,264,558 $ 288,622,127 $

Governmental Activities

17

June 30, June 30, 2014 2013

Revenues: Program Revenues: Charges for Services 2,675,687 $ 2,513,050 $ Operating Grants and Contributions 8,740,134 8,334,627 Capital Grants and Contributions 881,129 888,495 General Revenues: Property Taxes 57,659,104 60,295,522 Other Taxes 9,007,765 8,206,074 Grants and Contributions Not Restricted

to Specific Programs 114,790,011 105,093,241 Unrestricted Investment Earnings 479,244 443,527 Miscellaneous 5,641,459 3,906,445

Total Revenues 199,874,533 189,680,981

Functions/Program Expenses: Instruction 105,662,000 100,345,605 Pupil Personnel Services 9,262,052 9,481,173 Instructional Media Services 2,118,740 1,944,186 Instruction and Curriculum Development Services 4,103,785 4,153,389 Instructional Staff Training Services 2,214,563 2,742,317 Instruction Related Technology 1,682,610 1,466,935 Board of Education 460,573 460,031 General Administration 1,286,149 1,036,546 School Administration 11,230,650 11,209,818 Facility Services - Non-Capitalized 2,013,899 3,125,424 Fiscal Services 1,101,844 784,117 Food Services 10,901,515 10,639,194 Central Services 1,895,196 1,784,314 Pupil Transportation Services 8,120,089 7,396,420 Operation of Plant 14,998,980 14,386,258 Maintenance of Plant 4,786,141 4,749,690 Administrative Technology Services 1,944,813 1,950,483 Community Services 186,817 33,324 Unallocated Interest on Long-Term Debt 7,604.707 7,596,032 Unallocated Depreciation Expense 15,209,697 12,641,415

Total Functions/Program Expenses 206,783,822 197,926,671

Change in Net Position (6,909,289) (8,245,690) Prior Year Audit Adjustment to Net Position (1,448,280)

Net Position, Beginning 288,622,127 296,867,817

Net Position, Ending 280,264,558 $ 288,622,127 $


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The total governmental net position decreased by $6,909,289 during the current year, as compared to a net decrease of $8,245,690 in the previous year. Total revenues increased by $10,193,552 compared to the prior year. District expenses increased $8,857,151 . Direct instructional expenses, including school administration increased $4,930,977. District-level expenses increased $1,349,217. Unallocated expenses for interest and depreciation increased $2,576,957. FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS Major Governmental Funds. The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District’s financial requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the District’s governmental funds reported combined ending fund balances of $56,432,366, a decrease of $2,368,269 in comparison with the prior year. The following schedule indicates the fund balances and changes in fund balances by major fund and other governmental (nonmajor) funds as reported in the basic financial statements for the fiscal years ended June 30, 2013 and June 30, 2014.

June 30, June 30, Increase PercentageFund Balance 2014 2013 (Decrease) ChangeMajor Governmental Funds:

General Fund 14,361,013$ 16,274,389$ (1,913,376)$ -11.76%Capital Projects Funds:

Other Capital Projects 33,807,232 30,435,451 3,371,781 11.08%Other Governmental Funds (nonmajor) 8,264,121 12,090,795 (3,826,674) -31.65%

Total Fund Balance 56,432,366$ 58,800,635$ (2,368,269)$ -4.03%

General Fund. The General Fund is the primary operating fund of the District. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $6,483,492, while total fund balance was $14,361,013. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total revenues. Unassigned fund balance represents 4.24 percent of General Fund revenues, while total fund balance represents 9.39 percent of that same amount. During the current fiscal year, the total fund balance of the General Fund decreased by $1,913,376. The following schedule shows the changes in General Fund revenues and transfers in for fiscal years ended June 30, 2013 and June 30, 2014.

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The following schedule shows the changes in General Fund expenditures (by major object) for fiscal years ended June 30, 2013 and June 30, 2014.

As the table above illustrates, the largest portions of General Fund expenditures are for salaries and employee benefits with $135,186,279 expended or 85.70 percent of total expenditures in the 2013-2014 fiscal year compared to $128,356,930 or 86.16 percent in the 2012-2013 fiscal year. The District is a service entity and as such is labor intensive. Expenditures are up $8,733,497 or 5.86 percent higher than the 2012-2013 fiscal year due to the higher cost of purchased services. Salaries and employee benefits increased a combined 5.32 percent.

June 30, June 30, Increase Percentage

2014 2013 (Decrease) Change

Salaries 103,583,009 $ 99,407,169 $ 4,175,840 $ 4.20%

Employee Benefits 31,603,270 28,949,761 2,653,509 9.17%

Purchased Services 6,945,858 6,046,243 899,615 14.88%

Energy Services 7,138,663 6,761,389 377,274 5.57%

Materials and Supplies 4,662,146 4,895,002 (232,856) -4.76%

Capital Outlay 1,068,867 767,505 301,362 39.27%

Other Expenditures 2,731,719 2,132,966 598,753 28.07%

Total Expenditures by Major Object 157,733,532 $ 148,960,035 $ 8,733,497 $ 5.86%

General Fund Expenditures by Major Object

June 30, June 30, Increase Percentage 2014 2013 (Decrease) Change

Federal Direct Sources: Reserve Officers Training Corps (ROTC) 211,147 $ 181,480 $ 29,667 $ 16.35%

Federal through State Sources: Medicaid 617,340 666,908 (49,568) -7.43% Other Federal through State Sources - 17,089 (17,089) 100.00%

State Sources: Florida Education Finance Program (FEFP) 75,288,663 65,005,531 10,283,132 15.82% Categorical Programs 23,834,105 24,553,914 (719,809) -2.93% Other State Sources 2,324,307 800,518 1,523,789 190.35%

Local Sources: Ad Valorem Taxes 45,785,613 48,159,073 (2,373,460) -4.93% Interest Income 36,979 120,658 (83,679) -69.35% Other Local Sources 4,750,165 3,717,049 1,033,116 27.79%

Other Financing Sources: Transfers In 4,221,974 5,250,000 (1,028,026) -19.58% Other Financing Sources 57,181 35,740 21,441 59.99%

Total Revenues and Other Financing Sources 157,127,474 $ 148,507,960 $ 8,619,514 $ 5.80%

General Fund Revenues and Other Financing Sources

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Special Revenue Fund – Federal Economic Stimulus Programs. These funds are federally provided revenues that passed through to the State that provide for the stabilization of jobs and stimulus to the economy. Special Revenue Funds do not report fund balance because revenues are reported to the extent of expenditures. Revenues and expenditures decreased $919,410 from the previous year. The following schedule shows the changes in Special Revenue Fund - Federal Economic Stimulus Programs revenues and expenditures for fiscal years ended June 30, 2013 and June 30, 2014.

June 30, June 30, Increase Percentage2014 2013 (Decrease) Change

Targeted ARRA Stimulus Funds 43,361 1,174,247 (1,130,886)$ -2608.07%Race to the Top 552,038 340,562 211,476$ 38.31%Education Jobs Act - -$ -100.00%

Total Federal Economic Stimulus Programs 595,399$ 1,514,809$ (919,410)$ -57.66%

Special Revenue Fund - Federal Economic Stimulus Programs

Capital Projects – Nonvoted Capital Improvements Fund. The fund balance of the Capital Projects – Nonvoted Capital Improvements Fund increased by $2,629,678 to $6,411,993. Capital Projects – Other Fund. The fund balance of the Capital Projects – Other Fund decreased by $3,040,212 to $27,395,239. Funds from Capital Projects are the primary source of funds to pay debt service. GENERAL FUND BUDGETARY HIGHLIGHTS The following schedule shows the changes in General Fund revenues and other financing sources between the original and final budgets for the fiscal year ended June 30, 2014.

Original Final Increase Percentage Budget Budget (Decrease) Change

Federal Direct Sources: Reserve Officers Training Corps (ROTC) 230,000 $ 211,147 $ (18,853) $ -8.20%

Federal through State Sources: Medicaid 670,000 617,340 (52,660) $ -7.86%

State Sources: Florida Education Finance Program (FEFP) 77,192,427 75,288,663 (1,903,764) $ -2.47% Categorical Programs 24,357,690 23,624,478 (733,212) $ -3.01% Other State Sources 1,995,295 2,533,934 538,639 $ 27.00%

Local Sources: Ad Valorem Taxes 44,571,455 45,785,613 1,214,158 $ 2.72% Interest Income 130,000 36,979 (93,021) $ -71.55% Other Local Sources 1,852,004 5,010,165 3,158,161 $ 170.53%

Other Financing Sources: Transfers In 2,000,000 4,221,974 2,221,974 $ 111.10% Other - 57,181 57,181 $ 100.00%

Total Revenues and Other Financing Sources 152,998,871 $ 157,387,474 $ 4,388,603 $ 2.87%

General Fund Revenues and Other Financing Sources

21

Final budgeted revenues and other financing sources for the General Fund when compared to the initial budget were 2.87 percent higher. Reductions in FEFP and categorical programs funding from the State totaling $2,636,976 were due to decreases in the number of full-time students from the amounts projected. Ad Valorem Tax collections were budgeted at 96 percent as required by Section 1011.62(4)(a), Florida Statutes. However, actual collections were 2.72 percent higher or an increase of $1,214,158. Actual Collections from Other Local Sources resulted in an increase of $3,158,161 in revenues. The following schedule shows the changes in General Fund expenditures by function between the original and final budgets for the fiscal year ended June 30, 2014.

Original Final Increase PercentageGeneral Fund Expenditures by Function Budget Budget (Decrease) ChangeCurrent:

Instruction 102,701,479$ 100,235,140$ (2,466,339)$ -2.40%Pupil Personnel Services 7,456,405 7,046,828 (409,577)$ -5.49%Instructional Media Services 2,161,448 2,095,267 (66,181)$ -3.06%Instruction and Curriculum Development 2,542,641 1,645,177 (897,464)$ -35.30%Instructional Staff Training 1,020,750 691,984 (328,766)$ -32.21%Instruction Related Technology 985,298 1,078,435 93,137$ 9.45%School Board 506,678 456,414 (50,264)$ -9.92%General Administration 906,006 732,867 (173,139)$ -19.11%School Administration 11,477,302 11,085,405 (391,897)$ -3.41%Facility Services - Non Capitalized 683,071 582,439 (100,632)$ -14.73%Fiscal Services 1,102,110 1,084,570 (17,540)$ -1.59%Food Services 20,064 30,768 10,704$ 53.35%Central Services 1,945,944 1,813,368 (132,576)$ -6.81%Pupil Transportation Services 8,002,342 7,950,952 (51,390)$ -0.64%Operation of Plant 15,134,693 14,851,305 (283,388)$ -1.87%Maintenance of Plant 5,195,152 4,728,859 (466,293)$ -8.98%Administrative Related Technology Services 1,914,295 1,850,052 (64,243)$ -3.36%Community Services 841,043 185,766 (655,277)$ -77.91%

Capital Outlay - 97,936 97,936$ 100.00%Total Expenditures by Function 164,596,721$ 158,243,532$ (6,353,189)$ -3.86% The final budgeted expenditures were lower than the original budget by $6,353,189 or 3.86 percent. Reductions were realized through the District’s conservative spending and through savings initiatives that were implemented during the fiscal year. CAPITAL ASSETS AND LONG-TERM DEBT Capital Assets. The District’s investment in capital assets for governmental activities as of June 30, 2014, amounts to $391,260,133 (net of accumulated depreciation). This investment in capital assets includes land; improvements other than buildings; buildings and fixed equipment; furniture, fixtures, and equipment; motor vehicles; and property under capital leases. The total decrease of

22

$14,009,405 in the District’s investment in capital assets (net of accumulated depreciation) for the current fiscal year was 3.68 percent.

Additional information on the District’s capital assets can be found in Notes 4 and 18 of this report. Long-Term Debt. At the end of the current fiscal year, the District has total long-term debt outstanding of $148,689,170, which excludes compensated absences payable and other postemployment benefits payable. This amount is comprised of a note payable of $7,262,686, $50,273 of obligations under capital lease agreements, $127,485,183 in Certificates of Participation, and $13,891,028 in bonded debt. The District’s current rating on Sales Tax Revenue Bonds from Standard & Poor’s Rating Services is A with a stable outlook. The District’s current rating on outstanding Certificates of Participation (COPs) from Standard & Poor’s Rating Services is A- with a negative outlook. During the current fiscal year, the District paid $12,338,922 for principal payments on long-term debt as follows:

State School Bonds 545,000$ Other Debt Service:

District Revenue Bonds 85,000 Sales Tax Revenue Bonds 6,180,000 Certificates of Participation 4,187,037 Note Payable 1,108,526 Obligations Under Capital Leases 233,359 Total Principal Payments 12,338,922$

Additional information on the District’s long-term debt can be found in Notes 5 through 11 of this report.

June 30, June 30, 2014 2013

Land 10,317,174 $ 10,317,174 $ Improvements Other Than Buildings 13,666,263 14,687,450 Buildings and Fixed Equipment 364,888,612 374,042,031 Furniture, Fixtures, and Equipment 2,108,431 Motor Vehicles 464,837 Construction in Progress - Property Under Capital Leases 2,388,084 3,649,615

Total Capital Assets 391,260,133 $ 405,269,538 $


23

ECONOMIC FACTORS AND FORECAST As of July 2014, the unemployment rate for Hernando County is currently 7.90 percent, which is a decrease from the rate of 8.90 percent a year ago. This compares to the State’s average unemployment rate of 6.2 percent. These factors were considered in preparing the District budget for the 2013-2014 fiscal year. During the current fiscal year, the fund balance in the General Fund decreased by $1,913,376 to $14,361,013 Included in this total, the District has inventories of $1,434,975 that are classified as nonspendable, $30,755 in State categorical funds reported as restricted, and $454,519 in encumbrances reported as assigned, which are reappropriated in the budget for the 2014-2015 fiscal year. Assigned fund balance also includes $1,520,679 for the return of FEFP funds to DOE for FTE audits, health insurance rebates and profit sharing, which will be held in fund balance until appropriated. In addition, the District has appropriated $4,436,593 in unassigned fund balance for spending in the 2014-2015 fiscal year. As a result, this amount was moved from unassigned to assigned fund balance at June 30, 2014. It is anticipated that this use of unassigned fund balance will be replenished at year-end through unspent appropriations and operating fund property tax revenues in excess of the budget. It is anticipated that the fund balance at June 30, 2015, will be in excess of 3 percent of general fund revenues. REQUESTS FOR INFORMATION

This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a general overview of the District’s finances and to demonstrate compliance and accountability for its resources. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Chief Financial Officer, Hernando County District School Board, 919 North Broad Street, Brooksville, Florida, 34601.

BASIC FINANCIAL STATEMENTS

ASSETSCash and Cash Equivalents $ 30,510,819 $ 119,536 Investments 22,418,191 Accounts Receivable 1,072,924 Intergovernmental Receivable 2,747,951 9,853 Inventories 1,556,989 Prepaid Items 23,500Capital Credits Receivable 3,420,244 Capital Assets:

Nondepreciable Capital Assets 10,317,174 Depreciable Capital Assets, Net 380,942,959 165,301

Total Assets 452,987,251 318,190

LIABILITIESSalaries and Benefits Payable 14,657 20,113 Accounts Payable 993,416 1,129 Accrued Interest Payable 5,106 Deposits Payable 74,632 Sales Tax Payable 2 Intergovernmental Payable 1,814 Unearned Revenue 784,881 Long-Term Liabilities:

Due Within One Year 13,788,931 16,284 Due in More Than One Year 157,059,254 56,411

Total Liabilities 172,722,693 93,937

NET POSITIONNet Investment in Capital Assets 252,232,149 92,606 Restricted for:

State Required Carryover Programs 30,755 Food Service 2,351,287 Debt Service 5,606,795 Capital Projects 23,160,245 Other Purposes

Unrestricted (3,116,673) 131,647 Total Net Position $ 280,264,558 $ 224,253

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

GovernmentalActivities

ComponentUnits

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDASTATEMENT OF NET POSITION

June 30, 2014

PrimaryGovernment

24

Functions/ProgramsPrimary Government:Governmental Activities:

Instruction $ 105,662,002 $ 64,628 $Pupil Personnel Services 9,262,052 Instructional Media Services 2,118,740 Instruction and Curriculum Development Services 4,103,785 Instructional Staff Training Services 2,214,563 Instruction Related Technology 1,681,610 Board of Education 460,573 General Administration 1,286,149 School Administration 11,230,650 Facility Services - Non-Capitalized 2,013,899 Fiscal Services 1,101,844 Food Services 10,901,515 2,453,338 8,740,134 Central Services 1,895,196 157,721 Pupil Transportation Services 8,120,089 Operation of Plant 14,998,980 Maintenance of Plant 4,786,141 Administrative Technology Services 1,944,813 Community Services 186,817 Unallocated Interest on Long-Term Debt 7,604,707 Unallocated Depreciation Expense* 15,209,697

Total Primary Government $ 206,783,822 $ 2,675,687 $ 8,740,134

Component Units Educational Foundation/Charter School $ 2,231,597 $ 185,466 $ 295,981

General Revenues: Taxes: Property Taxes, Levied for Operational Purposes Property Taxes, Levied for Capital Projects Local Sales TaxesGrants and Contributions Not Restricted to Specific ProgramsUnrestricted Investment EarningsMiscellaneous

Total General RevenuesChange in Net PositionNet Position - July 1, 2013 (As Restated)

Net Position - June 30, 2014


DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDA

For the Fiscal Year Ended June 30, 2014STATEMENT OF ACTIVITIES

Expenses Servicesfor

Charges OperatingGrants and

Contributions

Program Revenues

25

(Continued)

$ $ (105,597,374) $(9,262,052) (2,118,740) (4,103,785) (2,214,563) (1,681,610)

(460,573) (1,286,149)

(11,230,650) 128,008 (1,885,891)

(1,101,844) 291,957

(1,737,475) (8,120,089)

(14,998,980) (4,786,141) (1,944,813)

(186,817) 753,121 (6,851,586)

(15,209,697)

$ 881,129 (194,486,872)

$ 55,463 (1,694,687)

45,785,613 11,873,491 9,007,765

114,790,011 48,627 479,244

5,641,459 1,742,630

187,577,583 1,791,257

(6,909,289) 96,570

287,173,847 127,683

$ 280,264,558 $ 224,253


For the Fiscal Year Ended June 30, 2014STATEMENT OF ACTIVITIES

CapitalGrants and

Contributions

Program Revenues Net (Expense) Revenue and Changes in Net AssetsPrimary Government

GovernmentalActivities

ComponentUnits

26

ASSETSCash and Cash Equivalents $ 7,095,478 $ $Investments 4,827,675 Accounts Receivable 1,069,480 Due from Other Funds 543,062 Intergovernmental Receivables 196,309 492,284 52,765 Inventories 1,434,975

TOTAL ASSETS $ 15,166,979 $ 492,284 $ 52,765

LIABILITIES AND FUND BALANCESLiabilities:

Salaries and Benefits Payable $ 14,657 $ $Accounts Payable 786,042 1,987 Deposits Payable 3,451 Accrued Interest PayableSales Tax Payable 2 Intergovernmental Payables 1,814 Due to Other Funds 490,297 52,765 Unearned RevenueTotal Liabilities 805,966 492,284 52,765

Fund Balances:Nonspendable 1,434,975 Spendable:

Restricted 30,755 Assigned 6,411,791 Unassigned 6,483,492

Total Fund Balances 14,361,013 - -

TOTAL LIABILITIES AND FUND BALANCES $ 15,166,979 $ 492,284 $ 52,765


DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDABALANCE SHEET - GOVERNMENTAL FUNDS

June 30, 2014

GeneralFund

Special Revenue -Other

FederalPrograms Fund

Special Revenue -Federal Economic

StimulusPrograms Fund

27

(Continued)

Capital Projects -NonVoted CapitalSec 1011.71(2)F.S.

$ 5,504,613 $ 15,562,065 $ 2,348,663 $ 30,510,819 1,004,190 11,701,787 4,884,539 22,418,191

1,000 2,444 1,072,924 543,062

8,853 929,609 1,068,131 2,747,951 122,014 1,556,989

$ 6,517,656 $ 28,194,461 $ 8,425,791 $ 58,849,936

$ $ $ $ 14,657 105,663 14,342 85,382 993,416

71,181 74,632 5,106 5,106

2 1,814

543,062 784,881 784,881

105,663 799,223 161,669 2,417,570

847,458 122,067 2,404,500

6,174,484 26,545,696 8,059,333 40,810,268 237,509 2,084 82,722 6,734,106

6,483,492 6,411,993 27,395,238 8,264,122 56,432,366

$ 6,517,656 $ 28,194,461 $ 8,425,791 $ 58,849,936

FundsGovernmental

Other TotalGovernmental

FundsCapital Projects -

Other Fund

28

Total Fund Balances - Governmental Funds $ 56,432,366

Nondepreciable Capital Assets $ 10,317,174 Depreciable Capital Assets, Net 380,942,959 391,260,133

3,420,244

Bonds Payable $ 13,891,028 Certificates of Participation Payable 127,485,183 Obligations Under Capital Leases 50,273 Note Payable 7,262,686 Other Postemployment Benefits Payable 7,691,104 Compensated Absences Payable 14,467,911 (170,848,185)

Total Net Position - Governmental Activities $ 280,264,558


Capital credits to be received in future years are not available to liquidate liabilities in governmentalfunds, but are accrued in the government-wide statements.

Long-term liabilities are not due and payable in the current period and, therefore, are not reported asliabilities in the governmental funds. Long-term liabilities at year-end consist of:

June 30, 2014

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDARECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

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

Capital assets, net of accumulated depreciation, used in governmental activities are not financialresources and, therefore, are not reported as assets in the governmental funds.

29

RevenuesIntergovernmental:

Federal Direct $ 211,147 $ $Federal Through State and Local 617,340 11,670,426 595,399 State 101,447,075

Local:Property Taxes Levied for Operational Purposes 45,785,613 Property Taxes Levied for Capital ProjectsLocal Sales TaxesCharges for Service - Food ServicesOther Local Revenue 4,787,144

Total Revenues 152,848,319 11,670,426 595,399

ExpendituresCurrent:

Instruction 99,985,140 4,274,208 130,051 Pupil Personnel Services 7,046,828 2,096,654 9,016 Instructional Media Services 2,095,267 Instruction and Curriculum Development Services 1,645,177 2,365,886 52,310 Instructional Staff Training Services 691,984 1,442,603 63,552 Instruction Related Technology 1,078,435 581,940 1,199 Board of Education 456,414 General Administration 732,867 441,004 123,802 School Administration 11,085,405 36,508 10,777 Facility Services - Non-Capitalized 582,439 36,968 Fiscal Services 1,084,570 7,392 Food Services 30,768 Central Services 1,813,368 1,959 59,068 Pupil Transportation Services 7,950,952 61,479 746 Operation of Plant 14,591,305 Maintenance of Plant 4,728,859 Administrative Technology Services 1,850,052 73,303 Community Services 185,766

Debt Service:PrincipalInterest and Fiscal ChargesDues and Fees

Capital Outlay:Facilities Acquisition and Construction 25,279 61,963 Other Capital Outlay 72,657 261,862 71,575

Total Expenditures 157,733,532 11,670,426 595,399

Excess (Deficiency) of Revenues Over (Under) Expenditures (4,885,213)

Other Financing Sources (Uses)Issuance of Refunding BondsPremium on Refunding BondsPayments to Refunded Bonds Escrow AgentTransfers In 4,221,974 Insurance Loss Recoveries 57,181 Transfers Out (1,307,318)

Total Other Financing Sources (Uses) 2,971,837

Net Change in Fund Balances (1,913,376) Fund Balances, July 1, 2013 16,274,389

Fund Balances, June 30, 2014 $ 14,361,013 $ $


DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDASTATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDSFor the Fiscal Year Ended June 30, 2014

Fund

FederalOther

Programs Fund

Special Revenue -Federal Economic

StimulusPrograms Fund

General

Special Revenue -

30

(Continued)

Nonvoted CapitalSec 1011.71(2) F.S.

$ $ $ $ 211,147 8,594,896 21,478,061

62,256 1,278,427 102,787,758

45,785,613 11,873,491 11,873,491

9,007,765 9,007,765 2,453,338 2,453,338

7,058 426,957 21,826 5,242,985

11,880,549 9,496,978 12,348,487 198,840,158

104,389,399 9,152,498 2,095,267 4,063,373 2,198,139 1,661,574

456,414 1,297,673

11,132,690 1,078,177 163,664 164,365 2,025,613

1,091,962 10,746,969 10,777,737

1,874,395 8,013,177

14,591,305 4,728,859 1,923,355

185,766

12,338,922 12,338,922 6,692,404 6,692,404

113,267 113,267

353,697 41,049 9,338 491,326 248,702 205,336 860,132

1,680,576 204,713 30,270,601 202,155,247

10,199,973 9,292,265 (17,922,114) (3,315,089)

29,685,000 29,685,000 82,496 82,496

(28,877,849) (28,877,849) 2,260 16,990,376 21,214,610

57,181 (7,570,295) (12,334,737) (2,260) (21,214,610)

(7,570,295) (12,332,477) 17,877,763 946,828

2,629,678 (3,040,212) (44,351) (2,368,261) 3,782,315 30,435,451 8,308,472 58,800,627

$ 6,411,993 $ 27,395,239 $ 8,264,121 $ 56,432,366

Capital Projects -

GovernmentalFunds

TotalCapital Projects -

Other Fund

OtherGovernmental

Funds

31

Net Change in Fund Balances - Governmental Funds $ (2,368,261)

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

Capital Outlay - Facilities and Construction - Governmental Funds $ 491,326 Capital Outlay - Other Capital Outlay - Governmental Funds 860,132 Less: Depreciation Expense (15,360,863) (14,009,405)

11,253,922

Unamortized Premium:Prior Year $ 84,309Less: Current Year (82,496)Increase in Unamortized Premiums 1,813

Current Year Accruals 3,420,244 Less: Prior Year (3,242,855) Net Increase in Capital Credits Receivable 177,389

(846,107)

(1,118,640)

Change in Net Position - Governmental Activities $ (6,909,289)


Other postemployment benefits costs are recorded in the governmental funds under the pay-as-you-gomethod, but under the full accrual method in the government-wide statements. This is the net increasein the other postemployment benefits liability for the current period.

For the Fiscal Year Ended June 30, 2014

REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDARECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF

TO THE STATEMENT OF ACTIVITIES

Capital outlays are reported in the governmental funds as expenditures. However, in the statement ofactivities, the cost of those assets is allocated over their estimated useful lives as depreciation expense.This is the amount of capital outlays and donations in excess of depreciation expense in the currentperiod.

Long-term debt proceeds provide current financial resources to the governmental funds, but issuingdebt increases long-term liabilities in the statement of net assets. Repayment of long-term debt is anexpenditure in the governmental funds, but the repayment reduces long-term liabilities in the statementof net assets. This is the amount by which repayments exceeded proceeds in the current period.

Premiums and debt issuance costs are reported in the governmental funds in the year debt is issued,but are capitalized and amortized over the life of the debt in the statement of activities

Capital credits to be received in future years are accrued in the government-wide statements, but thecredits do not provide current financial resources and are not recognized in the governmental funds.

In the statement of activities, the cost of compensated absences is measured by the amounts earnedduring the year, while in the governmental funds expenditures are recognized based on the amountsactually paid for compensated absences. This is the net amount of compensated absences used inexcess of the amount earned in the current period.

32

ASSETSCash and Cash Equivalents $ $ 1,505,570 Investments 63,082 Receivables 7,816

TOTAL ASSETS $ 63,082 $ 1,513,386

LIABILITIESInternal Accounts Payable 1,513,386 Due to Budgetary Funds $ $

Total Liabilities $ 1,513,386

NET POSITIONAssets Held in Trust for Scholarships and Other Purposes 63,082

TOTAL LIABILITIES AND NET POSITION $ 63,082


FundAgencyFunds

June 30, 2014

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDASTATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

Private-PurposeTrust

33

Private-PurposeTrustFund

ADDITIONSInvestment Earnings:

Interest $ 3,206 Net Increase (Decrease) in the Fair Value of

Investments $ (6,824) DEDUCTIONSOther 2,300

Change in Net Position (5,918)

Net Position, July 1, 2013 69,000 Net Position, June 30, 2014 $ 63,082


STATEMENT OF CHANGES IN FIDUCIARY NET POSITIONFIDUCIARY FUND



34

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS

June 30, 2014

35

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The District School Board has direct responsibility for operation, control, and supervision of District schools and is considered a primary government for financial reporting. The Hernando County School District is considered part of the Florida system of public education. The governing body of the school district is the Hernando County District School Board which is composed of five elected members. The appointed Superintendent of Schools is the executive officer of the School Board. Geographic boundaries of the District correspond with those of Hernando County. Criteria for determining if other entities are potential component units which should be reported within the District's basic financial statements are identified and described in the Governmental Accounting Standards Board's (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Sections 2100 and 2600. The application of these criteria provides for identification of any entities for which the District School Board is financially accountable and other organizations for which the nature and significance of their relationship with the School Board are such that exclusion would cause the District's basic financial statements to be misleading or incomplete. Based on the application of these criteria, the following component units are included within the District School Board's reporting entity:

Blended Component Unit. The Hernando School Board Leasing Corporation (Leasing Corporation) was formed in July 2011 to facilitate financing for the acquisition of facilities and equipment as further discussed in Note 7. The governing board of the Leasing Corporation is the District School Board. Due to the substantive economic relationship between the District and the Leasing Corporation, the financial activities of the Leasing Corporation are included in the accompanying basic financial statements. Separate financial statements of the Leasing Corporation are not published.

Discretely Presented Component Units. The component unit columns in the government-wide financial statements include the financial data of the Hernando County Education Direct Support Organization, Inc., (Foundation), Best Academy (Charter School), Gulf Coast Middle School (Charter School) and the Gulf Coast Academy of Science and Technology, Inc. (Charter School). The Foundation is a separate not-for-profit corporation organized and operated as a direct-support organization under Section 1001.453, Florida Statutes, to receive, hold, invest, and administer property and to make expenditures to or for the benefit of the District. The Foundation is considered to be a component unit of the District because of the nature and significance of its relationship to the District.


June 30, 2014

36

The Charter Schools are separate not-for-profit corporations organized pursuant to Chapter 617, Florida Statutes, the Florida Not-For-Profit Corporation Act, and Section 1002.33, Florida Statutes. The Charter Schools operates under a charter of the sponsoring School District and are considered component units since they are fiscally dependent on the District to levy taxes for its support. Annual audits of the Foundation’s and the Charter School’s financial statements are conducted by independent certified public accountants and are filed in the District’s administrative office.

Basis of Presentation

Government-wide Financial Statements - Government-wide financial statements, including the statement of net position and the statement of activities, present information about the School District as a whole. These statements include the nonfiduciary financial activity of the primary government and its component units. Government-wide financial statements are prepared using the economic resources measurement focus. The 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 thereby clearly identifiable to a particular function. Depreciation expense associated with the District’s motor vehicles is allocated to the applicable functions, while remaining depreciation expense is not readily associated with a particular function and is reported as unallocated. Program revenues include charges paid by the recipient of the goods or services offered by the program, and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. 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. The effects of interfund activity have been eliminated from the government-wide financial statements. Fund Financial Statements - Fund financial statements provide detailed information about the District in the governmental and fiduciary funds. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is reported in a separate column. Nonmajor funds are aggregated and reported in a single column. Because the focus of governmental fund financial statements differs from the focus of government-wide financial statements, reconciliation is presented with each of the governmental fund financial statements.


June 30, 2014

37

The District reports the following major governmental funds:

General Fund – to account for all financial resources not required to be accounted for in another fund, and for certain revenues from the State that are legally restricted to be expended for specific current operating purposes.

Special Revenue Funds – Other Federal Programs – to account for revenue sources that are legally restricted for specified purposes. These Special Revenue Funds track federal grants and entitlements that are received by the District from various federal and state agencies. These Funds must be carefully monitored to ensure that all expenditures are itemized in the approved budget and occur within a stipulated time period.

Special Revenue Funds – Federal Economic Stimulus Programs – to account for revenues received as part of the American Recovery and Restoration Act (ARRA). These Federal funds are disbursed through the State over a two-year period for the stabilization of local school district funding. Also included are Race to the Top (RTTT) funds which are disbursed through the State over a five-year period.

Capital Project – Local Capital Improvement Fund – to account for the

financial resources generated by the local capital improvement tax levy to be used for educational capital outlay needs, including new construction, renovation, and remodeling project, and debt service payments on lease-purchase agreements for educational facilities.

Capital Projects – Other Fund – to account for the financial resources

generated by the local voted sales surtax tax and the impact fees levied by the Hernando County Board of County Commissioners. The impact fees may be used for educational capital outlay needs, including new construction, renovation and remodeling projects, and debt service payments.

Additionally, the District reports the following fiduciary fund types: Private-Purpose Trust Fund – to account for resources of the Hernando High

School Renaissance Scholarship Endowment Fund which are used for student scholarships.

Agency Funds – to account for resources of the school internal funds which are used to administer moneys collected at the several schools in connection with school, student athletic, class, and club activities.


June 30, 2014

38

Basis of Accounting

Basis of accounting refers to when revenues and expenditures, or expenses, are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. The government-wide financial statements are prepared using the accrual basis of accounting, as are the fiduciary funds financial statements. Revenues are recognized when earned and expenses are recognized when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized in the year for which they are levied. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements imposed by the provider have been satisfied. Governmental fund financial statements are prepared using the modified accrual basis of accounting. Revenues, except for certain grant revenues, are recognized when they become measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The District considers property taxes, sales taxes, and interest to be available if they are collected within 30 days of the end of the current fiscal year. When grant terms provide that the expenditure of resources is the prime factor for determining eligibility for Federal, State, and other grant resources, revenue is recognized at the time the expenditure is made. Under the modified accrual basis of accounting, expenditures are generally recognized when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, postemployment benefits, and compensated absences, which are recognized when due. Allocations of cost, such as depreciation, are not recognized in governmental funds. Revenues can be classified into two kinds of transactions: (a) exchange and exchange-like transactions, in which each party receives and gives up essentially equal value and (b) non-exchange transactions, in which a government gives (or receives) value without directly receiving (or giving) equal value in exchange. Revenue resulting from exchange transactions is recorded on the accrual basis when the exchange takes place. Revenues resulting from non-exchange transactions are further classified into (a) derived tax revenues, (b) imposed non-exchange revenues, (c) government-mandated non-exchange transactions, and (d) voluntary non-exchange transactions. Derived tax revenues (e.g., sales tax) are recorded when the exchange transaction occurs. Imposed non-exchange transactions (e.g., property taxes) are recorded when use of the resource is required or first permitted by time requirements (e.g., for property taxes, the period for which they are levied). Government-mandated and voluntary non-exchange transactions, (e.g., Federal mandates, grants, and


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donations) are recorded when all eligibility requirements have been met. When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, then unrestricted resources as they are needed. The three Charter Schools and the Hernando County Education Foundation, shown as discretely presented component units, are accounted for as a governmental organization and follows the same accounting model as the District’s governmental activities.

Deposits and Investments The District’s cash and cash equivalents are considered to be demand deposits. On June 30, 2014, the carrying amount of the District’s bank deposit accounts was $30,510,819. Cash deposits are held by banks qualified as public depositories under Florida law. All deposits are insured by Federal depository insurance and collateralized with securities held in Florida's multiple financial institution collateral pool as required by Chapter 280, Florida Statutes. The Agency Funds consider cash as those accounts used as demand deposit accounts and considers cash equivalents as those amounts invested in certificates of deposit. Investments consist of amounts placed in State Board of Administration (SBA) Debt Service accounts for investment of debt service moneys, amounts placed with SBA for participation in Florida PRIME (formerly known as the Local Government Surplus Funds Trust Fund Investment Pool) and the Fund B Surplus Funds Trust Fund (Fund B) investment pools created by Sections 218.405 and 218.417, Florida Statutes, and those made locally. These investment pools operate under investment guidelines established by Section 215.47, Florida Statutes. The District’s investments in Florida PRIME, which SBA indicates is a Securities and Exchange Commission Rule 2a7-like external investment pool, as of June 30, 2014, are similar to money market funds in which shares are owned in the fund rather than the underlying investments. These investments are reported at fair value, which is amortized cost. The District’s investments in Fund B are accounted for as a fluctuating net asset value pool, with a fair value factor of 1.84438408 at June 30, 2014. Fund B is not subject to participant withdrawal requests. Distributions from Fund B, as determined by SBA, are effected by transferring eligible cash or securities to Florida PRIME, consistent with the pro rata allocation of pool shareholders of record at the creation date of Fund B. One hundred percent of such distributions from Fund B are available as liquid balance within Florida PRIME. The Reserve Primary Fund Valuation - On September 18, 2008, the net asset value of the Reserve Primary Fund was 97 cents, which is the date that the Reserve Primary Fund ceased calculating net asset value.


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The District classified a portion of fund balances as nonspendable for investments in the SBA Fund B and the Reserve Primary Fund, because the funds are not available for appropriation and the actual percentage at final distribution is not known. Investments made locally consist of certificates of deposit, commercial paper, money market mutual funds, United States Treasury securities, and Federal Instrumentalities and are reported at fair value. Types and amounts of investments held at fiscal year-end are described in a subsequent note on investments.

Inventories

Inventories consist of expendable supplies held for consumption in the course of District operations. Inventories are stated at average cost, except for transportation and food service inventories which are stated at last invoice, which approximates the first-in, first-out basis. The United States Department of Agriculture donated foods are stated at their fair value as determined at the time of donation to the District’s food service program by the Florida Department of Agriculture and Consumer Services, Bureau of Food Distribution. The costs of inventories are recorded as expenditures when used rather than purchased.

Capital Assets

Expenditures for capital assets acquired or constructed for general District purposes are reported in the governmental fund that financed the acquisition or construction. The capital assets so acquired are reported at cost in the government-wide statement of net position but are not reported in the governmental fund financial statements. Capital assets are defined by the District as those costing more than $1,000. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated assets are recorded at fair value at the date of donation. Interest costs incurred during construction of capital assets are not considered material and are not capitalized as part of the cost of construction. Capital assets are depreciated using the composite method over the following estimated useful lives:

DescriptionEstimated

Lives

Buildings and Fixed Equipment 50 yearsImprovements Other than Buildings 25 yearsFurniture, Fixtures, and Equipment 7 yearsMotor Vehicles 10 yearsProperty Under Capital Leases 7 - 25 years


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Current-year information relative to changes in capital assets is described in a subsequent note.

Bond Issuance Cost

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities Statement of Net Position. Bond premiums and discounts are deferred and amortized over the term of the bonds using the straight-ling method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. As a result of the implementation of GASB 65, bond issuance costs are no longer treated as deferred charges. Beginning net position was restated for all such costs outstanding and new issuance costs will be an expenditure in the year of issuance. Beginning net position at July 1, 2013 was decreased by $836,790 to write off deferred bond issuance costs.

Long-Term Liabilities

Long-term obligations that will be paid from resources to be received in the future by governmental funds are reported as liabilities in the government-wide statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued, and premiums on debt issuances, are reported as other financing sources. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. In the government-wide financial statements, compensated absences (i.e., paid absences for employee vacation leave and sick leave) are accrued as liabilities to the extent that it is probable that the benefits will result in termination payments. A liability for these amounts is reported in the governmental fund financial statements only if it has matured, for example, unused reimbursable leave still outstanding following employee resignations and retirements. Changes in long-term liabilities for the current year are reported in a subsequent note.

State Revenue Sources

Revenues from State sources for current operations are primarily from the Florida Education Finance Program administered by the Florida Department of Education (Department) under the provisions of Section 1011.62, Florida Statutes. In accordance with this law, the District determines and reports the number of full-time equivalent (FTE) students and related data to the Department. The Department


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performs certain edit checks on the reported number of FTE and related data, and calculates the allocation of funds to the District. The District is permitted to amend its original reporting for a period of nine months following the date of the original reporting. Such amendments may impact funding allocations for subsequent years. The Department may also adjust subsequent fiscal period allocations based upon an audit of the District's compliance in determining and reporting FTE and related data. Normally, such adjustments are treated as reductions or additions of revenue in the year when the adjustments are made. The State provides financial assistance to administer certain categorical educational programs. State Board of Education rules require that revenue earmarked for certain programs be expended only for the program for which the money is provided, and require that the money not expended as of the close of the fiscal year be carried forward into the following year to be expended for the same categorical educational programs. The Department generally requires that categorical educational program revenues be accounted for in the General Fund. A portion of the fund balance of the General Fund is restricted in the governmental fund financial statements for the balance of categorical educational program resources. The State allocates gross receipts taxes, generally known as Public Education Capital Outlay money, to the District on an annual basis. The District is authorized to expend these funds only upon applying for and receiving an encumbrance authorization from the Department. A schedule of revenue from State sources for the current year is presented in a subsequent note.

District Property Taxes

The School Board is authorized by State law to levy property taxes for district school operations, capital improvements, and debt service. Property taxes consist of ad valorem taxes on real and personal property within the District. Property values are determined by the Hernando County Property Appraiser, and property taxes are collected by the Hernando County Tax Collector. The School Board adopted the 2013 tax levy on September 17, 2013. Tax bills are mailed in October and taxes are payable between November 1 of the year assessed and March 31 of the following year at discounts of up to 4 percent for early payment. Taxes become a lien on the property on January 1, and are delinquent on April 1, of the year following the year of assessment. State law provides for enforcement of collection of personal property taxes by seizure of the property to satisfy unpaid taxes, and for enforcement of collection of real property taxes by the sale of interest-bearing tax certificates to satisfy unpaid taxes. The procedures result in the


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collection of essentially all taxes prior to June 30 of the year following the year of assessment. Property tax revenues are recognized in the government-wide financial statements when the Board adopts the tax levy. Property tax revenues are recognized in the governmental fund financial statements when taxes are received by the District, except that revenue is accrued for taxes collected by the Hernando County Tax Collector at fiscal year-end but not yet remitted to the District. Millages and taxes levied for the current year are presented in a subsequent note.

Local Sales Tax

On March 9, 2004, the voters of Hernando County approved a one-half cent school capital outlay sales tax on sales in Hernando County for ten years, commencing January 1, 2005 and ending December 31, 2014, to pay for the construction of certain educational facilities and other related costs, in accordance with Section 212.055(6), Florida Statutes.

Educational Impact Fees The District anticipates receiving in the future educational impact fees based on an ordinance adopted by the Hernando County Commission on October 28, 1986. The Commission currently has a moratorium prohibiting the collection of impact fees. The fees are collected by the County and each municipality within the County for most new residential construction based on an interlocal agreement. The fees shall be used solely for the purpose of providing capital improvements to the public educational system necessitated by new residential development, and shall not be used for any expenditure that would be classified as a maintenance or repair expense. The authorized uses include land acquisition; facility design and construction costs; furniture and equipment; and payment of principal, interest, and related costs of indebtedness necessitated by new residential development. Because the educational impact fee is similar to a capital-type special assessment, it is reported as program revenue in the government-wide financial statements.

Federal Revenue Sources

The District receives Federal awards for the enhancement of various educational programs, including American Recovery and Reinvestment Act (ARRA) funds. Federal awards are generally received based on applications submitted to, and approved by, various granting agencies. For Federal awards in which a claim to these grant proceeds is based on incurring eligible expenditures, revenue is recognized to the extent that eligible expenditures have been incurred.


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2. BUDGETARY COMPLIANCE AND ACCOUNTABILITY

The Board follows procedures established by State statutes and State Board of Education rules in establishing budget balances for governmental funds, as described below:

Budgets are prepared, public hearings are held, and original budgets are adopted

annually for all governmental fund types in accordance with procedures and time intervals prescribed by law and State Board of Education rules.

Appropriations are controlled at the object level (e.g., salaries, purchased services,

and capital outlay) within each activity (e.g., instruction, pupil personnel services, and school administration) and may be amended by resolution at any School Board meeting prior to the due date for the annual financial report.

Budgets are prepared using the same modified accrual basis as is used to account

for governmental funds except that no budget appropriation is made for capital leases in the year of inception.

Budgetary information is integrated into the accounting system and, to facilitate

budget control, budget balances are encumbered when purchase orders are issued. Appropriations lapse at fiscal year-end and encumbrances outstanding are honored from the subsequent year's appropriations.

3. INVESTMENTS

Cash and Cash Equivalents and Investment Portfolio. On February 15, 2000, the District formally adopted a comprehensive investment policy pursuant to Section 218.415, Florida Statutes, and revised on December 8, 2009, that established permitted investments, asset allocation limits and issuer limits, credit rating requirements and maturity limits to protect the District’s cash and investment assets. The District maintains a common cash and investment pool for the use of all funds. In addition, cash and investments are separately held by the District’s special revenue, debt service, capital projects, enterprise and trust funds. Cash and Cash Equivalents On June 30, 2014, the carrying amount of the District’s bank deposit account was $30,510,819. The District’s cash deposits are held by a bank that qualifies as a public depository under the Florida Security for Public Deposits Act as required by Chapter 280, Florida Statutes. Investment Portfolio. Investment holdings consist of $22,418,191 in direct obligations of the United States Treasury Securities, LGIP, Registered Investment Companies (Mutual Funds), Intergovernmental Investment Pool and Interest Bearing Time Deposits, which are reported at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools.


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Section 218,415, Florida Statutes, limits the types of investments that the District can invest in unless specifically authorized in the District’s investment policy. The District has a formal investment policy that allows for the following investments: United States Government Securities, Unites States Government Agencies, Federal Instrumentalities, Non-Negotiable Interest Bearing Time Certificates of Deposit, Commercial Paper, Bankers Acceptances, Corporate Notes, State and/or Local Government Taxable and/or Tax-Exempt Debt, Registered Investment Companies (Money Market Mutual Funds) in including Local Government Surplus Funds Trust Fund (“Florida PRIME” or “SBA”), Intergovernmental Investment Pools. As of June 30, 2014, the District has the following investments and maturities:

A Money Market Fund’s duration on weighted average maturity in days. The Florida PRIME (the “SBA”) June 30, 2014 reports were the sources for Pool A & B’s weighted average maturity and Pool A’s credit rating. https://www.sbafla.com/prime/ http://www.institutionalinvestors.firstamericanfunds.com/Uploads/FileManager/MoneyMarket/FactSheet/PrimeObligations_QuarterlyFactSheet_Classl.pdf was the source for the First American Prime Obligation Fund’s credit rating and weighted average maturity. http://www.feitfund.com/ Fund Fact Sheet as of June 30, 2014 was the source for the Florida Education Investment Trust Fund’s credit rating and weighted average maturity. Interest Rate Risk. The District’s investment policy limits interest rate risk by attempting to match investment maturities with known cash needs and anticipated cash flow requirements. Investments of short-term funds will have maturities of no longer than twenty-four (24) months. Investments of bond reserves, construction funds, and other nonoperating funds (“core funds”) shall have a term appropriate to the need for funds and in accordance with debt covenants. The purchase of investments for core funds with maturities longer than five (5) years requires School Board approval prior to purchase.

Security Type Fair Value

Duration (Years)

State Board of Administration: Florida PRIME 15,390,958 $ 40.2 days

Fund B Surplus Funds Trust Fund 904,022 2.86

Debt Service Accounts 429,622 0.50

Money Market Funds: Reserve Primary Fund 143,192 N/A

Intergovernmental Investment Pool Florida Education Investment Trust Fund 5,550,397 51 days

Total 22,418,191 $ 0.24

https://www.sbafla.com/prime/

http://www.institutionalinvestors.firstamericanfunds.com/Uploads/FileManager/MoneyMarket/FactSheet/PrimeObligations_QuarterlyFactSheet_Classl.pdf

http://www.institutionalinvestors.firstamericanfunds.com/Uploads/FileManager/MoneyMarket/FactSheet/PrimeObligations_QuarterlyFactSheet_Classl.pdf


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The District utilizes “weighted average maturity” as a measurement of interest rate risk and as of June 30, 2014, the investment portfolio had a weighted average maturity of 0.24 years. The District has no Federal Instrumentalities Mortgage pass-through securities. Credit Risk. The District’s investment policy permits investments which are limited to credit quality ratings from nationally recognized rating agencies as follows: Commercial paper of any United States company that is rated, at the time or purchase, “Prime-1” by Moody’s and “A-1” by Standard & Poor’s (prime commercial paper). In addition, corporate obligations allowed are corporate obligations issued by financial institutions that participate in the FDIC's Temporary Liquidity Guarantee Program and are fully insured by the FDIC and are guaranteed by the full faith and credit of the United States Government. Bankers’ acceptances which are issued by a domestic bank which has at the time of purchase, an unsecured, uninsured and unguaranteed obligation rating of at least “Prime-1” by Moody’s or “A-1” by Standard & Poor’s. Corporate notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States that have a long term debt rating, at the time or purchase, at a minimum “Aa” by Moody’s and a minimum long term debt rating of “AA” by Standard & Poor’s. In addition, corporate obligations allowed are corporate obligations issued by financial institutions that participate in the FDIC's Temporary Liquidity Guarantee Program and are fully insured by the FDIC and are guaranteed by the full faith and credit of the United States Government. State and/or local government taxable and/or tax-exempt debt, general obligation and/or revenue bonds, rated at least “Aa” by Moody’s or “AA” by Standard & Poor’s for long-term debt, or rated at least “MIG-2” by Moody’s or “SP-2” by Standard & Poor’s for short-term debt. Registered Investment Companies (Money Market Mutual Funds) shall be rated “AAAm” by Standard & Poor’s or the equivalent by another national rating agency. Investment pool shall be rated “AAAm” by Standard & Poor’s or the equivalent by another rating agency.

As of June 30, 2014, $20,941,355 of the District’s investment securities were individually rated “AAAm” by Standard & Poor’s, $904,022 of the District’s investments are locked up in the State Board of Administration Pool B and $143,192 of the District’s investments are locked up in the Reserve Primary Fund. Return of SBA Fund B Principal The first table below details the SBA’s progress in returning principal to investors in Fund B. Through the end of June 2014, investors cumulatively received distributions from Fund B totaling $1.98 billion or 98.5% of their original balances.


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The securities remaining in Fund B are legacy items from the four issuers whose financial circumstances gave rise to the November 2007 run (as well as overnight instruments temporarily holding fund earnings). As of June 30, 2014, their remaining amortized cost was $153.5 million or 399.13% more than remaining participant positions in Fund B. Conversely, the current estimated liquidation (market) value of these securities is pegged at $56.71 million or 184.44% of remaining participant positions. It is important to note that due to the lack of an actively traded market for Fund B securities, their “market value” is an estimate of current liquidation value that has been determined through a collaborative process among various pricing experts and sources in the marketplace. Florida PRIME (“SBA”) Pool B Legal Issue As an ongoing legal matter, the SBA asserts Lehman Brothers (which is now in liquidation) sold the SBA certain unregistered secured notes that were not exempt from registration under the Securities Act of 1933. The Lehman Trustee recently provided a formal objection to the SBA’s general creditor claim on behalf of Fund B. The SBA has responded to that objection asserting the validity of its claim. The parties have scheduled mediation for August 20, 2014. Notwithstanding the SBA’s claim, the secured notes sold by Lehman Brothers were secured by certain collateral. Fund B has been receiving and is expected to continue receiving monetary distributions of principal and interest from that underlying collateral. The SBA will promptly disclose any future developments as they become matters of public record. Source for all information regarding the Florida PRIME’s Pool B is from the June 30, 2014 report provided by Florida Prime on their website https://www.sbafla.com/prime/. The District’s bank balance of $30,510,819 was deposited in a qualified public depository, as required by Chapter 280, Florida Statutes.

As of June 30, 2014, had the following credit quality:

Security Type Standard & Poor's

Credit Rating Portfolio Asset

Allocation Florida PRIME ("SBA") Pool A AAAm 68.65% Florida PRIME ("SBA") Pool B N/A 4.03% Florida PRIME ("SBA") Debt Service Accounts N/A 1.92% Money Market Fund - Reserve Primary Fund N/A 0.64% Intergovernmental Investment Pool - Florida Education Investment Trust Fund AAAm 24.76% ____________________________________________________ ____________________ _____________________ Total 100%

https://www.sbafla.com/prime/


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Custodial Credit Risk. The District’s investment policy pursuant to Section 218.415(18), Florida Statutes, requires securities, with the exception of certificates of deposits, shall be held with a third party custodian; and all securities purchased by, and all collateral obtained by the District should be properly designated as an asset of the District. The securities must be held in an account separate and apart from the assets of the financial institution. A third-party custodian is defined as any bank depository chartered by the Federal Government, the State of Florida, or any other state or territory of the United States which has a branch or principal place of business in the State of Florida, or by a national association organized and existing under the laws of the United States which is authorized to accept and execute trusts and is doing business in the State of Florida. Certificates of Deposit will be placed in the provider’s safekeeping department for the term of the deposit. As of June 30, 2014, the District’s investment portfolio was held with a third-party custodian as required by the District’s investment policy. Concentration of Credit Risk. The District’s investment policy has established asset allocation and issuer limits on the following investments which are designed to reduce concentration of credit risk of the District’s investment portfolio. A maximum of 100% of available funds may be invested in the United States Government Securities, 50% of available funds may be invested in United States Government agencies with a 25% limit on individual issuers, 75% of available funds may be invested in Federal Instrumentalities with a 25% limit on individual issuers, 50% of available funds may be invested in non-negotiable interest bearing time certificates of deposit with a 25% limit on individual issuers, 15% of available funds may be invested in corporate notes with a 5% limit on individual issuers, 20% of available funds may be invested in State and/or Local Government Taxable and/or Tax-Exempt Debt with a 10% limit on individual issuers, 50% of available funds may be invested in Registered Investment Companies (Money Market Mutual Funds) with a 25% limit of individual issuers, 25% of available funds may be invested in Intergovernmental Investment Pools. As of June 30, 2014, the District had the following issuer concentration based on fair value

Security Type Fair Value Portfolio Asset

Allocation Florida PRIME ("SBA") Pool A $15,390,958 68.65% Florida PRIME ("SBA") Pool B 904,022 4.03% Florida PRIME ("SBA") Debt Service Accounts 429,622 1.92% Money Market Fund - Reserve Primary Fund 143,192 0.64% Intergovernmental Investment Pool - Florida Education Investment Trust Fund 5,550,397 24.76%

Total $22,418,191 100%


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Foreign Currency Risk The District investment policy does not allow for investments in foreign currency therefore the District has no exposure to foreign currency risk. 4. CHANGES IN CAPITAL ASSETS

Changes in capital assets are presented in the table below.

Balance BalanceJuly 1, 2013 Additions Deletions Transfers June 30, 2014

GOVERNMENTAL ACTIVITIES

Capital Assets Not Being Depreciated:Land (660) 10,317,174$ -$ -$ -$ 10,317,174$

Total Capital Assets Not Being Depreciated 10,317,174 - - - 10,317,174

Capital Assets Being Depreciated:Improvements Other Than Buildings (670) 28,381,060 118,808 - - 28,499,868 Buildings and Fixed Equipment (680) 475,924,324 372,518 476,296,842 Furniture, Fixtures, and Equipment (641/643/691) 27,506,458 784,188 76,039 28,214,607 Motor Vehicles (652 Vehicles) (651 Buses) 15,154,668 75,944 113,975 - 15,116,637 Property Under Capital Leases 8,828,066 - - 8,828,066

Total Capital Assets Being Depreciated 555,794,576 1,351,458 190,014 - 556,956,020

Less Accumulated Depreciation for:Improvements Other Than Buildings 13,693,610 1,139,995 14,833,605 Buildings and Fixed Equipment 101,882,293 9,525,937 - 111,408,230 Furniture, Fixtures, and Equipment 25,398,027 2,892,619 76,039 28,214,607 Motor Vehicles 14,689,831 540,781 113,975 15,116,637 Property Under Capital Leases 5,178,451 1,261,531 6,439,982

Total Accumulated Depreciation 160,842,212 15,360,863 190,014 - 176,013,061

Total Capital Assets Being Depreciated, Net 394,952,364 (14,009,405) (0) - 380,942,959

Governmental Activities Capital Assets, Net 405,269,538$ (14,009,405)$ (0)$ -$ 391,260,133$ The classes of property under capital leases are presented in Note 5. Depreciation expense was charged to functions as follows: Function AmountGovernmental Activities

Instruction 100,066$ Pupil Personnel Services 8,773 Facilities Acquisition & Construction 1,906 Food Services 10,331 Central Services 1,797 Operation of Plant 7,681 Maintenance of Plant 14,235 Transportation 4,533 Administrative Related Technology 1,844 Unallocated 15,209,697

Total Depreciation Expense - Governmental Activities 15,360,863$


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5. OBLIGATIONS UNDER CAPITAL LEASES

The classes and amounts of property being acquired under capital leases are as follows:

Asset Balance

Data Processing Equipment 8,828,066$

Future minimum capital lease payments and the present value of the minimum lease payments as of June 30 are as follows: Fiscal Year Ending June 30 Total Principal Interest2015 53,312 50,273 3,040

Total Minimum Lease Payments 53,312$ 50,273$ 3,040$

The imputed interest rates range from 5.75 to 6.25 percent.

6. NOTES PAYABLE

Notes payable is comprised of the following:

Balance at June 30, 2014

Banc of America Public Capital Corp

7,262,686$

$14,419,695, was borrowed on 3-16-07, under provisions of Section1013.23, Florida Statutes at an Interest rate of 3.83 percent.Proceeds were used to refinance the purchase of energy savingsequipment. This maturity date is 4-29-20. Amounts payable for the planned extended repayment of the Section 1013.23, Florida Statutes, financing agreement are as follows:


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Fiscal Year Ending June 30 Total Principal Interest2015 1,413,189$ 1,151,573 261,616 2016 1,413,189 1,196,292 216,897 2017 1,413,189 1,242,748 170,441 2018 1,413,189 1,291,007 122,182 2019 1,413,189 1,341,141 72,048 2020 1,059,222 1,039,925 19,297 Total 8,125,167$ 7,262,686$ 862,481$

7. CERTIFICATES OF PARTICIPATION

The District entered into a financing arrangement on November 1, 1991, which was characterized as a lease-purchase agreement, with the Hernando School Board Leasing Corporation, whereby the District secured financing of various educational facilities in the total amount of $11,435,000 for the Certificates of Participation, Series 1993; $30,000,000 for the Certificates of Participation, Series 2003A; $7,175,000 for the Certificates of Participation, Series 2003B; $106,670,000 for the Certificates of Participation, Series 2005 and $29,162,000 for the Certificates of Participation, Series 2013A. The Certificates of Participation, Series 2003B, were used to advance refund the outstanding Certificates of Participation, Series 1993. The Certificates of Participation, Series 2013A were used to advance refund the outstanding Certificates of Participation, Series 2003A. The financings were accomplished through the issuance of Certificates of Participation. As a condition of the financing arrangement, the District has given ground leases on District property to the Hernando School Board Leasing Corporation, with terms ranging from 20 to 30 years. The properties covered by the ground leases are, together with the improvements constructed thereon from the financing proceeds, leased back to the District. If the District fails to renew the lease and to provide for the rent payments through to term, the District may be required to surrender the sites included under the Ground Lease Agreements for the benefit of the securers of the Certificates for a period of time specified by the arrangement which may be up to 35 years from the date of inception of the arrangements.

The District properties included in the ground leases under this arrangement include land on which the projects have been constructed. The projects related to the ground leases are as follows:


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Series 2005 Certificates Series 2013 CertificatesExplorer K-8 School Challenger K-8 School Science and MathematicsWinding Waters K-8 SchoolGrade Specific Additions at Pine Grove Elementary School,

West Hernando Middle School, and Central High SchoolImprovements and Additions to Hernando High SchoolImprovements and Additions to Springstead High School Improvements and Additions to Spring Hill Elementary School

The lease payments for the 2005 and 2013A Series are payable by the District, semiannually, on July 1 and January 1 at interest rates ranging from 2.08 to 5.0 percent. The payment of principal and interest on the bonds underlying the lease agreements are due on July 1 and January 1 of each year. The July 1 payment is typically made on or around June 15 and is considered to be a reduction of bond principal as of June 30. The following is a schedule by years of future minimum lease payments under the lease agreements together with the present value of minimum lease payments as of June 30: Fiscal Year Ending June 30 Total Principal Interest

2015 9,254,164$ 3,993,273$ 5,260,891$ 2016 9,252,976 4,097,022$ 5,155,954$ 2017 9,249,326 4,212,152$ 5,037,174$ 2018 9,251,726 4,329,429$ 4,922,297$ 2019 9,254,089 4,450,260$ 4,803,829$ 2020-2024 46,671,999 24,587,827$ 22,084,172$ 2025-2029 48,328,125 31,630,000$ 16,698,125$ 2030-2034 48,323,675 40,110,000$ 8,213,675$ 2035 9,664,650 9,220,000$ 444,650$

Total Minimum Lease Payments 199,250,732 126,629,963 72,620,769 Unamortized COP Premiums 855,220 855,220 Total 200,105,952$ 127,485,183$ 72,620,769$ The Advanced Refunding of the Series 2003A Certificate with the Series 2013A Certificate resulted in a fixed interest rate of 2.08% through July 1, 2023 (maturity date). The present value of savings of interest expense from October 18, 2013 to July 1, 2023 is $3,622,224.


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8. BONDS PAYABLE

Bonds payable at June 30, 2014, are as follows:

Original Debt Amount Interest Rates AnnualBond Type Issue Amount Outstanding (Percent) Maturity To

State School Bonds:Series 2004A, Refunding 460,000 270,000 4.00-4.625 2015Series 2005A, Refunding 545,000 340,000 4.00-5.00 2015Series 2005B, Refunding 3,885,000 1,815,000 5.00 2018Series 2009A, Refunding 370,000 160,000 4.00 - 5.00 2019Series 2010A, Refunding 1,435,000 1,260,000 3.50 - 5.00 2030Series 2011A, Refunding 365,000 340,000 3.00 - 5.00 2023Series 2014A, Refunding 523,000 523,000 2.00 - 5.00 2025

Subtotal 7,583,000 4,708,000 Unamortized Premium 400,431 357,436

State School Bonds 7,983,431 5,065,436

District Revenue Bonds:Series 2001, Refunding 3,290,000 2,410,000 4.500 - 5.125 2031

Sales Tax Revenue Bonds:Series 2006 45,000,000 6,415,000 3.50 - 4.25 2014Unamortized Bond Premium 1,181 592

Sales Tax Revenue Bonds 45,001,181 6,415,592

Total Bonds Payable 56,274,612$ 13,891,028$ The various bonds were issued to finance capital outlay projects of the District. The following is a description of the bonded debt issues:

State School Bonds

These bonds are issued by the State Board of Education on behalf of the District. The bonds mature serially, and are secured by a pledge of the District's portion of the State-assessed motor vehicle license tax. The State's full faith and credit is also pledged as security for these bonds. Principal and interest payments, investment of Debt Service Fund resources, and compliance with reserve requirements are administered by the State Board of Education and the State Board of Administration.


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District Revenue Bonds

Refunding and Capital Improvement Revenue Bonds, Series 2001. These bonds were issued in June 2001 to refund the Refunding and Improvement Revenue Bonds, Series 1992, and to finance the costs of various capital improvements within the school district. These bonds were authorized by Chapter 79-471, Laws of Florida, which provides that the bonds be secured from racetrack funds and jai alai fronton funds accruing annually to the District from the State’s Pari-mutuel Tax Collection Trust Fund pursuant to Chapter 550, Florida Statutes (effective July 1, 2000, tax proceeds are distributed pursuant to Section 212.20(6)(d)7.a., Florida Statutes). The annual distribution is remitted by the Florida Department of Financial Services to the District.

Sales Tax Revenue Bonds

Sales Tax Revenue Bonds, Series 2006. These bonds are authorized by Chapters 1001 and 212, Florida Statutes. Principal and interest on these bonds are payable solely from and secured by a lien upon and pledge of proceeds from the levy and collection of the one-half cent local capital outlay sales surtax pursuant to Section 212.055(6), Florida Statutes. The bonds were issued for the principal purpose of acquiring, construction, and equipping a new high school. The sales tax collection began on January 1, 2005, and will be in place for ten years. The sales tax was projected to generate at least $68,708,600 or 130.44 percent of the principal and interest payments over the eight years of the bonds. During the 2013-2014 fiscal year, the District recognized sales tax revenues totaling $9,007,765 and expended $6,533,449 (72.53 percent) of these revenues for debt service directly collateralized by these revenues.

Annual requirements to amortize all bonded debt outstanding as of June 30, 2014, are as follows: Fiscal Year Ending June 30 Total Principal Interest

State School Bonds:2015 794,301 600,000 194,301 2016 805,551 640,000 165,551 2017 817,751 682,000 135,751 2018 819,001 715,000 104,001 2019 308,976 238,000 70,976 2020-2024 1,398,109 1,163,000 235,109 2025-2029 633,750 550,000 83,750 2030 124,800 120,000 4,800 Unamortized Bond Premium 357,436 357,436

Total State School Bonds 6,059,676 5,065,436 994,240


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District Revenue Bonds:2015 203,918 85,000 118,918 2016 204,825 90,000 114,825 2017 205,372 95,000 110,372 2018 205,619 100,000 105,619 2019 205,622 105,000 100,622 2020-2024 1,017,813 600,000 417,813 2025-2029 1,016,922 770,000 246,922 2030-2032 609,203 565,000 44,203

Total District Revenue Bonds 3,669,293 2,410,000 1,259,293

Sales Tax Revenue Bonds:2015 6,531,775 6,415,000 116,775

Unamortized Bond Premium 592 592

Total Sales Tax Revenue Bonds 6,532,367 6,415,592 116,775

Total 16,261,336$ 13,891,028$ 2,370,308$

9. DEFEASED DEBT

In prior years, the Board defeased in substance certain outstanding bonds by placing the proceeds of new bonds in irrevocable trusts to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the in-substance defeased bonds are not included in the District’s financial statements. On June 30, 2014, bonds considered defeased in substance are as follows:

AmountBond Issues Outstanding

Refunding and Capital Improvement Revenue Bonds, Series 1992 905,000$ State School Bonds, Series 1999A 220,000

Total Defeased Debt 1,125,000$


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10. CHANGES IN LONG-TERM LIABILITIES

The following is a summary of changes in long-term liabilities:

Balance BalanceDescription June 30, 2013 Additions Deductions June 30, 2014 Due in One Year

GOVERNMENTAL ACTIVITIES

Bonds Payable 19,820,000$ 523,000$ 6,810,000$ 13,533,000$ 7,100,000$ Unamortized Premium 319,116 82,496 43,584 358,028$ 51,087

Total Bonds Payable 20,139,116 605,496 6,853,584 13,891,028 7,151,087

Certificates of Participation Payable 130,255,000 29,162,000 32,787,037 126,629,963 3,993,273 Unamortized Premium 895,945 40,725 855,220 40,725

Total Certificates of Participation Payable 131,150,945 29,162,000 32,827,762 127,485,183 4,033,998

Obligations Under Capital Leases 283,632 233,359 50,273 50,273 Note Payable 8,371,212 1,108,526 7,262,686 1,151,573 Other Post Employment Benefits 6,572,464 1,118,640 7,691,104 Compensated Absences Payable 13,621,804 2,139,783 1,293,676 14,467,911 1,402,000

Total Governmental Activities 180,139,173$ 33,025,919$ 42,316,907$ 170,848,185$ 13,788,931$ For the governmental activities, compensated absences and postemployment benefits are generally liquidated with resources of the General Fund.

11. FUND BALANCE REPORTING

Governmental Accounting Standards Board (GASB) has issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB 54) to provide a more structured classification of fund balance and to improve the usefulness of fund balance reporting to the users of the District’s financial statements. The reporting standard establishes a hierarchy for fund balance classifications and the constraints imposed on the uses of those resources. GASB 54 provides two major types of fund balances, which are nonspendable and spendable. Nonspendable fund balances are balances that cannot be spent because they are not expected to be converted to cash or they are legally or contractually required to remain intact. Examples of this classification are prepaid items, inventories, and principal (corpus) of an endowment fund. The District has a long-term receivable and inventory items that are considered nonspendable. The District has no nonspendable funds related to endowment. In addition to the nonspendable fund balance, GASB 54 has provided a hierarchy of the spendable fund balances, based on a hierarchy of spending constraints.


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Restricted: fund balances that are constrained by external parties, constitutional provisions, or enabling legislation.

Committed: fund balances that contain constraints imposed by formal action of the government from its highest level of decision making authority. At the end of the fiscal year, there were no commitments.

Assigned: fund balances that contain self imposed constraints by the governing body to be used for a particular purpose.

Unassigned: fund balance of the general fund that is not constrained for any particular purpose.

The District has classified its fund balances with the following hierarchy: Nonspendable: The District has inventories, and investments totaling $2,404,500 that are classified as nonspendable. Spendable: The District has classified the spendable fund balances as Restricted, Assigned and Unassigned and considered each to have been spent when expenditures are incurred. The District currently has no funds classified as Committed.

Restricted for State Categorical Programs, Food Services, Debt Service, and Capital

Projects:

Federal Laws, Florida Statutes and local ordinances require that specifically designated for the purposes of capital and debt service requirements and for certain designated state categorical spending. These funds have been included in the restricted category of fund balance. The restricted fund balance totaled $40,810,268 and represented $30,755 for State categorical programs, $2,351,287 in food services, $5,606,796 in debt service, and $32,821,430 in capital projects.

Assigned for School Operations, Department Of Education (DOE) Obligations,

Health Insurance Rebates and Profit Sharing:

In accordance with Fund Balance Policy 7.11, the assigned fund balance includes amounts which are assigned for a specific purpose by the Board or by delegation to the Superintendent or his or her designee. The School Board has set aside certain spendable fund balance for school operations. At year end, the assigned general fund balance is $6,734,106 of which $5,213,427 is for school operations, $341,249 is for the return of FEFP funds to the Florida DOE for FTE audits, and $1,179,430 is for health insurance rebates received and profit sharing that can only be used for premium increases. The assigned fund balance for school operations includes $776,834 for outstanding encumbrances and $4,436,593 for target operating fund balance reserve.

Unassigned:

The unassigned fund balance for the General Fund is $6,483,492.


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At the end of the fiscal year, the assigned general fund balance was $6,411,791 and the unassigned general fund balance was $6,483,492 or 8.44% of general fund revenues.

12. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS

The following is a summary of interfund receivables and payables reported in the fund financial statements:

Funds Receivables PayablesMajor Funds:

General 543,062$ -$ ARRA Stimulas 52,765 Nonmajor Governmental - 490,297 Total Governmental Funds 543,062$ 543,062$

Interfund

Interfund receivables and payables are temporary loans of cash between funds allowable under Section 1011.09, Florida Statutes, for a period of less than 13 months. The temporary loans do not restrict, impede, or limit implementation or fulfillment of the original purposes for which the moneys were received in the fund providing the advancement.

Other Nonmajor Total Capital Governmental Governmental

General Projects Funds Funds Fund Balances:

Nonspendable: Inventory 1,434,975 $ $ 122,014 $ 1,556,989 $ Other Not in Spendable Form 847,458 53 847,511 $ - $

Restricted: State Categoricals 30,755 30,755 $ Debt Service 5,606,795 5,606,795 $ Capital Projects 32,720,181 101,250 32,821,431 $ Food Services 2,351,287 2,351,287 $ - $

Assigned: School Operations:

Encumbrances 454,519 239,593 82,722 776,834 $ Target Operating Fund Balance Reserve

4,436,593 4,436,593 $ DOE Obligations 341,249 341,249 $ Health Insurance Rebates & Profit Sharing 1,179,430 1,179,430 $ - $

Unassigned: 6,483,492 6,483,492 $

Total Fund Balances 14,361,013 $ 33,807,232 $ 8,264,121 $ 56,432,366 $

Major Funds


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The following is a summary of interfund transfers reported in the fund financial statements:

Funds Transfers In Transfers OutMajor Funds:

General 4,221,974$ 1,307,318$ Other Debt 16,985,058 2,260$ Capital Projects: Section 1011.71(2), F.S., Local

Local Capital Improvement 7,570,295 Other Capital Outlay 2,260 12,334,737

Nonmajor Governmental 5,318

Total Governmental Funds 21,214,610$ 21,214,610$

Interfund

Interfund transfers represent permanent transfers of moneys between funds. In general, funds are transferred from the General Fund and Capital Projects Funds to the Debt Service Funds for annual debt payments and from the Capital Projects Funds to the General Fund to assist in financing maintenance operations of the District and payment of property-casualty insurance premiums.

13. SCHEDULE OF STATE REVENUE SOURCES

The following is a schedule of the District’s State revenue for the 2013-2014 fiscal year: Source Amount

Florida Education Finance Program:Transportation 4,411,979$ Instructional Materials 1,714,288 School Recognition 338,778 Florida Teachers Lead 374,558 Other 68,787,838

Categorical Educational Program - Class Size Reduction 23,285,700 Motor Vehicle License Tax (Capital Outlay and Debt Service) 876,894 Workforce Development Program 2,015,185 Food Service Supplement 145,238 Discretionary Lottery Funds 209,627 Charter School Capital Outlay 55,463 Interest on Investment of Bond Reserves 4,235 Miscellaneous 567,975

Total 102,787,758$


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Accounting policies relating to certain State revenue sources are described in Note 1.

14. PROPERTY TAXES

The following is a summary of millages and taxes levied on the 2013 tax roll for 2013-2014 fiscal year:

MillagesGENERAL FUNDNonvoted School Tax:

Required Local Effort 4.889Required Local Effort -Prior Period Adj. 0.143Basic Discretionary Local Effort 0.748

CAPITAL PROJECTS FUNDSNonvoted Tax:

Local Capital Improvements 1.500

Total 7.280

15. FLORIDA RETIREMENT SYSTEM

Florida Retirement System. Essentially all regular employees of the District are eligible to enroll as members of the Florida Retirement System (FRS). Provisions relating to FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida Statutes; and Florida Retirement System Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, and benefits are defined and described in detail. FRS is a single retirement system administered by the Department of Management Services, Division of Retirement, and consists of two cost-sharing, multiple-employer retirement plans and other nonintegrated programs. These include a defined-benefit pension plan (Plan), a Deferred Retirement Option Program (DROP), and a defined-contribution plan, referred to as the Florida Retirement System Investment Plan (Investment Plan). Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service and employees enrolled in the Plan on or after July 1, 2011, vest at eight years of creditable service. All vested members, enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62 or at any age after 30 years of service. All members enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service. Members of both Plans may include up to 4 years of credit for military service toward creditable service. The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments.


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DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirement under the Plan to defer receipt of monthly benefit payments while continuing employment with an FRS employer. An employee may participate in the DROP for a period not to exceed 60 months after electing to participate, except that certain instructional personnel may participate for up to 96 months. During the period of DROP participation, deferred monthly benefits are held in the FRS Trust Fund and accrue interest. As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined-benefit plan. District employees participating in DROP are not eligible to participate in this program. Employer and employee contributions are defined by law, but the ultimate benefit depends in part on the performance of investment funds. The Investment Plan is funded by employer and employee contributions that are based on salary and membership class (Regular Class, Senior Management Service Class, etc.). Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Employees in the Investment Plan vest at one year of service. The State of Florida establishes contribution rates for participating employers and employees. Contribution rates during the 2013-2014 fiscal year were as follows:

Percent of Gross Salary

Employee Employer (a)

Florida Retirement System, Regular 3.00 6.95

Florida Retirement System, Elected County Officers 3.00 33.03

Florida Retirement System, Senior Management Service 3.00 18.31

Deferred Retirement Option Program - Applicable to Members from All of the Above Classes 0.00 12.84

Florida Retirement System, Reemployed Retiree (b) 3.39

Notes: (a)

(b)

Class

Employer rates include 1.11 percent for the postemployment health insurance

subsidy. Also, employer rates, other than for DROP participants, include .03

percent for administrative costs of the PEORP. Contribution rates are dependent upon the retirement class in which reemployed.


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The District's liability for participation is limited to the payment of the required contribution at the rates and frequencies established by law on future payrolls of the District. The District's contributions including employee contributions for the fiscal years ending June 30, 2012, June 30, 2013, and June 30, 2014, totaled $8,170,354, $8,591,318 and $8,193,921 respectively, which were equal to the required contributions for each fiscal year. There were 403 District participants in the Investment Plan during the 2013-2014 fiscal year. The District’s contributions including employee contributions to the Investment Plan totaled $1,099,598, which was equal to the required contribution for the 2013-2014 fiscal year. Financial statements and other supplementary information of FRS are included in the State’s Comprehensive Annual Financial Report, which is available from the Florida Department of Financial Services. An annual report on FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services, Division of Retirement.

16. OTHER POSTEMPLOYMENT BENEFITS PAYABLE

Plan Description. The Other Postemployment Benefits Plan (Plan) is a single-employer defined benefit plan administered by the District. Pursuant to the provisions of Section 112.0801, Florida Statutes, former employees who retire from the District and eligible dependents, may continue to participate in the District’s fully insured group health plan. The District subsidizes the premium rates paid by retirees by allowing them to participate in the plan at blended group (implicitly subsidized) premium rates for both active and retired employees. These rates provide an implicit subsidy for retirees because, on an actuarial basis, their current and future claims are expected to result in higher costs to the plan on average than those of active employees. Retirees are required to enroll in the Federal Medicare program for their primary coverage as soon as they are eligible. The Plan does not issue a stand-alone report and is not included in the report of a Public Employee Retirement System or another entity. Funding Policy. Benefit provisions for the Plan are pursuant to provisions of Section 112.081, Florida Statutes, and are amended through negotiations between the District and the respective unions.

The District has not advance-funded or established a funding methodology for the annual Other Postemployment Benefit (OPEB) costs or the net OPEB obligation, and the Plan is financed on a pay-as-you-go basis. For the 2013-2014 fiscal year, 113 retirees received postemployment group healthcare benefits. The District’s contribution to the OPEB obligation is the implicit subsidy for the retirees, which was $234,317. Plan members receiving benefits contributed $1,003,063 through their required contributions ranging from $560 to $596 per month for retiree-only coverage and from $1,072 to


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$1,134 for retiree and spouse coverage, depending on health plan selected. Annual OPEB Cost and Net OPEB Obligations. The District’s annual OPEB cost (expense) is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. The ARC represents a level of funding that is paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following table shows 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 for Postemployment Healthcare Benefits:

Description Amount

Normal Cost (service cost for one year) 851,980$ Amortization of Unfunded Actuarial Accrued Liability 489,228Annual Required Contribution 1,341,208Interest on Net OPEB Obligation 262,899Adjustment to Annual Required Contribution 251,150Annual OPEB Cost (Expense) 1,352,957Contribution Toward the OPEB Cost (234,317)Increase in Net OPEB Obligation 1,118,640Net OPEB Obligation, Beginning of Year 6,572,464

Net OPEB Obligation, End of Year 7,691,104$

The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation as of June 30, 2014, and the preceding years, were as follows:

Percentage ofAnnual Net

Annual OPEB Cost OPEB ContributionFiscal Year OPEB Cost Contributed Obligation per Table 1Beginning Balance, 7-1-11 -$ -$ 2011-2012 1,208,791 13.6% 5,618,025 163,8142012-2013 1,188,756 19.8% 6,572,464 234,3172013-2014 1,352,957 17.4% 7,691,104 234,317


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Funded Status and Funding Progress. As of July 1, 2014, the most recent actuarial valuation date accrued liability for benefits was $12,802,856, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability of $12,802,856 and a funded ratio of 0 percent. The covered payroll (annual payroll of active participating employees) was $102,912,805 for the 2013-2014 fiscal year, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 12.44 percent. 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 and termination, mortality, and the healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. The schedule of funding progress can be found in Exhibit D-2 of this report. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan provisions, as understood by the employer and participating 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 participating members. The actuarial methods and assumptions used include techniques that are designed to reduce the efforts of short-term volatility in actuarial accrued liabilities and the actuarial value of the assets, consistent with the long-term perspective of the calculations. The District’s OPEB actuarial valuation as of July 1, 2014, used the projected unit credit actuarial cost method to estimate the unfunded actuarial accrued liability as of June 30, 2014, and to estimate the District’s 2013-2014 annual required contribution. Because the OPEB liability is currently unfunded, the actuarial assumption included a 4 percent rate of return on invested assets. The actuarial assumptions also included a payroll growth rate of 3 percent annually and an annual healthcare cost trend of 7.75 percent for the 2013-2014 fiscal year, reduced by 0.5 percent per year, to an ultimate rate of 5 percent after six years. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payrolls on an open basis. The remaining amortization period at June 30, 2014, was 30 years.

17. COMMITMENTS

The District uses encumbrance accounting for recording purchase order commitments for goods and services. The District has recorded $694,112 in encumbrances for major funds and $82,722 in nonmajor funds at June 30, 2014.


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18. MEMBERSHIP IN NONPROFIT CORPORATION

The District participated in a nonprofit electric cooperative, the Withlacoochee River Electric Cooperative, Inc., established under the provisions of Chapter 425, Florida Statutes. In accordance with this statute, revenues in excess of operating expenses, unless determined by a vote of the membership, are distributed by the Cooperative on a pro rata basis to its members. The policy of the Cooperative is to credit the excess revenues to members’ accounts. Capital credits are distributed only after the Cooperative attains a certain margin of profit required by the Rural Electrification Administration. At June 30, 2014, the accumulated credits to the District’s account are $3,420,244. During the 2013-2014 fiscal year, the District received $120,637 in capital credits.

19. RISK MANAGEMENT PROGRAMS

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Hernando County District School Board is a participating district of the North East Florida Educational Consortium (Consortium) under which several district school boards have established a combined limited self-insurance program for property protection, general liability, automobile liability, workers’ compensation, money and securities, employee fidelity and faithful performance, boiler and machinery, and other coverage deemed necessary by the members and participants of the Consortium. Section 1001.42(12)(k), Florida Statutes, provides the authority for the District to enter into such a risk management program. The Consortium is self-sustaining through member and participant assessments (premiums), and purchases coverage through commercial companies for claims in excess of specified amounts. Reinsurance from commercial companies provided excess property coverage of up to $75 million during the 2013-2014 fiscal year, which is the same excess property coverage provided during the 2012-2013 fiscal year. The Board of Directors for the Consortium is composed of superintendents of all member districts. The Putnam County District School Board serves as fiscal agent for the Consortium.

Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. Health and hospitalization coverage is being provided through purchased commercial insurance with minimum deductibles for each line of coverage. Settled claims resulting from these risks have not exceeded commercial coverage in any of the past three fiscal years.

20. LITIGATION AND CONTINGENCIES

The District is subject to potential litigation in the normal course of business. It is the opinion of management, after giving consideration to the District's related insurance coverage, as well as the Florida statutory limitations on governmental liability on


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uninsured risks, that the amount of losses resulting from litigation, which exceed the above-mentioned limits, would not be material to the financial position of the District. Amounts received or receivable from grantors are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures, which may be disallowed by grantors, cannot be determined at this time. In the opinion of the management of the District, no material refunds will be required as a result of expenditures disallowed by grantors.

21. SUBSEQUENT EVENT

An extension of the one half cent school capital outlay sales tax referred to in Note 1 was not approved by the voters on November 4, 2014.

REQUIRED SUPPLEMENTARY INFORMATION

Revenues Intergovernmental:

Federal Direct $ 230,000 $ 211,147 $ 211,147 $Federal Through State and Local 670,000 617,340 617,340 State 103,545,412 101,447,075 101,447,075

Local:Property Taxes Levied for Operational Purposes 44,571,455 45,785,613 45,785,613 Miscellaneous 1,982,004 5,047,144 4,787,144 (260,000)

Total Revenues 150,998,871 153,108,319 152,848,319 (260,000)


Instruction:Salaries 70,128,758 71,879,792 71,629,792 250,000 Employee Benefits 19,927,580 21,079,814 21,079,814 Purchased Services 2,624,382 1,973,441 1,973,441 Energy Services 341 442 442 Materials and Supplies 7,205,685 3,053,263 3,053,263 - Capital Outlay 719,672 267,980 267,980 Other Expenses 2,095,061 1,980,408 1,980,408 Total Instruction 102,701,479 100,235,140 99,985,140 250,000

Pupil Personnel Services:Salaries 5,125,944 5,390,197 5,390,197 Employee Benefits 1,770,381 1,568,188 1,568,188 Purchased Services 509,681 14,785 14,785 - Energy Services 5,000 7,613 7,613 Materials and Supplies 42,263 41,453 41,453 Capital Outlay 874 4,419 4,419 Other Expenses 2,262 20,173 20,173 Total Pupil Personnel Services 7,456,405 7,046,828 7,046,828

Instructional Media Services:Salaries 1,506,470 1,500,263 1,500,263 Employee Benefits 510,951 460,352 460,352 Purchased Services 14,736 17,970 17,970 Energy Services 100 144 144 Materials and Supplies 25,478 5,837 5,837 Capital Outlay 99,413 108,088 108,088 Other Expenses 4,300 2,613 2,613 Total Instructional Media Services 2,161,448 2,095,267 2,095,267

Instruction and Curriculum Development Services:Salaries 2,152,108 1,099,149 1,099,149 Employee Benefits 333,461 318,327 318,327 Purchased Services 26,903 15,112 15,112 Energy Services - 272 272 Materials and Supplies 29,815 27,339 27,339 Capital Outlay 354 183,240 183,240 Other Expenses 1,738 1,738 Total Instruction and Curriculum Development Services 2,542,641 1,645,177 1,645,177

Instructional Staff Training Services:Salaries 708,589 496,593 496,593 Employee Benefits 256,067 140,406 140,406 Purchased Services 30,594 28,300 28,300 Materials and Supplies 5,500 4,101 4,101 Capital Outlay 20,000 17,954 17,954 Other Expenses 4,630 4,630 Total Instructional Staff Training Services 1,020,750 691,984 691,984

Instruction Related Technology:Salaries 745,356 690,506 690,506 Employee Benefits 239,942 212,154 212,154 Purchased Services 247 247 Materials and Supplies 6,083 6,083 Capital Outlay 169,445 169,445 Total Instruction Related Technology 985,298 1,078,435 1,078,435

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAREQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE - GENERAL FUNDFor the Fiscal Year Ended June 30, 2014

General Fund

Original FinalBudget Budget Actual (Negative)

PositiveFinal Budget -Variance with

67

ExpendituresCurrent (Continued)

Board of Education:Salaries 276,566 206,335 206,335 Employee Benefits 104,286 106,213 106,213 Purchased Services 120,836 126,236 126,236 Materials and Supplies 4,990 2,169 2,169 Other Expenses 15,461 15,461 Total Board of Education 506,678 456,414 456,414

General Administration: Salaries 742,540 543,853 543,853 Employee Benefits 142,632 140,898 140,898 Purchased Services 6,840 28,756 28,756 Materials and Supplies 11,494 2,936 2,936 Capital Outlay 550 550 Other Expenses 2,500 15,874 15,874 Total General Administration 906,006 732,867 732,867

School Administration:Salaries 8,520,380 8,421,210 8,421,210 Employee Benefits 2,837,585 2,520,816 2,520,816 Purchased Services 69,020 65,219 65,219 Materials and Supplies 46,137 36,837 36,837 Capital Outlay 500 11,139 11,139 Other Expenses 3,680 30,184 30,184 Total School Administration 11,477,302 11,085,405 11,085,405

Facility Services - Non-Capitalized:Salaries 487,087 411,930 411,930 Employee Benefits 114,662 106,449 106,449 Purchased Services 75,322 58,157 58,157 Materials and Supplies 6,000 2,879 2,879 Capital Outlay 1,602 1,602 Other Expenses 1,422 1,422 Total Facility Services - Non-Capitalized 683,071 582,439 582,439

Fiscal Services:Salaries 833,449 515,841 515,841 Employee Benefits 186,639 162,039 162,039 Purchased Services 77,850 260,824 260,824 Materials and Supplies 4,172 4,582 4,582 Capital Outlay 267 267 Other Expenses 141,017 141,017 Total Fiscal Services 1,102,110 1,084,570 1,084,570

Food Services:Salaries 13,694 24,262 24,262 Employee Benefits 6,370 6,506 6,506 Total Food Services 20,064 30,768 30,768

Central Services:Salaries 978,914 929,941 929,941 Employee Benefits 355,155 304,812 304,812 Purchased Services 538,175 512,994 512,994 Materials and Supplies 73,700 44,869 44,869 Capital Outlay 15,377 15,377 Other Expenses 5,375 5,375 Total Central Services 1,945,944 1,813,368 1,813,368

Pupil Transportation Services:Salaries 3,416,257 3,657,735 3,657,735 Employee Benefits 1,643,934 1,554,650 1,554,650 Purchased Services 406,882 213,646 213,646 Energy Services 2,006,159 1,541,195 1,541,195 Materials and Supplies 529,110 562,775 562,775 Capital Outlay 35,795 35,795 Other Expenses 385,156 385,156 Total Pupil Transportation Services 8,002,342 7,950,952 7,950,952


BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (Continued)For the Fiscal Year Ended June 30, 2014

Variance withFinal Budget -

Original Final PositiveBudget Budget Actual (Negative)

General Fund

68


Operation of Plant:Salaries 4,490,585 4,247,221 4,247,221 Employee Benefits 2,088,808 1,672,693 1,672,693 Purchased Services 2,315,855 2,736,918 2,736,918 Energy Services 5,550,775 5,691,646 5,431,646 260,000 Materials and Supplies 542,044 372,064 372,064 Capital Outlay 1,000 4,442 4,442 Other Expenses 145,626 126,321 126,321 Total Operation of Plant 15,134,693 14,851,305 14,591,305 260,000

Maintenance of Plant: Salaries 2,927,105 2,630,211 2,630,211 Employee Benefits 1,049,794 898,083 898,083 Purchased Services 437,943 542,926 542,926 Energy Services 321,288 157,351 157,351 Materials and Supplies 459,022 474,752 474,752 - Capital Outlay 24,189 24,189 Other Expenses 1,347 1,347 Total Maintenance of Plant 5,195,152 4,728,859 4,728,859

Administrative Technology Services: Salaries 1,244,908 1,175,870 1,175,870 Employee Benefits 405,345 346,083 346,083 Purchased Services 264,042 181,898 181,898 Materials and Supplies 19,757 19,757 Capital Outlay 126,444 126,444 Total Administrative Technology Services 1,914,295 1,850,052 1,850,052

Community Services: Salaries 12,100 12,100 12,100 Employee Benefits 9,571 4,787 4,787 Purchased Services 818,285 168,429 168,429 Materials and Supplies 972 450 450 Capital Outlay 115 - Total Community Services 841,043 185,766 185,766

Fixed Capital Outlay:Facilities Acquisition and Construction 72,657 72,657 Other Capital Outlay 25,279 25,279 Total Fixed Capital Outlay 97,936 97,936

Total Expenditures 164,596,721 158,243,532 157,733,532 (510,000)

Excess (Deficiency) of Revenues Over(Under) Expenditures (13,597,850) (5,135,213) (4,885,213) 250,000

Other Financing Sources (Uses)Transfers In 2,000,000 4,221,974 4,221,974 Insurance Loss Recoveries 57,181 57,181 Transfers Out (1,300,000) (1,307,318) (1,307,318)

Total Other Financing Sources (Uses) 700,000 2,971,837 2,971,837

Net Change in Fund Balances (12,897,850) (2,163,376) (1,913,376) Fund Balances, July 1, 2013 17,747,657 16,274,389 16,274,389

Fund Balances, June 30, 2014 $ 4,849,807 $ 14,111,013 $ 14,361,013 $ 250,000


General FundVariance with

BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (Continued)For the Fiscal Year Ended June 30, 2014

Final Budget -Original Final PositiveBudget Budget Actual (Negative)

69

Final Budget -


Federal Through State and Local $ 14,827,743 $ 11,604,734 $ 11,670,426 $ 65,692 Local:

MiscellaneousTotal Revenues 14,827,743 11,604,734 11,670,426 65,692


Instruction: Salaries 3,206,119 1,659,031 1,659,031 Employee Benefits 1,016,523 576,584 576,584 Purchased Services 699,703 177,914 177,914 Materials and Supplies 871,005 666,046 648,439 (17,607) Capital Outlay 851,828 1,132,926 1,141,494 8,568 Other Expenses 120,338 70,746 70,746 Total Instruction 6,765,516 4,283,247 4,274,208 (9,039)

Pupil Personnel Services: Salaries 1,322,980 1,497,143 1,497,143 Employee Benefits 580,401 475,011 475,011 Purchased Services 50,361 32,769 32,769 Energy Services 1,000 98 98 Materials and Supplies 85,638 71,148 71,148 Capital Outlay 22,775 14,842 14,842 Other Expenses 5,750 5,643 5,643 Total Pupil Personnel Services 2,068,905 2,096,654 2,096,654

Instructional Media Services:Salaries 2,000 Employee Benefits 193 Total Instructional Media Services 2,193

Instruction & Curriculum Development Services: Salaries 1,829,338 1,779,708 1,779,708 Employee Benefits 580,297 483,256 483,256 Purchased Services 101,342 33,633 33,633 Materials and Supplies 42,914 33,546 33,546 Capital Outlay 29,572 25,558 25,558 Other Expenses 7,188 10,185 10,185 Total Instruction & Curriculum Development Services 2,590,651 2,365,886 2,365,886

Instructional Staff Training Services: Salaries 751,871 725,368 725,368 Employee Benefits 241,606 141,689 141,689 Purchased Services 471,567 241,714 241,714 Materials and Supplies 107,141 89,898 89,898 Capital Outlay 128,963 136,370 136,370 Other Expenses 158,121 107,564 107,564 Total Instructional Staff Training Services 1,859,269 1,442,603 1,442,603

Instruction Related Technology: Salaries 453,755 414,011 414,011 Employee Benefits 235,430 157,544 157,544 Materials and Supplies 13,573 9,625 9,625 Capital Outlay 760 760 Total Instruction Related Technology 702,758 581,940 581,940

General Administration: Other Expenses 645,702 420,275 441,004 20,729 Total General Administration 645,702 420,275 441,004 20,729

School Administration:Salaries 3,004 20,496 20,496 Employee Benefits 208 2,183 2,183 Purchased Services 10,655 6,980 6,980 Capital Outlay 3,781 1,026 6,849 5,823 Total School Administration 17,648 8,006 36,508 28,502

Budget Budget Actual (Negative)


BUDGETARY COMPARISON SCHEDULESPECIAL REVENUE FUND - OTHER FEDERAL PROGRAMS FUND


Special Revenue Fund - Other Federal Programs FundVariance with

Original Final Positive

70

Final Budget -


Facility Acquisition & ConstructionPurchased Services 25,500 25,500 Capital Outlay -

- 25,500 25,500 Fiscal Services:

Purchased Services 7,392 7,392 7,392 Total Fiscal Services 7,392 7,392 7,392

Food Services Salaries 1,000 Employee Benefits 96

Total Food Services 1,096

Central ServicesSalaries 1,828 1,828 Employee Benefits 131 131

1,959 1,959

Transportation Salaries 74,494 24,416 24,416 Employee Benefits 12,852 4,124 4,124 Purchased Supplies 11,250 - Energy Services 41,318 30,731 30,731 Other Expenses 2,208 2,208 Total Transportation 139,914 61,479 61,479

Operation of PlantSalaries 1,000 Employee Benefits 97 Total Central Services 1,097

Maintenance of Plant Salaries 25,602 Employee Benefits

Total Maintenance of Plant 25,602

Fixed Capital Outlay:Facilities Acquisition and Construction 61,963 61,963 Other Capital Outlay 273,330 273,330

335,293 335,293

Total Expenditures 14,827,743 11,604,734 11,670,426 65,692

Net Change in Fund Balances

Fund Balances, July 1, 2013

Fund Balances, June 30, 2014 $ $ $ $



BUDGETARY COMPARISON SCHEDULESPECIAL REVENUE FUND - OTHER FEDERAL PROGRAMS FUND (continued)


Special Revenue Fund - Federal Economic Stimulus Programs FundVariance with


71

Final Budget -


Federal Through State and Local $ 1,640,582 $ 595,399 $ 595,399 $ Total Revenues 1,640,582 595,399 595,399


Instruction: Salaries 420,844 84,713 84,713 Employee Benefits 76,440 8,083 8,083 Purchased Services 101,600 1,600 1,600 Materials and Supplies 48,262 18,130 18,130 Capital Outlay 102,317 14,713 14,713 Other Expenses 10,992 2,812 2,812 Total Instruction 760,455 130,051 130,051

Pupil Personnel Services: Salaries 4,840 4,840 Employee Benefits 368 368 Purchased Services 6,188 3,808 3,808 Total Pupil Personnel Services 6,188 9,016 9,016

Instruction & Curriculum Development Services: Salaries 7,400 40,600 40,600 Employee Benefits 7,141 3,070 3,070 Materials and Supplies 8,640 8,640 Total Instruction & Curriculum Development Services 14,541 52,310 52,310

Instructional Staff Training Services: Salaries 63,919 5,035 5,035 Employee Benefits 32,908 1,062 1,062 Purchased Services 48,908 29,328 29,328 Capital Outlay 8,176 6,829 6,829 Other Expenses 67,744 21,298 21,298 Total Instructional Staff Training Services 221,655 63,552 63,552

Instruction Related Technology: Salaries 40,101 1,117 1,117 Employee Benefits 7,188 82 82 Capital Outlay 5 Other Expenses - Total Instruction Related Technology 47,294 1,199 1,199

General Administration: Salaries 109,948 79,990 79,990 Employee Benefits 48,017 23,693 23,693 Other Expenses 76,036 20,119 20,119 Total General Administration 234,001 123,802 123,802

School Administration:Salaries 42,511 10,024 10,024 Employee Benefits 34,293 753 753 Total School Administration 76,804 10,777 10,777

Central ServicesSalaries 45,780 33,308 33,308 Employee Benefits 23,678 10,770 10,770 Capital Outlay 15,307 14,990 14,990 Total Central Services 84,765 59,068 59,068

Transportation Salaries 500 190 190 Employee Benefits 75 32 32 Purchased Supplies 26,044 Energy Services 5,909 524 524 Total Transportation 32,528 746 746

Special Revenue Fund - Federal Economic Stimulus Programs Fund


BUDGETARY COMPARISON SCHEDULESPECIAL REVENUE FUND - FEDERAL ECONOMIC STIMULUS PROGRAMS FUND


Variance with

Original Final PositiveBudget Budget Actual (Negative)

72

Final Budget -


Administrative Technology Services: Salaries 121,116 54,825 54,825 Employee Benefits 40,250 18,471 18,471 Purchased Services 985 7 7 Total Administrative Technology Services 162,351 73,303 73,303

Fixed Capital Outlay:Facilities Acquisition and Construction - Other Capital Outlay 71,575 71,575

Total Fixed Capital Outlay 71,575 71,575

Total Expenditures 1,640,582 595,399 595,399

Net Change in Fund Balances

Fund Balances, July 1, 2013

Fund Balances, June 30, 2014 $ $ $ $


BUDGETARY COMPARISON SCHEDULESPECIAL REVENUE FUND - FEDERAL ECONOMIC STIMULUS PROGRAMS FUND (continued)



Special Revenue Fund - Federal Economic Stimulus Programs FundVariance with


73

ActuarialAccrued

Liability (AAL) - UAAL as a Actuarial Actuarial Value Projected Unfunded Percentage of Valuation of Assets Unit Credit AAL (UAAL) Funded Ratio Covered Payroll Covered Payroll

Date (A) (B) (B-A) (A/B) (C) [(B-A)/C]July 1, 2006 $ 8,161,669$ 8,161,669$ 0.0% 79,177,114$ 10.3%July 1, 2008 9,152,972 9,152,972 0.0% 103,207,238 8.9%July 1, 2010 8,635,415 8,635,415 0.0% 107,619,848 8.0%July 1, 2012 11,102,322 11,102,322 0.0% 104,694,262 10.6%July 1, 2014 12,802,856 12,802,856 0.0% 102,912,805 12.4%


SCHEDULE OF FUNDING PROGRESSOTHER POSTEMPLOYMENT BENEFITS PLAN

74

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

June 30, 2014

75

1. GAAP TO BUDGET COMPARISON

There is no GAAP reconciliation required between budgetary inflows and outflows and generally accepted accounting principles revenues and expenditures since both reflect the modified accrual basis of accounting.

76


OTHER SUPPLEMENTARY INFORMATION

Nonmajor Governmental Funds

77

Special Revenue Funds Special revenue funds are used to account for specific revenues that are legally restricted to be expended for particular purposes.

Food Service Fund – To account for and report on the activities of the food service program in serving breakfast and lunch at the schools. These activities are primarily funded through local charges and Federal awards.

Debt Service Funds

The Debt Service Funds are used to account for the payment of interest and principal of the current portion on long-term debt.

SBE/COBI Bonds Fund – To account for and report on payment of principal, interest, and related costs of the state school bonds issued by the State Board of Education on behalf of the District. These bonds are payable from the District’s portion of the state-assessed motor vehicle license tax. Special Act Bonds Fund – To account for and report on payment of principal, interest, and related costs on the Special Acts bonds. These bonds are authorized by Chapter 79-471, Laws of Florida, which provides that the bonds be secured from racetrack funds and jai alai fronton funds accruing annually to the District from the State’s Pari-mutuel Tax Collection Trust Fund pursuant to Chapter 550, Florida Statutes (effective July 1, 2000, tax proceeds are distributed pursuant to Section 212.20(6)(d)7.a., Florida Statutes).

Other Debt Service Fund – To account for and report on payment of principal, interest, and related costs on the District’s Note Payable, Certificates of Participation issued in 2003, 2005 and 2013, and Sales tax Revenue Bonds, Series 2006.

Capital Projects Funds Capital projects funds are used to account for the financing and acquisition or construction of major capital facilities, such as new school buildings or additions to existing buildings, or for major renovation projects.

State Board of Education Bonds Fund – To account for and report on proceeds received from the bonds issued by the State Board of Education on behalf of the District. Public Education Capital Outlay (PECO) Fund – To account for and report on funds received from the State for the construction and maintenance of schools. Capital Outlay and Debt Service Fund – To account for and report on the dollars received through the State's Capital Outlay and Debt Service (CO & DS) program, used for construction and maintenance of schools.

ASSETSCash and Cash Equivalents $ 1,452,527 $ $ 288,505 $ 493,336 Investments 14,215 429,622 5,304 4,397,604 Accounts Receivable 2,444 Due from Other Agencies 1,068,131 Inventories 122,014

TOTAL ASSETS $ 2,659,331 $ 429,622 $ 293,809 $ 4,890,940

LIABILITIES AND FUND BALANCESLiabilities:

Accounts Payable $ 65,422 $ $ $ 2,416 Accrued Interest Payable 5,106 Deposits Payable 71,181

Total Liabilities 136,603 5,106 2,416

Fund Balances:Nonspendable:

Inventory 122,014 Other Not in Spendable Form 53

Total Nonspendable Fund Balance 122,014 - 53 Restricted for:

Debt Service 424,516 293,809 4,888,471 Capital ProjectsReserved for Investments in SBA Fund B Surplus Funds Trust FundSpecial Revenue - Food Service 2,400,714

Total Restricted Fund Balance 2,400,714 424,516 293,809 4,888,471

Total Fund Balances 2,522,728 424,516 293,809 4,888,524

TOTAL LIABILITIES AND FUND BALANCES $ 2,659,331 $ 429,622 $ 293,809 $ 4,890,940

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDACOMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS

June 30, 2014

Food

Special Revenue Funds

Special ActService

410Bonds

SBE/COBI

210 290

Other DebtService

Debt Service Funds

Bonds220

78

(Continued)

$ $ 114,295 $ 2,348,663 33,730 4,064 4,884,539

2,444 1,068,131

122,014

$ 33,730 $ 118,359 $ 8,425,791

$ $ 17,544 $ 85,382 5,106

71,181

17,544 161,669

122,014 53

122,067

5,606,796 33,730 100,815 134,545

2,400,714 33,730 100,815 8,142,055

33,730 100,815 8,264,122

$ 33,730 $ 118,359 $ 8,425,791

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDACOMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS

June 30, 2014

TotalNonmajor

GovernmentalFunds

Capital Projects Funds

310Bonds

of EducationState Board Capital Outlay

andDebt Service

360

79


Federal Through State and Local $ 8,594,896 $ $ $State 145,238 753,121 209,750

Local:Property Taxes Levied for Capital ProjectsCharges for Service - Food Services 2,453,338 Other Local Revenue 6,735 331 14,693

Total Revenues 11,200,207 753,121 210,081 14,693

ExpendituresCurrent - Education:

Food Services 10,746,969 Fixed Capital Outlay:

Facilities Acquisition and Construction 852 Other Capital Outlay 205,336

Debt Service:Principal 545,000 85,000 11,708,922 Interest and Fiscal Charges 221,351 122,785 6,348,268 Dues and Fees 8,954 500 103,322

Total Expenditures 10,953,157 775,305 208,285 18,160,512

Excess (Deficiency) of Revenues Over (Under) Expenditures 247,050 (22,184) 1,796 (18,145,819)

Other Financing Sources (Uses)Refunding Bonds Issued 523,000 29,162,000 Premium on Refunding Bonds Issued 82,496 Payments to Refunded Bond Escrow Agent (277,849) (28,600,000) Insurance Loss Recoveries 5,318 Transfers In 16,985,058 Transfers Out (2,260) Total Other Financing Sources (Uses) 5,318 327,647 17,544,798

Net Change in Fund Balances 252,368 305,463 1,796 (601,021) Fund Balances, July 1, 2013 2,270,360 119,053 292,013 5,489,544

Fund Balances, June 30, 2014 $ 2,522,728 $ 424,516 $ 293,809 $ 4,888,523

220Bonds

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDACOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDSFor the Fiscal Year Ended June 30, 2014

290

Debt Service Funds

FoodService

410

SBE/COBIBonds

210

Other DebtService

Special Revenue Funds

Special Act

80

(Continued)

$ $ $ $ 8,594,896 55,463 114,855 1,278,427

- 2,453,338

67 21,826

67 55,463 114,855 12,348,487

10,746,969

27,503 55,463 89,885 173,703 205,336

12,338,922 6,692,404

491 113,267

27,503 55,463 90,376 30,270,601

(27,436) - 24,479 (17,922,114)

29,685,000 82,496

(28,877,849) 5,318

16,985,058 (2,260)

17,877,763

(27,436) - 24,479 (44,351) 61,166 76,336 8,308,472

$ 33,730 $ $ 100,815 $ 8,264,121

Capital Outlayand

Debt Service360 Funds

TotalNonmajor

Governmental

Capital Projects Funds

340(PECO)

Capital OutlayPublic Education

310Bonds

of EducationState Board

81

Balance Balance

July 1, 2013 Additions Deductions June 30, 2014AssetsCash and Cash Equivalents $ 1,367,294 $ 4,802,228 $ 4,663,952 $ 1,505,570 Accounts Receivable 12,691 7,816 12,691 7,816

Total Assets $ 1,379,985 $ 4,810,044 $ 4,676,643 $ 1,513,386

LiabilitiesAccounts Payable and Other Current Liabilities $ 1,379,985 $ 4,810,044 $ 4,676,643 $ 1,513,386


DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDASTATEMENT OF CHANGES IN ASSETS AND LIABILITIES - AGENCY FUNDS

82


Federal Through State and Local $ 7,930,000 $ 8,594,896 $ 8,594,896 $ State 145,000 145,238 145,238

Local: Investment Income 3,500 Charges for Service - Food Services 3,341,143 2,453,338 2,453,338 Other Local Revenue 1,500 6,736 6,736

Total Revenues 11,421,143 11,200,208 11,200,208


Food Services: Salaries 3,531,022 3,388,358 3,388,358 Employee Benefits 1,627,522 1,505,967 1,505,967 Purchased Services 359,816 261,052 261,052 Energy Services 410,800 413,296 413,296 Materials and Supplies 4,888,290 4,703,093 4,703,093 Capital Outlay 413,422 120,630 120,630 Other Expenses 227,308 355,425 355,425 Total Food Services 11,458,180 10,747,821 10,747,821

Fixed Capital Outlay: Other Capital Outlay 205,336 205,336 Total Fixed Capital Outlay 205,336 205,336

Total Expenditures 11,458,180 10,953,157 10,953,157

Excess (Deficiency) of Revenues Over (Under) Expenditures (37,037) 247,051 247,051

Other Financing SourcesTransfers In 5,318 5,318

Total Other Financing Sources - 5,318 5,318

Net Change in Fund Balances (37,037) 252,369 252,369 Fund Balances, July 1, 2013 2,310,218 2,270,360 2,270,360

Fund Balances, June 30, 2014 $ 2,273,181 $ 2,522,729 $ 2,522,729 $

(Negative)


Positive

Special Revenue Fund - Food Service

OriginalBudget

FinalBudget Actual

SPECIAL REVENUE FUND - FOOD SERVICEFor the Fiscal Year Ended June 30, 2014


BUDGETARY COMPARISON SCHEDULEOTHER SUPPLEMENTARY INFORMATION

83


State $ 765,000 $ 753,121 $ 753,121 $ Total Revenues 765,000 753,121 753,121

ExpendituresDebt Service:

Principal 545,000 545,000 545,000 Interest and Fiscal Charges 222,351 221,351 221,351 Dues and Fees 8,954 8,954

Total Expenditures 767,351 775,305 775,305

Excess (Deficiency) of Revenues Over (Under) Expenditures (2,351) (22,184) (22,184)

Other Financing Sources (Uses)Refunding Bonds Issued 523,000 523,000Premium on Refunding Bonds 82,496 82,496Payments to Refunded Bond Escrow Agent (277,849) (277,849)

Total Other Financing Sources (Uses) 327,647 327,647

Net Change in Fund Balances (2,351) 305,463 305,463Fund Balances, July 1, 2013 119,053 119,053 119,053

Fund Balances, June 30, 2014 $ 116,702 $ 424,516 $ 424,516 $

Debt Service Fund - SBE/COBI Bonds

OriginalBudget Budget

FinalActual (Negative)

PositiveFinal Budget -Variance with


DEBT SERVICE FUND - SBE/COBI BONDSFor the Fiscal Year Ended June 30, 2014

BUDGETARY COMPARISON SCHEDULEOTHER SUPPLEMENTARY INFORMATION

84


State $ 209,750 $ 209,750 $ 209,750 $ Local:

Other Local Revenue 300 331 331Total Revenues 210,050 210,081 210,081


Principal 85,000 85,000 85,000 Interest and Fiscal Charges 122,785 122,785 122,785 Dues and Fees 500 500 500


Excess (Deficiency) of Revenues Over (Under) Expenditures 1,765 1,796 1,796

Net Change in Fund Balances 1,765 1,796 1,796 Fund Balances, July 1, 2013 292,013 292,013 292,013



Debt Service Fund - Special Act BondsVariance withFinal Budget -



DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAOTHER SUPPLEMENTARY INFORMATIONBUDGETARY COMPARISON SCHEDULE

DEBT SERVICE FUND - SPECIAL ACT BONDS

85

RevenuesLocal:

Other Local Revenue $ 9,700 $ 14,693 $ 14,693 $ Total Revenues 9,700 14,693 14,693


Principal 11,151,885 11,708,922 11,708,922 Interest and Fiscal Charges 6,711,155 5,863,441 6,348,268 484,827 Dues and Fees 40,500 26,149 103,322 77,173

Total Expenditures 17,903,540 17,598,512 18,160,512 562,000

Excess (Deficiency) of Revenues Over (Under) Expenditures (17,893,840) (17,583,819) (18,145,819) 562,000

Other Financing Sources (Uses)Refunding Bonds Issued 29,162,000 (29,162,000) Payments to Refunded Bond Escrow Agent (28,600,000) 28,600,000 Transfers In 17,839,217 16,985,058 16,985,058 Transfers Out (2,260) (2,260)

Total Other Financing Sources (Uses) 17,839,217 16,982,798 17,544,798 (562,000)

Net Change in Fund Balances (54,623) (601,021) (601,021) 0Fund Balances, July 1, 2013 5,487,044 5,489,544 5,489,544






Debt Service Fund - Other Debt Service


DEBT SERVICE FUND - OTHER DEBT SERVICE

86

RevenuesLocal:

Other Local Revenue $ 200 $ 67 $ 67 $ Total Revenues 200 67 67

ExpendituresFixed Capital Outlay:

Facilities Acquisition and Construction Remodeling and Renovations 61,366 27,503 27,503

Total Facilities Acquisition and Construction 61,366 27,503 27,503


Excess (Deficiency) of Revenues Over (Under) Expenditures (61,166) (27,436) (27,436)

Net Change in Fund Balances (61,166) (27,436) (27,436) Fund Balances, July 1, 2013 61,166 61,166 61,166

Fund Balances, June 30, 2014 $ $ 33,730 $ 33,730 $





Capital Projects Fund - State Board of Education Bonds


CAPITAL PROJECTS FUND - STATE BOARD OF EDUCATION BONDS

87


State $ - $ 55,463 $ 55,463 $ Total Revenues 55,463 55,463


Facility Services - Non-Capitalized:Remodeling and Renovations - 55,463 55,463Total Facility Services - Non-Capitalized 55,463 55,463

Total Expenditures - 55,463 55,463

Excess (Deficiency) of Revenues Over (Under) Expenditures - - -

Net Change in Fund Balances - - - Fund Balances, July 1, 2013 -

$ $ - $ - $ Fund Balances, June 30, 2014





Capital Projects Fund - Public Education Capital Outlay (PECO)


CAPITAL PROJECTS FUND - PUBLIC EDUCATION CAPITAL OUTLAY (PECO)

88


State $ 100,000 $ 114,855 $ 114,855 $ Local:

Other Local Revenue 1,500 Total Revenues 101,500 114,855 114,855


Facility Services - Non-CapitalizedImprovements Other Than Buildings 18,965 18,965 Remodeling and Renovations 63,808 63,808

Total Facility Services - Non-Capitalized 82,773 82,773

Fixed Capital Outlay:Facilities Acquisition and Construction

Improvements Other Than Buildings 4,669 Remodeling and Renovations 122,331 7,112 7,112

Total Facilities Acquisition and Construction 127,000 7,112 7,112

Debt Service:Dues and Fees 491 491


Excess (Deficiency) of Revenues Over (Under) Expenditures (25,500) 24,479 24,479

Net Change in Fund Balances (25,500) 24,479 24,479 Fund Balances, July 1, 2013 46,590 76,336 76,336






Capital Projects Fund - Capital Outlay and Debt Service


CAPITAL PROJECTS FUND - CAPITAL OUTLAY AND DEBT SERVICE

89

RevenuesLocal:

Property Taxes Levied for Capital Projects $ 11,949,734 $ 11,873,491 $ 11,873,491 $ - Other Local Revenue 10,000 7,058 7,058 -

Total Revenues 11,959,734 11,880,549 11,880,549


Facility Services - Non-Capitalized:Furniture, Fixtures, and Equipment 150,073 637,129 637,129 - Motor VehiclesImprovements Other than Buildings 1,046,657 45,867 45,867Remodeling and Renovations 183,563 349,274 349,274Computer Software 75,676 45,907 45,907Total Facility Services - Non-Capitalized 1,455,969 1,078,177 1,078,177

Fixed Capital Outlay:Facilities Acquisition and Construction:

Buildings and Fixed EquipmentImprovements Other than Buildings 68,820 77,759 77,759Remodeling and Renovations 546,552 275,938 275,938Total Facilities Acquisition and Construction 615,372 353,697 353,697

Other Capital Outlay:Furniture, Fixtures, and Equipment 37,795 62,402 62,402Computer Hardware 184,550 184,550Computer Software 1,750 1,750 1,750Total Other Capital Outlay 39,545 248,702 248,702

Debt Service:Interest and Fiscal ChargesTotal Debt Service

Total Expenditures 2,110,886 1,680,576 1,680,576 -

Excess (Deficiency) of Revenues Over (Under) Expenditures 9,848,848 10,199,973 10,199,973 -

Other Financing Sources (Uses)Inception of Capital LeasesTransfers Out to General Fund (2,000,000) (4,221,974) (4,221,974)Transfers Out to Debt Service Fund (4,503,123) (3,348,321) (3,348,321)Transfers Out to Other Capital Projects Fund

Total Other Financing Sources (Uses) (6,503,123) (7,570,295) (7,570,295)

Net Change in Fund Balances 3,345,725 2,629,678 2,629,678 - Fund Balances, July 1, 2013 2,173,909 3,782,315 3,782,315 -

Fund Balances, June 30, 2014 $ 5,519,634 $ 6,411,993 $ 6,411,993 $ -





Capital Projects Fund - Local Capital Improvement


CAPITAL PROJECTS FUND - LOCAL CAPITAL IMPROVEMENT

90

RevenuesState $ $ 62,256 $ 62,256 $ Local:

Local Sales Tax 6,000,000 9,007,765 9,007,765 Other Local Revenue 54,500 426,957 426,957

Total Revenues 6,054,500 9,496,978 9,496,978


Facility Services - Non-Capitalized:Furniture, Fixtures, and Equipment 19,430 163,664 163,664Remodeling and Renovations 48,992 Total Facility Services - Non-Capitalized 68,422 163,664 163,664

Fixed Capital Outlay:Facilities Acquisition and Construction:

Buildings and Fixed Equipment 96,000 Improvements Other than Buildings 41,049 41,049Total Facilities Acquisition and Construction 96,000 41,049 41,049

Other Capital Outlay:Furniture, Fixtures, and EquipmentComputer SoftwareTotal Other Capital Outlay


Excess (Deficiency) of Revenues Over (Under) Expenditures 5,890,078 9,292,265 9,292,265

Other Financing UsesTransfers In 2,260 2,260Transfers Out (12,036,094) (12,334,737) (12,334,737) Total Other Financing Uses (12,036,094) (12,332,477) (12,332,477) .Net Change in Fund Balances (6,146,016) (3,040,212) (3,040,212) Fund Balances, July 1, 2013 34,925,177 30,435,451 30,435,451






Capital Projects Fund - Other


CAPITAL PROJECTS FUND - OTHER

91

Nonmajor Component Units

92

Component units are legally separate organizations that the primary government must include as part of its financial reporting entity for fair presentation in conformity with generally accepted accounting principles.

Gulf Coast Academy of Science and Technology, Inc. – A charter school which is a not-for-profit corporation organized pursuant to Chapter 617, Florida Statutes, the Florida Not-For-Profit Corporation Act, and Section 1002.33, Florida Statutes. The Charter School operates under a charter of the sponsoring School District and is considered a component unit since it is fiscally dependent on the District to levy taxes for its support. Brooksville Engineering Science & Technology, Inc. – A charter school which is a not-for-profit corporation organized pursuant to Chapter 617, Florida Statutes, the Florida Not-For-Profit Corporation Act, and Section 1002.33, Florida Statutes. The Charter School operates under a charter of the sponsoring School District and is considered a component unit since it is fiscally dependent on the District to levy taxes for its support. Gulf Coast Middle School, Inc. – A charter school which is a not-for-profit corporation organized pursuant to Chapter 617, Florida Statutes, the Florida Not-For-Profit Corporation Act, and Section 1002.33, Florida Statutes. The Charter School operates under a charter of the sponsoring School District and is considered a component unit since it is fiscally dependent on the District to levy taxes for its support. The Hernando County Education Direct Support Organization, Inc. (Foundation) – A separate not-for-profit corporation organized and operated as a direct-support organization under Section 1001.453, Florida Statutes, to receive, hold, invest, and administer property and to make expenditures to or for the benefit of the District. The Foundation is considered to be a component unit of the District because of the nature and significance of its relationship to the District.

ASSETSCash and Cash Equivalents $ 14,397 $ 9,987 $ 95,152 Accounts ReceivableDue from Other Agencies 9,853 Prepaid Items 17,000 6,500 Other Current AssetsCapital Assets:

Leasehold Improvements, Net 39,030 Furniture, Fixtures, and Equipment, Net 22,059 21,719 Motor Vehicles, Net 82,493 Property Under Capital Lease, Net

Total Assets 36,456 131,199 150,535

LIABILITIESSalaries and Benefits Payable $ 3,887 $ 5,966 $ 10,260 Accounts Payable 1,129 Long-Term Liabilities:

Due Within One Year:Note Payable 16,284

Due in More Than One Year:Note Payable 56,411

Total Liabilities 5,016 78,661 10,260

NET POSITIONNet Investment in Capital Assets 22,059 31,517 39,030 Restricted for:

Other PurposesUnrestricted 9,381 21,021 101,245

Total Net Position $ 31,440 $ 52,538 $ 140,275

(Charter School)

Gulf CoastMiddle

(Charter School) (Charter School)

6/30/2014 (Continued) (With comparative totals for June 30, 2013)

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FL COMBINING SCHEDULE OF NET POSITION - NONMAJOR COMPONENT UNITS

Gulf CoastAcademy ofScience and

Technology, Inc.BEST Academy

93

$ 126,438 $ 245,974 $ 174,913

9,853 2,956 26,456 2,919 4,500 4,500

39,030 46,081 43,778 82,493

133,894 452,084 223,913

$ 4,568 $ 24,681 $ 15,735 260 1,389 6,343

16,284 3,010

56,411

4,828 98,765 25,088

92,606 43,071

106,955 106,955 74,960 22,111 153,758 80,794

$ 129,066 $ 353,319 $ 198,825

2014 2013

Hernando CountyEducation Direct

SupportOrganization, Inc.

(Foundation)

6/30/2014 (Continued) (With comparative totals for June 30, 2013)

Totals

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FL COMBINING SCHEDULE OF NET POSITION - NONMAJOR COMPONENT UNITS

94

Functions/ProgramsCharter SchoolsGovernmental Activities:

Instruction $ 1,177,287 $ 171,884 $ 137,106 $Pupil Personnel Services 51 Instructional Media Services 5,408 Instructional Staff Training Services 9,553 5,194 Board of Education 139,656 33,424 School Administration 460,552 75,865 Facility Services - Non-Capitalized 239,450 34,500 55,463 Fiscal Services 34,652 9,892 Food Services 18,869 13,582 Pupil Transportation Services 78,437 Operation of Plant 47,241 Maintenance of PlantInterest on Long-Term Debt 4,200 Unallocated Depreciation Expense 16,241

Total Charter Schools 2,231,597 185,466 295,981 55,463

Hernando Education Foundation 163,792 221,716

Total Component Units $ 2,395,389 $ 185,466 $ 517,697 $ 55,463

General Revenues: Grants and Contributions Not Restricted to Specific ProgramsMiscellaneous

Total General Revenues

Change in Net Position

Net Position - July 1, 2013

Net Position - June 30, 2014

Program Revenues

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDACOMBINING SCHEDULE OF ACTIVITIES - NONMAJOR COMPONENT UNITS


Expenses Servicesfor

Charges OperatingGrants and

Contributions

CapitalGrants and

Contributions

95

(Continued)

$ (868,297) $ $ (868,297) (51) (51)

(5,408) (5,408) (4,359) (4,359)

(106,232) (106,232) (384,687) (384,687) (149,487) (149,487) (24,760) (24,760) (5,287) (5,287)

(78,437) (78,437) (47,241) (47,241)

(4,200) (4,200)

(16,241) (16,241)

(1,694,687) (1,694,687)

57,924 57,924

(1,694,687) 57,924 (1,636,763)

48,627 48,627 1,742,630 1,742,630

1,791,257 1,791,257

96,570 57,924 154,494

127,683 71,142 198,825

$ 224,253 $ 129,066 $ 353,319

TotalComponent

Units

Total CharterSchools Foundation

EducationHernando

96

STATISTICAL SECTION

Statistical Section

97

This part of the District School Board of Hernando County, Florida’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, notes disclosures, and required supplementary information says about the School District’s overall financial health. Contents Page Financial Trend Information 98

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

Revenue Capacity Information 108

These schedules contain information to help the reader assess the District’s most significant local revenue sources, the property tax.

Debt Capacity Information 114 These schedules present information to help the reader assess the affordability of the District’s current levels of outstanding debt and the government’s ability to issue additional debt in the future.

Demographic and Economic Information 122

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

Operating Information 125

These schedules contain service data to help the reader understand how the information in the District’s financial report relates to the services the District provides and the activities it performs.

Primary Government:Governmental Activities:

Net Investment in Capital Assets (1) $ 172,977,972 $ 175,100,895 $ 200,321,945 $ 211,125,761 Restricted 26,253,503 44,111,824 74,156,527 106,441,480 Unrestricted (5,572,393) (3,404,223) (1,598,307) (522,035)

Total Governmental Activities Net Position 193,659,082 215,808,496 272,880,165 317,045,206

Total Primary Government Net Position $ 193,659,082 $ 215,808,496 $ 272,880,165 $ 317,045,206

Source: District records

(1) Prior to 2011, the growth in net position was due primarily to the increase in property taxes, increase in impact fees, and inception of the second voter approved local option half cent sales tax. These revenues were used to payoff debt and to construct or purchase capital assets that will be expensed in future years through depreciation. The recent decline in net assets is primarily due to the reduction of State education funding, Federal ARRA funding and the collection of property taxes.

Fiscal Year Ending

TABLE 1

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDANET POSITION BY COMPONENT - GOVERNMENT-WIDE

LAST TEN FISCAL YEARS(Accrual Basis of Accounting)

(Unaudited)

June 30, 2005 June 30, 2006 June 30, 2007 June 30, 2008

98

TABLE 1 (Continued)

$ 244,788,425 $ 261,589,398 $ 272,982,528 $ 266,338,102 $ 246,772,905 $ 252,232,149 74,596,072 57,039,558 31,888,578 30,470,226 24,608,615 31,149,082

1,903,139 2,988,133 4,312,371 59,489 17,240,607 (3,116,673) 321,287,636 321,617,089 309,183,477 296,867,817 288,622,127 280,264,558

$ 321,287,636 $ 321,617,089 $ 309,183,477 $ 296,867,817 $ 288,622,127 $ 280,264,558

Fiscal Year EndingJune 30, 2010 June 30, 2011 June 30, 2012 June 30, 2013 June 30, 2014June 30, 2009

(Restated)

99

TABLE 2

Expenses:Governmental Activities

Instruction $ 74,677,333 $ 84,165,241 $ 97,956,943 $ 104,620,004 Pupil Personnel Services 7,360,526 8,169,248 8,676,491 9,358,470 Instructional Media Services 1,773,331 1,932,166 2,096,047 2,228,490 Instruction and Curriculum Development Services 3,277,284 3,738,300 3,575,078 3,597,622 Instructional Staff Training Services 2,356,855 1,852,367 1,790,904 2,912,419 Instruction Related Technology 1,466,525 1,428,024 1,559,473 Board of Education 440,051 571,481 516,018 483,014 General Administration 808,738 685,915 805,161 694,464 School Administration 8,066,629 8,840,345 9,201,708 9,653,650 Facility Services - Non-Capitalized 4,635,438 5,774,968 3,769,071 6,927,176 Fiscal Services 1,173,832 854,026 809,663 797,447 Food Services 6,235,348 6,964,646 7,426,980 8,632,568 Central Services 2,634,518 1,577,345 1,781,400 1,831,782 Pupil Transportation Services 7,822,199 9,249,176 9,896,289 9,077,198 Operation of Plant 9,865,184 12,100,415 13,714,898 14,779,400 Maintenance of Plant 4,308,389 4,674,804 4,697,022 4,688,615 Administrative Technology Services 1,155,807 1,326,400 1,564,077 Community Services 249,435 171,320 130,879 124,926 Interest and Fiscal Charges 4,299,027 6,108,573 9,397,699 9,863,723 Depreciation Unallocated 8,026,814 9,229,864 9,891,881 11,560,613

Total Governmental Activities Expenses 148,010,931 169,282,532 188,888,556 204,955,131

Program Revenues:Governmental Activities

Charges for ServicesFood Service 2,518,082 2,807,464 3,013,294 3,048,305 Transportation 252,972 55,706 85,480 96,819 Instruction 8,735 7,702 13,618 6,240

Operating Grants and Contributions 8,885,585 9,436,410 10,687,997 11,510,662 Capital Grants and Contributions 11,476,230 20,279,296 35,174,765 28,693,243

Total Governmental Activities Program Revenues 23,141,604 32,586,578 48,975,154 43,355,269

Net Expenses Governmental Activities (124,869,327) (136,695,954) (139,913,402) (161,599,862)

Total Primary Government Net Expenses (124,869,327) (136,695,954) (139,913,402) (161,599,862)

General Revenues and Other Changes in Net Assets:Governmental Activities

Property TaxesLevied for Operational Purposes 37,400,909 44,417,019 55,935,944 62,911,292 Levied for Debt Service 5,758,154 4,080,174 4,100,210 3,761,480 Levied for Capital Projects 12,275,778 14,829,187 19,336,480 21,909,025

Local Sales Tax 2,951,467 8,492,036 8,526,614 7,950,810 Grants and Contributions not restricted to specific purposes 79,159,048 90,837,458 97,639,807 100,724,798 Unrestricted Investment Earnings 1,296,207 4,284,359 9,916,074 6,493,112 Miscellaneous 2,604,043 1,679,554 1,529,942 2,014,386

Total Governmental Activities 141,445,606 168,619,787 196,985,071 205,764,903

Total Primary Government General Revenues and Other Changesin Net Assets 141,445,606 168,619,787 196,985,071 205,764,903

Change in Net Assets:Governmental Activities 16,576,279 31,923,833 57,071,669 44,165,041

Total Primary Government $ 16,576,279 $ 31,923,833 $ 57,071,669 $ 44,165,041


Fiscal Year EndingJune 30, 2005 June 30, 2006 June 30, 2007 June 30, 2008

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDACHANGES IN NET POSITION - GOVERNMENT-WIDE


(Unaudited)

100

TABLE 2 TABLE 2 (Continued)

$ 103,745,430 $ 103,169,236 $ 109,286,283 $ 98,717,026 $ 100,345,605 $ 105,662,000 9,659,517 10,523,787 11,190,219 9,550,196 9,481,173 9,262,052 2,405,268 2,257,766 2,158,115 1,962,166 1,944,186 2,118,740 3,416,775 3,505,308 3,607,898 3,661,358 4,153,389 4,103,785 3,172,689 3,326,018 3,695,145 3,122,643 2,742,317 2,214,563 1,056,421 1,013,023 1,078,892 1,283,515 1,466,935 1,681,610

481,247 473,107 470,422 371,024 460,031 460,573 751,679 1,224,187 1,173,733 944,946 1,036,546 1,286,149

10,317,777 10,628,079 11,630,524 11,041,666 11,209,818 11,230,650 7,902,932 5,654,963 7,223,486 18,555,981 3,125,424 2,013,899

810,278 842,412 1,043,193 919,336 784,117 1,101,844 9,802,355 9,975,167 10,123,836 10,458,339 10,639,194 10,901,515 1,938,922 1,749,237 1,906,293 1,905,301 1,784,314 1,895,196 9,230,050 9,138,394 9,464,261 7,675,794 7,396,420 8,120,089

14,714,540 14,975,932 15,095,661 14,319,724 14,386,258 14,998,980 4,548,453 4,704,812 5,073,419 4,554,190 4,749,690 4,786,141 1,804,846 1,725,352 1,884,354 1,722,324 1,950,483 1,944,813

67,495 72,223 51,574 52,954 33,324 186,817 9,341,317 9,067,113 8,446,040 8,088,488 7,596,032 7,604,707

12,442,492 14,390,404 15,360,681 12,641,415 15,209,697 207,610,483 208,416,520 219,964,029 198,906,971 197,926,671 206,783,822

2,957,657 2,508,261 2,530,839 2,473,071 2,455,483 2,453,338 74,241 95,330 91,506 9,774 - 157,721

3,216 3,880 7,796 56,592 57,567 64,628 11,545,815 7,546,609 7,846,239 8,156,319 8,334,627 8,740,134

6,732,775 1,848,617 2,149,168 866,466 888,495 881,129 21,313,704 12,002,697 12,625,548 11,562,222 11,736,172 12,296,950

(186,296,779) (196,413,823) (207,338,481) (187,344,749) (186,190,499) (194,486,872)

(186,296,779) (196,413,823) (207,338,481) (187,344,749) (186,190,499) (194,486,872)

63,936,956 61,263,111 51,986,840 48,807,293 48,159,073 45,785,613 2,571,651 34,753

19,325,518 15,358,825 13,189,912 12,242,466 12,136,449 11,873,491 7,558,751 7,470,501 7,828,758 7,832,909 8,206,074 9,007,765

94,316,939 108,040,457 118,663,422 101,639,556 105,093,241 114,790,011 (931,032) 1,732,003 652,985 459,580 443,527 479,244

3,760,426 2,624,192 2,802,386 4,047,285 3,906,445 5,641,459 190,539,209 196,523,842 195,124,303 175,029,089 177,944,809 187,577,583

190,539,209 196,523,842 195,124,303 175,029,089 177,944,809 187,577,583

4,242,430 110,019 (12,214,178) (12,315,660) (8,245,690) (6,909,289)

$ 4,242,430 $ 110,019 $ (12,214,178) $ (12,315,660) $ (8,245,690) $ (6,909,289)

June 30, 2013 June 30, 2014June 30, 2009 June 30, 2010 June 30, 2011 June 30, 2012

Fiscal Year Ending

(Restated)

101

Property Taxes:Levied for Operational Purposes $ 37,400,909 $ 44,417,019 $ 55,935,944 $ 62,911,292 Levied for Debt Service (2) 5,758,154 4,080,174 4,100,210 3,761,480 Levied for Capital Projects 12,275,778 14,829,187 19,336,480 21,909,025

Local Sales Taxes (1) 2,951,467 8,492,036 8,526,614 7,950,810 Total $ 58,386,308 $ 71,818,416 $ 87,899,248 $ 96,532,607


(1) Fiscal year ending June 30, 2005, the District began receiving a new 10-year local option half centsales tax that was approved by voters on March 9, 2004.

(2) The property tax for Debt Service steadily declined over the years because the debt servicerequirement also declined. In prior years, the combination of an increase in taxable property values and thedecline in millage necessary to meet the debt service, reduced the amount levied for debt service.However, in the 2009-2010 fiscal year, sufficient funds were available to meet the debt service requirementthereby eliminating the need to levy a specific debt service millage. Collections represent collections fromprior years.

Fiscal Year Ending

(Unaudited)

June 30, 2005 June 30, 2006 June 30, 2007 June 30, 2008

TABLE 3

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAGOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE


102

TABLE 3 (Continued)

(Restated)

$ 63,936,956 $ 61,263,111 $ 51,986,840 $ 48,807,293 $ 48,159,073 $ 45,785,613 2,571,651 34,753

19,325,518 15,358,825 13,189,912 12,242,466 12,136,449 11,873,491 7,558,751 7,470,501 7,828,758 7,832,909 8,206,074 9,007,765

$ 93,392,876 $ 84,127,190 $ 73,005,510 $ 68,882,668 $ 68,501,596 $ 66,666,869

June 30, 2014Fiscal Year Ending

June 30, 2009 June 30, 2010 June 30, 2011 June 30, 2012 June 30, 2013

103

General FundFund Balances:

Nonspendable $ 1,605,027 $ 1,596,279 $ 1,396,442 $ 1,946,610 $ 2,217,341 Spendable:

Restricted 1,914,302 78,282 308,080 678,600 265,638 Assigned 346,413 395,311 912,781 859,400 708,550 Unassigned (2) 1,150,606 3,747,441 4,809,512 4,633,247 8,906,593

Total General Fund $ 5,016,348 $ 5,817,313 $ 7,426,815 $ 8,117,857 $ 12,098,122

All Other Governmental FundsFund Balances:

Nonspendable $ 115,037 $ 130,238 $ 195,696 $ 6,265,896 $ 9,130,163 Spendable:

Restricted 31,471,186 149,442,886 189,821,116 189,296,868 141,446,480 Assigned 560,879 93,200 86,924 87,007 88,907 Unassigned (2)

Total All Other Governmental Funds $ 32,147,102 $ 149,666,324 $ 190,103,736 $ 195,649,771 $ 150,665,550

Total Combined All Governmental funds $ 37,163,450 $ 155,483,637 $ 197,530,551 $ 203,767,628 $ 162,763,672


(2) The District reported a negative unassigned fund balance for the All Other Governmental Funds for fiscal year ending June 30, 2011. Thiswas the result of a Section 1011, Florida Statutes, loan .

(1) The District implemented GASB 54 for the fiscal year ended June 30, 2011. The fund balances from the prior fiscal years were restated forcomparison purposes.

Restated (1) Restated (1) Restated (1) Restated (1)June 30, 2009Restated (1)

TABLE 4

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAFUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS(Modified Accrual Basis of Accounting)

(Unaudited)

Fiscal Year EndingJune 30, 2005 June 30, 2006 June 30, 2007 June 30, 2008

104

TABLE 4 (Continued)

$ 1,529,590 $ 1,536,754 $ 1,440,561 $ 1,490,830 $ 1,434,975

2,268,658 1,119,658 978,496 478,153 30,755 925,935 13,572,025 10,216,038 9,455,599 5,957,272

14,222,563 4,476,866 4,224,837 4,849,807 6,938,011

$ 18,946,746 $ 20,705,303 $ 16,859,932 $ 16,274,389 $ 14,361,013

$ 3,781,823 $ 2,784,619 $ 2,452,182 $ 1,601,859 $ 969,525

97,876,944 59,268,493 46,419,030 40,924,387 41,101,828 78,263 80,059

(1,878,472) $ 101,737,030 $ 60,254,699 $ 48,871,212 $ 42,526,246 $ 42,071,353

$ 120,683,776 $ 80,960,002 $ 65,731,144 $ 58,800,635 $ 56,432,366

Restated (1) Restated (1) Restated (1) June 30, 2010 June 30, 2011 June 30, 2012 June 30, 2013

Fiscal Year EndingJune 30, 2014

105

Federal Direct Sources:Reserve Officers Training Corps (ROTC) $ 228,039 $ 196,832 $ 208,251 $ 162,034 $ 260,685 Miscellaneous Federal Direct 16,752 455,475

Total Federal Direct 244,791 196,832 208,251 162,034 716,160

Federal Through State and Local Sources:Food Service 3,350,811 3,882,765 4,177,343 5,343,737 6,278,739 Donated Foods and Cash in Lieu of 356,757 352,824 436,799 Other Federal Through State and Local Grants 10,418,952 11,464,799 10,466,907 11,183,726 11,197,717

Total Federal Through State and Local Sources 14,126,520 15,700,388 15,081,049 16,527,463 17,476,456

State Sources:Florida Education Finance Program (FEFP) 55,944,824 59,094,920 63,346,022 60,785,801 53,730,728 Other Categoricals 3,160,462 3,366,443 2,761,577 2,764,163 4,065,892 Class Size Reduction 6,763,734 11,525,626 17,019,169 21,980,256 22,839,350 Transportation 5,080,776 5,102,187 5,975,878 6,061,757 5,122,307 District Discretionary Lottery Funds 1,651,846 1,912,792 1,949,968 1,970,029 545,122 Motor Vehicle License Tax (Capital Outlay and Debt Service) 798,351 850,094 888,962 895,482 884,388 Gross Receipts Tax (Public Education Capital Outlay) 1,238,939 4,667,215 5,984,938 8,523,072 4,537,560 Class Size Reduction Construction 1,687,538 1,641,946 23,205,539 16,756,747 Food Services 97,240 98,634 100,290 105,168 143,886 Other State Sources and State Grants 1,322,581 1,112,269 1,890,826 1,905,803 1,231,802

Total State Sources 77,746,291 89,372,126 123,123,169 121,748,278 93,101,035

Local Sources:Ad Valorem Taxes 55,434,841 63,326,380 79,372,634 88,581,797 85,834,125 Food Services Sales 2,544,580 2,818,508 3,030,322 3,048,305 2,957,657 Sales Taxes 2,951,467 8,492,036 8,526,614 7,950,810 7,558,751 Impact Fees 7,740,186 15,283,818 5,090,100 2,490,928 1,301,878 Investment Income 1,296,207 4,284,359 9,916,074 6,493,112 (931,032) Local Grants and Other Local Sources 1,874,648 1,381,236 1,396,269 1,792,548 2,973,128

Total Local Sources 71,841,929 95,586,337 107,332,013 110,357,500 99,694,507

Total Revenues 163,959,531 200,855,683 245,744,482 248,795,275 210,988,158

Expenditures:Current:

Instruction 74,927,102 83,887,361 97,690,359 102,447,519 101,380,908 Pupil Personnel Services 7,385,145 8,138,977 8,649,355 9,175,754 9,484,456 Instructional Media 1,779,262 1,923,339 2,087,854 2,184,830 2,352,336 Instruction & Curriculum Development Services 3,288,245 3,727,170 3,566,349 3,562,404 3,388,001 Instructional Staff Training Services 2,364,738 1,846,852 1,786,532 2,895,189 3,158,549 Instruction Related Technology 1,462,158 1,424,538 1,541,064 1,041,472 Board of Education 441,523 569,779 514,758 479,387 477,287 General Administration 811,442 683,911 803,195 690,566 747,894 School Administration 8,093,609 8,814,025 9,179,242 9,543,008 10,202,828 Facility Services - Non-Capitalized 4,831,113 5,796,038 3,778,561 6,911,177 8,129,034 Fiscal Services 1,177,758 851,484 807,686 790,765 803,075 Food Services 6,256,207 6,940,272 7,405,207 8,469,157 9,754,764 Central Services 2,643,330 1,557,239 1,760,556 1,798,695 1,898,484 Pupil Transportation Services 7,848,361 8,102,138 8,521,112 8,892,943 9,020,767 Operation of Plant 9,898,179 12,059,274 13,676,296 14,506,048 14,398,158 Maintenance of Plant 4,322,799 4,548,953 4,572,314 4,603,035 4,450,916 Administrative Technology Services 1,148,864 1,319,658 1,537,591 1,769,627 Community Services 250,269 170,810 130,559 124,329 67,009

Fixed Capital Outlay Facilities Acquisition & Construction 42,076,275 20,706,823 59,032,314 37,472,530 40,894,834 Other Capital Outlay 556,484 2,713,418 4,439,330 2,914,648 11,624,051

Debt Service Principal 8,657,896 7,309,954 8,148,145 13,025,474 15,849,019 Interest 4,176,455 6,024,319 9,208,025 9,674,887 9,160,593 Dues and Fees 143,610 1,613,414 966,924 107,148 99,036

Total Expenditures 191,929,802 190,596,572 249,468,869 243,348,148 260,153,098

Excess (Deficiency) of Revenues Over (Under) Expenditures (27,970,271) 10,259,111 (3,724,387) 5,447,127 (49,164,940)

Other Financing Sources (Uses):Refunding Note Payable Issued 14,419,695 Refunding Bonds Issued Premium on Refunding Bonds Sale of Bonds 1,005,000 3,885,000 45,000,000 Insurance Loss Recoveries 98,508 154,713 76,537 789,950 162,664 Certificates of Participation 106,670,000 Payments to Refunding Bonds Escrow Agent (4,248,548) Payment to Refund Note Payable (13,730,235) Premium on Long Term Debt Issued 21,039 1,599,911 5,304 Discount on Long Term Debt Issued Inception of Capital Leases 2,582,741 7,998,320 Proceeds from Sale of Capital Assets 397,293 Transfers In 8,695,325 10,897,065 17,249,400 28,808,674 17,844,559 Transfers Out (8,695,325) (10,897,065) (17,249,400) (28,808,674) (17,844,559)

Total Other Financing Sources (Uses) 4,104,581 108,061,076 45,771,301 789,950 8,160,984

Net Change in Fund Balance (23,865,690) 118,320,187 42,046,914 6,237,077 (41,003,956)

Debt Service as a percentage of noncapital expenditures 8.6% 8.0% 9.3% 11.2% 12.0%

Beginning Fund Balance 61,029,140 37,163,450 155,483,637 197,530,551 203,767,628

Ending Fund Balance $ 37,163,450 $ 155,483,637 $ 197,530,551 $ 203,767,628 $ 162,763,672



(Modified Accrual Basis of Accounting)(Unaudited)

Fiscal Year Ending

TABLE 5

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDASUMMARY OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS

106

TABLE 5 (Continued)

$ 217,776 $ 225,623 $ 212,982 $ 181,480 $ 211,147 123,106

340,882 225,623 212,982 181,480 211,147

7,289,956 6,971,515 7,358,101 7,538,918 7,948,367 726,851 647,480 650,756 646,529

24,122,698 28,318,563 15,354,876 14,223,225 12,883,165

31,412,654 36,016,929 23,360,457 22,412,899 21,478,061

53,387,105 63,220,906 60,448,872 65,005,531 75,288,663 1,093,016 480,823 785,735 338,778

24,105,224 24,438,240 24,160,280 23,768,179 23,768,179 5,005,490

62,403 83,024 71,021 209,627 849,718 868,853 857,309 885,165 881,096 319,256 942,885

133,173 147,873 148,847 144,953 145,238

1,186,744 1,292,207 916,672 1,094,671 2,156,177 85,049,113 92,087,004 87,083,824 91,684,234 102,787,758

76,656,689 65,176,752 61,049,759 60,295,522 57,659,104 2,727,695 2,530,839 2,473,071 2,455,483 2,453,338 7,470,501 7,828,758 7,832,909 8,206,074 9,007,765

413,600 327,925 156,980 17,400 1,732,003 652,985 459,580 443,527 479,244 2,594,348 2,423,840 3,738,298 3,780,410 4,763,741

91,594,836 78,941,099 75,710,597 75,198,416 74,363,192

208,397,485 207,270,655 186,367,860 189,477,029 198,840,158

101,243,638 107,247,996 98,066,676 98,589,783 104,389,399 10,345,671 10,986,694 9,511,114 9,318,507 9,152,498 2,218,152 2,117,279 1,953,328 1,929,947 2,095,267 3,480,918 3,580,302 3,652,268 4,122,970 4,063,373 3,315,294 3,670,248 3,113,823 2,722,233 2,198,139 1,000,352 1,068,551 1,191,584 1,456,191 1,661,574

470,756 467,180 370,010 456,661 456,414 1,221,328 1,167,900 943,700 1,028,954 1,297,673

10,547,741 11,525,178 10,939,393 11,108,102 11,132,690 5,585,133 7,160,263 4,906,994 536,955 2,014,145

837,880 1,035,147 916,353 778,374 1,091,962 9,812,031 9,977,413 10,165,772 10,455,762 10,777,737 1,720,285 1,871,409 1,807,463 1,753,480 1,874,395 8,972,334 9,265,825 7,614,044 7,268,604 8,013,177

14,726,793 14,829,965 14,278,025 14,132,010 14,591,305 4,627,275 4,992,144 4,482,917 4,668,408 4,728,859 1,699,381 1,837,435 1,713,875 1,936,198 1,923,355

71,956 51,065 52,702 33,081 185,766

44,704,012 29,595,893 4,601,562 4,061,686 491,326 2,214,117 4,030,948 2,697,848 631,706 871,600

12,755,702 10,651,500 11,182,245 11,930,409 12,338,922 8,912,777 8,264,159 7,951,530 7,527,482 6,692,404

47,979 54,839 42,831 22,270 113,267

250,531,505 245,449,333 202,156,057 196,469,773 202,155,247

(42,134,020) (38,178,678) (15,788,197) (6,992,744) (3,315,089)

370,000 365,000 29,685,000 32,698 55,865 82,496

1,554,601 50,764 127,921 75,157 62,235 57,181

(399,338) (3,574,267) (419,780) (28,877,849)

346,649 483,097

22,498,420 31,476,798 23,871,497 20,641,428 21,214,610 (22,498,420) (31,476,798) (23,871,497) (20,641,428) (21,214,610)

54,124 (1,545,096) 559,339 62,235 946,828

(42,079,896) (39,723,774) (15,228,858) (6,930,509) (2,368,261)

10.6% 8.9% 9.8% 10.1% 9.5%

162,763,672 120,683,776 80,960,002 65,731,144 58,800,627

$ 120,683,776 $ 80,960,002 $ 65,731,144 $ 58,800,635 $ 56,432,366

(Restated) June 30, 2012 June 30, 2013 June 30, 2014

Fiscal Year EndingJune 30, 2010 June 30, 2011

107

(Unaudited)

Property Tax Sales Tax TotalFiscal General Debt Service Capital Capital Governmental Year Fund Funds Projects Funds Projects Funds Activities

2013-2014 45,785,613$ 11,873,491$ 9,007,765$ 66,666,869$ 2012-2013 48,159,073 12,136,449 8,206,074 68,501,596 2011-2012 48,807,293 12,242,466 7,832,909 68,882,668 2010-2011 51,986,840 13,189,912 7,828,758 73,005,510 2009-2010 61,263,111 34,753 15,358,825 7,470,501 84,127,190 2008-2009 63,936,956 2,571,651 19,325,518 7,558,751 93,392,876 2007-2008 62,911,292 3,761,480 21,909,025 7,950,810 96,532,607 2006-2007 55,935,944 4,100,210 19,336,480 8,526,614 87,899,248 2005-2006 44,417,019 4,080,174 14,829,187 8,492,036 71,818,4162004-2005 37,400,909 5,758,154 12,275,778 2,951,467 58,386,308

Note: The District's first local option half-cent sales tax (5-Years) approved by the voters on November 3, 1998, began January 1, 1999, and ended December 31, 2003. The District's second local option half-cent sales tax (10-Years) approved by the voters on March 9, 2004, began January 1, 2005, and will end December 31, 2014.


(Modified Accrual Basis of Accounting)

TABLE 6

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAGENERAL GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE

LAST TEN FISCAL YEARS

General Fund Property Tax

68%

Capital Projects Funds Property Tax

18%

Capital Projects Funds Sales Tax

14%

2013-2014 Tax Revenues

108

(Unaudited)

Ratio ofTaxable Value Base

Fiscal Real Personal Real Personal Real Personal Real Personal Centrally to Assessed MillageYear Property Property Property Property Property Property Property Property Assessed (5) Total Value Rate (6)

2013-2014 9,989,311 1,602,911 9,368,594 1,594,242 2,417,252 627,891 6,951,343 966,351 7,626 7,925,320 72.29% 15.44802012-2013 9,949,202 1,691,643 9,351,346 1,645,987 2,437,024 339,564 6,914,323 1,306,423 7,325 8,228,070 74.82% 14.66742011-2012 10,600,374 1,629,933 9,949,584 1,585,617 2,417,670 325,372 7,531,914 1,260,245 7,445 8,799,604 76.28% 14.43242010-2011 11,572,263 1,669,623 10,731,692 1,652,662 3,593,658 336,472 7,138,035 1,316,191 6,499 8,460,725 68.32% 14.13712009-2010 13,488,242 1,427,069 12,000,601 1,407,365 3,750,459 338,717 8,250,142 1,068,648 6,924 9,325,714 69.55% 14.20872008-2009 15,836,287 1,185,886 13,371,281 1,167,054 3,920,192 325,882 9,451,089 841,172 6,398 10,298,659 70.84% 14.50872007-2008 16,518,236 1,105,701 13,238,586 1,085,763 2,695,549 244,027 10,543,037 841,735 13,699 11,398,471 79.57% 14.59662006-2007 14,737,836 961,199 11,719,661 942,889 2,566,896 177,754 9,152,765 765,135 6,506 9,924,406 78.38% 16.42162005-2006 11,004,597 959,181 9,098,120 939,176 2,193,314 182,425 6,904,806 756,751 6,579 7,668,136 76.40% 17.24662004-2005 8,743,878 916,509 7,586,704 897,250 1,986,023 170,782 5,600,681 726,468 10,866 6,338,015 74.71% 17.8014

Source: Hernando County Property Appraiser

(6) Base Millage Rate comprised of total County, total School and Southwest Florida Management District countywide levy. Specific basins, special ad valorem districts, and municipalities are not included. See calculation of base millage rate on Table 8 page 109.

TABLE 7

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAFAIR MARKET VALUE, ASSESSED VALUE, AND TAXABLE VALUE OF PROPERTY

LAST TEN FISCAL YEARS(amounts expressed in thousands)

Fair Market Value (1) Assessed Value (2) Exemptions (3) Taxable Value (4)

(1) Fair Market Value of property is amount it could sell for in a competitive open market, assuming that the buyer and seller both acted knowledgeably and without duress.

(2) Assessed value of property is different than fair market value for those properties that have assessment limitations on them, such as the Save Our Homes (SOH) limitation, "greenbelt" for properties which have an agricultural use classification, and pollution control devices.

(3) There are a number of property tax exemptions which include, but are not limited to; homestead, low income seniors, widow/widowers, blind, disabled, veterans, government, and institutional.

(4) Taxable value of property is the resulting value after all applicable exemptions have been deducted from the assessed value of the property. The taxable value is what the millage rates are applied to develop the ad valorem property tax. The 2011 Values based on Final Certification dated October 4, 2011. All other years based on re-certification values after the Value Adjustment Board.

(5) Centrally assessed property are the railroad tracks and train cars which cross county lines and are assessed by the Florida Department of Revenue, who provides the assessed values to the respective Property Appraiser.

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

Taxable Value (amounts expressed in thousands)

109


District Direct Rates:District School Board:

Local Required Effort 5.3450 5.2070 5.0100 4.9960 5.0860Discretionary Local 0.5100 0.5100 0.5100 0.5100 0.4980Supplemental Discretionary 0.1710 0.2500 0.2470 0.2160 0.2130Voted Debt Service 0.9330 0.5470 0.4220 0.3430 0.2320Local Capital Improvement 2.0000 2.0000 2.0000 2.0000 1.7500

Total District School Board Direct Rates 8.9590 8.5140 8.1890 8.0650 7.7790

Overlapping Rates:Other Hernando County:

General Fund 7.3498 7.2400 6.7400 5.4394 5.4394Public Health 0.1306 0.1306 0.1306 0.1102 0.1102Road & Bridge 0.8400 0.8400 0.8400 0.7091 0.7091Recreation/Sensitive Lands 0.1000 0.1000 0.1000 0.0844 0.0844Special Ad Valorem Districts 3.5050 3.4550 3.3550 2.9664 2.9423

Total Other Hernando County Rates 11.9254 11.7656 11.1656 9.3095 9.2854

Southwest Florida Water Management Districts (SWFWMD):SWFWMD County Wide 0.4220 0.4200 0.4220 0.1885 0.3866Hillsborough BasinWithlacoochee Basin 0.2650 0.2650 0.2650 0.2308 0.2308Coastal Basin 0.2350 0.2350 0.2050 0.3866 0.1885

Total Southwest Florida Water Management Districts 0.9220 0.9200 0.8920 0.8059 0.8059

Municipalities:City of Brooksville 7.8700 7.5000 7.5000 6.3230 6.0690City of Weeki Wachee 2.5500 2.4856 2.3898 2.1744 2.1173

Total Municipalities 10.4200 9.9856 9.8898 8.4974 8.1863

Total Overlapping Rates (1) 23.2674 22.6712 21.9474 18.6128 18.2776

Base Millage Rate (2) 17.8014 17.2446 16.4216 14.5966 14.5087


Fiscal Year Ending

(2) Base Millage Rate comprised of Total County, Total School, and Southwest Florida Management District Countywide levy. It excludes specific basins, special ad valorem districts, and municipalities. See Table 7 for use of Base Millage Rate on page 111.

(1) Total Overlapping Rates comprised of Total Other Hernando County Rates, Total Southwest Florida Water Management Districts, and Total Municipalities.

TABLE 8

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY. FLORIDAPROPERTY TAX RATES

DIRECT AND OVERLAPPING GOVERNMENTSLAST TEN FISCAL YEARS

(per $1,000 Assessed Valuation)(Unaudited)

110

TABLE 8 (Continued)


5.2310 5.1690 5.2600 5.2060 5.03200.7480 0.7480 0.7480 0.7480 0.74800.0000 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.00001.5000 1.5000 1.5000 1.5000 1.50007.4790 7.4170 7.5080 7.4540 7.2800

5.4394 5.4394 5.6279 5.9169 6.86690.1102 0.1102 0.1102 0.1102 0.11020.7091 0.7091 0.7091 0.7091 0.70910.0844 0.0844 0.0844 0.0844 0.10002.9423 3.1737 3.1737 3.1737 0.66739.2854 9.5168 9.7053 9.9943 8.4535

0.3866 0.3770 0.3928 0.3928 0.3818

0.2308 0.2308 0.0000 0.0000 0.00000.1885 0.1885 0.0000 0.0000 0.00000.8059 0.7963 0.3928 0.3928 0.3818

6.0690 6.3700 6.3700 6.6000 6.73172.5769 2.6587 2.7838 2.7137 2.76548.6459 9.0287 9.1538 9.3137 9.4971

18.7372 19.3418 19.2519 19.7008 18.3324

14.2087 14.1371 14.4324 14.6674 15.4480

Fiscal Year Ending

111

TABLE 9

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAPRINCIPAL PROPERTY TAXPAYERS

CURRENT YEAR AND NINE YEARS AGO(Unaudited)

2013-2014 2004-2005Percent of Percent of

Type of Taxable Taxable Type of Taxable TaxableTaxpayer Business Value Rank Value (1) Business Value Rank Value (1)

Cemex, Inc. Cement Manufacturing 265,911,477 1 3.81% Cement Manufacturing 45,033,218 6 0.71%

Withlacoochee River Public Utility 174,949,722$ 2 2.51% Public Utility 99,777,850$ 2 1.57% Electric Co-op

Wal-Mart Stores, Inc. Retail Sales 118,429,014 3 1.70% Retail Sales 103,201,368 1 1.63%

Progress Energy Public Utility 69,124,126 4 0.99% Public Utility 33,011,929 7 0.52%(Florida Power Corporation)

Florida Gas Transmission Co. Public Utility 52,484,745 5 0.75%

AT&T Florida Telecommunications 46,769,534 6 0.67% Telecommunications 73,613,089 3 1.16%

Bright House Networks Cable Utility 33,694,274 8 0.48% Cable Utility 29,095,829 8 0.46%

HCA Health Services Hospital/ Health Care 36,427,408 7 0.52% Hospital/ Health Care 50,540,373 5 0.80% of Florida, Inc.

Central Power & Lime Inc. Utilities Utilities 27,621,388 10 0.44%

Millennium Venture Limited Senior Care 22,503,210 9 0.32%

Federal National Mortgage Assoc Real Estate 20,054,030 10 0.29%

CSX (Seaboard Coast line RR Co Railroad 27,760,216 9 0.44%

Florida Crushed Stone Rock Mining 58,401,616 4 0.92% Corporation

Hernando County Water Public Utility 33,604,340 7 0.58%& Sewer

(1) Percentage of Taxable Value to County Total Taxable Value. Total Taxable Value can be found on Table 7 page 111 of this report.


112

Collected to End of Tax Year Collected in Fiscal YearCurrent

Fiscal Total Tax Tax Percent Delinquent Total Percent Year Levy Collections (1) of Levy Collections (1) Collections (1) of Levy

2013-2014 57,696,331$ 57,372,277$ 99.44% 286,827$ 57,659,104$ 99.94%2012-2013 61,332,036$ 59,856,352$ 97.59% 439,170$ 60,295,522$ 98.31%2011-2012 66,067,422 60,364,306 91.37% 685,453 61,049,759 92.41%2010-2011 71,473,086 64,278,055 89.93% 439,784 64,717,839 90.55%2009-2010 78,787,235 76,656,689 97.30% - 76,656,689 97.30%2008-2009 89,340,049 85,566,159 95.78% 267,966 85,834,125 96.08%2007-2008 92,033,622 88,415,644 96.07% 166,153 88,581,797 96.25%2006-2007 81,382,516 79,349,039 97.50% 23,595 79,372,634 97.53%2005-2006 65,368,562 63,250,756 96.76% 75,624 63,326,380 96.88%2004-2005 56,824,659 55,256,318 97.24% 178,523 55,434,841 97.55%

(1) Net of allowable discounts

Note:

Source: Hernando County Tax Collector and District records

Property taxes become due and are payable between November 1st of the year assessed and March 31st ofthe following year. A four percent (4%) discount is allowed if the taxes are paid in November, with thediscount declining by one percent (1%) each month thereafter. Accordingly, taxes collected will never equal100% of the tax levy. Taxes become delinquent on April 1st of each tax year and tax certificates for the fullamount of any unpaid taxes and assessments must be sold no later than June 1st of each year. Accordingly,the majority of taxes are collected in the fiscal year levied.

TABLE 10

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAPROPERTY TAX LEVIES AND COLLECTIONS

LAST TEN FISCAL YEARS(Unaudited)

113

Fiscal General State Board Certificates District Sales Total PercentageYear Obligation of Education of Revenue Tax Revenue Capital Primary Per of Per Capita

Bonds Bonds Participation Bonds Bonds Notes Leases Government Capita (2) Income (2)

2013-2014 $ $ 5,065,436 $ 127,485,183 $ 2,410,000 $ 6,415,592 $ 7,262,686 $ 50,273 $ 148,689,170 847 2.65%2012-2013 5,047,935 131,150,945 2,495,000 12,596,181 8,371,212 283,633 159,944,906 923 3.00%2011-2012 5,260,000 133,755,000 2,575,000 18,590,000 9,438,299 1,041,954 170,660,253 986 3.21%2010-2011 6,158,406 136,282,396 2,650,000 24,342,358 10,465,497 2,833,904 182,732,561 1,055 3.59%2009-2010 5,117,145 141,343,121 2,725,000 29,902,947 11,454,297 4,539,955 195,082,465 1,177 3.93%2008-2009 805,000 5,576,805 144,468,846 2,795,000 35,273,537 12,406,134 6,585,904 207,911,226 1,260 4.32%2007-2008 4,555,000 6,015,895 147,479,571 2,860,000 40,439,126 13,322,390 1,160,347 215,832,329 1,309 4.66%2006-2007 8,180,000 6,449,985 150,380,296 2,925,000 45,004,715 14,204,395 1,783,816 228,928,207 1,411 5.10%2005-2006 11,675,000 6,864,075 153,176,021 2,985,000 14,235,885 2,516,010 191,451,991 1,219 4.62%2004-2005 15,045,000 7,050,000 47,420,000 3,045,000 14,848,167 3,303,682 90,711,849 602 2.35%

Note: The primary government does not have any outstanding debt for business-type activities.

Source: (1) District Records(2) Total Primary Government Debt divided by Population and Per Capita Income from Table 18 on Page 124.

Governmental Activities (1)

TABLE 11

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDARATIOS OF OUTSTANDING DEBT BY TYPE


114

Percentage PercentageApplicable to Applicable

School Board of ToHernando Hernando

Jurisdiction County CountyHernando County Board of County Commissioners

Gas Tax Bonds, Series 2002 $ 1,110,000 100.00% $ 1,110,000 Capital Improvement Bonds, Series 2004 3,565,000 100.00% 3,565,000 Non-Ad Valorem Refunding Bonds, Series 2010 3,970,000 100.00% 3,970,000

Subtotal Overlapping Debt 8,645,000 8,645,000

District School Board of Hernando CountyState Board of Education Bonds, Series 2004A 270,000 100.00% 270,000 100.00% 270,000 State Board of Education Bonds, Series 2005A 340,000 100.00% 340,000 100.00% 340,000 State Board of Education Bonds, Series 2005B Refunding 1,815,000 100.00% 1,815,000 100.00% 1,815,000 State Board of Education Bonds, Series 2009A Refunding 160,000 100.00% 160,000 100.00% 160,000 State Board of Education Bonds, Series 2010A 1,260,000 100.00% 1,260,000 100.00% 1,260,000 State Board of Education Bonds, Series 2011A Refunding 340,000 100.00% 340,000 100.00% 340,000 State Board of Education Bonds, Series 2014A Refunding 523,000 100.00% 523,000 100.00% 523,000 Certificates of Participation, Series 2005 100,390,000 100.00% 100,390,000 100.00% 100,390,000 Certificates of Participation, Series 2013A 26,239,963 100.00% 26,239,963 100.00% 26,239,963 Capital Improvement Bonds, Series 2001 2,410,000 100.00% 2,410,000 100.00% 2,410,000 Sales Tax Revenue Bonds, Series 2006 6,415,000 100.00% 6,415,000 100.00% 6,415,000 Note Payable 7,262,686 100.00% 7,262,686 100.00% 7,262,686 Obligations under Capital Lease 50,273 100.00% 50,273 100.00% 50,273

Subtotal Direct Debt 147,475,922 147,475,922 147,475,922

Totals $ 156,120,922 $ 147,475,922 $ 156,120,922

(1) Overlapping governments are those whose geographic area coincides at least in part with the area of the District.

Source: District Records and Hernando County, Florida Comprehensive Annual Financial Report

Outstanding

Other

County

School Board ofApplicable

ToHernando

Direct DebtAmount

Direct and Overlapping Debt (1)

TABLE 12

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDADIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT

June 30, 2014(Unaudited)

Amount

HernandoCounty

Applicable to

Debt

115

Taxable Value (1) $ 6,338,015 $ 7,668,136 $ 9,924,406 $ 11,398,471

Debt Limit - 10% of Taxable Value (2) $ 633,802 $ 766,814 $ 992,441 $ 1,139,847

Amount of Debt Applicable to the Debt Limit:

General Obligation Bonds Payable $ 15,045 $ 11,675 $ 8,180 $ 4,555 Less, Amount Available for Debt Service 2,253 2,451 2,712 2,572

Total Debt Applicable to the Debt Limit $ 12,792 $ 9,224 $ 5,468 $ 1,983

Legal Debt Margin $ 621,010 $ 757,590 $ 986,973 $ 1,137,864

Total Debt Applicable to the Debt Limitas a Percentage of the Debt Limit 2.02% 1.20% 0.55% 0.17%

Source: District Records

(amounts expressed in thousands)(Unaudited)

TABLE 13

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDACALCULATION OF LEGAL DEBT MARGIN


(1) Provided by Hernando County Property Appraiser. The 2013 Taxable Value based on Final Certification dated October 7, 2013. All other years based on re-certification values after Value Adjustment Board.(2) This schedule was previously presented as a requirement of State Board of Education Rule 6A-1.037(2), Florida Administrative Code, which established a legal debt limit of 10 percent of the assessed valuation of the District. This rule was repealed in March 2006, however, management believes this information may still be of value to users.

Fiscal Year EndingJune 30, 2007 June 30, 2008June 30, 2005 June 30, 2006

116

TABLE 13 (Continued)

$ 10,298,659 $ 9,325,714 $ 8,460,725 $ 8,799,604 $ 8,228,070 $ 7,925,320

$ 1,029,866 $ 932,571 $ 846,073 $ 879,960 $ 822,807 $ 792,532

$ 805 $ $ $ $ $805

$ $ $ $ $ $

$ 1,029,866 $ 932,571 $ 846,073 $ 879,960 $ 822,807 $ 792,532

0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

June 30, 2014Fiscal Year Ending

June 30, 2012June 30, 2010 June 30, 2011 June 30, 2013June 30, 2009

117

Ratio ofNet General

Fiscal Bonded DebtYear Population (1) to Taxable Value

2013-2014 175,502 $ 7,925,320 $ $ $ 0.00%2012-2013 173,227 8,228,070 0.00%2011-2012 173,142 8,799,604 0.00%

2010-2011 173,162 8,460,725 0.00%

2009-2010 165,802 9,325,714 0.00%

2008-2009 165,048 10,298,659 805 805 0.00%2007-2008 164,907 11,398,471 4,555 2,573 1,982 0.02% 12 2006-2007 162,193 9,924,406 8,180 2,712 5,468 0.06% 34 2005-2006 157,006 7,668,136 11,675 2,451 9,224 0.12% 59 2004-2005 150,784 6,338,015 15,045 2,253 12,792 0.20% 85 1996-97 121,016 ######### 46,325,000 2,566,551 43,758,449 1.20% 362

(1) Hernando County Monthly Demographics Update Summary - through August 31, 2013(2) Includes General Obligation Bonds only(3) Reserved for Debt Service - General Obligation Bonds only


Debt

TABLE 14

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDA RATIO OF NET GENERAL BONDED DEBT OUTSTANDING

LAST TEN FISCAL YEARS (dollar amounts expressed in thousands)

PerCapita

(Unaudited)

ValueTaxable

Debt (2)

GrossGeneralBonded

Less DebtService

Funds (3)

NetGeneralBonded

118

Ratio ofDebt Service to

Total General General Interest Total Governmental Governmental

Fiscal and Debt Noncapital NoncapitalYear Principal Dues & Fees Service Expenditures Expenditures

2013-2014 $ $ $ 200,803,789$ 0.00%2012-2013 191,775,959 0.00%2011-2012 194,856,647 0.00%2010-2011 211,749,992 0.00%2009-2010 805,000 44,680 849,680 203,613,376 0.42%2008-2009 3,750,000 188,482 3,938,482 207,634,213 1.90%2007-2008 3,625,000 341,835 3,966,835 202,960,970 1.95%2006-2007 3,495,000 474,718 3,969,718 185,997,225 2.13%2005-2006 3,370,000 590,811 3,960,811 167,176,331 2.37%2004-2005 4,925,000 778,146 5,703,146 149,297,043 3.82%


TABLE 15

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDARATIO OF ANNUAL DEBT SERVICE EXPENDITURES

FOR GENERAL OBLIGATION BONDED DEBTTO TOTAL GENERAL GOVERNMENT EXPENDITURES


119

Millage LevyFiscal to ProvideYear 1.00x Coverage (1)

2013-2014 $ 7,925,320 9,376 1.232 Mills2012-2013 8,228,070 9,641 1.221 Mills2011-2012 8,799,604 7,771 0.920 Mills2010-2011 8,460,725 7,775 0.957 Mills2009-2010 9,325,714 9,663 1.091 Mills2008-2009 10,298,659 9,667 0.988 Mills2007-2008 11,398,471 9,667 0.893 Mills2006-2007 9,924,406 9,663 1.025 Mills2005-2006 7,668,136 6,286 0.863 Mills2004-2005 6,338,015 4,155 0.690 Mills

(1) Millage rate calculated using 95 percent of the taxable value through Fiscal Year 2009-2010. Increased to 96 percent of taxable value beginning in Fiscal Year 2010-2011

Note: Capital lease arrangements financed by certificates of participation are not considered general obligationdebt as no specific property tax levy has been pledged



(Unaudited)

ValueTaxable

PaymentLeaseAnnual

(amounts expressed in thousands)

TABLE 16

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAANTICIPATED CAPITAL OUTLAY MILLAGE LEVY

REQUIRED TO COVER CERTIFICATES OF PARTICIPATION PAYMENTS

120

Sales TaxFiscal RevenueYear Coverage (2)

2013-2014 9,007,765 6,180,000 353,449 6,533,449 1.382012-2013 8,206,074 5,995,000 578,938 6,573,938 1.252011-2012 7,832,909 5,750,000 792,834 6,542,834 1.202010-2011 7,828,758 5,560,000 997,240 6,557,240 1.192009-2010 7,470,501 5,370,000 1,187,265 6,557,265 1.142008-2009 7,558,751 5,165,000 1,384,540 6,549,540 1.152007-2008 7,950,810 4,565,000 1,579,110 6,144,110 1.292006-2007 8,526,614 1,223,342 1,223,342 6.972005-2006 8,492,036


(2) Sales tax revenue collections divided by the debt service on the sales tax revenue bonds.

Revenue (1)Sales Tax10-Year

Principal Dues & Feesand

Interest

Revenue Bondson Sales TaxDebt Service

(1) Collections on the District's second local option half-cent sales tax (10 Years) approved by the voters on March 9, 2004, began January 1, 2005 and will end December 31, 2014. The District issued $45,000,000 in sales tax revenue bonds on November 1, 2006.

Annual

TABLE 17

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAANTICIPATED SALES TAX REVENUE COLLECTIONS

REQUIRED TO COVER SALES TAX REVENUE BOND PAYMENTSLAST NINE FISCAL YEARS

(Unaudited)

121

PublicFiscal Estimated SchoolYear Population (1) Enrollment (3)

2013-2014 175,502 22,186 2012-2013 173,227 22,228 2011-2012 173,142 5,320,481 30,729 22,442 2010-2011 173,162 5,090,443 29,397 22,998 2009-2010 165,802 4,965,770 29,950 23,2962008-2009 165,048 4,810,819 29,148 23,4542007-2008 164,907 4,627,950 28,064 23,1722006-2007 162,193 4,488,367 27,673 23,2272005-2006 157,006 4,138,678 26,360 22,3332004-2005 150,784 3,857,356 25,582 21,272

Source:(1) Hernando County Monthly Demographics Update Summary - through August 31, 2014(2) Personal Income was calculated by multiplying the Estimated

Population and Per Capita Income. Personal Income stated in thousands.(3) District records(4) Hernando County Monthly Demographics Update Summary - through August 31, 2014(5) U.S. Census Bureau - State & County Quickfacts

Bachelor's degree or higher, % of persons 25+ 2008-2012(6) Food & Nutrition Data as of 7/1/14 Reduced = 56.92% Free = 7.35%

TABLE 18

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDACOUNTY-WIDE DEMOGRAPHIC STATISTICS


Income (1)Per Capita

Income (2)Personal

5,323,092 30,72931,9275,603,252

122


Percentage Citizensof Students on With a

Free and Reduced Labor Unemployment Median Bachelor'sLunch (6) Force (1) Rate % (1) Age (1) Degree (5)

64.3% 64,040 8.4% 47.7 15.7%66.1% 63,513 8.9% 47.7 16.2%62.6% 63,088 10.8% 47.7 16.2%60.5% 62,854 13.8% 47.7 16.1%59.5% 64,364 15.0% 50.7 12.7%54.1% 63,228 13.1% 50.0 12.7%47.1% 64,694 7.5% 45.3 12.7%42.7% 62,107 5.4% 46.6 10.5%41.0% 56,262 4.1% 46.6 10.5%43.3% 54,301 4.9% 49.7 8.2%

123

Number of Number of Employer / Type of Business Employees Rank % (1) Employees Rank Hernando Healthcare 913 3 1.4% 900 3

Healthcare Oak Hill Hospital 1,089 1 1.7% 930 2

Healthcare Wal-Mart Distribution Center 1,020 2 1.6% 1,044 1

Distribution Center HealthSouth 355 4 0.6%

Healthcare Cemex, Inc. 250 6 0.4%

Cement Manufacturer Accuform, Inc. 280 5 0.4% 210 6

Manufacturer Sparton Electronics 219 7 0.3% 325 4

Manufacturer Hernando Pasco Hospice 221 8 0.3%

Healthcare Sun Trust 110 9 0.2% 113 10

Banking Withlacoochee River Electric 80 10 0.1%

UtilityEvergreen Woods, Inc. 160 7

Residential Care Commercial Carrier Corporation 145 9

Transportation Rinker Materials/FCS 300 5

Mining and Cement Gale Insulation 160 8

Residential & Commercial Contractor Total 4,537 7.2% 4,287

Source: Hernando County Office of Business Development

(Unaudited)

(1) Percentage shown represents the number of employees as a percent of Hernando County's total labor force of 64,040.

2012-20132013-2014

TABLE 19

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAPRINCIPAL EMPLOYERS

NON-RETAIL, NON-GOVERNMENTLAST TWO FISCAL YEARS

124

Age of RelocatableYear School in Student

Constructed (1) Years Relocatables Stations (4)Elementary Schools:

Brooksville Elementary 1968 46 120,448 769 102.5% 13 222Chocachatti Elementary (Magnet) 1998 16 112,096 737 112.1% 8 300Deltona Elementary 1989 25 124,038 743 112.1% 7 156Eastside Elementary 1973 41 93,669 718 65.2% 7 112John D. Floyd Elementary (Changed to K-8) 1986 28 139,288Moton Elementary 1989 25 96,590 750 82.0% 5 118Pine Grove Elementary 1988 26 123,380 688 88.7% 26 620Spring Hill Elementary 1980 34 94,407 588 155.4% 13 249Suncoast Elementary 1994 20 113,360 744 93.1% 4 128Westside Elementary 1972 42 81,436 590 100.7% 21 440

Total Elementary School Student Enrollment

Middle Schools:Fox Chapel Middle School 1978 36 125,125 1,120 57.3% 7 132D. S. Parrott Middle School 1988 26 147,600 1,143 69.3%Powell Middle School 1984 30 150,693 1,200 68.9%West Hernando Middle School 1993 21 181,213 1,274 57.9% 6 220

Total Middle School Student Enrollment

Combination Schools:Challenger K-8 School of Science and Mathematics (Magnet) 2004 10 264,087 1,734 91.9% 1 44Explorer K-8 2008 6 278,996 2,095 84.5%John D. Floyd Elementary (Changed from Elementary) 1986 28 108,941 696 144.7% 19 498Winding Waters K-8 2012 2 183,590 1,560 77.4%

Total Combination School Student Enrollment

High Schools:Central High School 1989 25 242,032 1,613 71.4% 4 100Hernando High School 1962 52 252,545 1,888 67.3% 7 145Nature Coast Technical High School (Magnet) 2001 13 255,290 1,371 93.7%Springstead High School 1975 39 238,847 1,760 91.3% 22 525Weeki Wachee High School (Grades 9-12) 2011 3 211,991 1,615 85.5%

Total High School Student Enrollment

Specialty Schools:Endeavor Academy (formerly STAR Center) 1974 40 19,260 121 43.0% 4 70Hernando eSchool N/A N/A N/A N/A N/A N/A Incarcerated Youth Program N/A N/A N/A N/A N/A N/A Stop Camp/Withlacoochee DJJ N/A N/A N/A N/A N/A N/A

Total Specialty Schools Student Enrollment

Charter Schools:Best Academy N/A N/A N/A N/A N/A N/A Gulf Coast Middle School N/A N/A N/A N/A N/A N/A Gulf Coast Academy of Science and Mathematics N/A N/A N/A N/A N/A N/A

Total Charter School Student Enrollment

Total Pre-Kindergarten to Grade 12 Student Enrollment

Adult Education:Adult Education Centers N/A N/A N/A N/A N/A N/A Heart Literacy 1986 28 3,598 N/A N/A N/A N/A

Total Adult Student Enrollment

District Total Pre-Kindergarten to Adult Student Enrollment

(1) Year constructed date from the Florida Inventory of School Housing (FISH). This date does not reflect additions, renovations, replacements or remodelings. Average age of the schools 25.8 years.

(2) Square footage is current permanent and does not include portables.(3) Permanent student stations reflect student stations in permanent buildings which excludes student stations in relocatables.(4) Student stations in relocatable classrooms.(5) Permanent student stations reflect utilization factor per State Requirements for Educational Facilitites (SREF).


(Unaudited)

TABLE 20

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDASCHOOL BUILDING INFORMATION AND STUDENT ENROLLMENT DATA


Square

CurrentUtilizationBased on

PermanentStudent

Footage (2) Stations (3)Student

Permanent

Stations

125


2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

864 810 808 766 797 802 881 765 778 788806 921 916 922 915 940 936 920 865 826956 1,037 1,057 951 876 862 808 806 831 833631 680 681 653 588 593 540 532 508 468

1,372 1,258 1,508727 653 711 794 863 826 793 632 650 615

1,016 1,075 1,240 1,399 1,154 1,147 1,085 616 578 6101,005 920 1,056 1,053 689 694 735 680 697 9141,016 917 976 928 914 890 923 941 926 693

897 875 935 965 814 787 778 581 571 5949,290 9,146 9,888 8,431 7,610 7,541 7,479 6,473 6,404 6,341

1,205 1,113 1,015 958 782 737 702 677 681 642971 963 851 828 851 841 836 840 811 792

1,384 1,139 1,203 1,211 1,033 954 979 1,021 919 8271,355 1,130 1,108 1,121 1,035 1,000 963 953 847 7384,915 4,345 4,177 4,118 3,701 3,532 3,480 3,491 3,258 2,999

1,379 1,460 1,472 1,469 1,553 1,648 1,626 1,586 1,5931,943 2,014 1,799 1,770 1,827 1,770

1,587 1,003 1,064 1,160 1,159 1,049 1,007805 1,044 1,208

1,379 1,460 3,059 4,415 4,631 4,607 5,360 5,506 5,578

1,942 1,964 1,876 1,947 1,904 1,753 1,579 1,337 1,169 1,1511,287 1,379 1,348 1,371 1,360 1,383 1,410 1,371 1,296 1,2701,257 1,410 1,373 1,361 1,463 1,480 1,408 1,331 1,304 1,2841,724 1,904 1,915 1,924 1,968 2,164 1,833 1,774 1,615 1,606

569 915 1,265 1,3816,210 6,657 6,512 6,603 6,695 6,780 6,799 6,728 6,649 6,692

69 57 90 97 89 94 92 39 57 5245 39 60 3120 11 10 12

21 17 13 90 74 103 97 89 94 157 89 127 95

76108

108 117 117 115 113 117 119 120 117 116108 117 117 115 113 117 119 120 117 300

20,613 21,718 22,257 22,423 22,623 22,695 22,641 22,261 22,061 22,005

367 378 706 470 539 274 99 6 1 22292 237 264 279 292 327 258 175 166 159659 615 970 749 831 601 357 181 167 181

21,272 22,333 23,227 23,172 23,454 23,296 22,998 22,442 22,228 22,186

Student Enrollment

126

Ratio of Instructional

Fiscal Classroom Other Total Personnel to Year Teachers (1) Instructional (2) Administrative (3) Support Services (4) Full Time Administrators

2013-2014 1,507 69 96 1,135 2,807 16.422012-2013 1,525 169 92 1,113 2,899 18.412011-2012 1,575 175 93 1,134 2,977 18.822010-2011 1,590 201 92 1,241 3,124 19.472009-2010 1,508 193 81 1,240 3,022 21.002008-2009 1,563 184 85 1,281 3,113 20.552007-2008 1,627 169 85 1,252 3,133 21.132006-2007 1,561 161 86 1,240 3,048 20.022005-2006 1,456 149 85 1,311 3,001 18.892004-2005 1,296 136 81 1,260 2,773 17.68

(1) Elementary classroom teachers, secondary classroom teachers, exceptional education teachers, other teachers (2) Guidance counselors, occupational specialists, social workers, psychologists, media specialists (3) Principals, assistant principals, superintendent, executive directors, directors, managers, coordinators (4) Paraprofessionals, bus drivers, clerical, secretarial, service workers, skilled craft, etc.


TABLE 21

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDANUMBER OF PERSONNELLAST TEN FISCAL YEARS

(Unaudited)

127

Fiscal AllYear Bachelor's Master's Specialist's Doctorate Degrees

2013-2014 40,614$ 49,042$ 40,453$ 52,577$ 43,107$ 2012-2013 40,872 47,773 47,841 48,932 43,970 2011-2012 41,425 47,678 47,892 48,095 43,616 2010-2011 40,880 46,096 46,431 48,202 42,681 2009-2010 40,568 45,963 43,496 50,705 42,398 2008-2009 39,996 45,622 43,124 49,815 41,795 2007-2008 38,263 45,270 48,218 50,730 40,753 2006-2007 36,322 44,291 45,099 51,607 39,089 2005-2006 34,181 41,279 40,647 46,887 36,733 2004-2005 33,583 40,630 39,336 47,660 36,177



TABLE 22

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAAVERAGE TEACHER SALARIES

128

(Unaudited)

Government-wide Governmental Public Pupil

Fiscal Activities School Percentage Cost per Percentage Classroom Percentage TeacherYear Expenses Enrollment (1) Change Student Change Teachers Change (2) Ratio

2013-2014 $ 206,783,822 22,186 -0.2% $ 9,320 4.7% 1,507 -1.2% 14.722012-2013 197,926,671 22,228 -1.0% 8,904 0.5% 1,525 -3.2% 14.582011-2012 198,906,971 22,442 -2.4% 8,863 -7.3% 1,575 -0.9% 14.252010-2011 219,964,029 22,998 -1.3% 9,564 6.9% 1,590 5.4% 14.462009-2010 208,416,520 23,296 -0.7% 8,946 1.1% 1,508 -3.5% 15.452008-2009 207,610,483 23,454 1.2% 8,852 0.1% 1,563 -3.9% 15.012007-2008 204,955,131 23,172 -0.2% 8,845 8.8% 1,627 4.2% 14.242006-2007 188,888,556 23,227 4.0% 8,132 7.3% 1,561 7.2% 14.882005-2006 169,282,532 22,333 5.0% 7,580 8.9% 1,456 12.3% 15.342004-2005 148,010,931 21,272 4.8% 6,958 4.4% 1,296 17.7% 16.41

(1) Enrollment includes grades prekindergarten through adult students.(2) The November 2002 Constitutional Amendment to reduce class size began in the 2003-2004 fiscal year.


TABLE 23

DISTRICT SCHOOL BOARD OF HERNANDO COUNTY, FLORIDAOPERATING STATISTICSLAST TEN FISCAL YEARS

129

COMPLIANCE SECTION

Compliance Section

130

This part of the District School Board of Hernando County, Florida’s comprehensive annual financial report presents specific compliance information. Content Page Schedule of Expenditures of Federal Awards 131 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards 132 Independent Auditor’s 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-133 134 Schedule of Findings and Questioned Costs 136 Management Letter 138 Management Letter Comments 140 District Response 142

HERNANDO COUNTYDISTRICT SCHOOL BOARD

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFor the Fiscal Year Ended June 30, 2014

Pass-Through Amount

CFDA Grantor Amount of Provided toNumber Number Expenditures (1) Subrecipients

United States Department of Agriculture:Indirect:

Florida Department of Education:Child Nutrition Cluster:

School Breakfast Program 10.553 321 1,657,895$ National School Lunch Program 10.555 300 5,967,761 Summer Food Service Program for Children 10.559 323 322,710 Child Nutrition Discretionary Grants 10.579 371 -

Total Child Nutrition Cluster 7,948,366 Florida Department of Agriculture and Consumer Services:

National School Lunch Program 10.555 (2) None 646,529 Total United States Department of Agriculture 8,594,895

United States Department of Education:Indirect:

Special Education Cluster:Florida Department of Education:

Special Education - Grants to States 84.027 261,262 4,174,640 Special Education - Preschool Grants 84.173 267 89,418

Total Special Education Cluster 4,264,058 Florida Department of Education:

Adult Education - Basic Grants to States 84.002 191,193 249,646 Title I Grants to Local Educational Agencies 84.010 212,222,223,226,228 5,826,432 Career and Technical Education - Basic Grants to States 84.048 161 213,446 Education for Homeless 84.196 123 32,775 English Language Acquisition Grants 84.365 102 106,587 Improving Teacher Quality State Grants 84.367 224 697,687 School Improvement Grants 84.377 126 56,513 Charter Schools 84.282 298 217,682 School Improvement Grants, Recovery Act 84.388 126 43,361 State Fiscal Stabilization Fund (SFSF) - Race-to-the-Top Incentive Grants, Recovery Act 84.395 RL1, RD2, RG3 552,038

Washington County District School Board:Reading First State Grants 84.357 None 5,600

Total United States Department of Education 12,265,825 -

United States Department of Defense:Direct:

Air Force Junior Reserve Officers Training Corps None N/A 107,440 Navy Junior Reserve Officers Training Corps None N/A 103,707

Total United States Department of Defense 211,147

Total Expenditures of Federal Awards 21,071,867$ -$

Notes:(1)

(2)

Federal Grantor/Pass-Through Grantor/Program Title

Basis of Presentation - The Schedule of Expenditures of Federal Awards represents amounts expended from Federal Programs during the 2013-2014 fiscal year as determined based on the modified accrual basis of accounting. The amounts reported on the Schedule have been reconciled to and are in material agreement with amounts recorded in the District's accounting records from which the basic financial statements have been reported.

Noncash Assistance - Food Donation - Represents the amount of cash-in-lieu of foods received during the 2013-2014 fiscal year totaling totaling $646,529.

131

132

INDEPENDENT AUDITORS’ 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

Hernando County District School Board and Superintendent of Schools Brooksville, Florida We have audited, 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, the financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Hernando County District School Board (the District), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated December 16, 2014. Our report includes a reference to other auditors who audited the financial statements of the three Charter Schools listed as discretely presented component units and the Fiduciary Funds, as described in our report on the District. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control 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 combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

133


INDEPENDENT AUDITORS’ 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

(Concluded)

Compliance and Other Matters As part of obtaining reasonable assurance about whether the District's basic 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. We noted certain matters that we reported to management of the District in a separate letter dated December 16, 2014. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of the audit performed in accordance with Government Auditing Standards in considering the District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. December 16, 2014 Ocala, Florida

134

INDEPENDENT AUDITORS’ 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

Hernando County District School Board and Superintendent of Schools Brooksville, Florida Report on Compliance for Each Major Federal Program We have audited the Hernando County District School Board’s (the District) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133, Compliance Supplement that could have a direct and material effect on each of the District’s major federal programs for the year ended June 30, 2014. The District's major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditors’ Responsibility Our responsibility is to express an opinion on compliance for each of the District’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District's compliance with those requirements and performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination on the District's compliance. Opinion on Each Major Federal Program In our opinion, the District 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, 2014.

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INDEPENDENT AUDITORS’ 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

(Continued) Report on Internal Control Over Compliance Management of the District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance; such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of the 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 that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. December 16, 2014 Ocala, Florida

136

HERNANDO COUNTY DISTRICT SCHOOL BOARD BROOKSVILLE, FLORIDA

SCHEDULE OF FINDINGS AND QUESTIONED COSTS 1. Summary of Auditors’ Results I. The auditors’ report expresses an unmodified opinion on the financial statements of

Hernando County District School Board (the District). II. No significant deficiencies or material weaknesses relating to the audit of the financial

statements are reported in the Independent Auditors’ 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.

III. No instances of noncompliance material to the financial statements of the District were

disclosed during the audit. IV. No significant deficiencies or material weaknesses relating to the audit of the major federal

award programs are reported in the Independent Auditors’ 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.

V. The auditors’ report on compliance for major federal programs expresses an unmodified

opinion. VI. There are no audit findings that are required to be reported in accordance with Section 510(a)

of OMB Circular A-133. VII. The program tested as a major program was: ■ Department of Education ● Total Title I, Part A Cluster: Title I Grants to Local Educational Agencies (CFDA No. 84.010)

VIII. Dollar Threshold Used to Distinguish Between Type A and Type B Programs $632,156 IX. Auditee Qualification as Low-risk Auditee The auditee qualified as a low-risk auditee per criteria set forth in Section .530 of OMB

Circular A-133.

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HERNANDO COUNTY DISTRICT SCHOOL BOARD BROOKSVILLE, FLORIDA

SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Concluded)

2. Findings Related to the Basic Financial Statements Required to be Reported Under Generally

Accepted Government Auditing Standards (GAGAS) The audit disclosed no findings, which are required to be reported under GAGAS. 3. Findings and Questioned Costs for Federal Awards Required to be Reported Under

Section .510(a) of OMB Circular A-133 There were no current year findings. 4. Status of Prior Audit Findings There were no prior audit findings.

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MANAGEMENT LETTER Hernando County District School Board and Superintendent Brooksville, Florida Report on the Financial Statements We have audited the financial statements of the Hernando County District School Board, Florida (the District), as of and for the fiscal year ended June 30, 2014, and have issued our report thereon dated December 16, 2014. Our report includes a reference to other auditors. Other auditors audited the financial statements of the three Charter Schools included in the aggregate discretely presented component units and the Fiduciary Funds, as described in our report on the District’s financial statements. This letter does not include the results of the other auditors’ and such information related to those audits is reported on separately by those auditors. Auditors’ Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Other Reporting Required by Government Auditing Standards We have issued our Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standard, Independent Auditors’ 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, and Schedule of Findings and Questioned Costs. Disclosures in those reports, which are dated December 16, 2014, should be considered in conjunction with this Management Letter. Other Reporting Required by Rules of the Auditor General for the State of Florida Additionally, our audit was conducted in accordance with the provisions of Chapter 10.800, Rules of the Auditor General, which governs the conduct of the district school boards’ audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditors’ report or schedule: Prior Audit Findings ■ Section 10.804(1)(f)1., Rules of the Auditor General, requires that we determine whether or not

corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report (see Management Letter Comments).

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Hernando County District School Board and Superintendent Brooksville, Florida

MANAGEMENT LETTER (Concluded)

Other Reporting Required by Rules of the Auditor General for the State of Florida (Concluded) Financial Condition ■ Section 10.804(1)(f)2., Rules of the Auditor General, requires a statement be included as to whether

or not the District has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the District did not meet any of the conditions described in Section 218.503(1), Florida Statutes.

■ Section 10.804(1)(f)5.a and 10.805(6), Rules of the Auditor General, require that we apply financial

condition assessment procedures for the District. It is management’s responsibility to monitor the District’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by the same.

Transparency ■ Section 10.804(1)(f)6., Rules of the Auditor General, requires the auditor to state whether or not the

District complied with the transparency requirements (Section 1011.035, Florida Statutes, provides that district school boards include a plain language version of each proposed, tentative, and official budget that describes each budget item in terms that are easily understandable to the public). In connection with our audit, we determined that the District complied with transparency requirements.

Other Matters ■ Section 10.804(1)(f)3., Rules of the Auditor General, requires that we address in the management

letter any recommendations to improve financial management. In connection with our audit, please see the accompanying Management Letter Comments.

■ Section 10.804(1)(f)4., Rules of the Auditor General, requires that we address noncompliance with

provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of this Letter Our Management Letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the District School Board members, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. December 16, 2014 Ocala, Florida

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MANAGEMENT LETTER COMMENTS

Hernando County District School Board and Superintendent Brooksville, Florida During the course of our 2014 audit, the following items came to our attention. These items involve primarily operational matters, which, if improved, will result in more efficient and effective operations. Prior Year Comments 2011-01—Payroll-Timekeeping Methodology The Hernando County District School Board (the District) has a variety of timekeeping methodologies and procedures that have been implemented. During our audit, we observed significant variances between timekeeping methodologies used by schools and departments. Some schools/departments used a check-off system or sign-in/sign-out sheet; some schools/departments used timecards; and some schools lacked appropriate documentation of time worked or time off for nonexempt and exempt employees, documenting time worked only on an exception basis. This complexity poses a risk that time is not being appropriately tracked and recorded. We recommend that the District continue its efforts to standardize time keeping throughout the many sites of the District and consider implementing a timekeeping application that will assist the District. Current Year Comments 2014-1—Personnel File Documentation As part of the hiring process, the principal of the school or the supervisor of the respective department completes and signs a Personnel Action Form (PAF) to indicate their approval to hire an employee (or change an employee’s rate, position, account coding, etc.) and forwards the PAF to Human Resources (HR). HR reviews the PAF, makes any necessary corrections to the PAF, and signs the PAF to indicate HR’s approval. The Superintendent submits the PAF forms to the Board for approval. The Board must approve all full time, part-time, and substitute employees. Once HR has the Board approval of the PAF, HR adds or changes the employee's information in the TERMS application. As part of this process, HR identifies the salary schedule that the employee is going to follow. Unless an employee changes jobs, changes pay rates, changes account coding, or leaves and then returns, no additional formal documentation is required, and the District appears to depend on the TERMS system to track the information. During our audit, we observed that the District’s HR department maintains personnel files and records in one of two places: electronic files or hard copy files. During our audit, we encountered inefficiencies in finding documentation to support the employee’s gross pay, which includes various factors such as years of experience, hire date, position or job title, among other factors.

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Hernando County District School Board and Superintendent Brooksville, Florida

MANAGEMENT LETTER COMMENTS (Concluded)

Current Year Comments (Concluded) 2014-1—Personnel File Documentation (Concluded) Additionally, we noted that the District, like other Districts in the State of Florida, will be moving to a performance-based pay system in the near future. The District has also recently hired a new HR Director and reorganized its HR department. We believe this is an opportune time for the District to review its HR policies and procedures for ensuring that employee’s pay rates are authorized and supported by documentation in personnel files. 2014-2—Inventory of Capital Assets Per our review of the capital asset records and discussion with management, we noted that an inventory of capital assets should be performed that reconciles all capital assets in the subsidiary ledger with capital assets on hand. A further reconciliation should be made of these records with the general ledger control account. During our review of the capital asset audit area, we noted discrepancies of the information provided and management was required to provide additional information and reconciliations. We recommend that with the change in personnel responsible for the safeguarding of these capital assets and record keeping, additional reviews of the physical locations of these capital assets including the documentation of the procedures to ensure that the inventory records and the financial records reconcile, would provide for improvement in financial reporting in this area. December 16, 2014 Ocala, Florida

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