ImagineSchoolsͲChancellorCampus (ADivisionoftheLearningExcellenceFoundationof SouthPalmBeachCounty,Inc.) BasicFinancialStatements andSupplementaryInformation FortheYearEndedJune30,2016
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) TableofContents IndependentAuditor’sReport Management'sDiscussionandAnalysis(NotCoveredby IndependentAuditor’sReport) BasicFinancialStatements GovernmentͲwideFinancialStatements: StatementofNetPosition StatementofActivities FundFinancialStatements: BalanceSheetͲGovernmentalFunds ReconciliationoftheBalanceSheetofGovernmentalFundstothe StatementofNetPosition StatementofRevenues,ExpendituresandChangeinFundBalancesͲ GovernmentalFunds ReconciliationoftheStatementofRevenues,ExpendituresandChanges inFundBalancesofGovernmentalFundstotheStatementofActivities NotestoBasicFinancialStatements RequiredSupplementaryInformation ScheduleofRevenuesandExpendituresͲBudgetandActual–GeneralFund ScheduleofRevenuesandExpendituresͲBudgetandActual–CapitalOutlayFund ScheduleofRevenuesandExpendituresͲBudgetandActual–SpecialRevenueFund NotestoRequiredSupplementaryInformation OtherIndependentAuditor’sReports IndependentAuditor’sReportonInternalControlOverFinancialReporting andonComplianceandOtherMattersBasedonanAuditofFinancial StatementsPerformedinAccordancewithGovernmentAuditingStandards IndependentAuditor’sReporttotheBoardofDirectors
1Ͳ2 3Ͳ7
8 9
10 11 12 13 14Ͳ23
24 25 26 27
28Ͳ29 30Ͳ31
INDEPENDENTAUDITOR’SREPORT
TotheBoardofDirectors LearningExcellenceFoundationofSouthPalmBeachCounty,Inc. BoyntonBeach,Florida ReportontheFinancialStatements We have audited the accompanying financial statements of the governmental activities, each major fund and the aggregate remaining fund information of Imagine Schools – Chancellor Campus (the “School”), a division of the Learning Excellence Foundation of South Palm Beach County, Inc. (the “Charterholder”), as of and for the yearendedJune 30, 2016, and the related notes to the financial statements,whichcollectivelycomprisetheSchool’sbasicfinancialstatementsaslistedinthetableof contents. Management'sResponsibilityfortheFinancialStatements Managementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsin accordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica;thisincludes thedesign,implementation,andmaintenanceofinternalcontrolrelevanttothepreparationandfair presentationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraud orerror. Auditor’sResponsibility Our responsibility is to express opinions on these financial statements based on our audit. We conductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesof AmericaandthestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards, 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 frommaterialmisstatement. Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosures inthefinancialstatements.Theproceduresselecteddependontheauditors’judgment,includingthe assessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudor error.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity's preparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significantaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentation ofthefinancialstatements. Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasis forourauditopinions.
KMCcpa.com | 6550 N Federal Hwy, 4th Floor Fort Lauderdale, FL 33308 Phone: 954.771.0896 Fax: 954.938.9353
1
ImagineSchoolsͲChancellorCampus Opinions Inouropinion,thefinancialstatementsreferredtoabove presentfairly,inallmaterialrespects,the respective financial position of the governmental activities, each major fund and the aggregate remainingfundinformationoftheSchool,asofJune30,2016,andtherespectivechangesinfinancial position for the year then ended in accordance with accounting principles generally accepted in the UnitedStatesofAmerica. EmphasisofMatter As described in Note 1, the accompanying financial statements referred to above are intended to present only the financial position of the School at June 30, 2016, and the respective changes in financialpositionfortheyearthenended,andisnotintendedtobeacompletepresentationofthe Charterholder. OtherMatters RequiredSupplementaryInformation Accounting principles generally accepted in the United States of America require that the management'sdiscussionandanalysisandbudgetarycomparisoninformation,aslistedinthetableof contents,bepresentedtosupplementthebasicfinancialstatements.Suchinformation,althoughnot apartofthebasicfinancialstatements,isrequiredbytheGovernmentalAccountingStandardsBoard, whoconsidersittobeanessentialpartoffinancialreportingforplacingthebasicfinancialstatements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generallyacceptedintheUnitedStatesofAmerica,whichconsistedofinquiriesofmanagementabout the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtainedduringourauditofthebasicfinancialstatements.Wedonotexpressanopinionorprovide any assurance on the information because the limited procedures do not provide us with sufficient evidencetoexpressanopinionorprovideanyassurance. OtherReportingRequiredbyGovernmentAuditingStandards InaccordancewithGovernmentAuditingStandards,wehavealsoissuedourreportdatedSeptember 26,2016,onourconsiderationoftheSchool’sinternalcontroloverfinancialreportingandonourtests 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 overfinancialreportingandcomplianceandtheresultsofthattesting,andnottoprovideanopinion oninternalcontroloverfinancialreportingoroncompliance.Thatreportisanintegralpartofanaudit performed in accordance with Government Auditing Standards in considering the School’s internal controloverfinancialreportingandcompliance. KEEFEMcCULLOUGH FortLauderdale,Florida September26,2016
2
MANAGEMENT'SDISCUSSION ANDANALYSIS
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) Management'sDiscussionandAnalysis June30,2016 AsmanagementofImagineSchools–ChancellorCampus(the“School”),whichisadivisionofthe LearningExcellenceFoundationofSouthPalmBeachCounty,Inc.(the“Charterholder”),weoffer readers of the School’s financial statements this narrative overview and analysis of the financial activities of the School for the year ended June 30, 2016 to (a) assist the reader in focusing on significantfinancialissues,(b)provideanoverviewandanalysisoftheSchool’sfinancialactivities, (c) identify changes in the School’s financial position (d) identify material deviations from the approvedbudget,and(e)highlightsignificantissuesinindividualfunds. SincetheinformationcontainedintheManagement’sDiscussionandAnalysis(MD&A)isintended tohighlightsignificanttransactions,events,andconditions,itshouldbeconsideredinconjunction withthebasicfinancialstatementsfoundstartingonpage8. FinancialHighlights ThefollowingarethehighlightsoffinancialactivityfortheyearendedJune30,2016. x TheassetsoftheSchoolexceededitsliabilitiesatthecloseofthemostrecentfiscalyearby $1,877,923(netposition). x TheSchool’stotalnetpositionincreasedby$305,310overprioryear. x As of the close of the current fiscal year, the School’s governmental funds reported combinedendingfundbalancesof$525,625. x At the end of the current fiscal year, unassigned fund balance for the general fund was $256,899. OverviewoftheFinancialStatements ThisdiscussionandanalysisisintendedtoserveasanintroductiontotheSchool’sbasicfinancial statements. The School’s basic financial statements are comprised of three components: 1) governmentͲwidefinancialstatements,2)fundfinancialstatements,and3)notestobasicfinancial statements.Thisreportalsocontainsotherrequiredsupplementaryinformationinadditiontothe basicfinancialstatements. GovernmentͲwidefinancialstatements:ThegovernmentͲwidebasicfinancialstatements,which consistofthefollowingtwostatements,aredesignedtoprovidereaderswithabroadoverviewof theSchool’sfinances,inamannersimilartoprivateͲsectorbusiness. Thestatementofnetpositionpresentsinformationonall theSchool'sassets,liabilities,withthe difference between the two reported as net position. Over time, increases or decreases in net assetsmayserveasausefulindicatorofwhetherthefinancialpositionoftheSchoolisimproving ordeteriorating. The statement of activities presents information showing how the School's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus,revenuesandexpensesarereportedinthisstatementforsomeitemsthatwillonlyresultin cashflowsinfuturefiscalperiods(e.g.uncollectedfundingandearnedbutunusedvacationleave). 3
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) Management'sDiscussionandAnalysis June30,2016 Both of the governmentͲwide financial statements distinguish functions of the School that are principallysupportedbythedistrict,state,andfederalfunding(governmentalactivities). Basicand exceptionalinstructionandfoodservicesareexamplesoftheSchool'sgovernmentalactivities. ThegovernmentͲwidefinancialstatementscanbefoundonpages8and9ofthisreport. Fund financial statements: A fund is a collection of related accounts grouped together to maintaincontroloverresourcesthathavebeensegregatedforspecificactivitiesorobjectives. The School, like state and local governments, uses fund accounting to ensure and demonstrate compliance with financeͲrelated legal requirements. All of the operations of the School are presentedingovernmentalfundsonly. Governmental funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the governmentͲwide financial statements. However, unlike the governmentͲwide financial statements, governmental fund financial statements focus on nearͲterm inflows and outflows of spendable resources, as well as on balances ofspendable resources available attheendofthefiscalyear. Such information maybe usefulinevaluatingagovernment'snearͲtermfinancingrequirements. Becausethefocusofgovernmental funds isnarrowerthanthatofthe governmentͲwide financial statements, itisusefultocomparetheinformationpresentedforgovernmentalfundswithsimilar information presented in the governmentͲwide financial statements. By doing so, readers may betterunderstandthelongͲtermimpactofthegovernment's nearͲtermfinancing decisions. Both the governmental fund balance sheet and the statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmentalfundsandgovernmentalactivities. TheSchoolmaintainsthreeindividualgovernmentfunds. Informationispresentedseparatelyin the governmental fund balancesheetandstatement of revenues, expenditures andchanges in fund balances. The general fund, capital outlay fund, and special revenue fund are consideredto be majorfunds. The basicgovernmental fund financial statements can befound on pages 10through 13ofthis report. The School adopts an annual appropriated budget for its entire operations. Budgetary comparison schedules and notes to these schedules have been provided to demonstrate compliancewiththisbudgetandcanbefoundonpages24through27ofthisreport. Notesto the financial statements:The notes provide additional informationthat is essentialto a full understanding of the data provided in the governmentͲwide and fund financial statements. The notes to the financial statements can be found starting on page 1 4 of this report.
4
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) Management'sDiscussionandAnalysis June30,2016 GovernmentͲWideFinancialAnalysis: As noted previously, net position may serve over time as a useful indicator of the School's financial position. In the case of the School, for the years ended June 30, 2016 and 2015, assets exceeded liabilities by $ 1,877,923 (net position) and $ 1,572,613 (net position, as restated), respectively. The largestportion ofthe School's net position reflects its net investment incapital assets (e.g., land, building improvements, leasehold improvements, furniture, fixtures and equipment, audio visual equipment, and information technologyequipment). The School uses these capitalassets toprovideservicestostudents; consequently,theseassetsarenotavailableforfuturespending. Comparison of the condensed statement of net position and the statement of activities are providedbelow. ImagineSchools–ChancellorCampus NetPosition
GovernmentalActivities 2016 Assets: Currentassets Capitalassets,netof accumulateddepreciation
$
$
936,069
1,874,551
1,949,314
2,926,607
2,885,383
Liabilities: Currentliabilities LongͲtermliabilities
657,816 390,868
790,410 522,360
Totalliabilities
1,048,684
1,312,770
1,352,806 525,117
1,302,499 270,114
Totalassets
NetPosition: Netinvestmentincapitalassets Unrestricted Totalnetposition
1,052,056
2015
$
1,877,923
$
1,572,613
The increase in current assets is due to the increase in due from other governments and prepaid expenses. The decrease in liabilities relates to the reduction in current balances of accruedexpensesandscheduledprincipalpaymentsmadeonthenotepayable,respectively.
5
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) Management'sDiscussionandAnalysis June30,2016 ImagineSchools–ChancellorCampus StatementofActivities
GovernmentalActivities 2016 Revenues: Programrevenues: Chargesforservices Operatinggrantsandcontributions Capitalgrantsandcontributions Generalrevenues: Statepassedthroughlocalschool district Otherrevenues
$
Totalrevenues Functions/ProgramExpenses: Basicinstruction Exceptionalinstruction Guidanceservices Healthservices Mediaservices Curriculumdevelopment Staffdevelopment BoardofDirectors Schooladministration Foodservices Centralservices Transportation Operationofplant Maintenanceofplant Communityservices InterestonlongͲtermdebt Totalexpenses Changeinnetposition Netposition,beginningofyear Restatement,Note10 Netposition,endofyear
337,104 238,182 271,350
2015
$
6,936,080
6,562,743
293,525
424,922
8,076,241
7,849,079
3,527,545 320,941 55,767 313 37,169 84,251 968 15,115 1,098,366 8,656 59,341 124,400 2,129,750 76,969 204,032 27,348
3,378,268 294,898 53,119 254 39,484 85,935 11,543 15,500 1,144,177 8,666 13,800 22,110 2,084,753 129,494 221,435 33,667
7,770,931
7,537,103
305,310
311,976
1,572,613
703,064
Ͳ $
342,900 169,057 349,457
1,877,923
557,573 $
1,572,613
The increase in the state passed throughlocal school district relates directly to the increase in the per pupilfunding from the prior year to the current year.The decrease in other revenues isrelatedto anescrow settlement andflood insurance reimbursementreceivedintheprioryear. TheincreaseintransportationisaresultoftheSchoolDistricteliminatingthisserviceforallCharter schools. 6
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) Management'sDiscussionandAnalysis June30,2016 Governmentalactivities:GovernmentalactivitiesincreasedtheSchool'snet positionby$305,310 for the year ended June 30, 2016. The increase in net position is primarily due to increasesin revenues. Thelargestincreasesinexpenseswereforbasicinstructionandtransportation. Financial Analysis of the Government's Funds: As noted previously, the School uses fund accountingtoensureanddemonstratecompliancewithfinanceͲrelatedlegalrequirements. Governmentalfunds: Thefocus oftheSchool'sgovernmental funds istoprovide information on nearͲterm inflows, outflows, and balances of spendable resources.Such information isusefulin assessingtheSchool'sfinancingrequirements. Inparticular,unassignedfundbalance mayserveas ausefulmeasureofaSchool'snetresourcesavailableforspendingattheendofthefiscalyear. Thegeneralfund isthechief operating fund oftheSchool. Attheend ofthe current fiscalyear, unassignedfundbalanceofthegeneralfundwas$256,899 andnonͲspendablefundbalances for prepaids and deposits were $ 121,409 and $3,317, respectively. Assigned fund balances for future technology improvements, lake and road maintenance, and roof and HVAC maintenance were$10,000,$85,000,and$49,000, respectively. ThefundbalanceoftheSchool'sgeneralfund hasincreasedby$248,899fromtheprioryear. GeneralFundBudgetaryHighlights
The actualrevenuesweremorethanbudgeted revenuesby$314,854. The approved budgeted expenseswere m or e thanactualexpenses by$65,219. Thegeneralfund budgetaryinformation canbefoundonpage24ofthisreport. CapitalAssetandDebtAdministration
Capitalassets:TheSchool'sinvestment incapitalassetsfor itsgovernmental activities asof June 30, 2016 amounts to $1,874,551. This investment in capital assets includes land, land improvements, building improvements, leasehold improvements, furniture, fixture and equipment, audio visual equipment, and information technology equipment. Additional information on the School'scapitalassetscanbefoundinNote4. Debt Administration: The School's longͲterm liabilities at June 30, 2016 totaled $522,253 a decreaseof$131,174from2015. AdditionalinformationontheSchool'slongͲtermobligationscan befoundinNote5. Economic Factors: A majority of the School's funding isdetermined bythe number of enrolled students.TheSchoolisforecastingenrollmenttoincreasetoapproximately 1,025studentsforthe 2016/2017schoolyear. Request for Information. This financial report is designed to provide a general overview of the School'sfinances for allthosewith aninterestinthe School'sfinances. Questions concerning any ofthe information provided inthis report orrequestsfor additional financial informationshould beaddressedtoSusanOnoriat3333HighRidgeRoad,BoyntonBeach,FL 33426
7
BASIC FINANCIALSTATEMENTS
ImagineSchoolsͲChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) StatementofNetPosition June30,2016 Governmental Activities Assets: CurrentAssets: Cash Duefromothergovernments Duefromotherschools Prepaidexpenses Deposits
$
Totalcurrentassets
752,762 152,219 22,349 121,409 3,317 1,052,056
CapitalAssets: Capitalassetsnotbeingdepreciated Capitalassetsbeingdepreciated,net
1,259,432 615,119
Totalcapitalassets,net
1,874,551
Totalassets
2,926,607
Liabilities: Currentliabilities: Accountspayableandaccruedexpenses Accruedpayrollandbenefits Unearnedrevenue Noncurrentliabilities: Duewithinoneyear Duewithinmorethanoneyear
64,363 409,679 52,389 131,385 390,868
Totalliabilities
1,048,684
NetPosition: Netinvestmentincapitalassets Unrestricted
1,352,806 525,117
Totalnetposition
$
1,877,923
Theaccompanyingnotestobasicfinancialstatementsareanintegralpartofthesestatements.
8
ImagineSchoolsͲChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) StatementofActivities FortheYearEndedJune30,2016
ProgramRevenues
Chargesfor Services
Expenses Functions/Programs: Basicinstruction Exceptionalinstruction Guidanceservices Healthservices Mediaservices Curriculumdevelopment Staffdevelopment BoardofDirectors Schooladministration Foodservices Centralservices Transportation Operationofplant Maintenanceofplant Communityservices InterestonlongͲtermdebt Totalgovernmentalactivities
Operating Grantsand Contributions
Capital Grantsand Contributions
Governmental Activities NetRevenue (Expense)and Changesin NetPosition
$ 3,527,545 320,941 55,767 313 37,169 84,251 968 15,115 1,098,366 8,656 59,341 124,400 2,129,750 76,969 204,032 27,348
$ 126,788 Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ 210,316 Ͳ
$ 12,760 160,922 Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ 64,500 Ͳ Ͳ Ͳ Ͳ
$ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ 271,350 Ͳ Ͳ Ͳ
$ (3,387,997) (160,019) (55,767) (313) (37,169) (84,251) (968) (15,115) (1,098,366) (8,656) (59,341) (59,900) (1,858,400) (76,969) 6,284 (27,348)
$ 7,770,931
$
$ 238,182
$ 271,350
(6,924,295)
337,104
Generalrevenues: Statepassedthroughlocalschooldistrict Otherrevenues
6,936,080 293,525
Totalgeneralrevenues
7,229,605
Changeinnetposition Netposition,July1,2015,asrestated,Note10 Netposition,June30,2016
305,310 1,572,613 $ 1,877,923
Theaccompanyingnotestobasicfinancialstatementsareanintegralpartofthesestatements.
9
ImagineSchoolsͲChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) BalanceSheetͲGovernmentalFunds June30,2016 Capital Outlay Fund
General Fund Assets: Cash Duefromothergovernments Duefromotherschools Duefromotherfunds Prepaiditems Deposits Totalassets Liabilities: Accountspayable Accruedpayrollandbenefits Unearnedrevenue Duetootherfunds Totalliabilities FundBalances: Nonspendable: Prepaiditems Deposits Assignedto: Technology Lakeandroadmaintenance RoofandHVACmaintenance Unassigned Totalfundbalances Totalliabilitiesand fundbalances
Special Revenue Fund
Ͳ Ͳ Ͳ Ͳ
$ 752,762 152,219 22,349 152,219 121,409 3,317
$ 23,251
$ 128,968
$ 1,204,275
$ Ͳ
$ Ͳ
Ͳ Ͳ
Ͳ Ͳ
23,251
128,968
$ 64,363 409,679 52,389 152,219
526,431
23,251
128,968
678,650
121,409 3,317
Ͳ Ͳ
Ͳ Ͳ
121,409 3,317
10,000 85,000 49,000 256,899
Ͳ Ͳ Ͳ Ͳ
Ͳ Ͳ Ͳ Ͳ
10,000 85,000 49,000 256,899
525,625
Ͳ
Ͳ
525,625
$ 23,251
$ 128,968
$ 752,762 Ͳ 22,349 152,219 121,409 3,317
$ Ͳ 23,251
$ 1,052,056
$ 64,363 409,679 52,389 Ͳ
Ͳ Ͳ Ͳ Ͳ
$ 1,052,056
$ Ͳ 128,968
Total Governmental Funds
$ 1,204,275
Theaccompanyingnotestobasicfinancialstatementsareanintegralpartofthesestatements.
10
ImagineSchoolsͲChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) ReconciliationoftheBalanceSheetofGovernmentalFunds totheStatementofNetPosition June30,2016 TotalFundBalancesͲGovernmentalFunds,Page10
$ 525,625
Thenetpositionreportedforgovernmentalactivitiesin thestatementofnetpositionaredifferentbecause: Capitalassetsusedingovernmentalactivitiesarenot financialresourcesandthereforearenotreportedin thegovernmentalfunds.Thestatementofnetposition includesthosecapitalassets,netofaccumulated depreciation,amongtheassetsfortheSchoolasawhole. Costofcapitalassets Lessaccumulateddepreciation
$ 2,488,689 (614,138)
1,874,551
Certainliabilitiesarenotdueandpayableinthe currentperiodand,therefore,arenotreportedin thegovernmentalfundstatements. Utilitiespayable Notepayable
(508) (521,745)
NetPositionofGovernmentalActivities,Page8
$ 1,877,923
Theaccompanyingnotestobasicfinancialstatementsareanintegralpartofthesestatements.
11
ImagineSchoolsͲChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) StatementofRevenues,Expendituresand ChangesinFundBalancesͲGovernmentalFunds FortheYearEndedJune30,2016 Capital Outlay Fund
General Fund Revenues: Statepassedthroughlocalschool district Federalpassedthroughlocalschool district Chargesforservices Otherlocalrevenues
$ 7,013,340
$ 271,350
Special Revenue Fund $ Ͳ
Total Governmental Funds $ 7,284,690
Ͳ 337,104 293,525
Ͳ Ͳ Ͳ
160,922 Ͳ Ͳ
160,922 337,104 293,525
7,643,969
271,350
160,922
8,076,241
3,527,545 160,019 55,767 313 34,942 84,251 968 15,115 1,072,775 6,029 59,341 124,400 1,814,082 76,969 204,032
Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ 271,350 Ͳ Ͳ
Ͳ 160,922 Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ
3,527,545 320,941 55,767 313 34,942 84,251 968 15,115 1,072,775 6,029 59,341 124,400 2,085,432 76,969 204,032
131,174 27,348
Ͳ Ͳ
Ͳ Ͳ
131,174 27,348
Totalexpenditures
7,395,070
271,350
160,922
7,827,342
Netchangesinfundbalances
248,899
Ͳ
Ͳ
248,899
276,726
Ͳ
Ͳ
276,726
$ 525,625
$ Ͳ
$ Ͳ
$ 525,625
Totalrevenues Expenditures: Current: Basicinstruction Exceptionalinstruction Guidanceservices Healthservices Mediaservices Curriculumdevelopment Staffdevelopment Boardofdirectors Schooladministration Foodservices Centralservices Transportation Operationofplant Maintenanceofplant Communityservices Debtservice: Principal Interest
FundBalances,July1,2015 FundBalances,June30,2016
Theaccompanyingnotestobasicfinancialstatementsareanintegralpartofthesestatements.
12
ImagineSchoolsͲChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) ReconciliationoftheStatementofRevenues, ExpendituresandChangesinFundBalancesof GovernmentalFundstotheStatementofActivities FortheYearEndedJune30,2016 ChangesinFundBalancesͲGovernmentalFunds,Page12
$ 248,899
Thechangeinnetpositionreportedforgovernmentalactivities inthestatementofactivitiesisdifferentbecause: Governmentalfundsreportcapitaloutlaysasexpenditures; however,inthestatementofactivities,thecostofthose assetsisallocatedovertheirestimatedusefullivesand reportedasprovisionfordepreciationexpense. Provisionfordepreciation
(74,763)
TheissuanceoflongͲtermdebtprovidescurrentfinancial resourcestogovernmentalfunds,whiletherepaymentof theprincipaloflongͲtermdebtconsumescurrentfinancial resourcesofgovernmentalfunds.Neithertransaction; however,hasanyeffectonnetposition.
Principalpaymentsonnotepayable Paymentsofutilitiespayable
125,070 6,104
ChangeinNetPositionofGovernmentalActivities,Page9
$ 305,310
Theaccompanyingnotestobasicfinancialstatementsareanintegralpartofthesestatements.
13
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotestoBasicFinancialStatements June30,2016 Note1ͲOrganizationandOperations Imagine Schools Ͳ Chancellor Campus (the "School") is a division of the Learning Excellence Foundation of South Palm Beach County, Inc. (the "Charterholder"), a notͲforͲprofit corporation organized pursuant to Chapter 617, Florida Statutes, the Florida NotͲForͲProfit Corporation Act, andSection1002.33,FloridaStatutes.ThegoverningbodyoftheSchoolistheBoardofDirectors, which is composed of nine members. The financial information presented is that of Imagine Schools Ͳ Chancellor Campus only and is not intended to be a complete presentation of the Charterholder. Note2ͲSummaryofSignificantAccountingPolicies Reportingentity: ThegeneraloperatingauthorityoftheSchooliscontainedinSection1002.33, FloridaStatutes.TheSchooloperatesunderacharterofthesponsoringschooldistrict,whichisthe School District of Palm Beach County, Florida (the "District"). The charter may be renewed by mutualagreementbetweentheSchoolandtheDistrict.Thecharterwasamendedandrenewedin November 2014 and is effective until June 30, 2024. At the end of the term of the charter, the Districtmaychoosenottorenewthecharterundergroundsspecifiedinthecharterinwhichcase the District is required to notify the School in writing at least 90 days prior to the charter's expiration.Duringthetermofthecharter,theDistrictmayalsoterminatethecharterifgoodcause isshown. The School's entire workforce is provided by the operating company; therefore, all benefits are providedbytheoperatingcompany. The School may also be financially accountable if an organization is fiscally dependent on the School regardless of whether the organization has a separately elected governing board, a governing board appointed by another government, or a jointly approved board. In addition, component units can be other organizations for which the nature and significance of their relationshipwiththeSchoolaresuchthatexclusionwouldcausethebasicfinancialstatementsto bemisleadingorincomplete. Asaresultofevaluatingtheabovecriteria,managementhasdeterminedthatnocomponentunits existforwhichtheSchoolisfinanciallyaccountable,whichwouldrequireinclusionintheSchool’s basicfinancialstatements. Basis of presentation: Based on the guidance presented in the American Institute of Certified Public Accountants Audit and Accounting Guide Ͳ NotͲforͲProfit Organizations and provisions of Section 228.056(9), Florida Statutes, the School is presented as a governmental organization for financialstatementreportingpurposes. GovernmentͲwidebasicfinancialstatements:ThegovernmentͲwidefinancialstatementsconsist ofastatementofnetpositionandastatementofactivities.Thesestatementsreportinformation onallofthenonfiduciaryactivitiesoftheSchool.Aspartoftheconsolidationprocess,allinterfund activities are eliminated from these statements. Both statements report only governmental activitiesastheSchooldoesnotengageinanybusinesstypeactivities. Net position, the difference between assets and liabilities, as presented in the statement of net position, are subdivided into three categories: net investment in capital assets, restricted net position,andunrestrictednetposition.Netpositionisreportedasrestrictedwhenconstraintsare imposedontheuseoftheamountseitherexternallybycreditors,grantors,contributors,lawsor regulationsofothergovernments,orenablinglegislation.
14
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotestoBasicFinancialStatements June30,2016 Note2ͲSummaryofSignificantAccountingPolicies(continued) Thestatementofactivitiespresentsacomparisonbetweenthedirectandindirectexpensesofa given function and its program revenues, and displays the extent to which each function contributes to the change in net position for the fiscal year. Direct expenses are those that are clearlyidentifiabletoaspecificfunction.IndirectexpensesarecoststheSchoolhasallocatedto various functions. Program revenues consist of charges for services, operating grants and contributions,andcapitalgrantsandcontributions. Chargesforservicesrefertoamountsreceivedfromthosewhopurchase,use,ordirectlybenefit from goods, services, or privileges provided by a given function or segment. Grants and contributions consist of revenues that are restricted to meeting the operational or capital requirementsofaparticularfunction.Revenuesnotclassifiedasprogramrevenuesarereportedas generalrevenues. Fund financial statements: The School's fund financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America as prescribedbytheGovernmentalAccountingStandardsBoard.Accordingly,thefinancialstatements are organized on the basis of funds. A fund is an accounting entity having a selfͲbalancing set of accountsforrecordingassets,liabilities,fundequity,revenues,expenditures,andotherfinancing sources and uses. A reconciliation is provided that converts the results of governmental fund accountingtothegovernmentͲwidepresentation. TheSchoolreportsthefollowingmajorgovernmentalfunds: x GeneralFundͲisthegeneraloperatingfundoftheSchoolandisusedtoaccountforall financialresourcesnotrequiredtobeaccountedforinanotherfund. x CapitalOutlayFundͲThisfundaccountsforallresourcesfortheleasingoracquisition ofcapitalfacilitiesbytheSchooltotheextentfundedbycapitaloutlayfunds. x Special Revenue Fund Ͳ This fund is used to account primarily for federal grants and certainstategrantsthatarelegallyrestrictedtoexpendituresforparticularpurposes. Measurement focus and basis of accounting: The governmentͲwide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recognized in the period earned and expenses are recognized when a liability is incurred. All governmental fund financial statements are reported using a current financial resources measurementfocusonamodifiedaccrualbasisofaccounting.Underthemodifiedaccrualbasisof accounting,revenues,exceptforcertaingrantrevenues,arerecognizedintheaccountingperiodin whichtheybecomebothmeasurableandavailabletofinanceexpendituresofthecurrentperiod. Availablemeanscollectiblewithinthecurrentperiod,orsoonenoughthereaftertobeusedtopay liabilitiesofthecurrentperiod.Forthispurpose,theSchoolconsidersrevenuestobeavailableif they are collected within sixty days of the end of the current fiscal period. When grant terms providethattheexpenditureofresourcesistheprimefactorfordeterminingeligibilityforfederal, state,andothergrantresources,revenueisrecognizedatthetimetheexpenditureismade. Under the modified accrual basis of accounting, expenditures are generally recorded when the related fund liability is incurred. However, principal and interest on general longͲterm debt is recordedasexpendituresonlywhenpaymentisdue.
15
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotestoBasicFinancialStatements June30,2016 Note2ͲSummaryofSignificantAccountingPolicies(continued) Cash:TheSchoolconsidersalldemandaccountsandmoneymarketfundswhicharenotsubjectto withdrawalrestrictiontobecashandcashequivalents.TheSchoolmaintainsitscashaccountwith onefinancialinstitutionwhich,attimes,mayexceedthefederallyinsuredlimit.TheSchoolhasnot experiencedanylossesinsuchaccountanddoesnotbelieveitisexposedtoanysignificantcredit risk. Receivables:Receivablesincludeprogramreceivablesandamountsduefromotheragencies.The School'smanagementdeterminedthatthereceivablebalancesaredeemedtobefullycollectible. Therefore,noallowancefordoubtfulaccountshasbeenprovided. Due to and due from other funds: Interfund receivables and payables arise from interfund transactions and are recorded by all funds affected in the period in which transactions are executed. The balances result from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accountingsystem,andpaymentsbetweenfundsaremade. Prepaiditems:Paymentsmadetovendorsforservicesthatwillbenefitfutureaccountingperiods arerecordedasprepaiditemsinbothgovernmentͲwideandfundfinancialstatements. Capitalassets:CapitalassetsarereportedinthegovernmentalcolumnonthegovernmentͲwide financialstatements.CapitalassetsaredefinedbytheSchoolasassetswithaninitialindividualcost ofmorethan$750andanestimatedusefullifeofmorethantwoyears.Suchassetsarerecorded athistoricalcost.Donatedcapitalassetsarerecordedattheirestimatedfairvaluesatthedateof donation.Thecostofnormalmaintenanceandrepairsthatdonotaddtothevalueoftheassetor materiallyextendassetslivesarenotcapitalized. Capital assets of the School are depreciated using the straightͲline method over the following estimatedusefullives: Buildingimprovements 5Ͳ20 Landimprovements 40 Leaseholdimprovements 7Ͳ40 Furniture,fixturesandequipment 5Ͳ10 Audiovisualequipment 7Ͳ10 Computersoftware 3 Informationtechnologyequipment 5Ͳ10 LongͲterm obligations: In the governmentͲwide financial statements, longͲterm debt and other longͲterm obligations are reported as liabilities in the statement of net position. In the fund financialstatements,governmentalfundsreportthefaceamountofdebtissuedasotherfinancing sourcesandpaymentsofdebtasdebtserviceexpenditures. Revenuesources:RevenuesforcurrentoperationsarereceivedprimarilyfromtheStateofFlorida passedthroughtheDistrictpursuanttothefundingprovisionsincludedintheSchool'scharter.In accordance with the funding provisions of the charter and Section 1002.33(17), Florida Statutes, the School reports the number of fullͲtime equivalent (FTE) students and related data to the District.
16
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotestoBasicFinancialStatements June30,2016 Note2ͲSummaryofSignificantAccountingPolicies(continued) Under the provisions of Section 1011.62, Florida Statutes, the District reports thenumber ofFTE studentsandrelateddatatotheFloridaDepartmentofEducation(FDOE)forfundingthroughthe Florida Education Finance Program. Funding for the School is adjusted during the year to reflect revisedcalculationsbytheFDOEundertheFloridaEducationFinanceProgramandactualweighted FTEstudentsreportedbytheSchoolduringdesignatedFTEstudentsurveyperiods. The School receives federal awards for the enhancement of various educational programs. This assistance is generally based on applications submitted to and approved by various granting agencies. These federal awards may have requirements whereby the issuance of grant funds is withheld until qualifying eligible expenditures are incurred. Revenues for these awards are recognizedonlytotheextentthateligibleexpenditureshavebeenincurred. Additionally,otherrevenuesmaybederivedfromvarious fundraisingactivitiesandcertainother programs. Deferred outflows/inflows of resources: In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statementelement,deferredoutflowsofresources,representsaconsumptionofnetpositionthat applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure)untilthen.TheSchooldoesnothaveanyitemsthatqualifyforreportingin thiscategory. Inadditiontoliabilities,thestatementofnetpositionwillsometimesreportaseparatesectionfor deferred inflows of resources. This separate financial statement element, deferred inflows of resources,representsanacquisitionofnetpositionthatappliestoafutureperiod(s)andsowillnot be recognized as an inflow of resources (revenue) until that time. The School does not have any itemsthatqualifyforreportinginthiscategory. Unearned revenue: Unearned revenue arises when assets are recognized before revenue recognitionhasbeensatisfied. Incometaxes:TheSchoolisadivisionofanonprofitcorporation.RevenueoftheSchoolisderived primarilyfromothergovernmentalentities.TheSchoolisexemptfromincometaxesunderSection 501(c)(3)oftheInternalRevenueCode.Accordingly,noprovisionforincometaxeshasbeenmade inthesefinancialstatements. TheSchool’sFederalReturnofOrganizationExemptfromIncomeTax(Form990)for2016,2015, 2014,and2013aresubjecttoexaminationbytheIRS,generallyforthreeyearsaftertheyarefiled. Net position: Net position is classified in three categories. The general meaning of each is as follows: x Net investment in capital assets Ͳ represents the difference between the cost of capital assets, less accumulated depreciation reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets.
17
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotestoBasicFinancialStatements June30,2016 Note2ͲSummaryofSignificantAccountingPolicies(continued) x RestrictedͲconsistsofnetpositionwithconstraintsplacedontheiruseeitherby1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments, or 2) law through constitutional provisions or enabling legislation. x UnrestrictedͲindicatesthatportionofnetpositionthatisavailabletofundfuture operations. Fund balance classification: The governmental fund financial statements present fund balances based on the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This Statement provides more clearly defined fund balance classifications and also sets a hierarchy which details how the School may spend funds based on certain constraints.Theclassificationsusedinthegovernmentalfundfinancialstatementsareasfollows: x Nonspendable fund balance Ͳ amounts that are not spendable form (such as inventoryandprepaidexpenses)orarerequiredtobemaintainedintact. x Restricted fund balance Ͳ amounts constrained to specific purposes by their providers(suchasgrantors,bondholders,andhigherlevelsofgovernment),through constitutionalprovisions,orbyenablinglegislation. x CommittedfundbalanceͲamountsconstrainedtospecificpurposesbytheSchool itself, using its highest level of decisionͲmaking authority (i.e., Board of Directors). Tobereportedascommitted,amountscannotbeusedforanyotherpurposeunless theSchooltakesthesamehighestlevelactiontoremoveorchangetheconstraint. x Assigned fund balance Ͳ amounts the School intends to use for a specific purpose. IntentcanbeexpressedbytheBoardofDirectorsorbyanofficialorbodytowhich theBoardofDirectorsdelegatestheauthority. x Unassigned fund balance Ͳ amounts that are available for any purpose. No other fund except the General Fund can report positive amounts of unassigned fund balance. TheSchoolwouldtypicallyuserestrictedfundbalancesfirst,followedbycommittedresources,and then assigned resources, as appropriate opportunities arise, but reserves the right to selectively spendunassignedresourcesfirsttodefertheuseoftheseotherclassifiedfunds. Useofestimates:Thepreparationoffinancialstatementsinconformitywithgenerallyaccepted accountingprinciplesrequiresmanagementtomakeestimatesandassumptionsthataffectcertain reportedamountsanddisclosures.Accordingly,actualresultscoulddifferfromthoseestimates. Budget: An operating budget is adopted and maintained by the governing board for the School pursuanttotherequirementsofFloridaStatutes.Thebudgetisadoptedusingthesamebasisof accountingthatisusedinthepreparationofthebasicfinancialstatements,exceptforadjustments requiredrelatedtoprincipalpaymentsonlongͲtermdebt. Date of management review: Subsequent events were evaluated by management through September26,2016,whichisthedatethefinancialstatementswereavailabletobeissued. 18
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotestoBasicFinancialStatements June30,2016 Note3ͲDeposits AtJune30,2016thecarryingvalueoftheSchool’sdepositsandcashonhandtotaled$752,762 andthebankbalancewas$792,437. Statestatutesrequire,anditistheSchool’spolicy,thatalldepositsbemadeinto,andbeheldby, financial institutions designated by the Treasurer of the State of Florida as qualified public depositories as defined by Chapter 280 of the Florida Statutes. This statute requires that every qualifiedpublicdepositoryinstitutionmaintaineligiblecollateraltosecurethepublicentity’sfunds. The minimum collateral to be pledged by an institution, the collateral eligible for pledge, and reportingrequirementsofthequalifiedpublicdepositortothetreasurerisdefinedbythestatute. Collateral is pooled in a multiple qualified public depository institution pool with the ability to assess members of the pool should the need arise. The School’s deposits are held in a qualified publicdepository.ThedepositsareinsuredbytheFDICupto$250,000perfinancialinstitution. Moniesinvestedinamountsgreaterthantheinsurancecoveragearecoveredbythecollateralpool astheSchoolhasidentifieditselfasapublicentityatJune30,2016. Note4ͲCapitalAssets Asummaryofchangesingovernmentalcapitalassetsisasfollows: Balance July1, 2015 Capitalassets,notbeingdepreciated: Land
$
Capitalassetsbeingdepreciated: Buildingimprovements Landimprovements Leaseholdimprovements Furniture,fixturesandequipment Audiovisualequipment Computersoftware Informationtechnologyequipment Totalcapitalassets,being depreciated Totalcapitalassets Lessaccumulateddepreciation: Buildingimprovements Landimprovements Leaseholdimprovements Furniture,fixturesandequipment Audiovisualequipment Computersoftware Informationtechnologyequipment Totalaccumulateddepreciation Totalgovernmentalactivities capitalassets,net
$
Additions
Balance June30, 2016
Deletions
1,259,432
$ Ͳ
$ Ͳ
97,756 369,218 329,885 138,989 3,348 7,058 283,003
Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ
Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ
97,756 369,218 329,885 138,989 3,348 7,058 283,003
1,229,257
Ͳ
Ͳ
1,229,257
2,488,689
Ͳ
Ͳ
2,488,689
70,812 769 210,273 80,776 2,582 7,058 167,105
5,007 9,230 18,267 14,705 354 Ͳ 27,200
Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ
75,819 9,999 228,540 95,481 2,936 7,058 194,305
539,375
74,763
Ͳ
614,138
1,949,314
$ (74,763)
$ Ͳ
19
$
$
1,259,432
1,874,551
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotestoBasicFinancialStatements June30,2016 Note4ͲCapitalAssets(continued) DepreciationexpensefortheyearendedJune30,2016waschargedtofunctionsoftheSchoolas follows: Operationofplant Schooladministration Foodservices Mediaservices
$
44,318 25,591 2,627 2,227
$
74,763
Note5–LongͲTermLiabilities ThefollowingisasummaryofchangesintheSchool’slongͲtermliabilitiesfortheyearendedJune 30,2016: Balance July1, 2015 (asrestated)
Additions
Deletions
Duein OneYear
Notepayable Utilitiespayable
$ 646,815 6,612
$ Ͳ Ͳ
$ 125,070 6,104
$ 521,745 508
$ 130,877 508
Total
$ 653,427
$ Ͳ
$ 131,174
$ 522,253
$ 131,385
Note Payable: In March 2013, the School entered into a loan agreement with a bank for the acquisition of land. The note is payable in monthly installments of $ 12,702 including interest at 4.66%throughMarch2020andissecuredbytheland.Theagreementcontainscertainrestrictive covenantsincludingthemaintenanceofadebtservicecoverageratiogreaterthan1.20,asdefined intheloanagreement,andalsoseveralfinancialreportingrequirements.FortheyearendedJune 30,2016,theSchoolwasincompliancewiththefinancialrestrictivecovenant. The annual minimum payment requirements to maturity consist of the following for the years endedJune30:
Principal 2017 2018 2019 2020
Balance June30, 2016
Interest
Total
$
130,877 137,108 143,636 110,124
$
21,541 15,311 8,783 2,117
$
152,418 152,419 152,419 112,241
$
521,745
$
47,752
$
569,497
Utilities payable: In November 2014, the School entered into an agreement with the City of Boynton Beach for the payment of utilities charges due to a missing meter at the School. The balance is payable in monthly installments of $508 with no interest. The agreement ends in July 2016uponfullpaymentoftheoutstandingbalance.
20
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotestoBasicFinancialStatements June30,2016 Note6ͲConcentrations Revenue sources: As stated in Note 1, the School receives revenues for current operations primarily from the State of Florida through the District. The following is a schedule of revenue sourcesandamounts:
Sources
Amounts
SchoolDistrictofPalmBeachCounty,Florida: Basefunding Classsizereduction Discretionarylocaleffort ESEguaranteedallocation Supplementalacademicinstruction Instructionalmaterials Safeschools Digitalclassroomsallocation Studenttransportation Prorationtofundsavailable Districtadministrationfee Subtotal
$
Capitaloutlay IDEA Floridateacherlead Other
4,605,995 1,211,847 621,810 282,107 193,500 78,351 23,114 16,863 64,500 (12,284) (86,845) 6,998,958 271,350 160,922 12,760 1,622
TotalthroughSchoolDistrictofPalmBeach County,Florida
7,445,612
Localrevenues: Other Before/afterschoolcare Summerprogramandotherfees
293,525 210,316 126,788
Totalrevenue
$
8,076,241
Note7ͲCommitments Operatingagreement:Anamended and restated operatingagreement was made and entered into inNovember 2009. The agreement calls for anadministrative allocation equalto 8.75% of full time equivalent generated revenue and capital outlay funding. Current year management feeschargedtooperationstotaled$582,106. In the event there are not sufficient funds to pay operating expenditures, the operating company will provide operating advances to cover such shortfalls. The operatingcompany shall be reimbursed for such advances on the first date of each month inwhichfunds reside in the School's operating account for which not otherwise reserved by the operating budget. At the end of each fiscalyear, any advances that cannot be reimbursed by current year revenue shall be considereda contribution from the operating company.There wereno amountscontributed tothe School for theyearendedJune30,2016. 21
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotestoBasicFinancialStatements June30,2016 Note7ͲCommitments(continued) Facilities: In April 2009, the School signed a lease for a facility that was occupied beginning with the 2010Ͳ2011 school year. Terms of the lease agreement require equal monthly installments of oneͲtwelfth (1/12) of the base rent. The base rent willincrease annuallyby a specified amount for the nexttwentyͲfive(25) years whichhasbeenpredeterminedin the lease agreement. In July, 2013, a second amendment was executed revising the base rent starting in 2014 through the term of the lease. The base rent will be based on the School achieving the following;(a)obtainandretainacharterfromthePalmBeachCountySchoolBoardforatermofat leastfifteenyears,(b)achieveatleasta"B"gradeontheFCAT(oranequivalentgradeorscoreon any subsequent academic proficiency evaluation of charter schools implemented by the Florida DepartmentofEducationandthePalmBeachCountySchoolBoard)forthepreviousSchoolYear ("Academic Proficiency"), and (c) an enrollment of 98% of the maximum enrollment permitted underthechartercontractwiththePalmBeachCountySchoolBoardor980ormorecharterschool students,whicheverisgreater.Theamendmentprovidestwobaseleasefeeschedulesinwhichthe School will receive a reduced annual lease fee for meeting the above standards. Current year facility allocation charged to operations totaled $1,441,221. A portion ofthe facility use fee in the amount of $ 271,350 was reimbursed through capital outlay funds. The current charter agreementexpires in June 30, 2024 and the future base rents are only reported through that date.Thefuturebaserentsunderthetermoftheleasehavebeencalculatedonthehigherlease feesforconservatismsandareasfollows:
YearEnding June30,
Principal
2017 2018 2019 2020 2021 Thereafter
$
1,481,134 1,517,906 1,555,802 1,594,644 1,634,457 5,152,406
$
12,936,349
Note8ͲRelatedParties Operating agreement: The School has entered into multiple agreements with an operating company. The operating company is responsible for organizing, developing, managing, staffing and operating the School.During the current year, the operating company charged fees tothe School for operating services and the use of the facility and certain equipmentasdescribed in Note 7 . Due from other schools: The School shares employees with other schools operated by the same managementcompany. A portion of their salariesare allocated to eachSchool on a cost reimbursement basis. The total amount billed to other schools amounted to approximately $36,200fortheyearendedJune30,2016,witharemainingbalanceof$22,349reportedindue fromotherSchools.
22
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotestoBasicFinancialStatements June30,2016 Note 9 Ͳ Risk Management
The School is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the Schoolcarries commercial insurance.Underthe property insurance policy,the School's liabilityis $25,000 per occurrence. There have been no significant reductions in insurance coverage during fiscal year 2016. Settled claims resulting from the risks described above have not exceeded the insurance coverage duringthepreviousthreeyears. Note10ͲRestatementofBeginningNetPosition TheSchoolrecordedanadjustmenttoitsbeginningnetpositioninthegovernmentͲwidefinancial statements, due to a correction relating to the straightͲline treatment of operating leases, in accordance with GASB Statement No. 13. Accounting for Operating Leases with Scheduled Rent Increases.TheadjustmentincreasedtheJune30,2015netpositionby$557,573.
23
REQUIREDSUPPLEMENTARY INFORMATION
ImagineSchoolsͲChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) ScheduleofRevenuesandExpendituresͲBudgetandActualͲGeneralFund FortheYearEndedJune30,2016
BudgetedAmounts Original Final Revenues: FTEfunding Otherstaterevenues Supplementalfeerevenues
Actual
Variance withFinal Budget
$ 6,636,676 13,091 490,716
$ 6,824,189 12,760 492,166
$ 6,998,958 14,382 630,629
$ 174,769 1,622 138,463
7,140,483
7,329,115
7,643,969
314,854
4,203,914 311,879 158,661 426,014 3,345 287,388
4,232,187 330,781 163,494 438,187 3,750 317,569
4,191,420 455,783 195,409 357,591 1,881 309,210
40,767 (125,002) (31,915) 80,596 1,869 8,359
5,391,201
5,485,968
5,511,294
(25,326)
1,011,817 5,000 120,297 612,168
1,087,869 1,625 120,297 633,356
1,169,871 625 Ͳ 582,106
(82,002) 1,000 120,297 51,250
Totalfacilityoperations
1,749,282
1,843,147
1,752,602
90,545
Totalexpenditures
7,140,483
7,329,115
7,263,896
65,219
Netchangeinfundbalance (budgetarybasis)
Ͳ
Ͳ
380,073
380,073
AdjustmentstoconformwithGAAP: PrincipalpaymentsonlongͲterm debt
Ͳ
Ͳ
131,174
(131,174)
$ Ͳ
$ Ͳ
$ 248,899
Totalrevenues Expenditures: Schooloperations: Salariesandbenefits Schoolservicesexpenditures Directeducationalexpenditures Generalandadministrative Marketingandenrollment Facilityoperatingexpenditures Totalschooloperations Facilityoperations: Facilityusefee Equipmentusefee Contingency Indirectcosts
Netchangeinfundbalance (GAAPbasis)
$ 248,899
24
ImagineSchoolsͲChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) ScheduleofRevenuesandExpendituresͲBudgetandActualͲCapitalOutlayFund FortheYearEndedJune30,2016
BudgetedAmounts Original Final Revenues: Chartercapitaloutlayfunding Totalrevenues Expenditures: Facilityusefee Totalexpenditures Netchangeinfundbalance
Actual
Variance withFinal Budget
$ 348,744
$ 272,692
$ 271,350
$ (1,342)
348,744
272,692
271,350
(1,342)
348,744
272,692
271,350
1,342
348,744
272,692
271,350
1,342
$ Ͳ
$ Ͳ
25
$ Ͳ
$ Ͳ
ImagineSchoolsͲChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) ScheduleofRevenuesandExpendituresͲBudgetandActualͲSpecialRevenueFund FortheYearEndedJune30,2016
BudgetedAmounts Original Final Revenues: Federalpassedthroughlocal schooldistrict
Actual
Variance withFinal Budget
$ 153,666
$ 160,922
$ 160,922
$ Ͳ
Totalrevenues
153,666
160,922
160,922
Ͳ
Expenditures: Schoolservicesexpenditures
153,666
160,922
160,922
Ͳ
153,666
160,922
160,922
Ͳ
Totalexpenditures Netchangeinfundbalance
$ Ͳ
$ Ͳ
26
$ Ͳ
$ Ͳ
ImagineSchools–ChancellorCampus (ADivisionofLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.) NotetoRequiredSupplementaryInformation June30,2016 Note1ͲBudgetaryInformation Budgetarybasisofaccounting:TheSchool'sannualbudgetsareadoptedfortheentireoperations atthecombinedgovernmentallevelandmaybeamendedbytheBoard.Sincethebudgetarybasis differsfromaccountingprinciplesgenerallyacceptedintheUnitedStates(GAAP),budgetandactual amountsintheaccompanyingrequiredsupplementaryinformationarepresentedonthebudgetary basis.AreconciliationtothenetchangeinfundbalancespresentedinconformitywithGAAPisset forthintheadjustmentstotherequiredsupplementaryinformation. Although budgets are adopted for the entire operation, budgetary comparisons have been presentedforthegeneralfundandeachmajorfundforwhichanadoptedbudgetexists.
27
OTHERINDEPENDENT AUDITOR’SREPORTS
INDEPENDENTAUDITOR’SREPORTONINTERNALCONTROLOVER FINANCIALREPORTINGANDONCOMPLIANCEANDOTHER MATTERSBASEDONANAUDITOFFINANCIALSTATEMENTSPERFORMED INACCORDANCEWITHGOVERNMENTAUDITINGSTANDARDS TotheBoardofDirectors LearningExcellenceFoundationofSouthPalmBeachCounty,Inc. BoyntonBeach,Florida Wehaveaudited,inaccordancewiththeauditingstandardsgenerallyacceptedintheUnitedStatesof AmericaandthestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards issuedbytheComptrollerGeneraloftheUnitedStates,thefinancialstatementsofthegovernmental activities, each major fund, and the aggregate remaining fund information of Imagine Schools Ͳ Chancellor Campus (the “School”), a division of the Learning Excellence Foundation of South Palm BeachCounty,Inc.,asofandfortheyearendedJune30,2016,andtherelatednotestothefinancial statements, which collectively comprise the School’s basic financial statements, and have issued our reportthereondatedSeptember26,2016. InternalControlOverFinancialReporting Inplanningandperformingourauditofthefinancialstatements,weconsideredtheSchool’sinternal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School’s internalcontrol.Accordingly,wedonotexpressanopinionontheeffectivenessoftheSchool’sinternal control. A deficiency in internal control exists when the design or operation of a control does not allow managementoremployees,inthenormalcourseofperformingtheirassignedfunctions,toprevent,or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and correctedonatimelybasis.Asignificantdeficiencyisadeficiency,oracombinationofdeficiencies,in internalcontrolthatislessseverethanamaterialweakness,yetimportantenoughtomeritattention bythosechargewithgovernance. Our consideration of internal control was for the limited purpose described in the first paragraph of thissectionandwasnotdesignedtoidentifyalldeficienciesininternalcontrolthatmightbematerial weaknessesorsignificantdeficiencies.Giventheselimitations,duringourauditwedidnotidentifyany deficiencies in internal control that we consider to be material weaknesses. However, material weaknessesmayexistthathavenotbeenidentified.
KMCcpa.com | 6550 N Federal Hwy, 4th Floor Fort Lauderdale, FL 33308 Phone: 954.771.0896 Fax: 954.938.9353
28
ImagineSchoolsͲChancellorCampus ComplianceandOtherMatters As part of obtaining reasonable assurance about whether the School’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and materialeffectonthedeterminationoffinancialstatementamounts.However,providinganopinion 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 mattersthatarerequiredtobereportedunderGovernmentAuditingStandards. PurposeofthisReport The purpose of this report is solely to describe the scope of our testing of internal control and complianceandtheresultsofthattesting,andnottoprovideanopinionontheeffectivenessofthe entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance.Accordingly,thiscommunicationisnotsuitableforanyotherpurpose. KEEFEMcCULLOUGH FortLauderdale,Florida September26,2016
29
INDEPENDENTAUDITOR’SREPORTTOTHEBOARDOFDIRECTORS TotheBoardofDirectors LearningExcellenceFoundationofSouthPalmBeachCounty,Inc. BoyntonBeach,Florida ReportontheFinancialStatements We have audited the financial statements of Imagine Schools Ͳ Chancellor Campus (the “School”), a divisionoftheLearningExcellenceFoundationofSouthPalmBeachCounty,Inc.,asofandfortheyear endedJune30,2016,andhaveissuedourreportthereondatedSeptember26,2016. Auditor’sResponsibility WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStates ofAmerica;thestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards, issuedbytheComptrollerGeneralofUnitedStates;andChapter10.850,RulesoftheAuditorGeneral. OtherReport WehaveissuedourIndependentAuditor’sReportonInternalControlOverFinancialReportingandon Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance withGovernmentAuditingStandards.Disclosuresinthatreport,whichisdatedSeptember26,2016, shouldbeconsideredinconjunctionwiththismanagementletter. PriorAuditFindings Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or not correctiveactionshavebeentakentoaddressfindingsandrecommendationsmadeinthepreceding annualfinancialauditreport.Therewerenorecommendationsmadeintheprecedingauditreport. OfficialTitle Section10.854(1)(e)5,RulesoftheAuditorGeneral,requiresthenameorofficialtitleoftheentity.The officialtitleoftheSchoolisImagineSchoolsͲChancellorCampus,whichisadivisionoftheLearning ExcellenceFoundationofSouthPalmBeachCounty,Inc. KMCcpa.com | 6550 N Federal Hwy, 4th Floor Fort Lauderdale, FL 33308 Phone: 954.771.0896 Fax: 954.938.9353
30
ImagineSchoolsͲChancellorCampus FinancialCondition Sections 10.854(1)(e)2., Rules of the Auditor General, require that we report the results of our determinationastowhetherornottheSchoolhasmetoneormoreoftheconditionsdescribedinSection 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit,wedeterminedthattheSchooldidnotmeetanyoftheconditionsdescribedinSection218.503(1), FloridaStatutes. PursuanttoSections10.854(1)(e)6.a.and10.855(12),RulesoftheAuditorGeneral,weappliedfinancial conditionassessmentproceduresfortheSchool.Itismanagement’sresponsibilitytomonitortheSchool’s financialcondition,andourfinancialconditionassessmentwasbasedinpartonrepresentationsmadeby managementandthereviewoffinancialinformationprovidedbysame. Transparency Sections10.854(1)(e)7.and10.855(13),RulesoftheAuditorGeneral,requirethatwereporttheresultsof ourdeterminationastowhethertheSchoolmaintainsonitswebsitetheinformationspecifiedinSection 1002.33(9)(p),FloridaStatutes.Inconnectionwithouraudit,wedeterminedthattheSchoolmaintained onitswebsitetheinformationspecifiedinSection1002.33(9)(p),FloridaStatutes. OtherMatters Section10.854(1)(e)3.,RulesoftheAuditorGeneral,requiresthatweaddressinthemanagementletter any recommendations to improve financial management. In connection with our audit, we did not have anysuchrecommendations. Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliance with provisionsofcontractsorgrantagreements,orabuse,thathaveoccurred,orarelikelytohaveoccurred, thathaveaneffectonthefinancialstatementsthatislessthanmaterialbutwhichwarrantstheattention ofthosechargedwithgovernance.Inconnectionwithouraudit,wedidnothaveanysuchfindings. PurposeofthisLetter Our management letter is intended solely for the information and use of the Legislative Auditing Committee,membersoftheFloridaSenateandtheFloridaHouseofRepresentatives,theFloridaAuditor General,Federalandothergrantingagencies,theBoardofDirectorsandapplicablemanagementandis notintendedtobeandshouldnotbeusedbyanyoneotherthanthesespecifiedparties. KEEFEMcCULLOUGH FortLauderdale,Florida September26,2016
31
