audited june 30, financial 2017 statements...the financial statements also include notes that...

AuditedFinancialStatements

June30,2017

CONTENTS PAGEINDEPENDENTAUDITOR'SREPORT 1‐3

MANAGEMENT'SDISCUSSIONANDANALYSIS(UNAUDITED) 4‐12

BASICFINANCIALSTATEMENTSGovernment‐wideFinancialStatements

StatementofNetPosition 13StatementofActivities 14

FundFinancialStatementsBalanceSheet‐GovernmentalFunds 15ReconciliationoftheGovernmentalFundsBalanceSheettotheStatementof

NetPosition 16StatementofRevenues,Expenditures,andChangesinFundBalances‐

GovernmentalFunds 17ReconciliationoftheGovernmentalFundsStatementofRevenues,

Expenditures,andChangesinFundBalancetotheStatementofActivities 18StatementofNetPosition‐ProprietaryFund 19StatementofRevenues,Expenses,andChangesinFundNetPosition‐

ProprietaryFund 20StatementofCashFlows‐ProprietaryFund 21StatementofFiduciaryNetPosition 22StatementofChangesinFiduciaryNetPosition 23

NotestotheFinancialStatements 24‐54

REQUIREDSUPPLEMENTARYINFORMATION(UNAUDITED)BudgetaryComparisonSchedule–GeneralFund 55ScheduleofSchoolDistrict’sProportionateShareofNetPensionLiability–Public

SchoolEmployee’sRetirementSystem 56ScheduleofSchoolDistrict’sContributions–PublicSchoolEmployee’sRetirement

System 57OPEBScheduleofFundingProgress 58

OTHERSUPPLEMENTARYINFORMATIONScheduleofExpendituresofFederalAwards 59‐60NotestoScheduleofExpendituresofFederalAwards 61

INDEPENDENTAUDITOR'SREPORTONINTERNALCONTROLOVERFINANCIALREPORTINGANDONCOMPLIANCEANDOTHERMATTERSBASEDONANAUDITOFFINANCIALSTATEMENTSPERFORMEDINACCORDANCEWITHGOVERNMENTAUDITINGSTANDARDS 62‐63

INDEPENDENTAUDITOR'SREPORTONCOMPLIANCEFOREACHMAJORPROGRAMANDONINTERNALCONTROLOVERCOMPLIANCEREQUIREDBYTHEUNIFORMGUIDANCE 64‐65

SCHEDULEOFFINDINGSANDQUESTIONEDCOSTS 66‐67

SUMMARYSCHEDULEOFPRIORAUDITFINDINGS 68

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INDEPENDENTAUDITOR’SREPORT

BoardofDirectorsHanoverPublicSchoolDistrictHanover,Pennsylvania

REPORTONTHEFINANCIALSTATEMENTS

Wehaveauditedtheaccompanyingfinancialstatementsofthegovernmentalactivities,thebusiness‐typeactivities,eachmajorfund,andtheaggregateremainingfundinformationofHanoverPublicSchoolDistrict,asofandfortheyearendedJune30,2017,andtherelatednotestothefinancialstatements,whichcollectivelycomprisetheSchoolDistrict'sbasicfinancialstatementsaslistedinthetableofcontents.

Management’sResponsibilityfortheFinancialStatements

ManagementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica;thisincludesthedesign,implementation,andmaintenanceofinternalcontrolrelevanttothepreparationandfairpresentationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’sResponsibility

Ourresponsibilityistoexpressopinionsonthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmericaandthestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStates.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Accordingly,weexpressnosuchopinion.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofsignificantaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinions.

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Opinions

Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,therespectivefinancialpositionofthegovernmentalactivities,thebusiness‐typeactivities,eachmajorfund,andtheaggregateremainingfundinformationoftheHanoverPublicSchoolDistrict,asofJune30,2017,andtherespectivechangesinfinancialposition,and,whereapplicable,cashflowsthereoffortheyearthenendedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.

OtherMatters

RequiredSupplementaryInformation

AccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequirethatthemanagement'sdiscussionandanalysisonpages4to12,thebudgetarycomparisonschedule–generalfundonpage55,scheduleofSchoolDistrict’sproportionateshareofthenetpensionliability–PSERSonpage56,scheduleofSchoolDistrict’scontributions–PSERSonpage57andtheOPEBscheduleoffundingprogressonpage58bepresentedtosupplementthebasicfinancialstatements.Suchinformation,althoughnotapartofthebasicfinancialstatements,isrequiredbytheGovernmentalAccountingStandardsBoard,whoconsidersittobeanessentialpartoffinancialreportingforplacingthebasicfinancialstatementsinanappropriateoperational,economic,orhistoricalcontext.WehaveappliedcertainlimitedprocedurestotherequiredsupplementaryinformationinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica,whichconsistedofinquiriesofmanagementaboutthemethodsofpreparingtheinformationandcomparingtheinformationforconsistencywithmanagement’sresponsestoourinquiries,thebasicfinancialstatements,andotherknowledgeweobtainedduringourauditofthebasicfinancialstatements.Wedonotexpressanopinionorprovideanyassuranceontheinformationbecausethelimitedproceduresdonotprovideuswithsufficientevidencetoexpressanopinionorprovideanyassurance.

OtherInformation

OurauditwasconductedforthepurposeofformingopinionsonthefinancialstatementsthatcollectivelycompriseHanoverPublicSchoolDistrict'sbasicfinancialstatements.ThescheduleofexpendituresoffederalawardsispresentedforpurposesofadditionalanalysisasrequiredbyTitle2U.S.CodeofFederalRegulations(CFR)Part200,UniformAdministrativeRequirements,CostPrinciples,andAuditRequirementsforFederalAwards,andisnotarequiredpartofthebasicfinancialstatements.

Thescheduleofexpendituresoffederalawardsistheresponsibilityofmanagementandwasderivedfromandrelatesdirectlytotheunderlyingaccountingandotherrecordsusedtopreparethebasicfinancialstatements.Suchinformationhasbeensubjectedtotheauditingproceduresappliedintheauditofthefinancialstatementsandcertainadditionalprocedures,includingcomparingandreconcilingsuchinformationdirectlytotheunderlyingaccountingandotherrecordsusedtopreparethebasicfinancialstatementsortothebasicfinancialstatementsthemselves,andotheradditionalproceduresinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.Inouropinion,thescheduleofexpendituresoffederalawardsisfairlystated,inallmaterialrespects,inrelationtothebasicfinancialstatementsasawhole.

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OtherReportingRequiredbyGovernmentAuditingStandards

InaccordancewithGovernmentAuditingStandards,wehavealsoissuedourreportdatedJanuary3,2018,onourconsiderationoftheHanoverPublicSchoolDistrict’sinternalcontroloverfinancialreportingandonourtestsofitscompliancewithcertainprovisionsoflaws,regulations,contracts,andgrantagreementsandothermatters.Thepurposeofthatreportistodescribethescopeofourtestingofinternalcontroloverfinancialreportingandcomplianceandtheresultsofthattesting,andnottoprovideanopiniononinternalcontroloverfinancialreportingoroncompliance.ThatreportisanintegralpartofanauditperformedinaccordancewithGovernmentAuditingStandardsinconsideringHanoverPublicSchoolDistrict’sinternalcontroloverfinancialreportingandcompliance.

Hanover,PennsylvaniaJanuary3,2018

HANOVERPUBLICSCHOOLDISTRICTManagement'sDiscussionandAnalysis(MD&A)RequiredSupplementaryInformationJune30,2017

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ThediscussionandanalysisofHanoverPublicSchoolDistrict’sfinancialperformanceprovidesanoverallreviewoftheSchoolDistrict’sfinancialactivitiesforthefiscalyearendedJune30,2017.TheintentofthisdiscussionandanalysisistolookattheSchoolDistrict’sfinancialperformanceasawhole;readersshouldalsoreviewthefinancialstatementsandthenotestothebasicfinancialstatementstoenhancetheirunderstandingoftheSchoolDistrict’sfinancialperformance.TheManagementDiscussionandAnalysis(MD&A)isanelementofthereportingmodeladoptedbytheGovernmentalAccountingStandardsBoard(GASB)intheirStatementNo.34BasicFinancialStatements–andManagement’sDiscussionandAnalysis–forStateandLocalGovernments.CertaincomparativeinformationbetweenthecurrentyearandtheprioryearisrequiredtobepresentedintheMD&A.FINANCIALHIGHLIGHTS

TheSchoolDistrict’sfinancialstatusdeclinedduringthe2016‐17fiscalyear.Totalnetpositiondecreased5%overthecourseoftheyear.

Overallgeneralrevenuesandnettransferswere$25,854,647,whichrepresents$452,486less

thannetprogramexpenses.

Thenetpositionofbusiness‐typeactivities–foodservices–decreased4%thisyear.Revenuesincreased5%to$965,432(includingtransfers),whileexpensesincreased7%to$993,066.

Attheendofthecurrentfiscalyear,thefundbalanceoftheGeneralFundwas$1,345,780

comparedto$1,049,042intheprioryear.Adecreasewasanticipatedinthebudgetprocessasfundbalancewasexpectedtobeusedtobalancethebudgetbutbecauseofrevenuesexceedingbudgetmorethanexpenses,thegeneralfundhadapositivechangeinfundbalanceduringtheyear.

OVERVIEWOFTHEFINANCIALSTATEMENTS

Thisannualreportconsistsofthreeparts:management’sdiscussionandanalysis(thissection),thebasicfinancialstatements,andrequiredsupplementaryinformation.Thebasicfinancialstatementsincludetwokindsofstatements,whichpresentdifferentviewsoftheSchoolDistrict.ThefirsttwostatementsareGovernment‐widefinancialstatementsthatprovidebothshort‐termandlong‐terminformationabouttheSchoolDistrict’soverallfinancialstatus.TheremainingstatementsarefundfinancialstatementsthatfocusonindividualpartsoftheSchoolDistrict,reportingtheSchoolDistrict’soperationsinmoredetailthanthegovernment‐widestatements.Thegovernmentalfundsstatementsindicatehowbasicservicessuchasregularandspecialeducationwerefinancedintheshorttermaswellasindicatefuturespendingplans.Proprietaryfundsstatementsoffershort‐termandlong‐termfinancialinformationabouttheactivitiestheSchoolDistrictoperateslikeabusiness,suchasfoodservices.FiduciaryfundsstatementsprovideinformationaboutthefinancialrelationshipsinwhichtheSchoolDistrictactssolelyasatrusteeoragentforthebenefitofothers,suchasstudentactivityfundsandscholarshipfunds.Thefundfinancialstatementsalsoincludethebudget/actualcomparisonofthegeneralfund,whichisreportedaspartofthebasicfinancialstatementsratherthanasrequiredsupplementaryinformationinaccordancewithrequirementsofthePennsylvaniaDepartmentofEducation.


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Thefinancialstatementsalsoincludenotesthatexplainsomeoftheinformationinthestatements,aswellasprovidemoredetaileddata.ThestatementsarefollowedbyasectionofrequiredsupplementaryinformationthatfurtherexplainsandsupportsthefinancialstatementswithacomparisonoftheSchoolDistrict’sbudgetfortheyear.FigureA‐1showshowthevariouspartsofthisannualreportarearrangedandrelatetooneanother.

FigureA‐1RequiredComponentsof

HanoverPublicSchoolDistrict’sFinancialReport

BasicFinancialStatements

RequiredSupplementaryInformation

District‐wideFinancialStatements

FundFinancialStatements

NotestotheFinancialStatements

Management’sDiscussion&Analysis


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FigureA‐2summarizesthemajorfeaturesoftheSchoolDistrict’sfinancialstatements,includingtheportionoftheSchoolDistricttheycoverandthetypesofinformationtheycontain.Theremainderofthisoverviewsectionofthemanagementdiscussionandanalysisexplainsthestructureandcontentsofeachofthestatements.

FigureA‐2MajorFeaturesofHanoverPublicSchoolDistrict’sGovernment‐wideandFundFinancialStatements

Government‐wide

StatementsFundFinancialStatements

GovernmentalFunds ProprietaryFunds FiduciaryFundsScope EntireSchoolDistrict

(exceptfiduciaryfunds)

ActivitiesoftheSchoolDistrictthatisnotproprietaryorfiduciary,suchasgeneraloperatingandcapitalprojects.

ActivitiestheSchoolDistrictoperatessimilartoprivatebusinesses,suchasfoodservice.

InstancesinwhichtheSchoolDistrictadministersresourcesonbehalfofsomeoneelse,suchasscholarshipandstudentactivitiesprograms.

RequiredFinancialStatements

StatementofNetPosition

StatementofActivities

BalanceSheet StatementofRevenues,Expenditures,andChangesinFundBalances

StatementofNetPosition

StatementofRevenues,Expenditures,andChangesinNetPosition

StatementofCashFlows

StatementofFiduciaryNetPosition

StatementofChangesinFiduciaryNetPosition

AccountingBasis&MeasurementFocus

Accrualaccountingandeconomicresourcesfocus

Modifiedaccrualaccountingandcurrentfinancialfocus



Typesofassets/liabilityinformation

Allassetsandliabilities,bothfinancialandcapital,andshort‐termandlong‐term.

Generally,assetsexpectedtobeusedupandliabilitiesthatcomedueduringtheyearorsoonthereafter;nocapitalassetsorlong‐termliabilitiesincluded.

Allassetsandliabilities,bothfinancialandcapital,andshort‐termandlong‐term.

Allassetsandliabilities,bothshort‐termandlong‐term;fundsdonotcurrentlycontaincapitalassets,althoughtheycan.

Typesofinflow/outflowinformation

Allrevenuesandexpensesduringyear,regardlessofwhencashisreceivedorpaid.

Revenueforwhichcashisreceivedduringorsoonaftertheendoftheyear;expenditureswhengoodsorserviceshavebeenreceivedandtherelatedliabilityisdueandpayable.

Allrevenuesandexpensesduringyear,regardlessofwhencashisreceivedorpaid.

Alladditionsanddeductionsduringyear,regardlessofwhencashisreceivedorpaid.


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GOVERNMENT‐WIDESTATEMENTS

Thegovernment‐widestatementsreportinformationabouttheSchoolDistrictasawholeusingaccountingmethodssimilartothoseusedbyprivate‐sectorcompanies.TheStatementofNetPositionincludesalloftheSchoolDistrict’sassets,deferredoutflowsofresources,liabilitiesanddeferredinflowsofresources.Allofthecurrentyear’srevenuesandexpensesareaccountedforintheStatementofActivitiesregardlessofwhencashisreceivedorpaid.

Thetwogovernment‐widestatementsreporttheSchoolDistrict'snetpositionandhowtheyhavechanged.Netposition,thedifferencebetweentheSchoolDistrict’sassets,deferredoutflowsofresources,liabilitiesanddeferredinflowsofresources,areonewaytomeasuretheSchoolDistrict’sfinancialhealthorposition.

Overtime,increasesordecreasesintheSchoolDistrict’snetpositionareanindicationofwhetheritsfinancialhealthisimprovingordeteriorating,respectively.

ToassesstheoverallhealthoftheSchoolDistrict,youneedtoconsideradditionalnon‐financialfactors,suchaschangesintheSchoolDistrict’spropertytaxbaseandtheconditionorneedforimprovementsorexpansionoftheexistingschoolfacilities.

Thegovernment‐widefinancialstatementsoftheSchoolDistrictaredividedintotwocategories:

Governmentalactivities–MostoftheSchoolDistrict’sbasicservicesareincludedhere,suchasinstruction,administration,andcommunityservices.Propertytaxes,stateandfederalsubsidies,andgrantsfinancemostoftheseactivities.

Business‐typeactivities–TheSchoolDistrictoperatesafoodserviceoperationandchargesfeestostudents,staff,andvisitorstohelpitcoverthecostsofthefoodserviceoperation.

FUNDFINANCIALSTATEMENTS

ThefundfinancialstatementsprovidemoredetailedinformationabouttheSchoolDistrict’sfunds.ThesestatementsfocusontheSchoolDistrict’smostsignificantor“major”funds–notontheSchoolDistrictasawhole.FundsareaccountingcomponentsthattheSchoolDistrictusestokeeptrackofspecificsourcesoffundingandspendingonparticularprograms.Somefundsarerequiredbystatelawandbybondrequirements.TheSchoolDistrictmayestablishotherfundstocontrolandmanagemoneyforparticularpurposes,suchasrepayingitslong‐termdebts.

TheSchoolDistricthasthreetypesoffundsasfollows:

Governmentalfunds–MostoftheSchoolDistrict’sactivitiesarereportedingovernmentalfunds,whichfocusonthedeterminationoffinancialpositionandchangeinfinancialposition,notonincomedetermination.Theyarereportedusinganaccountingmethodcalledmodifiedaccrualaccounting,whichmeasurescashandallotherfinancialassetsthatcanreadilybeconvertedtocash.Thegovernmentalfundstatementsprovideadetailedshort‐termviewoftheSchoolDistrict’soperationsandtheservicesitprovides.GovernmentalfundinformationhelpsthereaderdeterminewhethertherearemoreorfewerfinancialresourcesthatcanbespentinthenearfuturetofinancetheSchoolDistrict’sprograms.Therelationship(ordifferences)betweengovernmentalactivities(reportedintheStatementofNetPositionandtheStatementofActivities)andgovernmentalfundsisreconciledinthefinancialstatements.


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Proprietaryfunds–ThesefundsareusedtoaccountfortheSchoolDistrict'sactivitiesthataresimilartobusinessoperationsintheprivatesector;orwherethereportingisondeterminingnetincome,financialposition,changesinfinancialposition,andasignificantportionoffundingthroughusercharges.WhentheSchoolDistrictchargescustomersforservicesitprovides–whethertooutsidecustomersortootherunitsintheSchoolDistrict–theseservicesaregenerallyreportedinproprietaryfunds.TheFoodServiceFundistheSchoolDistrict’sproprietaryfundandisthesameasthebusiness‐typeactivitieswereportinthegovernment‐widestatements,butprovidesmoredetailandadditionalinformation,suchascashflows.Fiduciaryfunds‐TheSchoolDistrictisthetrustee,orfiduciary,forassetsthatbelongtoothers,suchasscholarshipfundsorstudentactivityfunds.TheSchoolDistrictisresponsibleforensuringthattheassetsreportedinthesefundsareusedonlyfortheirintendedpurposesandbythosetowhomtheassetsbelong.TheSchoolDistrictexcludestheseactivitiesfromtheSchoolDistrict'sgovernment‐widefinancialstatementsbecausetheSchoolDistrictcannotusetheseassetstofinanceitsoperations.

FINANCIALANALYSISOFTHESCHOOLDISTRICTASAWHOLE

TheSchoolDistrict’scombinednetpositionwassmalleronJune30,2017whencomparedtothepriorfiscalyear.Totalnetpositiondecreased5%duringtheyear.(SeeFigureA‐1)ThedownturnintheSchoolDistrict’sfinancialpositioncamefromitsgovernmentalandbusiness‐typeactivities.Governmentalnetpositiondecreased2%fromprioryear.ThenetpositionoftheSchoolDistrict’sbusiness‐typeactivitiesdecreased4%fromprioryear.

TableA‐1June30,2017and2016

NetPosition

2016 2017 2016 2017 2016 2017Currentandotherassets 6,160,476$ 6,342,831$ 37,842$ 74,026$ 6,198,318$ 6,416,857$Capitalassets 29,862,840 28,728,096 64,060 49,874 29,926,900 28,777,970

TotalAssets 36,023,316 35,070,927 101,902 123,900 36,125,218 35,194,827

Deferredoutflowsofresources 4,370,443 9,339,115 105,888 216,794 4,476,331 9,555,909Totaldeferredoutflowsofresources 4,370,443 9,339,115 105,888 216,794 4,476,331 9,555,909

Currentandotherliabilities 5,232,899 6,091,741 20,625 17,473 5,253,524 6,109,214Long‐termliabilities 60,037,428 64,178,619 842,240 968,858 60,879,668 65,147,477

Totalliabilities 65,270,327 70,270,360 862,865 986,331 66,133,192 71,256,691

Deferredinflowsofresources 301,613 462,054 5,153 42,225 306,766 504,279Totaldeferredinflowsofresources 301,613 462,054 5,153 42,225 306,766 504,279

NetPositionNetinvestmentincapitalassets 12,517,007 13,535,403 64,060 49,874 12,581,067 13,585,277

Restricted 1,946,690 1,674,840 ‐ ‐ 1,946,690 1,674,840Unrestricted (39,641,878) (41,532,615) (724,288) (737,736) (40,366,166) (42,270,351)

Totalnetposition (25,178,181)$ (26,322,372)$ (660,228)$ (687,862)$ (25,838,409)$ (27,010,234)$

Governmental Business‐typeActivities Activities Total

MostoftheSchoolDistrict'snetpositionareinvestedincapitalassets(buildings,land,andequipment).Theremainingnetpositionconsistofrestrictedandunrestrictedamounts.


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Theresultsofthisyear'soperationsasawholearereportedintheStatementofActivities.Allexpensesarereportedinthefirstcolumn.Specificcharges,grants,revenues,andsubsidiesthatdirectlyrelatetospecificexpensecategoriesarerepresentedtodeterminethefinalamountoftheSchoolDistrict'sactivitiesthataresupportedbyothergeneralrevenues.ThetwolargestgeneralrevenuesarethelocaltaxesassessedtocommunitytaxpayersandtheBasicEducationSubsidyprovidedbytheStateofPennsylvania.TableA‐2takestheinformationfromthatStatement,rearrangesitslightly,soyoucanseeourtotalrevenuesfortheyear.ThetablealsopresentstheexpensesofboththeGovernmentalActivitiesandtheBusiness‐typeActivitiesoftheSchoolDistrict.

TableA‐2

FiscalYearsendedJune30,2017and2016ChangesinNetposition

2016 2017 2016 2017 2016 2017RevenuesProgramrevenuesChargesforservices 209,695$ 119,164$ 167,650$ 148,141$ 377,345$ 267,305$Operatinggrantsandcontributions 4,799,721 4,920,103 702,843 744,687 5,502,564 5,664,790Capitalgrantsandcontributions 481,582 345,457 ‐ ‐ 481,582 345,457Generalrevenues ‐ ‐Propertyandwagetaxes 21,540,499 22,268,547 ‐ ‐ 21,540,499 22,268,547Unrestrictedgrants,subsidiesandcontributions 3,268,399 3,555,339 ‐ 7,599 3,268,399 3,562,938Other 96,971 98,557 3,066 16,241 100,037 114,798TotalRevenues 30,396,867$ 31,307,167$ 873,559$ 916,668$ 31,270,426$ 32,223,835$

ExpensesInstruction 20,665,070$ 22,170,361$ ‐$ ‐$ 20,665,070$ 22,170,361$Instructionalstudentsupport 2,538,449 2,572,814 ‐ ‐ 2,538,449 2,572,814Administrativeandfinancialsupport 2,861,479 3,082,531 ‐ ‐ 2,861,479 3,082,531Operationandmaintenanceofplant 2,316,281 2,232,019 ‐ ‐ 2,316,281 2,232,019Pupiltransportation 1,703,570 1,225,360 ‐ ‐ 1,703,570 1,225,360Studentactivities 548,047 615,183 ‐ ‐ 548,047 615,183Communityservices 22,746 21,518 ‐ ‐ 22,746 21,518Interestonlong‐termdebt 543,607 482,808 ‐ ‐ 543,607 482,808Foodservices ‐ ‐ 924,878 993,066 924,878 993,066TotalExpenses 31,199,249$ 32,402,594$ 924,878$ 993,066$ 32,124,127$ 33,395,660$

Transfers(out)in (23,980) (48,764) 23,980 48,764 ‐ ‐

Increase(Decrease)inNetPosition (826,362)$ (1,144,191)$ (27,339)$ (27,634)$ (853,701)$ (1,171,825)$

Governmental Business‐typeActivities Activities Total

TableA‐3showstheSchoolDistrict'slargestfunctions‐instructionalprograms,instructionalstudentsupport,administrative,operationandmaintenanceofplant,pupiltransportation,studentactivities,communityservices,facilitiesacquisition,andinterestonlong‐termdebt.Thistablealsoshowseachactivity’snetcost(totalcostlessfeesgeneratedbytheactivitiesandgovernmentalaidprovidedforspecificprograms).ThenetcostshowsthefinancialburdenplacedontheSchoolDistrict’staxpayersbyeachofthesefunctions.


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TableA‐3FiscalYearsendedJune30,2017and2016

GovernmentalActivities

Percentage PercentageChange Change

2016 2017 2016‐2017 2016 2017 2016‐2017

Instruction 20,665,070$ 22,170,361$ 7.28% 16,857,700$ 18,142,940$ 7.62%Instructionalstudentsupport 2,538,449 2,572,814 1.35% 2,220,470 2,215,966 (0.20% )Administrativeandfinancialsupport 2,861,479 3,082,531 7.73% 2,606,801 2,784,106 6.80%Operationandmaintenanceofplant 2,316,281 2,232,019 (3.64% ) 2,162,846 2,078,765 (3.89% )Pupiltransportation 1,703,570 1,225,360 (28.07% ) 1,325,600 1,106,964 (16.49% )Studentactivities 548,047 615,183 12.25% 464,158 543,848 17.17%Facilitiesacquisition 22,746 21,518 (5.40%) 8,651 7,930 (8.33%)Interestonlong‐termdebt 543,607 482,808 (11.18%) 62,025 137,351 121.44%Totalgovernmentalactivities 31,199,249$ 32,402,594$ 3.86% 25,708,251$ 27,017,870$ 5.09%

OfServices OfServicesTotalCost NetCost

TableA‐4reflectstheactivitiesoftheFoodServiceprogram,theonlyBusiness‐typeactivityoftheSchoolDistrict.

TableA‐4

FiscalYearsendedJune30,2017and2016

Business‐typeActivitiesPercentage Percentage

Functions/Programs Change Change

2016 2017 2015‐2016 2016 2017 2015‐2016

Foodservices 924,878$ 993,066$ 7.37% 54,385$ 100,238$ 84.31%

TotalCost NetCost

OfServices OfServices

TheStatementofRevenues,Expenses,andChangesinFundNetPositionforthisproprietaryfundwillfurtherdetailtheactualresultsofoperation.FINANCIALANALYSISOFTHESCHOOLDISTRICT’SFUNDS

AtJune30,2017,theSchoolDistrict'sgovernmentalfundsreportedacombinedfundbalanceof$3,020,620,whichisanincreaseof$50,400.Themajorchangesinfundbalanceoccurredintwofunds:

GeneralFund

TheGeneralFundhadanincreaseinfundbalanceof$296,738,despitetheanticipatedbudgeteduseoffundbalanceof$212,390.Thiswastheresultoftaxrevenuebeinghigherthanbudgeted,anincreaseinthestatebasiceducationformulathatbenefitedtheDistrictandadditionalfederalrevenues.

CapitalReserveFund

The$246,338decreaseinfundbalancewasduetotheutilizationofcapitalreservemoniestomakepaymentsonmaintenanceprojectsthroughouttheSchoolDistrict.


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GENERALFUNDBUDGETARYHIGHLIGHTS

Duringthefiscalyear,theBoardofSchoolDirectors(TheBoard),throughtheBudgetandFinanceCommittee,authorizesrevisionstotheoriginalbudgettoaccommodatedifferencesfromtheoriginalbudgettotheactualexpendituresoftheSchoolDistrict.Alladjustmentsareagainconfirmedatthetimetheannualauditisaccepted,whichisaftertheendofthefiscalyear,whichisnotprohibitedbystatelaw.AscheduleshowingtheSchoolDistrict'soriginalandfinalbudgetamountscomparedwithamountsactuallypaidandreceivedisshowninthefinancialstatements.

TheSchoolDistrict’s2016‐2017budgetforthegeneralfundprojectedthatexpenditureswouldexceedrevenuesbyapproximately$212,390.Theactualresultsfortheyearshowedrevenuesexceedingexpendituresbyapproximately$296,738.

Actualrevenueswere$732,262higherthanexpected,duetoadditionaltaxcollectionsof$203,175,additionalbasiceducationfundingstaterevenueof$337,500duetoachangeinthestatebasiceducationfundingformula,andadditionalfederalrevenueof$137,000.

Actualexpenditureswerehigherthanbudgetby$212,856,orlessthan1percentoftotalexpenditures.

CAPITALASSETANDDEBTADMINISTRATION

CapitalAssets

AtJune30,2017,theSchoolDistricthad$28,777,970investedinabroadrangeofcapitalassets,includingland,buildings,andfurnitureandequipment.Thisamountrepresentsanetdecrease(includingadditions,deletions,anddepreciation)of$1,148,930,or4%fromlastyear.Totaldepreciationexpensefortheyearwas$1,671,865,whilebuildingandsiteimprovementsandadditionstoequipmentandfurnituretotaled$567,767.

DEBTADMINISTRATION

AsofJuly1,2016,theSchoolDistricthadtotaloutstandingbondprincipalof$16,905,000.TheSchoolDistrictmadepaymentsagainstprincipalof$2,085,000resultinginendingoutstandingbondprincipalasofJune30,2017of$14,820,000:

TableA‐5OutstandingDebt

2016 2017

GeneralObligationBonds

Series2012 6,795,000$ 6,105,000$

Series2013 10,110,000 8,715,000

Bond(discounts)/premium‐net 1,092,751 929,946

Total 17,997,751$ 15,749,946$

Otherlong‐termobligationsincludeaccruedvacationpayandsickleaveforspecificemployeesoftheSchoolDistrict,aswellascertainotherpostemploymentbenefits(OPEB)andpensionliabilities.Moredetailedinformationaboutourlong‐termliabilitiesisincludedinthenotestothefinancialstatements.


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CURRENTLYKNOWNFACTS,DECISIONS,ORCONDITIONS

Atthetimethesefinancialstatementswerepreparedandaudited,theSchoolDistrictwasawareofthefollowingexistingcircumstancesthatcouldsignificantlyaffectitsfinancialhealthinthefuture:

Theretirementsystem(PSERS)istohaverateincreasesto33.43%ofwagesin2018‐2019,andprojectedfutureyearlyrateincreasesatslightlyhigherlevels,howeveratamorelevelamount.The2017‐2018enactedrateis32.57%.TheSchoolDistrictatthecompletionoftheretirementspikehasbeenabletomaintain3%to6%oftotalexpensesinfundbalanceaspreviouslyprojected.

ThecurrentstateAct1IndexallowanceontheamountofmillagethatcanbeincreasedinanyoneyearimpactstheSchoolDistrict’sabilitytogeneraterevenue.

TheSchoolDistrictisreducingtheuseoffundbalancetobalancethebudget.For2017‐2018thebudgeteduseoffundbalanceiszero.

TheSchoolDistrictisconsideringanewbondissue,whilemaintainingannualdebtpaymentsatthecurrentlevels,through2026‐2027andreducedandeliminatedin2027‐2028.

CONTACTINGTHESCHOOLDISTRICTFINANCIALMANAGEMENT

Ourfinancialreportisdesignedtoprovideourcitizens,taxpayers,parents,students,investors,andcreditorswithageneraloverviewoftheSchoolDistrict'sfinancesandtoshowtheBoard'saccountabilityforthemoneyitreceives.Ifyouhavequestionsaboutthisreportorwishtorequestadditionalfinancialinformation,pleasecontactTroyS.Wentz,BusinessManager/BoardSecretary,atHanoverPublicSchoolDistrict,403MoulAvenue,Hanover,PA17331,(717)637‐9000.

HANOVERPUBLICSCHOOLDISTRICTStatementofNetPositionJune30,2017

TheNotestoFinancialStatementsareanintegralpartofthisstatement. 13


Business‐TypeActivities Total

ASSETSCurrentAssetsCashandcashequivalents 1,075,269$ 326,252$ 1,401,521$Investments 2,538,502 ‐ 2,538,502Receivables:Taxes‐net 1,127,900 ‐ 1,127,900Intergovernmental 1,063,325 ‐ 1,063,325Other 266,703 253 266,956

Internalbalances 263,406 (263,406) ‐Inventories ‐ 10,927 10,927Prepaidexpenses 7,726 ‐ 7,726Totalcurrentassets 6,342,831 74,026 6,416,857

NoncurrentAssetsCapitalassetsnotbeingdepreciated:Land 410,600 ‐ 410,600

Capitalassets,net:Siteimprovements 3,444,855 ‐ 3,444,855Buildingsandimprovements 23,846,697 ‐ 23,846,697Furniture,fixturesandequipment 1,025,944 49,874 1,075,818Totalnoncurrentassets 28,728,096 49,874 28,777,970TotalAssets 35,070,927 123,900 35,194,827

DEFERREDOUTFLOWSOFRESOURCESDeferredoutflowsrelatedtopensionliability 8,781,862 216,794 8,998,656Deferredchargeonbondrefunding 557,253 ‐ 557,253Totaldeferredoutflowsofresources 9,339,115 216,794 9,555,909

TotalAssetsandDeferredOutflowsofResources 44,410,042$ 340,694$ 44,750,736$

LIABILITIESCurrentLiabilitiesAccountspayable 1,190,406$ 13,278$ 1,203,684$Accruedsalariesandbenefits/withholdings 2,256,054 220 2,256,274Accruedinterest 130,476 ‐ 130,476Portiondueorpayablewithinoneyear:Generalobligationbondspayable 2,292,805 ‐ 2,292,805Compensatedabsences 222,000 3,975 225,975Totalcurrentliabilities 6,091,741 17,473 6,109,214

NoncurrentLiabilitiesPortiondueorpayableafteroneyear:Generalobligationbondsandnotespayable 13,457,141 ‐ 13,457,141Compensatedabsences 268,200 7,794 275,994Netpensionobligation 49,735,570 961,064 50,696,634OPEBLiability 717,708 ‐ 717,708

Totalnoncurrentliabilities 64,178,619 968,858 65,147,477

TotalLiabilities 70,270,360 986,331 71,256,691

DEFERREDINFLOWSOFRESOURCESDeferredinflowsrelatedtopensionliability 462,054 42,225 504,279

NETPOSITIONNetinvestmentincapitalassets 13,535,403 49,874 13,585,277Restricted 1,674,840 ‐ 1,674,840Unrestricted (41,532,615) (737,736) (42,270,351)

TotalNetPosition (26,322,372) (687,862) (27,010,234)

TotalLiabilities,DeferredInflowsofResourcesandNetPosition 44,410,042$ 340,694$ 44,750,736$

HANOVERPUBLICSCHOOLDISTRICTStatementofActivitiesYearEndedJune30,2017


ProgramRevenues Net(Expense)RevenueandChangesinNetPosition

Functions/Programs ExpensesChargesforServices

OperatingGrantsandContributions

CapitalGrantsandContributions


Business‐typeActivities Total

Governmentalactivities:Instruction 22,170,361$ 42,675$ 3,984,746$ ‐$ (18,142,940)$ ‐$ (18,142,940)$Instructionalstudentsupport 2,572,814 ‐ 356,848 ‐ (2,215,966) ‐ (2,215,966)Administrationandfinancialsupportservices 3,082,531 ‐ 298,425 ‐ (2,784,106) ‐ (2,784,106)Operationandmaintenanceofplantservices 2,232,019 21,508 131,746 ‐ (2,078,765) ‐ (2,078,765)Pupiltransportation 1,225,360 ‐ 118,396 ‐ (1,106,964) ‐ (1,106,964)Studentactivities 615,183 44,886 26,449 ‐ (543,848) ‐ (543,848)Communityservices 21,518 10,095 3,493 ‐ (7,930) ‐ (7,930)Interestandamortization 482,808 ‐ ‐ 345,457 (137,351) ‐ (137,351)

Totalgovernmentalactivities 32,402,594 119,164 4,920,103 345,457 (27,017,870) ‐ (27,017,870)

Business‐typeactivities:Foodservices 993,066 148,141 744,687 ‐ ‐ (100,238) (100,238)

Totalprimarygovernment 33,395,660$ 267,305$ 5,664,790$ 345,457$ (27,017,870)$ (100,238)$ (27,118,108)$

Generalrevenuesandtransfers:Propertytaxes,leviedforgeneralpurposes,publicutilityrealtytax,earnedincometax 22,268,547$ ‐$ 22,268,547$

Grants,subsidiesandcontributionsnotrestricted 3,555,339 7,599 3,562,938Investmentearnings 41,217 28 41,245Miscellaneousincome 57,340 16,213 73,553Transfers (48,764) 48,764 ‐Totalgeneralrevenuesandtransfers 25,873,679 72,604 25,946,283

Changeinnetposition (1,144,191) (27,634) (1,171,825)

Netposition‐beginning (25,178,181) (660,228) (25,838,409)

Netposition‐ending (26,322,372)$ (687,862)$ (27,010,234)$

HANOVERPUBLICSCHOOLDISTRICTBalanceSheet‐GovernmentalFundsJune30,2017


GeneralFundCapitalReserve

Fund

TotalGovernmental

FundsASSETSCashandcashequivalents 909,975$ 165,294$ 1,075,269$Investments 1,000,000 1,538,502 2,538,502Receivables:Taxes‐net 1,127,900 ‐ 1,127,900Intergovernmental 1,063,325 ‐ 1,063,325Otherreceivables 266,703 ‐ 266,703

Duefromotherfunds 263,406 ‐ 263,406Prepaidexpenditures 7,726 ‐ 7,726

Totalassets 4,639,035$ 1,703,796$ 6,342,831$

LIABILITIESAccountspayable 444,233$ 28,956$ 473,189$Accruedsalariesandbenefits 2,256,054 ‐ 2,256,054

Totalliabilities 2,700,287 28,956 2,729,243

DEFERREDINFLOWSOFRESOURCES

Unavailabletaxrevenue 592,968 ‐ 592,968

Totaldeferredinflowsofresources 592,968 ‐ 592,968

FUNDBALANCESNonspendable 7,726 ‐ 7,726Restricted ‐ 1,674,840 1,674,840Unassigned 1,338,054 ‐ 1,338,054

Totalfundbalances 1,345,780 1,674,840 3,020,620

Totalliabilities,deferredinflowsofresourcesandfundbalances

4,639,035$ 1,703,796$ 6,342,831$

HANOVERPUBLICSCHOOLDISTRICTReconciliationoftheGovernmentalFundsBalanceSheettothe

StatementofNetPositionJune30,2017


Totalfundbalances‐governmentalfunds 3,020,620$

AmountsreportedforgovernmentalactivitiesintheStatementofNetPositionaredifferentbecause:

Capitalassetsusedingovernmentalactivitiesarenotcurrentfinancialresourcesandthereforearenotreportedinthefundfinancialstatements,butarereportedinthegovernmentalactivitiesoftheStatementofNetPosition.

Costofassets 57,523,785Accumulateddepreciation (28,795,689) 28,728,096

Taxesreceivablewillbecollectedthisyear,butarenotavailablesoonenoughtopayforthecurrentperiod'sexpenditures,andthereforeareunavailableinthefundfinancialstatements. 592,968

Deferredchargesonbondrefundingsarereportedasdeferredoutflowsofresourcesinthestatementofnetposition. 557,253

Claimsandjudgmentsthatarenotdueandpayableinthecurrentperiodarenotincludedinthefundfinancialstatements,butareincludedinthegovernmentalactivitiesoftheStatementofNetPosition (717,217)

Long‐termliabilitiesarenotdueandpayableinthecurrentperiodandarethereforenotincludedinthefundfinancialstatements,butareincludedinthegovernmentalactivitiesoftheStatementofNetPosition.Long‐termliabilitiesconsistof:

Bondsandnotespayable,netofdiscountandpremium (15,749,946)Accruedinterestonbonds (130,476)OPEBliability (717,708)Netpensionliability (49,735,570)Deferredoutflowsrelatedtopensionliability 8,781,862Deferredinflowsrelatedtopensionliability (462,054)Compensatedabsences (490,200) (58,504,092)

NetpositionofgovernmentalactivitiesintheStatementofNetPosition (26,322,372)$

HANOVERPUBLICSCHOOLDISTRICTStatementofRevenues,ExpendituresandChangesinFundBalance‐

GovernmentalFundsYearEndedJune30,2017


GeneralFundCapitalReserve

Fund

TotalGovernmental

FundsREVENUESLocalrevenuesTaxes 22,232,805$ ‐$ 22,232,805$Investmentincome 27,366 13,851 41,217Federalrevenuefromintermediatesources 355,559 ‐ 355,559Other 275,949 ‐ 275,949

Statesources 7,643,353 ‐ 7,643,353Federalsources 722,542 ‐ 722,542

Totalrevenues 31,257,574 13,851 31,271,425

EXPENDITURESInstruction 19,182,341 ‐ 19,182,341Supportservices 8,517,585 ‐ 8,517,585Operationofnoninstructionalservices 599,576 ‐ 599,576Facilitiesacquisition,constructionandimprovements ‐ 278,911 278,911

Debtservice:Principal 2,085,000 ‐ 2,085,000Interest 566,056 ‐ 566,056

Totalexpenditures 30,950,558 278,911 31,229,469

OTHERFINANCINGSOURCES(USES)Refundofprioryearrevenue 57,208 ‐ 57,208Interfundtransfers,net (67,486) 18,722 (48,764)

Totalotherfinancingsourcesanduses (10,278) 18,722 8,444

Netchangeinfundbalances 296,738 (246,338) 50,400

Fundbalances‐beginning 1,049,042 1,921,178 2,970,220

Fundbalances‐ending 1,345,780$ 1,674,840$ 3,020,620$

HANOVERPUBLICSCHOOLDISTRICTReconciliationoftheStatementofRevenues,ExpendituresandChangesinFundBalance

ofGovernmentalFundstotheStatementofActivitiesYearEndedJune30,2017


NETCHANGEINFUNDBALANCES‐TOTALGOVERNMENTALFUNDS 50,400$

Amountsreportedforgovernmentalactivitiesinthestatementofactivitiesaredifferentbecause:

Depreciationexpense (1,671,865)Capitaloutlays 537,121 (1,134,744)

16,710

2,085,000

68,140

15,108

(179,674)

(1,359,012)

Inthestatementofactivities,claimsandjudgmentsarerecordedasexpense.However,sincethisdoesnotrequiretheuseofcurrentfinancialresources,theyarenotreportedasexpendituresinthegovernmentalfunds. (691,705)

(14,414)

CHANGEINNETPOSITIONOFGOVERNMENTALACTIVITIES (1,144,191)$

Inthestatementofactivities,compensatedabsencesrepresentcontractuallyrequiredobligationsthatdonotrequiretheuseofcurrentfinancialresourcesandthereforearenotreportedasexpendituresingovernmentalfunds.

Governmentalfundsreportcapitaloutlaysasexpenditures.However,inthestatementofactivities,thecostoftheseassetsisallocatedovertheirestimatedusefullivesasdepreciationexpense.Thisistheamountbywhichdepreciationexpensediffersfromcapitaloutlaysintheperiod.

BecausesomepropertytaxesandstaterevenueswillnotbecollectedforseveralmonthsaftertheSchoolDistrict'sfiscalyearends,theyarenotconsidered"available"revenuesinthegovernmentalfunds.Unavailabletaxrevenuesincreasedbythisamountthisyear.

Governmentalfundsreportprepaidbondinsurance,deferredchargeonbondrefundinganddiscountsandpremiumsasexpenditures.However,inthestatementofactivities,thesecostsareamortizedoverthelifeoftherelatedbond.Thisistheamountofamortizationinthecurrentperiod.

Interestonlong‐termdebtinthestatementofactivitiesdiffersfromtheamountreportedinthegovernmentalfundsbecauseinterestisrecognizedasanexpenditureinthefundswhenitisdue,andthusrequirestheuseofcurrentfinancialresources.Inthestatementofactivities,interestexpenseisrecognizedastheinterestaccrues,regardlessofwhenitisdue.Thisistheadditionalinterestaccruedinthestatementofactivitiesovertheamountdue.

Inthestatementofactivities,netpensionactivityrepresentsfutureestimatedobligationsthatdonotrequiretheuseofcurrentfinancialresourcesandthereforearenotreportedasexpendituresingovernmentalfunds.

Inthestatementofactivities,thechangeinOPEBliabilityisrecordedasanexpense.However,sincethisdoesnotrequiretheuseofcurrentfinancialresources,thisisnotreportedasanexpenditureinthegovernmentalfunds.

Repaymentofbondprincipalisanexpenditureinthegovernmentalfunds,buttherepaymentreduceslong‐termliabilitiesinthestatementofnetposition.

HANOVERPUBLICSCHOOLDISTRICTStatementofNetPosition‐ProprietaryFundJune30,2017


FoodServiceASSETSCurrentAssetsCashandcashequivalents 326,252$Accountsreceivable 253Inventory 10,927

Totalcurrentassets 337,432

NoncurrentAssetsMachineryandequipment‐net 49,874Totalnoncurrentassets 49,874

DEFERREDOUTFLOWSOFRESOURCESDeferredoutflowsrelatedtopensionliability 216,794

Totalassetsanddeferredoutflowsofresources 604,100$

LIABILITIESCurrentLiabilitiesUnearnedrevenue 13,278$Accruedwages 220Duetootherfunds 263,406Currentportionofcompensatedabsences 3,975Totalcurrentliabilities 280,879

NoncurrentLiabilitiesCompensatedabsencespayable 7,794Netpensionobligation 961,064Totalnoncurrentliabilities 968,858

Totalliabilities 1,249,737

DEFERREDINFLOWSOFRESOURCESDeferredinflowsrelatedtopensionliability 42,225

NETPOSITIONNetinvestmentincapitalassets 49,874Unrestricted (737,736)Totalnetposition (687,862)

Totalliabilities,deferredinflowsofresourcesandnetposition 604,100$

HANOVERPUBLICSCHOOLDISTRICTStatementofRevenues,Expenses,andChangesinFundNetPosition‐ProprietaryFundYearEndedJune30,2017


FoodServiceOPERATINGREVENUEFoodservicerevenues 162,651$Totaloperatingrevenues 162,651

OPERATINGEXPENSESFoodandmilkpurchases 518,596Salaries 259,253Employeebenefits 149,486Supplies 30,350Depreciation 27,634Professionalservices 5,922Repairsandmaintenance 871Travel 954Totaloperatingexpenses 993,066

Operating(loss) (830,415)

NON‐OPERATINGREVENUES(EXPENSES)Statesubsidies 77,123Federalsubsidies 667,564Capitalcontribution 9,302Investmentearnings 28Totalnon‐operatingrevenue(expenses) 754,017

TRANSFERSTransfersin(out) 48,764

Changeinnetposition (27,634)

Totalnetposition‐beginning (660,228)

Totalnetposition‐ending (687,862)$

HANOVERPUBLICSCHOOLDISTRICTStatementofCashFlows‐ProprietaryFundYearEndedJune30,2017


FoodServiceCashflowsfromoperatingactivities:Cashreceivedfromfoodsales 163,837$Cashpaymentstosuppliersforgoods (491,995)Cashpaymentstoandonbehalfofemployees (331,178)

Netcash(used)byoperatingactivities (659,336)

Cashflowsfromcapitalfinancingactivities:Purchaseofcapitalassets (4,146)

Netcash(used)bycapitalfinancingactivities (4,146)

Cashflowsfromnoncapitalfinancingactivities:Federalsubsidies 608,427Statesubsidies 77,123

Netcashprovidedbynoncapitalfinancingactivities 685,550

Cashflowsfrominvestingactivities:Earningsoninvestments 28

Netincreaseincashandcashequivalents 22,096

Cashandcashequivalents‐beginning 304,156

Cashandcashequivalents‐ending 326,252$

Reconciliationofincome(loss)fromoperationstonetcashprovided(used)byoperatingactivities

Cashflowsfromoperatingactivities:Operatingloss (830,415)$Adjustmentstoreconcileoperatingincome(loss)tonetcashprovided(used)byoperatingactivities:Depreciation 27,634Donatedfoodused 62,469

(Increase)decreasein:Accountsreceivable (253)Prepaidexpense 200Inventory 2,816

Increase(decrease)in:Duetootherfunds 28,581Accruedwages (1,140)Compensatedabsencespayable 2,228Accountspayable/unearnedrevenue (787)Netpensionliabilityandrelateddeferredinflows/outflows 49,331

Totaladjustments 171,079

Netcash(used)byoperatingactivities (659,336)$

HANOVERPUBLICSCHOOLDISTRICTStatementofFiduciaryNetPositionJune30,2017


PrivatePurposeTrustFund AgencyFund

ASSETSCashandcashequivalents 552,433$ 60,408$Accountsreceivable 9,000 2,515Totalassets 561,433$ 62,923$

LIABILITIESAccountspayableandotherliabilities 30,384$ 1,057$Duetostudentgroups ‐ 61,866Totalliabilities 30,384 62,923

NETPOSITIONNetpositionheldintrustforothers 531,049 ‐Totalnetposition 531,049 ‐

Totalliabilitiesandnetposition 561,433$ 62,923$

HANOVERPUBLICSCHOOLDISTRICTStatementofChangesinFiduciaryNetPositionYearEndedJune30,2017


PrivatePurposeTrustFund

ADDITIONSInterestincome 2,937$Contributions 113,028Totaladditions 115,965

DEDUCTIONSScholarshipsandawards/grants 53,119Otheroperatingexpenses 250Totaldeductions 53,369

Changeinnetposition 62,596

Netposition‐beginning 468,453

Netposition‐ending 531,049$

HANOVERPUBLICSCHOOLDISTRICTNotestoFinancialStatementsJune30,2017

24

NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES

NatureofOperations

HanoverPublicSchoolDistrict(SchoolDistrict)operatesapublicschoolsystemwhichisgeographicallycomprisedoftheBoroughofHanoverinYorkCounty,Pennsylvania.

TheSchoolDistrictconsistsofHanoverHighSchool,HanoverMiddleSchool,Clearview,HanoverStreet,andWashingtonElementarySchools.

ThefinancialstatementsoftheSchoolDistricthavebeenpreparedinconformitywithgenerallyacceptedaccountingprinciples(GAAP)asappliedtogovernmentalunits.TheGovernmentalAccountingStandardsBoard(GASB)istheacceptedstandard‐settingbodyforestablishinggovernmentalaccountingandfinancialreportingprinciples.ThemostsignificantoftheSchoolDistrict'saccountingpoliciesaredescribedbelow.

ReportingEntity

TheGovernmentalAccountingStandardsBoard(GASB)Statementsdefinethecriteriausedtodeterminethecompositionofthereportingentity.Thesestandardsrequirethatthereportingentityinclude(1)theprimarygovernment,(2)organizationsforwhichtheprimarygovernmentisfinanciallyaccountable;and(3)organizationsthatarefiscallydependentontheprimarygovernmentandafinancialbenefitorburdenexists,and(4)otherorganizationsforwhichthenatureandsignificanceoftheirrelationshipwiththeprimarygovernmentaresuchthattheexclusionwouldcausethereportingentity'sfinancialstatementstobemisleadingorincomplete.TheSchoolDistrictisnotacomponentunitofanyotherentities.Basedontheabovecriteria,theSchoolDistricthasnocomponentunits.

JointVentures

ThefollowingjointventuresarenotcomponentunitsofHanoverPublicSchoolDistrict,andarenotincludedinthisreport.

YorkCountySchoolofTechnology–TheSchoolDistrictisoneoffourteenmemberschooldistrictsparticipatingintheoperationoftheYorkCountySchoolofTechnology.TheSchoolisoperated,administered,andmanagedbyajointoperatingcommitteeconsistingofboardmembersfromthefourteenmemberschooldistricts.Thesemembersareelectedbytheirindividualschooldistrictboardofdirectors.TheSchoolDistrict’sshareofannualoperatingandcapitalcostsforYorkCountySchoolofTechnologyarereflectedasintergovernmentalexpendituresoftheGeneralFund.

LincolnIntermediateUnit#12–ThisisaseparatelegalentityorganizedbyconstituentschooldistrictsinYork,AdamsandFranklincountiestoprovideservicestotheschooldistricts.EachofthememberschooldistrictsappointsonemembertoserveontheBoardofDirectorsoftheIntermediateUnit.TheSchoolDistrictcontractswiththeIntermediateUnitprimarilyforspecialeducationservicesandtraining.

SeeNote12foradditionalinformationonjointventures.


25

NOTE1 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)

FundAccounting

TheSchoolDistrictusesfundstomaintainitsfinancialrecordsduringthefiscalyear.FundaccountingisdesignedtodemonstratelegalcomplianceandtoaidmanagementbysegregatingtransactionsrelatedtocertainSchoolDistrictfunctionsoractivities.Afundisdefinedasafiscalandaccountingentitywithaself‐balancingsetofaccounts.ThevariousfundsoftheSchoolDistrictaregroupedintothecategoriesofgovernmental,proprietary,andfiduciary.

1. GovernmentalFunds

GovernmentalFundsarethosethroughwhichmostgovernmentalfunctionsoftheSchoolDistrictarefinanced.Themeasurementfocusisontheflowofexpendableresources,ratherthanonnetearningsdetermination.

TheSchoolDistrictreportsthefollowingmajorgovernmentalfunds:

GeneralFund

TheGeneralFundisusedtoaccountforallfinancialtransactionsnotaccountedforinanotherfund.Revenuesareprimarilyderivedfromlocalproperty,earnedincome,percapitaandoccupationtaxes,andstateandfederalsubsidies.ManyofthemoreimportantactivitiesoftheSchoolDistrict,includinginstruction,administrationoftheSchoolDistrict,andcertainnon‐instructionalservicesareaccountedforinthisfund.Thisisabudgetedfund,andanyunrestrictedfundbalancesareconsideredasresourcesavailableforuse.

CapitalReserveFund

ThisfundisauthorizedbyP.L.145,ActofApril30,1943,knownas53PS1432,andaccountsformoniestransferredduringanyfiscalyearfromappropriations,orfromsurplusmoniesintheGeneralFund,tobeusedforfuturecapitalimprovements.

2. ProprietaryFunds

ProprietaryFundsareusedtoaccountfortheSchoolDistrict'songoingactivitieswhicharesimilartothoseoftenfoundintheprivatesector.Thefocusofproprietaryfundsisonthedeterminationofnetearningsandcapitalmaintenance.Thefollowingfundisutilized:

FoodServiceFund

ThisfundaccountsforallrevenuesandexpensespertainingtocafeteriaoperationsasauthorizedunderSection504ofthePublicSchoolCodeof1949.Itistheintentofthegoverningbodythatthecostofprovidingfoodorservicestothestudentsonacontinuingbasisbefinancedorrecoveredprimarilythroughuserchargesorcost


26


FundAccounting(Continued)

reimbursementplans.Therevenuesfromfoodsalesandexpensestoprovideservicesareclassifiedas"operating".Federalandstategrantsandearningsoninvestmentsareclassifiedas"non‐operating".Significantaccountingpoliciesforthisfundinclude:

Equipmentutilizedbythefoodservicefundisrecordedascapitalassetsofthatfund(atcost),andisdepreciatedonastraight‐linebasisovertheestimatedusefullifeof5‐15years.

Foodandsuppliesinventoriesarevaluedatcostonafirst‐in,first‐outbasis.

TheSchoolDistrictdoesnotattempttoallocate"building‐widecosts"tothefoodservicefund.Thus,generalfundexpenditures,whichpartiallybenefitthefoodservicefund(utilities,janitorialservices,insurance,etc.),arenotproportionatelyrecognizedwithinthefoodservicefund;similarly,thefoodservicefunddoesnotrecognizeacostforthebuildingspaceitoccupies(norental‐of‐facilitiesexpense).

3. FiduciaryFunds

Fiduciaryfundreportingfocusesonnetpositionandchangesinnetposition.Thefiduciaryfundcategoryissplitintofourclassifications:pensiontrustfunds,investmenttrustfunds,private‐purposetrustfunds,andagencyfunds.TrustfundsareusedtoaccountforassetsheldbytheSchoolDistrictunderatrustagreementforindividuals,privateorganizations,orothergovernmentsandarethereforenotavailabletosupporttheSchoolDistrict’sownprograms.Agencyfundsarecustodialinnature(assetsequalliabilities)anddonotinvolvemeasurementofresultsofoperations.

AgencyFund

Thisfundaccountsforthereceiptsanddisbursementsofmoniesfromstudentactivityorganizations.TheseorganizationsexistwithexplicitapprovalandaresubjecttorevocationoftheSchoolDistrict’sgoverningbody.ThisaccountingreflectstheSchoolDistrict’sagencyrelationshipwithstudentactivityorganizations.

PrivatePurposeTrustFund

ThisfundaccountsforscholarshipmoniesthataremaintainedbytheSchoolDistrict,butareforthebenefitofindividualstudentswithintheSchoolDistrict.

BasisofPresentation

Government‐wideFinancialStatements‐ThestatementofnetpositionandthestatementofactivitiesdisplayinformationabouttheSchoolDistrictasawhole.Thesestatementsincludethefinancialactivitiesoftheprimarygovernment,exceptforfiduciaryfunds.ThestatementsdistinguishbetweenthoseactivitiesoftheSchoolDistrictthataregovernmentalandthosethatareconsideredbusiness‐typeactivities.


27


BasisofPresentation(Continued)

Thegovernment‐widestatementsarepreparedusingtheeconomicresourcesmeasurementfocus.Thisisthesameapproachusedinthepreparationoftheproprietaryfundfinancialstatements,butdiffersfromthemannerinwhichgovernmentalfundfinancialstatementsareprepared.Governmentalfundfinancialstatementsthereforeincludeareconciliationwithbriefexplanationstobetteridentifytherelationshipbetweenthegovernment‐widestatementsandthestatementsforgovernmentalfunds.

Thegovernment‐widestatementofactivitiespresentsacomparisonbetweendirectexpensesandprogramrevenuesforeachsegmentofthebusiness‐typeactivitiesoftheSchoolDistrict,andforeachfunctionorprogramoftheSchoolDistrict'sgovernmentalactivities.Directexpensesarethosethatarespecificallyassociatedwithaservice,program,ordepartmentandthereforeclearlyidentifiabletoaparticularfunction.Programrevenuesincludechargespaidbytherecipientofthegoodsorservicesofferedbytheprogramandgrantsandcontributionsthatarerestrictedtomeetingtheoperationalorcapitalrequirementsofaparticularprogram.RevenueswhicharenotclassifiedasprogramrevenuesarepresentedasgeneralrevenuesoftheSchoolDistrict,withcertainlimitedexceptions.Thecomparisonofdirectexpenseswithprogramrevenuesidentifiestheextenttowhicheachbusinesssegmentorgovernmentalfunctionisself‐financingordrawsfromthegeneralrevenuesoftheSchoolDistrict.

FundFinancialStatements‐FundfinancialstatementsreportdetailedinformationabouttheSchoolDistrict.Thefocusofgovernmentalandproprietaryfundfinancialstatementsisonmajorfundsratherthanreportingfundsbytype.Eachmajorfundispresentedinaseparatecolumn.Non‐majorfundsareaggregatedandpresentedinasinglecolumn.Fiduciaryfundsarereportedbyfundtype.

Theaccountingandfinancialreportingtreatmentappliedtoafundisdeterminedbyitsmeasurementfocus.Allgovernmentalfundtypesareaccountedforusingaflowofcurrentfinancialresourcesmeasurementfocus.Thefinancialstatementsforgovernmentalfundsareabalancesheet,whichgenerallyincludesonlycurrentassetsandcurrentliabilities,andastatementofrevenues,expenditures,andchangesinfundbalances,whichreportsonthesources(i.e.,revenuesandotherfinancingsources)anduses(i.e.,expendituresandotherfinancinguses)ofcurrentfinancialresources.

Allproprietaryfundsareaccountedforonaflowofeconomicresourcesmeasurementfocus.Withthismeasurementfocus,allassetsandliabilitiesassociatedwiththeoperationofthesefundsareincludedonthestatementofnetposition.Thestatementofchangesinfundnetpositionpresentsincreases(i.e.,revenues)anddecreases(i.e.,expenses)innetposition.ThestatementofcashflowsprovidesinformationabouthowtheSchoolDistrictfinancesandmeetsthecashflowneedsofitsproprietaryactivities.

Fiduciaryfundsarereportedusingtheeconomicresourcesmeasurementfocus.


28


BasisofAccounting

Thegovernment‐wide,proprietaryandfiduciaryfundfinancialstatementsarereportedusingtheeconomicresourcesmeasurementfocusandtheaccrualbasisofaccounting.Revenuesarerecordedwhenearnedandexpensesarerecordedwhenaliabilityisincurred,regardlessofthetimingofrelatedcashflows.Propertytaxesarerecognizedasrevenuesintheyearforwhichtheyarelevied.Grantsandsimilaritemsarerecognizedasrevenueassoonasalleligibilityrequirementsimposedbytheproviderhavebeenmet.Netposition(totalassetsplustotaldeferredoutflowsofresourceslesstotalliabilitiesplusdeferredinflowsofresources)isusedasapracticalmeasureofeconomicresourcesandtheoperatingstatementincludesalltransactionsandeventsthatincreasedordecreasednetposition.Depreciationischargedasexpenseagainstcurrentoperationsandaccumulateddepreciationisreportedonthestatementofnetposition.

Thegovernmentalfundfinancialstatementsarereportedusingthecurrentfinancialresourcesmeasurementfocusandthemodifiedaccrualbasisofaccounting.Revenuesarerecognizedassoonastheyarebothmeasurableandavailable.Revenuesareconsideredtobeavailablewhentheyarecollectiblewithinthecurrentperiodorsoonenoughthereaftertopayliabilitiesofthecurrentperiod.Forthispurpose,thegovernmentconsiderstaxrevenuetobeavailableifcollectedwithin60daysoftheendofthefiscalperiod.Revenuefromfederal,state,andotherrelatedgrantsdesignatedforpaymentofspecificSchoolDistrictexpendituresisrecognizedwhentherelatedexpendituresareincurredandareavailable,whichisgenerally60days;accordingly,whensuchfundsarereceived,theyarerecordedasliabilitiesuntilearned.Iftimeeligibilityrequirementsarenotmet,adeferredinflowofresourceswouldberecorded.Expendituresgenerallyarerecordedwhenaliabilityisincurred,asunderaccrualaccounting.However,debtserviceexpenditures,aswellasexpendituresrelatedtocompensatedabsencesandclaimsandjudgments,arerecordedonlywhenpaymentisdue.

Proprietaryfundsdistinguishoperatingrevenuesandexpensesfromnon‐operatingitems.Operatingrevenuesandexpensesgenerallyresultfromprovidingfoodservices,includingchargesformeals,andthecostsoffood,salariesandbenefits,depreciationandotherexpenses.Federalandstatesubsidiesareconsiderednon‐operatingrevenueasnoexchangetransactionoccurs.

BudgetsandBudgetaryAccounting

AnoperatingbudgetisadoptedeachyearfortheGeneralFundonamodifiedaccrualbasisofaccounting.

1. ThePennsylvaniaSchoolCodedictatesspecificproceduresrelativetoadoptionoftheSchoolDistrict’sbudgetandreportingofitsfinancialstatements,specifically:

2. TheSchoolDistrict,beforelevyingannualschooltaxes,isrequiredtoprepareanoperatingbudgetforthesucceedingfiscalyear.


29


BudgetsandBudgetaryAccounting(Continued)

3. TheBoardofSchoolDirectorsmaymaketransfersoffundsappropriatedtoanyparticularitemofexpenditurebylegislativeaction.Anaffirmativevoteoftwo‐thirdsofallmembersoftheBoardisrequired.Thefinalbudgetamountsshowninthefinancialstatementsarethefinalauthorizedamountsasrevisedduringtheyear.

4. FundbalancesinbudgetaryfundsmaybeappropriatedbasedonresolutionspassedbytheBoardofEducation,whichauthorizetheSchoolDistricttomakeexpenditures.Appropriationslapseattheendofthefiscalperiod.

5. IncludedintheGeneralFundbudgetareprogrambudgetsasprescribedbythestateandfederalagenciesfundingtheprograms.Thesebudgetsareapprovedonaprogram‐by‐programbasisbythestateorfederalfundingagency.Theseprogramsfrequentlyresultinsupplementarybudgetappropriations.

CapitalbudgetsarenotimplementedforcapitalimprovementsintheCapitalReserveFund.AlltransactionsoftheCapitalReserveFundareapprovedbytheBoardpriortocommitment,therebyconstructivelyachievingbudgetarycontrol.

During2016‐2017,theSchoolDistrictoverspentthebudgetedexpendituresofthegeneralfund,whichisaviolationofthePennsylvaniaSchoolCode,butisnotexpectedtoresultinanynegativeimplicationsfortheSchoolDistrict.

CashandCashEquivalents

Cashconsistsofcashonhandandchecking,savings,andmoneymarketaccountbalances.

Cashandcashequivalentsaredefinedasshort‐term,highlyliquidinvestments(certificatesofdeposit)thatarereadilyconvertibletoknownamountsofcashandincludeinvestmentswithoriginalmaturitiesofthreemonthsorless.

Investments

TheSchoolDistricthaslimitedauthorityastothetypesofallowableinvestments.TheSchoolDistrictinvestsfundswithanexternalinvestmentpool,ThePennsylvaniaSchoolDistrictLiquidAssetFund(PSDLAF).PSDLAFoperatesandisauthorizedundertheIntergovernmentalCooperationActof1972.Investmentsinthesefundsarevaluedatamortizedcostwhichapproximatesmarketvalue.

ThesefundsinvestinfederalsecuritiesbackedbythefullfaithandcreditoftheUnitedStatesGovernment,inagencies,instrumentalitiesandsubdivisionsoftheCommonwealthofPennsylvaniaandbackedbythefullfaithandcreditoftheCommonwealth,andcertificatesofdepositwhichareinsuredbytheFederalDepositInsuranceCorporationorwhicharecollateralizedasprovidedbylawofAct72of1971.


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StatementofCashFlows

Forpurposesofthestatementofcashflows,theproprietaryfundconsidersallhighlyliquidinvestmentswithamaturityofthreemonthsorlesswhenpurchasedtobecashequivalents.

Inventories

TheFoodServiceFundfoodinventoryconsistsofexpendablesuppliesheldforconsumptionandfederalgovernmentdonatedcommoditiesthatarevaluedatestimatedfairmarketvalue.Theexpendablesuppliesarerecordedasanexpensewhenused.Thecostofgovernmentalfundinventoriesarerecordedasexpenditureswhenpurchasedratherthanwhenconsumed.ThevalueofgovernmentalfundinventoriesisnotsignificantatJune30,2017.

CapitalAssets

Generalcapitalassetsarethoseassetsnotspecificallyrelatedtoactivitiesreportedintheproprietaryfunds.Theseassetsgenerallyresultfromexpendituresinthegovernmentalfunds.Theseassetsarereportedinthegovernmentalactivitiescolumnofthegovernment‐widestatementofnetpositionbutarenotreportedinthefundfinancialstatements.Capitalassetsutilizedbytheproprietaryfundarereportedbothinthebusiness‐typeactivitiescolumnofthegovernment‐widestatementofnetpositionandintherespectivefundfinancialstatements.

Allcapitalassetsarecapitalizedatcost(orestimatedhistoricalcost)andupdatedforadditionsandretirementsduringtheyear.Donatedcapitalassetsarerecordedattheiraquisitionvaluesasofthedatereceived.TheSchoolDistrictmaintainsacapitalizationthresholdof$1,000.TheSchoolDistrictdoesnotpossessanyinfrastructure.Improvementsarecapitalized;thecostsofnormalmaintenanceandrepairsthatdonotaddtothevalueoftheassetormateriallyextendanasset'slifeareexpensed.Interestincurredduringtheconstructionofcapitalassetsisnotcapitalized.

Allreportedcapitalassetsexceptlandaredepreciated.Improvementsaredepreciatedovertheremainingusefullivesoftherelatedcapitalassets.Depreciationiscomputedusingthestraight‐linemethodoverthefollowingusefullives:


EstimatedLives

Business‐TypeActivities

EstimatedLives Landimprovements 20years N/ABuildingsandimprovements 20‐50years N/AFurnitureandequipment 5‐20years 5‐15yearsVehicles 10years N/A


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InterfundActivity

Advancesbetweenfundsareaccountedforintheappropriateinterfundreceivableandpayableaccounts.Advancesbetweenfundswhicharenotexpectedtoberepaidareaccountedforastransfers.Interfundbalancesandtransactionsareeliminatedinthegovernment‐widefinancialstatements.

Exchangetransactions,ifany,betweenfundsarereportedasrevenuesinthesellerfundsandasexpenditures/expensesinthepurchaserfunds.Flowsofcashorgoodsfromonefundtoanotherwithoutarequirementforrepaymentarereportedasinterfundtransfers.Interfundtransfersarereportedasotherfinancingsources/usesingovernmentalfundsandasnon‐operatingrevenues/expensesinproprietaryfunds.

UseofEstimates

Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciplesrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassets,deferredoutflowsofresources,liabilities,anddeferredinflowsofresourcesanddisclosureofcontingentassetsandliabilities,ifany,atthedateofthefinancialstatements,andthereportedamountsofrevenuesandexpensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates.

Long‐TermObligations

Inthegovernment‐widefinancialstatements,long‐termdebtandotherlong‐termobligationsarereportedasliabilitiesintheapplicablegovernmentalorbusinesstype‐activitycolumnsinthestatementofnetposition.Thissametreatmentalsoappliestoproprietaryfundfinancialstatements.Bondpremiumsanddiscounts,deferredchargeonbondrefunding,aswellasprepaidbondinsurancecosts,aredeferredandamortizedoverthelifeofthebondsusingthestraight‐linemethod,whichapproximatestheeffectiveinterestmethod.Bondspayablearereportednetoftheapplicablebondpremiumordiscount.Thedeferredchargeonbondrefundingisreportedasdeferredoutflowsofresourcesandamortizedoverthelifeoftheremainingdebt.Prepaidbondinsuranceisreportedasanassetandamortizedoverthetermoftherelateddebt.Otherbondissuancecostsareexpensedatthetimedebtisissued.

Inthefundfinancialstatements,governmentalfundtypesrecognizebondpremiumsanddiscounts,aswellasbondissuancecosts,duringthecurrentperiod.Thefaceamountofdebtissuedandoriginalissuediscountsorpremiumsarereportedasotherfinancingusesorsources.Issuancecostsandunderwriter'sdiscount,whetherornotwithheldfromtheactualdebtproceedsreceived,arereportedasdebtserviceexpenditures.

RetirementPlans

TheSchoolDistrictcontributestothePublicSchoolEmployeesRetirementSystem(PSERS),acost‐sharingmultiple‐employerdefinedbenefitpensionplan.TheSchoolDistrictaccountsfortheplanundertheprovisionsofGASBStatements,whichestablishstandardsforthemeasurement,recognition,anddisplayofpensionexpenseandrelatedliabilities,assets,andnotedisclosures.


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RetirementPlans(Continued)

Forpurposesofmeasuringthenetpensionliability,deferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensions,andpensionexpense,informationaboutthefiduciarynetpositionofthePublicSchoolEmployees’RetirementSystem(PSERS)andadditionsto/deductionsfromPSERS’sfiduciarynetpositionhavebeendeterminedonthesamebasisastheyarereportedbyPSERS.Forthispurpose,benefitpayments(includingrefundsofemployeecontributions)arerecognizedwhendueandpayableinaccordancewiththebenefitterms.Investmentsarereportedatfairvalue.

CompensatedAbsences

LiabilityforcompensatedabsencesisaccountedforinaccordancewiththeprovisionsofGASB,whichrequiresentitiestoaccrueforemployees'rightstoreceivecompensationforvacationleave,orpaymentsinlieuofaccruedvacationorsickleave,assuchbenefitsareearnedandpaymentbecomesprobable.

Theestimateoftheliabilityfortheaccumulatedunpaidsickleavehasbeencalculatedusingthevestingmethod.Underthatmethod,theSchoolDistricthasidentifiedtheaccruedsickleavebenefitearnedtodatebyeachemployee,determinedthecostofthatbenefitbyreferencetothebenefitprovisionsandthecurrentratespaidbytheSchoolDistrict,andestimatedtheprobabilityofthepaymentofthatbenefittoemployeesuponretirementortermination.

Liabilitiesforvested,unusedvacation,sickpay,andpersonalleavearerecordedintheproprietaryfundsandthegovernment‐widefinancialstatements,andareexpensedasincurred.

Paymentsforvacation,sickpay,andpersonalleaveareexpensedaspaidinthegovernmentalfundfinancialstatements.

OtherPostemploymentBenefitsOtherThanPensions

TheSchoolDistrictprovidescontinuationofmedicalbenefits,includingprescriptiondrugcoverage,toeligibleretiredemployeesandqualifiedspouses/beneficiariesuntiltheretiredemployeereachesMedicareage.Retiredemployeeshavetheabilitytoparticipateintheemployeehealthplanatthesamepremiumrate,albeit100%paidbytheretirees,thustheSchoolDistrictisprovidinganimplicitratesubsidytoitsretirees.ThesebenefitsaredetailedinNote11andarefinancedonapay‐as‐you‐gobasis.

Inadditiontotheotherpostemploymentbenefitdetailedabove,thePublicSchoolEmployees’RetirementSystem(PSERS)alsoprovidesahealthinsurancepremiumassistanceprogramforalleligibleemployees,whichisacost‐sharingmultipleemployerdefinedbenefitplan.


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DeferredOutflowsandInflowsofResources

Inadditiontoassets,thestatementofnetpositionwillsometimesreportaseparatesectionfordeferredoutflowsofresources.Thisseparatefinancialstatementelement,deferredoutflowsofresources,representsaconsumptionofnetpositionthatappliestoafutureperiod(s)andsowillnotberecognizedasanoutflowofresources(expense)untilthen.TheSchoolDistricthasseveralitemsthatqualifyforreportinginthiscategory,includingthedeferredchargeonbondrefundingandvariousitemsrelatedtopensionliabilities.Theseamountswillbeamortizedinfutureperiods.

Adeferredchargeonbondrefundingresultsfromthedifferenceinthecarryingvalueofrefundingdebtanditsreacquisitionprice.Thisamountisdeferredandamortizedovertheshorterofthelifeoftherefundedorrefundingdebt.

Inadditiontoliabilities,thestatementofnetpositionorbalancesheetwillsometimesreportaseparatesectionfordeferredinflowsofresources.Thisseparatefinancialstatementelement,deferredinflowsofresources,representsanacquisitionofnetpositionorfundbalancethatappliestoafutureperiod(s)andsowillnotberecognizedasaninflowofresources(revenue)untilthattime.TheSchoolDistrict’sdeferredinflowsofresourcesonthestatementofnetpositionconsistofvariousitemsrelatedtopensionliabilities(onthestatementofnetposition).TheSchoolDistrictalsoreportsunavailabletaxrevenueonthegovernmentalfundbalancesheetasdeferredinflowsofresources.

NetPosition

Inthegovernment‐widefinancialstatementsandproprietaryfundfinancialstatements,netpositionisclassifiedinthefollowingcategory:

NetInvestmentinCapitalAssets:Thiscomponentconsistsofcapitalassets,netofaccumulateddepreciationandreducedbyanyoutstandingbalancesofanybonds,mortgages,notesorotherborrowingsthatareattributabletotheacquisition,construction,orimprovementofthosecapitalassets.Iftherearesignificantunspentrelateddebtproceedsatyear‐end,theportionofthedebtattributabletotheunspentbondproceedsisnotincludedinthecalculationofnetinvestmentincapitalassets.Rather,thatportionofdebtisincludedinthesamenetpositioncomponentastheunspentproceeds.Deferredoutflowsofresourcesanddeferredinflowsofresourcesattributabletoacquisition,construction,orimprovementofassetsorrelateddebtalsoareincludedinthiscomponentofnetposition.

RestrictedNetPosition:Thiscomponentconsistsofrestrictedassetsanddeferredoutflowsofresourcesreducedbyliabilitiesanddeferredinflowsofresourcesrelatedtothoseassets.Theserestrictionscouldincludeconstraintsimposedbycreditors(suchasthroughdebtcovenants),grantors,contributors,orlawsorregulationsofothergovernmentsorconstraintsimposedbylawthroughconstitutionalprovisionorenablinglegislation.

AsofJune30,2017,restrictednetpositioningovernmentactivitiesconsistofthefollowing:

Restrictedforfuturecapitalprojects 1,674,840$


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NetPosition(Continued)

UnrestrictedNetPosition:Thiscomponentisthenetamountofassets,deferredoutflowsofresources,liabilities,anddeferredinflowsofresourcesthatarenotincludedinthedeterminationofnetinvestmentincapitalassetsortherestrictedcomponentofnetposition.

NetPositionFlowAssumption:SometimestheSchoolDistrictwillfundoutlaysforaparticularpurposefrombothrestricted(e.g.restrictedbondorgrantproceeds)andunrestrictedresources.Inordertocalculatetheamountstoreportasrestrictednetpositionandunrestrictednetposition,aflowassumptionmustbemadeabouttheorderinwhichtheresourcesareconsideredtobeapplied.ItistheSchoolDistrict’spolicytouserestrictedresourcesfirst,thenunrestrictedresourcesastheyareneeded.

FundBalance–GovernmentalFunds

Governmentalfundsclassifyfundbalancebasedontherelativestrengthofthespendingconstraintsplacedonthepurposeforwhichresourcescanbeused.Theclassificationsareasfollows:

Nonspendable:Thisclassificationincludesamountsthatcannotbespentbecausetheyareeither(1)notinspendableformor(2)legallyorcontractuallyrequiredtobemaintainedintact.Thisclassificationincludesitemssuchasprepaidamounts,inventories,andlong‐termamountofloansandnotesreceivable.Thisalsoincludesthecorpus(orprincipal)ofpermanentfunds.

Restricted:Thisclassificationincludesamountswheretheconstraintsplacedontheuseofresourcesareeither(1)externallyimposedbycreditors(suchasthroughdebtcovenants),grantors,contributors,orlawsorregulationsofothergovernments;or(2)imposedbylawthroughconstitutionalprovisionsorenablinglegislation.Enablinglegislationauthorizesthegovernmenttoassess,levy,changeormandatepaymentandincludesalegallyenforceablerequirementontheuseofthesefunds.

Committed:ThisclassificationincludesamountsthatcanonlybeusedforspecificpurposespursuanttoconstraintsimposedbyformalactionoftheSchoolDistrict’shighestlevelofdecision‐makingauthority.ThisformalactionisintheformofaresolutionwhichismadebytheSchoolBoard.Onceanamountiscommitted,itcannotbeusedforanyotherpurposeunlesschangedbythesametypeofformalactionusedtoinitiallyconstrainthefunds.

Assigned:ThisclassificationincludesspendableamountsthatarereportedingovernmentalfundsotherthanintheGeneralFundthatareneitherrestrictednorcommitted,andamountsintheGeneralFundthatareintendedtobeusedforaspecificpurpose.TheintentofanassignedfundbalanceshouldbeexpressedbyeithertheSchoolBoard,orasubordinatehigh‐levelbody,suchasthefinancecommittee,superintendent,orbusinessmanagerthatisauthorizedtoassignamountstobeusedforspecificpurposes.AsdetailedinitsFundBalancePolicy,thefinancecommitteehastheauthoritytomakeassignmentsoffundbalance.Thus,theseassignmentscanbemadeorchangedwithoutformalactionofthefullBoard.

Theassignmentoffundbalancecannotresultinanegativeunassignedfundbalance.


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FundBalance–GovernmentalFunds(Continued)

Unassigned:Thisclassificationrepresentstheportionofaspendablefundbalancethathasnotbeencategorizedasrestricted,committed,orassigned.Thegeneralfundistheonlyfundwhichwouldincludeapositiveunassignedfundbalanceasallotherfundtypesmustcategorizeamountswithintheotherclassifications.Anegativeunassignedfundbalancemayoccurinanyfundwhenthereisanoverexpenditureofrestrictedorcommittedfundbalance.Inthiscase,anyassignedfundbalance(andassignedfundbalanceinthegeneralfund)wouldbeeliminatedpriortoreportinganegativeunassignedfundbalance.

MinimumFundBalancePolicy

TheSchoolDistrictwillstrivetomaintainanunassignedfundbalancelevelinthegeneralfundofnotlessthanthreepercent(3%)andnotmorethaneightpercent(8%)ofbudgetedexpendituresforthatfiscalyear.

Thetotalfundbalance,consistingofseveralportionsincludingcommitted,assignedandunassigned,mayexceedeightpercent(8%).Iftheassignedandunassignedportionoffundbalanceexceedstwentypercent(20%)ofbudgetedexpenditures,theBoardmayutilizeaportionoffundbalancebyappropriatingexcessfundsfornonrecurringexpendituresonly.

PolicyRegardingOrderofSpending

TheSchoolDistrictcurrentlydoesnothaveaformalpolicyinplaceregardingtheorderofspendingresidualfundbalance.Therefore,thedefaultorderofspendingistouserestrictedresourcesfirstandthenapplyunrestrictedresourcesinthefollowingorder:committed,assigned,andunassigned.

NOTE2 CASHANDINVESTMENTS

Section440.1ofthePennsylvaniaSchoolCodeandAct10of2016definesallowableinvestmentsforschooldistricts,whicharesummarizedasfollows:

U.S.TreasuryBills

ShorttermobligationsoftheU.S.Governmentoritsagencies

DepositsinsavingsaccountsortimedepositsorshareaccountsofinstitutionsinsuredbytheFederalDepositInsuranceCorporation(FDIC)ortheNationalCreditUnionShareInsuranceFundtotheextentthatsuchaccountsaresoinsured,and,foranyamountsabovetheinsuredmaximum,providedthatapprovedcollateralasprovidedbylawthereforeshallbepledgedbythedepository.

ObligationsoftheUnitedStatesofAmericaoranyofitsagenciesorinstrumentalitiesbackedbythefullfaithandcreditoftherespectivegovernmententity.

SharesofaninvestmentcompanyrestrictedundertheInvestmentCompanyActof1940.

Obligations,participationsorotherinstrumentsofanyFederalagency,instrumentality,orUnitedStatesgovernment‐sponsoredenterpriseifthedebtobligationsareratedatleast“A”oritsequivalent.


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NOTE2 CASHANDINVESTMENTS(CONTINUED)

Commercialpaperissuedbycorporationsorotherbusinessentitiesorganizedinaccordancewithfederalorstatelaw,withamaturitynottoexceed270days.

Billsofexchangeortimedraftsdrawnonandacceptedbyacommercialbank,otherwiseknownasbankers’acceptances,ifthebankers’acceptancesdonotexceed180daysmaturity.

Negotiablecertificatesofdepositorotherevidenceofdeposit,witharemainingmaturityofthreeyearsorless.

CustodialCreditRisk–Deposits

Custodialcreditriskistheriskthatintheeventofabankfailure,theSchoolDistrict’sdepositsmaynotbereturnedtoit.TheSchoolDistrictdoesnothaveadepositpolicyforcustodialcreditrisk.

AsofJune30,2017,$2,604,167oftheSchoolDistrict’sbankbalanceof$3,354,167wasexposedtocreditrisk.Allofthe$2,604,167wasuninsuredandcollateralizedwithsecuritiesheldbythepledgingbank’strustdepartment,butnotintheSchoolDistrict’sname.

PennsylvaniaAct72of1971,asamended,isanactstandardizingtheproceduresforpledgesofassetstosecuredepositsofpublicfundswithbankinginstitutionspursuanttootherlaws;establishingastandardruleforthetypes,amountsandvaluationsofassetseligibletobeusedascollateralfordepositsofpublicfunds;permittingassetstobepledgedagainstdepositsonapooledbasisandauthorizingtheappointmentofcustodianstoactasthepledgeroftheassets.BasedonthestandardsoutlinedinAct72,thevariousbanksutilizedbytheDistricthavepledgedcollateralonapooledbasisonbehalfoftheDistrictandallothergovernmentaldepositorsintherespectivefinancialinstitutions.

CustodialCreditRisk–Investments

IncludedincashandcashequivalentsonthestatementofnetpositionarepooledinvestmentsinthePennsylvaniaSchoolDistrictLiquidAssetFund(PSDLAF)of$20,055.Allthesefundsarebasicallymutualfundsthatconsistofshorttermmoneymarketinstrumentsandseektomaintainaconstantnetassetvalueof$1pershare.PSDLAFdepositsareinvestedbyPSDLAFdirectlyinportfoliosofsecuritiesheldbyathird‐partycustodianandarecollateralizedwithsecuritiesheldbythePSDLAFagentinacollateralpool.

Includedininvestmentsonthestatementofnetpositionarecertificatesofdeposits(CDs),allwithmaturitiesgreaterthanthreemonths.Theseareconsidereddepositsforpurposesofthisdisclosureandareincludedinthecustodialcreditriskdisclosureabove.TheSchoolDistricthasinvested$1,000,000inPSDLAF’sfullflexinvestmentpoolwhichhaveweeklyliquidityandarecollateralizedat102%oftheprincipaldeposit.TheSchoolDistrictalsohasoneCDtotaling$1,538,502atanindividualbank.

TheSchoolDistricthasarepurchasesweepaccountinplacethattransfersabalanceinexcessofanagreeduponamountintoasweepaccountattheendofeachday.ThebankusesthefundstopurchaseGovernmentSecuritiesinthenameoftheSchoolDistrict.Thesefundsarethereforenolongercoveredunderthebank’sFDICinsurancelevels.ThebalanceinthisrepurchaseaccountincludedininvestmentsatJune30was$545,457.


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NOTE2 CASHANDINVESTMENTS(CONTINUED)

CreditRisk–Investments

InvestmentsinPSDLAFaresubjecttoincome,marketandcreditriskrelatedtothepotentialfor(1)declineincurrentincome,(2)declineinmarketvalueand(3)thatanissuerofsecuritiesheldintheinvestmentportfoliosofthefundwouldfailtomaketimelypaymentsofprincipalandinterest.

TheSchoolDistrictdoesnothaveaformalwritteninvestmentpolicythatlimitsitsinvestmentchoicestocertaincreditratings.AsofJune30,2017,theSchoolDistrict’sinvestmentswereratedas:

Investment Standard&Poor’sPASchoolDistrictLiquidAssetFund AAAm

PoliciesFollowedatPSDLAF

RegulatoryOversight

TheoperationofPSDLAFisgovernedbyanelevenmemberBoardofTrustees,nineofwhomareelectedandtwoofwhomserveexofficio.TheTrusteeshavefull,exclusive,andabsolutecontrolandauthorityoverthebusinessoftheFundanditsassets,subjecttorightsoftheSettlors,asprovidedintheDeclarationofTrust.

PSDLAFisnotregisteredwiththeSecuritiesandExchangeCommission(SEC);however,PSDLAFfollowsinvestmentproceduressimilartothosefollowedbySECregisteredmoneymarketfunds.

ValuationofInvestments

InaccordancewiththeGovernmentAccountingStandardsBoard,portfoliosecuritiesarevaluedatamortizedcost,whichapproximatesmarketvalue.Theamortizedcostmethodinvolvesvaluingasecurityatitscostonthedateofpurchaseandrecordingaconstantamortizationoraccretiontomaturityofanydiscountorpremium,regardlessoftheimpactoffluctuatinginterestratesonthemarketvalueoftheinvestment.

TheSchoolDistricthasnolimitationsorrestrictionsonwithdrawalsonaccountsheldatPSDLAF.


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NOTE3 TAXES

Realestatetaxesareconsideredfullycollectiblesincelienscanbefiledonproperties.Theuncollectibleportionofpercapitataxeswasestimatedbasedonpreviouscollectionexperience.

PropertytaxesforthefiscalyearareleviedasofJuly1onassessedpropertyvalues.ThetaxbillsaremailedbytheTaxCollectorsinmid‐Julyandarepayableasfollows:

Discount July1–September1Face September2–November1Penalty November2‐December31

Installmentpaymentsareavailable,withone‐thirdofthefacevaluedueatSeptember1,October1andNovember1.AfterDecember31,thebillsareconsidereddelinquentandturnedovertoYorkCountyforrealestatetaxbillcollectionandtheYorkAdamsTaxBureauforpercapitataxescollection.

NOTE4 TAXESRECEIVABLEANDDEFERREDINFLOWSOFRESOURCES

TaxesreceivableanddeferredinflowsofresourcesinthefundfinancialstatementsconsistofthefollowingasofJune30,2017:

Realestate 691,285$Percapita 126,605Earnedincome 355,389Realtytransfer 36,934

1,210,213Reserveforuncollectibleaccounts (82,313)Taxesreceivable,net 1,127,900

Taxescollectedwithinsixtydays,recordedasrevenuesingovernmentalfunds (534,932)

Taxesestimatedtobecollectedaftersixtydays,recordedas

deferredinflowsofresourcesingovernmentalfunds 592,968$


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NOTE5 INTERFUNDRECEIVABLEANDPAYABLESANDTRANSFERS

Duefrom/tootherfundsconsistofthefollowingasJune30,2017:

FundsDuefromOther

FundsDuetoOther

FundsGovernmentalFunds:

GeneralFund 263,406$ ‐$EnterpriseFunds:

FoodServiceFund ‐ 263,406263,406$ 263,406$

Theinterfundreceivable/payableresultsfromthegeneralfundpayingforfoodservicefundexpenses,mainlypayroll,whichthefoodservicefundexpectstoreimburseinthenextfiscalyear.

InterfundtransfersconsistofthefollowingfortheyearendedJune30,2017:

Funds TransfersIn TransfersOutGeneralFund ‐$ 67,486$CapitalReserveFund 18,722 ‐FoodServiceFund 48,764 ‐

67,486$ 67,486$

Thetransfersfromthegeneralfundtothecapitalreservefundwererelatedtodonationsoriginallyrecordedinthegeneralfund.Thetransferfromthegeneralfundtothefoodservicefundwasrelatedtothenetlossinthefoodservicefund.

NOTE6 INTERGOVERNMENTALRECEIVABLES

IntergovernmentalreceivablesatJune30,2017consistofthefollowing:

State: SocialSecuritysubsidy 161,477$Retirementsubsidy 661,685Rentals‐debtservicereimbursement 97,157 (A)Various 100,863

Federal: Various 42,143Total‐GovernmentalFunds 1,063,325$

(A) TheSchoolDistrictrecordsareceivablefromtheCommonwealthofPennsylvaniafor

estimatedreimbursementsrelatedtodebtservicepaymentsmadeinthecurrentandprioryears.


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NOTE7 CAPITALASSETS

CapitalassetactivityfortheSchoolDistrictconsistsofthefollowingasofandfortheyearendedJune30,2017:

Beginning EndingBalance Additions Retirements Balance


Cost

Land 410,600$ ‐$ ‐$ 410,600$

Constructioninprogress 14,062 ‐ (14,062) ‐

Siteimprovements 5,644,955 134,177 ‐ 5,779,132

Buildingsandimprovements 45,012,671 220,953 ‐ 45,233,624Furniture,fixturesandequipment 5,904,376 196,053 ‐ 6,100,429

Totalcost 56,986,664 551,183 (14,062) 57,523,785

Lessaccumulateddepreciation

Siteimprovements (2,101,267) (233,010) ‐ (2,334,277)

Buildingsandimprovements (20,105,343) (1,281,584) ‐ (21,386,927)

Furniture,fixturesandequipment (4,917,214) (157,271) ‐ (5,074,485)

Totalaccumulateddepreciation (27,123,824) (1,671,865) ‐ (28,795,689)

Capitalassets,net 29,862,840$ (1,120,682)$ (14,062)$ 28,728,096$

Business‐TypeActivitiesCostMachineryandequipment 489,428$ 16,584$ ‐$ 506,012$

LessaccumulateddepreciationMachineryandequipment (425,368) (30,770) ‐ (456,138)

Capitalassets,net 64,060$ (14,186)$ ‐$ 49,874$

DepreciationexpensefortheyearendedJune30,2017waschargedtogovernmentalfunctionsasfollows:

Instruction 1,264,211$Instructionalstudentsupport 61,045Administrationandfinancialsupportservices 13,117Operationandmaintenanceofplantservices 298,627Studentactivities 34,865

1,671,865$


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NOTE8 ACCRUEDSALARIESANDBENEFITS/WITHHOLDINGS

Accruedsalariesandbenefits/withholdingsconsistofthefollowingasofJune30,2017:

GeneralFund

FoodServiceFund

Salaries 818,175$ 18$SocialSecurity 61,753 41Retirement 1,303,433 161Payrollwithholdings 72,693 ‐

2,256,054$ 220$

NOTE9 LONG‐TERMLIABILITIES

Thechangesinlong‐termliabilitiesduringtheyearendedJune30,2017wereasfollows:

Beginning Ending Current Long‐termBalance Additions Reductions Balance Portion Portion

GovernmentalActivities:Generalobligationbonds/notespayable:(A) Seriesof2012 6,795,000$ ‐$ (690,000)$ 6,105,000$ 705,000$ 5,400,000$(B) Seriesof2013 10,110,000 ‐ (1,395,000) 8,715,000 1,425,000 7,290,000

Bond(discounts)/premium‐net 1,092,751 ‐ (162,805) 929,946 162,805 767,141Subtotal‐bonds/notes 17,997,751 ‐ (2,247,805) 15,749,946 2,292,805 13,457,141

Compensatedabsences:Sickleave 257,499 39,100 (31,287) 265,312 125,000 140,312Personalleave 49,149 81,517 (79,922) 50,744 22,000 28,744Vacationpay 169,138 171,653 (166,647) 174,144 75,000 99,144

Subtotal‐compensatedabsences 475,786 292,270 (277,856) 490,200 222,000 268,200

Totallong‐termliabilities 18,473,537$ 292,270$ (2,525,661)$ 16,240,146$ 2,514,805$ 13,725,341$

Business‐TypeActivities:Compensatedabsences:

Sickleave 1,976$ 1,183$ (1,629)$ 1,530$ 475$ 1,055$Vacationpay 5,894 3,696 (2,043) 7,547 2,500 5,047Personalleave 1,671 3,850 (2,829) 2,692 1,000 1,692

Totallong‐termliabilities 9,541$ 8,729$ (6,501)$ 11,769$ 3,975$ 7,794$


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NOTE9 LONG‐TERMLIABILITIES(CONTINUED)

BondsandNotes

Thebondsandnotesaresecuredbyapledgeofthefullfaith,credit,andtaxingpoweroftheSchoolDistrictandincludethefollowing:

(A) TheRefundingSeriesof2012bondswereissuedintheamountof$9,365,000.Interestratesrangefrom1.00%to3.00%.ThosebondswereissuedtoprovidefundstorefundtheSchoolDistrict’sSeries2011bondsandtopayallcostsandexpensesincidenttotheissuanceandsaleoftheRefundingSeriesof2012bonds.

(B) TheRefundingSeriesof2013bondswereissuedintheamountof$14,085,000.Interestratesrangefrom0.35%to4.50%.

ThosebondswereissuedtoprovidefundstorefundtheSchoolDistrict’sSeries2004and2005AbondsandtopayallcostsandexpensesincidenttotheissuanceandsaleoftheRefundingSeriesof2013bonds.TheSchoolDistrictused$750,000ofcashreservestowardsthepayoffoftheSeriesof2004and2005AbondsinordertoreducetheamountoffundsnecessarytoborrowwithSeriesof2013bondsandsubsequentlyreducefutureinterestexpense.

TheannualprincipalandinterestrequirementsforfuturegeneralobligationbondsandnotesasofJune30,2017areasfollows:

Seriesof Seriesof2012 2013 Totals

Principal Interest Principal Interest Principal Interest Total

2018 705,000$ 145,431$ 1,425,000$ 361,775$ 2,130,000$ 507,206$ 2,637,206$2019 725,000 127,481 1,495,000 304,775 2,220,000 432,256 2,652,2562020 735,000 115,156 1,545,000 244,975 2,280,000 360,131 2,640,1312021 750,000 100,456 1,615,000 183,175 2,365,000 283,631 2,648,6312022 770,000 82,831 1,670,000 118,575 2,440,000 201,406 2,641,406

2023‐2025 2,420,000 130,363 965,000 43,425 3,385,000 173,788 3,558,7886,105,000$ 701,719$ 8,715,000$ 1,256,700$ 14,820,000$ 1,958,419$ 16,778,419$

Leases

OperatingLeases:

TheSchoolDistricthasenteredintononcancelableoperatingleasesforcopiersandamailingmachine.Minimumleasepaymentsinfutureyearsareasfollows:

2018 35,623$2019 34,4502020 17,225

Totalminimumleasepayments 87,298$

ThetotalrentforalloperatingleasesfortheyearendedJune30,2017was$84,782.


43

NOTE10 PENSIONPLAN

GeneralInformationAboutthePensionPlan

PlanDescription

PSERSisagovernmentalcost‐sharingmulti‐employerdefinedbenefitpensionplanthatprovidesretirementbenefitstopublicschoolemployeesoftheCommonwealthofPennsylvania.ThememberseligibletoparticipateintheSystemincludeallfull‐timepublicschoolemployees,part‐timehourlypublicschoolemployeeswhorenderatleast500hoursofserviceintheschoolyear,andpart‐timeperdiempublicschoolemployeeswhorenderatleast80daysofserviceintheschoolyearinanyofthereportingentitiesinPennsylvania.PSERSissuesapubliclyavailablefinancialreportthatcanbeobtainedatwww.psers.state.pa.us.

BenefitsProvided

PSERSprovidesretirement,disability,anddeathbenefits.Membersareeligibleformonthlyretirementbenefitsuponreaching(a)age62withatleast1yearofcreditedservice;(b)age60with30ormoreyearsofcreditedservice;or(C)35ormoreyearsofserviceregardlessofage.Act120of2010(Act120)preservesthebenefitsofexistingmembersandintroducedbenefitreductionsforindividualswhobecomenewmembersonorafterJuly1,2011.Act120createdtwonewmembershipclasses,MembershipClassT‐E(ClassT‐E)andMembershipClassT‐F(ClassT‐F).Toqualifyfornormalretirement,ClassT‐EandClassT‐Fmembersmustworkuntilage65withaminimumof3yearsofserviceorattainatotalcombinationofageandservicethatisequaltoorgreaterthan92withaminimumof35yearsofservice.

Benefitsaregenerallyequalto2%or2.5%,dependinguponmembershipclass,ofthemember’sfinalaveragesalary(asdefinedbytheCode)multipliedbythenumberofyearsofcreditedservice.FormemberswhosemembershipstartedpriortoJuly1,2011,aftercompletionoffiveyearsofservice,amember’srighttothedefinedbenefitsisvestedandearlyretirementbenefitsmaybeelected.ForClassT‐EandClassT‐Fmembers,therightstobenefitsisvestedaftertenyearsofservice.

Participantsareeligiblefordisabilityretirementbenefitsaftercompletionoffiveyearsofcreditedservice.Suchbenefitsaregenerallyequalto2%or2.5%,dependinguponmembershipclass,ofthemember’sfinalaveragesalary(asdefinedbytheCode)multipliedbythenumberofyearsofcreditedservice,butnotlessthanone‐thirdofsuchsalarynorgreaterthanthebenefitsthememberwouldhavehadatnormalretirementage.Membersovernormalretirementagemayapplyfordisabilitybenefits.

Deathbenefitsarepayableuponthedeathofanactivememberwhohasreachedage62withatleastoneyearofcreditedservice(age65withatleastthreeyearsofcreditedserviceforClassT‐EandClassT‐Fmembers)orwhohasatleastfiveyearsofcreditedservice(tenyearsforClassT‐EandClassT‐Fmembers).Suchbenefitsareactuariallyequivalenttothebenefitthatwouldhavebeeneffectiveifthememberhadretiredonthedaybeforedeath.


44

NOTE10 PENSIONPLAN(CONTINUED)

GeneralInformationAboutthePensionPlan(Continued)

Contributions

Membercontributions:

ActivememberswhojoinedtheSystempriortoJuly22,1983contributeat5.25%(MembershipClassT‐C)orat6.50%(MembershipClassT‐D)ofthemember'squalifyingcompensation.

MemberswhojoinedtheSystemonorafterJuly22,1983,andwhowereactiveorinactiveasofJuly1,2001contributeat6.25%(MembershipClassT‐C)orat7.50%(MembershipClassT‐D)ofthemember'squalifyingcompensation.

MemberswhojoinedtheSystemafterJune30,2001andbeforeJuly1,2011,contributeat7.50%(automaticMembershipClassT‐D).ForallnewhiresandformemberswhoelectedClassT‐Dmembership,thehighercontributionratesbeganwithservicerenderedonorafterJanuary1,2002.

MemberswhojoinedtheSystemafterJune30,2011,automaticallycontributeattheMembershipClassT‐Erateof7.5%(baserate)ofthemember’squalifyingcompensation.AllnewhiresafterJune30,2011,whoelectClassT‐Fmembership,contributeat10.3%(baserate)ofthemember’squalifyingcompensation.MembershipClassT‐EandClassT‐Fareaffectedbya“sharedrisk”provisioninAct120of2010thatinfuturefiscalyearscouldcausetheMembershipClassT‐Econtributionratetofluctuatebetween7.5%and9.5%andMembershipClassT‐Fcontributionratetofluctuatebetween10.3%and12.3%.

EmployerContributions:

TheSchoolDistrict’scontractuallyrequiredcontributionrateforfiscalyearendedJune30,2017was29.20%ofcoveredpayroll,actuariallydeterminedasanamountthat,whencombinedwithemployeecontributions,isexpectedtofinancethecostsofbenefitsearnedbyemployeesduringtheyear,withanadditionalamounttofinanceanyunfundedaccruedliability.ContributionsrecognizedasrevenuebythepensionplanfromtheSchoolDistrictwere$3,872,746fortheyearendedJune30,2017.

StateFunding:

TheCommonwealthofPennsylvaniagenerallyreimbursestheSchoolDistrictfor50%ofitsretirementexpense.ThisarrangementdoesnotmeetthecriteriaofaspecialfundingsituationinaccordancewithGASBstandards.Therefore,thenetpensionliabilitiesandrelatedpensionexpenserepresent100%oftheSchoolDistrict’sshareoftheseamounts.DuringtheyearendedJune30,2017,theSchoolDistrictrecognizedrevenueof$2,043,038asreimbursementforitscurrentyearpensionpayments.


45


PensionLiabilities,PensionExpense,andDeferredOutflowsofResourcesandDeferredInflowsofResourcesRelatedtoPensions

AtJune30,2017,theSchoolDistrictreportedaliabilityof$50,696,634foritsproportionateshareofthenetpensionliability.ThenetpensionliabilitywasmeasuredasofJune30,2016,andthetotalpensionliabilityusedtocalculatethenetpensionliabilitywasdeterminedbyrollingforwardtheSystem’stotalpensionliabilityasofJune30,2015toJune30,2016.

TheSchoolDistrict’sproportionofthenetpensionliabilitywascalculatedutilizingtheemployer’sone‐yearreportedcoveredpayrollasitrelatestothetotalone‐yearreportedcoveredpayroll.AtJune30,2016,theSchoolDistrict’sproportionwas0.1023percent,whichwasthesamepercentageasitsproportionmeasuredasofJune30,2015.

FortheyearendedJune30,2017,theSchoolDistrictrecognizedpensionexpenseasfollows:

GovernmentalActivities $5,166,187

Business‐TypeActivities $122,899

AtJune30,2017,theSchoolDistrictreporteddeferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensionsfromthefollowingsources:

DeferredOutflowsofResources

DeferredInflowsofResources

Differencebetweenexpectedandactualexperience ‐$ 422,302$Changesinassumptions 1,830,000 ‐Netdifferencebetweenprojectedandactualinvestmentearnings 2,825,637 ‐Changesinproportion‐plan 298,130 ‐Changesinproportion‐fund 81,977 81,977Differencebetweenemployercontributionsandproportionateshareoftotalcontributions 82,169 ‐Contributionssubsequenttothemeasurementdate 3,880,743 ‐

8,998,656$ 504,279$

The$3,880,743reportedasdeferredoutflowsofresourcesrelatedtopensionsresultingfromSchoolDistrictcontributionssubsequenttothemeasurementdatewillberecognizedasareductionofthenetpensionliabilityintheyearendedJune30,2017.Otheramountsreportedasdeferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensionswillberecognizedinpensionexpenseasfollows:

YearendedJune30:2018 962,209$2019 962,2092020 1,615,0102021 1,073,7422022 465

Total 4,613,634$


46


PensionLiabilities,PensionExpense,andDeferredOutflowsofResourcesandDeferredInflowsofResourcesRelatedtoPensions(Continued)

ChangesinActuarialAssumptions

ThetotalpensionliabilityasofJune30,2016wasdeterminedbyrollingforwardtheSystem’stotalpensionliabilityasoftheJune30,2015actuarialvaluationtoJune30,2016usingthefollowingactuarialassumptions,appliedtoallperiodsincludedinthemeasurement:

TheInvestmentrateofreturnwasadjustedfrom7.50%to7.25%

Investmentreturn–7.50%,includesinflationat2.75%

Salaryincreases–Effectiveaverageof5.50%,whichreflectsanallowanceforinflationof3.00%,realwagegrowthof2.50%,toaneffectiveaverageof5.00%comprisedofinflationof2.75%and2.25%forrealwagegrowthandformeritandseniorityincreases

MortalityratesweremodifiedfromtheRP‐2000CombinedHealthyAnnuitantTables(maleandfemale)withagesetback3yearsforbothmalesandfemalestotheRP‐2014MortalityTablesforMalesandFemales,adjustedtoreflectPSERS’experienceandprojectedusingamodifiedversionoftheMP‐2015MortalityImprovementScale.FordisabledannuitantstheRP‐2000CombinedDisabledTables(maleandfemale)withagesetback7yearsformalesand3yearsforfemalestotheRP‐2014MortalityTablesforMalesandFemales,adjustedtoreflectPSERS’experienceandprojectedusingamodifiedversionoftheMP‐2015MortalityImprovementScale.

TheactuarialassumptionsusedintheJune30,2016valuationwerebasedontheexperiencestudythatwasperformedforthefive‐yearperiodendingJune30,2015.TherecommendedassumptionchangesbasedonthisexperiencestudywereadoptedbytheBoardatitsJune10,2016Boardmeeting,andwereeffectivebeginningwiththeJune30,2016actuarialvaluation.

Thelong‐termexpectedrateofreturnonpensionplaninvestmentswasdeterminedusingabuilding‐blockmethodinwhichbest‐estimaterangesofexpectedfuturerealratesofreturn(expectedreturns,netofpensionplaninvestmentexpensesandinflation)aredevelopedforeachmajorassetclass.Theserangesarecombinedtoproducethelong‐termexpectedrateofreturnbyweightingtheexpectedfuturerealratesofreturnbythetargetassetallocationpercentageandbyaddingexpectedinflation.

Thepensionplan’spolicyinregardtotheallocationofinvestedplanassetsisestablishedandmaybeamendedbythePSERSBoard.Planassetsaremanagedwithalong‐termobjectiveofachievingandmaintainingafullyfundedstatusforthebenefitsprovidedthroughthepension.


47



ActuarialAssumptions(Continued)

AssetClassTarget

Allocation

Long‐TermExpectedRealRateofReturn

Globalpublicequity 22.5% 5.3%Fixedincome 28.5% 2.1%Commodities 8.0% 2.5%Absolutereturn 10.0% 3.3%Riskparity 10.0% 3.9%MLPs/Infrastructure 5.0% 4.8%Realestate 12.0% 4.0%Alternativeinvestments 15.0% 6.6%Cash 3.0% 0.2%Financing(LIBOR) (14.0%) 0.5%

100.0%

TheabovewastheBoard’sadoptedassetallocationpolicyandbestestimatesofgeometricrealratesofreturnforeachmajorassetclassasofJune30,2016.

DiscountRate

Thediscountrateusedtomeasurethetotalpensionliabilitywas7.25%.Theprojectionofcashflowsusedtodeterminethediscountrateassumedthatcontributionsfromplanmemberswillbemadeatthecurrentcontributionrateandthatcontributionsfromemployerswillbemadeatcontractuallyrequiredrates,actuariallydetermined.Basedonthoseassumptions,thepensionplan’sfiduciarynetpositionwasprojectedtobeavailabletomakeallprojectedfuturebenefitpaymentsofcurrentplanmembers.Therefore,thelong‐termexpectedrateofreturnonpensionplaninvestmentswasappliedtoallperiodsofprojectedbenefitpaymentstodeterminethetotalpensionliability.


48



SensitivityoftheSchoolDistrict’sProportionateShareoftheNetPensionLiabilitytoChangesintheDiscountRate

Thefollowingpresentsthenetpensionliabilitycalculatedusingthediscountrateof7.25%,aswellaswhatthenetpensionliabilitywouldbeifitwerecalculatedusingadiscountratethatis1‐percentagepointlower(6.25%)or1‐percentagepointhigher(8.25%)thanthecurrentrate:

1%DecreaseCurrent

DiscountRate 1%Increase6.25% 7.25% 8.25%

SchoolDistrict'sproportionateshareofthenetpensionliability 62,016,000$ 50,696,634$ 41,185,000$

PensionPlanFiduciaryNetPosition

DetailedinformationaboutPSERS’fiduciarynetpositionisavailableinPSERSComprehensiveAnnualFinancialReportwhichcanbefoundontheSystem’swebsiteatwww.psers.state.pa.us.

PayablestothePensionPlan

AsofJune30,2017,theSchoolDistricthad$1,303,594includedinaccruedbenefitsliability,ofwhich$1,056,454isforthecontractuallyrequiredcontributionforthesecondquarterof2017and$247,140isrelatedtotheaccruedpayrollliabilityforwagesincurredasofJune30,2017.

NOTE11 POSTEMPLOYMENTHEALTHCAREPLAN

PlanDescription

TheSchoolDistricthasahealthcareplanforretiredemployees,whichisasingleemployerdefinedbenefithealthcareplanadministeredbytheSchoolDistrict.Theplanprovidesmedical,prescriptiondruganddentalcoverageforbothretireeandfamily.ThememberiseligibleuntiltheemployeereachesMedicareage.Tocontinuecoverageuponretirement,theretireemustreimbursetheSchoolDistrict100%oftheSchoolDistrict’scostofcoverage.

RetireesoptingtoparticipatearerequiredtopayapremiumamountthatislessthantheSchoolDistrict'sannualcosttoprovidehealthcarecoveragetoretirees.Thepremiumamountretireespayisablendedrateforcoveringbothactiveandretiredplanmembers.Thefactthattheblendedratethatretireespayislessthanthecostofcoveringretiredmembersandtheirbeneficiariesresultsinwhatisknownasan"implicitratesubsidy"bytheSchoolDistrict,whichgivesrisetothebenefit.


49

NOTE11 POSTEMPLOYMENTHEALTHCAREPLAN(CONTINUED)

FundingPolicy

ThecontributionrequirementsofplanmembersandtheSchoolDistrictareestablishedandmaybeamendedbytheSchoolDistrict.Therequiredcontributionisbasedonprojectedpay‐as‐you‐gofinancingrequirements,withanadditionalamounttoprefundbenefitsasdeterminedannuallybytheSchoolDistrict.Forfiscalyear2017,theSchoolDistrictcontributed$110,379intheformofestimatedadditionalpremiumsforactiveemployeesbasedonimplicitratesforretiredemployeesintheplan.Planmembersreceivingbenefitsalsocontributed$143,937,or100%ofthetotalpremiums.

AnnualOPEBCostandNetOPEBObligation

TheSchoolDistrict’sannualotherpostemploymentbenefit(OPEB)cost(expense)iscalculatedbasedontheannualrequiredcontribution(ARC)oftheemployer,anamountactuariallydeterminedinaccordancewiththeparametersofGASBStatement45.TheARCrepresentsaleveloffundingthat,ifpaidonanongoingbasis,isprojectedtocovernormalcosteachyearandamortizeanyunfundedactuarialliabilities(orfundingexcess)overaperiodnottoexceedthirtyyears.ThefollowingtableshowsthecomponentsoftheSchoolDistrict’sannualOPEBcostfortheyear,theamountactuallycontributedtotheplan,andchangesintheSchoolDistrict’snetOPEBobligationtotheplan:

Annualrequiredcontribution(ARC) 298,872$InterestonnetOPEBobligation 24,212AdjustmenttoARC (33,031)AnnualOPEBcost 290,053Employercontributionsmade‐estimated (110,379)IncreaseinnetOPEBobligation 179,674NetOPEBobligation‐beginningoftheyear 538,034NetOPEBobligation‐endoftheyear 717,708$

AnnualOPEBCostandNetOPEBObligation

TheSchoolDistrict’sannualOPEBcost,thepercentageofannualOPEBcostcontributedtotheplan,andthenetOPEBobligationfortheyearendedJune30,2017andtheprecedingtwoyearsareasfollows:

FiscalYear Annual PercentageofAnnual NetOPEBEnded OPEBcost OPEBCostContributed Obligation

2017 290,053$ 38% 717,708$2016 186,698 55% 538,0342015 187,896 61% 453,472


50


FundedStatusandFundingProgress

AsofJuly1,2016,themostrecentactuarialvaluationdate,theplanhadthefollowingfundingstatusandprogress:

Actuarial ActuarialAccrued UAALasaValuation Value Liability(AAL)‐ UnfundedAAL Funded Covered PercentageofDate ofAssets EntryAge (UAAL) Ratio Payroll CoveredPayroll

7/1/2016 ‐$ 2,373,151$ 2,373,151 0.00% 12,495,790 18.99%

Actuarialvaluationsofanongoingplaninvolveestimatesofthevalueofreportedamountsandassumptionsabouttheprobabilityofoccurrenceofeventsfarintothefuture.Examplesincludeassumptionsaboutfutureemployment,mortality,andthehealthcarecosttrend.Amountsdeterminedregardingthefundedstatusoftheplanandtheannualrequiredcontributionsoftheemployeraresubjecttocontinualrevisionasactualresultsarecomparedwithpastexpectationsandnewestimatesaremadeaboutthefuture.Thescheduleoffundingprogress,presentedasrequiredsupplementaryinformationfollowingthenotestothefinancialstatements,presentsmultiyeartrendinformationaboutwhethertheactuarialvalueofplanassetsisincreasingordecreasingovertimerelativetotheactuarialaccruedliabilitiesforbenefits.

ActuarialMethodsandAssumptions

Projectionsofbenefitsforfinancialreportingpurposesarebasedonthesubstantiveplan(theplanasunderstoodbytheemployerandtheplanmembers)andincludethetypesofbenefitsprovidedatthetimeofeachvaluationandthehistoricalpatternofsharingofbenefitcostsbetweentheemployerandtheplanmemberstothatpoint.Theactuarialmethodsandassumptionsusedincludetechniquesthataredesignedtoreducetheeffectsofshort‐termvolatilityinactuarialaccruedliabilitiesandtheactuarialvalueofassets,consistentwiththelong‐termperspectiveofthecalculations.

IntheJuly1,2016actuarialvaluation,theentryagenormalcostmethodwasused.Theactuarialassumptionincludeda4.5percentinvestmentrateofreturn(netofadministrativeexpenses),annualsalaryincreasesof2.5%costoflivingadjustment,1%realwagegrowth,andforteachersandadministratorsameritincreasewhichvariesbyagefrom2.75%to0.25percent,andanannualhealthcarecosttrendrateof6.5percentin2016,decreasing0.5percenttoanultimaterateof5.5%in2018.Ratesgraduallydecreasefrom5.4%in2021to3.8%in2075andlater.Theactuarialvaluationofassetswasbasedonthefairvalueofassets,ofwhichtherearenone.TheUAALisbeingamortizedbasedonaleveldollar30yearopenperiod.


51


OtherPost‐employmentBenefits–PublicSchoolEmployee’sRetirementSystem(PSERS)

Inadditiontotheotherpost‐employmentbenefitdetailedabove,thePublicSchoolEmployee’sRetirementSystem(PSERS)alsoprovidesahealthinsurancepremiumassistanceprogramforalleligibleemployeeswhoqualifyandelecttoparticipate,whichisacost‐sharingmultipleemployerdefinedbenefitplan.ThePSERSRetirementBoardisestablishedbystatelawasanindependentadministrativeboardoftheCommonwealth.TheplanbenefitsandcontributionsarespecifiedinthePennsylvaniaPublicSchoolEmployee’sCode.Changesinbenefitandcontributionprovisionsmustbemadebylegislation.Pursuanttostatelaw,alllegislativebillsandamendmentsproposingtochangetheplanaretobeaccompaniedwithanactuarialnotepreparedbyanenrolledactuaryfromthePublicEmployeeRetirementCommissionprovidinganestimateofthecostandactuarialeffectoftheproposedchange.Underthisprogram,SchoolDistrictcontributionratesforpremiumassistanceareestablishedtoprovidereservesinthehealthinsuranceaccountthataresufficientforthepaymentofpremiumassistancebenefitsforeachsucceedingyear.

ThePSERSissuesapubliclyavailablefinancialreportthatincludesfinancialstatementsandrequiredsupplementaryinformationthatcanbeobtainedfromtheirwebsiteathttp://www.psers.state.pa.us/.

Participatingeligibleemployeesareentitledtoreceivepremiumassistancepaymentsequaltothelesserof$100permonthortheirout‐of‐pocketmonthlyhealthinsurancepremium.Toreceivepremiumassistance,eligibleemployeesmustobtaintheirhealthinsurancethroughtheSchoolDistrict.Thecontributionrateissetatalevelnecessarytoestablishreservessufficienttoprovidepremiumassistanceforthesubsequentfiscalyear.TheportionofthetotalcontributionratefortheSchoolDistrictwas0.83%fortheyearendedJune30,2017.

Theinformationbelowsummarizestherequiredcontributions,thepercentageofrequiredcontributioncontributedandthecontributionrateforthecurrentyearandtwoprecedingyears:

FiscalYear Required PercentageofRequired ContributionEnded Contribution ContributionContributed Rate2017 110,081$ 100% 0.83%2016 99,364$ 100% 0.84%2015 116,495$ 100% 0.90%


52

NOTE12 JOINTVENTURES

ExpenditurespaidtothefollowingjointventuresarereflectedasinstructionexpendituresintheGeneralFundandconsistofthefollowingfortheyearendedJune30,2017:

YorkCountySchoolofTechnology 561,031$

LincolnIntermediateUnitNo.12 1,896,273$

NOTE13 FUNDBALANCE

Thefollowingtableprovidesdetailsofthefundbalanceclassificationswhichareaggregatedonthegovernmentalfundsbalancesheet:

Capital TotalGeneral Reserve GovernmentalFund Fund Funds

FUNDBALANCESNonspendablefor:Prepaidexpenses 7,726$ ‐$ 7,726$

Restrictedfor:Futurecapitalexpenditures ‐ 1,674,840 1,674,840

Unassigned 1,338,054 ‐ 1,338,054

TotalFundBalances 1,345,780$ 1,674,840$ 3,020,620$

NOTE14 COMMITMENTSANDCONTINGENCIES

TheSchoolDistrictissubjecttorealestatetaxassessmentappealsonanongoingbasis.Iftaxappealsaresuccessful,theresultisalossoftaxrevenuetotheSchoolDistrict.ItisanticipatedthatanymateriallossoftaxrevenueonindividualtaxappealswillbeoffsetwithadditionalrevenuesfromotherpropertiesorothersourcesofrevenueandwouldnotcreateafinancialhardshiptotheSchoolDistrict.

AttimestheSchoolDistrictisinvolvedwithvariouslawsuitsinthenormalcourseofoperations.Managementbelievesthatlossesresultingfromthesematters,ifany,wouldbesubstantiallycoveredundertheSchoolDistrict’sprofessionalliabilityinsurancepolicyandwouldnothaveamaterialeffectonthefinancialpositionoftheSchoolDistrict.Accordingly,noprovisionsforanycontingentliabilitiesthatmayresulthavebeenmadeinthefinancialstatements.


53

NOTE14 COMMITMENTSANDCONTINGENCIES(CONTINUED)

TheSchoolDistrictparticipatesinnumerousstateandfederalprograms,whicharegovernedbyvariousrulesandregulationsofthegrantoragencies.Costschargedtotherespectivegrantprogramsaresubjecttoauditandadjustmentbythegrantoragencies;therefore,totheextentthattheSchoolDistricthasnotcompliedwithrulesandregulationsgoverningthegrants,refundsofanymoneyreceivedmayberequiredandthecollectabilityofanyrelatedreceivableatJune30,2017maybeimpaired.Intheopinionofmanagement,therearenosignificantcontingentliabilitiesrelatingtocompliancewiththerulesandregulationsgoverningtherespectivegrants;therefore,noprovisionhasbeenrecordedintheaccompanyingfinancialstatementsforsuchcontingencies.

NOTE15 RISKMANAGEMENT

TheSchoolDistrictisexposedtovariousrisksoflossrelatedtotorts;theftof,damageto,anddestructionofassets;errorsandomissions;injuriestoemployees;andnaturaldisasters.TheSchoolDistrictisinsuredagainsttheserisksbythepurchaseofcommercialinsurancetocoveranyreasonableloss.Settlementamountshavenotexceededinsurancecoverageforthecurrentyearorthreeprioryears.AllexpendituresfortheSchoolDistrict’sriskmanagementarerecordedinthegeneralfundorfoodservicefund.

LincolnBenefitTrust

TheSchoolDistrictisamemberofLincolnBenefitTrust.TheTrustisaclaimsservicingpoolwhichpaysclaimsforhospitalbenefits,medicalcoverageforphysicians’services,certaindentalcoverage,majormedicalcoverage,andcertainotherbenefitssubmittedbyemployeesoftheseventeenparticipatingSchoolDistricts.Eachparticipatingemployercontributestothetrustamountsdeterminedbyactuarialprinciplestobeadequatetocoverannualclaimcosts,operatingcosts,andreservessufficienttoprovidestatedbenefits.Sinceeachdistrictisresponsibleforitsownrisk,additionalassessmentswouldbechargedtomakeupanydeficiency;thus,thisfunctionslikearetrospectivelyratedprogram.

BecauseLincolnBenefitTrustactsasaclaim‐servicingpool,theSchoolDistrictremainsresponsiblefortheeconomicriskofprovidingstatedbenefitstoemployees.However,claimsincurredbetween$100,000and$300,000arepaidfromtheTrustminipool.Claimsincurredover$300,000arepaidfromastoplossinsurancepolicypurchasedbytheTrust.


54

NOTE15 RISKMANAGEMENT(CONTINUED)

LincolnBenefitTrust(Continued)

ChangesinnetpositionfortheSchoolDistrict’saccountatLincolnBenefitTrust(basedonauditedfinancialstatementsofLincolnBenefitTrust)wereasfollowsfortheyearendedJune30,2017:

Netposition‐July1,2016 2,330,202$

Contributionsandinterestincome 2,355,527Minipoolreimbursement 98,017Claimspaid (2,617,926)Stop‐lossinsurance (230,653)Minipoolpremium (72,613)Administrativefees (135,528)

Netposition‐June30,2017 1,727,026$

Overall,theLincolnBenefitTrusthadnetpositionof$95,706,536asofJune30,2017,andreportedanincreaseinnetpositionof$5,913,422fortheyearthenended.FinancialstatementsoftheTrustareavailableattheSchoolDistrict.

REQUIREDSUPPLEMENTARYINFORMATION

HANOVERPUBLICSCHOOLDISTRICTBudgetaryComparisonSchedule‐GeneralFundYearEndedJune30,2017

55

BUDGETACTUAL

(BUDGETARY/

VARIANCEWITHFINALBUDGETPOSITIVE

ORIGINAL FINAL GAAPBASIS) (NEGATIVE)REVENUESLocalSourcesTaxes 22,029,630$ 22,029,630$ 22,232,805$ 203,175$Investmentearnings 20,000 20,000 27,366 7,366Federalrevenuefromintermediatesources 313,000 313,000 355,559 42,559Other 142,500 142,500 275,949 133,449

Statesources 7,434,682 7,434,682 7,643,353 208,671Federalsources 585,500 585,500 722,542 137,042

Totalrevenues 30,525,312 30,525,312 31,257,574 732,262

EXPENDITURESInstruction 19,057,491 19,057,491 19,182,341 (124,850)Supportservices 8,422,923 8,422,923 8,517,585 (94,662)Operationofnoninstructionalservices 456,232 606,232 599,576 6,656Debtservice:Principal 2,085,000 2,085,000 2,085,000 ‐Interest 566,056 566,056 566,056 ‐Totalexpenditures 30,587,702 30,737,702 30,950,558 (212,856)

OTHERFINANCINGSOURCES(USES)Refundofprioryearrevenue ‐ ‐ 57,208 57,208Interfundtransfers,net (150,000) ‐ (67,486) (67,486)

Totalotherfinancingsourcesand(uses) (150,000) ‐ (10,278) (10,278)

Netchangeinfundbalance (212,390)$ (212,390)$ 296,738 509,128$

Fundbalance‐beginning 1,049,042

Fundbalance‐ending 1,345,780$

HANOVERPUBLICSCHOOLDISTRICTScheduleofSchoolDistrict’sProportionateShareofNetPensionLiability–PublicSchool

Employee’sRetirementSystemYearEndedJune30,2017

56

FortheFiscalYearEndedJune30

SchoolDistrict'sProportionoftheNetPension

Liability(Asset)

SchoolDistrict'sProportionateShareoftheNetPensionLiability

(Asset)

SchoolDistrict'sCoveredPayroll‐

measurementperiod

SchoolDistrict'sProportionateShareof

theNetPensionLiability(Asset)asaPercentageofitsCoveredPayroll

PlanFiduciaryNetPositionasa

PercentageoftheTotalPensionLiability

2017 0.1023% 50,696,634$ 13,253,629$ 382.51% 50.14%2016 0.1023% 44,311,561$ 13,161,320$ 336.68% 54.36%2015 0.1018% 40,293,170$ 12,986,990$ 310.26% 57.24%

NOTES

Theamountspresentedforeachfiscalyearweredeterminedasofthemeasurementperiodyear‐endthatwasusedforthefiscalyear.ForPSERS,themeasurementperiodyear‐endisoneyearpriortothefiscalyear‐end.

Thisschedulewillbeexpandedtoshow10yearsonceinformationbecomesavailableinthefuture.

ChangesinActuarialAssumptions

Thefollowingactuarialassumptionswerechangedduringthe2016/2017fiscalyear:

Theinvestmentrateofreturnwasadjustedfrom7.50%to7.25%

Theinflationassumptionwasdecreasedfrom3.00%to2.75%

Salarygrowthchangedfromaneffectiveaverageof5.50%,whichwascomprisedofinflationof3.00%realwagegrowthandformeritorseniorityincreasesof2.50%,toaneffectiveaverageof5.00%,comprisedofinflationof2.75%and2.25%forrealwagegrowthandformeritandseniorityincreases

MortalityratesweremodifiedfromtheRP‐2000CombinedHealthyAnnuitantTables(maleandfemale)withagesetback3yearsforbothmalesandfemalestotheRP‐2014MortalityTablesforMalesandFemales,adjustedtoreflectPSERS’experienceandprojectedusingamodifiedversionoftheMP‐2015MortalityImprovementScale.FordisabledannuitantstheRP‐2000CombineDisablesTables(maleandfemale)withagesetback7yearsformalesand3yearsforfemalestotheRP‐2014MortalityTablesforMalesandFemales,adjustedtoreflectPSERS’experienceandprojectedusingamodifiedversionoftheMP‐2015MortalityImprovementScale.

HANOVERPUBLICSCHOOLDISTRICTScheduleofSchoolDistrict’sContributions–PublicSchoolEmployee’sRetirement

SystemYearEndedJune30,2017

57

FortheFiscalYearEndedJune30

ContractuallyRequired

Contribution

Contributionsinrelationtothecontractuallyrequired

contribution

ContributionDeficiency(Excess)

CoveredPayroll‐fiscalyear

ContributionsasaPercentageofCoveredPayroll

2017 3,872,746$ 3,872,746$ ‐$ 13,212,578$ 29.31%2016 2,957,274 2,957,274 ‐ 13,253,629 22.31%2015 2,653,496 2,653,496 ‐ 13,161,320 20.16%2014 2,047,324 2,047,324 ‐ 12,986,990 15.76%2013 1,494,635 1,494,635 ‐ 12,930,547 11.56%

NOTES

Thisschedulewillbeexpandedtoshow10yearsonceinformationbecomesavailableinthefuture.

HANOVERPUBLICSCHOOLDISTRICTOPEB(OtherPostEmploymentBenefitPlan)UnauditedRequiredScheduleofFundingProgressYearEndedJune30,2017

58

Actuarial ActuarialAccrued UAALasaValuation Value Liability(AAL)‐ UnfundedAAL Funded Covered PercentageofDate ofAssets EntryAge (UAAL) Ratio Payroll CoveredPayroll

7/1/2016 ‐$ 2,373,151$ 2,373,151$ 0.00% 12,495,790$ 18.99%1/1/2014 ‐$ 1,571,908$ 1,571,908$ 0.00% 12,239,556$ 12.84%1/1/2012 ‐$ 1,167,228$ 1,167,228$ 0.00% 11,487,207$ 10.16%

OTHERSUPPLEMENTARYINFORMATION

HANOVERPUBLICSCHOOLDISTRICTScheduleofExpendituresofFederalAwardsYearEndedJune30,2017

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Federal Pass‐Through Program Total Receivable Receivable TotalFederalGrantor/Pass‐ThroughGrantor/ Source CFDA Grantor's Program orAward Received (Payable) Revenue (Payable) Passed‐Through

ProgramorClusterTitle Code Number Number Period Amount fortheYear atJuly1,2016 Recognized Expenditures atJune30,2017 toSubrecipientsDEPARTMENTOFEDUCATION

PassedthroughPennsylvaniaDepartmentofEducationTitleI‐ImprovingBasicPrograms I 84.010 013‐15‐0181 7/1/16‐9/30/17 480,167 480,167$ ‐$ 480,167$ 480,167$ ‐$ ‐$SchoolImprovement I 84.010 042‐16‐0181 7/10/15‐9/30/16 66,653 11,762 11,762 ‐ ‐ ‐ ‐SchoolImprovement I 84.010 042‐17‐0181 7/10/16‐9/30/17 84,832 84,832 ‐ 84,832 84,832 ‐ ‐

TitleI 576,761 11,762 564,999 564,999 ‐ ‐

TitleII‐ImprovingTeacherQuality I 84.367 020‐16‐0181 7/1/15‐9/30/16 69,730 18,525 8,641 9,884 9,884 ‐ ‐TitleII‐ImprovingTeacherQuality I 84.367 020‐17‐0181 7/1/16‐9/30/17 68,058 63,580 ‐ 68,058 68,058 4,478 ‐

TitleII 82,105 8,641 77,942 77,942 4,478 ‐

TitleIII I 84.365 010‐16‐0181 7/1/15‐6/30/16 35,510 2,367 2,367 ‐ ‐ ‐ ‐TitleIII I 84.365 010‐17‐0181 7/1/16‐6/30/17 37,455 37,455 ‐ 37,455 37,455 ‐ ‐

TitleIII 39,822 2,367 37,455 37,455 ‐ ‐

PassedthroughLincolnIntermediateUnitNo12SpecialEducationCluster(IDEA)IDEAPartB‐SpecialEducation I 84.027 N/A 7/1/16‐9/30/17 350,663 350,663 ‐ 350,663 350,663 ‐ ‐IDEA619funds‐SpecialEducation I 84.173 N/A 7/1/16‐9/30/17 4,896 4,896 ‐ 4,896 4,896 ‐ ‐

TotalSpecialEducationCluster 355,559 ‐ 355,559 355,559 ‐ ‐

TotalDepartmentofEducation 1,054,247 22,770 1,035,955 1,035,955 4,478 ‐

DEPARTMENTOFAGRICULTURE

PassedthroughPennsylvaniaDepartmentofEducationChildNutritionClusterSchoolBreakfastProgram I 10.553 365/367 7/1/16‐6/30/17 N/A 118,878 ‐ 118,878 118,878 ‐ ‐

TotalSchoolBreakfastProgram 118,878 ‐ 118,878 118,878 ‐ ‐

NationalSchoolLunchProgram‐cash I 10.555 362 7/1/16‐6/30/17 N/A 483,311 ‐ 483,311 483,311 ‐ ‐PassedthroughPennsylvaniaDepartmentofAgricultureNationalSchoolLunchProgram‐commodities I/B 10.555 N/A 7/1/16‐6/30/17 N/A 62,469 ‐ 62,469 62,469 ‐ ‐

TotalNationalSchoolLunchProgram 545,780 ‐ 545,780 545,780 ‐ ‐PassedthroughPennsylvaniaDepartmentofEducationSummerFoodServiceProgramforChildren I 10.559 364 7/1/15‐6/30/16 N/A 3,332 3,332 ‐ ‐ ‐ ‐SummerFoodServiceProgramforChildren I 10.559 364 7/1/16‐6/30/17 N/A 2,907 ‐ 2,907 2,907 ‐ ‐

TotalSummerFoodServiceProgram 6,239 3,332 2,907 2,907 ‐ ‐TotalChildNutritionCluster 670,897 3,332 667,565 667,565 ‐ ‐

TotalDepartmentofAgriculture 670,897$ 3,332$ 667,565$ 667,565$ ‐$ ‐$

HANOVERPUBLICSCHOOLDISTRICTScheduleofExpendituresofFederalAwards(Continued)YearEndedJune30,2017

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Federal Pass‐Through Program Total Receivable Receivable TotalFederalGrantor/Pass‐ThroughGrantor/ Source CFDA Grantor's Program orAward Received (Payable) Revenue (Payable) Passed‐Through

ProgramorClusterTitle Code Number Number Period Amount fortheYear atJuly1,2016 Recognized Expenditures atJune30,2017 toSubrecipients

DEPARTMENTOFHEALTHANDHUMANSERVICES

PassedthroughtheCommonwealthofPennsylvania

ACCESS‐Administration I 93.778 N/A 7/1/15‐6/30/16 N/A 8,585$ 8,585$ ‐$ ‐$ ‐$ ‐$ACCESS‐Administration I 93.778 N/A 7/1/16‐6/30/17 N/A 7,565 ‐ 14,514 14,514 6,949 ‐

TotalDepartmentofHealthandHumanServices 16,150 8,585 14,514 14,514 6,949 ‐

DEPARTMENTOFHOMELANDSECURITYPassedthroughthePennsylvaniaEmergencyManagementAgencyDisastergrants‐PublicAssistance I 97.036 N/A N/A 9,625 9,625 9,625 ‐ ‐ ‐ ‐

TotalDepartmentofHomelandSecurity 9,625 9,625 ‐ ‐ ‐ ‐

Totalfederalfinancialassistance 1,750,919$ 44,312$ 1,718,034$ 1,718,034$ 11,427$ ‐$

HANOVERPUBLICSCHOOLDISTRICTNotestoScheduleofExpendituresofFederalAwardsYearEndedJune30,2017

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NOTE1 REFERENCETOSCHEDULEOFEXPENDITURESOFFEDERALAWARDS

(I) Indirectfunding

(B) BasedonUSDAvaluation

NOTE2 SIGNIFICANTACCOUNTINGPOLICIES

BasisofAccounting

ThescheduleofexpendituresoffederalawardsispresentedusingthemodifiedaccrualbasisinaccordancewithaccountingprinciplesprescribedbythePennsylvaniaDepartmentofEducation,whichconformtogenerallyacceptedgovernmentalaccountingprinciples.Expendituresarerecognizedintheaccountingperiodinwhichtheliabilityisincurred,ifmeasurable.RevenuesdesignatedforpaymentofspecificSchoolDistrictexpendituresarerecognizedwhentherelatedexpendituresareincurred.Anyexcessofrevenuesorexpendituresatthefiscalyearendisrecordedasaliabilityorareceivable,respectively.

TheSchoolDistrictelectednottousea10%deminimusrateforchargingindirectcoststoprograms.

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INDEPENDENTAUDITOR’SREPORTONINTERNALCONTROLOVERFINANCIALREPORTINGANDONCOMPLIANCEANDOTHERMATTERSBASEDONANAUDITOFFINANCIALSTATEMENTSPERFORMEDIN

ACCORDANCEWITHGOVERNMENTAUDITINGSTANDARDS


Wehaveaudited,inaccordancewiththeauditingstandardsgenerallyacceptedintheUnitedStatesofAmericaandthestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandardsissuedbytheComptrollerGeneraloftheUnitedStates,thefinancialstatementsofthegovernmentalactivities,thebusiness‐typeactivities,eachmajorfund,andtheaggregateremainingfundinformationofHanoverPublicSchoolDistrict,asofandfortheyearendedJune30,2017,andtherelatednotestothefinancialstatements,whichcollectivelycomprisetheHanoverPublicSchoolDistrict’sbasicfinancialstatements,andhaveissuedourreportthereondatedJanuary3,2018.

INTERNALCONTROLOVERFINANCIALREPORTING

Inplanningandperformingourauditofthefinancialstatements,weconsideredHanoverPublicSchoolDistrict’sinternalcontroloverfinancialreporting(internalcontrol)todeterminetheauditproceduresthatareappropriateinthecircumstancesforthepurposeofexpressingouropinionsonthefinancialstatements,butnotforthepurposeofexpressinganopinionontheeffectivenessofHanoverPublicSchoolDistrict’sinternalcontrol.Accordingly,wedonotexpressanopinionontheeffectivenessofHanoverPublicSchoolDistrict’sinternalcontrol.

Adeficiencyininternalcontrolexistswhenthedesignoroperationofacontroldoesnotallow

managementoremployees,inthenormalcourseofperformingtheirassignedfunctions,toprevent,ordetectandcorrect,misstatementsonatimelybasis.Amaterialweaknessisadeficiency,orcombinationofdeficiencies,ininternalcontrol,suchthatthereisareasonablepossibilitythatamaterialmisstatementoftheentity’sfinancialstatementswillnotbeprevented,ordetectedandcorrectedonatimelybasis.Asignificantdeficiencyisadeficiency,oracombinationofdeficiencies,ininternalcontrolthatislessseverethanamaterialweakness,yetimportantenoughtomeritattentionbythosechargedwithgovernance.

Ourconsiderationofinternalcontrolwasforthelimitedpurposedescribedinthefirst

paragraphofthissectionandwasnotdesignedtoidentifyalldeficienciesininternalcontrolthatmightbematerialweaknessesorsignificantdeficiencies.Giventheselimitations,duringourauditwedidnotidentifyanydeficienciesininternalcontrolthatweconsidertobematerialweaknesses.However,materialweaknessesmayexistthathavenotbeenidentified.

63

COMPLIANCEANDOTHERMATTERS

AspartofobtainingreasonableassuranceaboutwhetherHanoverPublicSchoolDistrict’sfinancialstatementsarefreeofmaterialmisstatement,weperformedtestsofitscompliancewithcertainprovisionsoflaws,regulations,contracts,andgrantagreements,noncompliancewithwhichcouldhaveadirectandmaterialeffectonthedeterminationoffinancialstatementamounts.However,providinganopiniononcompliancewiththoseprovisionswasnotanobjectiveofouraudit,andaccordingly,wedonotexpresssuchanopinion.TheresultsofourtestsdisclosednoinstancesofnoncomplianceorothermattersthatarerequiredtobereportedunderGovernmentAuditingStandards.

PURPOSEOFTHISREPORT

Thepurposeofthisreportissolelytodescribethescopeofourtestingofinternalcontrolandcomplianceandtheresultsofthattesting,andnottoprovideanopinionontheeffectivenessoftheentity’sinternalcontroloroncompliance.ThisreportisanintegralpartofanauditperformedinaccordancewithGovernmentAuditingStandardsinconsideringtheentity’sinternalcontrolandcompliance.Accordingly,thiscommunicationisnotsuitableforanyotherpurpose.

Hanover,PennsylvaniaJanuary3,2018

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INDEPENDENTAUDITOR’SREPORTONCOMPLIANCEFOREACHMAJORPROGRAMANDONINTERNALCONTROLOVERCOMPLIANCE

REQUIREDBYUNIFORMGUIDANCE


REPORTONCOMPLIANCEFOREACHMAJORFEDERALPROGRAM

WehaveauditedHanoverPublicSchoolDistrict’scompliancewiththetypesofcompliancerequirementsdescribedintheOMBComplianceSupplementthatcouldhaveadirectandmaterialeffectoneachofHanoverPublicSchoolDistrict’smajorfederalprogramsfortheyearendedJune30,2017.HanoverPublicSchoolDistrict’smajorfederalprogramsareidentifiedinthesummaryofauditor’sresultssectionoftheaccompanyingscheduleoffindingsandquestionedcosts.

Management’sResponsibility

Managementisresponsibleforcompliancewithfederalstatutes,regulations,andthetermsandconditionsofitsfederalawardsapplicabletoitsfederalprograms.

Auditor’sResponsibility

OurresponsibilityistoexpressanopiniononcomplianceforeachofHanoverPublicSchoolDistrict’smajorfederalprogramsbasedonourauditofthetypesofcompliancerequirementsreferredtoabove.WeconductedourauditofcomplianceinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica;thestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStates;andtheauditrequirementsofTitle2U.S.CodeofFederalRegulationsPart200,UniformAdministrativeRequirements,CostPrinciples,andAuditRequirementsforFederalAwards(UniformGuidance).ThosestandardsandtheUniformGuidancerequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethernoncompliancewiththetypesofcompliancerequirementsreferredtoabovethatcouldhaveadirectandmaterialeffectonamajorfederalprogramoccurred.Anauditincludesexamining,onatestbasis,evidenceaboutHanoverPublicSchoolDistrict’scompliancewiththoserequirementsandperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.

Webelievethatourauditprovidesareasonablebasisforouropiniononcomplianceforeachmajorfederalprogram.However,ourauditdoesnotprovidealegaldeterminationofHanoverPublicSchoolDistrict’scompliance.

65

OpiniononEachMajorFederalProgram

Inouropinion,HanoverPublicSchoolDistrict,complied,inallmaterialrespects,withthetypesofcompliancerequirementsreferredtoabovethatcouldhaveadirectandmaterialeffectoneachofitsmajorfederalprogramsfortheyearendedJune30,2017.

REPORTONINTERNALCONTROLOVERCOMPLIANCE

ManagementofHanoverPublicSchoolDistrict,isresponsibleforestablishingandmaintainingeffectiveinternalcontrolovercompliancewiththetypesofcompliancerequirementsreferredtoabove.Inplanningandperformingouraudit,weconsideredHanoverPublicSchoolDistrict’sinternalcontrolovercompliancewiththetypesofrequirementsthatcouldhaveadirectandmaterialeffectoneachmajorfederalprogramtodeterminetheauditingproceduresthatareappropriateinthecircumstancesforthepurposeofexpressinganopiniononcomplianceforeachmajorfederalprogramandtotestandreportoninternalcontrolovercomplianceinaccordancewiththeUniformGuidance,butnotforthepurposeofexpressinganopinionontheeffectivenessofinternalcontrolovercompliance.Accordingly,wedonotexpressanopinionontheeffectivenessofHanoverPublicSchoolDistrict’sinternalcontrolovercompliance.

Adeficiencyininternalcontrolovercomplianceexistswhenthedesignoroperationofacontrolovercompliancedoesnotallowmanagementoremployees,inthenormalcourseofperformingtheirassignedfunctions,toprevent,ordetectandcorrect,noncompliancewithatypeofcompliancerequirementofafederalprogramonatimelybasis.Amaterialweaknessininternalcontrolovercomplianceisadeficiency,orcombinationofdeficiencies,ininternalcontrolovercompliance,suchthatthereisareasonablepossibilitythatmaterialnoncompliancewithatypeofcompliancerequirementofafederalprogramwillnotbeprevented,ordetectedandcorrected,onatimelybasis.Asignificantdeficiencyininternalcontrolovercomplianceisadeficiency,oracombinationofdeficiencies,ininternalcontrolovercompliancewithatypeofcompliancerequirementofafederalprogramthatislessseverethanamaterialweaknessininternalcontrolovercompliance,yetimportantenoughtomeritattentionbythosechargedwithgovernance.

Ourconsiderationofinternalcontrolovercompliancewasforthelimitedpurposedescribedintheprecedingparagraphandwasnotdesignedtoidentifyalldeficienciesininternalcontrolovercompliancethatmightbematerialweaknessesorsignificantdeficiencies.Wedidnotidentifyanydeficienciesininternalcontrolovercompliancethatweconsidertobeamaterialweakness.However,materialweaknessesmayexistthathavenotbeenidentified.

Thepurposeofthisreportoninternalcontrolovercomplianceissolelytodescribethescopeof

ourtestingofinternalcontrolovercomplianceandtheresultsofthattestingbasedontherequirementsoftheUniformGuidance.Accordingly,thisreportisnotsuitableforanyotherpurpose.Hanover,PennsylvaniaJanuary3,2018

HANOVERPUBLICSCHOOLDISTRICTScheduleofFindingsandQuestionedCostsYearEndedJune30,2017

66

SectionI‐SummaryofAuditor'sResultsFinancialStatementsTypeofauditor'sreportissued: Unmodified

Internalcontroloverfinancialreporting: Materialweakness(es)identified? Yes ⊠No Significantdeficienciesidentified? Yes ⊠NoneReported

Noncompliancematerialtofinancialstatementsnoted? Yes ⊠NoFederalAwardsInternalcontrolovermajorprograms: Materialweakness(es)identified? Yes ⊠No Significantdeficienciesidentified? Yes ⊠NoneReported

Typeofauditor'sreportissuedoncomplianceforthemajorprograms: Unmodified Anyauditfindingsdisclosedthatare

requiredtobereportedinaccordancewithSection2CFRSection200.516? Yes ⊠No

Identificationofthemajorprograms:

CFDANumber(s) NameofFederalProgram

10.55310.55510.559

84.02784.173

ChildNutritionCluster:SchoolBreakfastProgramNationalSchoolLunchProgramSummerFoodServiceProgramforChildren

SpecialEducationClusterIDEAPartB–SpecialEducationIDEA619funds–SpecialEducation

DollarthresholdusedtodistinguishbetweentypeAandtypeBprograms $750,000 Auditeequalifiedaslow‐riskauditee? Yes No

HANOVERPUBLICSCHOOLDISTRICTScheduleofFindingsandQuestionedCosts(Continued)YearEndedJune30,2017

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SectionII‐FinancialStatementFindings

A. SignificantDeficienciesorMaterialWeaknessesinInternalControl

Nonenoted

B. ComplianceFindings

Nonenoted

SectionIII–FederalAwardFindingsandQuestionedCosts

A. SignificantDeficienciesorMaterialWeaknessesinInternalControlOverCompliance

Nonenoted

B. ComplianceFindings

Nonenoted

HANOVERPUBLICSCHOOLDISTRICTSummaryScheduleofPriorAuditFindingsYearEndedJune30,2017

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Findingsrelatedtofinancialstatements:

None

Findingsrelatedtofederalawards:

None

audited june 30, financial 2017 statements...the financial statements also include notes that...

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