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NORWALK-LA MIRADA

UNIFIED SCHOOL DISTRICT

ANNUAL FINANCIAL REPORT

JUNE 30, 2013

NORWALK-LA MIRADA UNIFIED SCHOOL DISTRICT

TABLE OF CONTENTSJUNE 30, 2013

FINANCIAL SECTIONIndependent Auditors' Report 2Management's Discussion and Analysis 5Basic Financial Statements

Government-Wide Financial StatementsStatement of Net Position 16Statement of Activities 17

Fund Financial StatementsGovernmental Funds - Balance Sheet 18Reconciliation of the Governmental Funds Balance Sheet to the Statement ofNet Position 19

Governmental Funds - Statement of Revenues, Expenditures, and Changes in FundBalances 20

Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, andChanges in Fund Balances to the Statement of Activities 21

Proprietary Funds - Statement of Net Position 23Proprietary Funds - Statement of Revenues, Expenses, and Changes in Fund Net Position 24Proprietary Funds - Statement of Cash Flows 25Fiduciary Funds - Statement of Net Position 26Fiduciary Funds - Statement of Changes in Net Position 27

Notes to Financial Statements 28

REQUIRED SUPPLEMENTARY INFORMATIONGeneral Fund - Budgetary Comparison Schedule 64Special Education Pass-Through Fund – Budgetary Comparison Schedule 65Schedule of Other Postemployment Benefits (OPEB) Funding Progress 66

SUPPLEMENTARY INFORMATIONSchedule of Expenditures of Federal Awards 68Local Education Agency Organization Structure 70Schedule of Average Daily Attendance 71Schedule of Instructional Time 72Reconciliation of Annual Financial and Budget Report With Audited Financial Statements 73Schedule of Financial Trends and Analysis 74Combining Statements - Non-Major Governmental Funds

Combining Balance Sheet 75Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 76

General Fund Selected Financial Information 77Cafeteria Fund Selected Financial Information 78Note to Supplementary Information 79

SUPPLEMENTARY INFORMATION - UNAUDITEDContinuing Disclosure for Bond Issuance 82Note to Supplementary Information - Unaudited 83


TABLE OF CONTENTSJUNE 30, 2013

INDEPENDENT AUDITORS' REPORTSReport on Internal Control Over Financial Reporting and on Compliance and Other MattersBased on an Audit of Financial Statements Performed in Accordance With GovernmentAuditing Standards 85

Report on Compliance for Each Major Program and Report on Internal Control OverCompliance Required by OMB Circular A-133 87

Report on State Compliance 89

SCHEDULE OF FINDINGS AND QUESTIONED COSTSSummary of Auditors' Results 92Financial Statement Findings 93Federal Awards Findings and Questioned Costs 94State Awards Findings and Questioned Costs 95Summary Schedule of Prior Audit Findings 96Management Letter 97

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FINANCIAL SECTION

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INDEPENDENT AUDITORS' REPORT

Governing BoardNorwalk-La Mirada School DistrictNorwalk, California

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-typeactivities, each major fund, and the aggregate remaining fund information of the Norwalk-La Mirada UnifiedSchool District (the District) as of and for the year ended June 30, 2013, and the related notes to the financialstatements, which collectively comprise the District's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordancewith accounting principles generally accepted in the United States of America; this includes the design,implementation, and maintenance of internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted ouraudit in accordance with auditing standards generally accepted in the United States of America and the standardsapplicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and Standards and Procedures for Audits of California K-12 Local Education Agencies2012-2013, issued by the California Education Audit Appeals Panel as regulations. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessment of therisks of material misstatement of the financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the District's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we expressno such opinion. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of significant accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinions.

8270 Aspen Street Rancho Cucamonga, CA 91730 Tel: 909.466.4410 Fax: 909.466.4431 www.vtdcpa.com

Vavrinek, Trine, Day & Co., LLPCertified Public Accountants

VALUE THE D IFFERENCE

FRESN O • L AGUN A H I L LS • PALO ALTO • P LEASANTON • RAN C HO CUC AMON GA • R I v E R S I d E • SACRAMENTO

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Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the respectivefinancial position of the governmental activities, the business-type activities, each major fund, and the aggregateremaining fund information of the Norwalk-La Mirada Unified School District, as of June 30, 2013, and therespective changes in financial position and, where applicable, cash flows thereof for the year then ended inaccordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the required supplementaryinformation, such as management's discussion and analysis on pages 5 through 15 and budgetary comparison andother postemployment benefit information on pages 64 and 65 and page 66, respectively, be presented tosupplement the basic financial statements. Such information, although not a part of the basic financial statements,is required by the Governmental Accounting Standards Board who considers it to be an essential part of financialreporting for placing the basic financial statements in an appropriate operational, economic, or historical context.We have applied certain limited procedures to the required supplementary information in accordance withauditing standards generally accepted in the United States of America, which consisted of inquiries ofmanagement about the methods of preparing the information and comparing the information for consistency withmanagement's responses to our inquiries, the basic financial statements, and other knowledge we obtained duringour audit of the basic financial statements. We do not express an opinion or provide any assurance on theinformation because the limited procedures do not provide us with sufficient evidence to express an opinion orprovide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the Norwalk-La Mirada Unified School District's basic financial statements. The accompanyingsupplementary information such as the Schedule of Expenditures of Federal Awards, as required by Office ofManagement and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations andthe other supplementary information, as listed on the table of contents, are presented for purposes of additionalanalysis and are not a required part of the basic financial statements.

The accompanying supplementary information is the responsibility of management and was derived from andrelates directly to the underlying accounting and other records used to prepare the basic financial statements.Such information has been subjected to the auditing procedures applied in the audit of the basic financialstatements and certain additional procedures, including comparing and reconciling such information directly tothe underlying accounting and other records used to prepare the basic financial statements or to the basic financialstatements themselves, and other additional procedures in accordance with auditing standards generally acceptedin the United States of America. In our opinion, the accompanying supplementary information is fairly stated, inall material respects, in relation to the basic financial statements as a whole.

The Continuing Disclosure for Bond Issuance and related note has not been subjected to the auditing proceduresapplied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provideany assurance on it.

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Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 3, 2013, onour consideration of the Norwalk-La Mirada Unified School District's internal control over financial reporting andon our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements andother matters. The purpose of that report is to describe the scope of our testing of internal control over financialreporting and compliance and the results of that testing, and not to provide an opinion on internal control overfinancial reporting or on compliance. That report is an integral part of an audit performed in accordance withGovernment Auditing Standards in considering Norwalk-La Mirada Unified School District's internal control overfinancial reporting and compliance.

Rancho Cucamonga, CaliforniaDecember 3, 2013

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This section of Norwalk-La Mirada Unified School District's (the District) annual financial report presents ourdiscussion and analysis of the District's financial performance during the fiscal year that ended on June 30, 2013.Please read it in conjunction with the District's financial statements, which immediately follow this section.

OVERVIEW OF THE FINANCIAL STATEMENTS

The Financial Statements

The financial statements presented herein include all of the activities of the District and its component units usingthe integrated approach as prescribed by Governmental Accounting Standards Board (GASB) Statement No. 34.

The Government-Wide Financial Statements present the financial picture of the District from the economicresources measurement focus using the accrual basis of accounting. They present governmental activities andbusiness-type activities separately. These statements include all assets of the District (including capital assets), aswell as all liabilities (including long-term obligations). Additionally, certain eliminations have occurred asprescribed by the statement in regards to interfund activity, payables, and receivables.

The Fund Financial Statements include statements for each of the three categories of activities: governmental,business-type, and fiduciary.

The Governmental Activities are prepared using the current financial resources measurement focus and modifiedaccrual basis of accounting.

The Business-Type Activities are prepared using the economic resources measurement focus and the accrual basisof accounting. The fiduciary activities are agency funds, which only report a balance sheet and do not have ameasurement focus. Reconciliation of the Fund Financial Statements to the Government-Wide FinancialStatements is provided to explain the differences created by the integrated approach.

The Primary unit of the government is the Norwalk-La Mirada Unified School District.


MANAGEMENT'S DISCUSSION AND ANALYSISJUNE 30, 2013

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REPORTING THE DISTRICT AS A WHOLE

The Statement of Net Position and the Statement of Activities

The Statement of Net Position and the Statement of Activities report information about the District as a whole andabout its activities. These statements include all assets and liabilities of the District using the accrual basis ofaccounting, which is similar to the accounting used by most private-sector companies. All of the current year'srevenues and expenses are taken into account regardless of when cash is received or paid.

These two statements report the District's net position and changes in them. Net position is the differencebetween assets and deferred outflows of resources, and liabilities and deferred inflows of resources, which is oneway to measure the District's financial health, or financial position. Over time, increases or decreases in theDistrict's net position will serve as a useful indicator of whether the financial position of the District is improvingor deteriorating. Other factors to consider are changes in the District's property tax base and the condition of theDistrict's facilities.

The relationship between revenues and expenses is the District's operating results. Since the governing board'sresponsibility is to provide services to our students and not to generate profit as commercial entities do, one mustconsider other factors when evaluating the overall health of the District. The quality of the education and thesafety of our schools will likely be an important component in this evaluation.

In the Statement of Net Position and the Statement of Activities, we separate the District activities as follows:

Governmental Activities - Most of the District's services are reported in this category. This includes theeducation of kindergarten through grade twelve students, adult education students, the operation of childdevelopment activities, and the on-going effort to improve and maintain buildings and sites. Property taxes, Stateincome taxes, user fees, interest income, Federal, State, and local grants, as well as general obligation bonds,finance these activities.

Business-Type Activities - The District charges fees to help it cover the costs of certain services it provides. TheDistrict's child care program is included here.

REPORTING THE DISTRICT'S MOST SIGNIFICANT FUNDS

Fund Financial Statements

The fund financial statements provide detailed information about the most significant funds - not the District as awhole. Some funds are required to be established by State law and by bond covenants. However, managementestablishes many other funds to help it control and manage money for particular purposes or to show that it ismeeting legal responsibilities for using certain taxes, grants, and other money that it receives from theU.S. Department of Education.



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Governmental funds - Most of the District's basic services are reported in governmental funds, which focus onhow money flows into and out of those funds and the balances left at year-end that are available for spending.These funds are reported using an accounting method called modified accrual accounting, which measures cashand all other financial assets that can readily be converted to cash. The governmental fund statements provide adetailed short-term view of the District's general government operations and the basic services it provides.Governmental fund information helps determine whether there are more or fewer financial resources that can bespent in the near future to finance the District's programs. The differences of results in the governmental fundfinancial statements to those in the government-wide financial statements are explained in a reconciliationfollowing each governmental fund financial statement.

Proprietary funds - When the District charges users for the services it provides, whether to outside customers orto other departments within the District, these services are generally reported in proprietary funds. Proprietaryfunds are reported in the same way that all activities are reported in the Statement of Net Position and theStatement of Revenues, Expenses, and Changes in Fund Net Position. In fact, the District's enterprise funds arethe same as the business-type activities we report in the government-wide statements, but provide more detail andadditional information, such as cash flows, for proprietary funds. We use internal service funds (the othercomponent of proprietary funds) to report activities that provide supplies and services for the District's otherprograms and activities, such as the District's Self-Insurance Fund. The internal service funds are reported withgovernmental activities in the government-wide financial statements.

THE DISTRICT AS A TRUSTEE

Reporting the District's Fiduciary Responsibilities

The District is the trustee, or fiduciary, for funds held on behalf of others, like our funds for associated studentbody activities and scholarships. The District's fiduciary activities are reported in the Statement of Fiduciary NetPosition and the Statement of Revenues, Expenses, and Changes in Fund Net Position. We exclude theseactivities from the District's other financial statements because the District cannot use these assets to finance itsoperations. The District is responsible for ensuring that the assets reported in these funds are used for theirintended purposes.



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THE DISTRICT AS A WHOLE

Net Position

The District's net position was $164.3 million for the fiscal year ended June 30, 2013. Of this amount,$26.8 million was unrestricted. Restricted net position is reported separately to show legal constraints from debtcovenants and enabling legislation that limit the governing board's ability to use that net position for day-to-dayoperations. Our analysis below, in summary form, focuses on the net position (Table 1) and change in netposition (Table 2) of the District's activities.

Table 1

(Amounts in millions)2013 2012 2013 2012 2013 2012

ASSETSCurrent and other assets 142.5$ 149.8$ -$ -$ 142.5$ 149.8$Capital assets 264.7 265.2 - - 264.7 265.2

Total Assets 407.2 415.0 - - 407.2 415.0LIABILITIES

Current liabilities 18.8 19.2 - - 18.8 19.2Long-term obligations 224.1 207.9 - - 224.1 207.9

Total Liabilities 242.9 227.1 - - 242.9 227.1NET POSITION

Net investment in

capital assets 110.5 116.6 - - 110.5 116.6Restricted 27.0 35.5 - - 27.0 35.5Unrestricted 26.8 35.8 - - 26.8 35.8

Total Net Position 164.3$ 187.9$ -$ -$ 164.3$ 187.9$

Governmental Activities Business-Type Activities School District Activities

The $26.8 million in unrestricted net position represents the accumulated results of all past years' operations. Thisunrestricted net position puts the District in a position, if required, to take care of its obligations, but still have asufficient fund balance. The Board of Education has been especially prudent in light of continuing decliningenrollment to provide direction to staff. Unrestricted net position – the part of net position that can be used tofinance day-to-day operations without constraints established by debt covenants, enabling legislation, or otherlegal requirements – decreased by 25.1 percent ($26.8 million compared to $35.8 million).



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Changes in Net Position

The results of this year's operations for the District as a whole are reported in the Statement of Activities onpage 17. Table 2 takes the information from the Statement, rounds off the numbers, and rearranges them slightlyso you can see our total revenues for the year.

Table 2

(Amounts in millions)

2013 2012 2013 2012 2013 2012

Revenues

Program revenues:

Charges for services 3.3$ 2.5$ 0.7$ 0.7$ 4.0$ 3.2$

Operating grants and contributions 64.4 64.4 - - 64.4 64.4

Capital grants and contributions - 0.1 - - - 0.1

General revenues:

Federal and State aid not restricted 103.5 112.7 - - 103.5 112.7

Property taxes 29.6 21.2 - - 29.6 21.2

Other general revenues 6.8 10.1 - - 6.8 10.1

Total Revenues 207.6 211.0 0.7 0.7 208.3 211.7

Expenses

Instruction-related 145.1 138.7 - - 145.1 138.7

Student support services 21.9 20.8 - - 21.9 20.8

Administration 10.0 8.3 - - 10.0 8.3

Maintenance and operations 20.0 20.6 - - 20.0 20.6

Other 34.5 33.9 0.5 0.5 35.0 34.4

Total Expenses 231.5 222.3 0.5 0.5 232.0 222.8

Transfers 0.2 0.2 (0.2) (0.2) - -

Change in Net Position (23.7)$ (11.1)$ -$ -$ (23.7)$ (11.1)$

Governmental Activities Business-Type Activities School District Activities

Governmental Activities

As reported in the Statement of Activities on page 17, the cost of all of our governmental activities this year was$231.5 million, an increase of $9.2 million or 4.1 percent over the prior year. However, the amount that ourtaxpayers ultimately financed for these activities through local taxes is only a small portion equating to12.8 percent of overall expenditures and the vast majority of expenditures were paid by those who benefited fromthe programs ($3.3 million) or by other governments and organizations who subsidized certain programs withgrants and contributions ($64.4 million). We paid for the remaining "public benefit" portion of our governmentalactivities with $110.3 million from Federal and State unrestricted funds and from other revenue sources, such asinterest and general entitlements.



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In Table 3, we have presented the cost and net cost of each of the District's largest functions: regular programinstruction, including special instruction programs and other instruction-related programs, student supportservices, including student transportation and school food services, administration, maintenance and operations,and all other remaining functional costs. As discussed above, net cost shows the financial burden that was placedon the District's taxpayers by each of these functions. Providing this information allows our citizens to considerthe cost of each function in comparison to the benefits they believe are provided by that function.

Table 3

(Amounts in millions)2013 2012 2013 2012

Instruction-related 145.1$ 138.7$ 103.9$ 98.1$Student support services 21.9 20.8 8.6 7.7Administration 10.0 8.3 8.6 6.9Maintenance and operations 20.0 20.6 19.4 20.1Other 34.5 33.9 23.3 22.5

Total 231.5$ 222.3$ 163.8$ 155.3$

Total Cost of Services Net Cost of Services

THE DISTRICT'S FUNDS

As the District completed this year, our governmental funds reported a combined fund balance of $93.8 million,which is a decrease of $9.1 million from last year. An itemized chart is provided below labeled as Table 4.

Table 4

(Amounts in millions)

July 1, 2012 Revenues Expenditures June 30, 2013

General Fund 46.7$ 167.8$ 174.3$ 40.2$

Special Education Pass-Through Fund - 14.3 14.3 -

Adult Education Fund - 3.9 3.9 -

Building Fund 28.4 13.4 16.0 25.8

Child Development Fund 0.4 7.3 7.4 0.3

Cafeteria Fund 6.4 10.9 9.6 7.7

Deferred Maintenance Fund 1.9 0.7 2.6 -

Pupil Transportation Fund - - - -

Capital Facilities Fund 0.9 0.4 0.3 1.0

County School Facilities Fund 3.5 - - 3.5

Special Reserve Fund for

Capital Outlay Projects 9.6 1.8 2.3 9.1

Bond Interest and Redemption Fund 5.1 7.2 6.1 6.2Total 102.9$ 227.7$ 236.8$ 93.8$

Balances and Activity



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The primary reasons for these decreases are:

The General Fund difference is inclusive of the Special Reserve Fund for Postemployment Benefits(Fund 20) in accordance with GASB 54 Fund Balance Regulations. The combined fund balances werereduced from $46.7 million down to $40.2, a change of $6.5 million.

o The General Fund is our principal operating fund and decreased by $6.04 million, making up92 percent of the total ending fund balance decrease of $6.5 million. The unrestricted portiondecreased by $3.4 million, and restricted balances decreased by $2.64 million ; as result of thefollowing:

The loss of $3.95 million in one-time Ed Jobs funding utilized in 2011-2012 to lowerunrestricted instruction-related salaries has been removed. However, the financial affectsfrom declining State Aid revenues caused by declining enrollment and increases inroutine operating costs, have been managed through prudent planning and alignment ofresources.

Various restricted program decreases were the result of use of prior-year balances topurchase instructional materials ($1.03), cover one-time mental health operations ($0.38),unexpected routine maintenance projects ($0.35), and the loss of Economic Impact Aiddollars from the state ($0.88).

o The Special Reserve Fund for Postemployment Benefits decreased by $0.53 million, oreight percent of the total General Fund ending balance decrease of $6.5 million. The PostRetirement Fund was established in 2008-2009 to fund the 2009 memorandum of understandingbetween the District and employee associations to support the cost of retiree medical premiums.The funds received come from one-time mandated costs reimbursements from the State ofCalifornia. For 2012-2013, the District received $0.18 million in funding and transferred out$0.71 million to cover the pay-as-you-go amount for OPEB.

The Building Fund decreased from $28.4 million to $25.8 million, a decrease of $2.6 million, or roughly28 percent of the total $9.1 million fund balances decrease. The Building Fund utilized Bond Proceeds tobegin planning and interim housing on the final two school site (Benton & Corvallis) modernizationprojects of the District., and other construction related projects.

General Fund Budgetary Highlights

Over the course of the year, the District revises its budget as it attempts to deal with unexpected changes inrevenues and expenditures. The final amendment to the budget was adopted on May 20, 2013. (A scheduleshowing the District's original and final budget amounts compared with amounts actually paid and received isprovided in our annual report on page 64.

In total, budgetary revisions for the 2012-2013 fiscal year projected a decrease in the estimated fund balanceof $10.3 million. Final actuals resulted in a fund balance decrease of $6.6 million, which was explained in thesection above. The total difference between the final budget and actual was $3.7 million. Revenue changeswere $9.6 million higher than original anticipated, inclusive of transfers in; and expenditures were higher by$5.9 million, inclusive of transfers out, from the Adopted Budget.



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Noteworthy budget revisions to revenues are outlined below:

o Revenue Limit funding originally included the per-ADA Trigger reduction of $441/ADA, whichwas later rescinded, increasing base funding by $7.8 million.

o Federal revenues were decreased by $0.33 million, as a result of mid-year reductions to NCLB,Title I funding.

o State revenues increased slightly by $0.08 million or 0.2 percent, for various changes in Statecategorical programs.

o Local revenues were revised upward by 40.6 percent or $0.86 million for the following: One-time reimbursement of $0.13 million from the property/liability insurance carrier to

cover lost/theft. The Los Angeles Universal Preschool (LAUP) added additional sites to receive services,

resulting in an increase of $0.22 million. $0.38 million from additional special education excess cost billing for services provided

to ABC USD pupils. One-time miscellaneous locally restricted programs were added for arts/music and health-

on-wheels, totaling $0.04 million.o Contributions and transfers-in increased by $1.2 million. A board approved one-time transfer

from the Special Reserve-Facilities Fund was made to cover infrastructure projects, various one-time school site expenses, and technology supplies.

Noteworthy budget revisions to expenditures are outlined below:

o Certificated salaries were $2.09 million higher than the Adopted Budget due additional classroomteacher positions to support educational programs for students, including transitionalkindergarten. Classified salaries were also $0.49 million lower than original projections, due tosavings from vacant positions not hired/frozen, and lower than anticipated extra-pay/overtime.

o Employee benefits were increased by $1.09 million, as part of the 2011-2012 negotiationscompleted in December 2012, which resulted in the District providing a one-time rebate for PlanYear 2012 out-of-pocket health and welfare employee contributions estimated at $1.0 million.

o Books and supply budgets were $0.97 million higher than the original budget due to the use ofone-time balances to purchase additional instructional textbooks/materials ($0.39 million) andtechnology supplies ($0.6 mil.).

o Other operating expenditures and capital outlay increased by $2.2 million, or 16 percent to reflectthe following changes: Higher utility costs of $0.21 million $0.23 million for additional Title I supplementary services provided to sites Additional contracted services for special education and mental health related pupils of

$0.69 million One-time site software licenses totaling $0.21 million Miscellaneous site improvement projects, such as technology upgrades and routine

maintenance, increased by $0.49 million Capital equipment purchases of $0.20 million for transportation, technology and

facilities.



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CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At June 30, 2013, the District had $264.7 million in a broad range of capital assets (net of depreciation), includingland, buildings, and furniture and equipment. This amount represents a net decrease (including additions,deductions, and depreciation) of $0.5 million, or 0.2 percent, from last year (Table 5).

Table 5


Land and construction

in progress 14.3$ 11.6$ -$ -$ 14.3$ 11.6$Buildings and improvements 247.2 250.0 - - 247.2 250.0Furniture and equipment 3.2 3.6 - - 3.2 3.6

Total 264.7$ 265.2$ -$ -$ 264.7$ 265.2$

Governmental Activities Business-Type Activities Total

Capital assets represent one of the largest investments for the District. Modernization and construction projectscontinue to progress and a more detailed explanation is outlined in Note 4.

Significant projects over prior year commitments include Benton and Corvallis Middle School modernizationplanning and interim housing; Los Alisos Middle School science classroom conversion; Dept. of State Architects'close-out items for various; and final close-circuit television installation.

Long-Term Obligations

At the end of this year, the District had $224.1 million in long-term obligations outstanding versus $207.9 millionlast year, an increase of 7.8 percent. Those obligations consisted of:

Table 6


General obligation bonds - net

(financed with property taxes) 181.9$ 177.9$ -$ -$ 181.9$ 177.9$Certificates of participation 2.8 2.8 - - 2.8 2.8Postemployment benefits 17.6 14.4 - - 17.6 14.4Other 21.8 12.8 - - 21.8 12.8

Total 224.1$ 207.9$ -$ -$ 224.1$ 207.9$

Governmental Activities Business-Type Activities Total

The District's general obligation bond rating continues to be AAA and Aaa assigned by Standard and Poor's andMoody's, respectively, and has not changed since the prior year. The State limits the amount of general obligationdebt that districts can issue to five percent of the assessed value of all taxable property within the district'sboundaries. The District's outstanding general obligation debt of $181.9 million is significantly below the voter-approved threshold statutorily imposed limits.



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Other obligations include compensated absences payable and other long-term obligations. We present moredetailed information regarding our long-term obligations in Note 8 of the financial statements.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES

In considering the District Budget for the 2013-2014 year, the governing board and management used thefollowing criteria:

The key assumptions in our revenue forecast are:

1. Base revenue limit is budgeted at $5,318.36, an increase of $82.62 per ADA from the 2012-2013 fundinglevel. Revenue Limit funding includes a positive 1.565 percent cost-of-living adjustment, or$106 per ADA, and the deficit factor remains at 22.272 percent. Projected Second Period Apportionment(P2 ADA) is calculated at 18,840 including Special Education, County Operated Programs, andIndependent Study. Enrollment projections indicate a decline in student population that directly effectsrevenue limit funding. Under the funding provision for base revenue limit, the District is eligible to claimthe higher totals between current and prior year ADA; consequently, budget projections for 2013-2014are based using 2012-2013 generated ADA.

a. Property tax revenues are budgeted at $15.7 million, or 10.04 percent of total revenues.

b. Revenue limit income is projected at $100.39 million (inclusive of EPA funding), a decrease of$1.5 million over prior year estimated actuals. This adjustment includes a negative 0.14 percentpercentage change in per-pupil funding, as result of the declining enrollment of -1.72 percent.Additionally, a reduction in unemployment insurance revenue due to the change in rates from 1.1percent to 0.05 percent resulted in lowered revenue; however, this was offset by lowerunemployment benefit expenditures.

2. Federal income decreased by $2.7 million, or 19.8 percent from the previous year, and is budgeted at$11.0 million. The decline in funding can be attributed to the loss of one-time Title I ProgramImprovement dollars, and Federal sequestration reductions of 5.9 percent across most programs.

3. State income is budgeted at $41.1 million, a slight decrease of $0.43 million or -1.03 percent from prioryear estimates. Special Education pass-through funding for our SELPA was previously included in theGeneral Fund, but is now included in Fund 10. State revenue sources include; Lottery, CategoricalFlexibility Programs, Class-Size Reduction, Transportation, Special Education, and various Restrictedprograms.

4. Local revenues are projected to be $0.46 million, or 15.5 percent higher than prior year estimates, and arebudgeted at $3.44 million. A one-time reimbursement from Microsoft-tech vouchers resulted in thechange. Other local income continues to include interest income, use-of-facilities proceeds, income fromother local agency agreements, and locally restricted LAUP preschool program reimbursements.



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Expenditures are based on the following forecasts:

Staffing Ratio EnrollmentGrades kindergarten through third 28:1 5,641Grades four through five 31:1 2,728Grades six through eight 30:1 4,297Grades nine through twelve 28.8:1 5,894

The new items specifically addressed in the budget are:

1. Certificated and classified salaries and benefits total over 86 percent of total expenditures and reflectstaffing ratios approved in policy. Certificated and classified salaries total $109.2 million, a reductionof $2.2 million, or -1.96 percent from prior year estimated totals. Salary projections include thefollowing:

a. Reductions for certificated staffing, loss of certificated coaching positions funded throughrestricted programs, and the removal of frozen positions.

b. Step, scale, and longevity increases estimated at $0.98 million, which has been adjusted forattrition.

c. Negotiations for the 2012-2013 and 2013-2014 school remain unsettled at this time.

2. Employee benefits are budgeted at $31.41 million, and include statutory benefits for all positions asfollows: (STRS 8.25 percent, PERS 11.442 percent, OASDI 6.2 percent, Medicare 1.45 percent,SUI 0.05 percent, Workers' Comp 2.92 percent, Alternative Retirement 5.21 percent, and OPEB0.03 percent.) Additionally, eligible employees for health and welfare benefits receive $9,000contribution and retirees pay-as-you go portion are combined into the Self-Insurance Fund to cover thecost of medical insurance.

3. $21.96 million, or 13.51 percent of the total General Fund operating budget is spread among books,supplies, other operating expenses and services, capital outlay, and other outgo and uses.

4. Lottery funds are budgeted using $154.00/ADA and estimated ADA of 21,797, which reflectsregulations freezing the funded ADA at 2007-2008 levels through 2012-2013. Lottery proceeds aredirectly utilized by school sites to fund operations and to also purchase various State-mandatedtextbooks.

5. Staff formally discussed with the Board the use of Categorical Flexibility and continues to recommendapproval of utilizing funding to stabilize the General Fund and offset the loss of revenue limit funding.The revised Categorical Flexibility plan was consistent with the previous year, apart from the decreasein ROC/P pass-through funds and Adult Education support.

CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with ageneral overview of the District's finances and to show the District's accountability for the money it receives. Ifyou have questions about this report or need any additional financial information, contact Estuardo Santillan,Assistant Superintendent, Business Services at Norwalk-La Mirada Unified School District, 12820 Pioneer Blvd,Norwalk, California, 90650, or e-mail at [email protected].


STATEMENT OF NET POSITIONJUNE 30, 2013

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

16

Governmental Business-Type

Activities Activities Total

ASSETS

Deposits and investments 97,113,455$ 48,644$ 97,162,099$

Receivables 40,274,094 1,895 40,275,989

Prepaid expenses 16,589 1,362 17,951

Stores inventories 383,007 - 383,007

Deferred cost of issuance 2,856,495 - 2,856,495

Deferred amounts on refunding 1,822,934 - 1,822,934

Capital assets

Land and construction in process 14,310,271 - 14,310,271

Other capital assets 340,085,567 12,795 340,098,362

Less: accumulated depreciation (89,660,474) (12,795) (89,673,269)

Total Capital Assets 264,735,364 - 264,735,364

Total Assets 407,201,938 51,901 407,253,839

LIABILITIES

Accounts payable 17,623,562 14,301 17,637,863

Accrued interest payable 920,583 - 920,583

Deferred revenue 289,473 22,880 312,353

Long-term obligations

Current portion of long-term obligations 7,400,976 - 7,400,976

Noncurrent portion of long-term obligations 216,712,249 - 216,712,249

Total Long-Term Obligations 224,113,225 - 224,113,225

Total Liabilities 242,946,843 37,181 242,984,024

NET POSITION

Net investment in capital assets 110,530,673 - 110,530,673

Restricted for:

Debt service 6,800,654 - 6,800,654

Capital projects 4,489,545 - 4,489,545

Educational programs 370,078 - 370,078

Other activities 15,289,708 - 15,289,708

Unrestricted 26,774,437 14,720 26,789,157Total Net Position 164,255,095$ 14,720$ 164,269,815$


STATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2013


17

Charges for Operating Capital

Services and Grants and Grants and

Functions/Programs Expenses Sales Contributions Contributions

Governmental Activities:

Instruction 121,106,822$ 1,106,847$ 31,120,379$ 22,398$

Instruction-related activities:

Supervision of instruction 11,083,975 163,865 7,339,581 -Instructional library, media,

and technology 838,576 - 159,208 -

School site administration 12,106,799 36,982 1,277,163 -

Pupil services:

Home-to-school transportation 5,032,709 7,571 1,291,046 -

Food services 8,954,797 1,417,312 8,100,179 -

All other pupil services 7,940,902 64,825 2,494,798 -

Administration:

Data processing 2,452,610 12,434 107,642 -

All other administration 7,474,165 61,555 1,130,714 -

Plant services 20,022,301 56,636 544,339 -

Ancillary services 853,104 - 12,157 -

Community services 118,695 - 1,033 -

Enterprise services 430,951 - - -

Interest on long-term obligations 8,762,032 - - -

Other outgo 17,603,191 361,218 10,831,984 -

Depreciation (unallocated)16,733,343 - - -

Total Governmental Activities 231,514,972 3,289,245 64,410,223 22,398

Business-Type Activities

Enterprise services 493,821 691,570 - -

Total Business-Type Activities 493,821 691,570 - -Total School District 232,008,793$ 3,980,815$ 64,410,223$ 22,398$

General revenues and subventions:

Property taxes, levied for general purposes

Property taxes, levied for debt service

Taxes levied for other specific purposes

Federal and State aid not restricted to specific purposes

Interagency revenues

Interest and investment earnings

Miscellaneous

Subtotal, General Revenues

Transfers

Change in Net Position

Net Position - BeginningNet Position - Ending

Program Revenues

1 This amount excludes any depreciation that is included in the direct expenses of the various programs.

17

Business-

Governmental Type

Activities Activities Total

(88,857,198)$ -$ (88,857,198)$

(3,580,529) - (3,580,529)

(679,368) - (679,368)

(10,792,654) - (10,792,654)

(3,734,092) - (3,734,092)

562,694 - 562,694

(5,381,279) - (5,381,279)

(2,332,534) - (2,332,534)

(6,281,896) - (6,281,896)

(19,421,326) - (19,421,326)

(840,947) - (840,947)

(117,662) - (117,662)

(430,951) - (430,951)

(8,762,032) - (8,762,032)

(6,409,989) - (6,409,989)

(6,733,343) - (6,733,343)

(163,793,106) - (163,793,106)

- 197,749 197,749

- 197,749 197,749(163,793,106) 197,749 (163,595,357)

21,988,621 - 21,988,621

7,132,227 - 7,132,227

492,225 - 492,225

103,488,543 - 103,488,543

279,946 - 279,946

212,465 - 212,465

6,342,745 785 6,343,530

139,936,772 785 139,937,557

187,843 (187,843) -

(23,668,491) 10,691 (23,657,800)

187,923,586 4,029 187,927,615164,255,095$ 14,720$ 164,269,815$

Net (Expenses) Revenues and

Changes in Net Position


GOVERNMENTAL FUNDSBALANCE SHEETJUNE 30, 2013


18

Special

Education Non-Major Total

General Pass-Through Building Governmental GovernmentalFund Fund Fund Funds Funds

ASSETSDeposits and investments 13,752,063$ 49,279$ 25,875,982$ 26,197,163$ 65,874,487$Receivables 31,380,057 6,003,374 61,158 2,769,600 40,214,189Due from other funds 1,652,501 - - 940,497 2,592,998Prepaid expenditures 16,589 - - - 16,589Stores inventories 248,145 - - 134,862 383,007

Total Assets 47,049,355$ 6,052,653$ 25,937,140$ 30,042,122$ 109,081,270$

LIABILITIES ANDFUND BALANCES

Liabilities:Accounts payable 5,671,596$ 6,052,653$ 107,693$ 569,340$ 12,401,282$Due to other funds 940,497 - - 1,652,501 2,592,998Deferred revenue 287,519 - - 1,954 289,473

Total Liabilities 6,899,612 6,052,653 107,693 2,223,795 15,283,753

Fund Balances:Nonspendable 389,734 - - 134,862 524,596Restricted 370,078 - 25,829,447 19,821,567 46,021,092Assigned 4,494,545 - - 7,861,898 12,356,443Unassigned 34,895,386 - - - 34,895,386

Total Fund Balances 40,149,743 - 25,829,447 27,818,327 93,797,517

Total Liabilities and

Fund Balances 47,049,355$ 6,052,653$ 25,937,140$ 30,042,122$ 109,081,270$


RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEETTO THE STATEMENT OF NET POSITIONJUNE 30, 2013


19

Total Fund Balance - Governmental Funds 93,797,517$

Amounts Reported for Governmental Activities in the Statement of Net

Position are Different Because:

Capital assets used in governmental activities are not financial resources and,

therefore, are not reported as assets in governmental funds.

The cost of capital assets is: 354,395,838$

Accumulated depreciation is: (89,660,474)

Net Capital Assets 264,735,364

This is the deferred amount on refunding as a result of refunding of bonds.

The difference between the amounts that were sent to the escrow agent for the

repayment of the old debt and the actual remaining debt obligation will be

amortized as an adjustment to interest expense over the remaining life of the

refunded debt. This balance represents the unamortized remaining balance

as of year-end. 1,822,934

Expenditures relating to issuance of debt of next fiscal year were recognized on

modified accrual basis, but are not recognized on the accrual basis. 2,856,495

In governmental funds, unmatured interest on long-term obligations is

recognized in the period when it is due. On the government-wide

statements, unmatured interest on long-term obligations is

recognized when it is incurred. (920,583)

An Internal Service Fund is used by the District's management to charge the

costs of the workers' compensation insurance program to the individual

funds. The assets and liabilities of the Internal Service Fund are included

with governmental activities. 7,544,061

Long-term obligations, including bonds payable, are not due and payable in the

current period and, therefore, are not reported as liabilities in the funds.

Long-term obligations at year-end consist of:

General obligation bonds (142,693,698)

Unamortized premium on bond issuance (5,623,491)

2005 Certificates of Participation (QZAB program) (2,770,165)

Capital leases payable (19,521)

Other postemployment benefits (OPEB) (17,569,564)

Compensated absences (vacations) (2,006,996)

Supplemental early retirement plan (SERP) (1,290,566)In addition, the District has issued "capital appreciation" General

Obligation Bonds. The accretion of interest on the General

Obligation Bonds to date is: (33,606,692)

Total Long-Term Obligations (205,580,693)

Total Net Position - Governmental Activities 164,255,095$


GOVERNMENTAL FUNDSSTATEMENT OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCESFOR THE YEAR ENDED JUNE 30, 2013


20

Special Education Non-Major Total

General Pass-Through Building Governmental Governmental

Fund Fund Fund Funds Funds

REVENUES

Revenue limit sources 101,910,738$ -$ -$ -$ 101,910,738$

Federal sources 12,735,128 3,802,688 - 14,251,431 30,789,247

Other State sources 45,707,722 10,525,030 - 1,858,206 58,090,958

Other local sources 4,250,257 - 365,029 12,085,808 16,701,094

Total Revenues 164,603,845 14,327,718 365,029 28,195,445 207,492,037

EXPENDITURES

Current

Instruction 107,419,092 - - 6,219,177 113,638,269


Supervision of instruction 9,368,386 - - 1,442,890 10,811,276Instructional library, media, and

technology 703,325 - - 7,340 710,665

School site administration 9,847,587 - - 1,521,138 11,368,725

Pupil services:

Home-to-school transportation 4,767,033 - - 12,847 4,779,880

Food services 16,309 - - 8,746,678 8,762,987

All other pupil services 6,850,409 - - 590,818 7,441,227

Administration:

Data processing 2,348,215 - - - 2,348,215

All other administration 6,684,936 - - 393,966 7,078,902

Plant services 17,858,929 - 12,619 1,310,779 19,182,327

Facility acquisition and construction 287,364 - 2,906,378 2,613,150 5,806,892

Ancillary services 820,061 - - - 820,061

Community services 110,499 - - - 110,499

Other outgo 3,275,473 14,327,718 - - 17,603,191

Enterprise services - - - 318,010 318,010

Debt service

Principal 18,376 - - 3,470,000 3,488,376

Interest and other 2,380 - 224,465 2,568,388 2,795,233

Total Expenditures 170,378,374 14,327,718 3,143,462 29,215,181 217,064,735

Excess (Deficiency) of

Revenues Over Expenditures (5,774,529) - (2,778,433) (1,019,736) (9,572,698)

Other Financing Sources (Uses)

Transfers in 3,141,568 - - 3,957,032 7,098,600Other sources - proceeds from

refunding bonds - - 13,096,199 - 13,096,199

Transfers out (3,934,634) - - (2,976,123) (6,910,757)Other uses - payment to refunded

bond escrow agent - - (12,871,734) - (12,871,734)

Net Financing Sources (Uses) (793,066) - 224,465 980,909 412,308

NET CHANGE IN FUND BALANCES (6,567,595) - (2,553,968) (38,827) (9,160,390)

Fund Balances - Beginning 46,717,338 - 28,383,415 27,857,154 102,957,907Fund Balances - Ending 40,149,743$ -$ 25,829,447$ 27,818,327$ 93,797,517$


GOVERNMENTAL FUNDSRECONCILIATION OF GOVERNMENTAL FUNDS STATEMENT OFREVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESTO THE STATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2013


21

Total Net Change in Fund Balances - Governmental Funds

Amounts Reported for Governmental Activities in the Statement of

Activities are Different Because: (9,160,390)$

Capital outlays to purchase or build capital assets are reported in governmental

funds as expenditures; however, for governmental activities, those costs are

shown in the Statement of Net Position and allocated over their estimated useful

lives as annual depreciation expenses in the Statement of Activities.

This is the amount by which depreciation exceeds capital outlays in the period.

Depreciation expense (6,733,343)$

Capital outlays 6,258,248

Net Expense Adjustment (475,095)

Loss on disposal of capital assets is reported in the government-wide Statement

of Net Assets, but is not recorded in the governmental funds. (2,594)

In the Statement of Activities, certain operating expenses - compensated absences

(vacations) and special termination benefits (early retirement) are measured by

the amounts earned during the year. In the governmental funds, however,

expenditures for these items are measured by the amount of financial resources

used (essentially, the amounts actually paid). This year, early retirement benefits

of $645,283 were paid. Vacation earned was less than the amounts used

by $29,494. 674,777

Contributions for postemployment benefits are recorded as an expense in the

governmental funds when paid. However, the difference between the annual

required contribution and the actual contribution made, if less, is recorded in the

government wide statements as an expense. The actual amount of the

contribution was less than the annual required contribution. (3,131,543)

Proceeds received from issuance of debt is a revenue in the governmental funds,

but it increases long-term obligations in the Statement of Net Position and does

not affect the Statement of Activities:

Proceeds from refunding general obligation bonds (11,630,000)

Governmental funds report the effect of premiums, discounts, issuance costs,

and the deferred amount on a refunding when the debt is first issued, whereas

the amounts are deferred and amortized in the Statement of Activities. This

amount is the net effect of these related items:

Cost of issuance 224,465

Deferred charges on refunding 1,601,734

Premium on issuance (1,466,199)

Combined Adjustment 360,000


GOVERNMENTAL FUNDSRECONCILIATION OF GOVERNMENTAL FUNDS STATEMENT OFREVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESTO THE STATEMENT OF ACTIVITIES (Continued)FOR THE YEAR ENDED JUNE 30, 2013


22

Repayment of principal is an expenditure in the governmental funds, but it reduces

long-term liabilities in the Statement of Net Position and does not affect the

Statement of Activities:

General obligation bonds 14,740,000$

Capital lease obligations 18,376

Governmental funds report the effect of premiums, discounts, issuance costs, and

deferred costs on a refunding when the debt is first issued, whereas the amounts

are deferred and amortized in the Statement of Activities. This amount is the net

effect of the amortization of the related items:

Cost of issuance (199,682)$

Deferred charges on refunding (611,311)

Premium on issuance 636,614

Combined Adjustment (174,379)

Interest on long-term obligations in the Statement of Activities differs from

the amount reported in the governmental funds because interest is recorded

as an expenditure in the funds when it is due, and thus requires the use of

current financial resources. In the Statement of Activities, however, interest

expense is recognized as the interest accrues, regardless of when it is due. The

additional interest reported in the Statement of Activities is the result of two

factors. First, accrued interest on the general obligation bonds and the

certificates of participation decreased by $299,157 and second, $6,316,042 of

accumulated interest was accreted on the District's "capital appreciation"

general obligation bonds. (6,016,885)

An Internal Service Fund is used by the District's management to charge the

costs of workers' compensation coverage, liability and property coverage, and

health benefits to the individual funds. The net revenue of the Internal Service

Fund is reported with governmental activities. (8,870,758)

Change in Net Position of Governmental Activities (23,668,491)$


PROPRIETARY FUNDSSTATEMENT OF NET POSITIONJUNE 30, 2013


23

Business-TypeActivities Governmental

Enterprise Fund Activities -Child Care InternalEnterprise Service Fund

ASSETSCurrent Assets

Deposits and investments 48,644$ 31,238,968$Receivables 1,895 59,905Prepaid expenses 1,362 -

Total Current Assets 51,901 31,298,873

Noncurrent AssetsFurniture and equipment 12,795 -

Less: accumulated depreciation (12,795) -Total Capital Assets - -Total Assets 51,901 31,298,873

LIABILITIESCurrent Liabilities

Accounts payable 14,301 5,222,280Deferred revenue 22,880 -Current portion of claims liability - 2,301,172

Total Current Liabilities 37,181 7,523,452

Noncurrent LiabilitiesNoncurrent portion of claims liability and SELF

assessment - 16,231,360

NET POSITIONRestricted - 7,544,061Unrestricted 14,720 -

Total Net Position 14,720$ 7,544,061$


PROPRIETARY FUNDSSTATEMENT OF REVENUES, EXPENSES, AND CHANGESIN FUND NET POSITIONFOR THE YEAR ENDED JUNE 30, 2013


24



OPERATING REVENUESLocal and intermediate sources 691,570$ 27,235,793$

OPERATING EXPENSESPayroll costs 442,697 171,098Professional and contract services 21,416 36,087,732Supplies and materials 29,545 16,916Depreciation 163 -

Total Operating Expenses 493,821 36,275,746Operating Income (loss) 197,749 (9,039,953)

NONOPERATING REVENUES

Interest income 785 169,195Income (Loss) Before Transfers 198,534 (8,870,758)

Transfers out (187,843) -Change in Net Position 10,691 (8,870,758)Total Net Position - Beginning 4,029 16,414,819Total Net Position - Ending 14,720$ 7,544,061$


PROPRIETARY FUNDSSTATEMENT OF CASH FLOWSFOR THE YEAR ENDED JUNE 30, 2013


25



CASH FLOWS FROM OPERATING ACTIVITIESCash receipts from customers 691,669$ -$Cash received from assessments made to other funds - 27,225,432Cash payments to employees for services (442,697) (171,098)Cash receipts from interfund services provided - (25,227,362)Cash payments to other suppliers of goods or services (25,925) 83,237Other operating cash payments (22,564) (1,166,219)

Net Cash Provided by Operating Activities 200,483 743,990

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIESTransfers out (187,843) -

CASH FLOWS FROM INVESTING ACTIVITIESInterest on investments 785 169,195

Net Increase in Cash and Cash Equivalents 13,425 913,185Cash and Cash Equivalents - Beginning 35,219 30,325,783Cash and Cash Equivalents - Ending 48,644$ 31,238,968$

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET

CASH PROVIDED BY OPERATING ACTIVITIESOperating income (loss) 197,749$ (9,039,953)$Adjustments to reconcile operating income to net

cash provided by operating activities:Depreciation 163 -

Changes in assets and liabilities:Receivables (381) (10,361)Prepaid expenses 480 -Accounts payable 3,620 100,153Deferred revenue (1,148) -Claims liability - 9,694,151

NET CASH PROVIDED BY OPERATING ACTIVITIES 200,483$ 743,990$


FIDUCIARY FUNDSSTATEMENT OF NET POSITIONJUNE 30, 2013


26

Scholarship AgencyTrust Funds

ASSETSDeposits and investments 17,143$ 883,126$Receivables 39 -

Stores inventories - 37,392Total Assets 17,182 920,518$

LIABILITIESAccounts payable - 25,801$Due to student groups - 894,717

Total Liabilities - 920,518$

NET POSITIONRestricted 17,182

Total Net Position 17,182$


FIDUCIARY FUNDSSTATEMENT OF CHANGES IN NET POSITIONFOR THE YEAR ENDED JUNE 30, 2013


27

Scholarship

ADDITIONS Trust

Interest 110$

Change in Net Position 110

Net Position - Beginning 17,072Net Position - Ending 17,182$


NOTES TO FINANCIAL STATEMENTSJUNE 30, 2013

28

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial Reporting Entity

The Norwalk-La Mirada Unified School District (the District) was unified on July 1, 1965 under the laws of theState of California. The District operates under a locally elected seven-member Board form of government andprovides educational services to grades K-12 as mandated by the State and/or Federal agencies. The District islocated in Los Angeles County, and occupies the cities of Norwalk and La Mirada, in addition to smaller portionsof the cities of Santa Fe Springs, Whittier, and unincorporated areas of Los Angeles County. The Districtoperates 17 elementary schools, six middle schools, three high schools, a continuation high school, and two adulteducation schools.

A reporting entity is comprised of the primary government, component units, and other organizations that areincluded to ensure the financial statements are not misleading. The primary government of the District consists ofall funds, departments, boards, and agencies that are not legally separate from the District. For Norwalk-LaMirada Unified School District, this includes general operations, food service, and student related activities of theDistrict.

Basis of Presentation - Fund Accounting

The accounting system is organized and operated on a fund basis. A fund is defined as a fiscal and accountingentity with a self-balancing set of accounts, which are segregated for the purpose of carrying on specific activitiesor attaining certain objectives in accordance with special regulations, restrictions, or limitations. The District'sfunds are grouped into three broad fund categories: governmental, proprietary, and fiduciary.

Governmental Funds Governmental funds are those through which most governmental functions typically arefinanced. Governmental fund reporting focuses on the sources, uses, and balances of current financial resources.Expendable assets are assigned to the various governmental funds according to the purposes for which they mayor must be used. Current liabilities are assigned to the fund from which they will be paid. The differencebetween governmental fund assets and liabilities is reported as fund balance. The following are the District'smajor and non-major governmental funds:

Major Governmental Funds

General Fund The General Fund is the chief operating fund for all districts. It is used to account for the ordinaryoperations of the District. All transactions except those accounted for in another fund are accounted for in thisfund.

One fund currently defined as a special revenue fund in the California State Accounting Manual (CSAM) does notmeet the GASB Statement No. 54 special revenue fund definition. Specifically, Fund 20, Special Reserve Fundfor Postemployment Benefits, is not substantially composed of restricted or committed revenue sources. Whilethis fund is authorized by statute and will remain open for internal reporting purposes, this fund functionseffectively as an extension of the General Fund, and accordingly has been combined with the General Fund forpresentation in these audited financial statements.

As a result, the General Fund reflects an increase in fund balance of $4,494,545 as of June 30, 2013.



29

Special Education Pass-Through Fund This fund is used by the Administrative Unit of a multi-districtSpecial Education Local Plan Area (SELPA) to account for Special Education revenue passed through to othermember districts.

Building Fund The Building Fund exists primarily to account separately for proceeds from the sale of bonds(Education Code Section 15146) and may not be used for any purposes other than those for which the bonds wereissued.

Non-Major Governmental Funds

Special Revenue Funds The Special Revenue funds are established to account for the proceeds from specificrevenue sources (other than trusts, major capital projects, or debt service) that are restricted or committed to thefinancing of particular activities and that compose a substantial portion of the inflows of the fund. Additionalresources that are restricted, committed, or assigned to the purpose of the fund may also be reported in the fund.

Adult Education Fund The Adult Education Fund is used to account separately for Federal, State, andlocal revenues for adult education programs and is to be expended for adult education purposes only.

Child Development Fund The Child Development Fund is used to account separately for Federal, State,and local revenues to operate child development programs and is to be used only for expenditures for theoperation of child development programs.

Cafeteria Fund The Cafeteria Fund is used to account separately for Federal, State, and local resources tooperate the food service program (Education Code Sections 38090-38093) and is used only for thoseexpenditures authorized by the governing board as necessary for the operation of the District's food serviceprogram (Education Code Sections 38091 and 38100).

Deferred Maintenance Fund The Deferred Maintenance Fund is used to account separately forState apportionments and the District's contributions for deferred maintenance purposes (EducationCode Sections 17582-17587) and for items of maintenance approved by the State Allocation Board.

Pupil Transportation Equipment Fund The Pupil Transportation Fund is used to account separately forState and local revenues specifically for the acquisition, rehabilitation, or replacement of equipment used totransport students (Education Code Section 41852[b]).

Capital Project Funds The Capital Project funds are used to account for financial resources that are restricted,committed, or assigned to the acquisition or construction of major capital facilities and other capital assets (otherthan those financed by proprietary funds and trust funds).

Capital Facilities Fund The Capital Facilities Fund is used primarily to account separately for moniesreceived from fees levied on developers or other agencies as a condition of approving a development(Education Code Sections 17620-17626). Expenditures are restricted to the purposes specified in GovernmentCode Sections 65970-65981 or to the items specified in agreements with the developer (Government CodeSection 66006).



30

County School Facilities Fund The County School Facilities Fund is established pursuant to Education CodeSection 17070.43 to receive apportionments from the 1998 State School Facilities Fund (Proposition lA), the2002 State School Facilities Fund (Proposition 47), the 2004 State School Facilities Fund (Proposition 55), orthe 2006 State Schools Facilities Fund (Proposition 1D) authorized by the State Allocation Board for newschool facility construction, modernization projects, and facility hardship grants, as provided in the Leroy F.Greene School Facilities Act of 1998 (Education Code Section 17070 et seq.).

Special Reserve Fund for Capital Outlay Projects The Special Reserve Fund for Capital Outlay Projectsexists primarily to provide for the accumulation of General Fund monies for capital outlay purposes(Education Code Section 42840).

Debt Service Funds The Debt Service funds are used to account for the accumulation of restricted, committed,or assigned resources for and the payment of principal and interest on general long-term debt.

Bond Interest and Redemption Fund The Bond Interest and Redemption Fund is used for the repayment of

bonds issued for a District (Education Code Sections 15125-15262).

Proprietary Funds Proprietary funds are used to account for activities that are more business-like thangovernment-like in nature. Business-type activities include those for which a fee is charged to external users or toother organizational units of the local education agency, normally on a full cost-recovery basis. Proprietary fundsare generally intended to be self-supporting and are classified as enterprise or internal service. The District hasthe following proprietary funds:

Enterprise Fund Enterprise funds may be used to account for any activity for which a fee is charged toexternal users for goods or services. The only enterprise fund of the District accounts for the financialtransactions related to the fee-based child care program of the District.

Internal Service Fund Internal service funds may be used to account for goods or services provided to otherfunds of the District on a cost-reimbursement basis. The District operates a self-insurance program that isaccounted for in an internal service fund. The Internal Service Fund consists of three sub-funds as follows:

Health and Welfare Fund The Health and Welfare Fund is used to account for resources committed tothe District's medical insurance program.

Workers' Compensation Fund The Workers' Compensation Fund is used to account for resourcescommitted to the District's self-insurance program for workers' compensation.

Property and Liability Fund The Property and Liability Fund is used to account for resourcescommitted to the District's self-insurance program for property and liability insurance.

Fiduciary Funds Fiduciary funds are used to account for assets held in trustee or agent capacity for others thatcannot be used to support the District's own programs. The fiduciary fund category is split into fourclassifications: pension trust funds, investment trust funds, private-purpose trust funds, and agency funds. Thekey distinction between trust and agency funds is that trust funds are subject to a trust agreement that affects thedegree of management involvement and the length of time that the resources are held.



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Trust funds are used to account for the assets held by the District under a trust agreement for individuals, privateorganizations, or other governments and are therefore, not available to support the District's own programs. TheDistrict operates a trust fund for the Paul and Estelle Fincik Scholarship Fund. Agency funds are custodial innature (assets equal liabilities) and do not involve measurement of results of operations. Such funds have noequity accounts since all assets are due to individuals or entities at some future time. The District's agency fundaccounts for associated student body (ASB) activities.

Basis of Accounting - Measurement Focus

Government-Wide Financial Statements The government-wide financial statements are prepared using theeconomic resources measurement focus and the accrual basis of accounting. This is the same approach used inthe preparation of the proprietary fund financial statements, but differs from the manner in which governmentalfund financial statements are prepared.

The government-wide statement of activities presents a comparison between expenses, both direct and indirect,and program revenues for each segment of the business-type activities of the District and for each governmentalfunction, and excludes fiduciary activity. Direct expenses are those that are specifically associated with a service,program, or department and are therefore, clearly identifiable to a particular function. The District does notallocate indirect expenses to functions in the Statement of Activities. Program revenues include charges paid bythe recipients of the goods or services offered by the programs and grants and contributions that are restricted tomeeting the operational or capital requirements of a particular program. Revenues that are not classified asprogram revenues are presented as general revenues. The comparison of program revenues and expensesidentifies the extent to which each program or business segment is self-financing or draws from the generalrevenues of the District. Eliminations have been made to minimize the double counting of internal activities.

Net position should be reported as restricted when constraints placed on net asset use are either externallyimposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of othergovernments or imposed by law through constitutional provisions or enabling legislation. The net positionrestricted for other activities result from special revenue funds and the internal service fund and the restrictions ontheir net asset use.

Fund Financial Statements Fund financial statements report detailed information about the District. The focusof governmental and proprietary fund financial statements is on major funds rather than reporting funds by type.Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a singlecolumn. The internal service fund is presented in a single column on the face of the proprietary fund statements.

Governmental Funds All governmental funds are accounted for using the flow of current financialresources measurement focus and the modified accrual basis of accounting. With this measurement focus,only current assets and current liabilities generally are included on the balance sheet. The statement ofrevenues, expenditures, and changes in fund balances reports on the sources (revenues and other financingsources) and uses (expenditures and other financing uses) of current financial resources. This approachdiffers from the manner in which the governmental activities of the government-wide financial statements areprepared. Governmental fund financial statements, therefore, include reconciliations with brief explanationsto better identify the relationship between the government-wide financial statements, prepared using theeconomic resources measurement focus and the accrual basis of accounting, and the governmental fundfinancial statements, prepared using the flow of current financial resources measurement focus and themodified accrual basis of accounting.



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Proprietary Funds Proprietary funds are accounted for using the flow of economic resources measurementfocus and the accrual basis of accounting. All assets and all liabilities associated with the operation of thisfund are included in the Statement of Net Position. The statement of changes in fund net position presentsincreases (revenues) and decreases (expenses) in net total assets. The statement of cash flows providesinformation about how the District finances and meets the cash flow needs of its proprietary fund.

Fiduciary Funds Fiduciary funds are accounted for using the flow of economic resources measurementfocus and the accrual basis of accounting. Fiduciary funds are excluded from the government-wide financialstatements because they do not represent resources of the District.

Revenues – Exchange and Non-Exchange Transactions Revenue resulting from exchange transactions, inwhich each party gives and receives essentially equal value, is recorded on the accrual basis when the exchangetakes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources aremeasurable and become available. Available means that the resources will be collected within the current fiscalyear or are expected to be collected soon enough thereafter, to be used to pay liabilities of the current fiscal year.For the District, available means expected to be received within 90 days of fiscal year-end. However, to achievecomparability of reporting among California districts and so as not to distort normal revenue patterns, withspecific respect to reimbursement grants and corrections to state-aid apportionments, the California Department ofEducation has defined available for districts as collectible within one year. The following revenue sources areconsidered to be both measurable and available at fiscal year-end: State apportionments, interest, certain grants,and other local sources.

Non-exchange transactions, in which the District receives value without directly giving equal value in return,include property taxes, certain grants, entitlements, and donations. Revenue from property taxes is recognized inthe fiscal year in which the taxes are received. Revenue from certain grants, entitlements, and donations isrecognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirementsinclude time and purpose restrictions. On a modified accrual basis, revenue from non-exchange transactions mustalso be available before it can be recognized.

Deferred Revenue Deferred revenue arises when potential revenue does not meet both the "measurable" and"available" criteria for recognition in the current period or when resources are received by the District prior to theincurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, orwhen the District has a legal claim to the resources, the liability for deferred revenue is removed from the balancesheet and revenue is recognized.

Certain grants received before the eligibility requirements are met are recorded as deferred revenue. On thegovernmental fund financial statements, receivables that will not be collected within the available period are alsorecorded as deferred revenue.

Expenses/Expenditures On the accrual basis of accounting, expenses are recognized at the time they areincurred. The measurement focus of governmental fund accounting is on decreases in net financial resources(expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which therelated fund liability is incurred, if measurable, and typically paid within 90 days. Principal and interest on long-term obligations, which has not matured, are recognized when paid in the governmental funds as expenditures.Allocations of costs, such as depreciation and amortization, are not recognized in the governmental funds but arerecognized in the entity-wide statements.



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Cash and Cash Equivalents

The District's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-terminvestments with original maturities of three months or less from the date of acquisition. Cash equivalents alsoinclude cash with county treasury balances for purposes of the statement of cash flows.

Investments

Investments held at June 30, 2013, with original maturities greater than one year are stated at fair value. Fairvalue is estimated based on quoted market prices at year-end. All investments not required to be reported at fairvalue are stated at cost or amortized cost. Fair values of investments in county and State investment pools aredetermined by the program sponsor.

Prepaid Expenditures (Expenses)

Prepaid expenditures (expenses) represent amounts paid in advance of receiving goods or services. The Districthas the option of reporting an expenditure in governmental funds for prepaid items either when purchased orduring the benefiting period. The District has chosen to report the expenditures when paid.

Stores Inventories

Inventories consist of expendable food and supplies held for consumption. Inventories are stated at cost, on thefirst-in, first-out basis. The costs of inventory items are recorded as expenditures in the governmental andfiduciary funds when used.

Capital Assets and Depreciation

The accounting and reporting treatment applied to the capital assets associated with a fund are determined by itsmeasurement focus. General capital assets are long-lived assets of the District. The District maintains acapitalization threshold of $5,000. The District does not possess any infrastructure. Improvements arecapitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materiallyextend an asset's life are not capitalized, but are expensed as incurred.

When purchased, such assets are recorded as expenditures in the governmental funds and capitalized in thegovernment-wide financial statement of net position. The valuation basis for general capital assets are historicalcost, or where historical cost is not available, estimated historical cost based on replacement cost. Donated capitalassets are capitalized at estimated fair market value on the date donated.

Capital assets in the proprietary funds are capitalized in the fund in which they are utilized. The valuation basisfor proprietary fund capital assets are the same as those used for the capital assets of governmental funds.

Depreciation of capital assets is computed and recorded by the straight-line method. Estimated useful lives of thevarious classes of depreciable capital assets are as follows: buildings and improvements, 20 to 50 years;equipment, 2 to 15 years; and vehicles, 8 years.



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Compensated Absences

Compensated absences are accrued as a liability as the benefits are earned. The entire compensated absenceliability is reported on the government-wide statement of net position. For governmental funds, the currentportion of unpaid compensated absences is recognized upon the occurrence of relevant events such as employeeresignations and retirements that occur prior to year-end that have not yet been paid with expendable availablefinancial resources. These amounts are reported in the fund from which the employees who have accumulatedleave are paid.

Sick leave is accumulated without limit for each employee at the rate of one day for each month worked. Leavewith pay is provided when employees are absent for health reasons; however, the employees do not gain a vestedright to accumulated sick leave. Employees are never paid for any sick leave balance at termination ofemployment or any other time. Therefore, the value of accumulated sick leave is not recognized as a liability inthe District's financial statements. However, credit for unused sick leave is applicable to all classified schoolmembers who retire after January 1, 1999. At retirement, each member will receive .004 year of service credit foreach day of unused sick leave. Credit for unused sick leave is applicable to all certificated employees and isdetermined by dividing the number of unused sick days by the number of base service days required to completethe last school year, if employed full-time.

Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities, and long-term obligations are reported in the government-wide and proprietaryfund financial statements. In general, governmental fund payables and accrued liabilities that, once incurred, arepaid in a timely manner and in full from current financial resources are reported as obligations of thegovernmental funds.

However, claims and judgments, compensated absences, special termination benefits, and contractually requiredpension contributions that will be paid from governmental funds are reported as a liability in the governmentalfund financial statements only to the extent that they are due for payment during the current year. Bonds, capitalleases, and other long-term obligations are recognized as liabilities in the governmental fund financial statementswhen due.

Deferred Issuance Costs, Premiums and Discounts

In the government-wide financial statements and in the proprietary fund type financial statements, long-termobligations are reported as liabilities in the applicable governmental activities, business-type activities, orproprietary fund statement of net position. Bond premiums and discounts, as well as issuance costs, are deferredand amortized over the life of the bonds using the straight line method.

Refunding of Debt - Deferred Charges on Refunding

Gains or losses occurring from advance refundings, completed subsequent to June 30, 1993, are deferred andamortized into expenses for both business-type activities and proprietary funds. For governmental activities, theyare deferred and amortized into expense if they have occurred subsequent to June 30, 2000.



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Fund Balances - Governmental Funds

As of June 30, 2013, fund balances of the governmental funds are classified as follows:

Nonspendable - amounts that cannot be spent either because they are in nonspendable form or because they arelegally or contractually required to be maintained intact.

Restricted - amounts that can be spent only for specific purposes because of constitutional provisions or enablinglegislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws orregulations of other governments.

Assigned - amounts that do not meet the criteria to be classified as restricted or committed but that are intended tobe used for specific purposes. Under the District's adopted policy, only the governing board or chief businessofficer/assistant superintendent of business services may assign amounts for specific purposes.

Unassigned - all other spendable amounts.

Spending Order Policy

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available,the District considers restricted funds to have been spent first. When an expenditure is incurred for whichcommitted, assigned, or unassigned fund balances are available, the District considers amounts to have been spentfirst out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the governingboard has provided otherwise in its commitment or assignment actions.

Minimum Fund Balance Policy

The governing board adopted a minimum fund balance policy for the General Fund in order to protect the districtagainst revenue shortfalls or unpredicted one-time expenditures. The policy requires a Reserve for EconomicUncertainties consisting of unassigned amounts equal to no less than five percent of General Fund expendituresand other financing uses.

Net Position

Net position represents the difference between assets and liabilities. Net position net of investment in capitalassets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of anyborrowings used for the acquisition, construction or improvement of those assets. Net position is reported asrestricted when there are limitations imposed on their use either through the enabling legislation adopted by theDistrict or through external restrictions imposed by creditors, grantors, or laws or regulations of othergovernments. The District first applies restricted resources when an expense is incurred for purposes for whichboth restricted and unrestricted net position is available. Enabling legislation relates to laws passed that create arevenue source to be used for specific purposes. The government-wide financial statements report $26,949,985restricted by enabling legislation.



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Operating Revenues and Expenses

Operating revenues are those revenues that are generated directly from the primary activity of the proprietaryfunds. For the District, these revenues are charges to other funds related to the self-insurance program and childcare fees. Operating expenses are necessary costs incurred to provide the good or service that is the primaryactivity of the fund. All revenues and expenses not meeting this definition are reported as nonoperating revenuesand expenses.

Interfund Activity

Transfers between governmental and business-type activities in the government-wide financial statements arereported in the same manner as general revenues.

Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses inthe purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment arereported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmentalfunds and after non-operating revenues/expenses in proprietary funds. Repayments from funds responsible forparticular expenditures/expenses to the funds that initially paid for them are not presented in the financialstatements. Interfund transfers are eliminated in the governmental and business-type activities columns of theStatement of Activities, except for the net residual amounts transferred between governmental and business-typeactivities.

Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptions that affect the amountsreported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Budgetary Data

The budgetary process is prescribed by provisions of the California Education Code and requires the governingboard to hold a public hearing and adopt an operating budget no later than July 1st of each year. The Districtgoverning board satisfied these requirements. The adopted budget is subject to amendment throughout the year togive consideration to unanticipated revenue and expenditures primarily resulting from events unknown at the timeof budget adoption with the legal restriction that expenditures cannot exceed appropriations by major objectaccount.

The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts when theoriginal appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetarystatements reflect the amounts after all budget amendments have been accounted for. For budget purposes, onbehalf payments have not been included as revenue and expenditures as required under generally acceptedaccounting principles.



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Property Tax

Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in twoinstallments on November 1 and February 1 and become delinquent on December 10 and April 10, respectively.Unsecured property taxes are payable in one installment on or before August 31. The County of Los Angelesbills and collects the taxes on behalf of the District. Local property tax revenues are recorded when received.

Changes in Accounting Principles

In June 2011, the GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources,Deferred Inflows of Resources, and Net Position. This Statement provides financial reporting guidance fordeferred outflows of resources and deferred inflows of resources. Concepts Statement No. 4, Elements ofFinancial Statements, introduced and defined those elements as a consumption of net assets by the governmentthat is applicable to a future reporting period, and an acquisition of net assets by the government that is applicableto a future reporting period, respectively. Previous financial reporting standards do not include guidance forreporting those financial statement elements, which are distinct from assets and liabilities.

Concepts Statement No. 4 also identifies net position as the residual of all other elements presented in a statementof financial position. This Statement amends the net asset reporting requirements in Statement No. 34, BasicFinancial Statements—and Management's Discussion and Analysis—for State and Local Governments, and otherpronouncements by incorporating deferred outflows of resources and deferred inflows of resources into thedefinitions of the required components of the residual measure and by renaming that measure as net position,rather than net assets.

The District has implemented the provisions of this Statement for the year ended June 30, 2013.

New Accounting Pronouncements

In March 2012, the GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities. ThisStatement establishes accounting and financial reporting standards that reclassify, as deferred outflows ofresources or deferred inflows of resources, certain items that were previously reported as assets and liabilities andrecognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assetsand liabilities.



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Concepts Statement No. 4, Elements of Financial Statements, introduced and defined the elements included infinancial statements, including deferred outflows of resources and deferred inflows of resources. In addition,Concepts Statement 4 provides that reporting a deferred outflow of resources or a deferred inflow of resourcesshould be limited to those instances identified by the Board in authoritative pronouncements that are establishedafter applicable due process. Prior to the issuance of this Statement, only two such pronouncements have beenissued. Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, requires the reportingof a deferred outflow of resources or a deferred inflow of resources for the changes in fair value of hedgingderivative instruments, and Statement No. 60, Accounting and Financial Reporting for Service ConcessionArrangements, requires a deferred inflow of resources to be reported by a transferor government in a qualifyingservice concession arrangement. This Statement amends the financial statement element classification of certainitems previously reported as assets and liabilities to be consistent with the definitions in Concepts Statement 4.This Statement also provides other financial reporting guidance related to the impact of the financial statementelements deferred outflows of resources and deferred inflows of resources, such as changes in the determinationof the major fund calculations and limiting the use of the term deferred in financial statement presentations.

The provisions of this Statement are effective for financial statements for periods beginning afterDecember 15, 2012. Early implementation is encouraged.

In June 2012, the GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions—anamendment of GASB Statement No. 27. The primary objective of this Statement is to improve accounting andfinancial reporting by state and local governments for pensions. It also improves information provided by stateand local governmental employers about financial support for pensions that is provided by other entities. ThisStatement results from a comprehensive review of the effectiveness of existing standards of accounting andfinancial reporting for pensions with regard to providing decision-useful information, supporting assessments ofaccountability and inter-period equity, and creating additional transparency.

This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and LocalGovernmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate topensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafterjointly referred to as trusts) that meet certain criteria. The requirements of Statements 27 and 50 remainapplicable for pensions that are not covered by the scope of this Statement.

The scope of this Statement addresses accounting and financial reporting for pensions that are provided to theemployees of state and local governmental employers through pension plans that are administered through truststhat have the following characteristics:

Contributions from employers and non-employer contributing entities to the pension plan and earnings onthose contributions are irrevocable.

Pension plan assets are dedicated to providing pensions to plan members in accordance with the benefitterms.

Pension plan assets are legally protected from the creditors of employers, non-employer contributingentities, and the pension plan administrator. If the plan is a defined benefit pension plan, plan assets alsoare legally protected from creditors of the plan members.



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This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, anddeferred inflows of resources, and expense/expenditures. For defined benefit pensions, this Statement identifiesthe methods and assumptions that should be used to project benefit payments, discount projected benefitpayments to their actuarial present value, and attribute that present value to periods of employee service.

Note disclosure and required supplementary information requirements about pensions also are addressed.Distinctions are made regarding the particular requirements for employers based on the number of employerswhose employees are provided with pensions through the pension plan and whether pension obligations andpension plan assets are shared. Employers are classified in one of the following categories for purposes of thisStatement:

Single employers are those whose employees are provided with defined benefit pensions through single-employer pension plans - pension plans in which pensions are provided to the employees of only oneemployer (as defined in this Statement).

Agent employers are those whose employees are provided with defined benefit pensions through agentmultiple-employer pension plans - pension plans in which plan assets are pooled for investment purposesbut separate accounts are maintained for each individual employer so that each employer's share of thepooled assets is legally available to pay the benefits of only its employees.

Cost-sharing employers are those whose employees are provided with defined benefit pensions throughcost-sharing multiple-employer pension plans - pension plans in which the pension obligations to theemployees of more than one employer are pooled and plan assets can be used to pay the benefits of theemployees of any employer that provides pensions through the pension plan.

In addition, this Statement details the recognition and disclosure requirements for employers with liabilities(payables) to a defined benefit pension plan and for employers whose employees are provided with definedcontribution pensions. This Statement also addresses circumstances in which a non-employer entity has a legalrequirement to make contributions directly to a pension plan.

This Statement is effective for fiscal years beginning after June 15, 2014. Early implementation is encouraged.



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NOTE 2 - DEPOSITS AND INVESTMENTS

Summary of Deposits and Investments

Deposits and investments as of June 30, 2013, are classified in the accompanying financial statements as follows:

Governmental activities 97,113,455$

Business-type activities 48,644

Fiduciary funds 900,269Total Deposits and Investments 98,062,368$

Deposits and investments as of June 30, 2013, consist of the following:

Cash on hand and in banks 883,126$

Cash in revolving 400,000

Investments 96,779,242Total Deposits and Investments 98,062,368$

Policies and Practices

The District is authorized under California Government Code to make direct investments in local agency bonds,notes, or warrants within the State; U.S. Treasury instruments; registered State warrants or treasury notes;securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of depositplaced with commercial banks and/or savings and loan companies; repurchase or reverse repurchase agreements;medium term corporate notes; shares of beneficial interest issued by diversified management companies,certificates of participation, obligations with first priority security; and collateralized mortgage obligations.

Investment in County Treasury - The District is considered to be an involuntary participant in an externalinvestment pool as the District is required to deposit all receipts and collections of monies with their CountyTreasurer (Education Code Section 41001). The fair value of the District's investment in the pool is reported inthe accounting financial statements at amounts based upon the District's pro-rata share of the fair value providedby the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio). The balanceavailable for withdrawal is based on the accounting records maintained by the County Treasurer, which isrecorded on the amortized cost basis.



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General Authorizations

Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in theschedules below:

Maximum Maximum Maximum

Authorized Remaining Percentage Investment

Investment Type Maturity of Portfolio in One Issuer

Local Agency Bonds, Notes, Warrants 5 years None None

Registered State Bonds, Notes, Warrants 5 years None None

U.S. Treasury Obligations 5 years None None

U.S. Agency Securities 5 years None None

Banker's Acceptance 180 days 40% 30%

Commercial Paper 270 days 25% 10%

Negotiable Certificates of Deposit 5 years 30% None

Repurchase Agreements 1 year None None

Reverse Repurchase Agreements 92 days 20% of base None

Medium-Term Corporate Notes 5 years 30% None

Mutual Funds N/A 20% 10%

Money Market Mutual Funds N/A 20% 10%

Mortgage Pass-Through Securities 5 years 20% None

County Pooled Investment Funds N/A None None

Local Agency Investment Fund (LAIF) N/A None None

Joint Powers Authority Pools N/A None None



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Authorized Under Debt Agreements

Maximum Maximum Maximum

Authorized Remaining Percentage Investment

Investment Type Maturity of Portfolio in One Issuer

U.S. Treasury Obligations N/A None None

Farmers Home Administration certificates N/A None None

General Services Administration certificates N/A None None

U.S. Maritime Administration financing N/A None None

Small Business Administration certificates N/A None None

Guaranteed Pool certificates N/A None None

Government National Mortgage Association (GNMA)

securities and bonds N/A None None

U.S Department of Housing and Urban

Development obligations N/A None None

U.S. Export-Import Bank obligations N/A None None

Washington Metropolitan Area Transit Authority bonds N/A None None

Federal Housing Administration debentures N/A None None

Federal Home Loan Mortgage Corporation obligations N/A None None

Farm Credit Banks bonds and notes N/A None None

Federal Financing Bank N/A None None

Federal Home Loan Banks obligations N/A None None

Federal National Mortgage Association

securities and obligations N/A None None

Student Loan Marketing Association securities N/A None None

Financing Corporation obligations N/A None None

Resolution Funding Corporation obligations N/A None None

Secured certificates of deposit, saving accounts,

and deposit accounts N/A None None

Unsecured certificates of deposit, time deposits, and

bankers acceptance 30 days None None

Fully insured deposits N/A None None

Commercial paper 270 days None None

Money market funds N/A None None

Los Angeles County Investment Pool N/A None None

Local Agency Investment Fund (LAIF) N/A None None

Repurchase Agreements 30 days None None

Repurchase Agreements 270 days None None

State obligations N/A None None

Investment Agreements N/A None None

Pre-Refunded Municipal Bonds N/A None None



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Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of aninvestment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value tochanges in market interest rates. The District manages its exposure to interest rate risk by investing in the LosAngeles County Investment Pool to provide the cash flow and liquidity needed for operations, and by purchasinga combination of shorter term and longer term investments and timing cash flows from maturities so that a portionof the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flownecessary for debt service requirements.

Specific Identification

Information about the sensitivity of the fair values of the District's investments to market interest rate fluctuationis provided by the following schedule that shows the distribution of the District's investment by maturity:

Average Maturity

Amortized Fair in Days/

Investment Type Cost Value Maturity Date

Los Angeles County Investment Pool 95,291,995$ 94,548,717$ 632

First American Treasury Obligations Money

Market Mutual Funds 1,865 1,865 51

Fortis Funding LLC Commercial Paper 1,485,382 1,509,000 7/1/2013Total 96,779,242$ 96,059,582$

Credit Risk

Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.This is measured by the assignment of a rating by a nationally recognized statistical rating organization. TheDistrict's investment in the Los Angeles County Investment Pool is not required to be rated, nor has it been ratedas of June 30, 2013. The First American Treasury Obligations Money Market Mutual Fund has been ratedAaa-mf and the investment in Fortis Funding LLC Commercial Paper has been rated P-1 by Moody's InvestorsService.

Custodial Credit Risk - Deposits

This is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The Districtdoes not have a policy for custodial credit risk for deposits. However, the California Government Code requiresthat a financial institution secure deposits made by State or local governmental units by pledging securities in anundivided collateral pool held by a depository regulated under State law (unless so waived by the governmentalunit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the totalamount deposited by the public agency. California law also allows financial institutions to secure public depositsby pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and lettersof credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secureddeposits. As of June 30, 2013, the District's cash in banks were either insured or collateralized by securities heldby the pledging financial institution's trust department, but not in the name of the District.



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NOTE 3 - RECEIVABLES

Receivables at June 30, 2013, consisted of intergovernmental grants, entitlements, interest and other local sources.All receivables are considered collectible in full.

Special Education Non-Major

General Pass-Through Building Governmental

Fund Fund Fund Funds

Federal Government

Categorical aid 3,649,656$ 2,499,204$ -$ 1,731,329$

State Government

Apportionment 22,061,372 3,127,780 - -

Categorical aid 2,733,091 376,390 - 576,121

Lottery 1,705,766 - - -

Local Government

Interest 34,434 - 59,691 39,355

Southeast Academy ROP 535,245 - - -

Other Local Sources 660,493 - 1,467 422,795

Total 31,380,057$ 6,003,374$ 61,158$ 2,769,600$

Total

Internal Governmental Enterprise Fiduciary

Service Fund Activities Fund Funds

Federal Government

Categorical aid -$ 7,880,189$ -$ -$

State Government

Apportionment - 25,189,152 - -

Categorical aid - 3,685,602 - -

Lottery - 1,705,766 - -

Local Government

Interest 59,905 193,385 444 39

Southeast Academy ROP - 535,245 - -

Other Local Sources - 1,084,755 1,451 -

Total 59,905$ 40,274,094$ 1,895$ 39$



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NOTE 4 - CAPITAL ASSETS

Capital asset activity for the fiscal year ended June 30, 2013, was as follows:

Balance Balance

July 1, 2012 Additions Deductions June 30, 2013

Governmental Activities

Capital Assets Not Being Depreciated:

Land 9,278,310$ -$ -$ 9,278,310$

Construction in Progress 2,324,628 3,393,663 686,330 5,031,961Total Capital Assets

Not Being Depreciated 11,602,938 3,393,663 686,330 14,310,271

Capital Assets Being Depreciated:

Land Improvements 6,821,279 465,364 - 7,286,643

Buildings and Improvements 314,491,166 2,932,367 - 317,423,533

Furniture and Equipment 15,304,543 153,184 82,336 15,375,391Total Capital Assets Being

Depreciated 336,616,988 3,550,915 82,336 340,085,567

Total Capital Assets 348,219,926 6,944,578 768,666 354,395,838

Less Accumulated Depreciation:

Land Improvements 4,530,229 149,807 - 4,680,036

Buildings and Improvements 66,745,562 6,019,934 - 72,765,496

Furniture and Equipment 11,731,082 563,602 79,742 12,214,942

Total Accumulated Depreciation 83,006,873 6,733,343 79,742 89,660,474Governmental Activities Capital

Assets, Net 265,213,053$ 211,235$ 688,924$ 264,735,364$

Business-Type Activities

Furniture and Equipment 12,795$ -$ -$ 12,795$

Less Accumulated Depreciation 12,632 163 - 12,795

Business-Type Activities Capital

Assets, Net 163$ (163)$ -$ -$

Depreciation expense was excluded as a direct expense to governmental functions.



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NOTE 5 - INTERFUND TRANSACTIONS

Interfund Receivables/Payables (Due to/Due from)

Interfund receivable and payable balances arise from interfund transactions and are recorded by all funds affectedin the period in which transactions are executed. Interfund receivable and payable balances at June 30, 2013,between major and non-major governmental funds, non-major enterprise funds, internal service funds, andfiduciary funds are as follows:

Non-Major

General Governmental

Due To Fund Funds Total

General Fund -$ 1,652,501$ 1,652,501$

Non-Major Governmental funds 940,497 - 940,497

Total 940,497$ 1,652,501$ 2,592,998$

940,497$

1,002,473

650,000

28

2,592,998$

Due From

The General Fund owes the Adult Education Non-Major Governmental Fund for adult

education funding.

The Adult Education Non-Major Governmental Fund owes the General Fund for a

temporary cash borrowing to be repaid.

The Child Development Non-Major Governmental Fund owes the General Fund for a

temporary cash borrowing to be repaid.

The Pupil Transportation Non-Major Governmental Fund owes the General Fund for

a temporary cash borrowing to be repaid.



47

Operating Transfers

Interfund transfers for the year ended June 30, 2013, consisted of the following:

Non-Major

General Governmental Enterprise

Transfer To Fund Funds Fund Total

General Fund -$ 2,953,725$ 187,843$ 3,141,568$

Non-Major Governmental Funds 3,934,634 22,398 - 3,957,032

Total 3,934,634$ 2,976,123$ 187,843$ 7,098,600$

3,265,704$

668,930

286,369

100,000

1,366,793

174,011

1,026,552

22,398

187,843Total 7,098,600$

The Adult Education Non-Major Governmental Fund transferred to the General Fund

for general education purposes resulting from flexibility provisions.

The Special Reserve Fund for Capital Outlay Projects Non-Major Governmental Fund

transferred to the General Fund for E-Rate project reimbursement.

The Child Care Enterprise Fund transferred to the General Fund as a result of excess

earnings from the fee-based program.

The Child Development Non-Major Governmental Fund transferred to the General Fund for

reimbursement of program costs.

Transfer From

The General Fund transferred to the Adult Education Non-Major Governmental Fund

for adult education funding and their share of lottery.

The General Fund transferred to the Deferred Maintenance Non-Major Governmental Fund

for deferred maintenance projects.

The Deferred Maintenance Non-Major Governmental Fund transferred to the

General Fund for general educational purposes resulting from flexibility provisions.

The County School Facilities Non-Major Governmental Fund transferred to the Special

Reserve Fund for Capital Outlay Projects Non-Major Governmental Fund for excess

interest earnings.

The Special Reserve Fund for Capital Outlay Projects Non-Major Governmental Fund

transferred to the General Fund for increased health benefit costs.



48

NOTE 6 - ACCOUNTS PAYABLE

Accounts payable at June 30, 2013, consisted of the following:

Special

Education Non-Major

General Pass-Through Building Governmental

Fund Fund Fund Funds

Salaries and benefits 1,939,052$ -$ -$ 185,160$

State apportionment 846,426 - - -

State categorical aid 2,779 - - -Supplies 286,664 - - 192,581

Services 1,247,522 - - 169,625

Construction - - 107,693 18,975

Special education 305,030 - - -

Pass-through of apportionment 1,011,256 6,052,653 - -

Other vendor payables 32,867 - - 2,999Total 5,671,596$ 6,052,653$ 107,693$ 569,340$

Internal Total

Service Governmental Enterprise Fiduciary

Fund Activities Fund Funds

Salaries and benefits -$ 2,124,212$ 13,248$ -$

State apportionment - 846,426 - -

State categorical aid - 2,779 - -

Supplies - 479,245 403 -

Services 5,222,280 6,639,427 650 -

Construction - 126,668 - -

Special education - 305,030 - -

Pass-through of apportionment - 7,063,909 - -

Other vendor payables - 35,866 - 25,801Total 5,222,280$ 17,623,562$ 14,301$ 25,801$



49

NOTE 7 - DEFERRED REVENUE

Deferred revenue at June 30, 2013, consists of the following:

Non-Major Total

General Governmental Governmental Enterprise

Fund Funds Activities Fund

Federal financial assistance 44,303$ -$ 44,303$ -$

State categorical aid 25,423 - 25,423 -

Other local 217,793 1,954 219,747 22,880

Total 287,519$ 1,954$ 289,473$ 22,880$

NOTE 8 - LONG-TERM OBLIGATIONS

Summary

The changes in the District's long-term obligations during the year consisted of the following:

Balance Balance Due in

July 1, 2012 Additions Deductions June 30, 2013 One Year

General Obligation Bonds 173,094,348$ 17,946,042$ 14,740,000$ 176,300,390$ 4,435,000$

Premium on issuance 4,793,906 1,466,199 636,614 5,623,491 -

2005 Certificates of Participation

(Qualified Academy Zone Bonds) 2,770,165 - - 2,770,165 -

Capital leases 37,897 - 18,376 19,521 19,521

Accumulated vacation - net 2,036,490 - 29,494 2,006,996 -

Claims liability 8,676,665 11,709,466 2,301,172 18,084,959 2,301,172

Supplemental Early Retirement

Plan (SERP) 1,935,849 - 645,283 1,290,566 645,283

Other postemployment benefits

(OPEB) 14,438,021 3,841,234 709,691 17,569,564 -

SELF workers' compensation

assessment 161,716 450,443 164,586 447,573 -

Total 207,945,057$ 35,413,384$ 19,245,216$ 224,113,225$ 7,400,976$

Payments on the General Obligation Bonds are made by the Bond Interest and Redemption Fund with localrevenues. The General Fund makes the payments for the capital leases. The accrued vacation will be paid by thefund for which the employee worked. Claims liability for workers' compensation and SELF assessment are paidout of the Internal Service Fund. Other postemployment benefits and the Supplemental Early Retirement Plan aregenerally paid by the General Fund.



50

General Obligation Bonds

The outstanding general obligation bonded debt is as follows:

Bonds Bonds

Issue Maturity Interest Original Outstanding Outstanding

Date Date Rate Issue July 1, 2012 Issued Accreted Redeemed June 30, 2013

4/20/2005 8/1/2029 3.00-5.31% 44,995,644$ 61,641,927$ -$ 3,049,990$ 555,000$ 64,136,917$

4/20/2005 8/1/2019 3.00-5.00% 57,105,000 37,985,000 - - 13,115,000 24,870,000

11/27/2007 8/1/2032 3.50-5.22% 29,200,602 26,320,556 - 847,673 - 27,168,229

7/14/2009 2/1/2034 6.16-7.36% 9,410,103 11,656,100 - 845,844 - 12,501,944

7/14/2009 8/1/2021 1.28-4.68% 13,580,000 10,870,000 - - 1,070,000 9,800,000

10/8/2009 8/1/2038 5.50-6.47% 21,392,349 24,620,765 - 1,572,535 - 26,193,300

1/30/2013 8/1/2019 2.00-4.00% 11,630,000 - 11,630,000 - - 11,630,000

173,094,348$ 11,630,000$ 6,316,042$ 14,740,000$ 176,300,390$

2002 General Obligation Bonds, Series 2005B

On April 20, 2005, the District issued the $44,995,644 of 2002 General Obligation Bonds, Series 2005B. TheSeries 2005B bonds were issued as both current interest bonds and capital appreciation bonds, with the value ofthe capital appreciation bonds accreting $70,089,356, and an aggregate principal debt service balance of$115,085,000. The bonds have a final maturity to occur on August 1, 2029, with interest rates of 3.00 to 5.31percent. Proceeds from the sale of the bonds were used to renovate, construct and modernize classrooms andschool facilities and to pay all necessary legal, financial, engineering and contingent costs in connection with theissuance of the bonds. At June 30, 2013, the principal balance outstanding of the 2002 General Obligation Bonds,Series 2005B was $64,136,917. Unamortized premium received on issuance of the bonds amounted to $419,212as of June 30, 2013.

2005 Refunding General Obligation Bonds

On April 20, 2005, the District issued the $57,105,000 of 2005 General Obligation Refunding Bonds. The bondshave a final maturity to occur on August 1, 2019, with interest rates from 3.00 to 5.00 percent. The net proceedsfrom the issuance were used to advance refund all of the District's outstanding 2003 General Obligation Bonds,Series A. Amounts paid to the refunded bond escrow agent in excess of outstanding debt at the time of paymentare recorded as deferred charges on refunding on the statement of net position and are amortized to interestexpense over the life of the liability. At June 30, 2013, the principal balance outstanding on the 2005 GeneralObligation Refunding Bonds was $24,870,000 as a portion of the bonds were refunded by the 2009 GeneralObligation Refunding Bonds and the 2013 General Obligation Refunding Bonds, Series A as discussed below.Unamortized premium received on issuance of the bonds amounted to $1,763,612 as of June 30, 2013.



51

2002 General Obligation Bonds, Series 2007C

On November 27, 2007, the District issued the $29,200,602 of 2002 General Obligation Bonds, Series 2007C.The Series 2007C bonds were issued as both current interest bonds and capital appreciation bonds, with the valueof the capital appreciation bonds accreting $29,734,398, and an aggregate principal debt service balance of$58,935,000. The bonds have a final maturity to occur on August 1, 2032, with interest rates of 3.50 to 5.22percent. Proceeds from the sale of the bonds were used to prepay a portion of the District's outstanding obligationrelated to the 2006 Certificates of Participations (School Facility Bridge Funding) and to pay all necessary legal,financial and contingent costs in connection with the issuance of the bonds. At June 30, 2013, the principalbalance outstanding of the 2002 General Obligation Bonds, Series 2007C was $27,168,229 as a portion of thebonds were refunded by the 2009 General Obligation Refunding Bonds as discussed below. Unamortizedpremium received on issuance of the bonds amounted to $500,138 as of June 30, 2013.

2002 General Obligation Bonds, Series 2009D

On July 14, 2009, the District issued the $9,410,103 General Obligation Bonds, Series 2009D. The Series 2009Dbonds were issued as capital appreciation bonds, with the value of the capital appreciation bonds accreting to$43,775,000. The bonds have a final maturity to occur on February 1, 2034, with interest rates of 6.16 to 7.36percent. Proceeds from the sale of the bonds will be used to renovate, construct and modernize classrooms andschool facilities; to prepay a portion of the District's 2006 Certificates of Participation; and pay certain costs ofissuance associated with the bonds. At June 30, 2013, the principal balance outstanding of the 2002 GeneralObligation Bonds, Series 2009D was $12,501,944. Unamortized premium received on issuance of the bondsamounted to $368,919 as of June 30, 2013.

2009 General Obligation Refunding Bonds

On July 14, 2009, the District issued the $13,580,000 of 2009 General Obligation Refunding Bonds. The bondshave a final maturity to occur on August 1, 2021, with interest rates from 1.28 to 4.68 percent. The net proceedsfrom the issuance were used to advance refund a portion of the District's outstanding 2002 General ObligationBonds, Series 2007C and 2005 Refunding General Obligation Bonds and to pay the costs of issuance associatedwith the refunding bonds. Amounts paid to the refunded bond escrow agent in excess of outstanding debt at thetime of payment are recorded as deferred charges on refunding on the statement of net position and are amortizedto interest expense over the life of the liability. Deferred charges on refunding of $488,156 remain to beamortized using the straight-line method. At June 30, 2013, the principal balance outstanding on the 2009General Obligation Refunding Bonds was $9,800,000. Unamortized premium received on issuance of the bondsamounted to $296,496 as of June 30, 2013.

2002 General Obligation Bonds, Series 2009E

On October 8, 2009, the District issued the $21,392,349 General Obligation Bonds, Series 2009E. The Series2009E bonds were issued as both capital appreciation bonds and convertible capital appreciation bonds, with thevalue of the bonds accreting to $102,175,000. The bonds have a final maturity to occur on August 1, 2038, withinterest rates of 5.50 to 6.47 percent. Proceeds from the sale of bonds will be used to renovate, construct andmodernize classrooms and school facilities; prepay a portion of the District's 2006 Certificates of Participation;and pay certain costs of issuance associated with the bonds. At June 30, 2013, the principal balance outstandingof the 2002 General Obligation Bonds, Series 2009E was $26,193,300. Unamortized premium received onissuance of the bonds amounted to $1,053,281 as of June 30, 2013.



52

2013 General Obligation Refunding Bonds, Series A

On January 30, 2013, the District issued the $11,630,000 of 2013 General Obligation Refunding Bonds, Series A.The bonds have a final maturity to occur on August 1, 2019, with interest rates from 2.00 to 4.00 percent. The netproceeds from the issuance were used to advance refund a portion of the District's outstanding 2005 GeneralObligation Refunding Bonds and to pay the costs of issuance associated with the refunding bonds. Amounts paidto the refunded bond escrow agent in excess of outstanding debt at the time of payment are recorded as deferredcharges on refunding on the statement of net position and are amortized to interest expense over the life of theliability. Deferred charges on refunding of $1,334,778 remain to be amortized using the straight-line method. AtJune 30, 2013, the principal balance outstanding on the 2013 General Obligation Refunding Bonds, Series A was$11,630,000. Unamortized premium received on issuance of the bonds amounted to $1,221,833 as ofJune 30, 2013.

Debt Service Requirements to Maturity

The bonds mature through 2039 as follows:

Principal Current

Including Accreted Accreted Interest to

Fiscal Year Interest to Date Interest Maturity Total

2014 4,435,000$ -$ 2,519,718$ 6,954,718$

2015 5,015,000 - 2,340,038 7,355,038

2016 5,805,000 - 2,080,375 7,885,375

2017 6,894,598 100,402 1,801,875 8,796,875

2018 8,237,516 142,484 1,501,013 9,881,013

2019-2023 45,975,050 9,804,950 4,063,913 59,843,913

2024-2028 40,604,771 30,355,229 3,820,213 74,780,213

2029-2033 39,221,770 60,278,230 452,925 99,952,925

2034-2038 17,446,081 59,264,770 - 76,710,851

2039 2,665,604 10,854,396 - 13,520,000Total 176,300,390$ 170,800,461$ 18,580,070$ 365,680,921$



53

2005 Certificates of Participation (Qualified Academy Zone Bonds Program)

On December 29, 2005, the District, pursuant to a sublease agreement with the Public Property FinancingCorporation of California (the Financing Corporation), issued the $2,770,165 2005 Certificates of Participation(Qualified Academy Zone Bonds). The District had been granted authorization from the State Superintendent ofPublic Instruction to issue securities in an aggregate principal amount not to exceed $3,069,000 in accordancewith the qualified zone academy bonds tax credit program found in Section 1397E of the Internal Revenue Codeof 1986 and State regulations, to finance certain projects at qualified zone academies within the District. TheDistrict and the Financing Corporation, in order to facilitate the financing of projects qualified under the QZABProgram, entered into a lease arrangement, by which the District will lease to the Financing Corporation thosecertain parcels of real property located in within the District and pursuant to a sublease the Corporation willsublease the property to the District, with the District required to pay base rental to the Corporation (an initiallease payment of $600,000 was made December 29, 2005). The annual base rental payment of $95,722, to beginDecember 29, 2006, will be deposited with the Bank of America into an interest generating investment to producesufficient income to repay the $2,770,165 certificates upon maturity on December 29, 2020. At June 30, 2013,the principal balance outstanding was $2,770,165.

Capital Leases

The District has entered into agreements to lease equipment. Such agreements are, in substance, purchases(capital leases) and are reported as capital lease obligations. The District's liability on lease agreements withoptions to purchase is summarized below:

Balance, July 1, 2012 41,474$

Additions -

Payments (20,737)Balance, June 30, 2013 20,737$

Future payments on capital leases are as follows:

Year Ending Lease

June 30, Payment

2014 20,737$

Less: Amount Representing Interest (1,216)Present Value of Minimum Lease Payments 19,521$

Accumulated Unpaid Employee Vacation

The long-term portion of accumulated unpaid employee vacation for the District at June 30, 2013, amounted to$2,006,996.



54

Claims Liability

Liabilities associated with workers' compensation claims are reported when it is probable that a loss has occurredand the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have beenincurred but not reported (IBNR). Claim liabilities are based upon estimated ultimate cost of settling the claims,considering recent claim settlement trends including the frequency and amounts of payouts and other economicand social factors. The liability for workers' compensation claims is reported in the Internal Service Fund. Theoutstanding claims liability at June 30, 2013, amounted to $18,084,959.

Supplemental Early Retirement Plan (SERP)

During 2010, the District adopted a supplemental early retirement plan whereby certain eligible employees areprovided an annuity to supplement the retirement benefits they are entitled to through the California StateTeachers' Retirement System. The annuities offered to the employees are to be paid over a five-year period. Theannuities, which were purchased for 54 employees who retired during 2009-2010 school year, were purchasedfrom United of Omaha Life Insurance Company.

During 2011, the District adopted a supplemental early retirement plan whereby certain eligible employees areprovided an annuity to supplement the retirement benefits they are entitled to through the California PublicEmployees' Retirement System. The annuities offered to the employees are to be paid over a five-year period.The annuities, which were purchase purchased for 20 employees who retired during 2010-2011 school year, werepurchased from United of Omaha Life Insurance Company.

As of June 30, 2013, the outstanding obligation for the aforementioned Supplemental Early Retirement Plans was$1,290,566.

Year Ending Total

June 30, Payments

2014 645,283$

2015 645,283Total 1,290,566$

Other Postemployment Benefits (OPEB) Obligation

The District's annual required contribution for the year ended June 30, 2013, was $3,758,749, and contributionsmade by the District during the year were $709,691. Interest on the net OPEB obligation and adjustments to theannual required contribution were $721,901 and ($639,416), respectively, which resulted in an increase to the netOPEB obligation of $3,131,543. As of June 30, 2013, the net OPEB obligation was $17,569,564. See Note 10for additional information regarding the OPEB obligation and the postemployment benefits plan.

Workers' Compensation Assessment

The District was a member of School Excess Liability Fund (SELF), a cost sharing Joint Powers Authority (JPA)for the purpose of providing the District excess workers' compensation insurance. The SELF board of directorsdeclared an entity assessment to the member districts. At June 30, 2013, the District's outstanding obligation totheir pro-rata share of equity assessed was $447,573.



55

NOTE 9 - FUND BALANCES

Fund balances are composed of the following elements:

Non-Major

General Building Governmental

Fund Fund Funds Total

Nonspendable

Revolving cash 125,000$ -$ -$ 125,000$

Stores inventories 248,145 - 134,862 383,007

Prepaid expenditures 16,589 - - 16,589

Total Nonspendable 389,734 - 134,862 524,596

RestrictedLegally restricted 370,078 - 7,610,785 7,980,863

Capital projects - 25,829,447 4,489,545 30,318,992

Debt services - - 7,721,237 7,721,237

Total Restricted 370,078 25,829,447 19,821,567 46,021,092

AssignedPostemployment benefits 4,494,545 - - 4,494,545Child development center reserve - - 235,578 235,578

Capital improvement projects - - 7,626,320 7,626,320

Total Assigned 4,494,545 - 7,861,898 12,356,443

UnassignedReserve for economic

uncertainties 5,108,338 - - 5,108,338

Remaining unassigned 29,787,048 - - 29,787,048

Total Unassigned 34,895,386 - - 34,895,386Total 40,149,743$ 25,829,447$ 27,818,327$ 93,797,517$

NOTE 10 - POSTEMPLOYMENT HEALTH CARE PLAN AND OTHER POSTEMPLOYMENTBENEFITS (OPEB) OBLIGATION

Plan Description

The Postemployment Benefits Plan (the Plan) is a single-employer defined benefit healthcare plan administeredby the Norwalk-La Mirada School District. The Plan provides medical and dental insurance benefits to eligibleretirees and their spouses. Membership of the Plan consists of 98 retirees and beneficiaries currently receivingbenefits, 20 terminated Plan members entitled to but not yet receiving benefits, and 1,698 active Plan members.In addition, the District has entered into an agreement with the former superintendent whereby the District willprovide fully paid medical and dental benefits for the lifetime of the superintendent.



56

Contribution Information

The contribution requirements of plan members and the District are established and may be amended by theDistrict and the Teachers Association (CEA), the local California Service Employees Association (CSEA), andunrepresented groups. The required contribution is based on projected pay-as-you-go financing requirements,with an additional amount to prefund benefits as determined annually through the agreements between theDistrict, FEA, CSEA and the unrepresented groups. For fiscal year 2012-2013, the District contributed $709,691to the plan, all of which was used for current premiums (approximately 65 percent of total premiums). Planmembers receiving benefits contributed $374,499, or approximately 35 percent of the total premiums.

Annual OPEB Cost and Net OPEB Obligation

The District's annual OPEB cost (expense) is calculated based on the annual required contribution of the employer(ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. TheARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each yearand amortize any unfunded actuarial accrued liabilities (UAAL) (or funding excess) over a period not to exceed30 years. The following table shows the components of the District's annual OPEB cost for the year, the amountactually contributed to the plan, and changes in the District's net OPEB obligation to the Plan:

Annual required contribution 3,758,749$

Interest on net OPEB obligation 721,901

Adjustment to annual required contribution (639,416)

Annual OPEB cost (expense) 3,841,234

Contributions made (709,691)

Increase in net OPEB obligation 3,131,543

Net OPEB obligation, beginning of year 14,438,021Net OPEB obligation, end of year 17,569,564$

Trend Information

Trend information for annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the netOPEB obligation is as follows:

Year Ended Annual Actual Percentage Net OPEB

June 30, OPEB Cost Contribution Contributed Obligation

2011 3,740,888$ 985,842$ 26.35% 11,629,903$

2012 3,825,191 1,017,073 26.59% 14,438,021

2013 3,841,234 709,691 18.48% 17,569,564



57

Funded Status and Funding Progress

A schedule of funding progress as of the most recent actuarial valuation is as follows:

Actuarial

Accrued UAAL as a

Liability Unfunded Percentage

Actuarial (AAL) - AAL of Covered

Valuation Actuarial Value Unprojected (UAAL) Funded Ratio Covered Payroll

Date of Assets (a) Unit Credit (b) (b - a) (a / b) Payroll (c) ([b - a] / c)

April 24, 2012 -$ 31,112,925$ 31,112,925$ 0% 113,318,164$ 27.46%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions aboutthe probability of occurrence of events far into the future. Examples include assumptions about futureemployment, investment returns, mortality, and the healthcare cost trend. Amounts determined regarding thefunded status of the Plan and the annual required contributions of the employer are subject to continual revision asactual results are compared with past expectations and new estimates are made about the future. The schedule offunding progress, presented as required supplementary information following the notes to the financial statements,presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasingover time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive Plan (the Plan as understoodby the employer and the Plan members) and include the types of benefits provided at the time of each valuationand the historical pattern of sharing of benefit costs between the employer and plan members to that point. Theactuarial methods and assumptions used include techniques that are designed to reduce the effects of short-termvolatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspectiveof the calculations.

In the April 24, 2012 actuarial valuation, the "entry age normal" method was used. The actuarial assumptionsincluded a five percent investment rate of return (net of administrative expenses), based on the Plan being fundedin an irrevocable employee benefit trust invested in a combined equity and fixed income portfolio. Healthcarecost trend rates reflect an ultimate rate of four percent. The UAAL is being amortized at a level percentage ofpayroll method. The remaining amortization period at June 30, 2013, was 25 years. The actuarial value of assetswas not determined in this actuarial valuation since there were no assets.



58

NOTE 11 - RISK MANAGEMENT

Employee Medical Benefits

The District has contracted with the Alliance of Schools for Cooperative Insurance Programs (ASCIP) publicentity risk pool to provide employee dental benefits. The District also purchases medical, vision, and lifeinsurance from various vendors for health care coverage. The District is not self-funded for employee medicalbenefits but has chosen to report the costs of health and welfare payments for all employees plus retirees in theInternal Service Fund.

Property and Liability

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errorsand omissions; injuries to employees; and natural disasters. To mitigate this potential loss, the District hasestablished an Internal Service Fund to account for and finance its uninsured risks of loss for property and liabilitycoverage. Under this program, the Internal Service Fund provides coverage for up to a maximum of $50,000 foreach general liability claim and $25,000 for each property damage claim. During fiscal year endingJune 30, 2013, the District participated in the ASCIP public entity risk pool for property and liability insurancecoverage in excess of self-insured limits. Settled claims have not exceeded the insured coverage in any of the pastthree years. There has not been a significant reduction in coverage from the prior year. In addition, the Districtpurchases commercial insurance for property and liability claims in excess of coverage provided by the InternalService Fund and for all other risks of loss.

Workers' Compensation and Property and Liability

Since 1985, the District has self-insured itself for workers' compensation coverage, retaining the risk of loss. TheDistrict has established an Internal Service Fund to account for and finance its uninsured risks of loss for workers'compensation coverage. Under this program, the Internal Service Fund provides coverage for up to a maximumof $350,000 for each workers' compensation claim. The District purchases insurance for workers' compensationclaims in excess of coverage provided by the Fund from Schools Excess Liability Fund (SELF) JPA.

Funding of the Internal Service Fund is based on estimates of the amounts needed to pay prior and current yearclaims. Workers' Compensation claims are charged to the respective funds which generate the liability and theProperty and Liability claims are paid by the General Fund.



59

Unpaid Claims Liabilities

The fund establishes a liability for both reported and unreported events, which includes estimates of both futurepayments of losses and related claim adjustment expenses. The following represent the changes in approximateaggregate liabilities for the District from July 1, 2011 to June 30, 2013:

Workers' Property

Compensation and Liability Total

Liability Balance, July 1, 2011 8,131,599$ 361,363$ 8,492,962$

Claims and changes in estimates 2,086,811 257,226 2,344,037

Claims payments (1,933,710) (226,624) (2,160,334)

Liability Balance, June 30, 2012 8,284,700 391,965 8,676,665

Claims and changes in estimates 11,622,999 86,467 11,709,466

Claims payments (2,130,740) (170,432) (2,301,172)Liability Balance, June 30, 2013 17,776,959$ 308,000$ 18,084,959$

Assets available to pay claims at June 30, 2013 25,131,058$ 786,986$ 25,918,044$

NOTE 12 - EMPLOYEE RETIREMENT SYSTEMS

Qualified employees are covered under multiple-employer retirement plans maintained by agencies of the State ofCalifornia. Certificated employees are members of the California State Teachers' Retirement System (CalSTRS)and classified employees are members of the California Public Employees' Retirement System (CalPERS).

CalSTRS

Plan Description

The District contributes to CalSTRS, a cost-sharing multiple-employer public employee retirement systemdefined benefit pension plan administered by CalSTRS. The plan provides retirement and disability benefits,annual cost-of-living adjustments, and survivor benefits to beneficiaries. Benefit provisions are established byState statutes, as legislatively amended, within the State Teachers' Retirement Law. CalSTRS issues a separatecomprehensive annual financial report that includes financial statements and required supplementary information.Copies of the CalSTRS annual financial report may be obtained from CalSTRS, 100 Waterfront Place, WestSacramento, California 95605.



60

Funding Policy

Active plan members are required to contribute 8.0 percent of their salary and the District is required to contributean actuarially determined rate. The actuarial methods and assumptions used for determining the rate are thoseadopted by CalSTRS Teachers' Retirement Board. The required employer contribution rate for fiscal year2012-2013 was 8.25 percent of annual payroll. The contribution requirements of the plan members areestablished by State statute. The District's contributions to CalSTRS for the fiscal years ending June 30, 2013,2012, and 2011, were $6,674,151, $6,720,757, and $6,676,478, respectively, and equal 100 percent of therequired contributions for each year.

CalPERS

Plan Description

The District contributes to the School Employer Pool under CalPERS, a cost-sharing multiple-employer publicemployee retirement system defined benefit pension plan administered by CalPERS. The plan providesretirement and disability benefits, annual cost-of-living adjustments, and survivor benefits to plan members andbeneficiaries. Benefit provisions are established by State statutes, as legislatively amended, within the PublicEmployees' Retirement Laws. CalPERS issues a separate comprehensive annual financial report that includesfinancial statements and required supplementary information. Copies of the CalPERS' annual financial reportmay be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, California 95811.

Funding Policy

Active plan members are required to contribute 7.0 percent of their salary and the District is required to contributean actuarially determined rate. The actuarial methods and assumptions used for determining the rate are thoseadopted by the CalPERS Board of Administration. The required employer contribution rate for fiscal year2012-2013 was 11.417 percent of covered payroll. The contribution requirements of the plan members areestablished by State statute. The District's contributions to CalPERS for the fiscal years ending June 30, 2013,2012, and 2011, were $3,546,346, $3,294,860, and $3,149,808, respectively, and equal 100 percent of therequired contributions for each year.

Alternative Retirement Program

As established by Federal law, all public sector employees who are not members of their employer's existingretirement system (CalSTRS or CalPERS) must be covered by social security or an alternative plan. The Districthas elected to use CalPERS to act as their administrators and Wells Fargo Bank to act as trustee and investmentmanager for the District's alternative plan. The plan is a defined benefit plan in which all contributions are madeby the District. The District contributes 5.0 percent of an employee's gross earnings. The District contributed$383,896 in the 2012-2013 fiscal year.



61

On Behalf Payments

The State of California makes contributions to CalSTRS on behalf of the District. These payments consist ofState General Fund contributions to CalSTRS in the amount of $4,188,387 (5.176 percent of annual payroll).Contributions are no longer appropriated in the annual Budget Act for the legislatively mandated benefits toCalPERS. Therefore, there is no on behalf contribution rate for CalPERS. Under accounting principles generallyaccepted in the United States of America, these amounts are to be reported as revenues and expenditures.Accordingly, these amounts have been recorded in these financial statements. On behalf payments have beenexcluded from the calculation of available reserves, and have not been included in the budgeted amounts reportedin the General Fund - Budgetary Comparison Schedule.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Grants

The District received financial assistance from Federal and State agencies in the form of grants. Thedisbursement of funds received under these programs generally requires compliance with terms and conditionsspecified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claimsresulting from such audits could become a liability of the General Fund or other applicable funds. However, inthe opinion of management, any such disallowed claims will not have a material adverse effect on the overallfinancial position of the District at June 30, 2013.

Litigation

The District is involved in various litigation arising from the normal course of business. In the opinion ofmanagement and legal counsel, the disposition of all litigation pending is not expected to have a material adverseeffect on the overall financial position of the District at June 30, 2013.

Operating Leases

The District has entered into various operating leases for buildings and equipment with lease terms in excess ofone year. None of these agreements contain bargain purchase options. All agreements contain a terminationclause providing for cancellation after a specified number of days written notice to lessors, but it is unlikely thatthe District will cancel any of the agreements prior to the expiration date. As of June 30, 2013, the District hasthe following lease obligations:

Year Ending Lease

June 30, Payment

2014 344,762$

2015 4,876Total 349,638$

Rental expenditures for the year ended June 30, 2013, amounted to $402,012.



62

Construction Commitments

As of June 30, 2013, the District had the following commitments with respect to the unfinished capital projects:

Remaining

Construction Expected Date of

Capital Projects Commitment Completion

Eastwood Modernization 8,068$ 6/1/2014

Lampton Modernization 62,412 6/1/2014

Escalona Modernization 8,268 6/1/2014

Glazier Modernization 3,680 6/1/2014

Edmondson Modernization 9,196 6/1/2014

Moffitt Modernization 34,544 6/1/2014

Benton Modernization 11,099,999 8/1/2015

Corvallis Modernization 10,048,419 12/1/2015

Waite Science CR Modernization 279,516 6/1/2014

La Mirada Expansion Project 36,439 6/1/2014

Norwalk Expansion Project 51,131 6/1/2014

Dolland Portable Replacement 5,454 6/1/2014

Morrison Portable Replacement 25,966 6/1/201421,673,092$

NOTE 14 - PARTICIPATION IN JOINT POWERS AGREEMENTS

The Norwalk-La Mirada Unified School District is a member of the Southeast Regional Occupational Program(SEROP) joint power authority (JPA), Schools Excess Liability Fund (SELF) JPA, and Alliance of Schools forCooperative Insurance Programs (ASCIP) Payments for ROP services are paid to the SEROP JPA. Payments aremade to ASCIP for dental benefits for District employees and for property and liability insurance. Payments aremade to SELF for excess liability coverage for workers' compensation.

These entities have budgeting and financial reporting requirements independent of member units and theirfinancial statements are not presented in these financial statements; however, fund transactions between theentities and the District are included in these statements. Audited financial statements are available from therespective entities.

During the year ended June 30, 2013, the District made payments of $1,879,454, $328,132, and $2,491,923 toSEROP, SELF, and ASCIP, respectively.

63

REQUIRED SUPPLEMENTARY INFORMATION


GENERAL FUNDBUDGETARY COMPARISON SCHEDULEFOR THE YEAR ENDED JUNE 30, 2013

64

Variances -

Positive

(Negative)

Actual Final

Original Final (GAAP Basis) to Actual

REVENUES

Revenue limit sources 94,088,284$ 101,913,060$ 101,910,738$ (2,322)$

Federal sources 14,042,582 13,714,371 12,735,128 (979,243)

Other State sources 41,396,259 41,478,837 45,707,722 4,228,885

Other local sources 2,118,000 2,978,000 4,250,257 1,272,257

Total Revenues1

151,645,125 160,084,268 164,603,845 4,519,577

EXPENDITURES

Current

Certificated salaries 77,549,006 79,635,195 79,358,470 276,725

Classified salaries 32,255,356 31,763,331 31,409,925 353,406

Employee benefits 32,753,370 33,846,502 37,588,467 (3,741,965)

Books and supplies 5,441,278 6,410,812 6,247,676 163,136

Services and operating expenditures 12,198,651 14,194,162 12,329,936 1,864,226

Other outgo 2,423,869 2,356,116 2,891,940 (535,824)

Capital outlay 447,563 649,188 531,204 117,984

Debt service - principal - - 18,376 (18,376)

Debt service - interest - - 2,380 (2,380)

Total Expenditures1

163,069,093 168,855,306 170,378,374 (1,523,068)Excess (Deficiency) of Revenues

Over Expenditures (11,423,968) (8,771,038) (5,774,529) 2,996,509


Transfers in 1,368,705 2,561,183 3,141,568 580,385

Transfers out (3,917,547) (4,046,674) (3,934,634) 112,040Net Financing Sources (2,548,842) (1,485,491) (793,066) 692,425

NET CHANGE IN FUND BALANCE (13,972,810) (10,256,529) (6,567,595) 3,688,934

Fund Balance - Beginning 46,717,338 46,717,338 46,717,338 -Fund Balance - Ending 32,744,528$ 36,460,809$ 40,149,743$ 3,688,934$

Budgeted Amounts

1On behalf payments of $4,188,387 are included in the actual revenues and expenditures, but have not been included in thebudgeted amounts. In addition, due to the consolidation of Fund 20, Special Reserve Fund for Postemployment Benefitsfor reporting purposes into the General Fund, additional revenues and expenditures pertaining to this fund is included in theActual (GAAP Basis) revenues and expenditures, however is not included in the original and final General Fund budgets.


SPECIAL EDUCATION PASS-THROUGH FUNDBUDGETARY COMPARISON SCHEDULEFOR THE YEAR ENDED JUNE 30, 2013

65

Variances -

Positive

(Negative)

Actual Final

Original Final (GAAP Basis) to Actual

REVENUES

Federal sources 3,791,369$ 3,880,960$ 3,802,688$ (78,272)$

Other State sources 10,508,556 10,687,811 10,525,030 (162,781)

Total Revenues 14,299,925 14,568,771 14,327,718 (241,053)

EXPENDITURES

Current

Other outgo 14,299,925 14,568,771 14,327,718 241,053

Total Expenditures 14,299,925 14,568,771 14,327,718 241,053NET CHANGE IN FUND BALANCE - - - -Fund Balance - Beginning - - - -Fund Balance - Ending -$ -$ -$ -$

Budgeted Amounts


SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS (OPEB)FUNDING PROGRESS

FOR THE YEAR ENDED JUNE 30, 2013

66

Actuarial

Accrued

Liability Unfunded UAAL as a

Actuarial (AAL) - AAL Percentage of

Valuation Actuarial Value Unprojected (UAAL) Funded Ratio Covered Covered Payroll

Date of Assets (a) Unit Credit (b) (b - a) (a / b) Payroll (c) ([b - a] / c)

May 16, 2006 -$ 32,613,981$ 32,613,981$ 0% 120,184,506$ 27.14%

March 13, 2009 - 34,922,000 34,922,000 0% 102,619,243 34.03%

April 24, 2012 - 31,112,925 31,112,925 0% 113,318,164 27.46%

67

SUPPLEMENTARY INFORMATION


See accompanying note to supplementary information.

68

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFOR THE YEAR ENDED JUNE 30, 2013

Pass-Through

Entity

Federal Grantor/Pass-Through CFDA Identifying Federal

Grantor/Program or Cluster Title Number Number Expenditures

U.S. DEPARTMENT OF EDUCATION

Passed through California Department of Education (CDE):

Adult Education - Basic Grants to States Cluster:

Adult Basic Education: Adult Basic Education and ESL 84.002A 14508 194,665$

Adult Education: Priority 5, Adult Secondary Education 84.002 13978 67,732

Adult Education: English Literacy and Civics Education 84.002A 14109 120,322

Subtotal Adult Education - Basic Grants to States Cluster 382,719

No Child Left Behind Act (NCLB)

Title I, Part A Cluster:

Title I, Part A - Basic Grants Low Income and Neglected 84.010 13797 4,525,673

Title I, Part A - Program Improvement LEA Corrective Action 84.389 15005 1,024,974

Subtotal Title I, Part A Cluster 5,550,647

Title II, Part A Improving Teacher Quality State Grants Cluster:

Title II, Part A - Improving Teacher Quality 84.367 14341 691,360

Title II, Part A - Administrator Training 84.367 14344 1,400Subtotal Title II, Part A Improving Teacher Quality

State Grants Cluster 692,760

Title X McKinney-Vento Homeless Assistance Grants 84.196 14332 219,919

Title I, Part C - Migrant Ed (Regular and Summer Program) 84.011 14326 592,625Title I, Part G - Advanced Placement (AP) Test Fee

Reimbursement 84.330 14326 4,866

Title III, Part C - Limited English Proficiency 84.365 10084 519,378

Title IV, Part B - 21st Century Community Learning Center 84.287 14535 462,904Carl D. Perkins Vocational and Technical Education Act of

1998 Career and Technical Education Cluster:

Vocational and Applied Technology Secondary I C, Section 131 84.048 13924 139,354

Postsecondary and Adult II C, Sec 132 (Carl Perkins Act) 84.048 13923 79,939

Subtotal Career and Technical Education Cluster 219,293

Passed through Los Angeles County Office of Education (LACOE):

Special Education Cluster (IDEA):

IDEA Basic Local Assistance Entitlement, Part B 84.027 13379 7,033,389

IDEA Local Assistance Private School ISPs 84.027 10115 8,849

IDEA Federal Preschool Grants 84.173 13430 196,691

IDEA Preschool Local Entitlement 84.027A 13682 368,290

IDEA Preschool Staff Development, Part B 84.173A 13431 1,253

Mental Health Allocation, Part B 84.027A 14468 89,731Subtotal Special Education Cluster (IDEA) 7,698,203



69

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)FOR THE YEAR ENDED JUNE 30, 2013

Pass-Through

Entity

Federal Grantor/Pass-Through CFDA Identifying Federal

Grantor/Program or Cluster Title Number Number Expenditures

U.S. DEPARTMENT OF EDUCATION (Continued)

IDEA Early Intervention Grants, Part C 84.181 23761 98,558$

Passed through Department of Rehabilitation

Workability II - Transition Partnership 84.158 10006 69,406

ARRA: Vocational Rehabilitation Grants 84.390 10130 17,686

Subtotal - U.S. Department of Education 16,528,964

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Passed through LACOE:

Head Start Program Cluster [2]

Head Start: Basic 93.600 10016 5,293,390

Head Start: Training and Technical Assistance (T&TA) 93.600 10016 24,524

Subtotal Head Start Program Cluster 5,317,914

Passed through CDE:

Medical Assistance Program Cluster:

Medi-Cal Administrative Activities (MAA) 93.778 10060 45,962

Medi-Cal Billing Option 93.778 10013 416,617

Subtotal Medical Assistance Program Cluster 462,579

Child Care and Development Fund - Federal Child Care 93.596 13609 81,933

Subtotal - U.S. Department of Health and Human Services 5,862,426

U.S. DEPARTMENT OF AGRICULTURE

Passed through CDE:

Child Nutrition Cluster:

National School Lunch Program 10.555 13396 5,843,836

Especially Needy Breakfast Program 10.553 13390 2,020,301

Basic Breakfast Program 10.553 13390 15,365

Meal Supplements 10.555 13392 211,326

Commodities 10.555 13396 378,038

Subtotal Child Nutrition Cluster 8,468,866

Supplemental Nutrition Assistance Program 10.561 [1] 57,196

Subtotal - U.S. Department of Agriculture 8,526,062

Total Federal Programs 30,917,452$

_____________________________________________________________________________________________________________

[1] Direct Award, PCA number not available

Head Start - Basic 93.600 10016 1,511,367$

Head Start - Training and Technical Assistance 93.600 10016 6,131

Total In-kind Contributions 1,517,498$

[2] Does not include District in-kind contributions of $1,517,498 to meet Federal match requirements. Contributions by program

are as follows:



70

LOCAL EDUCATION AGENCY ORGANIZATION STRUCTUREJUNE 30, 2013

ORGANIZATION

The Norwalk-La Mirada Unified School District was established on July 1, 1965. The District conducts akindergarten through twelfth grade educational program for approximately 21,000 students through 17 elementaryschools, six middle schools, three high schools, a continuation high school, and two adult education schools. TheDistrict is located in Los Angeles County, and occupies the cities of Norwalk and La Mirada, in addition tosmaller portions of the cities of Santa Fe Springs, Whittier, and unincorporated areas of Los Angeles County.

GOVERNING BOARD

MEMBER OFFICE TERM EXPIRES

Ed Hengler President 2013

Margarita Rios Vice President 2013

Darryl Adams Member 2013

Karen Morrison Member 2013

Chris Pflanzer Member 2015

Jesse Urquidi Member 2015

Anna Valencia Member 2013

ADMINISTRATION

Ruth Pérez, Ed.D. Superintendent

Wayne Shannon Assistant Superintendent, Human Resources

Estuardo Santillan Assistant Superintendent, Business Services

Lila Bronson Assistant Superintendent, Curriculum and Instruction



71

SCHEDULE OF AVERAGE DAILY ATTENDANCEFOR THE YEAR ENDED JUNE 30, 2013

Final Report

Amended

Second Period Annual

Report Report

ELEMENTARY

Kindergarten 1,412 1,420

First through third 3,932 3,933

Fourth through sixth 4,142 4,133

Seventh and eighth 2,829 2,827

Home and hospital 2 2

Special education 450 463

Total Elementary 12,767 12,778

SECONDARY

Regular classes 5,461 5,397

Continuation education 293 289

Home and hospital 9 11

Community day school 15 15

Special education 324 330

Total Secondary 6,102 6,042Total K-12 18,869 18,820



72

SCHEDULE OF INSTRUCTIONAL TIMEFOR THE YEAR ENDED JUNE 30, 2013

Reduced Reduced

1982-83 1982-83 1986-87 1986-87 2012-13

Actual Actual Minutes Minutes Actual Traditional Multitrack

Grade Level Minutes Minutes Requirement Requirement Minutes Calendar Calendar Status

Kindergarten 31,033 28,964 36,000 35,000 53,636 180 - Complied

Grades 1 - 3

Grade 1 40,153 37,476 50,400 49,000 53,636 180 - Complied

Grade 2 40,153 37,476 50,400 49,000 53,636 180 - Complied

Grade 3 40,153 37,476 50,400 49,000 53,636 180 - Complied

Grades 4 - 6

Grade 4 50,134 46,792 54,000 52,500 54,106 180 - Complied

Grade 5 50,134 46,792 54,000 52,500 54,106 180 - Complied

Grade 6 50,134 46,792 54,000 52,500 55,006 180 - Complied

Grades 7 - 8

Grade 7 50,134 46,792 54,000 52,500 56,385 180 - Complied

Grade 8 50,134 46,792 54,000 52,500 56,385 180 - Complied

Grades 9 - 12

Grade 9 60,758 56,707 64,800 63,000 65,114 180 - Complied

Grade 10 60,758 56,707 64,800 63,000 65,345 180 - Complied

Grade 11 60,758 56,707 64,800 63,000 65,114 180 - Complied

Grade 12 60,758 56,707 64,800 63,000 64,871 180 - Complied

Number of Days



73

RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT WITHAUDITED FINANCIAL STATEMENTSFOR THE YEAR ENDED JUNE 30, 2013

There were no adjustments to the Unaudited Actual Financial Report, which required reconciliation to the auditedfinancial statements at June 30, 2013.



74

SCHEDULE OF FINANCIAL TRENDS AND ANALYSISFOR THE YEAR ENDED JUNE 30, 2013

(Budget)

201412013 2012 2011

GENERAL FUND 4

Revenues 155,882,719$ 164,579,308$ 169,060,733$ 185,422,336$

Other sources 902,495 3,851,259 6,935,656 1,196,090

Total Revenues

and Other Sources 156,785,214 168,430,567 175,996,389 186,618,426

Expenditures 159,354,338 170,378,374 170,325,760 179,586,089

Other uses and transfers out 3,235,066 4,087,962 7,301,501 6,063,335

Total Expenditures

and Other Uses 162,589,404 174,466,336 177,627,261 185,649,424

INCREASE (DECREASE)IN FUND BALANCE (5,804,190)$ (6,035,769)$ (1,630,872)$ 969,002$

ENDING FUND BALANCE 29,851,008$ 35,655,198$ 41,690,967$ 43,321,839$

AVAILABLE RESERVES 228,931,453$ 34,895,386$ 37,601,554$ 36,670,086$

AVAILABLE RESERVES AS A

PERCENTAGE OF TOTAL OUTGO 317.79% 20.49% 21.65% 20.13%

LONG-TERM OBLIGATIONS N/A 224,113,225$ 207,945,057$ 203,088,628$

K-12 AVERAGE DAILYATTENDANCE AT P-2 18,541 18,869 19,207 19,557

The General Fund balance has decreased by $7,666,641 over the past two years. The fiscal year 2013-2014budget projects a further decrease of $5,804,190 (16.3 percent). For a district this size, the State recommendsavailable reserves of at least three percent of total General Fund expenditures, transfers out, and other uses (totaloutgo).

The District has incurred operating deficits in two of the past three years and anticipates incurring an operatingdeficit during the 2013-2014 fiscal year. Total long-term obligations have increased by $21,024,597 over the pasttwo years.

Average daily attendance has decreased by 688 over the past two years. Additional decline of 328 ADA isanticipated during fiscal year 2013-2014.

1Budget 2014 is included for analytical purposes only and has not been subjected to audit.

2Available reserves consist of all unassigned fund balances including all amounts reserved for economic uncertainties contained with theGeneral Fund.

3On behalf payments of $4,188,387, $3,974,006, and $3,453,155, have been excluded from the calculation of available reservesfor the fiscal years ending June 30, 2013, 2012, and 2011.

4General Fund amounts do not include activity related to the consolidation of the Special Reserve Fund for Other PostemploymentBenefits as required by GASB Statement No. 54.



75

NON-MAJOR GOVERNMENTAL FUNDSCOMBINING BALANCE SHEETJUNE 30, 2013

Adult Child Deferred

Education Development Cafeteria Maintenance

Fund Fund Fund Fund

ASSETS

Deposits and investments 1$ 217,882$ 6,159,595$ 17,190$

Receivables 158,972 839,062 1,701,812 1,785

Due from other funds 940,497 - - -

Stores inventories - - 134,862 -

Total Assets 1,099,470$ 1,056,944$ 7,996,269$ 18,975$

LIABILITIES AND

FUND BALANCES

Liabilities:

Accounts payable 96,997$ 123,614$ 296,420$ 18,975$

Due to other funds 1,002,473 650,000 - -

Deferred revenue - 1,954 - -

Total Liabilities 1,099,470 775,568 296,420 18,975

Fund Balances:

Nonspendable - - 134,862 -

Restricted - 45,798 7,564,987 -

Assigned - 235,578 - -

Total Fund Balances - 281,376 7,699,849 -

Total Liabilities and

Fund Balances 1,099,470$ 1,056,944$ 7,996,269$ 18,975$

75

Pupil Capital County School Special Reserve Bond Interest Total Non-Major

Transportation Facilities Facilities Fund for Capital and Redemption Governmental

Fund Fund Fund Outlay Projects Fund Funds

1$ 1,042,289$ 3,452,761$ 9,073,454$ 6,233,990$ 26,197,163$

27 2,255 7,939 57,748 - 2,769,600

- - - - - 940,497

- - - - - 134,862

28$ 1,044,544$ 3,460,700$ 9,131,202$ 6,233,990$ 30,042,122$

-$ 15,699$ -$ 17,635$ -$ 569,340$

28 - - - - 1,652,501

- - - - - 1,954

28 15,699 - 17,635 - 2,223,795

- - - - - 134,862

- 1,028,845 3,460,700 1,487,247 6,233,990 19,821,567

- - - 7,626,320 - 7,861,898

- 1,028,845 3,460,700 9,113,567 6,233,990 27,818,327

28$ 1,044,544$ 3,460,700$ 9,131,202$ 6,233,990$ 30,042,122$



76

NON-MAJOR GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCESFOR THE YEAR ENDED JUNE 30, 2013

Adult Child Deferred

Education Development Cafeteria Maintenance

Fund Fund Fund Fund

REVENUES

Federal sources 382,719$ 5,399,846$ 8,468,866$ -$

Other State sources - 1,099,711 679,320 -

Other local sources 254,735 779,435 1,746,721 7,318

Total Revenues 637,454 7,278,992 10,894,907 7,318

EXPENDITURES

Current

Instruction 1,729,562 4,489,615 - -


Supervision of instruction 345,610 1,097,280 - -Instructional library, media, and

technology 7,340 - - -

School site administration 979,516 541,622 - -

Pupil services:

Home-to-school transportation - - - -

Food services - - 8,746,678 -

All other pupil services 217,458 373,360 - -

Administration:

All other administration - 46,436 337,097 -

Plant services 344,688 371,255 58,478 146,574

Facility acquisition and construction - 46,960 488,317 1,072,830

Enterprise services - 318,010 - -

Debt service

Principal - - - -

Interest and other - - - -

Total Expenditures 3,624,174 7,284,538 9,630,570 1,219,404

Excess (Deficiency) of

Revenues Over Expenditures (2,986,720) (5,546) 1,264,337 (1,212,086)


Transfers in 3,265,704 - - 668,930

Transfers out (286,369) (100,000) - (1,366,793)Net Financing Sources

(Uses) 2,979,335 (100,000) - (697,863)

NET CHANGE IN FUND BALANCES (7,385) (105,546) 1,264,337 (1,909,949)

Fund Balances - Beginning 7,385 386,922 6,435,512 1,909,949Fund Balances - Ending -$ 281,376$ 7,699,849$ -$

76

Pupil Capital County School Special Reserve Bond Interest Total Non-Major

Transportation Facilities Facilities Fund for Capital and Redemption Governmental

Fund Fund Fund Outlay Projects Fund Funds

-$ -$ -$ -$ -$ 14,251,431$

- - - - 79,175 1,858,206

80 353,720 22,398 1,804,797 7,116,604 12,085,808

80 353,720 22,398 1,804,797 7,195,779 28,195,445

- - - - - 6,219,177

- - - - - 1,442,890

- - - - - 7,340

- - - - - 1,521,138

12,847 - - - - 12,847

- - - - - 8,746,678

- - - - - 590,818

- 10,433 - - - 393,966

- 192,537 - 197,247 - 1,310,779

- 61,300 20,872 922,871 - 2,613,150

- - - - - 318,010

- - - - 3,470,000 3,470,000

- - - - 2,568,388 2,568,388

12,847 264,270 20,872 1,120,118 6,038,388 29,215,181

(12,767) 89,450 1,526 684,679 1,157,391 (1,019,736)

- - - 22,398 - 3,957,032

- - (22,398) (1,200,563) - (2,976,123)

- - (22,398) (1,178,165) - 980,909

(12,767) 89,450 (20,872) (493,486) 1,157,391 (38,827)

12,767 939,395 3,481,572 9,607,053 5,076,599 27,857,154-$ 1,028,845$ 3,460,700$ 9,113,567$ 6,233,990$ 27,818,327$



77

GENERAL FUND SELECTED FINANCIAL INFORMATIONTHREE-YEAR SUMMARY OF REVENUES, EXPENDITURES, ANDCHANGES OF FUND BALANCEFOR THE YEAR ENDED JUNE 30, 2013

(Amounts in thousands) Actual Results for the Years

Percent Percent Percent

of of of

Amount Revenue Amount Revenue Amount Revenue

REVENUES

Federal revenue 12,735$ 7.7 17,114$ 10.1 20,749$ 11.2

State and local revenue

included in revenue limit 101,911 61.9 103,352 61.1 105,430 56.9

Other State revenue 45,708 27.8 46,186 27.3 56,677 30.6

Other local revenue 3,058 1.9 1,837 1.1 1,961 1.0

Tuition and transfers in 1,167 0.7 572 0.4 605 0.3

Total Revenues 164,579 100.0 169,061 100.0 185,422 100.0

EXPENDITURES

Salaries and benefits

Certificated salaries 79,358 48.2 79,768 47.2 79,063 42.6

Classified salaries 31,410 19.1 30,643 18.1 29,390 15.9

Employee benefits 37,588 22.8 38,585 22.8 36,589 19.7

Total Salaries

and Benefits 148,356 90.1 148,996 88.1 145,042 78.2

Books and supplies 6,248 3.8 6,368 3.8 7,071 3.8

Contracts and operating expenses 12,330 7.5 11,620 6.9 10,241 5.5

Capital outlay 531 0.3 643 0.4 560 0.3

Other outgo 2,913 1.8 2,699 1.6 16,672 9.0

Total Expenditures 170,378 103.5 170,326 100.8 179,586 96.8

EXCESS OF REVENUES OVER

EXPENDITURES (5,799) (3.5) (1,265) (0.8) 5,836 3.2

OTHER FINANCING

SOURCES (USES)

Incoming transfers 3,851 2.3 6,877 4.1 1,196 0.1

Other sources - - 59 - - -

Outgoing transfers (4,088) (2.5) (7,302) (4.3) (6,063) (2.5)INCREASE (DECREASE)

IN FUND BALANCE (6,036) (3.7) (1,631) (1.0) 969 0.8

FUND BALANCE, BEGINNING 41,691 43,322 42,353FUND BALANCE, ENDING 35,655$ 41,691$ 43,322$

2012-2013 2011-2012 2010-2011



78

CAFETERIA FUND SELECTED FINANCIAL INFORMATIONTHREE-YEAR SUMMARY OF REVENUES, EXPENDITURES ANDCHANGES IN FUND BALANCESFOR THE YEAR ENDED JUNE 30, 2013

(Amounts in thousands) Actual Results for the Years

Percent Percent Percent

of of of

Amount Revenue Amount Revenue Amount Revenue

REVENUES

Federal - NSLP 8,469$ 77.7 8,086$ 76.5 7,222$ 74.4

State meal program 679 6.2 661 6.3 586 6.0

Food sales 1,567 14.4 1,622 15.4 1,715 17.7

Other 180 1.7 192 1.8 181 1.9

Total Revenues 10,895 100.0 10,561 100.0 9,704 100.0

EXPENDITURES

Salaries and employee benefits 3,731 34.2 3,499 33.1 3,346 34.4

Food 3,659 33.6 4,003 37.9 3,751 38.7

Supplies 798 7.3 355 3.4 266 2.7

Other 1,442 13.2 1,162 11.0 972 10.0

Total Expenditures 9,630 88.3 9,019 85.4 8,335 85.8

INCREASE IN FUND BALANCE 1,265 11.7 1,542 14.6 1,369 14.2

FUND BALANCE, BEGINNING 6,435 4,893 3,524FUND BALANCE, ENDING 7,700$ 6,435$ 4,893$

* * * * * * * * * * * * * * * * * * * * * *

TYPE 'A' LUNCH/BREAKFAST PARTICIPATION

Amount Percent Amount Percent Amount Percent

TYPE 'A' LUNCHES

Paid 260,446 11.6 285,338 12.6 327,594 15.2

Reduced price 181,402 8.0 186,820 8.3 195,865 9.1

Free 1,813,130 80.4 1,791,414 79.1 1,632,282 75.7Total Lunches 2,254,978 100.0 2,263,572 100.0 2,155,741 100.0

BREAKFAST

Paid 96,435 8.0 89,510 8.0 64,903 7.0

Reduced price 77,514 6.5 72,927 6.5 60,285 6.5

Free 1,022,803 85.5 961,201 85.5 806,786 86.5Total Breakfast 1,196,752 100.0 1,123,638 100.0 931,974 100.0

2012-2013 2011-2012 2010-2011

2012-2013 2011-2012 2010-2011


79

NOTE TO SUPPLEMENTARY INFORMATIONJUNE 30, 2013

NOTE 1 - PURPOSE OF SCHEDULES

Schedule of Expenditures of Federal Awards

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Districtand is presented on the modified accrual basis of accounting. The information in this schedule is presented inaccordance with the requirements of the United States Office of Management and Budget Circular A-133, Auditsof States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in thisschedule may differ from amounts presented in, or used in the preparation of, the financial statements.

The following schedule provides reconciliation between revenues reported on the Statement of Revenues,Expenditures and Changes in Fund Balances, and the related expenditures reported on the Schedule ofExpenditures of Federal Awards. The reconciling amounts consist primarily of Medi-Cal Billing Option fundsthat have been recorded in the prior year as revenues. Those amounts were expended as of June 30, 2013.

CFDA

Number AmountTotal Federal Revenues from the Statement of Revenues, Expenditures,

and Changes in Fund Balances: 30,789,247$

Medi-Cal Billing Option 93.778 128,205Total Schedule of Expenditures of Federal Awards 30,917,452$

Subrecipients

Of the Federal expenditures presented in the schedule, the District provided Federal awards to subrecipients asfollows:

Federal Grantor/Pass-Through CFDA Amount Provided to

Grantor/Program Number Subrecipients

IDEA Basic Local Assistance Entitlement, Part B 84.027 3,405,206$

IDEA Federal Preschool Grants 84.173 23,603

IDEA Preschool Local Entitlement 84.027A 178,083

IDEA Mental Health Allocation, Part B 84.027A 25,950

IDEA Preschool Staff Development, Part B 84.173A 438

IDEA Early Intervention Grants, Part C 84.181 98,5583,731,838$

Local Education Agency Organization Structure

This schedule provides information about the District's boundaries and schools operated, members of thegoverning board, and members of the administration.


80

NOTE TO SUPPLEMENTARY INFORMATIONJUNE 30, 2013

Schedule of Average Daily Attendance (ADA)

Average daily attendance (ADA) is a measurement of the number of pupils attending classes of the District. Thepurpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments ofState funds are made to school districts. This schedule provides information regarding the attendance of studentsat various grade levels and in different programs.

Schedule of Instructional Time

The District has received incentive funding for increasing instructional time as provided by the Incentives forLonger Instructional Day. This schedule presents information on the amount of instructional time offered by theDistrict and whether the District complied with the provisions of Education Code Sections 46200 through 46206.

Districts must maintain their instructional minutes at either the 1982-1983 actual minutes or the 1986-1987requirement, whichever is greater, as required by Education Code Section 46201.

Reconciliation of Annual Financial and Budget Report With Audited Financial Statements

This schedule provides the information necessary to reconcile the fund balance of all funds reported on theUnaudited Actual Financial Report to the audited financial statements.

Schedule of Financial Trends and Analysis

This schedule discloses the District's financial trends by displaying past years' data along with current year budgetinformation. These financial trend disclosures are used to evaluate the District's ability to continue as a goingconcern for a reasonable period of time.

Non-Major Governmental Funds - Balance Sheet and Statement of Revenues, Expenditures and Changesin Fund Balances

The Non-Major Governmental Funds Combining Balance Sheet and Combining Statement of Revenues,Expenditures and Changes in Fund Balances is included to provide information regarding the individual fundsthat have been included in the Non-Major Governmental Funds column on the Governmental Funds BalanceSheet and Statement of Revenues, Expenditures, and Changes in Fund Balances.

General Fund Selected Financial Information

This schedule provides a comparison of revenues and expenditures as a percentage of total revenue for theGeneral Fund for the past three years.

Cafeteria Fund Selected Financial Information

This schedule provides a comparison of revenues and expenditures as a percentage of total revenue for theCafeteria Fund for the past three years.

81

SUPPLEMENTARY INFORMATION - UNAUDITED


See accompanying note to supplementary information - unaudited.

82

CONTINUING DISCLOSURE FOR BOND ISSUANCE - UNAUDITEDFOR THE YEAR ENDED JUNE 30, 2013

Local Secured Assessed valuation for fiscal year 2012-2013 9,263,243,142$ (2)

Secured tax levies for fiscal year 2012-2013 13,829,251$ (1)

Secured tax collections for fiscal year 2012-2013 13,317,915$ (1)

Secured tax collections for fiscal year 2012-2013 as a

percent of the total levy 96.3%

2012-13

Assessed Percentage

Property Owner Primary Use Valuation of Total (3)

1. Golden Springs Development Company, LLC Industrial 284,342,734$ 3.07%

2. Norwalk MM, LLC Office Building 59,130,000 0.64%

3. Vons Companies Inc. Industrial 47,228,441 0.51%

4. Price REIT Inc. Shopping Center 45,913,183 0.50%

5. USF Propco I LLC Industrial 42,875,742 0.46%

6. IMT Capital JJ Palm County Club, LLC Apartments 42,567,975 0.46%

7. Avalon California Value III LLC Apartments 41,544,711 0.45%

8. Levian Family Norwalk, LLC Shopping Center 33,392,468 0.36%

9. PPF Industrial Valley View LLP Industrial 33,034,448 0.36%

10. 14141 Alondra LP Industrial 32,095,944 0.35%662,125,646$ 7.15%

(1) Information obtained from the Los Angeles County Auditor-Controller's Office.(2) Information obtained from California Municipal Statistics, Inc.(3) Percentage of total assessed valuation was $9,263,243,142.

Ten Largest 2011-2012 Local Secured Taxpayers (2)


83

NOTE TO SUPPLEMENTARY INFORMATION - UNAUDITEDJUNE 30, 2013

Continuing Disclosure for Bond Issuance - Unaudited

This schedule is included to meet continuing disclosure requirements related to the General Obligation bondissuances.

84

INDEPENDENT AUDITORS' REPORTS

85

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Governing BoardNorwalk-La Mirada Unified School DistrictNorwalk, California

We have audited, in accordance with the auditing standards generally accepted in the United States of Americaand the standards applicable to financial audits contained in Government Auditing Standards issued by theComptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Norwalk-La Mirada UnifiedSchool District (the District) as of and for the year ended June 30, 2013, and the related notes to the financialstatements, which collectively comprise Norwalk-La Mirada Unified School District's basic financial statements,and have issued our report thereon dated December 3, 2013.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Norwalk-La Mirada UnifiedSchool District's internal control over financial reporting (internal control) to determine the audit procedures thatare appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, butnot for the purpose of expressing an opinion on the effectiveness of Norwalk-La Mirada Unified School District'sinternal control. Accordingly, we do not express an opinion on the effectiveness of Norwalk-La Mirada UnifiedSchool District's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent, or detect and correct,misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internalcontrol, such that there is a reasonable possibility that a material misstatement of the District's financial statementswill not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or acombination of deficiencies, in internal control that is less severe than a material weakness, yet important enoughto merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this sectionand was not designed to identify all deficiencies in internal control that might be material weaknesses orsignificant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internalcontrol that we consider to be material weaknesses. However, material weaknesses may exist that have not beenidentified.





86

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Norwalk-La Mirada Unified School District's financialstatements are free from material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and materialeffect on the determination of financial statement amounts. However, providing an opinion on compliance withthose provisions was not an objective of our audit, and accordingly, we do not express such an opinion. Theresults of our tests disclosed no instances of noncompliance or other matters that are required to be reported underGovernment Auditing Standards.

We noted certain matters that we reported to management of Norwalk-La Mirada Unified School District in aseparate letter dated December 3, 2013.

Purpose of This Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and theresults of that testing, and not to provide an opinion on the effectiveness of the District's internal control or oncompliance. This report is an integral part of an audit performed in accordance with Government AuditingStandards in considering the District's internal control and compliance. Accordingly, this communication is notsuitable for any other purpose.


87

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOREACH MAJOR PROGRAM AND REPORT ON INTERNAL CONTROL

OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133


Report on Compliance for Each Major Federal Program

We have audited Norwalk-La Mirada Unified School District's compliance with the types of compliancerequirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and materialeffect on each of Norwalk-La Mirada Unified School District's (the District) major Federal programs for the yearended June 30, 2013. Norwalk-La Mirada Unified School District's major Federal programs are identified in thesummary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grantsapplicable to its Federal programs.


Our responsibility is to express an opinion on compliance for each of Norwalk-La Mirada Unified SchoolDistrict's major Federal programs based on our audit of the types of compliance requirements referred to above.We conducted our audit of compliance in accordance with auditing standards generally accepted in the UnitedStates of America; the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, LocalGovernments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan andperform the audit to obtain reasonable assurance about whether noncompliance with the types of compliancerequirements referred to above that could have a direct and material effect on a major Federal program occurred.An audit includes examining, on a test basis, evidence about Norwalk-La Mirada Unified School District'scompliance with those requirements and performing such other procedures as we considered necessary in thecircumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federalprogram. However, our audit does not provide a legal determination of Norwalk-La Mirada Unified SchoolDistrict's compliance.





88

Opinion on Each Major Federal Program

In our opinion, Norwalk-La Mirada Unified School District complied, in all material respects, with the types ofcompliance requirements referred to above that could have a direct and material effect on each of its majorFederal programs for the year ended June 30, 2013.

Report on Internal Control Over Compliance

Management of Norwalk-La Mirada Unified School District is responsible for establishing and maintainingeffective internal control over compliance with the types of compliance requirements referred to above. Inplanning and performing our audit of compliance, we considered Norwalk-La Mirada Unified School District'sinternal control over compliance with the types of requirements that could have a direct and material effect oneach major Federal program to determine the auditing procedures that are appropriate in the circumstances for thepurpose of expressing an opinion on compliance for each major Federal program and to test and report on internalcontrol over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing anopinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion onthe effectiveness of Norwalk-La Mirada Unified School District's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliancedoes not allow management or employees, in the normal course of performing their assigned functions, toprevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on atimely basis. A material weakness in internal control over compliance is a deficiency, or combination ofdeficiencies, in internal control over compliance, such that there is a reasonable possibility that materialnoncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected andcorrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or acombination of deficiencies, in internal control over compliance with a type of compliance requirement of aFederal program that is less severe than a material weakness in internal control over compliance, yet importantenough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraphof this section and was not designed to identify all deficiencies in internal control over compliance that might bematerial weaknesses or significant deficiencies. We did not identify any deficiencies in internal control overcompliance that we consider to be material weaknesses. However, material weaknesses may exist that have notbeen identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing ofinternal control over compliance and the results of that testing based on the requirements of OMB Circular A-133.Accordingly, this report is not suitable for any other purpose.


89

INDEPENDENT AUDITORS' REPORT ON STATE COMPLIANCE


Report on State Compliance

We have audited Norwalk-La Mirada Unified School District's compliance with the types of compliancerequirements as identified in the Standards and Procedures for Audit of California K-12 Local EducationalAgencies 2012-2013 that could have a direct and material effect on each of the Norwalk-La Mirada UnifiedSchool District's State government programs as noted below for the year ended June 30, 2013.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grantsapplicable to its State's programs.


Our responsibility is to express an opinion on compliance of each of the Norwalk-La Mirada Unified SchoolDistrict's State programs based on our audit of the types of compliance requirements referred to above. Weconducted our audit in accordance with auditing standards generally accepted in the United States of America; thestandards applicable to financial audits contained in Government Auditing Standards, issued by the ComptrollerGeneral of the United States; and the Standards and Procedures for Audits of California K-12 Local EducationalAgencies 2012-2013. These standards require that we plan and perform the audit to obtain reasonable assuranceabout whether noncompliance with the compliance requirements referred to above that could have a materialeffect on the applicable government programs noted below. An audit includes examining, on a test basis,evidence about Norwalk-La Mirada Unified School District's compliance with those requirements and performingsuch other procedures as we considered necessary in the circumstances. We believe that our audit provides areasonable basis for our opinion. Our audit does not provide a legal determination of Norwalk-La Mirada UnifiedSchool District's compliance with those requirements.

Unmodified Opinion

In our opinion, Norwalk-La Mirada Unified School District complied, in all material respects, with thecompliance requirements referred to above that are applicable to the government programs noted below that wereaudited for the year ended June 30, 2013.





90

In connection with the audit referred to above, we selected and tested transactions and records to determine theNorwalk-La Mirada Unified School District's compliance with the State laws and regulations applicable to thefollowing items:

Procedures inAudit Guide

ProceduresPerformed

Attendance Accounting:Attendance Reporting 6 YesTeacher Certification and Misassignments 3 YesKindergarten Continuance 3 YesIndependent Study 23 YesContinuation Education 10 Yes, see below

Instructional Time:School Districts 6 YesCounty Offices of Education 3 Not applicable

Instructional Materials:General Requirements 8 Yes

Ratios of Administrative Employees to Teachers 1 YesClassroom Teacher Salaries 1 YesEarly Retirement Incentive 4 Not applicableGann Limit Calculation 1 YesSchool Accountability Report Card 3 YesJuvenile Court Schools 8 Not applicableClass Size Reduction Program (including in charter schools):

General Requirements 7 YesOption One Classes 3 YesOption Two Classes 4 Not applicableDistricts or Charter Schools With Only One School Serving K-3 4 Not applicable

After School Education and Safety Program:General Requirements 4 YesAfter School 5 YesBefore School 6 Not applicable

Charter Schools:Contemporaneous Records of Attendance 1 Not applicableMode of Instruction 1 Not applicableNon Classroom-Based Instruction/Independent Study 15 Not applicableDetermination of Funding for Non Classroom-Based Instruction 3 Not applicableAnnual Instruction Minutes Classroom-Based 4 Not applicable

We did not perform testing for the Work Experience Program because the District did not offer this program.


91

SCHEDULE OF FINDINGS AND QUESTIONED COSTS


SUMMARY OF AUDITORS' RESULTSFOR THE YEAR ENDED JUNE 30, 2013

92

FINANCIAL STATEMENTS

Unmodified

No

None reported

No

FEDERAL AWARDS

No

None reported

Unmodified

No

CFDA Numbers Name of Federal Program or Cluster84.027, 84.027A, 84.173

84.173A Special Education (IDEA) Cluster93.600 Head Start Program Cluster

927,524$

Auditee qualified as low-risk auditee? Yes

STATE AWARDS

Unmodified

Identification of major programs:

Type of auditors' report issued:

Internal control over financial reporting:

Material weakness identified?

Significant deficiency identified?

Noncompliance material to financial statements noted?

Internal control over major programs:

Material weakness identified?

Dollar threshold used to distinguish between Type A and Type B programs:

Significant deficiency identified?

Type of auditors' report issued on compliance for major programs:

Type of auditors' report issued on compliance for programs:

Any audit findings disclosed that are required to be reported in accordance with

Section .510(a) of OMB Circular A-133?


FINANCIAL STATEMENT FINDINGSFOR THE YEAR ENDED JUNE 30, 2013

93

None reported.


FEDERAL AWARDS FINDINGS AND QUESTIONED COSTSFOR THE YEAR ENDED JUNE 30, 2013

94

None reported.


STATE AWARDS FINDINGS AND QUESTIONED COSTSFOR THE YEAR ENDED JUNE 30, 2013

95

None reported.


SUMMARY SCHEDULE OF PRIOR AUDT FINDINGSFOR THE YEAR ENDED JUNE 30, 2013

96

There were no audit findings reported in the prior year's schedule of financial statement findings.

97


In planning and performing our audit of the financial statements of Norwalk-La Mirada Unified School District(the District) for the year ended June 30, 2013, we considered its internal control structure in order to determineour auditing procedures for the purpose of expressing our opinion on the financial statements and not to provideassurance on the internal control structure.

However, during our audit we noted matters that are opportunities for strengthening internal controls andoperating efficiency. The following items represent conditions noted by our audit that we consider importantenough to bring to your attention. This letter does not affect our report dated December 3, 2013, on the financialstatements of Norwalk-La Mirada Unified School District.

ASSOCIATED STUDENT BODY (ASB)

La Mirada High School

Observations

During our review of the associated study body procedures, the following issues were noted:

1. Purchase request forms are not utilized to approve purchases prior to initiating the transaction.Consequently, we noted twelve of sixteen disbursements did not receive pre-approval in the ASB minutesnor had a purchase request form on file.

2. Revenue potential forms are not being used to document and control fund-raising activities as they occur.These forms allow an ASB to determine the success of a fundraiser and to track money as it is spent andreceived.

3. It was noted that the November 2012 bank reconciliation had three stale dated checks.

Recommendations

1. The ASB should utilize purchase requisition forms to ensure that all disbursement transactions are pre-approved by authorized administrative personnel and the student council. This would allow the reviewingadministrator and/or the student council to determine if the proposed activities are appropriate and todetermine if sufficient funds are available to finance the activities or purchases.

2. As the revenue potential form is a vital internal control tool, it should be used to document potentialrevenues, expenditures, actual revenue and actual revenue. This allows an analysis of the fundraiser to beconducted, indicating to the staff the success or failure of the completed project. The revenue potentialalso indicates weak control areas in the fund-raising procedures at the site, including lost or stolenmerchandise, problems with collecting all monies due and so forth. The site administrator should ensurethat these forms are completed and turned into the bookkeeper at the conclusion of the fundraiser toprovide appropriate and effective analysis.





Governing BoardNorwalk La-Mirada Unified School District

98

3. As a good business practice, outstanding checks should be cleared within six months. If they are not,procedures should be in place to investigate the outstanding checks. This will improve reconciliation andaccuracy of funds.

Los Coyotes Middle School

Observations

During our review of the associated study body procedures, the following issues were noted:

1. It was noted that one of eight disbursements did not receive pre-approval in the ASB minutes nor had apurchase request form on file.

2. Revenue potential forms were not completed to document and control fund-raising activities as theyoccur. These forms allow an ASB to determine the success of a fundraiser and to track money as it isspent and received.

3. Monies collected were not deposited in a timely manner; thirty-nine instances were noted where depositswere made twenty-seven days after being receipted.

Recommendations

1. The ASB should utilize purchase requisition forms to ensure that all disbursement transactions are pre-approved by authorized administrative personnel and the student council. This would allow the reviewingadministrator and/or the student council to determine if the proposed activities are appropriate and todetermine if sufficient funds are available to finance the activities or purchases.

2. As the revenue potential form is a vital internal control tool, it should be used to document potentialrevenues, expenditures, actual revenue and actual revenue. This allows an analysis of the fundraiser to beconducted, indicating to the staff the success or failure of the completed project. The revenue potentialform also indicates weak control areas in the fund-raising procedures at the site, including lost or stolenmerchandise, problems with collecting all monies due and so forth. The site administrator should ensurethat these forms are completed and turned into the bookkeeper at the conclusion of the fundraiser toprovide appropriate and effective analysis.

3. In order to safeguard cash collections, all receipts should be deposited timely and intact. To avoid anymisappropriation of cash, all cash receipts to the ASB should be deposited to the bank within a week ofthe fundraising activity. Frequency of deposits should be increased based on the volume of cash received.

We will review the status of the current year comments during our next audit engagement.


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