HURON INTERMEDIATE SCHOOL DISTRICT Bad Axe, Michigan
REPORT ON FINANCIAL STATEMENTS (with required supplementary and additional supplementary information)
Year Ended June 30, 2021
PAGE NUMBER
INDEPENDENT AUDITOR'S REPORT 1 & 2
MANAGEMENT'S DISCUSSION AND ANALYSIS 3 - 8
BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements
Statement of Net Position 9
Statement of Activities 10
Fund Financial Statements
Balance Sheet - Governmental Funds 11
Reconciliation of the Governmental Funds Balance Sheet to the Statement
of Net Position 12
Statement of Revenues, Expenditures, and Changes in
Fund Balances - Governmental Funds 13
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances of Governmental Funds to the Statement of Activities 14
Notes to Financial Statements 15 - 38
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule - General Fund 39
Budgetary Comparison Schedule - Special Education Fund 40
Budgetary Comparison Schedule - Career Technical Education Fund 41
Schedule of Reporting Unit's Proportionate Share of the Net Pension Liability 42
Schedule of Reporting Unit's Pension Contributions 43
Schedule of Reporting Unit's Proportionate Share of the Net OPEB Liability 44
Schedule of Reporting Unit's OPEB Contributions 45
Notes to Required Supplementary Information 46
ADDITIONAL SUPPLEMENTARY INFORMATION Nonmajor Governmental Fund Types:
Balance Sheet 47
Statement of Revenues, Expenditures, and Changes in Fund Balances 48
Schedule of Bonded Debt - 2017 Refunding 49
Schedule of Expenditures of Federal Awards 50 - 52
Notes to Schedule of Expenditures of Federal Awards 53
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance 54 & 55 and Other Matters Based on an Audit of Financial Statements Performed in Accordance
with Government Auditing Standards
Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal 56 & 57 Control Over Compliance Required by the Uniform Guidance
Schedule of Findings and Questioned Costs 58
Schedule of Prior Audit Findings 59
Table of Contents
ANDERSON, TUCKEY, BERNHARDT & DORAN, P.C.
Certified Public Accountants
Thomas B. Doran, CPA Valerie J. Hartel, CPA Jamie L. Peasley, CPA Angela M. Burnette, CPA
David A. Ondrajka, CPA Chelsie M. Peruski, CPA Kendra K. Bednarski, CPA Bryan M. McShane, CPA
L K
715 East Frank Street • Caro, MI 48723 989-673-3137 fax: 989-673-3375 1-800-234-8829
2956 Main Street • Marlette, MI 48453
989-635-7545 fax: 989-635-7547 6476 Main Street, Suite 1 • Cass City, MI 48726 989-872-3730 fax: 989-872-3978 INDEPENDENT AUDITOR'S REPORT
Board of Education
Huron Intermediate School District
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Huron Intermediate School District, as of and for the year ended June 30, 2021, and the related notes to financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Huron Intermediate School District as of June 30, 2021, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and other required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Huron Intermediate School District's basic financial statements. The additional supplementary information, as identified in the table of contents, including the schedule of expenditures of federal awards as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and are not a required part of the basic financial statements.
The additional supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The additional supplementary information has been subjected to the auditing procedures applied in the audits of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the additional supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 18, 2021 on our consideration of Huron Intermediate 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 solely 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 effectiveness of Huron Intermediate School District's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Governmental Auditing Standards in considering Huron Intermediate School District’s internal control over financial reporting and compliance.
ANDERSON, TUCKEY, BERNHARDT & DORAN, P.C.
CERTIFIED PUBLIC ACCOUNTANTS CARO, MICHIGAN
October 18, 2021
3
HURON INTERMEDIATE SCHOOL DISTRICT BAD AXE, MICHIGAN
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2021
Huron Intermediate School District, located in Bad Axe, Michigan is one of 56 Intermediate School Districts in the State of Michigan and serves the 12 local public school districts and four non-public schools in Huron County. Management’s Discussion and Analysis, a requirement of GASB 34, is intended to be the Huron Intermediate School District management’s overview of the financial results for the year ended June 30, 2021.
Generally accepted accounting principles (GAAP), according to GASB 34, require the reporting of two types of financial statements: fund financial statements and government-wide financial statements.
FINANCIAL HIGHLIGHTS
The overall condition of all funds, and governmental activities, remains stable for Huron ISD. Financial goals have been met with consideration to the state's current economy. If current revenue and expenditure patterns can be maintained, the resources for the following year will be available to meet the District’s financial needs.
The liabilities and deferred inflows of Huron Intermediate School District exceeded its assets and deferred outflows at the close of fiscal year 2021 by $2,171,223 (net position).
As of the close of the current fiscal year, the district's governmental funds reported combined ending fund balances of $20,445,570, an increase of $1,287,861 in comparison with the prior year.
At the end of the current fiscal year, the aggregated fund balance for the District's operating funds (general fund, special education fund, and career and technical education fund) was $17,759,025 or 90.70% of the total expenditures of these operating funds.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction of the district's basic financial statements.
The district's basic financial statements comprise of three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.
Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the district's finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the district's assets, deferred outflows of
resources, deferred inflows of resources, and liabilities, with the difference between these reported as net
position. Over time, increases and decreases in net position may serve as a useful indicator of whether the
financial position of the district is improving or deteriorating.
The statement of activities presents information showing how the district's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. earned but unused vacation leave).
Both of the government-wide financial statements display functions of the district that are principally supported by taxes and intergovernmental revenues (governmental activities). The activities of the district include instruction, support services, and transfers to locals and other services. The district has no business- type activities as of and for the year ended June 30, 2021.
The government-wide financial statements can be found on pages 9-10 of this report.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The district, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the district fall within the governmental fund type category.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government- wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spend-able resources, as well as on balances of spend-able resources available at the end of the fiscal year.
Such information may be useful in evaluating the district's near-term financing requirements.
Because the focus of the governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for government activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the district's near-term financing decision. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The district maintains numerous government funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, special education fund, and career and technical education fund, each of which are considered to be a major fund. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report.
The district adopts an annual appropriated budget for its general and special revenue funds. Budgetary comparison statements or schedules have been provided herein to demonstrate compliance with those budgets.
The governmental fund financial statements can be found on pages 11 and 13 of this report, with
reconciliations between the two types of statements on pages 12 and 14.
5
Notes to financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to financial statements can be found on pages 15-38 of this report.
Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning budgetary information for the district's major funds. Required supplementary information can be found on pages 39-46 of this report.
The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the supplementary information. Combining fund statements can be found on pages 47-48 of this report.
Our auditor has provided assurance in their independent auditor's report, located immediately preceding this Management's Discussion and Analysis, that the Basic Financial Statements are fairly stated. Varying degrees of assurance are being provided by the auditor regarding the Required Supplementary Information and the Supplemental Information identified above. A user of this report should read the independent auditor's report carefully to ascertain the level of assurance being provided for each of the other parts in the financial section.
Government-wide Financial Analysis
The school district's net position was a deficit of $2,171,223 at June 30, 2021. This amount is negative due to the adoption of the accounting guidance GASB Statement No. 75.
The following tables present a comparative analysis of government-wide data for the fiscal years ended June 30, 2021 and 2020, respectively.
District’s Net Position
2021 2020
Current assets $ 24,746,450 $ 22,765,547
Non-current assets 6,982,183 7,131,516
Total Assets 31,728,633 29,897,063
Deferred Outflows:
Related to pensions 6,812,439 7,217,593
Related to other postemployment benefits 2,530,932 1,938,146
Related to bond refunding 115,504 129,942
Total Deferred Outflows of Resources 9,458,875 9,285,681
Current liabilities 4,309,547 3,617,482
Non-current liabilities 34,291,566 33,393,473
Total Liabilities 38,601,113 37,010,955
Deferred Inflows:
Related to pensions 262,762 1,241,096
Related to other postemployment benefits 3,430,641 2,359,532 Related to state aid funding for pension 1,064,215 849,343 Total Deferred Inflows of Resources 4,757,618 4,449,971 Net Position:
Invested in capital assets, net of related debt 4,677,183 4,566,516 Restricted for debt service 235,341 197,820
Unrestricted (7,083,747) (7,042,518)
Total Net Position $ (2,171,223) $ (2,278,182)
District's Changes in Net Position
Governmental Activities REVENUES: 2021 2020 Program Revenue:
Charges for services $ 477,344 $ 559,857
Operating grants 1,577,777 1,583,042 General Revenue:
Property taxes levied for general purposes 651,342 650,219 Property taxes levied for special education 8,338,419 8,323,864 Property taxes levied for career tech education 3,344,286 3,332,807
Investment earnings 34,563 285,135
State sources 6,160,370 5,568,910
Other 656,197 768,830
Total Revenues 21,240,298 21,072,664 EXPENSES
Instruction 5,992,413 5,837,050
Supporting Services 10,804,474 10,436,812 Community Services 233,255 267,173 Transfers to other districts 3,568,958 3,271,772 Interest & fees on long-term debt 72,120 77,750 Student/School Activities 54,609 118,663 Unallocated depreciation 407,510 434,605 Total Expenses 21,133,339 20,443,825 Changes in Net Position 106,959 628,839 Net Position, Beginning of Year (2,278,182) (2,907,021) Net Position, End of Year $ (2,171,223) $ (2,278,182)
Governmental Activities. Net position increased by $106,959. The key element of this increase is as follows:
Operating revenues decreased less than operating expenses increased
7
Major Governmental Funds Budgeting and Operating Highlights
The School districts budgets are prepared according to Michigan Law. The most significant budgeted funds are the general fund, special education fund, and career and technical education fund.
During the fiscal year ended June 30, 2021, the school district amended the budgets of these major governmental funds three times. This has been the normal business practice of the District.
General Fund – The general fund revenues exceeded expenditures in fiscal year 2021 by $232,624, increasing the fund balance to $2,286,723.
Special Education Fund- The special education revenues exceeded expenditures in fiscal year 2021 by
$562,287, increasing the fund balance to $11,665,355.
Career and Technical Education Fund- The career and technical education fund revenues exceeded expenditures during fiscal year 2021 by $403,667, increasing the fund balance to $3,806,947.
Capital Asset and Debt Administration
Capital Assets
At the end of fiscal year 2021, the district had $13,512,679 invested in land, buildings, office, instructional, and transportation equipment. Of this amount, $6,530,496 in depreciation has been taken over the years. The district has net capital assets of $6,982,183.
District's Capital Assets (Net of depreciation)
June 30, 2021
Land $ 72,000
Buildings and Improvements 11,052,369
Equipment and Furniture 2,100,519
Vehicles 287,791
Subtotal- $ 13,512,679
Accumulated depreciation $ 6,530,496
Net capital Assets $ 6,982,183
Additional information on the District's capital assets can be found on page 24 of this report.
Long-term Debt
At the end of the current fiscal year, the district had a total bonded debt outstanding of $2,305,000. The original bond was used for renovating and adding on to the learning center facility. Additional information on this debt can be found on page 49 of this report.
Economic Factors and Next Year's Budget
Operational funding for intermediate districts has remained stable. Categorical funding continues to change
and the direct impact to the District is unknown. Wind-turbine tax revenue is expected to remain relatively
stable for the 2021-2022 fiscal year. The outlook projects a decline in these revenues due to taxable value
depreciation. These revenues will have the greatest impact on the Special Education Fund and the Career
Technical Education Fund.
Huron ISD, along with various other districts, townships, and counties are part of the Michigan Renewable Energy Collaborative (MREC). Certain wind energy companies are contesting the assessed taxable value of the wind turbines. If the wind companies are successful in their claim then local governments would have to return tax dollars to these companies. The MREC was formed to fight the legal challenge and share legal costs related to the wind turbine tax value determinations. Certain wind companies have made tax appeals to the Michigan Tax Tribunal in several townships where they have wind turbines. Due to the inconclusive nature, it is not possible for Legal Counsel to determine the probable outcome or a reasonable estimate of the District’s potential liability, if any.
Overall, the District is financially secure, and programs are expected to maintain status quo in 2021-2022.
Requests for Information
The financial report is designed to provide a general overview of the district's finances for all those with an
interest in the district's finances. Questions concerning any of the information provided in this report or
requests for additional financial information should be addressed to the Business Office, Huron Intermediate
School District, 1299 South Thomas Road, Suite 1, Bad Axe, Michigan 48413.
BASIC FINANCIAL STATEMENTS
GOVERNMENTAL ACTIVITIES
ASSETS
Cash and cash equivalents $ 6,053,080
Investments 16,859,072
Receivables:
Accounts receivable 36,414
Intergovernmental receivables 1,712,367
Prepaid expenses 85,517
Capital assets not being depreciated 72,000
Capital assets, net of accumulated depreciation 6,910,183
TOTAL ASSETS 31,728,633
DEFERRED OUTFLOWS OF RESOURCES
Deferred charge on refunding 115,504
Related to other postemployment benefits 2,530,932
Related to pensions 6,812,439
TOTAL DEFERRED OUTFLOWS OF RESOURCES 9,458,875 LIABILITIES
Accounts payable 1,110,591
Salaries payable 759,578
Accrued retirement 404,391
Accrued expenses 145,608
Accrued interest 8,667
Unearned revenue 1,880,712
Noncurrent liabilities:
Due within one year 265,000
Due in more than one year 2,227,714
Net other postemployment benefits liability 4,377,282
Net pension liabilty 27,421,570
TOTAL LIABILITIES 38,601,113
DEFERRED INFLOWS OF RESOURCES
Related to pensions 262,762
Related to other postemployment benefits 3,430,641
Related to state aid funding for pension 1,064,215
TOTAL DEFERRED INFLOWS OF RESOURCES 4,757,618 NET POSITION
Net investment in capital assets 4,792,687
Restricted for debt service 235,341
Unrestricted (7,199,251)
TOTAL NET POSITION $ (2,171,223)
HURON INTERMEDIATE SCHOOL DISTRICT STATEMENT OF NET POSITION
JUNE 30, 2021
Governmental Activities Net (Expense) Program Revenues Revenue and Charges for Operating Changes in
Functions/Programs Expenses Services Grants Net Position
Governmental activities:
Instruction $ 5,992,413 $ 445,914 $ (5,546,499)
Support services 10,804,474 $ 477,344 1,040,466 (9,286,664)
Community services 233,255 (233,255)
Transfers to other governmental units 3,568,958 (3,568,958)
Interest on long-term debt 72,120 (72,120)
Student/school activities 54,609 91,397 36,788
Unallocated depreciation 407,510 (407,510)
Total governmental activities $ 21,133,339 $ 477,344 $ 1,577,777 (19,078,218) General revenues:
Property taxes, levied for general purposes 651,342
Property taxes, levied for special education 8,338,419
Property taxes, levied for career tech
education 3,344,286
State sources - unrestricted 6,160,370
Investment earnings 34,563
Transfers from other governmental units 427,601
Miscellaneous 228,596
Total general revenue 19,185,177
Change in net position 106,959
Net position beginning of year (2,278,182)
Net position, end of year $ (2,171,223)
See notes to financial statements.
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2021
OTHER
NONMAJOR TOTAL
GENERAL SPECIAL CAREER TECH GOVERNMENTAL GOVERNMENTAL
FUND EDUCATION EDUCATION FUNDS FUNDS
ASSETS CURRENT ASSETS:
Cash and cash equivalents $ 372,026 $ 3,003,598 $ - $ 2,677,456 $ 6,053,080 Investments 3,311,689 9,512,317 4,035,066 - 16,859,072 Accounts receivable 19,911 - 15,920 583 36,414 Intergovernmental receivable 590,902 1,034,047 85,912 1,506 1,712,367 Due from other funds 101,903 - - 7,000 108,903 Prepaid expenditures 1,800 63,402 20,315 85,517 TOTAL ASSETS $ 4,398,231 $ 13,613,364 $ 4,157,213 $ 2,686,545 $ 24,855,353
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable $ 168,744 $ 890,219 $ 51,628 $ - $ 1,110,591 Due to other funds 7,000 54,151 47,752 - 108,903
Salaries payable 107,647 486,758 165,173 759,578
Accrued payroll liabilities 23,552 84,963 37,093 145,608
Accrued retirement 30,170 327,311 46,910 404,391
Unearned revenue 1,774,395 104,607 1,710 1,880,712
TOTAL LIABILITIES 2,111,508 1,948,009 350,266 - 4,409,783
FUND BALANCES:
Nonspendable:
Prepaid expenditures 1,800 63,402 20,315 85,517 Restricted for:
Special education 11,218,401 11,218,401
Career Tech education 3,786,632 3,786,632
Debt service 244,008 244,008
Commited for:
Student/school activities 154,373 154,373
Capital projects 2,288,164 2,288,164
Assigned for:
Subsequent year expenditures - 383,552 383,552
Unassigned 2,284,923 2,284,923
TOTAL FUND BALANCES 2,286,723 11,665,355 3,806,947 2,686,545 20,445,570 TOTAL LIABILITIES & FUND BALANCES $ 4,398,231 $ 13,613,364 $ 4,157,213 $ 2,686,545 $ 24,855,353 See notes to financial statements.
SPECIAL REVENUE
HURON INTERMEDIATE SCHOOL DISTRICT BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2021
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
Total Fund Balances - Governmental Funds $ 20,445,570
Amounts reported for governmental activities in the statement of net position are different because:
Deferred outflows of resources- charges on refunding, net of amortization 115,504 Deferred outflows of resources- related to pensions 6,812,439 Deferred outflows of resources- related to other postemployment benefits 2,530,932 Deferred inflows of resources- related to pensions (262,762) Deferred inflows of resources- related to other postemployment benefits (3,430,641) Deferred inflows of resources- related to state pension (1,064,215) Capital assets used in governmental activities are not
financial resources and are not reported in the funds.
Cost of capital assets 13,512,679
Accumulated depreciation (6,530,496)
Long term liabilities are not due and payable in the current period and are not reported in the funds
Long-term debt obligations (2,305,000)
Compensated absences (187,714)
Accrued interest is not included as a liability in governmental
funds; it is recorded when paid (8,667)
Net other postemployment benefits liability (4,377,282)
Net pension liability (27,421,570)
Net Position of Governmental Activities $ (2,171,223)
See notes to financial statements.
TO THE STATEMENT OF NET POSITION
JUNE 30, 2021
OTHER
NONMAJOR TOTAL
GENERAL SPECIAL CAREER TECH GOVERNMENTAL GOVERNMENTAL
FUND EDUCATION EDUCATION FUNDS FUNDS
REVENUES:
Local sources
Taxes $ 296,406 $ 8,338,419 $ 3,405,503 $ 12,040,328
Medicaid - 451,665 - 451,665
Investment earnings 2,337 13,063 2,925 18,325
Student/school activities $ 91,397 91,397
Other revenues 116,073 17,814 56,922 371,172 561,981
State sources 2,649,107 2,914,142 597,121 6,160,370
Federal sources 176,130 1,250,953 59,297 1,486,380
Transfers from other governmental units 365,468 - 62,133 427,601
TOTAL REVENUES 3,605,521 12,986,056 4,183,901 462,569 21,238,047
EXPENDITURES:
Instruction 492,023 2,799,015 2,302,528 5,593,566
Student services 290,528 3,913,983 145,566 4,350,077
Instructional support 867,746 683,134 170,925 1,721,805
General administration 195,461 171,500 100,880 467,841
School administration 278,339 370,867 318,319 967,525
Business administration 513,645 573,863 77,462 1,164,970
Operation and maintenance 30,107 342,995 326,769 699,871
Transportation 15,679 153,598 122,380 291,657
Central services 78,560 78,560
Other support services - 44,282 396,787 441,069
Community services 159,039 45,014 29,202 233,255
Transfers to other governmental units 421,773 3,087,769 59,416 3,568,958
Student/school activities 54,609 54,609
Capital outlay 15 15
Debt service 318,659 318,659
TOTAL EXPENDITURES 3,342,900 12,186,020 4,050,234 373,283 19,952,437
EXCESS (DEFICIT) OF REVENUES
OVER (UNDER) EXPENDITURES 262,621 800,036 133,667 89,286 1,285,610
OTHER FINANCING SOURCES (USES):
Proceeds from sale of capital assets 2,251 2,251
Operating transfers in 3 - 270,000 270,003
Operating transfers out (30,000) (240,000) - (3) (270,003) TOTAL OTHER FINANCING SOURCES (USES) (29,997) (237,749) 270,000 (3) 2,251 CHANGES IN FUND BALANCES 232,624 562,287 403,667 89,283 1,287,861 FUND BALANCES BEGINNING OF YEAR 2,054,099 11,103,068 3,403,280 2,597,262 19,157,709 FUND BALANCES - END OF YEAR $ 2,286,723 $ 11,665,355 $ 3,806,947 $ 2,686,545 $ 20,445,570 See notes to financial statements.
SPECIAL REVENUE
HURON INTERMEDIATE SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2021
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
Changes in fund balances--governmental funds $ 1,287,861
Amounts reported for governmental activities in the statement of activities are different because:
Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of these assets are allocated over their estimated useful lives as depreciation:
Depreciation expense (407,510)
Capital outlay 258,177
Accrued interest on bonds is recorded in the statement of activities when incurred; it is not recorded in governmental funds until it is paid:
Accrued interest payable at the beginning of the year 9,644
Accrued interest payable at the end of the year (8,667)
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, where as these amounts are deferred and amortized in the statement of activities. The effect of these differences is the treatment of long-term debt and related items are as follows:
Principal payments 260,000
Amortization of deferred charge on bond refunding (14,438)
Compensated absences are reported on the accrual method in the statement of activities, and recorded as an expenditure when financial resources are used in the governmental funds:
Accrued absences at the beginning of the year 239,095
Accrued absences at the end of the year (187,714)
Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds.
Other postemployment benefit related items 676,059
Pension related items (1,790,676)
Restricted revenue reported in the governmental funds that is deferred to offset the deferred outflows related to section 147c pension contributions subsequent to the measurement period.
Change in state aid funding for pension (214,872)
Change in net position of governmental activities $ 106,959
See notes to financial statements.
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2021
TO THE STATEMENT OF ACTIVITIES
HURON INTERMEDIATE SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DESCRIPTION OF GOVERNMENT-WIDE FINANCIAL STATEMENTS:
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the District. Governmental activities normally are supported by taxes and intergovernmental revenues.
REPORTING ENTITY:
The Huron Intermediate School District (the "District") is governed by the Huron Intermediate School District Board of Education (the "Board"), which has responsibility and control over all activities related to public school education within the District. The District receives funding from local, state, and federal sources and must comply with all the requirements of these funding source entities. However, the District is not included in any other governmental reporting entity as defined by the accounting principles generally accepted in the United States of America. Board members are elected by the public and have decision-making authority, the power to designate management, the ability to significantly influence operations, and the primary accountability for fiscal matters. In addition, the District’s reporting entity does not contain any component units as defined in Governmental Accounting Standards Board (GASB) statements.
BASIS OF PRESENTATION – GOVERNMENT-WIDE FINANCIAL STATEMENTS:
While separate government-wide and fund financial statements are presented, they are interrelated. The government activities column incorporates data from governmental funds. Separate financial statements are provided for governmental funds.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.
BASIS OF PRESENTATION – FUND FINANCIAL STATEMENTS:
The fund financial statements provide information about the District’s funds. Separate statements for each fund category – governmental – are presented. The emphasis of fund financial statements is on major governmental funds. All remaining governmental funds are aggregated and reported as nonmajor funds. Major individual governmental funds are reported as separate columns in the fund financial statements.
The District reports the following major governmental funds:
The general fund is the District’s primary operating fund. It accounts for all financial resources of the District, except those required to be accounted for in another fund.
The special education special revenue fund which accounts for special education programs.
The vocational education special revenue fund (career technical education fund) which accounts for technical education programs.
OTHER NON-MAJOR FUNDS:
The Debt Service Funds account for the resources accumulated and payments made for principal and interest on long- term general obligation debt of governmental funds. The District has a 2017 debt retirement fund.
The Capital Project Building and Site Funds account for the receipt of transfers from other funds, other revenue and the acquisition of fixed assets or construction of major capital projects. The District has GF, SE, and CTE capital project funds.
The special revenue funds account for revenue sources that are legally restricted to expenditures for specific purposes (not including expendable trusts or major capital projects). The district accounts for its student/school activities in the special revenue fund.
During the course of operations the District has activity between funds for various purposes. Any residual balances outstanding at year end are reported as due from/to other funds and advances to/from other funds. While these balances are reported in fund financial statements, they are eliminated in the preparation of the government-wide financial statements.
NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021
Further, certain activity occurs during the year involving transfers of resources between funds. In fund financial statements these amounts are reported at gross amounts as transfers in/out. While reported in the fund financial statements, they are eliminated in the preparation of the government-wide financial statements.
MEASUREMENT FOCUS AND BASIS OF ACCOUNTING:
The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements.
The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions and events at the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated amounts.
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital lease are reported as other financing sources.
Property taxes, state and federal aid and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year-end).
The State of Michigan utilizes a foundation grant approach which provides for a specific annual amount of revenue per pupil based on a statewide formula. The foundation is funded from state and local sources. Revenues from state sources are primarily governed by the School Aid Act and the School Code of Michigan. The Michigan Department of Education administers the allocation of state funds to school districts based on information supplied by the districts. For the current year ended, the foundation allowance was based on the pupil membership counts.
The state portion of the foundation is provided primarily by a state education property tax millage of 6 mills on Principal Residence Exception (PRE) property and an allocated portion of state sales and other taxes. The local portion of the foundation is funded primarily by Non-PRE property taxes which may be levied at a rate of up to 18 mills as well as 6 mills for Commercial Personal Property Tax. The State revenue is recognized during the foundation period and is funded through payments from October to August. Thus, the unpaid portion at June 30th is reported as an intergovernmental receivable.
The District also receives revenue from the State to administer certain categorical education programs. State rules require that revenue earmarked for these programs be used for its specific purpose. Certain governmental funds require an accounting to the state of the expenditures incurred. For categorical funds meeting this requirement, funds received and accrued, which are not expended by the close of the fiscal year are recorded as unearned revenue.
All other revenue items are generally considered to be measureable and available only when cash is received by the District.
HURON INTERMEDIATE SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
BUDGETARY INFORMATION:
Budgetary basis of accounting:
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the general fund and special revenue funds. Capital projects funds are appropriated on a project-length basis. Other funds do not have appropriated budgets.
Appropriations in all budgeted funds lapse at the end of the fiscal year even if they have related encumbrances.
Encumbrances are commitments related to unperformed (executor) contracts for goods or services (i.e., purchase orders, contracts, and commitments). The District does not utilize encumbrance accounting.
The District follows these procedures in establishing the budgetary data reflected in the financial statements:
1. The Superintendent submits to the School Board a proposed operating budget for the fiscal year commencing on July 1. The operating budget includes proposed expenditures and the means of financing them. The level of control for the budgets is at the functional level as set forth and presented as required supplementary information.
2. Public hearings are conducted to obtain taxpayer comments.
3. Prior to July 1, the budget is legally adopted by School Board resolution pursuant to the Uniform Budgeting and Accounting Act (1968 PA 2). The Act requires that the budget be amended prior to the end of the fiscal year when necessary to adjust appropriations if it appears that revenues and other financing sources will be less than anticipated or so that expenditures will not be in excess of original estimates. Expenditures shall not be made or incurred, unless authorized in the budget, in excess of the amount appropriated. Violations, if any, in the general, special education, or career tech education funds are noted in the required supplementary information section.
4. Transfers may be made for budgeted amounts between major expenditure functions within any fund;
however, these transfers and any revisions that alter the total expenditures of any fund must be approved by the School Board.
5. The budget was amended during the year with supplemental appropriations, the last one approved prior to the year ended. The District does not consider these amendments to be significant.
ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET POSITION/FUND BALANCE:
Cash and cash equivalents
The District’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.
Investments
In accordance with Michigan Compiled Laws, the District is authorized to invest in the following investment vehicles:
a. Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States.
b. Certificates of deposit, savings accounts, deposit accounts, or depository receipts of a bank which is a member of the Federal Deposit Insurance Corporation (FDIC) or a savings and loan association which is a member of the Federal Savings and Loan Insurance Corporation (FSLIC) or a credit union which is insured by the National Credit Union Administration (NCUA), but only if the bank, savings and loan association, or credit union is eligible to be a depository of surplus funds belonging to the State under section 5 or 6 of Act No. 105 of the Public Acts of 1855, as amended, being Section 21.145 and 21.146 of the Michigan Compiled Laws.
NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021
c. Commercial paper rated at the time of purchase within the three (3) highest classifications established by not less than two (2) standard rating services and which matures not more than 270 days after the date of purchase.
d. The United States government or federal agency obligations repurchase agreements.
e. Banker’s acceptances of United States banks.
f. Mutual funds composed of investment vehicles, which are legal for direct investment by local units of government in Michigan.
Michigan Compiled Laws allow for collateralization of government deposits, if the assets for pledging are acceptable to the State Treasurer under Section 3 of 1855 PA 105, MCL 21.143, to secure deposits of State surplus funds, securities issued by the Federal Loan Mortgage Corporation, Federal National Mortgage Association, or Government National Mortgage Association.
Inventories and prepaid items
Inventories are valued at cost using the first-in/first-out (FIFO) method and consist of expendable supplies. The cost of such inventories is recorded as expenditures/expenses when consumed rather than when purchased.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.
Capital assets
Capital assets, which include property, plant equipment, and transportation vehicles, are reported in the government-wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Group purchases are evaluated on a case by case basis. Donated capital assets are recorded at their estimated acquisition value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets.
Land and construction in progress, if any, are not depreciated. The other property, plant, and equipment of the District are depreciated using the straight-line method over the following estimated useful lives:
Land improvements 15 – 30 years
Buildings and Improvements 40 – 50 years
Machinery and equipment 5 –15 years
Transportation equipment 5 – 10 years
Technology 5 – 10 years
Defined Benefit plan
For purposes of measuring the net pension and other postemployment benefit liability, deferred outflows of resources and deferred inflows of resources related to pensions and other postemployment benefits, and pension and other postemployment benefit expense, information about the fiduciary net position of the Michigan Public Employees Retirement System (MPSERS) and additions to/deductions from MPSERS fiduciary net position have been determined on the same basis as they are reported by MPSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
HURON INTERMEDIATE SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Deferred outflows of resources:
In addition to assets, the statement of net position will sometimes report a separate section of deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District has three items that qualify for reporting in this category. They are a deferred charge on refunding, pension and other postemployment benefits related items reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price.
This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. A deferred outflow is recognized for pension and other postemployment benefit related items. These amounts are expensed in the plan year in which they apply.
Deferred Inflows of resources:
In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.
The District has three items that qualify for reporting in this category. The first is restricted section 147c state aid deferred to offset deferred outflows related to section 147c pension contributions subsequent to the measurement period. The second and third items are future resources yet to be recognized in relation to the pension and other postemployment benefit actuarial calculation. These future resources arise from differences in the estimates used by the actuary to calculate the pension and other postemployment benefit liability and the actual results. The amounts are amortized over a period determined by the actuary.
Net position flow assumption
Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted – net position and unrestricted – net position in the government-wide financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s policy to consider restricted – net position to have been depleted before unrestricted – net position is applied.
Fund balance flow assumptions
Sometimes the District will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.
