Financial Statements June 30, 2009 and Aberdeen School District 6-1

Financial Statements June 30, 2009 and 2008 Aberdeen School District 6-1 ABERDEEN SCHOOL DISTRICT NO. 6-1 SCHOOL DISTRICT OFFICIALS JUNE 30, 2009 B...
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Financial Statements June 30, 2009 and 2008

Aberdeen School District 6-1

ABERDEEN SCHOOL DISTRICT NO. 6-1 SCHOOL DISTRICT OFFICIALS JUNE 30, 2009 Board Members Duane Alm Linda Burdette Robert Nikolas Brian Sharp Scott Wirth Mike Miller Brad Olson

Term Expiration June 30, 2010 June 30, 2010 June 30, 2011 June 30, 2011 June 30, 2011 June 30, 2012 June 30, 2012

Superintendent Dr. Gary Harms

N/A

Director of Finance Mr. Tom Janish

N/A

ABERDEEN SCHOOL DISTRICT NO. 6-1 Table of Contents

Exhibit

Page

INDEPENDENT AUDITOR’S REPORT

1

MANAGEMENT’S DISCUSSION AND ANALYSIS

3

BASIC FINANCIAL STATEMENTS Statement of Net Assets Statement of Activities Balance Sheet – Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities Statement of Net Assets – Proprietary Funds Statement of Revenues, Expenses and Changes in Net Assets – Proprietary Funds Statement of Cash Flows – Proprietary Funds Statement of Fiduciary Net Assets Statement of Changes in Fiduciary Net Assets Notes to Financial Statements

I II III

15 16 17 18

IV

19

V

22 23

VI VII VIII IX

REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule – Budgetary Basis – General Fund Budgetary Comparison Schedule – Budgetary Basis – Capital Outlay Fund Budgetary Comparison Schedule – Budgetary Basis – Special Education Fund Budgetary Comparison Schedule – Budgetary Basis – Pension Fund Budgetary Comparison Schedule – Budgetary Basis – Arena Fund Notes to Required Supplementary Information

24 25 26 27 28 47 50 51 52 53 54

SUPPLEMENTARY INFORMATION Schedule of Expenditures of Federal Awards

A-1

55

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS

A-2

57

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

A-3

58

REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

A-4

60

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

A-5

62

CORRECTIVE ACTION PLAN

A-6

64

INDEPENDENT AUDITOR’S REPORT

To the School Board Aberdeen School District No. 6-1 Aberdeen, South Dakota We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, and each major fund, and the aggregate remaining fund information of the Aberdeen School District No. 6-1, Brown County, South Dakota as of and for the year ended June 30, 2009, which collectively comprise the School District’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Aberdeen School District' s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the Aberdeen School District No. 6-1, as of June 30, 2009, the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 4, 2010 on our consideration of the School 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 and should be considered in accessing the results of our audit. The Management’s Discussion and Analysis and budgetary comparison information on pages 3 through 14 and 47 through 54, respectively, are not a required part of the basic financial statements, but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. 1

PEOPLE. PRINCIPLES. POSSIBILITIES. www.eidebailly.com 24 Second Ave. SW

PO Box 430

Aberdeen, South Dakota 57402-0430

Phone 605.225.8783

Fax 605.225.0508

EOE

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Aberdeen School District No. 6-1’s basic financial statements. The accompanying 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 Organization, and is not a required part of the basic financial statements of Aberdeen School District No. 6-1. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

Aberdeen, South Dakota February 4, 2010

2

MANAGEMENT’S DISCUSSION AND ANALYSIS This section of Aberdeen School District 6-1’s annual financial report presents our discussion and analysis of the School District’s financial performance during the fiscal year ended on June 30, 2009. Please read it in conjunction with the School District’s financial statements, which follow this section. FINANCIAL HIGHLIGHTS • • • • •

• •

The School District’s net assets from government and business-type activities increased $1,491,294. This increase was used to increase the cash position of the School District, reduce outstanding bonds payable and to purchase capital assets. During the year, the School District’s revenues generated from taxes and other revenues of the governmental and business-type programs were $34,633,536. Governmental and business-type program expenditures were $33,142,242. As of June 30, 2009, the School District’s governmental funds reported combined ending fund balances of $6,795,902, a decrease of $2,905,058, compared with the prior year. The general fund reported a $183,851 current year deficit. The Simmons Middle School renovation project includes a major addition and renovation of Simmons Middle School, demolition of part of the building and converting a portion of the building to the District Service Center. The total cost of this project is approximately $10 million. The project was completed in fiscal year 2008-09. The School District also completed construction of an addition to the May Overby Elementary School. The cost of the project was approximately $1.2 million. The project was completed in August 2009. The School District is also planning a major upgrade of the heating, ventilation and air conditioning (HVAC) systems at Holgate Middle School. The estimated cost of the project is $2.8 million. No costs were incurred on this project as of October 2009. The project will be funded partly from zero interest QSCB bonds.

OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts – management’s discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the School District. • • • • •

The first two statements are government-wide financial statements that provide both long-term and shortterm information about the School District’s overall financial status. The government-wide financial statements also include component unit financial statements. The remaining statements are fund financial statements that focus on individual parts of the School District government, reporting the School District’s operations in more detail than the government-wide statements. The governmental funds statements tell how general government services were financed in the short-term as well as what remains for future spending. Proprietary fund statements offer short- and long-term financial information about the activities that the School District operates like a business. Fiduciary fund statements provide information about the financial relationships, like scholarship plans for graduating students – in which the School District acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong.

(continued on next page)

3

The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. Figure A-1 shows how the required parts of this annual report are arranged and relate to one another. Figure A-1 Required Components of Aberdeen School District’s Annual Financial Report Management’s Discussion and Analysis

Basic Financial Information

Government-Wide Financial Statements

Fund Financial Statements

Required Supplemental Information

Notes to Financial Statements

Figure A-2 summarizes the major features of the School District’s financial statements, including the portion of the School District government they cover and the types of information they contain. The remainder of the overview section of the management’s discussion and analysis explains the structure and contents of each of the statements. Figure A-2 Major Features of Aberdeen School District’s Government-wide and Fund Financial Statements Government-wide Statements

Governmental Funds

Fund Statements Proprietary Funds

Fiduciary Funds

Scope

Entire School District government (except fiduciary funds and the School District’s component units)

The activities of the School District that are not proprietary or fiduciary, such as elementary and high school education programs

Activities the School District operates similar to private businesses, such as the food service program and the selfinsurance funds

Instances in which the School District is the trustee or agent for someone else’s resources

Required Financial Statements

*Statement of Net Assets *Statement of Activities

*Balance Sheet *Statement of Revenues, Expenditures and Changes in Fund Balances

*Balance Sheet *Statement of Revenues, Expenses and Changes in Net Assets *Statement of Cash Flows

*Statement of Fiduciary Net Assets *Statement of Changes in Fiduciary Net Assets

Accounting Basis and Measurement Focus Type of Asset/Liability Information

Accrual accounting and economic resources focus

Modified accrual accounting and current financial resources focus

Accrual accounting and economic resources focus

Accrual accounting and economic resources focus

All assets and liabilities, both financial and capital, and short-term and longterm

Only assets expected to be used up and liabilities that come due during the year or soon thereafter, no capital assets included

All assets and liabilities, both financial and capital, and short-term and long-term

All assets and liabilities, both short-term and long-term; the School District’s funds do not currently contain capital assets although they can

All revenues and expenses during year, regardless of when cash is received or paid

Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter

All revenues and expenses during year, regardless of when cash is received or paid

All revenues and expenses during year, regardless of when cash is received or paid

Type of Inflow/Outflow Information

(continued on next page)

4

Government-wide Statements The government-wide statements report information about the School District as a whole using accounting methods similar to those used by private-sector companies. The statement of net assets includes all of the government’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the School District’s net assets and how they have changed. Net assets, the difference between the School District’s assets and liabilities, are one way to measure the School District’s financial health or position. • •

Increases or decreases in the School District’s net assets are an indicator of whether its financial health is improving or deteriorating, respectively. To assess the overall health of the School District you need to consider additional non-financial factors; such as, changes in the School District’s property tax base and changes in the state school aid funding formula from the State of South Dakota.

The government-wide financial statements of the School District are reported in three categories: •

• •

Governmental Activities – This category includes the School District’s basic instructional services, such as elementary and high school educational programs, support services (guidance counselor, executive administration, Board of Education, fiscal services, etc.), debt service payments, extracurricular activities (sports, debate, music, etc.) and capital equipment purchases. Property taxes, state grants, federal grants and interest earnings finance most of these activities. Business-type Activities – The School District charges a fee to students to help cover the costs of providing hot lunch services to all students. The Food Service Fund is the only business-type activity of the School District. Discretely Presented Component Unit – Component units are legally separated organizations for which the School District is financially accountable, or the nature and significance of the unit’s relationship with the School District is such that exclusion of the unit would cause the School District’s financial statements to be misleading, or incomplete. The following entity is included in the component unit column of the School District’s government-wide financial statements: Aberdeen Public Schools Foundation, Inc.

Fund Financial Statements The fund financial statements provide more detailed information about the School District’s most significant funds – not the School District as a whole. Funds are accounting devices that the School District uses to keep track of specific sources of funding and spending for particular purposes. • •

State Law requires some of the funds. The School Board establishes other funds to control and manage money for particular purposes (like the Scholarship Trust).

(continued on next page)

5

The School District has four kinds of funds: •

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



Proprietary Funds – Services for which the School District charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both short- and long-term financial information. The food service enterprise fund (one type of proprietary fund) is the same fund as the business-type activities reported in the government-wide statement, but provides more detail and additional information such as a statement of cash flows. The self-insurance internal service fund and the unemployment internal service fund (the other type of proprietary fund) used to report activities that provide services to the School District’s other programs and activities.



Fiduciary Funds – The School District is the trustee, or fiduciary, for various external and internal parties. The School District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the School District’s fiduciary activities are reported in a separate statement of fiduciary net assets and a statement of changes in fiduciary net assets. We exclude these activities from the School District’s government-wide financial statements because the School District cannot use these assets to finance its operations.



Component Unit – As mentioned above, component units are legally separate organizations for which the School District is financially accountable. Since there is only one component unit, the government-wide financial statements present information for the component unit (a) in a single column on the statement of net assets and (b) in a single column on the statement of activities.

(continued on next page)

6

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE Net Assets The School District’s combined net assets increased as follows: TABLE A-1 ABERDEEN SCHOOL DISTRICT STATEMENT OF NET ASSETS

Current and Other Assets Capital Assets Total Assets Long-Term Debt Outstanding Unearned Revenue Other Liabilities Total Liabilities Net Assets Invested in Capital Assets Net of Related Debt Restricted Unrestricted Total Net Assets Total Liabilities and Net Assets 4

Beginning Net Assets Increase in Net Assets Percentage of Increase in Net Assets for 2009

Current and Other Assets Capital Assets Total Assets

$ $ $

$ $

$ $

Long-Term Debt Outstanding Unearned Revenue Other Liabilities Total Liabilities Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Net Assets Total Liabilities and Net Assets

$

Beginning Net Assets Increase in Net Assets Percentage of Increase in Net Assets for 2008

$

(continued on next page)

$

Governmental Activities 6-30-09

19,781,076 50,715,883 70,496,959 37,563,319 8,324,056 3,170,957 48,895,901 14,362,063 2,601,512 4,475,052 21,601,058 70,496,959 19,991,752 1,446,875 7.2%

Governmental Activities 6-30-08

23,053,658 47,554,983 70,608,641 39,422,381 7,898,898 3,295,610 50,616,889 9, 538,053 5,498,016 4,955,683 19,991,752 70,608,641 17,503,538 2,488,214 14.2%

$ $ $

$ $

$ $ $

$ $

Business-Type Activities 6-30-09

348,457 320,179 668,636

$

14,852 9,160 24,012

$

320,179 324,445 644,624 668,636 600,205 44,419 7.4%

Business-Type Activities 6-30-08

$

$ $

407,387 221,811 629,198

$

18,825 10,168 28,993

$

221,811 378,394 600,205 629,198 535,319 64,886 12.1%

$

$ $

Total 6-30-09

20,129,533 51,036,062 71,165,595 37,415,740 8,324,056 3,180,117 48,919,913 14,682,242 2,925,957 4,637,483 22,245,682 71,165,595 20,591,957 1,653,725 8.0%

Total 6-30-08

23,461,045 47,776,794 71,237,839 39,441,206 7,898,898 3,305,778 50,645,882 9,759,864 5,876,410 4,955,683 20,591,957 71,237,839 18,038,857 2,553,100 14.2%

7

The statement of net assets reports all financial and capital resources. The statement presents the assets and liabilities in order of relative liquidity. The liabilities with average maturities greater than one year are reported in two components – the amount due within one year and the amount due in more than one year. The long-term liabilities of the School District, consisting of compensated absences payable, early retirement benefits payable, capital outlay certificates payable and general obligation bonds payable, have been reported in this manner on the statement of net assets. The difference between the School District’s assets and liabilities is its net assets. Changes in Net Assets The School District’s total revenues totaled $34,633,536 (see Table A-2). Approximately 50 percent of the School District’s revenue comes from property and other taxes, with 27 percent coming from state aid (see Figure A-3). The School District’s total expenses totaled $33,142,242. The School District’s expenses cover a range of services, encompassing instruction, support services and food services. Fifty-three percent of the total expenses were spent on instruction with 32 percent for support services (see Figure A-4). Figure A-4, Aberdeen School District, Functional Expenses for Fiscal Year 2008-09

Co-Curricular Activities 4%

NonProgrammed Changes 1%

Support Services 32% Food Service 5%

Instruction 53%

Debt Services 5%

Figure A-3, Aberdeen School District, Sources of Revenue for Fiscal Year 2008-09 Local Sources 2% State Sources 27%

Program Grants & Contributions 16%

Unrestricted Investment Earnings 1% Charges for Services 3%

Intermediate 1%

Taxes 50%

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8

Governmental Activities

Table A-2, and the narrative that follows, consider the operations of the government-wide activities.

Revenues: Program Revenues Charges for Services Operating Grants and Contributions General Revenues Taxes Revenue State Sources Revenue Federal Sources Revenue Intermediate Sources Revenue Local Sources Unrestricted Investment Earnings Total Revenues

Total Governmental Activities 2008-09 $

Expenses: Instruction Support Services Nonprogrammed Charges Debt Service Cocurricular Activities Food Service Total Expenses Increase before Contributions Transfers Change in Net Assets Net Assets, Beginning of Period Net Assets, End of Period

(continued on next page)

$

130,207 4,813,169

Changes in Net Assets Total Business-Type Activities 2008-09 $

1,060,179 651,648

Total 2008-09 $

1,190,386 5,464,817

17,409,362 9,278,365 26,299 501,557 659,481 106,722 32,925,162

(3,453) 1,708,374

17,409,362 9,278,365 26,299 501,557 656,028 106,722 34,633,536

17,622,678 10,523,483 25,707 1,710,901 1,561,446 31,444,215

1,698,027 1,698,027

17,622,678 10,523,483 25,707 1,710,901 1,561,446 1,698,027 33,142,242

1,480,947 (34,072) 1,446,875

10,347 34,072 44,419

1491,294 1,491,294

19,991,752 21,438,627

$

600,205 644,624

$

20,591,957 22,083,251

9

Revenues: Program Revenues: Charges for Services Operating Grants and Contributions General Revenues: Taxes Revenue State Sources Revenue Federal Sources Revenue Intermediate Sources Revenue Local Sources Unrestricted Investment Earnings Total Revenues

Total Governmental Activities 2007-08

Changes in Net Assets Total Business-Type Activities 2007-08

$

$

Expenses: Instruction Support Services Nonprogrammed Charges Debt Service Cocurricular Activities Food Service Total Expenses Increase before Contributions Transfers Change in Net Assets Net Assets, Beginning of Period Net Assets, End of Period

$

150,686 4,374,696

996,674 582,156

Total 2007-08 $

1,147,360 4,956,852

16,976,001 9,325,736 24,289 466,791 252,428 465,462 32,036,089

(3,571) 4,897 1,580,156

16,976,001 9,325,736 24,289 466,791 248,857 470,359 33,616,245

16,072,392 9,980,965 161,892 1,782,311 1,535,063 29,532,623

1,530,522 1,530,522

16,072,392 9,980,965 161,892 1,782,311 1,535,063 1,530,522 31,063,145

2,503,466 (15,252) 2,488,214

49,634 15,252 64,886

2,553,100 2,553,100

17,503,538 19,991,752

$

535,319 600,205

$

18,038,857 20,591,957

Revenues of the School District’s governmental activities increased by approximately 2.8 percent to $32,925,162 and expenses increased by approximately 6 percent. Factors contributing to these results included: • •

The increase in revenue was due primarily to increases in tax valuations and state aid. The increase in expenditures was due to increases in salary and benefits and inflationary increases on other costs.

Business-Type Activities

Revenues of the School District’s business-type activities increased by approximately 8.1 percent to $1,708,374 and expenses increased by 10.8 percent. Factors contributing to these results included: • •

The increase in revenue was due to increased meal prices, student participation, increased ala carte sales and an increase in federal reimbursements for the 2008-09 school year. The primary reason for the increase in expenses was increases in salaries and benefits and food costs.

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10

Financial Analysis of the School District’s Funds Governmental Funds

The focus of the School 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 School District’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of the net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the School District’s governmental funds reported combined ending fund balances of $6,795,902, a decrease of $2,905,058, compared to the prior year. Approximately 98.4 percent of this total amount ($6,686,897) constitutes unreserved fund balances, which are available for spending at the School District’s discretion. The remainder of the fund balances is reserved to indicate that the amounts are not available for new spending because they have already been committed for inventory ($109,005). The general fund is the chief operating fund of the School District. At the end of the current fiscal year, unreserved fund balance of the general fund was $3,982,865, while total fund balance was $4,091,870. As a measure of the general fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 18.8 percent of total general fund expenditures, while total fund balance represents 19.4 percent of that same amount. The fund balance of the School District’s general fund decreased by $183,851 during the current fiscal year. The School District had budgeted for a decrease in the general fund balance of $625,904. Key factors in this decrease are as follows: • •

The budgeted revenues exceeded actual revenues and other financing sources by $16,750. Budgeted revenues and other financing sources were $20,951,877 and actual revenues and other financing sources were $20,447,597. The School District expended 97.9 percent of the 2008-09 general fund budget providing an unexpended budget of $447,597.

The capital outlay fund had a decrease in fund balance of $1,315,674. The School District had budgeted for a decrease in the capital outlay fund balance of $1,722,003. The special education fund had a decrease in fund balance of $78,401. The School District had budgeted to decrease the special education fund balance by $289,854. This is due primarily to budgeted revenues exceeding actual revenue by $21,813 and the School District expending 96.5 percent of the special education budget providing and unexpended budget of $189,640. The pension fund had an increase in fund balance of $82,216. The arena fund had an increase in fund balance of $7,804. The debt service fund had an increase in fund balance of $32,701. The capital project funds are used to account for the revenues and expenditures of the significant construction projects. Its fund balance decreased by $1,449,853 due primarily to the construction costs of the Simmons Middle School project. The total expenditures of this fund were $1,466,059. This fund was closed in 2008-09 fiscal year due to the completion of this project.

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11

Proprietary Funds

The School District’s enterprise fund, the food service fund, showed an increase in net assets of $44,419. The School District’s internal service funds saw a decrease in net assets of $443,590. Budgetary Highlights

Over the course of the year, the School Board revised the School District’s budget several times. These amendments fall into two categories: • •

Supplemental appropriations and contingency transfers approved for unanticipated, yet necessary, expenses to provide for items necessary for the education program of this School District. Increases in appropriations, primarily by contingency transfer, to prevent budget overruns.

Capital Asset Administration

By the end of 2008-09, the School District had invested $51,036,062 in a broad range of capital assets, including land, buildings, construction in progress and various machinery and equipment (see Table A-3). This amount represents a net increase (including additions and deductions) of $3,259,268, or 6.8 percent. Table A-3 Aberdeen School District 6-1 Capital Assets (Net of Depreciation)

Business-Type Activities 2008 2009

Total Dollar Change 2008-09

614,234 7,355,694 38,565,251 1,019,804

$

320,179

$

221,811

$

(6,390,939) 9,640,761 9,446

NA (86.9)% 25.0% 1.0%

$ 47,554,983

$

320,179

$

221,811

$

3,259,268

6.8%

Governmental Activities 2008 2009 Land Construction Work in Progress Buildings Machinery and Equipment

$

614,234 964,755 48,206,012 930,882

Total Capital Assets

$ 50,715,883

$

Total % Change 2008-09

This year’s capital asset purchases were primarily construction and remodeling of buildings as part of the Simmons Middle School project and the May Overby project. Additional information on the School District’s capital assets can be found in Note 3.

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12

Long-Term Debt

At year-end the School District had $37,578,171 in long-term debt. This is a decrease of 5.1 percent as shown on Table A-4 below. Table A-4 Aberdeen School District 6-1 Outstanding Debt and Obligations

General Obligation Bonds

Business-Type Activities 2008 2009

Governmental Activities 2008 2009 $ 19,360,000

$ 20,120,000

$

-

$

Total Dollar Change 2008-09 -

$

Total % Change 2008-09

(760,000)

(3.78)%

Early Retirement Capital Outlay Certificates

913,560

1,285,674

14,852

18,825

(376,087)

(28.8)%

16,993,820

17,896,930

-

-

(903,110)

(5.0)%

OPEB Obligation

162,431

-

-

-

162,431

-

Compensated Absences

133,508

119,777

-

-

13,731

11.5%

Total Outstanding Debt and Obligations

$ 37,563,319

$ 39,422,381

18,825

$ (2,025,466)

(4.7)%

$

14,852

$

The School District is liable for the accrued vacation leave payable for all full-time twelve (12) month employees. The School District also maintains an early retirement plan, which allows those meeting certain qualifications, to retire early and receive either 80 percent or 60 percent of their last year’s salary in equal payments spread over the next six years. This plan allows the School District to reduce the overall program cost by hiring lower paid teachers to replace the higher paid teachers. In addition, the School District allows retirees to participate in the School District’s group health plan. Additional information on the School District’s long-term debt can be found in Note 5. Economic Factors and Next Year’s Budgets and Rates

The School District experienced an increase in total property valuation of approximately $113,198,101 or 7.4 percent from the prior year. With the exception of the general fund and special education fund, the increase in property valuation allows the School District the ability to increase the amount of revenue generated from property taxes; however, the total amount which can be levied is limited by the State of South Dakota.

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13

For the general fund, one of the primary sources of revenue to the School District is based on a per-student allocation received from the State of South Dakota. This per-student allocation is based on student average daily membership (ADM) (see Figure A-5) and increases each year by the lesser of the rate of inflation or three percent. The state aid formula for fiscal year 2008-09 ensures that property taxes plus state aid will equal $4,665 per pupil. The allocation for fiscal year 2009-10 has been increased to $4,805 per pupil; however, since the funding formula was implemented in 1997-98, the annual increases in the allocation have not kept up with the increases in costs of education, primarily salary and benefit increases. The School District has been implementing budget cuts and efficiencies to help cover the gap between State funding and the costs of education. Remaining shortfalls have been paid using cash reserves. The School District’s enrollment for the past two years has been as follows in Figure A-5: Figure A-5, Aberdeen School District ADM For the Last Two Years

4000

3734

3738

3500

3000

2008

2009

Contacting the School District’s Financial Management

The financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the School District’s finances and to demonstrate the School District’s accountability for the money it receives. If you have questions about this report or need additional information, contact the Aberdeen School District’s Finance Office, 1224 S 3 St, Aberdeen, SD 57401. The School District’s discretely presented component unit issues its own separate financial statements. These statements may be obtained by directly contacting the individual component unit.

14

ABERDEEN SCHOOL DISTRICT 6-1 STATEMENT OF NET ASSETS JUNE 30, 2009

EXHIBIT I

Primary Government Governmental Business-Type Activities Activities ASSETS Cash and cash equivalents Investments Taxes receivable Other receivables Inventories Deferred charges Capital assets Land, improvements and construction in progress Other capital assets, net of depreciation TOTAL ASSETS LIABILITIES Accounts payable Other current liabilities Deferred revenue Noncurrent liabilities: Due within one year Due in more than one year

$

280,215 68,242 -

$

320,179

9,258,908 781,105 8,482,798 407,725 177,247 1,021,750

$

1,578,989 49,457,073

133,285 176,603 27,153

$

70,496,959

$

668,636

$

71,165,595

$

337,041

$

412,238 2,758,719 8,324,056

$

677 8,483 -

$

412,915 2,767,202 8,324,056

$

6,226 -

NET ASSETS Invested in capital assets, net of related debt Restricted for: Capital outlay Special education Bond redemption Food Service Arena Foundation Unrestricted TOTAL NET ASSETS

See Notes to Financial Statements.

$

1,578,989 49,136,894

TOTAL LIABILITIES

TOTAL LIABILITIES AND NET ASSETS

8,978,693 781,105 8,482,798 407,725 109,005 1,021,750

Total

Component Unit Aberdeen Public Schools Foundation, Inc.

$

2,542,569 35,020,750

3,336 11,517

2,545,905 35,032,267

-

49,058,332

24,013

49,082,345

6,226

14,362,063

320,179

14,682,242

27,153

1,246,673 605,935 717,913 30,991 4,475,052

324,444 -

1,246,673 605,935 717,913 324,444 30,991 4,475,052

209,564 94,098

21,438,627

644,623

22,083,250

330,815

70,496,959

$

668,636

$

71,165,595

$

337,041

15

ABERDEEN SCHOOL DISTRICT 6-1

STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2009

Functions/Programs Primary government Governmental activities: Instruction Support services Nonprogrammed charges *Interest on long-term debt Cocurricular activities Total governmental activities

EXHIBIT II

Program Revenues Operating Charges for Grants and Services Contributions

Expenses

$

Business-type activities Food service

17,622,678 10,523,483 25,707 1,710,901 1,561,446 31,444,215

$

1,698,027

36,791 93,416 130,207

$

1,060,179

4,813,169 4,813,169

Component Unit Aberdeen Public Schools Foundation, Inc.

$

$

651,648

Total primary government

$

33,142,242

$

1,190,386

$

5,464,817

Total component unit

$

96,491

$

170,847

$

144,160

* The School District does not have interest expense related to the functions presented above. This amount includes indirect interest expense on general long-term debt.

Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business-Type Activities Activities Total

$

-

-

$

13,800

(26,500,839)

(12,772,718) (10,523,483) (25,707) (1,710,901) (1,468,030) (26,500,839) 13,800

13,800

-

(26,487,039)

218,516

General revenues Taxes: Property taxes Gross receipts tax Revenue from State sources: State aid Revenue from federal sources Unrestricted investment earnings Other general revenues Transfers Loss on disposal of fixed assets

16,848,224 561,138

-

9,278,365 26,299 106,722 1,172,033 (34,072) (10,995)

Total general revenues and transfers

16,848,224 561,138

34,072 (3,453)

-

9,278,365 26,299 106,722 1,172,033 (14,448)

863 -

27,947,714

30,619

27,978,333

863

Change in net assets

1,446,875

44,419

1,491,294

219,379

Net assets - beginning

19,991,752

600,205

20,591,957

111,436

NET ASSETS - ENDING

See Notes to Financial Statements.

(12,772,718) (10,523,483) (25,707) (1,710,901) (1,468,030) (26,500,839)

$

21,438,627

$

644,624

$

22,083,251

$

330,815

16

ABERDEEN SCHOOL DISTRICT 6-1

BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2009

EXHIBIT III

General Fund

Capital Outlay Fund

ASSETS 104 Cash and cash equivalents 180 Investments 110 Taxes receivable - current 112 Taxes receivable - delinquent 120 Accounts receivable 140 Due from other government 162 Interest receivable on investments and deposits 170 Inventory of supplies

$ 4,778,190 781,105 4,061,648 84,511 6,226 388,371 1,676 109,005

$ 1,494,199 2,204,691 37,967 -

$

1,178,622 1,043,564 16,536 11,453 -

$

124,508 220,469 3,920 -

$

30,991 -

$

702,104 793,684 15,809 -

$

-

$

8,308,614 781,105 8,324,056 158,743 6,226 399,824 1,676 109,005

TOTAL ASSETS

$ 10,210,732

$ 3,736,857

$

2,250,175

$

348,897

$

30,991

$ 1,511,597

$

-

$

18,089,249

$

$

$

45,220 13,793 387,921

$

-

$

-

$

$

-

$

412,239 214,775 1,667,039

LIABILITIES AND FUND BALANCES Liabilities 402 Accounts payable 403 Accrued salaries payable 404 Contracts payable 406 Construction contracts payable retained percentage 450 Payroll deductions and withholdings and employer matching payable 474 Deferred revenue Total Liabilities

151,305 200,982 1,279,118

Special Education Fund

215,714 -

Pension Fund

Bond Redemption Fund

Arena Fund

-

Simmons Middle School Project Fund

Total Governmental Funds

-

69,779

-

-

-

-

-

69,779

341,298 4,146,159

2,242,658

105,419 1,060,099

224,389

-

809,493

-

446,717 8,482,798

6,118,862

2,528,151

1,612,452

224,389

-

809,493

-

11,293,347

Fund Balances 701 Reserved for 701.2 Inventory 704 Unreserved fund balances 704.2 Designated for next year' s budget: General fund 704.5 Undesignated

109,005

-

-

-

-

-

-

109,005

419,150 3,563,715

1,208,706

637,723

124,508

30,991

702,104

-

419,150 6,267,747

Total fund balances

4,091,870

1,208,706

637,723

124,508

30,991

702,104

-

6,795,902

$ 10,210,732

$ 3,736,857

30,991

$ 1,511,597

TOTAL LIABILITIES AND FUND BALANCES

See Notes to Financial Statements.

$

2,250,175

$

348,897

$

$

-

$

18,089,249

17

ABERDEEN SCHOOL DISTRICT 6-1

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS YEAR ENDED JUNE 30, 2009

Total Fund Balances - Governmental Funds

$

6,795,902

Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and; therefore, are not reported in the funds. The cost of the assets is $62,859,881 and the accumulated depreciation is $12,143,998

50,715,883

Long-term liabilities, including bonds payable, OPEB liabilities, and accrued leave payable are not due and payables in the current period and; therefore, are not reported in the funds. The cost of the liabilities is $37,563,319 less the cost of deferred charges of $1,021,750.

(36,541,569)

Assets such as taxes receivable (delinquent) are not available to pay for current period expenditures and; therefore, are deferred in the funds.

158,743

Internal service funds are used by management to charge the the costs of activities, such as insurance, to individual funds. The assets and liabilities of internal service funds are included in governmental activities in the statement of net assets.

547,369

Interest expense payable is not included as a liability in the fund statements. Interest expense payable is included as a liability in the statement of net assets.

(237,701)

Net Assets - Governmental Funds

See Notes to Financial Statements.

$

21,438,627

18

ABERDEEN SCHOOL DISTRICT 6-1

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2009 Capital Outlay Fund

General Fund Revenues 1000 Revenue from local sources 1100 Taxes 1110 Ad valorem taxes 1120 Prior year' s ad valorem taxes 1140 Gross receipts taxes 1190 Penalties and interest on taxes

$

8,253,013 67,619 561,139 16,887

$

Special Education Fund

4,383,464 29,722 7,663

$

Pension Fund

1,974,057 13,097 3,410

$

Bond Redemption Fund

Arena Fund

438,346 3,108 805

$

-

$

1,625,079 12,824 3,321

EXHIBIT IV

Simmons Middle School Project Fund

$

-

Total Governmental Funds

$

16,673,959 126,370 561,139 32,086

1300 Tuition and fees 1310 Regular day school tuition 1330 Summer school fees

8,891 23,840

-

4,060 -

-

-

-

-

12,951 23,840

1500 Earnings on investments and deposits

69,843

14,474

-

-

-

-

16,206

100,523

1700 Cocurricular activities 1710 Admissions

70,241

-

-

-

7,804

-

-

78,045

1900 Other revenue from local sources 1910 Rentals 1920 Contributions and donations 1970 Charges for service 1990 Other

15,370 167,930 196,393 31,744

155,000 19,990

99,418 -

-

-

-

-

15,370 322,930 295,811 51,734

2000 Revenue from intermediate sources 2100 County sources 2110 County apportionment 2200 Revenue in lieu of taxes

363,008 17,549

48,400 -

72,600 -

-

-

-

-

484,008 17,549

9,278,366 20,000

-

2,129,676

-

-

-

-

9,278,366 2,149,676

72,292

-

-

-

-

-

-

72,292

63,897

-

-

-

-

-

-

63,897

1,627,555

-

899,749

-

-

-

-

2,527,304

26,299 20,951,876

4,658,713

5,196,067

442,259

7,804

1,641,224

16,206

26,299 32,914,149

3000 Revenue from state sources 3100 Grants-in-aid 3110 Unrestricted grants-in-aid 3120 Restricted grants-in-aid 3300 Tuition 3320 Regular 4000 Revenue from federal sources 4140 Restricted grants-in-aid received directly from federal government 4150-4199 Restricted grants-in-aid received from Federal Government through the State 4400 Johnson O' Malley funds Total Revenues

(continued on next page)

19

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS – page 2

General Fund Expenditures 1000 Instruction 1100 Regular programs 1110 Elementary Schools 1120 Middle/Junior High Schools 1130 High School 1190 Other regular programs

Capital Outlay Fund

Special Education Fund

Pension Fund

Arena Fund

Bond Redemption Fund

Simmons Middle School Project Fund

Total Governmental Funds

4,652,865 2,428,460 2,977,875 942,106

139,552 139,596 162,155 -

-

-

-

-

-

4,792,417 2,568,056 3,140,030 942,106

120,776 105,187 660,524 356,846

191,864

3,434,444 -

-

-

-

-

120,776 3,434,444 105,187 660,524 548,710

502,277 105,828 -

-

69,506 479,118 588,819 266,562

-

-

-

-

502,277 175,334 479,118 588,819 266,562

2200 Support services - instructional staff 2210 Improvement of instruction 2220 Educational media

372,293 865,833

325,128 44,104

29,000 -

-

-

-

-

726,421 909,937

2300 Support services - general administration 2310 Board of Education 2320 Executive administration

110,198 238,227

-

-

-

-

-

-

110,198 238,227

2400 Support services - school administration 2410 Office of the principal

1,395,694

-

-

-

-

-

-

1,395,694

2500 Support services - business 2520 Fiscal services 2540 Operation and maintenance of plant 2550 Pupil transportation 2570 Internal services

308,123 3,151,393 244,180 92,174

38,682 406,018 26,902

-

-

-

-

-

346,805 3,557,411 244,180 119,076

207,998

-

-

-

-

-

-

207,998

1200 Special programs 1210 Gifted and talented 1220 Programs for special education 1250 Culturally different 1270 Educationally deprived 1290 Other special programs 2000 Support services 2100 Pupils 2120 Guidance 2130 Health 2140 Psychological 2150 Speech Pathology 2170 Student therapy services

2600 Support services - central 2640 Staff

(continued on next page)

20

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS – page 3

Capital Outlay Fund

General Fund 2700 Support services - special education 2710 Administrative costs 2730 Transportation costs

Special Education Fund

Pension Fund

Arena Fund

Bond Redemption Fund

Simmons Middle School Project Fund

Total Governmental Funds

-

-

152,381 216,860

-

-

-

-

152,381 216,860

-

-

37,778

360,043

-

-

-

397,821

-

2,018,372

-

-

-

1,608,523

-

3,626,895

392,410 279,363 625,162

86,156

-

-

-

-

-

392,410 279,363 711,318

11,142

2,861,117

-

-

-

-

1,466,059

4,338,318

21,146,934

6,439,646

5,274,468

360,043

-

1,608,523

1,466,059

36,295,673

82,216

7,804

32,701

(1,449,853)

(3,381,524)

-

-

-

4000 Nonprogrammed charges 4500 Early retirement payments 5000 Debt services 6000 Cocurricular activities 6100 Male activities 6200 Female activities 6900 Combined activities 7500 Capital outlay Total expenditures Excess of revenue over (under) expenditures

(195,058)

Other financing sources 5120 General long-term debt issued 5130 Sale of surplus property 8110 Transfers out Total Other financing sources

11,207 11,207

Net Change in fund balances

See Notes to Financial Statements.

4,275,721 $

4,091,870

(78,401)

325,592 173,739 (34,072) 465,259

(183,851)

FUND BALANCE - BEGINNING FUND BALANCE - ENDING

(1,780,933)

$

-

-

325,592 184,946 (34,072) 476,466

(1,315,674)

(78,401)

82,216

7,804

32,701

(1,449,853)

(2,905,058)

2,524,380

716,124

42,292

23,187

669,403

1,449,853

9,700,960

1,208,706

$

637,723

$

124,508

$

30,991

$

702,104

$

-

$

6,795,902

21

ABERDEEN SCHOOL DISTRICT 6-1

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2009 Net Change in Fund Balances - Total Governmental Funds

$

(2,905,058)

Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets in allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.

3,183,103

In the statement of activities, the loss on sale of assets is reported net of original cost and accumulated depreciation, whereas in the governmental funds, the loss is reported on cash received.

(22,203)

Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets.

760,000

In the statement of activities, certain operating expenses (early retirement) are measured by the amounts earned during the year. In the governmental expenditures, for these items are measured by the amount actually paid. Early retirement paid during the period exceeded the amount earned by $372,114.

372,114

In both the government-wide and fund financial statements, revenues from property tax levies are applied to finance the budget of a particular period. Accounting for revenues from property tax accruals in the funds'statement differs from the accounting in the government-wide statements in that the fund financial statements require the amounts to be "available". This amount reflects the application of both the application period and "availability criteria".

15,810

Governmental funds do not reflect the change in accrued leave, but the statement of activities reflects the change in accrued leave through expenditures.

(13,731)

Repayment of CO certificate principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets.

1,228,702

Interest expense payable is not included as an expenditure in the fund statements. Interest expense payable is included as an expenditure in the statement of activities.

3,478

Deferred charges from the issuance of refunding bonds are not recorded on the fund statements. The annual amortization of these deferred charges are reported as deferred charges are reported as interest expense in the statement of activities.

(76,187)

Issuance of CO lease/purchase principal is a revenue in the governmental funds, but the issuance increases long-term liabilities in the statement of net assets.

(325,592)

Internal service funds are used by management to charge the costs of certain activities, such as insurance to individual funds. The net expense of the internal service is reported with governmental activities.

(443,590)

Payment on installment contract is recognized as income in the year it is received in the fund statement. It was recognized as revenue in the year of sale in the statement of net assets. Total payment of $173,739 less interest of $12,176.

(167,540)

The accrual of OPEB costs are not reflected in governmental funds, but the statement of activities reflects the change in this liability from one year to the next.

(162,431)

Change in Net Assets of Governmental Activities

See Notes to Financial Statements.

$

1,446,875

22

ABERDEEN SCHOOL DISTRICT 6-1

STATEMENT OF NET ASSETS – PROPRIETARY FUNDS JUNE 30, 2009

ASSETS Current assets Cash and cash equivalents 170 Inventory of supplies 171 Inventory of stores purchased for resale 172 Inventory of donated food Total current assets

EXHIBIT V

Enterprise Fund Food Service Fund

Internal Service Funds

$

$

200 Capital assets 204 Machinery and equipment - local funds Less accumulated depreciation (credit) Total noncurrent assets TOTAL ASSETS LIABILITIES 400 Current liabilities 402 Accounts payable 403 Accrued salaries payable 409 Incurred but not reported claims 451 Early retirement payable - current Total current liabilities

652,569 (332,390) 320,179

-

668,636

$

670,078

$

677 8,483 3,336 12,496

$

122,709 122,709

NET ASSETS 706 Invested in capital assets 708 Unrestricted net assets Total net assets

See Notes to Financial Statements.

670,078 670,078

$

Noncurrent liabilities 509 Other long-term liabilities Total noncurrent liabilities

TOTAL LIABILITIES AND NET ASSETS

280,215 12,887 26,441 28,914 348,457

$

11,517 11,517

-

320,179 324,444 644,623

547,369 547,369

668,636

$

670,078

23

ABERDEEN SCHOOL DISTRICT 6-1

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS – PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2009

Operating revenue Sales 1610 To pupils 1620 To adults 1660 Other 1970 Self-insurance premiums Total operating revenue

EXHIBIT VI Enterprise Fund Food Service Fund $

Operating expenses 2560 Food service 100 Salaries 200 Employee benefits 300 Purchased services 400 Purchased Supplies services 461 Cost of sales - purchased food 462 Cost of sales - donated food 690 Miscellaneous 910 Depreciation - local funds 4620 Self-insurance costs Total operating expenses

743,148 9,986 307,045 1,060,179

Internal Service Funds $

517,329 229,697 10,312 61,878 712,131 114,284 19,541 32,856 1,698,028

Operating loss

3,948,180 3,948,180

(637,849)

Nonoperating revenue (expense) Local sources: 1510 Investment earnings 8100 Loss on disposal of fixed assets State sources: 3810 Cash reimbursements Federal sources: 4810 Cash reimbursements 4820 Donated food Total nonoperating revenue

3,496,504 3,496,504

(451,676)

(3,453)

8,086 -

7,834

-

527,468 116,346 648,195

8,086

Income before contributions, special items, extraordinary items and transfers

10,346

5170 Capital contributions

34,072

Change in Net Assets

44,418

(443,590)

Net assets - beginning

600,205

990,959

NET ASSETS- ENDING

See Notes to Financial Statements.

$

644,623

(443,590) -

$

547,369

24

ABERDEEN SCHOOL DISTRICT 6-1

STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2009

Cash flows used for operating activities Cash receipts from customers Cash receipts from interfund services provided Payments to employees Payments to suppliers Claims paid Net cash used for operating activities

EXHIBIT VII

Enterprise Funds Food Service Fund $

Cash flows from noncapital financing activity Operating subsidies Net cash from noncapital financing activity Cash flows used for capital and related financing activity Purchase of capital assets Net cash used for capital and related financing activity Cash flows from investing activity Interest earnings Net cash from investment activity

1,060,179 (751,084) (786,668) (477,573)

(100,605) (100,605)

-

-

Cash and cash equivalents beginning of year

323,091

Net cash used for operating activities Noncash investing, capital and financing activities Value of commodities received Loss on disposal of capital assets not affecting operating income Capital contributions

See Notes to Financial Statements.

3,496,504 (3,989,883) (493,379) -

(42,876)

RECONCILIATION OF OPERATING LOSS TO NET CASH USED FOR OPERATING ACTIVITIES Operating loss Adjustments to reconcile operating loss to net cash used for operating activities: Depreciation expense Value of donated commodities used Change in assets and liabilities: Inventories Accounts and other payables Accrued wages payable

$

535,302 535,302

Net increase in cash and cash equivalents

CASH AND CASH EQUIVALENTS END OF YEAR

Internal Service Funds

8,086 8,086 (485,293) 1,155,371

$

280,215

$

670,078

$

(637,849)

$

(451,676)

32,856 114,284

-

18,115 (4,897) (84)

(41,703) -

$

(477,575)

$

$

116,346 (3,453) 34,072

$

(493,379)

-

25

ABERDEEN SCHOOL DISTRICT 6-1

STATEMENT OF FIDUCIARY NET ASSETS JUNE 30, 2009

ASSETS Cash and cash equivalents

EXHIBIT VIII

Private-Purpose Trust Fund

Agency Fund

$

17,286

$

343,092

TOTAL ASSETS

$

17,286

$

343,092

LIABILITIES Amounts held for others

$

-

$

343,092

Total liabilities NET ASSETS Held in trust for scholarships TOTAL LIABILITIES AND NET ASSETS

See Notes to Financial Statements.

$

-

343,092

17,286

-

17,286

$

343,092

26

ABERDEEN SCHOOL DISTRICT 6-1

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS JUNE 30, 2009

ADDITIONS Interest and earnings Contributions Total additions

EXHIBIT IX

Private-Purpose Trust Fund $

DEDUCTIONS Investments transferred to Aberdeen Public Schools Foundation, Inc. Trust deductions for scholarships Total deductions

740 300 1,040 2,940 3,469 6,409

Change in net assets

(5,369)

Net assets - beginning

22,655

NET ASSETS - ENDING

See Notes to Financial Statements.

$

17,286

27

ABERDEEN SCHOOL DISTRICT 6-1 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Aberdeen School District 6-1’s (School District) financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for school districts through its pronouncements. School districts are also required to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued through November 30, 1989 (when applicable) that do not conflict with or contradict GASB pronouncements. The more significant accounting policies established in GAAP and used by the School District are discussed below. A. Reporting Entity The reporting entity of the Aberdeen School District 6-1consists of the primary government (which includes all of the funds, organizations, institutions, agencies, departments and offices that make up the legal entity, plus those funds for which the primary government has a fiduciary responsibility, even though those fiduciary funds may represent organizations that do not meet the criteria for inclusion in the financial reporting entity); its discretely presented component unit; and those organizations for which the primary government is financially accountable. Discretely presented component units are entities that are legally separate from the School District for which the School District is considered to be financially accountable or for which the nature and significance of the relationship with the School District are such that exclusion would cause the School District’s financial statements to be misleading or incomplete. The Aberdeen Public Schools Foundation, Inc. meets this definition of a discretely presented component unit. This component unit is displayed in a separate column in the government-wide financial statements to emphasize its legal separateness from the School District. Separate financial statements are available for the component unit. The financial statements are available upon request from the School District. The School District participates in a cooperative service unit with several other school districts. See detailed note entitled "Joint Ventures" for specific disclosures. Joint ventures do not meet the criteria for inclusion in the financial reporting entity as a component unit, but are discussed in these notes because of the nature of their relationship with the School District. B. Basis of Presentation, Basis of Accounting Basis of Presentation: Government-wide Statements: The statement of net assets and the statement of activities display information about the primary government (the School District). These statements include the financial activities of the overall government, except for fiduciary activities and component units. Eliminations to the various funds have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities and discretely presented component units of the School District. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. Discretely presented component units are legally separate organizations that meet certain criteria, as described above in Note 1A, and may be classified as either governmental or business-type activities. See the discussion of individual component units in Note 1A above.

(continued on next page)

28

NOTES TO FINANCIAL STATEMENTS

The statement of net assets reports all financial and capital resources in a net assets form (assets minus liabilities equal net assets). Net assets are displayed in three components, as applicable, invested in capital assets net of related debt, restricted (distinguishing between major categories of restrictions), and unrestricted. The statement of activities presents a comparison between direct expenses and program revenues for the businesstype activities of the School District and for each function of the School District’s governmental activities. Direct expenses are those that are specifically associated with a program or function and; therefore, are clearly identifiably to a particular function. Program revenues include (a) charges paid by recipients of goods and services offered by the programs and (b) 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, including all taxes, are presented as general revenues. Fund Financial Statements Fund financial statements of the School District are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, liabilities, fund equity, revenues and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the School District or it meets the following criteria: 1. Total assets, liabilities, revenues or expenditures/expenses of the individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type, and 2. Total assets, liabilities, revenues or expenditures/expenses of the individual governmental or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined, or 3. Management has elected to classify one or more governmental or enterprise funds as major for consistency in reporting from year to year, or because of public interest in the fund’s operations. The funds of the School District are described below within their respective fund types: Governmental Funds: General Fund: The General Fund is the general operating fund of the School District. It is used to account for all financial resources of the general government except those required to be accounted for in another fund. Special Revenue Funds: Special revenue funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The Capital Outlay, Special Education, Pension and Arena Funds are the special revenue funds, maintained by the School District. Debt Service Funds: Debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. Capital Projects Funds: Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds). The Simmons Middle School Project Fund is the only capital project fund maintained by the School District.

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29

NOTES TO FINANCIAL STATEMENTS

Proprietary Funds: Enterprise Funds: Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that costs of providing goods and services be financed or recovered primarily through user charges. The enterprise fund is used to account for the operations of the food service program for the students and faculty of the School District, financed primarily through meal sales and federal reimbursement. Internal Service Funds: Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies or other governments, on a cost-reimbursement basis. Internal service funds are never considered to be major funds. The self-insurance fund and the unemployment fund are the internal funds maintained by the School District with the primary purpose of the funds to account for self-funded health and unemployment insurance. Fiduciary Funds: Fiduciary funds are never considered to be major funds. Private-Purpose Trust Fund: Private-purpose trust fund was created to act as a custodian for funds, such as scholarships, held in trust for the benefit of private individuals or organizations. All resources of the fund, including any earnings on invested resources, may be used to support those private individuals and organizations. There is no requirement that any portion of these resources be preserved as capital. Agency Fund: The student activity fund is used to account for student funds generated within the various schools by the students or other School District organizations. The School District holds the student activity fund’s assets in a custodial capacity. Agency funds are accounted for using the accrual basis of accounting. Because agency funds are custodial in nature, they do not measure results of operations or have a measurement focus. The School District reports the following major funds: Fund

Brief Description

General Fund:

See above description

Special Revenue Funds: Special Education Fund -

A fund established by South Dakota Codified Law (SDCL) 13-37-16 to pay the costs for the special education of all children in need of special assistance and prolonged assistance who reside within the School District. This fund is financed by grants and property taxes.

Capital Outlay Fund -

A fund established by the SDCL 13-16-6 to meet expenditures that result in the acquisition of or additions to real property, plant or equipment. This fund is financed by property taxes.

Pension Fund -

A fund established by SDCL 13-10-6 for the purpose of continuing a fund for the payment of pensions to retired employees of school districts, which have established such systems. This fund is financed by property taxes.

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30

NOTES TO FINANCIAL STATEMENTS

Fund Arena Fund Debt Service Fund: Bond Redemption Fund -

Capital Projects Funds: Simmons Middle School Project Fund Enterprise Funds: Food Service Fund -

Brief Description A fund established by SDCL 6-4-1 to provide funding for improvements at the Central High School arena and theater. This fund is financed by 10 percent of the admission revenues at events held in these facilities. A fund established by SDCL 13-16-13 to account for the payment of principal and interest on all bonded indebtedness. This fund is financed by property taxes.

A fund established to account for transactions of the Simmons Middle School and C.C. Lee Elementary School renovation projects. A fund used to record financial transactions related to food service operations. This fund is financed by user charges and grants.

C. 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. The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from grants, entitlements and donations are recognized in the fiscal year that all eligibility requirements have been satisfied. In the fund financial statements, the governmental funds are reported using the current financial resources, measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. “Available” means resources are collected or to be collected soon enough after the end of the fiscal year that they can be used to pay bills of the current period. The accrual period does not exceed one bill paying cycle, which for the School District is 60 days. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Under the terms of grant agreements, the School District funds certain grants and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed. The business-type activities and enterprise funds do not apply any FASB Statements and Interpretations issued after November 30, 1989.

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31

NOTES TO FINANCIAL STATEMENTS

D. Interfund Eliminations and Reclassifications Government-wide Financial Statements: In the process of aggregating data for the government-wide financial statements, some amounts reported as interfund activity and balances in the fund financial statements have been eliminated or reclassified, as follows: 1. In order to minimize the grossing-up effect on assets and liabilities within the governmental and businesstype activities columns of the primary government, amounts reported as interfund receivables and payables have been eliminated in the governmental and business-type activities columns, except for the net, residual amounts due between governmental and business-type activities, which are presented as Internal Balances. 2. In order to minimize the doubling-up effect on internal service fund activity, certain “centralized expenses” are charged as direct expenses to funds or programs in order to show all expenses that are associated with a service, program, department or fund. When expenses are charged in this manner, expense reductions occur in the respective funds so that expenses are reported only in the function to which they relate. E. Deposits and Investments, Credit Risk, Concentrations of Credit Risk and Interest Rate Risk The School District follows the practice of aggregating some of the cash assets of various funds to maximize cash management efficiency and returns. Various restrictions on deposits and investments are imposed by statutes. These restrictions are summarized below: Deposits: The School District deposits are made in qualified public depositories as defined by SDCL 4-6A-1, 1316-15, 13-16-15.1 and 13-16-18.1. Qualified depositories are required by SDCL 4-6A-3 to maintain at all times, segregated from their other assets, eligible collateral having a value equal to at least 100 percent of the public deposit accounts which exceed deposit insurance such as the FDIC and NCUA. In lieu of pledging eligible securities, a qualified public depository may furnish irrevocable standby letters of credit issued by federal home loan banks accompanied by written evidence of that bank’s public debt rating which may not be less than “AA” or a qualified public depository may furnish a corporate surety bond of a corporation authorized to do business in South Dakota. Deposits are reported at cost plus interest, if the account is of the add-on type. State law allows income from deposits and investments to be credited to either the general fund or the fund making the investments. The School District’s policy is to credit income from pooled accounts to the general fund and interest on accounts held solely by one fund to the fund making the investment. Concentration of Credit Risk: The School District places no limit on the amount that the School District may deposit in one financial institution. Custodial Credit Risk: Custodial credit risk is the risk that in the event of a bank failure, the School District’s deposits may not be returned. The School District’s deposit policy requires deposits in excess of the Depository Insurance maximums to be 100 percent collateralized. All financial institutions which hold the School District’s deposits, pledges securities in the amount over $250,000 for all public School District funds. The financial institution where the collateral is held must be a member of the Federal Reserve. As of June 30, 2009 all of the School District' s deposits were covered by insurance or collateral in accordance with the deposit policy.

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32

NOTES TO FINANCIAL STATEMENTS

The actual bank balances at June 30, 2009 were as follows: Bank Balance Insured (FDIC/NCUA) Uninsured, collateral jointly held by State’s/School District’s agent in the name of the state and the pledging financial institution.

$

1,248,114 8,552,849

Total deposits

$ 9,800,963

The School District’s carrying amount of deposits at June 30, 2009:

$ 9,619,286

Reconciliation of deposits to Government-wide Statement of Net Assets: Cash and cash equivalents Add: Fiduciary fund cash (not included in government- wide Statement of Net Assets) Total reconciled deposits

$ 9,258,908 360,378 $ 9,619,286

Investments: In general, SDCL 4-5-6 permits School District funds to be invested in (a) securities of the United States and securities guaranteed by the United States government either directly or indirectly; or (b) repurchase agreements fully collateralized by securities described in (a); or in shares of an open-end, no-load fund administered by an investment company whose investments are in securities described in (a) and repurchase agreements described in (b). Also, SDCL 4-5-9 requires that investments shall be in the physical custody of the political subdivision or may be deposited in a safekeeping account with any bank or trust company designated by the political subdivision as its fiscal agent. Custodial Credit Risk: For investments, custodial credit risk is the risk that, in the event of the failure of the counterparty, the School District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The School District’s investment policy does not address custodial risk. All of the School District investments are held in book entry form with Chase Bank. Interest Rate Risk: Interest rate risk is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates. The School District has a formal investment policy that limits investment maturities to a maximum of 5 years. The School District invests in mortgage pass-through securities issued by Government National Mortgage Association and Federal Home Loan Mortgage Corporation. Because prepayments of mortgages under lying these securities affect the principal and interest payments, these securities are considered highly sensitive to interest rate risk.

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33

NOTES TO FINANCIAL STATEMENTS

The investments at June 30, 2009 were as follows:

Federal Home Loan Mortgage Corporation Government National Mortgage Association Total investments

Credit Rating AAA

Maturities Greater than 1 to 5 Years 5 Years

Fair Value

$

$

N/A

-

$

676,972

$

-

104,133

$

781,105

104,133 676,972

$

781,105

Credit Risk: Credit risk is the risk of loss due to the failure of the security issuer or backer. It is the investment policy of the School District to limit the purchase of investments of direct U.S. Government obligations and U.S. Government and Federal Agency issues. Concentration of Credit Risk: The School District places no limit on the amount that the School District may invest in any one issuer. F. Receivables Current portions of interfund receivables (reported in “Due from” asset accounts) are considered “available spendable resources”. Interfund receivables and payables between funds within governmental activities are eliminated in the statement of net assets. All accounts and property tax receivables are shown net of an allowance for uncollectibles of zero. The valuation allowance has been established based upon the School District’s estimate that uncollectible receivables, if any, would be immaterial. Property taxes are levied on or before each October 1, attached as an enforceable lien on property as of the following January 1, and are payable in two installments on or before the following April 30 and October 31. The county bills and collects the School District’s taxes and remits them to the School District. School District property tax revenues are recognized to the extent that they are used to finance each year’s appropriations. Revenue related to current year property taxes receivable which is not intended to be used to finance the current year’s appropriations and; therefore, are not susceptible to accrual has been reported as deferred revenue in both the fund financial statements and the government-wide financial statements. Additionally, in the fund financial statements, revenue from property taxes may be limited by any amount not collected during the current fiscal period or within the “availability period”. G. Inventory Inventory is stated at cost on the first-in, first-out (FIFO) basis. When individual inventory items are purchased they are recorded as assets. When they are consumed they are recorded as expenditures in governmental funds or expenses in proprietary funds. Although classified as current assets, these inventory balances are offset by a reservation of governmental fund balance to indicate they are not available, spendable resources. Inventories purchased by the food service fund are stated at cost as determined by the first-in, first-out method. Commodity inventories are stated at USDA’s assigned values, which approximate fair value at the date of receipt. Expenses for food items are recorded when consumed.

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34

NOTES TO FINANCIAL STATEMENTS

H. Capital Assets Capital assets include land, buildings, machinery and equipment, and all other tangible or intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period. The accounting treatment over capital assets depends on where the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. Government-wide Statements All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are valued at their estimated fair value on the date donated. Interest costs incurred during construction of capital assets are not capitalized along with other capital asset costs. The total June 30, 2009 balance of capital assets for governmental activities includes approximately 14 percent for which the costs were determined by estimates of the original costs. These estimated original costs were established by appraisals or deflated current replacement cost. The total June 30, 2009 balance of capital assets for business-type activities are all valued at original cost. Depreciation of all exhaustible fixed assets is recorded as an allocated expense in the statement of activities, with net capital assets reflected in the statement of net assets. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets reported in the government-wide statements and proprietary funds are as follows: Capitalization Threshold Land ** Buildings Machinery and Equipment

$

Any Amount 5,000 5,000

Depreciation Method

Estimated Useful Life

** Straight Line Straight Line

** 10-50 years 3-20 years

** Land, an inexhaustible capital asset, is not depreciated. Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital expenditures of the appropriate governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for on the accrual basis, the same as in the government-wide statements. I. Long-Term Liabilities The accounting treatment of long-term liabilities depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements.

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35

NOTES TO FINANCIAL STATEMENTS

All long-term liabilities to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term liabilities consist primarily of compensated absences, early retirement benefits payable, general obligation bonds, and capital outlay certificates payable. Long-term liabilities for governmental funds are not reported as liabilities in the fund financial statements. The debt proceeds are reported as revenues and payment of principal and interest reported as expenditures. The accounting for proprietary fund is on the accrual basis, the same in the fund statement as it is in the governmentwide statements. J. Deferred Revenue Receivables, such as taxes receivable, may be measurable but not available. Available means collectible within the current period or soon thereafter to be used to pay liabilities of the current period. Reported deferred revenues are those where asset recognition criteria have been met but for which revenue recognition criteria have not been met. K. Cash Flows The School District pools some of its cash resources for depositing and investing purposes. The School District has access to their cash resources on demand. Accordingly, all reported deposit and investment balances are considered to be cash equivalents for the purpose of the statement of cash flows. L. Program Revenues In the government-wide statement of activities, reported program revenues derive directly from the program itself or from parties other than the School District’s taxpayers or citizenry, as a whole. Program revenues are classified into three categories, as follows: 1. 2. 3.

Charges for services – These arise from charges to customers, applicants, or others who purchase, use, or directly benefit from the goods, services or privileges provided, or are otherwise directly affected by the services. Program-specific operating grants and contributions – These arise from mandatory and voluntary non-exchange transactions with other governments, organizations or individuals that are restricted for use in a particular program. Program-specific capital grants and contributions – These arise from mandatory and voluntary non exchange transactions with other governments, organizations or individuals that are restricted for the acquisition of capital assets for use in a particular program.

M. Proprietary Funds Revenue and Expense Classifications Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. In the Proprietary Fund’s statement of activities, revenues and expenses are classified in a manner consistent with how they are classified in the statement of cash flows. That is, transactions for which related cash flows are reported as capital and related financing activities, noncapital financing activities or investing activities, are not reported as components of operating revenues or expenses.

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36

NOTES TO FINANCIAL STATEMENTS

N. Equity Classifications Government-wide Statements:

Equity is classified as net assets and is displayed in three components: 1. Invested in capital assets, net of related debt – Consists of capital assets, including restricted capital assets, net of accumulated depreciation (if applicable) and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of those assets. 2. Restricted net assets – Consists of net assets with constraints placed on their use either by (a) external groups such as creditors, grantors, contributors or laws and regulations of other governments; or (b) law through constitutional provisions or enabling legislation. 3. Unrestricted net assets – All other net assets that do not meet the definition of “restricted” or “invested in capital assets, net of related debt”. Fund Financial Statements:

Governmental fund equity is classified as fund balance, and may distinguish between “Reserved” and “Unreserved” components. Proprietary fund equity is classified the same as in the government-wide financial statements. Fiduciary fund equity (except for Agency Funds, which have no fund equity) is reported as net assets held in trust for other purposes. O. Application of Net Assets It is the School District’s policy to first use restricted net assets, prior to the use of unrestricted net assets, when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. P. Rounding Computer generated rounding variances exist in the basic financial statements and supplementary information. The variances result from values being entered with cents rather than as whole numbers. NOTE 2 – DUE FROM OTHER GOVERNMENTS

As of June 30, 2009 amounts due from other governments are as follows: General Fund: Due from Federal sources Due from local sources

$ 347,445 52,379 $ 399,824

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37

NOTES TO FINANCIAL STATEMENTS NOTE 3 – CHANGES IN CAPITAL ASSETS

A summary of changes in capital assets for the year ended June 30, 2009 is as follows: Balance 7/1/2008

Primary Government Governmental Activities: Capital assets, not being depreciated: Land Construction work in progress Total capital assets not being depreciated

$

Capital assets being depreciated: Buildings Machinery and equipment Totals Less accumulated depreciation for: Buildings Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Government activity capital assets, net

**

614,234 7,355,694 7,969,928

$

4,232,747 4,232,747

Balance 6/30/2009

Decrease $

10,623,686 10,623,686

$

614,234 964,755 1,578,989

48,610,461 2,111,446 50,721,907

10,637,045 119,698 10,756,743

47,863 149,895 197,758

59,199,643 2,081,249 61,280,892

10,045,210 1,091,642 11,136,852

995,406 187,298 1,182,704

46,985 128,573 175,558

10,993,631 1,150,367 12,143,998

39,585,055 $ 47,554,983

9,574,039 $ 13,806,786

22,200 $ 10,645,886

** Depreciation expense was charged to functions as follows: Instruction Support staff Co-curricular activities Total depreciation expense - governmental activities

(continued on next page)

Increases

$

49,136,894 50,715,883

$

832,130 152,857 197,717

$

1,182,704

38

NOTES TO FINANCIAL STATEMENTS

Balance 7/1/2008

Business-type Activities Capital assets being depreciated: Machinery and equipment Totals Less accumulated depreciation for: Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Business-type activities capital assets, net

$

562,118 562,118

Increases $

340,307 340,307 221,811 221,811

134,677 134,677

$

32,856 32,856

44,226 44,226

$

40,773 40,773

332,390 332,390 320,179 320,179

** Depreciation expense was charged to functions as follows: Business-type activities: Food Services

$

32,856

Total depreciation expense - business-type activities

$

32,856

$

$

3,453 3,453

652,569 652,569

$

$

101,821 101,821

Balance 6/30/2009

Decrease

Construction work in progress at June 30, 2009 is composed of the following:

Project Name May Overby Elementary School Project

$

Central High School Project Total

Expended Through 6-30-09

Project Authorization 1,149,334

$

325,592 $

1,474,926

678,234

Committed $

286,521 $

964,755

Required Future Financing

471,100

$

39,071 $

510,171

-

$

-

NOTE 4 – CONTRACT NOTE RECEIVABLE

The School District entered into a contract for deed for the sale of the Central High School land and building complex to the City of Aberdeen. The contract for deed is receivable, earning interest at 3.75 percent, from the City of Aberdeen in seven annual principal and interest installments of $173,739, beginning November 2002. The final payment was received in November 2008.

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39

NOTES TO FINANCIAL STATEMENTS NOTE 5– LONG-TERM DEBT

A summary of changes in long-term debt follows: 7/1/2008 Governmental Activities: General obligation bonds Capital outlay certificates Early retirement OPEB Obligation Compensated absences Business-type Activities: Early retirement

Increases

Decrease

Due in One Year

6/30/2009

$ 20,120,000 17,896,930 1,285,674 119,777

$

325,592 25,707 274,656 152,841

$

(760,000) (1,228,702) (387,821) (112,225) (139,110)

$19,360,000 16,993,820 913,560 162,431 133,508

$

$ 39,442,381

$

504,140

$ (2,525,633)

$37,400,888

$ 2,542,569

$

$

-

$

$

$

18,825

(3,973)

14,852

795,000 1,297,469 316,592 133,508

3,336

No anticipated reduction in compensated absences is foreseen for next year, continued minor growth should be seen for governmental and business-type activities. Compensated absences for governmental activities typically have been liquidated from the General Fund and Special Education Fund. Early retirement benefits payable for governmental activities typically have been liquidated from the General Fund, Special Education Fund, and the Pension Fund. See Note 9 for further discussion of the OPEB liability. In prior years, the School District defeased certain long-term debt by placing the proceeds of new debt in an irrevocable trust to provide for all future debt service payments on the old debt. Accordingly, the assets being held in trust and the liability for the defeased debt are not included in the School District’s financial statements. On June 30, 2009, the School District had $17,456,761 on deposit with the escrow agent in this irrevocable trust to retire $17,070,000 of old debt still outstanding which is now considered to be defeased. A summary of deferred charges and deferred issuance costs on bond refundings as of June 30, 2009, follows: Original Cost 2005 Refunding: Deferred issuance costs Deferred charges 2006 Refunding: Deferred issuance costs Deferred charges

$ 129,407 745,593

2008-09 Amortization

06-30-09 Accumulated Amortization

06-30-09 Unamortized Costs

$

$

$

$

(4,382) 434,382 $ 1,305,000

(continued on next page)

06-30-08 Accumulated Amortization 24,264 139,798 (438) 43,438 $

207,062

8,088 46,600 (219) 21,719

$

76,187

32,352 186,398 (657) 65,157

$

283,250

97,055 559,195 (3,725) 369,225

$

1,021,750

40

NOTES TO FINANCIAL STATEMENTS

Debt payable at June 30, 2009 is comprised of the following individual issues: General Obligation Bonds: General obligation bonds, series 2000, subject to semi-annual sinking fund requirements in July and January beginning July 1, 2001, with final installment due January 1, 2011; interest rates range from 4.55% to 5%; paid from the Debt Service Fund. General Obligation Refunding Bonds: General obligation refunding bonds, series 2005, subject to semiannual sinking fund requirements in July and January beginning July 1, 2005, with final installment due January 1, 2021; interest rates range from 2.45% to 4.3%, paid from the Debt Service Fund.

$

1,425,000

9,625,000

General obligation refunding bonds, series 2006, subject to semiannual sinking fund requirements in July and January beginning July 1, 2006, with final installment due January 1, 2026; interest rates range from 4% to 4.5%, paid from the Debt Service Fund.

8,310,000

Capital Outlay Certificates: Capital outlay certificates, series 2002, subject to semi-annual sinking fund requirements in July and January beginning July 1, 2003, with final installment due January 1, 2023, interest rates range from 1.75% to 4.9%, paid from the Capital Outlay Fund.

5,925,000

Capital outlay certificates, series 2004, subject to semi-annual sinking fund requirements in July and January beginning July 15, 2005, with final installment due January 15, 2015; interest rate of 4.25%; paid from the Capital Outlay Fund.

3,650,286

Capital outlay certificates, series 2007, subject to semi-annual sinking fund requirements in July and January beginning July 15, 2007, with final installment due January 15, 2027; interest rate of 4.75%; paid from the Capital Outlay Fund.

7,092,942

Capital outlay certificates, guaranteed energy contract, subject to semi-annual sinking fund requirements in July and January beginning July 28, 2009, with final installment due January 28, 2019; interest rate of 4.63%; paid from the General Fund. Early Retirement: Requires annual payments of not more than $316,592 from Special Education Fund and Pension Fund; final payment July 2014. Requires annual payments of not more than $3,336 from Enterprise Fund; final payment in July 2014.

325,592

913,560 14,852 $ 37,282,232

(continued on next page)

41

NOTES TO FINANCIAL STATEMENTS

The annual requirements to maturity for all debt outstanding for governmental activities as of June 30, 2009, excluding compensated absences, but including sinking fund installments, are as follows: G.O. Bonds Principal Interest 2010 2011 2012 2013 2014 2015-2019 2020-2024 2025-2027

C. O. Certificates Principal Interest

Early Retirement

Principal

Total

Interest

795,000 830,000 875,000 905,000 935,000 5,300,000 6,620,000 3,100,000

$ 811,238 $ 1,297,469 772,156 1,186,895 736,775 1,240,615 703,300 1,296,070 666,469 1,348,335 2,718,260 4,701,409 1,457,239 4,289,607 141,075 1,633,420

$ 761,741 702,883 651,630 597,645 540,910 1,961,035 898,546 138,433

$

316,592 304,842 191,615 61,993 31,267 7,252 -

$ 2,409,061 2,321,737 2,307,230 2,263,063 2,314,602 10,008,661 10,909,607 4,733,420

$ 1,572,979 1,475,039 1,388,405 1,300,945 1,207,379 4,679,295 2,355,785 279,508

$19,360,000

$8,006,512 $16,993,820

$6,252,823

$

913,561

$37,267,381

$14,259,335

$

The annual requirements to maturity for all long-term liabilities for the business-type activities as of June 30, 2009, excluding compensated absences, are as follows: 2010 2011 2012 2013 2014 2015

Early Retirement $ 3,336 3,336 3,336 1,615 1,615 1,614 $

14,852

NOTE 6 - LEASES

The School District leases warehouse facilities from Thomas and Connie Schwan for $1,645 per month. The lease terminates on September 30, 2009, with an option to renew for an additional year for $1,695 per month from October 1, 2009 to September 30, 2010. It is paid from the Capital Outlay Fund. The following are the minimum payments on existing operating leases: Year 2010 2011

(continued on next page)

Amount $

20,190 5,085

$

25,275

42

NOTES TO FINANCIAL STATEMENTS NOTE 7 – RESTRICTED NET ASSETS

The following table shows the net assets restricted for other purposes as shown on the statement of net assets: Fund Special Education Fund Capital Outlay Fund Bond Redemption Fund Arena Fund Food Service Fund Total Restricted Net Assets

Restricted by Law Law Law Law Federal Regulation

Amount $

605,935 1,246,673 717,913 30,991 324,445

$ 3,005,704

NOTE 8 - RETIREMENT PLANS

All employees, except for part-time employees, participate in the South Dakota Retirement System (SDRS), a cost sharing, multiple employer public employee retirement system established to provide retirement benefits for employees of the State of South Dakota and its political subdivisions. The SDRS provides retirement, disability and survivor benefits. The right to receive retirement benefits vests after three years of credited service. Authority for establishing, administering and amending plan provisions are found in South Dakota Codified Law 3-12. The SDRS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the SDRS, PO Box 1098, Pierre, SD 57501-1098 or by calling (605) 773-3731. Covered employees are required by State statute to contribute the following percentages of their salary to the plan; Class A Members, 6 percent of salary; Class B Judicial Members, 9 percent of salary; and Class B Public Safety Member, 8 percent of salary. State statute also requires the employer to contribute an amount equal to the employee’s contribution. The School District’s share of contributions to the SDRS for the fiscal years ended June 30, 2009, 2008, and 2007 were $1,008,244, $953,204, and $912,817, respectively, equal to the required contributions each year. NOTE 9 – EARLY RETIREMENT

Each employee who accepts retirement after the age of fifty-five (55) and prior to the age of sixty-three (63) with at least twenty (20) years of service in the School District will receive incentive pay equal to eighty percent (80%) of their current annual salary for employees with thirty (30) or more years of service, and sixty percent (60%) of their current annual salary for employees with twenty (20) to twenty-nine (29) years of service, paid out in six (6) equal, annual installments. The liability is recorded based upon the specified annual payments that are due and have not been discounted as the School District has determined the discount to not be material.

(continued on next page)

43

NOTES TO FINANCIAL STATEMENTS

As permitted by South Dakota State statutes, the School District allows retirees to continue to participate in the School District’s group health plan upon retirement if they have: 1) contributed fifteen (15) years of service to the School District, and 2) reached the age of fifty-five (55). Retirees will not be able to continue on the plan after they have reached the age of sixty-five (65) with the exception of: 1) if at the time the Retiree Participant becomes eligible for Medicare (age sixty-five (65)) and he/she had dependent(s) not eligible for Medicare, coverage for those dependent(s) may be continued under the plan until the spouse reaches age sixty-five (65) and dependent(s) reach the age of twenty-three (23) or age twenty-five (25) if a full-time student. 2) Retirees over the age of sixtyfive (65) on the plan prior to January 1, 2002, have the option of staying on the plan indefinitely as a supplement to Medicare. Funding Policy Relating to Retired employees. The contribution requirement of plan members is established by the School District’s insurance committee in conjunction with our insurance provider. The required contribution is based on projected pay-as-you-go financing requirements. For fiscal year 2009, the School District contributed approximately $2,952,537 to the plan for current premiums or approximately 94 percent of total premiums. Plan members receiving benefits contributed approximately $188,136 or approximately 6 percent of the total premiums. Retirees are required to pay 100 percent of the premiums for both the retiree and the retiree plus spouse coverage. Monthly contribution rates in effect for retirees under age 65 during fiscal year 2009 were as follows: retiree premium - $434, retiree plus spouse premium - $868. Annual OPEB Cost and Net OPEB Obligation. The School District’s annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the School District’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the School District’s net OPEB obligation relating to retiree participating in the School District’s Health Insurance Plan: Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost (expense) Contributions made Increase in net OPEB obligation Net OPEB obligation—beginning of year Net OPEB obligation—end of year

$ 274,656

-

274,656 (112,225) 162,431 $ 162,431

Three year disclosure of the School District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation are not necessary as fiscal year 2009 is the year of implementation for GASB Statement 45. Funded Status and Funding Progress. As of June 30, 2009, the most recent actuarial valuation date, the actuarial accrued liability (AAL) and the unfunded actuarial accrued liability (UAAL) for benefits was $2,801,957. The School District’s plan is considered to be unfunded since there are no assets and retiree benefits are paid annually on a cash basis. Because the plan is unfunded, the AAL and UAAL are equal. The covered payroll (annual payroll of active employees covered by the plan) was $16,256,552 and the ratio of the UAAL to the covered payroll was 17.2%.

(continued on next page)

44

NOTES TO FINANCIAL STATEMENTS

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, the healthcare cost trend, 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 will be presented in the future when multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the June 30, 2009, actuarial valuation, the Projected Unit Credit (PUC) actuarial cost method was used. The actuarial assumptions included a 4.5 percent discount rate assuming the School District will fund the retirement benefit on a pay-as-you-go basis. The valuation assumes that 50 percent of eligible retirees will actually participate in the retiree medical benefit and 20 percent of their spouses will participate. The annual healthcare cost trend rate of 10 percent initially, decreasing approximately 1 percent per year until reaching an ultimate rate of 5 percent. It was assumed salary increases will be 3 percent per annum. The UAAL is being amortized as a level percentage of projected payrolls over a thirty year time period. NOTE 10 - LITIGATION

At June 30, 2009 the School District was not involved in any litigation. NOTE 11 - JOINT VENTURES

The School District participates in the Hub Area Technical School, a cooperative service unit formed for the purpose of providing educational services to the member school districts. The members of the Hub Area Technical School and their relative percentage of participation are as follows: Aberdeen School District No. 6-1 Frederick Area School District No. 6-2 Northwestern Area School District No. 56-3 Warner School District No. 6-5

84.10% 4.32 6.14 5.44 100.00%

Hub Area Technical School' s Governing Board is composed of one to three representatives from each member school district, who are school board members. The Board is responsible for adopting the Co-op' s budget and setting service fees at a level adequate to fund the adopted budget. At June 30, 2009, the Hub Area Technical School had total net assets of $840,825 and long-term debt of $11,233. Separate financial statements are available from Hub Area Technical School.

(continued on next page)

45

NOTES TO FINANCIAL STATEMENTS NOTE 12 - RISK MANAGEMENT

The School 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. During the period ended June 30, 2009, the School District managed its risks as follows: Employee Health Insurance: The School District has established a self-insurance fund for the purpose of paying claims of the employee group health care benefit plan. Premiums are paid by both the School District and the School District' s employees and are charged against the appropriate fund. Excess loss insurance is provided through private insurance carriers for claims exceeding $70,000 per individual and $3,687,891 in aggregate losses for each plan year. At June 30, 2009, an estimated liability of $122,709 was accrued for incurred but not reported claims. This estimate was based on information obtained from the plan' s third-party administrator. The Self-insurance Fund is reported as an internal service fund in these financial statements. The School District is responsible for deficiencies, if any, resulting from claims paid in excess of premiums received. 2009

2008

2007____

Amount of claim liabilities, beginning of year Incurred claims Claims paid

$

164,412 3,312,593 (3,354,296)

$ 180,395 3,636,085 (3,652,068)

$ 183,848 2,179,175 (2,182,628)

Amount of claim liabilities, end of year

$

$ 164,412

$

122,709

180,395

Worker's Compensation Insurance - The School District purchases liability insurance for worker’s compensation from a commercial carrier. Settled claims resulting from these risks have not exceeded the liability coverage during the past three years. Liability Insurance - The School District purchases liability insurance for risks related to torts; theft of or damage to property; and errors and omissions of public officials from a commercial insurance carrier. Settled claims resulting from these risks have not exceeded the liability coverage during the past three years. Unemployment Benefit - The School District has elected to be self-insured and retain all risk for liabilities resulting from claims for unemployment benefits. During the year ended June 30, 2009, four claims were filed for unemployment benefits, which resulted in the payment of benefits in the amount of $5,235. At June 30, 2009, no claims had been filed for unemployment benefits and approximately $5,000 are anticipated in the next fiscal year. NOTE 13 – SUBSEQUENT EVENT

In January 2010, the School District issued $2,800,000 of Qualified Bonds to finance improvements to be made by the District on the Holgate Middle School for approximately $2,500,000. The School District has evaluated subsequent events through February 4, 2010, the date which the financial statements were issued.

# # # # #

46

REQUIRED SUPPLEMENTARY INFORMATION

ABERDEEN SCHOOL DISTRICT NO. 6-1

ABERDEEN SCHOOL DISTRICT 6-1

BUDGETARY COMPARISON SCHEDULE – BUDGETARY BASIS – GENERAL FUND YEAR ENDED JUNE 30, 2009

Revenues 1000 Revenue from local sources 1100 Taxes 1110 Ad valorem taxes 1120 Prior year' s ad valorem taxes 1140 Gross receipts taxes 1190 Penalties and interest on taxes

Budgeted Amounts Original Final

Variance with Final Budget Positive (Negative)

Actual

$ 8,254,309 85,000 530,000 22,000

$ 8,254,309 85,000 560,000 22,000

$ 8,253,013 67,620 561,139 16,887

10,000 30,000

10,000 30,000

8,891 23,840

(1,109) (6,160)

100,000

100,000

69,843

(30,157)

83,000

83,000

70,241

(12,759)

1900 Other revenue from local sources 1910 Rentals 1920 Contributions and donations 1970 Charges for services 1990 Other

10,000 80,000 150,000 27,000

10,000 190,000 150,000 27,000

15,370 167,930 196,393 31,744

5,370 (22,070) 46,393 4,744

2000 Revenue from intermediate sources 2100 County sources 2110 County apportionment

350,000

350,000

363,008

13,008

6,000

6,000

17,549

11,549

9,791,481 20,000

9,861,481 20,000

9,278,366 20,000

40,125

40,125

72,292

5,000

5,000

-

63,897

63,897

63,897

-

1,073,329

1,073,329

1,627,555

554,226

25,486

25,486

26,299

813

2,000 20,758,627

2,000 20,968,627

20,951,877

1300 Tuition and fees 1310 Regular day school tuition 1330 Summer school fees 1500 Earnings on investments and deposits 1700 Cocurricular activities 1710 Admissions

2200 Revenue in lieu of taxes 3000 Revenue from state sources 3100 Grants-in-aid 3110 Unrestricted grants-in-aid 3120 Restricted grants-in-aid 3300 Tuition 3320 Regular 3900 Other state revenue 4000 Revenue from federal sources 4100 Grants-in-aid 4140 Restricted grants-in-aid received directly from federal government 4150-4199 Restricted grants-in-aid received from federal government through the State 4400 Johnson O' Malley funds 4900 Other federal revenue Total revenues

(continued on next page)

$

(1,296) (17,380) 1,139 (5,113)

(583,115) 32,167 (5,000)

(2,000) (16,750)

47

BUDGETARY COMPARISON SCHEDULE – BUDGETARY BASIS – GENERAL FUND – page 2

Expenditures 1000 Instruction 1100 Regular programs 1110 Elementary schools 1120 Middle/Junior High schools 1130 High school 1190 Other regular programs

Budgeted Amounts Original Final

Actual

Variance with Final Budget Positive (Negative)

4,719,996 2,441,531 2,909,762 1,001,571

4,719,996 2,441,531 3,019,762 1,014,571

4,652,865 2,428,460 2,989,017 942,106

67,131 13,071 30,745 72,465

1200 Special programs 1210 Gifted and talented 1250 Culturally Different 1270 Educationally deprived 1290 Other special programs

128,069 112,016 693,787 355,591

128,069 112,016 693,787 357,591

120,776 105,187 660,524 356,846

7,293 6,829 33,263 745

2110 Attendance and Social Work 2120 Guidance 2130 Health

502,506 107,471

502,506 107,471

502,277 105,828

229 1,643

2200 Support services - instructional staff 2210 Improvement of instruction 2220 Educational media

419,407 855,642

419,407 863,642

372,293 865,833

47,114 (2,191)

2300 Support services - general administration 2310 Board of Education 2320 Executive administration

116,400 239,323

117,400 239,323

110,198 238,227

7,202 1,096

2400 Support services - school administration 2410 Office of the principal

1,415,818

1,415,818

1,395,694

20,124

2500 Support services - business 2520 Fiscal services 2540 Operation and maintenance of plant 2550 Pupil transportation 2570 Internal services

324,016 2,948,516 198,000 84,912

324,016 3,121,516 298,000 92,912

308,123 3,151,393 244,180 92,174

15,893 (29,877) 53,820 738

2600 Support services - central 2640 Staff

189,642

204,642

207,998

(3,356)

6000 Cocurricular activities 6100 Male activities 6200 Female activities 6900 Combined activities

367,544 273,227 640,784

388,544 287,227 640,784

392,410 279,363 625,162

(3,866) 7,864 15,622

200,000 21,245,531

84,000 21,594,531

21,146,934

7000 Contingencies Total expenditures Excess of revenue over (under) expenditures

(continued on next page)

(486,904)

(625,904)

(195,057)

84,000 447,597 430,847

48

BUDGETARY COMPARISON SCHEDULE – BUDGETARY BASIS – GENERAL FUND – page 3

Budgeted Amounts Original Final Other financing sources 5130 Sale of surplus property Total other financing sources Net change in fund balances FUND BALANCE - BEGINNING FUND BALANCE - ENDING

(486,904)

Actual -

(625,904)

Variance with Final Budget Positive (Negative)

11,207 11,207

11,207 11,207

(183,850)

442,054

4,275,721

4,275,721

4,275,721

$ 3,788,817

$ 3,649,817

$ 4,091,871

$

442,054

49

ABERDEEN SCHOOL DISTRICT 6-1

BUDGETARY COMPARISON SCHEDULE – BUDGETARY BASIS – CAPITAL OUTLAY FUND YEAR ENDED JUNE 30, 2009

Revenues 1000 Revenue from local sources 1100 Taxes 1110 Ad valorem taxes 1120 Prior year' s ad valorem taxes 1190 Penalties and interest on taxes

Budgeted Amounts Original Final

$

1500 Earnings on investments and deposits

4,395,217 25,000 6,000

$

4,395,217 25,000 6,000

Actual

$

4,383,464 29,722 7,663

Variance with Final Budget Positive (Negative)

$

(11,753) 4,722 1,663

8,000

8,000

14,474

6,474

162,000 19,989

162,000 19,989

155,000 19,990

(7,000) 1

40,000 4,656,206

40,000 4,656,206

48,400 4,658,713

Expenditures 1000 Instruction 1100 Regular programs 1110 Elementary schools 1120 Middle/Junior high schools 1130 High school

167,933 143,633 161,134

167,933 143,633 161,134

139,552 139,596 162,155

28,381 4,037 (1,021)

1200 Special programs 1290 Other special programs

193,897

193,897

191,864

2,033

2200 Support services - instructional staff 2210 Improvement of instruction 2220 Educational media

595,001 73,000

595,001 73,000

325,128 55,593

269,873 17,407

2500 Support services - business 2520 Fiscal services 2540 Operation and maintenance of plant 2550 Pupil transportation 2560 Food services 2570 Internal services

37,500 2,727,850 100,000 35,000 30,000

37,500 2,935,850 100,000 35,000 30,000

38,682 3,244,503 26,902

5000 Debt services

2,019,000

2,019,000

2,018,372

60,000 6,343,948

60,000 6,551,948

97,299 6,439,646

(37,299) 112,302

(1,687,742)

(1,895,742)

(1,780,933)

114,809

1900 Other revenue from local sources 1920 Contributions and donations 1990 Other 2000 Revenue from intermediate sources 2100 County sources 2110 County apportionment Total revenues

6000 Cocurricular activities 6900 Combined activities Total expenditures Excess of revenue over (under) expenditures Other Financing Sources 8110 Transfers Out 5120 General Long-Term Debt Issued 5130 Sale of surplus property Total other financing sources

173,739 173,739

Net change in fund balances FUND BALANCE - BEGINNING FUND BALANCE - ENDING

$

173,739 173,739 (1,722,003)

(1,315,674)

2,524,380

2,524,380

2,524,380

$

802,377

(1,182) (308,653) 100,000 35,000 3,098 628

(34,072) 325,592 173,739 465,259

(1,514,003)

1,010,377

8,400 2,507

$

1,208,706

(34,072) 325,592 114,809 $

406,329

50

ABERDEEN SCHOOL DISTRICT 6-1

BUDGETARY COMPARISON SCHEDULE – BUDGETARY BASIS – SPECIAL EDUCATION FUND YEAR ENDED JUNE 30, 2009

Budgeted Amounts Original Final Revenues 1000 Revenue from local sources 1100 Taxes 1110 Ad valorem taxes 1120 Prior year' s ad valorem taxes 1190 Penalties and interest on taxes

$

1300 Tuition and fees 1310 Regular day school tuition

1,975,829 15,000 3,000

$

1,975,829 15,000 3,000

Actual (Budgetary Basis)

$

1,974,057 13,097 3,410

Variance with Final Budget Positive (Negative)

$

(1,772) (1,903) 410

4,500

4,500

4,060

(440)

100,000 2,000

100,000 2,000

99,418 -

(582) (2,000)

67,000

67,000

72,600

5,600

2,113,741

2,113,741

2,129,676

15,935

4000 Revenue from federal sources 4100 Grants-in-aid 4150-4199 Restricted grants-in-aid received from federal government through the State Total revenues

893,184 5,174,254

893,184 5,174,254

899,749 5,196,067

6,565 21,813

Expenditures 1200 Special programs 1220 Programs for special education

3,472,777

3,519,777

3,434,444

85,333

68,328 480,059 639,420 274,018

70,328 483,059 639,420 274,018

69,506 479,118 588,819 266,562

822 3,941 50,601 7,456

2200 Support services - instructional staff 2210 Improvement of instruction

29,569

29,569

29,000

569

2700 Support services - special education 2710 Administrative costs 2730 Transportation costs

168,158 242,000

168,158 242,000

152,381 216,859

15,777 25,141

37,779 5,412,108

37,779 5,464,108

37,778 5,274,467

1 189,641

1900 Other revenue from local sources 1970 Charges for services 1990 Other 2000 Revenue from Intermediate Sources: 2100 County sources 2110 County apportionment 3000 Revenue from state sources 3100 Grants-in-aid 3120 Restricted grants-in-aid

2000 Support services 2100 Pupils 2130 Health 2140 Psychological 2150 Speech pathology 2170 Student therapy services

4000 Nonprogrammed charges 4500 Early retirement payments Total expenditures Excess of revenue over (under) expenditures

(237,854)

(289,854)

(78,400)

211,454

Net change in fund balances

(237,854)

(289,854)

(78,400)

211,454

716,124

716,124

716,124

FUND BALANCE - BEGINNING FUND BALANCE - ENDING

$

478,270

$

426,270

$

637,724

$

211,454

51

ABERDEEN SCHOOL DISTRICT 6-1

BUDGETARY COMPARISON SCHEDULE – BUDGETARY BASIS – PENSION FUND YEAR ENDED JUNE 30, 2009

Budgeted Amounts Original Final Revenues 1000 Revenue from local sources 1100 Taxes 1110 Ad valorem taxes 1120 Prior year' s ad valorem taxes 1190 Penalties and interest on taxes

$

440,000 2,500 500

$

440,000 2,500 500

Actual

$

438,346 3,108 805

Variance with Final Budget Positive (Negative)

$

(1,654) 608 305

Total revenue

443,000

443,000

442,259

(741)

Expenditures 4500 Early retirement payments

360,044

360,044

360,043

(1)

Total expenditures

360,044

360,044

360,043

(1)

Excess of revenue over expenditures

82,956

82,956

82,216

(740)

Net change in fund balances

82,956

82,956

82,216

(740)

FUND BALANCE - BEGINNING

42,292

42,292

42,292

FUND BALANCE - ENDING

$

125,248

$

125,248

$

124,508

$

(740)

52

ABERDEEN SCHOOL DISTRICT 6-1

BUDGETARY COMPARISON SCHEDULE – BUDGETARY BASIS – ARENA FUND YEAR ENDED JUNE 30, 2009

Budgeted Amounts Original Final Revenues 1000 Revenue from local sources 1700 Cocurricular activities 1710 Admissions Total revenues

$

Expenditures 6000 Cocurricular activities: 6900 Combined activities Total expenditures

10,000 10,000

$

Variance with Final Budget Positive (Negative)

Actual

10,000 10,000

$

7,804 7,804

$

(2,196) (2,196)

-

-

-

Excess of revenue over (under) expenditures

10,000

10,000

7,804

(2,196)

Net change in fund balances

10,000

10,000

7,804

(2,196)

FUND BALANCE - BEGINNING

23,187

23,187

23,187

FUND BALANCE - ENDING

$

33,187

$

33,187

$

30,991

-

$

(2,196)

53

ABERDEEN SCHOOL DISTRICT 6-1

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2009 NOTE 1 – BUDGETS AND BUDGETARY ACCOUNTING

The School District followed these procedures in establishing the budgetary data reflected in the financial statements: 1.

Prior to the first regular School Board meeting in May of each year, the School Board causes to be prepared a proposed budget for the next fiscal year according to the budgetary standards prescribed by the Auditor General.

2.

The proposed budget is considered by the School Board at the first regular meeting held in the month of May of each year.

3.

The proposed budget is published for public review no later than July 15 each year.

4.

Public hearings are held to solicit taxpayer input prior to the approval of the budget.

5.

Before October 1 of each year, the School Board must approve the budget for the ensuing fiscal year for each fund, except trust and agency funds.

6.

After adoption by the School Board, the operating budget is legally binding and actual expenditures of each fund cannot exceed the amounts budgeted, except as indicated in number 8.

7.

A line item for contingencies may be included in the annual budget. Such a line item may not exceed 5 percent of the total School District budget and may be transferred by resolution of the School Board to any other budget category, except for capital outlay, that is deemed insufficient during the year.

8.

If it is determined during the year that sufficient amounts have not been budgeted, State statute allows adoption of supplemental budgets when money are available to increase legal spending authority.

9.

Unexpended appropriations lapse at year-end unless encumbered by resolution of the School Board.

10.

Formal budgetary integration is employed as a management control device during the year for the general fund and special revenue funds.

11.

Budgets for the General Fund and Special Revenue Funds are adopted on a basis consistent with generally accepted accounting principles (GAAP).

NOTE 2 – BUDGET RECONCILIATION

The School District is reporting financial position, results of operations, and changes in fund balances on the basis of generally accepted accounting principles (GAAP) while the budgetary comparison schedules are presented on the budgetary basis to provide meaningful comparison of actual results with the budget. The major difference between the budgetary basis and the GAAP basis is that all capital outlay expenditures are recorded with other functional expenses for budget purposes rather than as a separate line item for GAAP purposes. There is no effect on the net change in fund balance.

# # # # #

54

SUPPLEMENTARY INFORMATION

ABERDEEN SCHOOL DISTRICT 6-1

ABERDEEN SCHOOL DISTRICT NO. 6-1

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2009

EXHBIT A-1

CFDA Federal Grantor/Pass -Through Grantor Program Title U.S. Department of Agriculture: Child Nutrition Cluster: School Breakfast Program (Note 2) National School Lunch Program (Note 2) Total for Child Nutrition Cluster

Number

Pass Through Entity Identifying Number

10.553 10.555

3SD300310 3SD300310

Amount

$

Total U.S. Department of Agriculture U.S. Department of the Interior: Direct Federal Funding: Indian Education - Assistance to Schools (Note 1)

641,752

15.130

26,299

Total U.S. Department of the Interior U.S. Department of Education: Direct Federal Funding: Indian Education - Grants to Local Educational Agencies Pass-Through the SD Department of Education: Title I Grants to Local Educational Agencies Title I Program for Neglected and Delinquent Children Special Education Cluster: Special Education - Grants to States (Note 1) Special Education - Preschool Grants (Note 1) Total for Special Education Cluster Safe and Drug Free Schools and Communities - State Grants Innovative Education Program Strategies Education Technology State Grants English Language Acquisition Grants Improving Teacher Quality State Grants American Recovery and Reinvestment Act Pass-Through the SD Department of Education: State Fiscal Stabilization Fund (SFSF) - Education State Grant

26,299

84.060

63,897

84.010 84.013

S010A080041 S013A080041

580,187 80,331

84.027 84.173

H027A080091 H173A080091

852,711 47,038 899,749

84.186 84.298 84.318 84.365 84.367

Q186A080043 S298A070042 S318X080041 S365A080041 S367A080039

25,182 12,321 13,575 1,980 302,980

84.394

S394A090042

610,998

Total U.S. Department of Education U.S Department of Health and Human Services Medical Assistance Program

2,591,200 93.778

12,140

Total U.S. Department of Health and Human Services GRAND TOTAL

(continued on next page)

87,431 554,321 641,752

12,140 $

3,271,391

55

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS – page 2

EXHBIT A-1

NOTE 1: Federal reimbursements are not based upon specific expenditures. Therefore, the amounts reported here represent cash received rather than federal expenditures. NOTE 2: These amounts reflect cash and non cash assistance received. Federal reimbursements are based on approved rates for services provided rather than reimbursement for specific expenditures. NOTE 3: The accompanying schedule of expenditures of federal awards includes the federal grant activity of Aberdeen School District No. 6-1 and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Government, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. NOTE 4: The pass-through entity has not provided identifying numbers; therefore, they are not included in this schedule.

56

ABERDEEN SCHOOL DISTRICT 6-1

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS JUNE 30, 2009

EXHIBIT A-2

DEPARTMENT OF EDUCATION Title I Grants to Local Education Agencies – CFDA #84.010 – Grant year ending June 30, 2008

Significant Deficiency Finding 2008-2 Allocation of funds to individual schools

Condition:

When testing expenditures of the Title I program, we noted that the expenditures under this program have not been tracked or recorded by school attendance area.

Status:

As of June 30, 2009, this finding has been resolved.

57

EXHIBIT A-3

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

To the School Board Aberdeen School District 6-1 Brown County, South Dakota We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, and each major fund, and the aggregate remaining fund information of the Aberdeen School District No. 6-1, Brown County, South Dakota as of and for the year ended June 30, 2009, which collectively comprise the School District’s basic financial statements and have issued our report thereon dated February 4, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United State of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control over Financial Reporting

In planning and performing our audit, we considered Aberdeen School District 6-1’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Aberdeen School District 6-1’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Aberdeen School District 6-1’s internal control over financial reporting. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity’s internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. We did not identify any deficiencies or internal control over financial reporting that we consider to be material weaknesses, as defined above. 58

PEOPLE. PRINCIPLES. POSSIBILITIES. www.eidebailly.com 24 Second Ave. SW

PO Box 430

Aberdeen, South Dakota 57402-0430

Phone 605.225.8783

Fax 605.225.0508

EOE

EXHIBIT A-3 (Page 2)

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Aberdeen School District 6-1’s 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. This report is intended solely for the information and use of the governing board, management, others within the entity, federal awarding agencies and pass-through entities, and is not intended to be, and should not be, used by anyone other than these specified parties. However, as required by South Dakota Codified Law 4-11-11, this report is a matter of public record and its distribution is not limited.

Aberdeen, South Dakota February 4, 2010

59

EXHIBIT A-4

REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

To the School Board Aberdeen School District 6-1 Brown County, South Dakota Compliance

We have audited the compliance of Aberdeen School District 6-1 with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2009. Aberdeen School District 6-1’s major federal programs are identified in the summary of auditor’s results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of Aberdeen School District 6-1’s management. Our responsibility is to express an opinion on Aberdeen School District 6-1’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, 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 Aberdeen School District 6-1’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Aberdeen School District 6-1’s compliance with those requirements. In our opinion, Aberdeen School District 6-1 complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2009. However, the results of our auditing procedures disclosed an instance of noncompliance with those requirements, which is required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as item 2009-1.

60

PEOPLE. PRINCIPLES. POSSIBILITIES. www.eidebailly.com 24 Second Ave. SW

PO Box 430

Aberdeen, South Dakota 57402-0430

Phone 605.225.8783

Fax 605.225.0508

EOE

EXHIBIT A-4 (Page 2)

Internal Control over Compliance

The management of Aberdeen School District 6-1 is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered Aberdeen School District 6-1’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, 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 Aberdeen School District 6-1’s internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. However, as discussed below, we identified a certain deficiency in internal control over compliance that we consider to be a significant deficiency. A control deficiency in an entity’s internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity’s internal control. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item 2009-1 to be a significant deficiency. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity’s internal control. We did not consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs to be material weaknesses Aberdeen School District 6-1’s response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned costs. We did not audit Aberdeen School District 6-1’s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the governing board, management, others within the entity, federal awarding agencies and pass-through entities, and is not intended to be, and should not be, used by anyone other than these specified parties. However, as required by South Dakota Codified Law 4-11-11, this report is a matter of public record and its distribution is not limited.

Aberdeen, South Dakota February 4, 2010

61

ABERDEEN SCHOOL DISTRICT 6-1

SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2009

EXHIBIT A-5

Part I - Summary of Auditor's Results Financial Statements Type of auditor' s report issued:

Unqualified

Internal control over financial reporting: • Material weakness(es) identified? • Significant deficiencies (formerly known as reportable condition(s)) identified that are not considered to be material weaknesses? Noncompliance material to financial statements noted?

yes

X

no

yes

X

none reported

yes

X

no

yes

X

no

Federal Awards Internal control over major programs: • Material weakness(es) identified? • Significant deficiencies (formerly known as reportable condition(s)) identified that are not considered to be material weaknesses? Type of auditor' s report issued on compliance for major programs:

X

yes

none reported

yes

no

Unqualified

Any audit findings disclosed that are required to be reported in accordance with section 510(a) of OMB Circular A-133?

X

Identification of major programs: CFDA Number(s) 10.553 10.555 84.010 84.394

Name of Federal Program or Cluster School Breakfast Program National School Lunch Program Title I Grants to Local Educational Agencies State Fiscal Stabilization Fund (SFSF) - Education State Grants, Recovery Act

Dollar threshold used to distinguish between type A and type B programs: Auditee qualified as low-risk auditee?

(continued on next page)

$

300,000 yes

X

no

62

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – page 2 Part II - Findings Relating to the Financial Statements

None Part III - Findings and Questioned Costs for Federal Award Programs

DEPARTMENT OF AGRICULTURE School Breakfast Program – CFDA #10.553 National School Lunch Program – CFDA #10.555 Grant year ending June 30, 2009

Significant Deficiency Finding 2009-1 – Eligibility – Reduced Price Meals Condition:

When testing a sample of 40 student applications for free/reduced price school meals, we identified one application that was incorrectly awarded reduced price meals when that family did not meet the required income levels based on household size.

Criteria:

7 CFR 245.3 states that only children whose families meet the established income eligibility guidelines receive free or reduced price meals.

Cause:

On the application in question, the mother listed herself twice in the family income section due to having two sources of income. The School District official did not notice that the same name appeared twice and said person was counted twice in arriving at the family size number.

Effect:

The Aberdeen School District could be allowing students who do not qualify for the benefits of the program assistance to participate in the program, and may also run the risk of excluding students who do not qualify for the program assistance. In our sample of forty applications tested, one was approved for reduced price meals when the family was not eligible.

Questioned Costs: $488 - On the application with the incorrect determination of reduced price meals, two students were included. We obtained a listing of all breakfast and lunch meals eaten by these two children. We then multiplied these meals by the difference between what the School District gets reimbursed for a student paid meal and the reimbursement for a reduced price meal. Recommendation: We recommend a closer review of the information on all applications be performed to ensure that the calculation for free and reduced meals is being performed correctly. Management Response:

In an effort to guarantee only those households eligible for free/reduced price meal benefits are receiving benefits in the correct category the district will complete a second review of the information on all applications. The second review will be completed before final approvals are entered into the computerized counting system. This second review will also take place before eligibility notices are sent to the households and within the 10 days required for processing. 63

ABERDEEN SCHOOL DISTRICT 6-1

CORRECTIVE ACTION PLAN JUNE 30, 2009

EXHIBIT A-6

Aberdeen School District 6-1 respectfully submits the following corrective action plan for its audit finding for the year ended June 30, 2009. Independent Public Accounting Firm:

Eide Bailly LLP PO Box 430 Aberdeen, SD 57402-0430

Audit Period: July 1, 2008 – June 30, 2009 The finding from the June 30, 2009 Schedule of Findings and Questioned Costs is discussed below. Part I of the schedule, Summary of Auditor’s Results, does not include findings and is not addressed. Part II – Findings Related to the Financial Statements

None Part III – Findings Related to the Federal Award Programs

DEPARTMENT OF AGRICULTURE School Breakfast Program – CFDA #10.553 – Grant year ending June 30, 2008 National School Lunch Program – CFDA #10.555 – Grant year ending June 30, 2008

Significant Deficiency Finding 2009-1 – Eligibility – Reduced Price Meals Condition:

When testing a sample of 40 student applications for free/reduced price school meals, we identified one application that was incorrectly awarded reduced price meals when that family did not meet the required income levels based on household size.

Recommendation: We recommend a closer review of the information on all applications be performed to ensure that the calculation for free and reduced meals is being performed correctly. Planned Action:

In an effort to guarantee only those households eligible for free/reduced price meal benefits are receiving benefits in the correct category the district will complete a second review of the information on all applications. The second review will be completed before final approvals are entered into the computerized counting system. This second review will also take place before eligibility notices are sent to the households and within the 10 days required for processing.

Contact Person:

Thomas J. Janish (Director of Finance)

Anticipated Completion Date:

July 1, 2010

For questions or further information, please contact Thomas J. Janish at 605-725-7100.

64

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