audited financial statements for the year ended june 30,...

AUDITED FINANCIAL STATEMENTS

For the Year Ended June 30, 2009

PAGE

Financial Section

Independent Auditors' Report 1-2

Management’s Discussion and Analysis 3-12

Basic Financial Statements:

Government-wide Financial Statements

Statement of Net Assets 13

Statement of Activities 14

Fund Financial Statements:

Balance Sheet - Governmental Funds 15

Reconciliation of Fund Balances on the Balance Sheet for Governmental Funds

to Net Assets of Governmental Activities on the Statement of Net Assets 16

Statement of Revenues, Expenditures and Changes in Fund Balances -

Governmental Funds 17-18

Reconciliation of the Statement of Revenues, Expenditures and Changes

in Fund Balances of Governmental Funds to the Statement of Activities 19

Statement of Revenues, Expenditures and Changes in Fund Balances -

Budget and Actual - General Fund 20

Statement of Net Assets - Internal Service Fund 21

Statement of Revenues, Expenses and Changes in Fund Net Assets -

Internal Service Fund 22

Statement of Cash Flows - Internal Service Fund 23

Statement of Fiduciary Assets and Liabilities - Agency Funds 24

Notes to Financial Statements 25-42

Combining and Individual Fund Financial Statements and Schedules

Combining Balance Sheet - Nonmajor Governmental Funds 43-44

Combining Statement of Revenues, Expenditures and Changes in Fund Balances -

Nonmajor Governmental Funds 45-46

Statement of Changes in Fiduciary Assets and Liabilities - Agency Fund 47

MONA SHORES PUBLIC SCHOOLS

TABLE OF CONTENTS

Rehmann Robson

3597 Henry St., Ste. 201

Muskegon, MI 49441

Ph: 231.739.9441

Fx: 231.733.0031

www.rehmann.com

Muskegon, Michigan

INDEPENDENT AUDITORS' REPORT

Board of Education

Mona Shores Public Schools

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

and the aggregate remaining fund information of Mona Shores Public Schools (the "District"), as of

and for the year ended June 30, 2009, which collectively comprise the District’s basic financial

statements as listed in the table of contents. These financial statements are the responsibility of Mona

Shores Public Schools’ management. Our responsibility is to express opinions on these financial

statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States

of America, and the standards applicable to financial audits contained in Government Auditing

Standards , issued by the Comptroller General of the United States. Those standards require that we

plan and perform the audit to obtain reasonable assurance about whether the financial statements are

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

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

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

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

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

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

remaining fund information of Mona Shores Public Schools as of June 30, 2009, and the respective

changes in financial position, where applicable, thereof and the budgetary comparison of the general

fund for the year then ended in conformity with accounting principles generally accepted in the United

States of America.

October 28, 2009

In accordance with Government Auditing Standards, we have also issued, under separate cover, our

report dated October 28, 2009, on our consideration of Mona Shores Public School’s internal control

over financial reporting and our tests of its compliance with certain provisions of laws, regulations,

contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of

our testing of internal control over financial reporting and compliance and the results of that testing, and

not to provide an opinion on the internal control over financial reporting or on compliance. That report

is an integral part of an audit performed in accordance with Government Auditing Standards and should

be considered in assessing the results of our audit.

- 1 -

As discussed in Note 16 to the financial statements, accounts receivable were restated during the year in

connection with the Durant bonds. Accordingly, beginning net assets of governmental activities as of

July 1, 2008 have been restated to adjust these balances.

The Management’s Discussion and Analysis on pages 3-12 is not a required part of the basic financial

statements but is supplementary information required by the Governmental Accounting Standards

Board. We have applied certain limited procedures, which consisted principally of inquiries of

management regarding the methods of measurement and presentation of the required supplementary

information. However, we did not audit the information and express no opinion on it.

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

collectively comprise Mona Shores Public Schools’ basic financial statements. The combining fund

financial statements and schedules are presented for purposes of additional analysis and are not a

required part of Mona Shores Public Schools' basic financial statements. Such information has been

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

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

a whole.

- 2 -

MANAGEMENT'S DISCUSSION

AND ANALYSIS

Mona Shores Public Schools Management Discussion and Analysis

For the Fiscal Year Ended June 30, 2009

- 3 -

The management discussion and analysis of Mona Shores Public Schools’ financial performance provides an overall review of the School District’s financial activities for the fiscal year ended

June 30, 2009. The intent of this discussion and analysis is to provide, in layman’s terms, a look

at the District’s past performance and current position. Readers should also review financial

statements and notes to the financial statements to enhance their understanding of the district’s financial performance.

This reporting model was adopted by the Governmental Accounting Standards Board (GASB) in

their Statement No. 34 Basic Financial Statements – and Management Discussion and Analysis (MD&A) – for State and Local Governments issued in June of 1999.

Overview of the Financial Statements

This annual report consists of three parts: (1) management’s discussion and analysis (this

section), (2) the basic financial statements, and (3) other supplemental information. The financial

statements include notes that explain some of the information in the statements by providing detailed data. These statements are followed by a section of other supplementary information that

further explains and supports the financial statements. Additionally, the basic financial

statements also include district-wide financial statements and fund financial statements that

present different views of the district.

District-wide Financial Statements

The district-wide financial statements are full accrual basis statements that provide information about the District’s overall financial status. They are used to help determine whether or not the

District is better off, or worse off, as the result of the year’s activities. The Statement of Net

Assets reports all of the district’s assets and liabilities, both short-term and long-term, whether

they are “currently available” or not. Capital assets and long-term obligations of the District are reported in this statement. All of the current year’s revenues and expenses are accounted for in

the Statement of Activities, regardless of when cash is received or paid.

The two district-wide statements report the District’s net assets and how they have changed. Net assets – the difference between the District’s assets and liabilities – is one way to measure the

District’s financial health or position.

Over time, increases or decreases in net assets are an indicator of whether the District’s financial position is improving or deteriorating.

To assess the District’s overall health, you need to consider additional non-financial factors such as changes in the District’s property tax base, the quality of the education

provided, and the condition of the District’s buildings.



- 4 -

In district-wide statements, the District’s activities are classified as governmental activities. This includes most of the District’s basic services, such as regular and special education, food service,

athletics, transportation, and administration. Property taxes and state aid finance most of these

services.

Fund Financial Statements

The fund financial statements focus on individual parts of the District, while reporting the

District’s operations in more detail than the district-wide statements. The fund level statements are reported on a modified accrual basis. Only those assets that are “measurable” and

“currently available” are reported. Liabilities are recognized to the extent that they are normally

expected to be paid with current financial resources.

Fund statements are formatted to comply with the legal requirements of the Michigan

Department of Education’s “Accounting Manual.” In the State of Michigan, the District’s major

instructional and instructional support activities are reported in the General Fund. Additional activities are reported in their relevant funds including: Special Revenue Funds for Food

Service, Athletics, Community Services, and memorial scholarship activities, Debt Service

Fund, Internal Service Fund, Capital Projects Funds and Fiduciary Funds.

In fund financial statements, capital asset purchases are reported as expenditures in the year of

acquisition. No capital asset is reported. The issuance of debt is recorded as a financial resource.

The current year’s payments of principal and interest on long-term obligations are recorded as

expenditures. Future year’s debt obligations are not recorded.



- 5 -

Financial Analysis of the District as a Whole

The net assets of the District at June 30, 2009 amounted to $20.875 million. Figure A-1 shows a

condensed breakdown of the net assets.

Figure A-1

Condensed Statement of Net Assets

Governmental Activities

2009 2008

Current assets $ 26,197,298

$ 12,652,039

Noncurrent assets 39,199,458

41,660,106

Total assets 65,396,756

54,312,145

Current liabilities 9,764,946

9,006,619

Noncurrent liabilities 34,756,109

25,416,849

Total liabilities 44,521,055

34,423,468

Net assets

Invested in capital assets, net of related debt 14,723,525

14,427,262

Restricted 940,851

252,902

Unrestricted 5,211,325

5,208,513

Total net assets, as restated $ 20,875,701

$ 19,888,677

The largest portion of the District’s net assets (70.5%) reflects investment in capital assets (e.g., land, buildings and improvements, and furniture and equipment), less any related debt used to

acquire those assets that is still outstanding. The District uses these capital assets to provide

services to students; consequently, these assets are not available for future spending. Although

the District’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay the debt must be provided from other sources, since the capital

assets themselves cannot be used to liquidate these liabilities.

The remaining net assets, with the exception of the amount specifically restricted for debt service and capital improvements, represent resources that are unrestricted on how they may be used.



- 6 -

The net assets of the District increased by $987,024 during the 2008/09 fiscal year. Figure A-2 shows the breakdown of this change. The Statement of Activities presented later in the

government-wide financial statements, provides greater detail on the District’s annual activity.

The cost of the District’s governmental activities for the year was $38.95 million. However, the

amount that the District’s taxpayers ultimately financed for these activities was $32.09 million because $3.07 million of the cost was paid for by those who benefited from the programs, and

$3.79 million was paid for by other governments and organizations who subsidized certain

programs with grants and contributions. The remaining “public benefit” portion was paid for

with property taxes, state pupil foundation aid, investment earnings, and other miscellaneous revenues.

Figure A-2

Statement of Activities

Governmental Activities For the year ended June 30,

2009 2008

Revenues

Program Revenues

Charges for services $ 3,069,222

$ 3,314,892

Operating grants and contributions 3,790,425

3,117,827

General revenues

Property taxes 9,891,858

10,108,145

State formula aid 22,842,070

22,955,787

Other 341,597

615,011

Total revenues 39,935,172

40,111,662

Expenses

Instruction 20,352,637

20,287,504

Supporting services 12,015,344

11,737,798

Community services 663,431

766,865

Food service 1,127,229

1,184,957

Athletics 741,921

794,550

Interest on long-term debt 1,232,380

1,379,537

Depreciation 2,815,206

2,888,200

Total Expenses 38,948,148

39,039,411

Increase in net assets $ 987,024

$ 1,072,251



- 7 -

A substantial portion, 59 percent, of the District’s revenue is received from State sources. This portion is consistent with amounts received in the previous year with a shift of 5% in revenues to

Federal sources from state and local sources. This change is mostly the result of the State of

Michigan utilizing federal stimulus money to back fill a portion of the State’s per student

foundation. The current economic conditions required this immediate utilization of a large portion of the Federal stimulus. The financial stability of the District rests primarily with the

economic health of the State of Michigan. Figure A-3 depicts the breakdown of the sources of

revenue for the District.



- 8 -

As Figure A-4 depicts, 59% of the District’s resources are spent on instruction and pupil and instructional support services. This is down 6% from last year, mostly due to depreciation being

classified separately. Another 9% is spent on administrative and business services necessary to

efficiently operate the District, while 8% is spent for buildings, operations and maintenance,

which includes utilities and custodial services. 7% represents the depreciation of on District assets and the final 17% is spent on interest and other support services. With the exception of

depreciation, this is consistent with the prior years.



- 9 -

Financial Analysis of the District’s Funds

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

well. The combined governmental funds equity increased by $12.8 million during the 2008/09

fiscal year, resulting in total fund equity of $19.1 million at year end. (The general operating fund portion of this is $5.5 million.) The primary reasons for the change in fund equity are as

follows:

Factors Increasing Fund Equity

Federal Funding – The State of Michigan passed along $1.44 million of Federal stimulus to the

District to backfill the per pupil foundation. This money increased the total per pupil foundation to $7,316, a $112 increase over the prior year. This resulted in an increase of total revenues to

the District of $427,360.

Building and Site Funds – The District passed a millage in February and was able to sell $12.345 million in bonds in June. This money is intended to fund many District projects over the next

three years.

Sinking Funds – The 2005 Sinking Fund experienced revenues over expenditures totaling $677,304. This increase is expected to be used to fund a portion of the High School gymnasium

project that will begin fall of 2009.

Reduced Program Spending – Many of the District’s programs spent less than the prior year. These significant differences were as follows:

The District experienced many reductions in staff. The teacher group had a reduction of

10.7 positions. There was also a reduction of one clerical position in the central office and two special education parapro positions.

The teacher groups health cost went down as many staff moved from a more expensive

health insurance policy.

The yearly Early Retirement obligation was less than is typical. There were less

retirements than is typical as well as many retirees opted for Medicare early, eliminating

the District’s financial obligation.

Operation and Transportation expenses were less than anticipated. This was mostly due

to staff resignations and retirements that were replaced with temporary staff. Also

impacted by a significant reduction in the cost of heating and diesel fuel.

Factors Decreasing Fund Equity

Building & Site Funds – $554,253 was spent on bond projects during the course of the fiscal year.



- 10 -

Declining enrollment – Enrollment declined by 83 blended pupils (cost of approximately $597,932 using prior year per pupil foundation). This is similar to the downward trend that will

likely continue in the years ahead (See Figure A-5). Declining birthrates will continue to hold

down future kindergarten enrollments and large classes will continue to graduate in the coming

years. Additionally, smaller schools of choice numbers could have the potential of dramatically lowering enrollments and funding as well.

General Fund Budgetary Highlights

The Uniform Budget Act of the State of Michigan requires that the local Board of Education approve the original budget for the upcoming fiscal year prior to July 1, the start of the fiscal

year. As a matter of practice, the District amends its budget quarterly during the school year.

These revisions are made in order to deal with unexpected changes in revenues and expenditures.

The following analysis describes the reasons for changes in the budget during the year.

Revenues – There was a $319,320 (0.97%) increase in the total General Fund revenue budget

from the beginning to the end of the year. There were significant changes in funding sources as

follows:

The local source revenue budget increased by $265,727. This increase was the result of

additional property tax revenues needing to be budgeted for Commercial Personal tax value in the amount of $135,000. There was also an unanticipated $90,000 increase in

the Medicaid Fee for Service revenues during the year.



- 11 -

The state source and federal source revenue budgets decreased and increased by similar amounts. This was mostly due to the allocation of approximately $370 per student of

federal stimulus money to offset this same decrease to the state per student foundation.

Expenditures – There was a $138,831 (0.41%) increase in the total General Fund expenditures

from the original budget to the final revised budget. The significant changes by functional

category are as follows:

The operations and transportation budgets saw a decrease of just over $100,000. This

was a result of significant decreases in the cost of heating fuel and diesel fuel.

Capital Assets and Debt Administration

Capital Assets – A summary of the District’s capital assets at year end is outlined in Figure A-6.

Figure A-6

Summary of Capital Assets (Net of Depreciation)

Governmental Activities

2009

2008

Land $ 344,401

$ 344,401

Construction in Progress 227,134

-

Building and improvements 31,103,895

32,025,034

Furniture and equipment 6,939,526

8,255,699

Buses and other Vehicles 394,580

578,560

Total $ 39,009,536

$ 41,203,694



- 12 -

Debt Administration – A summary of the District’s indebtedness is outlined in figure A-7.

Figure A-7

Summary of Indebtedness

Outstanding at June 30,

2009

2008

Balance of 1995 bond issue $ 2,220,000

$ 4,295,000

2002 refunding bond issue 8,715,000

8,805,000


2,690,000

2005 bond issue 2,760,000

3,165,000


7,915,000

2009 bond issue 12,345,000

-

1998 school improvement bond (Durant) 247,110

272,825

Equipment note payable 125,763

144,002

Early retirement incentives 964,369

1,267,325

Compensated absences 560,273

520,900

Deferred amounts (discounts/premiums) (74,752)

(125,327)

Total $ 38,402,763

$ 28,949,725

Under State statute, the District is legally restricted from incurring long-term bonded debt in

excess of 15% of the assessed value of taxable property within the school district. At June 30,

2009, the District’s net bonded debt of $36,827,110 was well below the legal limit of approximately $135.8 million.

Requests for Information This financial report is designed to provide the District’s citizens, taxpayers, parents, students,

investors and creditors with a general overview of the District’s finances, and to show how the

District is accountable for the money it receives. Questions concerning any of the information

provided in this report, or requests for additional financial information should be addressed to Mr. Michael Schluentz, Chief Financial Officer, Mona Shores Public Schools, 3374 McCracken

St., Muskegon, MI 49441, telephone number (231) 780-4751 Extension 8209.

BASIC FINANCIAL STATEMENTS


Statement of Net Assets

June 30, 2009

Governmental

Activities

Assets

Cash and investments 19,879,568$

Accounts receivable 6,316,466

Inventory 1,264

Deferred charges 189,922

Nondepreciable capital assets 571,535

Depreciable capital assets, net 38,438,001

Total assets 65,396,756

Liabilities

Accounts payable 1,351,243

Accrued expenses 4,431,563

Accrued interest on long-term debt 247,050

Unearned revenue 88,436

Long-term liabilities

Due within one year 3,735,090

Due in more than one year 34,667,673

Total liabilities 44,521,055

Net assets

Invested in capital assets, net of related debt 14,723,525

Restricted for debt service 426,800

Restricted for capital projects 514,051

Unrestricted 5,211,325

Total net assets 20,875,701$

The accompanying notes are an integral part of these financial statements.

- 13 -


Statement of Activities


Program Revenues

Operating Net

Charges Grants and (Expense)

Functions / Programs Expenses for Services Contributions Revenue

Governmental activities:

Instruction 20,352,637$ 1,202,547$ 3,055,926$ (16,094,164)$

Supporting services 12,015,344 411,321 734,499 (10,869,524)

Community services 663,431 726,197 - 62,766

Athletics 741,921 108,933 - (632,988)

Food service 1,127,229 620,224 - (507,005)

Interest on long-term debt 1,232,380 - - (1,232,380)

Depreciation - unallocated 2,815,206 - - (2,815,206)

Total governmental activities 38,948,148$ 3,069,222$ 3,790,425$ (32,088,501)

General revenues:

Property taxes - operations 5,018,032

Property taxes - debt service 3,954,952

Property taxes - capital projects 918,874

State of Michigan aid - unrestricted 22,842,070

Grants and contributions not

restricted to specific programs 176,430

Unrestricted investment earnings 126,763

Gain on sale of capital assets 38,404

Total general revenues 33,075,525

Change in net assets 987,024

Net assets, beginning of year, as restated 19,888,677

Net assets, end of year 20,875,701$


- 14 -

General Building and Nonmajor

Fund Site Fund Funds Total

Assets

Cash and investments 5,309,760$ 11,797,803$ 1,806,047$ 18,913,610$

Accounts receivable 25,699 745 21,532 47,976

Due from other

governmental units 6,012,290 - 256,200 6,268,490

Inventory - - 1,264 1,264

Total assets 11,347,749$ 11,798,548$ 2,085,043$ 25,231,340$

Liabilities

Accounts payable 1,351,243$ -$ -$ 1,351,243$

Accrued expenses 4,419,073 - 12,490 4,431,563

Deferred revenue 70,766 - 264,780 335,546

Total liabilities 5,841,082 - 277,270 6,118,352

Fund balance

Reserved for inventory - - 1,264 1,264

Unreserved, designated

for capital projects - 11,798,548 - 11,798,548

Unreserved, undesignated 5,506,667 - - 5,506,667

Unreserved, undesignated,

reported in nonmajor:

Special revenue funds - - 72,156 72,156

Debt service funds - - 673,850 673,850

Capital projects funds - - 1,060,503 1,060,503

Total fund balances 5,506,667 11,798,548 1,807,773 19,112,988

Total liabilities and

fund balances 11,347,749$ 11,798,548$ 2,085,043$ 25,231,340$


Balance Sheet

Governmental Funds

June 30, 2009


- 15 -


Reconciliation of Fund Balances on the Balance Sheet

for Governmental Funds to Net Assets of

Governmental Activities on the Statement of Net Assets

June 30, 2009

Fund balances - total governmental funds 19,112,988$

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

different because:

Long-term receivables are reported as an asset and revenue when earned on the

statement of net assets while the governmental funds report these balances as an

asset and deferred revenue until the availability criterion for revenue recognition

is met.

Add - deferred long-term receivables 247,110

Capital assets used in governmental activities are not financial resources and

therefore are not reported in the funds.

Add - Nondepreciable capital assets 571,535

Add - Depreciable capital assets, nets 38,438,001

The assets and liabilities of the internal service fund are included in the

governmental activities in the statement of net assets.

Add - net assets of internal service fund 1,589

Certain liabilities, such as bonds payable, are not due and payable in the current

period and therefore are not reported in the funds.

Deduct - bonds payable and other long-term obligations (36,878,121)

Deduct - accrued interest on bonds payable (247,050)

Deduct - compensated absences (560,273)

Add - bond issuance costs, net of amortization 189,922

Net assets of governmental activities 20,875,701$


- 16 -



Revenue

Local sources:

Property taxes 5,018,032$ -$ 4,873,826$ 9,891,858$

Tuition 150,453 - 68,092 218,545

Investment income 88,945 3,588 34,230 126,763

Food sales, athletics

and recreation - - 744,149 744,149

Other 595,513 - 521,630 1,117,143

State sources 23,382,019 - 79,675 23,461,694

Federal sources 2,624,866 - 561,557 3,186,423

Interdistrict sources 1,175,908 - - 1,175,908

Total revenue 33,035,736 3,588 6,883,159 39,922,483

Expenditures

Current:

Instructional services 20,313,264 - - 20,313,264

Supporting services 11,848,968 - - 11,848,968

Community services 51,485 - 611,946 663,431

Food services - - 1,127,229 1,127,229

Athletic activities - - 741,921 741,921

Debt service:

Principal - - 2,660,715 2,660,715

Interest expense

and other charges - - 1,255,555 1,255,555

Bond issuance costs - 48,943 - 48,943

Capital outlay 12,920 505,310 244,969 763,199

Total expenditures 32,226,637 554,253 6,642,335 39,423,225

Revenues over (under)

expenditures 809,099 (550,665) 240,824 499,258


Statement of Revenue, Expenditures and Changes in Fund Balances

Governmental Funds



- 17 -




Statement of Revenue, Expenditures and Changes in Fund Balances

Governmental Funds


Other financing sources (uses)

Transfers in 189,961 - 771,384 961,345

Transfers out (771,612) (315) (189,418) (961,345)

Proceeds on sale of

capital assets 38,404 - - 38,404

Issuance of general

obligation bonds - 12,345,000 - 12,345,000

Total other financing

sources (uses) (543,247) 12,344,685 581,966 12,383,404

Net change in fund balances 265,852 11,794,020 822,790 12,882,662

Fund balances, beginning of year 5,240,815 4,528 984,983 6,230,326

Fund balances, end of year 5,506,667$ 11,798,548$ 1,807,773$ 19,112,988$


- 18 -


Reconciliation of the Statement of Revenues, Expenditures

and Changes in Fund Balances of Governmental Funds

to the Statement of Activities


Net change in fund balances - total governmental funds 12,882,662$

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

because:

Long-term receivables are reported as revenue when earned on the statement of

activities while the governmental funds report these balances as revenue when the

availability criterion for revenue recognition is met.

Deduct - change in deferred long-term receivables (25,715)

Governmental funds report capital outlays as expenditures. However, in the

statement of activities, the cost of those assets is allocated over their estimated

useful lives and reported as depreciation expense.

Add - capital outlay 621,048

Deduct - depreciation expense (2,815,206)

Deduct - proceeds on the sale of capital assets (38,404)

Add - gain on disposal of capital assets 38,404

The net revenue (expense) of the internal service fund is reported with

governmental activities.

Add - net income of the internal service fund 144

Bond proceeds provide current financial resources to governmental funds in the

period issued, but issuing bonds increases long-term liabilities in the statement of

net assets. Repayment of bond principal and other obligations is an expenditure in

the governmental funds, but a reduction in long-term liabilities in the statement of

net assets.

Add - principal payments on long-term debt 2,660,715

Add - principal payments on equipment notes payable 18,239

Deduct - issuance of long-term debt (12,345,000)

Add - bond issuance costs 48,943

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

funds.

Add - decrease in accrued interest payable on bonds 73,750$

Deduct - amortization of bond premiums, discounts and deferred loss (50,575)

Deduct - increase in the accrual for compensated absences (39,373)

Deduct - amortization of deferred charges (42,608)

Change in net assets of governmental activities 987,024$


- 19 -


Statement of Revenue, Expenditures and

Changes in Fund Balance - Budget and Actual

General Fund


Variance -

Over/(Under)

Original Amended Actual Budget

Revenue

Local sources:

Property taxes 4,933,587$ 5,070,448$ 5,018,032$ (52,416)$

Tuition 182,500 191,215 150,453 (40,762)

Investment income 120,000 90,000 88,945 (1,055)

Other 509,600 552,751 595,513 42,762

State sources 24,868,441 23,244,111 23,382,019 137,908

Federal sources 1,033,443 2,672,966 2,624,866 (48,100)

Interdistrict sources 1,060,000 1,167,000 1,175,908 8,908

Total revenue 32,707,571 32,988,491 33,035,736 47,245

Expenditures

Current:

Instructional services 20,834,321 20,590,963 20,313,264 (277,699)

Supporting services 12,107,105 12,200,609 11,848,968 (351,641)

Community services 26,979 34,736 51,485 16,749

Capital outlay - - 12,920 12,920

Total expenditures 32,968,405 32,826,308 32,226,637 (599,671)


expenditures (260,834) 162,183 809,099 646,916

Other financing sources

(uses)

Transfers in 158,750 158,750 189,961 31,211

Transfers out (822,395) (825,661) (771,612) 54,049

Proceeds from sale of

capital assets - 38,400 38,404 4


sources (uses) (663,645) (628,511) (543,247) 85,264

Net changes in fund balance (924,479) (466,328) 265,852 732,180

Fund balance, beginning of year 5,240,815 5,240,815 5,240,815 -

Fund balance, end of year 4,316,336$ 4,774,487$ 5,506,667$ 732,180$


Budget

- 20 -

Assets

Cash and cash equivalents 965,958$

Liabilities

Retirement liabilities 964,369

Net assets

Unrestricted 1,589$


Statement of Net Assets

Internal Service Fund

June 30, 2009


- 21 -



Operating revenue

Charges for services 20,455$

Operating expenses

Wages and benefits 20,228

Other 83

Total operating expenses 20,311

Operating income 144

Net assets, beginning of year 1,445

Net assets, end of year 1,589$

Statement of Revenue, Expenses

and Changes in Fund Net Assets



- 22 -



Cash flows from operating activities

Receipts from users 20,455$

Payments for insurance (323,267)

Net cash used in operating activities (302,812)

Cash flows from financing activities

Decrease in due to other funds (2,618)

Net decrease in cash and cash equivalents (305,430)

Cash and cash equivalents, beginning of year 1,271,388

Cash and cash equivalents, end of year 965,958$

Cashflows from operating activities

Operating income 144$

Adjustments to reconcile operating income to net

cash used in operating activities:

Decrease in:

Retirement liabilities (302,956)

Net cash used in operating activities (302,812)$

Statement of Cash Flows



- 23 -

Assets

Cash and investments 316,289$

Liabilities

Due to student groups 316,289$


Statement of Fiduciary Assets and Liabilities

Agency Funds

June 30, 2009


- 24 -

NOTES TO FINANCIAL STATEMENTS

1.

Government-wide and Fund Financial Statements


Notes to Financial Statements

The statement of activities demonstrates the degree to which the direct expenses of a given function

or segment is offset by program revenues. Direct expenses are those that are clearly identifiable

with a specific function or segment. Program revenues include 1) charges to customers or

applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a

given function or segment and 2) grants and contributions that are restricted to meeting the

operational or capital requirements of a particular function or segment. Taxes and other items not

properly included among program revenues are reported instead as general revenues .

A summary of the significant accounting policies of Mona Shores Public Schools (the "District")

consistently applied in the preparation of the accompanying financial statements follows:

The Reporting Entity

The District is governed by an elected seven-member Board of Education. As required by generally

accepted accounting principles, these financial statements present the reporting entity of Mona

Shores Public Schools. The criteria identified in GASB Statements 14 and 39, including financial

accountability, have been utilized in identifying the District's reporting entity which includes no

component units.

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

activities) report information on all of the nonfiduciary activities of the primary government. For the

most part, the effect of interfund activity has been removed from these statements. Governmental

activities, which normally are supported by taxes and intergovernmental revenues, are reported

separately from business-type activities, which rely to a significant extent on fees and charges for

support. The District had no business-type activities during the year ended June 30, 2009.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Separate financial statements are provided for governmental funds, proprietary funds and fiduciary

funds even though the latter are excluded from the government-wide financial statements.

Major individual governmental funds are reported as separate columns in the fund financial

statements.

- 25 -



Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement

focus and the accrual basis of accounting . Revenues are recorded when earned and expenses are

recorded 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 agency fund follows the accrual basis of accounting, but does not have a measurement focus.

The debt service funds account for the accumulation of resources which are restricted for the

payment of principal and interest on bonds.

The capital projects funds account for the accumulation and disbursement of funds for

construction projects.

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 or within one year for expenditure-driven grants. Expenditures

generally are recorded when a liability is incurred, as under accrual accounting. However, debt

service expenditures are recorded only when payment is due.

The building and site fund accounts for the costs of capital improvements. Financing is provided

by the Building & Site bonds issued in 2009.

Property taxes, expenditure-driven grant revenue 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. All other revenue items are considered to be measurable and available only

when cash is received by the District.

The District reports the following major governmental funds:

The special revenue funds account for assets which are restricted for specific purposes.

The general fund is the District’s primary operating fund. It accounts for all financial resources

of the general government, except those required to be accounted for in another fund.

Additionally, the District reports the following fund types:

- 26 -



1.

2.

Budgets are adopted for general and special revenue funds as required by state law and are adopted

on a basis consistent with generally accepted accounting principles (GAAP). The District considers

the debt service payment schedule to be an adequate budgetary control. The District follows these

procedures in establishing the budgetary data reflected in the financial statements:

Amounts reported as program revenues include 1) charges to customers or applicants for goods,

services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and

contributions. Internally dedicated resources are reported as general revenues rather than as program

revenues. Likewise, general revenues include all taxes, unrestricted grants and interest income.

The effect of interfund activity has been eliminated from the government-wide financial statements.

Budgets and Budgetary Accounting

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,

generally are followed in the government-wide financial statements to the extent that those standards

do not conflict with or contradict guidance of the Governmental Accounting Standards Board.

When both restricted and unrestricted resources are available for use, it is the District's policy to use

restricted resources first, then unrestricted resources as they are needed.

Proprietary funds distinguish operating revenues and expenses from non-operating items.

Operating revenues and expenses generally result from providing services and producing and

delivering goods in connection with a proprietary fund's principal ongoing operations. The principal

operating revenue of the internal service fund is charges to other funds to recover the costs of

benefits to retired employees. Operating expenses for the internal service fund includes the cost of

services. All revenues and expenses not meeting this definition are reported as nonoperating

revenues and expenses.

The internal service fund accounts for the cost of providing specific benefits to retired

employees. Operating expenses include the cost of services.

The Superintendent submits to the Board a proposed operating budget for the fiscal year

commencing the following July 1.

Public hearings are conducted to obtain taxpayer comments.

The agency fund accounts for resources held on behalf of other individuals and governments.

The District maintains a Student Activities Fund to record the transactions of student and parent

groups for school and school-related purposes. The funds are segregated and held in trust for the

students and parents.

- 27 -



3.

4.

5.

In general, outstanding balances between funds are reported as “due to/from other funds.” Activity

between funds that are representative of lending/borrowing arrangements outstanding at the end of

the fiscal year are referred to as “advances to/from other funds.”

For Mona Shores Public Schools, all properties are assessed as of December 31 and the related

property taxes are levied and become a lien on July 1 for 100 percent of the taxes which are due

September 15 and February 15.

Receivables and Revenue

Encumbrance accounting is employed in governmental funds. Encumbrances (purchase orders,

contracts) outstanding at year end are reported as reservations of fund balances and do not constitute

expenditures or liabilities because the goods or services have not been received as of year end; the

commitments will be reappropriated and honored during the subsequent year.

Cash and cash equivalents include cash on hand, demand deposits, and short-term investments with a

maturity of three months or less when acquired. Investments are stated at fair value.

Property taxes are recognized as revenue in the General and Debt Service funds on a levy year basis.

The 2008 levy amounts are recognized as current property tax revenue to the extent they are

collected during the year or within sixty days after year end. Collections of delinquent taxes in

subsequent years are recognized as property tax revenues in the year collected. Assessed values are

established annually by the various governmental units within the District and are equalized by the

State of Michigan.

Adoption and amendments of all budgets used by the District are governed by Public Act 621,

which was followed for the year ended June 30, 2009. Expenditures may not exceed

appropriations at the function level. The appropriations resolutions are based on the projected

expenditures budget of the department heads of the District. Any amendment to the original

budget must meet the requirements of Public Act 621. Any revisions that alter the total

expenditures of any fund must be approved by the Board of Education.

The budget is legally enacted through passage of a resolution.

Formal budgetary integration is employed as a management control device during the year for all

governmental funds requiring budgets.

Cash and Investments

The District did not have significant expenditure budget variances.

Encumbrances

Property Taxes

- 28 -



Years

20-50

5-10

5-20

Capital Assets

The State of Michigan utilized a foundation allowance approach, which provides for a specific

annual amount of revenue per student based on a state-wide formula. The foundation allowance is

funded from a combination of state and local sources. Revenues from state sources are primarily

governed by the District Aid Act and the School Code of Michigan. The State portion of the

foundation is provided from the State’s School Aid Fund and is recognized as revenue in accordance

with state law and accounting principles generally accepted in the United States of America.

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 categorical funds require an accounting to the State of the expenditures incurred.

For categorical funds meeting this requirement, funds received, which are not expended by the close

of the fiscal year, are recorded as deferred revenue. Other categorical funding is recognized when

the appropriation is received.

Inventory

Assets

Major outlays for capital assets and improvements are capitalized as projects are constructed.

Capital assets of the District are depreciated using the straight line method over the following

estimated useful lives:

Capital assets, which include land, buildings, equipment, and vehicles, are reported in the

governmental activities column 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 one year. Such assets are recorded at historical cost or estimated historical

cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the

date of donation.

Inventory is stated at cost (first-in, first-out). They consist primarily of food and cafeteria supplies

in the Food Service Fund. The donated commodities inventory in the Food Service Fund is valued

at current market value, based on government guidelines.

The costs of normal repair and maintenance that do not add to the value or materially extend asset

lives are not capitalized.

Buildings and additions

Furniture and other equipment

Buses and other vehicles

- 29 -



Salaries Payable and Accrued Employee Benefits

The liability for accrued retirement and the employer share of FICA related to the salaries payable

has been recorded as has the liability for employee health insurances for the months of July and

August. The District pays these insurances for this period as a part of the compensation for services

rendered in the preceding school year.

Reserves and Designations of Fund Balance/Restricted Net Assets

Compensated Absences

The liability for the sick leave has been computed using the vesting method in accordance with

Governmental Accounting Standards Board Statement No. 16. This liability is shown on the

statement of net assets.

Designations of fund balance are established to identify amounts set aside by the Board of Education

for future expenditures.

Reservations of fund balance are established to identify 1) third party claims against resources of the

entity that have not materialized as liabilities at the balance sheet date, or 2) the existence of assets

that, because of their nonmonetary nature or lack of liquidity, represent financial resources not

available for current appropriation or expenditure, or 3) the existence of assets that are legally

restricted to a future use.

A liability is recorded at June 30 for those amounts owed to teachers and other employees of the

District who do not work during the summer when school is not in session but have elected to have

their salaries paid over an entire year. This has the effect of properly charging their salaries to

expenditures in the fiscal year in which their services are received, even though they are not paid

until July and August of the following fiscal year.

Most employees of the District are compensated for leaves of absences chargeable to sick days.

Each school year, the covered employees are credited with a number of sick days and any unused

portion of such allowances can accumulate. Upon retirement, those employees who meet certain age

and years of service requirements will be paid for a portion of sick days accumulated to a maximum

number of days and at a rate determined by their job category.

Restricted net assets represent assets which are legally restricted by outside parties or enabling

legislation.

- 30 -



Districts electing to bond under the Durant settlement received a lump sum amount (bond proceeds)

on November 24, 1998. This created a liability which will be reduced each year with an annual state

appropriation made for debt service on the bonds. The annual State of Michigan appropriation is the

only revenue source for making the annual debt service payment on the bonds. If the legislature fails

to appropriate the funds, the District is under no obligation for payment. Additionally, the bond

documentation states specifically that the Bonds shall not be in any way a debt or liability of the

State of Michigan. This liability has been booked on the statement of net assets. Annual

appropriations from the State are recorded in the 1998 Bond Issue Fund along with the payment of

the interest and principal of the bonds.

The original bond proceeds were recorded in the 1998 Bond Issue Fund and expended for purposes

specified in Section 1351a of the Revised School code.

Interfund Transactions

The preparation of financial statements in conformity with generally accepted accounting principles

requires management to make estimates and assumptions that affect certain reported amounts and

disclosures. Accordingly, actual results could differ from those estimates.

During the course of normal operations, the District has numerous transactions between funds,

including expenditures and transfers of resources to provide services, construct assets, and service

debt. The accompanying financial statements generally reflect such transactions as transfers.

Operating subsidies are also recorded as transfers. The amounts recorded as subsidies or advances

are determined by the District.

Use of Estimates

Durant Related Issues

Settlement amounts were based on the formula used to determine amounts owed to Durant

plaintiffs. Half the settlement amount was received in ten annual payments; the other half was

received in a lump sum by participating in a special bonding program offered through the Michigan

Municipal Bond Authority (MMBA) or in fifteen annual payments. Mona Shores Public Schools

elected to participate in the special bonding program.

Under Public Act 142 of 1997, enacted in November 1997 as part of the Durant Resolution

Package, school districts and intermediate school districts were offered settlement amounts to settle,

compromise, and resolve, in their entirety, any potential claims they may have asserted for violations

of section 29, Article IX, of the constitution through September 30, 1997, which were similar to the

claims asserted by the plaintiffs in the Durant v. State of Michigan case. To be eligible to receive

its offer of settlement amount, the non-plaintiff district needed to adopt and submit to the State

Treasurer a waiver resolution, in the form set forth in Public Act 142 of 1997, waiving any potential

claims through September 30, 1997.

- 31 -



2.

3.

Governmental

Activities

Fiduciary

Activities Total

2,890$ -$ 2,890$

3,919,839 32,948 3,952,787

15,956,839 283,341 16,240,180

19,879,568$ 316,289$ 20,195,857$

a.

b.

c.

Subsequent Events

In preparing these financial statements, management has evaluated, for potential recognition or

disclosure, significant events or transactions that occurred during the period subsequent to June 30,

2009, the most recent statement of net assets presented herein, through the auditors' report date, the

date these financial statements were available to be issued. No significant such events or

transactions were identified.

Certificates of deposit insured by a State or national bank, savings accounts of a state or federal

savings and loan association, or certificates of deposit or share certificates of a state or federal

credit union organized and authorized to operate in this State.

Commercial paper rated prime at the time of purchase and maturing not more than 270 days after

the date of purchase.

Michigan law authorizes the School District to deposit and invest in:

The District reports State of Michigan school aid in the fiscal year in which the District is entitled to

the revenue as provided by State of Michigan school aid appropriation acts. State funding

represented 71% of the District's general fund revenue during the 2009 fiscal year.

Cash and investments are comprised of the following at year-end:

Deposits

Total cash and investments

STATE OF MICHIGAN SCHOOL AID

Investments

DEPOSITS AND INVESTMENTS

Bonds, bills or notes of the United States; obligations, the principal and interest of which are

fully guaranteed by the United States; or obligations of the State. In a primary or fourth class

school district, the bonds, bills or notes shall be payable at the option of the holder upon not

more than 90 days notice or, if not so payable, shall have maturity dates not more than 5 years

after the purchase dates.

Petty cash

- 32 -



d.

e.

f.

Maturity Fair Value Rating

MILAF External Investment Pool N/A $ 15,401,423 AAA S&P

Federal Home Loan Mortgage Corp 3/25/2014 250,000 AAA S&P

Federal National Mortgage Association 4/9/2012 200,000 AAA S&P

Federal Home Loan Bank 6/13/2016 162,434 AA S&P

Federal National Mortgage Association 7/2/2018 100,000 Aaa Moody

Shorebank CD 1/21/2011 100,000 Not Rated

GNMA II Single Family Pool 8/20/2025 9,991 Not Rated

Community Shores CD 3/3/2010 5,443 Not Rated



Total investments 16,240,180$

Interest Rate Risk - State law limits the allowable investments and the maturities of some of the

allowable investments as identified above. The District's investment policy does not have specific

limits in excess of state law on investment maturities as a means of managing its exposure to fair

value losses arising from increasing interest rates. None of the District's investments had fixed

maturities at year end.

The District has designated twelve banks for the deposit of its funds. All accounts are in the name

of the District and a specific fund or common account. They are recorded in District records at fair

value.

The District’s cash and investments are subject to several types of risk, which are examined in more

detail below:

The District chooses to disclose its investments by specifically identifying each. As of year end, the

District had the following investments:

Investment

Securities issued or guaranteed by agencies or instrumentalities of the United States government

or federal agency obligation repurchase agreements, and bankers' acceptance issued by a bank

that is a member of the federal deposit insurance corporation.

Mutual funds composed entirely of investment vehicles that are legal for direct investment by a

school district.

Investment and Deposit Risk

Investment pools, as authorized by the surplus funds investment pool act, composed entirely of

instruments that are legal for direct investment by a school district.

- 33 -

4.

General

Fund

Building

and Site

Fund

Nonmajor

and Other

Funds Total

Receivables

25,699$ 745$ 21,532$ 47,976$

6,012,290 - 256,200 6,268,490

6,037,989$ 745$ 277,732$ 6,316,466$

-$ -$ 220,172$ 220,172$ Noncurrent portion

Custodial Credit Risk - Investments - For an investment, custodial credit risk is the risk that, in the

event of the failure of the counterparty, the District will not be able to recover the value of its

investments or collateral securities that are in the possession of an outside party. The District

minimizes this risk by pre-qualifying the financial institutions, brokers/dealers, intermediaries and

advisors to be in compliance with the requirements set forth in the District's investment policy. Of

the above external investment pool the District's custodial credit risk exposure can not be

determined because the contains mutual funds which do not consist of specifically identifiable

securities.

Concentration of Credit Risk - State law limits allowable investments but does not limit

concentration of credit risk as identified above. The District's investment policy does not have

specific limits in excess of state law on concentration of credit risk.

RECEIVABLES

Receivables as of year-end for the District's individual major funds and the nonmajor and other

funds in the aggregate, including the applicable allowances for uncollectible accounts, are as

follows:

Trade

Intergovernmental

Credit Risk - State law limits investments to specific government securities, certificates of deposits

and bank accounts with qualified financial institutions, commercial paper with specific maximum

maturities and ratings when purchased, bankers acceptances of District's specific financial

institutions, qualified mutual funds, and qualified external investment pools as identified above.

The District's investment policy does not have specific limits in excess of state law on investment

credit risk. The ratings for each investment are identified above for investments held at year end.

Custodial Credit Risk - Deposits - Custodial credit risk is the risk that in the event of a bank failure,

the District’s deposits may not be returned. The District minimizes this risk by pre-qualifying the

financial institutions, broker/dealers, intermediaries, and advisors to be in compliance with the

requirements set forth in the District's investment policy. As of year end, $4,067,665 of the

District’s bank balance of $4,352,356 was exposed to custodial credit risk because it was uninsured

and uncollateralized.



Total governmental activities

- 34 -

5.

Balance Balance

July 1, June 30,

2008 Additions Dispositions 2009

Governmental activities

344,401$ -$ -$ 344,401$

- 227,134 - 227,134

344,401 227,134 - 571,535

51,040,828 242,322 - 51,283,150

21,140,840 151,592 45,683 21,246,749

72,181,668 393,914 45,683 72,529,899

(19,015,794) (1,163,461) - (20,179,255)

(12,306,581) (1,651,745) (45,683) (13,912,643)

(31,322,375) (2,815,206) (45,683) (34,091,898)

40,859,293 (2,421,292) - 38,438,001

41,203,694$ (2,194,158)$ -$ 39,009,536$

Land

capital assets

Depreciable capital assets:

capital assets, net

and equipment

Building furnishings

Depreciation expense was reported as unallocated on the statement of activities because the

District considers its assets to impact multiple activities and allocation is not practical.

Governmental activities

Total capital assets



Building and improvements

Building furnishings

and equipment

Nondepreciable capital assets:

Construction in progress

CAPITAL ASSETS

A summary of changes in capital assets activity for the year ended June 30, 2009 was as follows:

Total nondepreciable

Accumulated depreciation:

Building and improvements

Total depreciable capital assets

Total accumulated depreciation

being depreciated, net

- 35 -

6.

Transfers Transfers

In

Transfers

Out

Interfund Transfers

189,961$ 771,612$

Building and Site Fund - 315

Community services special revenue 47,667 38,750

Food service special revenue - 60,000

Athletics special revenue 723,402 90,668

1995 Bond issue debt service 315 -

Total $ 961,345 $ 961,345

7.

Balance Balance Due

July 1, June 30, Within

2008 Deletions 2009 One Year

1995 General

Obligation Bonds due

in a final installment of

$2,220,000 plus

interest ranging from

5.50% to 6.75%

through 2010 $ 4,295,000 $ 2,075,000 $ 2,220,000 $ 2,220,000

Transfers primarily reflect subsidies allocated from the General Fund.

Interfund balances primarily reflect balances utilized to facilitate appropriate cash flow for

operations. The composition of interfund balances is as follows:

Nonmajor Funds:



$ -

LONG-TERM LIABILITIES

The District issues bonds, notes, and other contractual commitments to provide for the acquisition

and construction of major capital facilities and the acquisition of certain equipment. General

obligation bonds are direct obligations and pledge the full faith and credit of the District. Other

long-term obligations include notes payable for equipment purchases, compensated absences and

early retirement incentives. The following is a summary of long-term debt transactions of the

District for the year ended June 30, 2009:

General Fund

INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS

Additions

- 36 -



Balance Balance Due



2005 General


in annual installments

ranging from $420,000

to $480,000 plus


4.0% to 5.0% through

2015 $ 3,165,000 $ 405,000 $ 2,760,000 $ 420,000

2009 General


in annual installments

ranging from $65,000

to $4,895,000 plus

interest of 3.99%

through 2019 - - 12,345,000 65,000

2002 Refunding

General Obligation

Bonds due in annual

installments ranging

from $65,000 to

$1,805,000 plus



2017 8,805,000 90,000 8,715,000 90,000

2003 Refunding

General Obligation

Bonds due in annual


from $1,325,000 to

$1,900,000 plus



2012 2,690,000 - 2,690,000 -

$ -

-

-

12,345,000

Additions

- 37 -



Balance Balance Due



2008 Refunding

General Obligation

Bonds due in annual


from $1,090,000 to

$1,200,000 plus



2017 $ 7,915,000 $ 65,000 $ 7,850,000 $ -

1998 School

Improvement Bonds

(Durant Settlement)

due in amounts ranging

from $22,365 to

$162,389 plus interest

at 4.76% through 2013 272,825 25,715 247,110 26,938

Equipment Note

Payable due in

amounts ranging from

$2,415 to $7,539

including interest

ranging from 3.27% to

8.258% through 2013 144,002 18,239 125,763 26,197

Subtotal installment

debt 27,286,827 2,678,954 36,952,873 2,848,135

Compensated

absences 520,900 - 560,273 560,273

Deferred issuance

discounts (22,625) - (4,873) (17,752) -

Deferred issuance

premiums 370,269 - 77,478 292,791 -

Deferred loss on

refunding (472,971) (123,180) (349,791) -

Net installment debt 27,682,400 2,628,379 37,438,394 3,408,408

Early retirement

incentives 1,267,325 302,956 964,369 326,682

Total long-term debt $ 28,949,725 $ 2,931,335 $ 38,402,763 $ 3,735,090

-

-

$ -

-

39,373

12,384,373

$ 12,384,373

-

Additions

12,345,000

- 38 -



Interest

2010 1,490,879$

2011 1,352,239

2012 1,245,890

2013 1,188,919

2014 1,009,400

2015-2019 2,740,581

Total 9,027,908$

8.

9.

RISK MANAGEMENT

Plan Description

3,046,226

RETIREMENT PLAN

2,848,135$

3,319,486

Principal

21,270,000

The District contributes to the Michigan Public School Employees’ Retirement System (MPSERS),

a cost-sharing multiple-employer defined benefit pension plan administered by the State of

Michigan Department of Management and Budget, Office of Retirement Systems. MPSERS

provides retirement, survivor and disability benefits to plan members and beneficiaries. Benefit

provisions are established and may be amended by state statute.

36,952,873$

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction

of assets; errors and omissions; injuries to employees and natural disasters. During the year ended

June 30, 2009, the District carried commercial insurance to cover losses related to these risks. The

District has had no settled claims resulting from these risks that exceeded their commercial

coverage in any of the past three fiscal years.

3,079,530

Following is a summary of future bond and loan principal maturities and interest requirements:

In prior years, the District had defeased certain bond issues by creating irrevocable trust funds.

New debt has been issued and the proceeds have been used to purchase U.S. government securities

that were placed in the trust funds. The investments and fixed earnings from the investments are

sufficient to fully service the defeased debt until the debt is called or matures. For financial

reporting purposes, the debt has been considered defeased and therefore removed as a liability from

the District’s long-term debt. As of June 30, 2009, the amount of defeased debt outstanding, but

removed from the long-term debt, amounted to $19,600,000.

The Office of Retirement Systems issues a publicly available financial report that includes

financial statements and required supplementary information for MPSERS. That report may be

obtained by writing to Michigan Public School Employees Retirement System, 7150 Harris Drive,

P.O. Box 30026, Lansing, Michigan 48909 or by calling (517) 322-6000.

3,389,496

- 39 -



10.

Member Investment Plan (MIP) members enrolled in MIP prior to January 1, 1990 contribute at a

permanently fixed rate of 3.9% of gross wages. Members first hired between January 1, 1990 and

June 30, 2008 contribute at the following graduated permanently fixed contribution rate: 3.0% of

the first $5,000; 3.6% of $5,001 through $15,000; 4.3% of all wages over $15,000. Members hired

after July 1, 2008 contribute at the following graduated permanently fixed contribution rate: 3.0%

of the first $5,000; 3.6% of $5,001 through $15,000; 6.4% of all wages over $15,000. Basic Plan

members make no contributions. The District is required to contribute the full actuarial funding

contribution amount to fund pension benefits, plus an additional amount to fund retiree health care

benefits on a cash disbursement basis.

During the year ended June 30, 2009, the District recorded expenses of approximately $40,000

relating to this plan. Estimated amounts under this and previous severance plans have been

accrued as of June 30, 2009.

The District negotiated a voluntary severance retirement incentive plan, which is offered to

teachers with 10 or more years of service with the District. Eligible employees who elect to retire

under the plan will receive a lump sum contribution into a 403(b) account in the amount of $1,000

for each full-time year of service with the District. This amount is reduced by any previous non-

elective employer contributions made to the teacher’s 403(b) account and shall not exceed $12,500.

The severance plan also includes an amount of up to $3,000 per year to be contributed as a non-

elective contribution into a 403(b) account or a Voluntary Employee Benefit Account for up to five

years after retirement. This benefit is intended to offset any out of pocket costs incurred by the

transition to the MPSERS retirement health plan.

Other Post-Employment Benefits

Post-employment benefits for health, dental, vision and hearing insurance are available at

retirement through the State Retirement Plan. Employees eligible for retirement benefits can use a

portion of those benefits to purchase these insurance benefits. Mona Shores Public Schools has no

obligation for post-employment benefits after an employee terminates employment.

The rate from July to September was 16.72%, and from October through June was 16.54% of

covered payroll. The contribution requirements of plan members and the District are established

by Michigan State statute and may be amended only by action of the State Legislature. The

District's contributions to MPSERS for the years ended June 30, 2009, 2008, and 2007 were

approximately $3,311,000, $3,318,000, and $3,504,000, respectively, equal to the required

contributions for each year.

Funding Policy

SEVERANCE / RETIREMENT INCENTIVE PLAN

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11.

12.

13.

763,199$

Adjustments:

Purchases under capitalization

policy limits (142,151)

Net assets capitalized 621,048$

14.

Since

Inception

Revenues 16,726,697$

Expenditures 4,928,149

The Building and Site Fund includes capital project activities funded with bonds issued after May

1, 1994. The following is a summary of the revenues and expenditures in the fund.

The District participates in federally assisted grant programs, which are subject to program

compliance audits by the grantor or its representatives. Such audits of these programs may be

performed at some future date. The amount, if any, of expenditures which may be disallowed by

the granting agencies cannot be determined at this time, although the District expects such

amounts, if any, not to be material.

Total capital outlay as reported in the governmental funds

CAPITAL PROJECTS FUNDS

CONTINGENCIES

ENDOWMENT FUNDS

The District holds funds in a trustee capacity which are restricted for scholarships and school

projects. At June 30, 2009, $16,332 was held by the District under its capacity as trustee.

Federal Grant Programs

Capital outlay expenditures for governmental funds differ from amounts capitalized. The

differences are detailed as follows:

RECONCILIATION OF CAPITAL OUTLAY

554,568

Year ended

June 30, 2009

For this capital project, the District has complied with the applicable provisions of Section 1351a

of the Michigan School Code.

12,348,588$

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15.

16.

*****

RESTATEMENT

Beginning net assets were increased by $272,825 to adjust amounts due from other governments in

connection with the Durant bonds.

BOND SINKING FUND

The Bond Sinking Fund records capital project activities funded with Sinking Fund millage. For

this fund, the District has complied with the applicable provisions of section 1212(1) of the

Revised School Code and the applicable section of the Revised Bulletin for School District Audits

of Bonded Construction Funds and of Sinking Funds in Michigan.

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COMBINING AND INDIVIDUAL FUND FINANCIAL

STATEMENTS AND SCHEDULES

NONMAJOR GOVERNMENTAL FUNDS


Combining Balance Sheet

Nonmajor Governmental Funds

June 30, 2009

Special Revenue

Community Food Memorial

Services Service Athletics Scholarship

Assets

Cash and investments 1,507$ 46,645$ 10,532$ 16,332$

Accounts receivable 18,210 - - -

Due from other governmental

units - 9,090 - -

Inventory - 1,264 - -

Total assets 19,717$ 56,999$ 10,532$ 16,332$

Liabilities

Accrued expenses 2,047$ (89)$ 10,532$ -$

Deferred revenue 17,670 - - -

Total liabilities 19,717 (89) 10,532 -

Fund balances

Reserved for inventory - 1,264 - -

Unreserved, undesignated - 55,824 - 16,332

Total fund balances - 57,088 - 16,332

Total liabilities

and fund balances 19,717$ 56,999$ 10,532$ 16,332$

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Combining Balance Sheet


June 30, 2009

Special Revenue

District Bond Durant Bond Bond Capital

Issues Issue Sinking Projects Total

670,528$ -$ 1,052,745$ 7,758$ 1,806,047$

3,322 - - - 21,532

- 247,110 - - 256,200

- - - - 1,264

673,850$ 247,110$ 1,052,745$ 7,758$ 2,085,043$

-$ -$ -$ -$ 12,490$

- 247,110 - - 264,780

- 247,110 - - 277,270

- - - - 1,264

673,850 - 1,052,745 7,758 1,806,509

673,850 - 1,052,745 7,758 1,807,773

673,850$ 247,110$ 1,052,745$ 7,758$ 2,085,043$

Capital ProjectsDebt Service

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Combining Statement of Revenue, Expenditures

and Changes in Fund Balances



Special Revenue

Community Food Memorial

Services Service Athletics Scholarship

Revenue

Local sources:

Property taxes -$ -$ -$ -$

Tuition 68,092 - - -

Investment income 646 900 254 -

Food sales, athletics

and recreation 14,992 620,224 108,933 -

Other 519,299 - - -

State sources - 47,227 - -

Federal sources - 561,557 - -

Total revenue 603,029 1,229,908 109,187 -

Expenditures

Current:

Recreational activities 611,946 - - -

Food service - 1,127,229 - -

Athletic activities - - 741,921 -

Debt service:

Principal - - - -

Interest expense and

other charges - - - -

Capital outlay - - - -

Total expenditures 611,946 1,127,229 741,921 -


expenditures (8,917) 102,679 (632,734) -

Other financing sources (uses)

Transfers in 47,667 - 723,402 -

Transfers out (38,750) (60,000) (90,668) -


sources (uses) 8,917 (60,000) 632,734 -

Net change in fund balances - 42,679 - -

Fund balances, beginning of year - 14,409 - 16,332

Fund balances, end of year -$ 57,088$ -$ 16,332$

- 45 -

District Bond Durant Bond Bond Capital

Issues Issue Sinking Projects Total

3,954,952$ -$ 918,874$ -$ 4,873,826$

- - - - 68,092

28,703 - 3,399 328 34,230

- - - - 744,149

- - - 2,331 521,630

- 32,448 - - 79,675

- - - - 561,557

3,983,655 32,448 922,273 2,659 6,883,159

- - - - 611,946

- - - - 1,127,229

- - - - 741,921

2,635,000 25,715 - - 2,660,715

1,248,822 6,733 - - 1,255,555

- - 244,969 - 244,969

3,883,822 32,448 244,969 - 6,642,335

99,833 - 677,304 2,659 240,824

315 - - - 771,384

- - - - (189,418)

315 - - - 581,966

100,148 - 677,304 2,659 822,790

573,702 - 375,441 5,099 984,983

673,850$ -$ 1,052,745$ 7,758$ 1,807,773$

Capital ProjectsDebt Service

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AGENCY FUND


Statement of Changes in Assets and Liabilities

Agency Fund


Balance Balance

July 1, June 30,

2008 Increases Decreases 2009

Assets

Cash and investments 315,793$ 809,312$ (808,816)$ 316,289$

Liabilities

Due to student groups 315,793$ 809,312$ (808,816)$ 316,289$

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audited financial statements for the year ended june 30,...

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