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Report No. 11267, School Board Report No _ ] L2 67 e N STATE OF FLORIDA Office of the Auditor General :uc REPORT ON AUDIT OF THE MONROE COUNTY DISTRICT SCHOOL BOARD FOR THE FISCAL YEAR ENDED JUNE 30, 1988 11267 STATE OF FLORIDA OFFICE OF THE AUDITOR GENERAL REPORT ON AUDIT OF THE MONROE COUNTY DISTRICT SCHOOL BOARD FOR THE FISCAL YEAR ENDED JUNE 30, 1988 DATED: JULY 10, 1989 MONROE COUNTY DISTRICT SCHOOL BOARD Table of Contents Page No. I SCOPE AND OBJECTIVES 1 II BACKGROUND 2 III INDEPENDENT AUDITOR GENERAL' S REPORT ON FINANCIAL STATEMENTS 2 IV REPORT ON INTERNAL CONTROL 3 V REPORT ON COMPLIANCE MATTERS 5 A. State and Locally Funded Activities 5 1 . Budget Administration 5 B. Federally Funded Activities 6 VI PRIOR AUDIT FINDINGS 8 VII STATEMENT FROM AUDITED OFFICIAL 8 VIII EXHIBITS AND SCHEDULES 9 -iii- STATE OIr FLORIDA '1 /J, � � OFFICE OF THE AUDITOR GENEIiAJ. :..''Gobwr s'`.•' TALLAHASSEE CHARLES L LESTER.C. P A. July 10, 1989 AUDITOM GENERAL The President of the Senate, the Speaker of the House of Representatives, and the Legislative Auditing Committee Pursuant to the provisions of Section 11 . 45, Florida Statutes, I have directed that an audit be made of the MONROE COUNTY DISTRICT SCHOOL BOARD For the Fiscal Year Ended June 30, 1988, and present this report thereon. Par. No. SCOPE AND OBJECTIVES ( 1) The Auditor General is responsible, as required by the State Constitution and implementing law, for independent financial, compliance, and operational performance audits of the District. Audit responsibilities assigned to the Auditor General include the presentation of a report on the District' s financial statements, assessment of the adequacy of the District' s control environment, and determination of the District' s compliance with legal requirements. (2) The scope of this audit included an examination of the District' s general purpose financial statements as of and for the fiscal year ended June 30, 1988. The audit also included examinations of various transactions to determine whether they were executed, both in manner and substance, in accordance with governing provisions of law, administrative rules, and restrictions imposed by grantors of resources to the State. The proper administration of public resources requires adoption and use of procedures by district school boards that will assure the effective and efficient conduct of their duties and -1- Par. No. responsibilities. Consequently, a study and evaluation of the adequacy of selected administrative procedures and controls was also included in the scope of the examination. (3) The objectives of these examinations are to determine whether the general purpose financial statements are presented in accordance with generally accepted accounting principles, to determine proper accountability for public resources, and to provide information the Legislature may use to improve District operations and allocate public resources. BACKGROUND (4) The School District is part of the State system of public education under the general direction and control of the State Board of Education. The geographic boundaries of the District are those of Monroe County. The governing body of the School District is the District School Board composed of five elected members. The executive officer of the Board is the elected Superintendent of Schools. Board members and the Superintendent of Schools who served during the audit period are shown in the following tabulation: District No. Robert R. Padron 1 Sydney E. Mathews 2 Lee George Ganim 3 Dr. Geraldine T. Caron, Vice-Chairwoman 4 Ruth Alice Campell, Chairwoman 5 Dr. Armando J. Henriquez, Superintendent (5) The primary sources of funding for the District are State of Florida Education Finance Program funds, local ad valorem taxes, and Federal grants and donations. During the audit period the District operated 13 schools and reported 8,074. 65 unweighted full-time equivalent students. In addition to its primary responsibility of providing educational services to students in grades kindergarten through 12, the District provides adult vocational-technical training. INDEPENDENT AUDITOR GENERAL' S REPORT ON FINANCIAL STATEMENTS (6) We have audited the general purpose financial statements of the Monroe County District School Board as of and for the fiscal year ended June 30, 1988, listed on page 9 of this report. These financial statements are the responsibility of the -2- Par. No. District' s management. Our responsibility is to express an opinion on the financial statements based on our audit. (7) Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and those additional standards applicable to financial audits of governmental units as set forth in the United States General Accounting Office publication GOVERNMENT AUDITING STANDARDS. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. (8) The Board is required by State Board of Education Rule 6A-1 . 087, Florida Administrative Code, to provide for audits of the school and activity funds, commonly called the school internal funds. Accordingly, our audit did not extend to the school internal funds reported as Expendable Trust Funds on the accompanying general purpose financial statements. (9) In our opinion, except for the Expendable Trust Funds, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Monroe County District School Board as of June 30, 1988, and the results of its operations and the changes in the financial position of the proprietary fund types for the fiscal year then ended, in conformity with generally accepted accounting principles. Because we did not audit the school internal funds, we do not express an opinion as to the Expendable Trust Funds presented on the general purpose financial statements. ( 10) Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The accompanying supplementary information relating to Federal financial assistance shown on schedule 1 is presented for the purpose of additional analysis and is not a required part of the general purpose financial statements. This information has been subjected to the tests and other auditing procedures applied in the audit of the general purpose financial statements mentioned above and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. REPORT ON INTERNAL CONTROL (11) The Board, as provided in Section 230.03(2) , Florida Statutes, shall operate, control, and supervise all free public -3- Par. No. schools in the District. Laws, rules, and grantor guidelines applicable to the District' s activities define, among other matters, the purposes for which resources may be used and the manner in which authorized uses shall be accomplished and documented. These requirements address such diverse matters as personnel qualifications and compensation, the purchase of goods and services, the control of acquired assets, and the reporting of financial activity to various State and Federal agencies. Section 230.03(3) , Florida Statutes, provides that the responsibility for the administration of the schools and for the supervision of instruction in the District is vested in the Superintendent as the secretary and executive officer of the Board, as provided by law. (12) To assure the efficient and effective operation of the District School System in accordance with applicable legal and contractual requirements, adequate systems of internal accounting control must be established and maintained. The Superintendent is responsible for maintaining adequate systems of internal accounting control . In fulfilling this responsibility, estimates and judgments are required to assess the expected benefits and related costs of control procedures. The objectives of the controls are to provide reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with the Board' s authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. (13) As part of our audit of the accompanying general purpose financial statements, we made a study and evaluation of the internal accounting control systems to the extent we considered necessary to evaluate the systems as required by generally accepted auditing standards and the standards for financial and compliance audits contained in the United States General Accounting Office publication GOVERNMENT AUDITING STANDARDS. (14) We also made a study and evaluation of the internal controls (accounting and administrative) established for Federal financial assistance programs to the extent required by Circular A-128 issued by the United States Office of Management and Budget. The administrative controls applicable to the various Federal programs are described in paragraph 24. (15) Internal accounting controls have been established pertaining to assets, liabilities, revenues, expenditures, equity balances, and financial reporting. We evaluated these significant internal accounting control systems and related classes of transactions to determine the nature, timing, and extent of the auditing procedures necessary for expressing an opinion on the accompanying general purpose financial statements. Because of inherent limitations in systems of internal control, errors and irregularities may occur and not be detected. Also, projection of any evaluation of the systems to future periods is subject to risk that procedures may become inadequate because of changes in -4- Par. No, conditions or that the degree of compliance with the procedures may deteriorate. Accordingly, we do not express an opinion on the systems of internal control taken as a whole. However, our evaluation disclosed no deficiencies that we consider a material weakness. REPORT ON COMPLIANCE MATTERS State and Locally Funded Activities ( 16) As part of our audit, we performed such tests and other audit procedures as we considered necessary to determine whether the District had complied substantially with applicable State and local laws, rules, and regulations and with grantor restrictions. Except as noted in the following paragraphs, our tests indicated that the District had generally complied with the various guidelines governing its operations. Nothing came to our attention that caused us to believe that untested items were not in compliance with laws and regulations noncompliance with which could have a material effect on the general purpose financial statements. (17) Budget Administration. Original budgets were prepared and approved in accordance with applicable laws and regulations. Expenditures were kept within final approved budget appropriations as shown on exhibit C. However, our audit disclosed certain deficiencies in the Board' s administration of its budgets as discussed below. ( 18) State Board of Education Rule 6A-1 . 006, Florida Administrative Code, requires that the Board approve amendments to its budget whenever function and object amounts are changed from those in the original budget, and that it adopt procedures whereby adjustments to the original budget are made as needed in order to comply with this rule. State Board of Education Rule 6A-1.006, Florida Administrative Code, and Section 237.02, Florida Statutes, provide that no expenditure shall be authorized or obligation incurred which is in excess of a budgetary appropriation. (19) Final budget amendments were approved by the Board on August 29, 1988, which was within the established deadline for amending the fiscal year 1987-88 budget. However, our review disclosed that at June 30, 1988, prior to Board approval of these amendments, eight functional expenditure categories for the General Fund were overexpended by a total of $852, 606.93 and one functional expenditure category for the Special Revenue Funds was overexpended by a total of $26, 476 .22 . (20) In the absence of procedures requiring the timely amendment of adopted budgets and strict adherence thereto, the effectiveness of the budget as a means of controlling expenditures within available resources is limited. The District should implement procedures to ensure that all necessary budget -5- Par. No. amendments are adopted by the Board to preclude incurring expenditures which exceed budget authority. Federally Funded Activities (21) Our audit of Federal financial assistance programs was made in accordance with generally accepted auditing standards; the financial and compliance elements of the publication GOVERNMENT AUDITING STANDARDS issued by the United States General Accounting Office; the Single Audit Act of 1984. (31 U. S.C. s. 7501-7507) ; and United States Office of Management and Budget Circular A-128. (22) Federal financial assistance programs are classified under the Single Audit Act of 1984 into major and nonmajor programs. Under the criteria established by the Single Audit Act of 1984, a major program for the District is any program for which Federal expenditures during the applicable year exceed the larger of $300,000 or 3 percent of such total Federal financial assistance expenditures. Federal financial assistance expenditures during the audit period are shown on schedule 1 . (23) Our audit included a review of the District' s systems of accounting and administrative control established to administer and account for Federal financial assistance in accordance with applicable grantor guidelines. (24) In addition to the internal accounting controls discussed in paragraph 15, internal administrative controls have been established pertaining to allowability of expenditures; eligibility of program participants; matching requirements and levels of effort; financial and other reporting; special program requirements; and the general compliance requirements applicable to Federal financial assistance programs. The objectives of these administrative controls, along with the internal accounting controls, are to provide management with reasonable, but not absolute, assurance that, with respect to Federal financial assistance programs, resource use is consistent with laws, regulations, and policies; that resources are safeguarded against waste, loss, and misuse; and that reliable data are obtained, maintained, and fairly disclosed in reports. (25) Our study included all of the applicable control categories discussed in paragraph 24 above. During the fiscal year ended June 30, 1988, the District expended approximately 65 percent of its total Federal financial assistance under major Federal financial assistance programs. With respect to internal control systems used in administering major Federal financial assistance programs, our study and evaluation included considering the types of errors or irregularities that could occur, determining whether the internal control procedures implemented by the District were adequate to meet specified Federal requirements, determining whether such procedures that should prevent or detect -6- Par. No. errors or irregularities were being followed satisfactorily, and evaluating any weaknesses disclosed by our review. (26) With respect to the internal administrative control systems used in administering the nonmajor Federal financial assistance programs of the District, our study and evaluation was limited to a preliminary review of the systems to obtain an understanding of the control environment and the flow of transactions through the accounting system. Our study and evaluation of the internal administrative control systems used in administering the nonmajor Federal financial assistance programs of the District did not extend beyond this preliminary review phase. (27) Our study and evaluation was more limited than would be necessary to express an opinion on the internal administrative control systems used in administering the Federal financial assistance programs of the District. Accordingly, we do not express an opinion on these internal administrative control systems. Also, our examination, made in accordance with the standards mentioned above, would not necessarily disclose all weaknesses in the internal administrative control systems used in administering nonmajor Federal financial assistance programs. However, as discussed in schedule 2 , our study and evaluation and our examination disclosed control deficiencies that could result in errors or irregularities. (28) These conditions were considered in determining the nature, timing, and extent of the audit tests to be applied in: (1 ) our audit of the fiscal year 1987-88 general purpose financial statements and (2 ) our examination and review of the District' s compliance with laws and regulations noncompliance with which we believe could have a material effect on the allowability of program expenditures for each major Federal financial assistance program and nonmajor Federal financial assistance program. Consequently, the control deficiencies discussed in schedule 2 do not affect our opinion on the general purpose financial statements and on the District' s compliance with laws and regulations reported in paragraphs 9 and 30, respectively. (29) In connection with our audit, we selected and tested transactions and records from each major Federal financial assistance program and certain nonmajor Federal financial assistance programs. The purpose of our testing of transactions and records from those Federal financial assistance programs was to obtain reasonable assurance that the District had, in all material respects, administered major programs, and executed the tested nonmajor program transactions, in compliance with applicable laws and regulations, including those pertaining to financial reports and claims for advances and reimbursements, noncompliance with which we believe could have a material effect on the District' s general purpose financial statements or the allowability of program expenditures. -7- Par. No. (30) In our opinion, the District, for the fiscal year ended June 30, 1988, administered each of its major Federal financial assistance programs in compliance, in all material respects, with applicable laws and regulations, noncompliance with which we believe could have a material effect on the District' s general purpose financial statements or on the allowability of program expenditures. However, as discussed in schedule 2, our testing of transactions and records selected from major Federal financial assistance programs did disclose some instances of noncompliance with applicable laws and regulations. (31) The results of our testing of transactions and records selected from nonmajor Federal financial assistance programs indicate that, for the transactions and records tested, the District complied with applicable laws and regulations, except as discussed in schedule 2. Our testing was more limited than would be necessary to express an opinion on whether the District administered those programs in compliance in all respects with those laws and regulations noncompliance with which we believe could have a material effect on the allowability of expenditures for a particular nonmajor program; however, with respect to the transactions and records that were not tested by us, nothing came to our attention to indicate that the District had not complied with applicable laws and regulations, except as discussed in schedule 2 . PRIOR AUDIT FINDINGS (32 ) Except as noted in schedule 2, the District substantially corrected the deficiencies cited in audit report No. 11063. STATEMENT FROM AUDITED OFFICIAL (33 ) In accordance with the provisions of Section 11 . 45(6) (d) , Florida Statutes, a list of audit findings was submitted to the Monroe County District School Board and the Superintendent. The Superintendent' s response to the audit findings included in this report is shown on exhibit G. _8_ EXHIBITS AND SCHEDULES The following exhibits and schedules are attached to and form an integral part of this report: EXHIBIT - A Combined Balance Sheet - All Fund Types and Account Groups. EXHIBIT - B Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types and Expendable Trust Funds. EXHIBIT - C Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Governmental Fund Types. EXHIBIT - D Combined Statement of Revenues, Expenses, and Changes in Retained Earnings - All Proprietary Fund Types. EXHIBIT - E Combined Statement of Changes in Financial Position - All Proprietary Fund Types. EXHIBIT - F Notes to Financial Statements. SCHEDULE - 1 Supplementary Schedule of Federal Assistance. SCHEDULE - 2 Schedule of Findings and Questioned Costs - Federal Programs. EXHIBIT - G Statement from Audited Official. Resp ctfully submitted, Charles L. Lester, C.P.A. Auditor General Audit supervised by: Gerald J. Schilling Audit made by: James A. Bell -9- EXHIBIT - A MONROE COUNTY DISTRICT SCHOOL BOARD COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS Jie 30, 1988 Governmental Fund Types General Special Debt Cepital Revenue Service Projects ASSETS AM OTHER DEBITS Cash 910,876,176.94 $321,909.30 9 6,837.55 $1,526,676.56 Cash with Fiscal Agent 191,303.86 Accounts Receivable 8,899.01 Due fran Reinsurer Due fran Other Finds 1,241,696.39 43,774.42 300,160.91 Investments 342,327.83 Inventory 324,068.50 115,003.52 Due from Other Agencies 188,896.57 161,969.73 72,322.00 Mortgage Note Receivable 46.716.42 General Fixed Assets: Land Improvements Other Than Buildings Buildings and Fixed Equipment Furniture, Fixtures, and Equipment Motor Vehicles Construction in Progress Amount Available for Debt Service Amount to be Provided for Retirement of General Long-Term Debt Amount to be Provided for Compensated Absences TOTAL ASSETS APO OTHER DEBITS $12,877,757.69 $642,656.97 $349,165.38 $1,899,159.47 LIABILITIES AM MO EQUITY Liabilities: Payroll Deductions and Withholdings 9 93,479.96 $ $ 9 Accents Payable 1,036,814.41 144,409.33 170,435.08 Construction Contracts Payable - Retainage 211,031.11 Due to Other Fads 1,008,648.16 16,831.14 1,423,218.56 Due to Other Agencies 6,954.58 Deferred Revenue 93,607.00 Estimated Insurance Claims Payable Compensated Absences Payable Notes Payable 7,000,000.00 Bonds Payable _- Total Liabilities 9,232,549.53 168.195.05 1,804,684.75 Fad Equity: Investment in Fixed Assets Contributed Capital: Contribution from General Fund Retained Earnings Fuld Balances: Reserved for State Categorical Programs 232,515.07 Reserved for Encumbrances 867.785.57 87,964.35 14,264.00 Reserved for Debt Service 342.327.83 Unreserved: Udesigated 2,544,907.52 386,497.57 6,837.55 80,210.72 Total Find Equity 3,645,208.16 474,461.92 349.165.38 94.474.72 TOTAL LIABILITIES AM FUO EQUITY $12,877,752.69 $642,656.97 $349,165.38 $1,899,159.47 The accompanying notes to the financial statements are an integral part of this statement. -10- EXHIBIT - A Proprietary Fiduciary Account Groups Total Fvd Types Fund Types General General (Memorandum Internal Expellable Fixed Lag-Term Only) Service Trust Assets Debt IUMeudited) 0 524,163.89 6437,415.91 $ $ •13,693,180.15 191,303.86 8,899.01 340140.33 34,140.33 917,063.05 2,502,694.77 342,327.83 439,072.02 423,188.30 46,716.42 2,452,653.66 2,452,653.66 1,175,430.55 1,175,430.55 30,493,873.47 30,493,873.67 4,538,964.60 4,538,964.60 2,125,261.64 2,125,261.64 3,713,793.35 3,713,793.35 342,327.83 342,327.83 1,217,672.17 1,217,472.17 517,177.84 517,177.84 41,475,367.21 $437,415.91 144,499,977.47 02,077,177.84 $84,258,478.00 0 $ $ $ $ 93,479.96 149,092.68 1,500,751.50 211,031.11 50,000.00 2,498,697.86 6,954.58 93,607.00 844,370.00 844,370.00 517,177.84 517,177.84 7,000,000.00 _ 1,560,000.00 1,560,000.00 1,043,462.68 2,011,177.84 14,326,069.85 44,499,977.47 44,499,977.47 382,718.29 382,718.29 49,186.30 49,186.30 I 232,515.07 970,013.92 342,327.83 431,415.91 3,455,849.27 431,904.59 437,415.91 44,499,977.47 49,932,608.15 01,475,367.27 04371415.91 044,499,911.47 $2,077.177.84 864,258,678.00 11- „!! „ ;:r==m,;,'„m , ,> ! § _ ¥|3 "1. . 4§( /$ \ (§§ 440 § 0§ ! f § ` \�(■ ; `§E§§S�N/$/§f § ) ! § „ - . , ;! - , - ! ! ) unm iq/ § ! § \ ) Q ! , - - -4 / ` C - CO \ - N |1 , - N , , _ /_ �\ / , / \ j 1f . ,§, ! § - ! ! , a ||§t! i ,§0 0 _! 'a § E cm ,;� � |; §_§ ! !`\ ! ! )§ ) ) j §§§ § | , . . . � . . !/� , |§! 2812 § 227 !§E §§§ §71!! ■ • < :|! ! §\ E C!- \!§;!¥ §!!;! w $ \ ; �| | , „!!!! E/§\4 } § • f § , / �\ N $� .4. M 44 ! 0 } | ! )\ / f ! | I F .t , !! | ; . ! £ , - e- ! | 5 � 3d / fl ! J - ! @- I. ` ! } \ . ] § . .lit-2/ R - 5 - ` ! ® ! d t- ' 10 •-4L 51 f/2 Z b iAlit } | I 2 \ 2y /a», Qgwq -12- �} ! §" ; ! § ® §kf § ! \ 4is 44 ( ) ) 0 " ` ! � ) ( I.. , £ / / is § ! E \ k } ! § f § 3 ! ! § „ P. || , - z HI- „ _ $ $ ! 8 ! i ! ! " \ I- , § ( - } \ } ! §|§§! ® ! ® , '6 ( N |§\ k| / ( f ! } { } a\ - - ! gf 8 § ! w § _ ||! } §> § ! H ! § !i | \-J , - - - , , 4 i o II ! TI § . iI | | } 2 ! - , | |I ,! ■ ! .9 ,� 2� : l � k � g \ ƒ � F E | � -- s | \ | 1Id1 h ill ! ! | ! . -a- EXHIBIT - C MUNOE COUNTY DISTRICT SCHOOL BOARD COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GOVERNMENTAL FUN TYPES For the Fiscal Year Ended an. 30, 1988 Governmental Fund Types General Budget Actual Variance - Favorable IUnfavorable) Revenues Intergovernmental: Federal Direct $ 618,704.85 $ 618,706.85 $ Federal Through State 485.00 485.00 State Sources 7,882,699.32 7,918,235.66 35,536.34 Local Sources 23,514,822.53 23,983,549.84 468,727.31 Total Revenues 32,016,713.70 32,520,977.35 504,263 65 Expenditures Current - Education: Instruction 18,703,152.14 17,505,857.10 1,197,300.04 Pupil Personnel Services 1,532,117.27 1,322,628.84 14,488.43 Instructional Media Services 682,818.78 660,301.41 22,517.37 Instruction and Curriculum Development Services 314,708.90 276.423.93 38.284.97 Instructional Staff Training 382,429.74 271,170.33 111,259.43 Board of Education 202,896.82 199,501.77 3,395.05 General Administration 1,374,490.84 1,336,019.24 38.471.40 School Administration 2,226,746.76 2,159,659.13 67,087.43 Fiscal Services 479,978.75 443,407.37 36.571.38 Food Services Central Services 791.443.88 671.275.10 120,188.78 Pupil Transportation Services 1,478,218.88 1,425,196.42 53,022.46 Operation of Plant 3,306,881.53 2,892,613.41 414.268.12 Maintenance of Plant 2,477,248.08 2,449,409.45 27.638.63 Community Services 190,588.07 129.479.99 60,908.08 Fixed Capital Outlay: Facilities Acquisition and Construction 632,000.00 602,323.58 29,476.42 Debt Service: Principal Interest and Fiscal Charges 255,000.00 255,000.00 Total Eopeditures 34,835,745.46 32,600,667.07 2,235,078.39 Excess (Deficiency) of Revenues Over Expenditures (2,819,031.761 179.689.72) 2,739,342.04 Other Financing Sources Ohms) Operating Transfers In Nonrevenue Sources Insurance Loss Recov 18,000.00 18,000.00 Operating Transfers Out (516,912.671 1516,912.611 Total Other Financing Saresa (Uses) (516,912.671 1498,912.67) 18.000.00 Excess loeficieay) of Revalues and Other Sources Over Expenditures end Other Wes (3,335,944.431 (578,402.391 2,757,342.04 Fond Balances. July 1. 1987 4,290,415.61 4,226,064.56 164,351.051 Adjustment to Decrease Find Balances 12.254.01) 12,254.011 Fund Balsam, July 1, 1957, as Restated 4,290,415.61 4,223,810.55 166,605.06) Residual Equity Transfer Fund Bala. Jue 30. 1988 $ 954,471.18 $ 3,645,208.14 $2,690,736.98 -14- EXHIBIT - C Governmental Find Type___ Spaniel Revenue Debt Service Budget Actual Variance - Budget Actual Variance - Favorable Favorable IUnfavorablel _ (Unfavorable) $ $ 9 S 9 $ 2,338,070.25 2,097,146.42 (240,923.831 30,737.00 30,737.00 262,837.20 261,764.85 (1,072.35) 1,185,000.00 1,178,681.38 (6,318.621 60,556.72 67,394.27 6,037.55 3,553,607.25 3,306,566.80 (247,242.651 323,393.92 329,159.12 5,765.20 1,361,349.59 1,291,596.89 69,752.70 206,591.74 272,834.7E 13,756.96 1,483.66 1,483.66 26,791.26 17,901.36 8,883.90 173,210.30 149,832.93 23,377.37 2.2929764.31 1,975,201.42 317,562.89 40,766.60 34,505.71 6,260.89 3,175.17 3,175.17 1,942.54 1,634.92 307.62 422.06 422.06 11,000.00 11.000.00 525,000.00 525,000.00 131,483.08 _131,483.08 4,199,497.23 3,744,997.67 454,499.56 656,483.08 656,683.08 _ (645)609.9BI (438,432.81) 207,257.11 (333)009.161 1327,323.96) 5,765.20 293,662.67 293,662.67 (760,794.201 1760,794.201 293,662.67 293,662.67 (760,794.20) 1760,794.20) (352,027.31) 1144,770.20) 207,257.11 (1,093,883.361 11,088,118.16) 5,765.20 619,232.12 619,232.12 1,437,283.54 L437,283.54 619,232.12 619,232_12 1,437,283.54 1,437,283.54 $ 267,204.81 $ 474,461.92 $ 207,257.11 $ 343)400.18 $ 349,165.38 $ 5,765.20 -15- EXHIBIT - C MONROE COUNTY (Contiaedl DISTRICT SCHOOL BOARD COMINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GOVERNMENTAL FUND TYPES For the Fiscal Year Ended Jule 30, 1988 Governmental Fund Types -- -- Capital Projects Budget Actual Variance - Favorable (Unfavorable) Ravaso Intergovernmental: Federal Direct S $ S Federal Through State State Sources 1,628,475.17 1,662,515.77 34.040.60 Local Sources _ 765,328.68 _ 766,262.45 __. 933.77 Total Revenues 2,393,803_85 214E8.778.22 34,974.37 Expenditures Current - Education: Instruction Pupil Personnel Services Instructional Media Services Instruction and Curriculum Development Services Instructional Staff Training Board of Education General Administration School Administration Fiscal Services Food Services Central Services Pupil Transportation Services Operation of Plant Maintenance of Plant Community Services Fixed Capital Outlay: Facilities Acquisition and Construction 5,427,315.76 4,548,666.42 878,649.34 Debt Service: Principal Interest and Fiscal Charges Total Expenditures 5,427,315.76 4,548,666.42 878.649.34 Excess (Deficiency) of Revenues Over Expenditures (3.033,511.91) _I.2.119,889.201 913,623.71 Other Financing sing Sources (Uses) Operating Transfers In 984,044.20 984.044.20 Nonrevenue Sources 1,598,456.00 (1,598.456.00) Insurance Loss Recoveries Operating Transfers Out _. — -- --- Total Other Financing Sources (Uses( 2,582,500.20 _. . 984.044.20 (1,698,456.00) Excess (Deficiency) of Revenues and Thar Sources Over Expenditures and Other Uses 1451,011.711 111,155,844.001 1684,832.29) Fund Balances, July 1. 1987 957,415.28 457,415.28 Adjustment to Decrease Fuld Balances Fund Balances. July 1, 1987. as Restated 457,415.28 457.415.28 Residual Equity Transfer ____. _ __. 772,903.444 772,903.44 Fund Balances. Jun 30. 19611 9 6,403.57 $ 94,474.72 S 88,071.15 The accompanying notes to the financial statements are an integral part of this statement. -16- EXHIBIT - C (Continued( Total (Memorandum Only! - Budget Actual Variance Favorable IUnfavorable) 8 618,706.85 • 618,706.85 • 2,338,555.25 2,097,631.42 1240,923.83) 9,804,748.69 9,873,253.28 68,504.59 25,525,707.93 25,995,881.94 4701180.01 38,2871718.72 38,585,479.49 297,780.71 20,064,506.73 18,797,453.99 1,267,052.74 1.623.109.01 1,595,463.62 28,245.39 684.302.44 661,785.07 22,517.37 314,708.90 276,423.93 38,284.97 409,221.02 289,077.69 120,143.33 202,896.82 199,501.77 3,395.05 1,547,701.14 1,485,852.17 61,848.97 2,226,744.76 2,159,659.13 67,087.63 479,978.75 443,407.37 36,571.38 2,292,764.31 17975,201.42 317,562.89 832,230.48 705,780.81 126,449.67 1,481,395.05 1,425,196.42 56,197.43 3,308,824.07 2,894,248.33 414,575.74 2,477,248.08 2,449,609.45 27,638.63 191,010.13 129,679.99 61,330.14 6,070,315.76 5,150,990.00 919,325.76 525,000.00 525,000.00 386,483.08 386,483.08 45,119,041.53 41,550,814.24 3,568,227.29 16,831,322.811 12,965,334.751 3,865,988.06 1.277.706.87 1,277,706.87 1,598,456.00 11,598,456.001 18,000.00 18.000.00 117277,704.871 11,277,706.871 1,598,456.00 18,000.00 11,580,456.001 15,232,866.81/ 12,947,334.751 2,285,532.06 6,804,346.55 6,739,995.50 164,351.05) 12,254.01, 12,254.011 6,804,346.55 6,737,741.49 166,605.061 _ 772,903.44 772,903.44 • 1,571,479.74 $ 4,543,310.18 $ 21991,830.44 _17_ EXHIBIT - D MONROE COUNTY DISTRICT SCHOOL BOARD COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES For the Fiscal Year Ended June 30, 1988 Internal Service Fund Operating Revenues: Premiums $1, 436,995 . 35 Miscellaneous 2 860. 22 Total Operating Revenues 1 439,855.57 Operating Expenses: Insurance Claims 1, 384, 306. 41 Insurance Premiums 127, 974. 39 Salaries and Benefits 70, 537 . 90 Purchased Services 21, 784.83 Materials and Supplies 4, 062 . 10 Capital Outlay 2, 015. 55 Fees and Other 55 669 . 70 Total Operating Expenses _ 1 666 350.88 Operating Income (Loss) (226 495.31) Nonoperating Revenues: Interest Income 148, 303 .30 Insurance Recoveries 219, 199.34 Total Nonoperating Revenues 367502 . 64 Net Income 141,007. 33 Retained Earnings, July 1, 1987 1,063,800. 70 Residual Equity Transfers to the Capital Projects Funds (772, 903 .44) Adjustment to Retained Earnings (382, 718.29) Retained Earnings, June 30, 1988 $ 49, 186.30 The accompanying notes to the financial statements are an integral part of this statement. -18- MONROE COUNTY EXHIBIT - E DISTRICT SCHOOL BOARD COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION - ALL PROPRIETARY FUND TYPES For the Fiscal Year Ended June 30, 1988 Internal Service Fund Sources of Working Capital : Operations: $ 141,007.33 Net Income Uses of Working Capital: Residual Equity Transfers to the 772,903 . 44 Capital Projects Funds Net Increase (Decrease) in Working Capital $ (631,896. 11) Elements of Changes in Working Capital : Cash $(1,457,284. 16) Due from Reinsurer 34, 140.33 Due from Other Funds 908,088.95 Accounts Payable (18,818.23 ) Due to Other Funds (50,000.00) Estimated Insurance Claims Payable (48,023.00) Net Increase (Decrease) in Working Capital $ (631,896. 11) The accompanying notes to the financial statements are an integral part of this statement. -19- EXHIBIT - F MONROE COUNTY DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The governing body of the school district is the District School Board composed of five elected members. The elected Superintendent of Schools is the executive officer of the Board. The District School Board is part of the State system of public education under the general direction and control of the State Board of Education and is financially dependent on State support. However, the Board is considered a separate financial reporting entity because it is directly responsible for the day-to-day operations and control of District schools within the framework of applicable State law and State Board of Education rules. Geographic boundaries of the District correspond with those of Monroe County. The general operating authority of the District School Board and Superintendent is contained in Chapters 228 through 238, Florida Statues. Pursuant to Section 237 . 01, Florida Statutes, the Superintendent of Schools is responsible for keeping records and accounts of all financial transactions in the manner prescribed by the State Board of Education. B. Basis of Presentation • Accounting policies conform with generally accepted accounting principles applicable to State and local governmental units. Accordingly, the District' s accounting system is organized on the basis of funds and account groups. A fund is an accounting entity having a self-balancing set of accounts for recording assets, liabilities, fund equity, revenues, either expenditures or expenses depending on fund type, and other financing sources and uses. Resources are allocated to and accounted for in individual funds based on the purposes for which they are to be spent and the means by which spending activities are controlled. The several individual generic funds are grouped, in the financial statements of this report, into Governmental Fund Types; Proprietary Fund Types; and Fiduciary Fund Types as follows: -20- MONROE COUNTY EXHIBIT - F DISTRICT SCHOOL BOARD (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 1988 GOVERNMENTAL FUND TYPES General Fund - to account for all financial resources not required to be accounted for in another fund and for certain revenues from the State that are legally restricted to be expended for specific current operating purposes. Special Revenue Funds - to account for the financial resources of the school food service program and certain Federal grant program resources. Debt Service Funds - to account for the accumulation of resources for, and the payment of, general long-term bonded debt principal, interest, and related costs. Capital Projects Funds - to account for financial resources to be used for educational capital outlay needs including new construction, renovation, and remodeling projects. PROPRIETARY FUND TYPES Internal Service Funds - to account for the Board' s individual self-insurance programs for property and casualty, including workers' compensation insurance coverage, and employee group health and life insurance. FIDUCIARY FUND TYPES Expendable Trust Funds - to account for resources of the school internal funds which are used to administer money collected at the several schools in connection with school, student athletic, class, and club activities. ACCOUNT GROUPS Account groups are not funds. They consist of self-balancing sets of accounts and are used only to establish accounting control over general fixed assets and general long-term obligations. Account groups are not used to account for available resources or the actual acquisition of fixed assets or payment of liabilities. General Fixed Assets Account Group - to establish accounting control for general fixed assets. General -21- EXHIBIT - F MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 fixed assets are usually acquired with resources of governmental fund types and expendable trust funds and used in association with activities of these funds. General Long-Term Debt Account Group - to establish accounting control for long-term debts and other long-term obligations of governmental fund types. Long-term obligations of funds using proprietary fund accounting are reported as liabilities in those funds rather than in the General Long-Term Debt Account Group. C. Basis of Accounting Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. All governmental fund types are accounted for using the modified accrual basis of accounting. Their revenues, except for certain grant revenues, are recognized when they become measurable and available. When grant terms provide that the expenditure of funds is the prime factor for determining eligibility for Federal, State, and other grant funds, revenue is recognized at the time the expenditure is made. Under the modified accrual basis of accounting, expenditures are generally recognized when the related fund liability is incurred. The principal exceptions to this general rule are: (1) prepaid expenses are generally not accrued; (2 ) interest on general long-term debt is recognized as expenditures when due; and (3) expenditures related to liabilities reported as general long-term debt are recognized when due. Expendable Trust Funds are reported on the cash basis of accounting, whereby revenues and expenditures are recognized when cash is received or disbursed. The Internal Service Funds are accounted for using the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. -22- MONROE COUNTY EXHIBIT - F DISTRICT SCHOOL BOARD (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 1988 D. Budgetary Basis Accounting The Board follows these procedures, established by State statutes and State Board of Education rules, in establishing final budget balances reported on the financial statements: 1 . Budgets are prepared, public hearings are held, and original budgets are adopted annually for all governmental fund types in accordance with procedures and time intervals prescribed by law and State Board of Education rules. Original budgets are submitted to the State Commissioner of Education for approval. 2 . Appropriations are controlled at the object (e.g. , salaries, purchased services, and capital outlay) level within each activity (e. g. , instruction, pupil personnel services, and school administration) and may be amended by resolution of the Board at any Board meeting prior to the due date for the annual financial report. 3. Budgets are prepared using the same modified accrual basis as is used to account for actual transactions. 4. Budgetary information is integrated into the accounting system and, to facilitate budget control, budget balances are encumbered when purchase orders are issued. Appropriations lapse at year-end and encumbrances outstanding are honored from the subsequent year' s appropriations as described in a subsequent note on the Reserve for Encumbrances. E. Cash Cash deposits are held by banks qualified as public depositories under Florida law. All deposits are fully insured by Federal depository insurance and a multiple financial institution collateral pool required by Sections 280.07 and 280.08, Florida Statutes. Included in cash reported in the General Fund are certificates of deposit in the amount of $10,093 , 397.22 . F. Investments Investments consist of those made by the State Board of Administration from the District' s bond proceeds held and administered by the State Board of Education. 1 -23- EXHIBIT - F MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 Investments are stated at cost. Information as to the market value of investments made by the State Board of Administration is not reported to the District. Types and amounts of investments held at year-end are described in a subsequent note on investments. G. Inventory Inventories consist of expendable supplies held for consumption in the course of District operations. Inventories are stated at cost, except that United States Department of Agriculture surplus commodities are stated at their fair value as determined at the time of donation to the District' s food service program by the Florida Department of Health and Rehabilitative Services, Food Distribution Center. The weighted average method is used in pricing the various General Fund inventories and the Special Revenue Funds inventories of small equipment and nonfood items. The first-in, first-out method is used in pricing the Special Revenue Funds food inventory. H. Fixed Assets and Depreciation Expenditures for fixed assets acquired or constructed for general District purposes are reported in the governmental fund type or Expendable Trust Fund that financed the acquisition or construction; whereas, the fixed assets so acquired are capitalized (recorded) at cost in the General Fixed Assets Account Group. Donated assets are recorded at fair market value at the date of donation. The depreciation of general fixed assets is not recorded in the District' s accounts. It is the opinion of the Board that interest costs incurred on long-term debt during the construction of District facilities which qualify for capitalization are immaterial; accordingly, interest was not capitalized as a part of the cost of construction. Current year information relative to changes in general fixed assets is described in a subsequent note. I . Long-Term Debt and Compensated Absences Long-term obligations that will be financed from resources to be received in the future by governmental fund -24- MONROE COUNTY EXHIBIT - F DISTRICT SCHOOL BOARD (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 1988 types and Expendable Trust Funds are reported in the General Long-Term Debt Account Group, not in individual funds. Compensated absences, i . e. , paid absences for employee vacation leave and sick leave, are recorded in governmental fund types as an expenditure when used or when accrued as payable to employees entitled to cash payment in lieu of taking leave. Compensated absences that exceed this amount at year-end are reported in the General Long-Term Debt Account Group and are not recorded as expenditures. Changes in long-term debt for the current year are reported in a subsequent note . J. State Revenue Sources Revenues from State sources for current operations are primarily from the Florida Education Finance Program administered by the Florida Department of Education under the provisions of Section 236.081, Florida Statutes. In accordance with this law, the District files reports of full-time equivalent student membership with the Department. The Department accumulates information from these reports and calculates the allocation of funds to the District. After review and verification of reports and supporting documentation, the Department may adjust subsequent fiscal period allocations of money for prior year errors disclosed by the review. In a report dated May 25, 1988, the Department reported that such an examination had resulted in a decrease of 237. 68 full-time equivalent student membership reported for the fiscal years 1982-83 and 1983-84. The Department has not determined the amount of any funding adjustments resulting from their findings. Normally, such adjustments are treated as reductions or additions of revenue of the year when the adjustment is made. The Board receives revenue from the State to administer certain categorical educational programs. State Board of Education rules require that revenue earmarked for these programs be expended only for the program for which the money is provided and require that the money not expended as of the close of the fiscal year be carried forward into the following year to be expended for the same categorical educational programs. The Department requires that categorical educational program revenues be accounted for in the General Fund. A portion of the fund balance of the -25- EXHIBIT - F MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 General Fund is reserved for the unencumbered balance of categorical educational program resources. The State allocates gross receipts taxes, generally known as Public Education Capital Outlay money, to the District School Board on an annual basis. The Board is authorized to expend these funds only upon applying for and receiving an encumbrance authorization from the Florida Department of Education. A schedule of revenue from State sources for the current year is presented in a subsequent note . K. Property Taxes - Revenue Recognition The Board is authorized by State law to levy property taxes for district school operations, capital improvements, and debt service. Property taxes consist of ad valorem taxes on real and personal property within the District. Property taxes are assessed by the Monroe County Property Appraiser and are collected by the Monroe County Tax Collector. Taxes become an enforceable lien on property as of January 1; tax bills are mailed in October; and taxes are payable between November 1 of the year assessed and March 31 of the following year at discounts of up to 4 percent for early payment. Taxes become delinquent on April 1 of the year following the year of assessment and State law provides for enforcement of collection of personal property taxes by seizure of the property to satisfy unpaid taxes and for enforcement of collection of real property taxes by the sale of interest-bearing tax certificates to satisfy unpaid taxes. The procedures result in the collection of essentially all taxes prior to June 30 of the year following the year of assessment. Property tax revenue is recognized when taxes are received by the Board except that at year-end revenue is accrued for taxes collected by the Monroe County Tax Collector but not yet remitted to the Board. Because any delinquent taxes collected after June 30 would not be material, delinquent taxes receivable are not accrued and no delinquent tax revenue deferral is recorded. -26- MONROE COUNTY EXHIBIT - F DISTRICT SCHOOL BOARD (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 1988 Millages and taxes levied for the current year are presented in a subsequent note. L. Total Columns on the Combined Statements Total columns on the accompanying combined financial statements are captioned "Memorandum Only" because they are presented only to facilitate financial analyses. Inasmuch as the total columns include fund types and account groups that use different bases of accounting, include both restricted and unrestricted amounts, and include interfund transactions that have not been eliminated, data in the total columns are not intended to present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. 2 . INVESTMENTS AND INTEREST EARNED Statement No. 3 of the Governmental Accounting Standards Board classifies credit risk of investments into the following three categories: 1. Insured or registered, or securities held by the entity or its agent in the entity' s name. 2 . Uninsured and unregistered, with securities held by the counterparty' s trust department or agent in the entity' s name. 3 . Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the entity' s name. Certain investments cannot be categorized because the District' s investments are not evidenced by securities that exist in physical or book entry form, such as investment pools managed by other governments. Section 218.407, Florida Statutes, authorizes the Board to participate in the State Board of Administration investment pool. All investments at June 30 were in the State Board of Administration investment pool with a carrying amount of $342, 327.83 . Interest earned during the fiscal year is as follows: _27_ EXHIBIT - F MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 Find Total Sources of Interest Earned State Boerd of Interest-Earning Undistributed Administration Cash Deposits Tax Receipts General $ 823,496.01 9 $ 788.273.24 $35,222.11 Special Revenue - Food Service 29,780.10 29.780.10 Debt Service 95'633.62 28,239.35 67,394.27 Capital Projects 9.604.50 4,728.90 4,216.14 659.46 Internal Service 148,303.30 148,303.30 Total $1,106,817.53 932.968.25 $1.037.967.05 $35,882.23 3 . DUE FROM OTHER AGENCIES The nature of amounts due from other agencies is as follows: -28- MONROE COUNTY EXHIBIT - F DISTRICT SCHOOL BOARD (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 1988 General Fund: Monroe County Board of County Commissioners: Summer Recreation Program $ 73,500.00 Florida Department of Education: District Quality Instruction Incentive Program 93, 607 .00 Summer In-service Program 10,896. 00 Dual Enrollment Program 4,053 .00 Instructional Television and Radio Equipment Program 6, 505 .69 Other 334.88 Total General Fund 188, 896.57 Special Revenue Funds: Florida Department of Education: Unreimbursed Food Service Expenditures 48,347 .00 Educationally Deprived Children - Local Educational Agencies 113, 622 .73 Total Special Revenue Funds 161,969. 73 Capital Projects Funds: Florida Department of Education: Public Education Capital Outlay Allocation 72, 322 .00 Total Due from Other Agencies $423, 188.30 4. MORTGAGE NOTE RECEIVABLE The mortgage note receivable is a preferred mortgage dated June 2, 1987, which is secured by the shrimp boat "Jean M. " The $55,000 principal sum, together with interest thereon at the rate of 8 percent per annum, is payable in quarterly installments of $5,200. 78 beginning September 1, 1987, and a final payment of $5,200. 75 due on June 1, 1990. In addition to the principal and interest payments the mortgage requires the purchaser to pay the Board, " . . . twenty five percent (25%) off the top of each boat landing . . . " while the mortgage is in effect. All or part of the mortgage may be prepaid without penalty. The mortgage was accepted by the Board as partial consideration received for the sale of the District' s shrimp boat. -29- EXHIBIT - F MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 5. CHANGES IN GENERAL FIXED ASSETS Changes in general fixed assets are shown below: Balance Additions Deletions Balance 7-1-87 6-30-88 Land 9 2,452,653.66 9 9 $ 2,452,653.66 Buildings 29,672,118.79 821,754.88 30,493,813.67 Improvements Other Than Buildings 1,006,229.38 169.201.17 1,175,430.55 Furniture, Fixtures, and Equipment 4,046,236.41 675.869.25 183.141.06 4,538,964.60 Motor Vehicles 1,949,571.18 206,385.00 30,694.54 2,125,261.64 Construction in Progress _ 3,713,793.35 3.713,793.35 Total $39,126,809.42 $5,581,003.65 0213,835.60 944,499,977.47 6. TAX ANTICIPATION NOTES PAYABLE Pertinent details of the tax anticipation notes issued during the fiscal year 1987-88 are as follows: Series 1988 Amount Authorized $8,000, 000 Amount Issued $7,000, 000 Date of Issue June 1, 1988 Interest Rate, % 5 . 3 Maturity Date May 31, 1989 Date of Sale June 14, 1988 Denomination $5,000 Interest $371,000 Underwriters Sun Trust Securities, Inc. Proceeds: Par Value of Notes $7, 000,000.00 Add, Accrued Interest 13,397.22 Total 7,013, 397.22 Less, Fees and Expenses 21, 560.00 Total $6,991 837.22 7. AMOUNT AVAILABLE FOR DEBT SERVICE The amount available for debt service consists of resources of the Debt Service Funds legally required to be used for debt service until the related debt is extinguished: 30- MONROE COUNTY EXHIBIT - F DISTRICT SCHOOL BOARD (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 1988 Balance in Debt Service Funds Reserved for Payment of State School Bonds $342,327 .83 Unreserved Balance Available to be Expended for Any Lawful District Purpose 6,837.55 Total Available in Debt Service Funds 349, 165.38 Less, Unreserved Balance 6,837.55 Amount Available for Debt Service Only $342, 327.83 8. DEFEASED BONDS On March 14, 1988, the District transferred $380, 728. 47 to an escrow agent to purchase United States Government securities to provide for the future debt service payments of the 1966 Revenue bond issue. Since moneys necessary to service this debt have been placed in an irrevocable trust in the escrow account, the Certificates of Indebtedness, dated June 1, 1966, are considered to be, in substance, defeased. Accordingly, the escrow account' s assets and the liability for the defeased bonds are not included in the District' s financial statements. On June 30, 1988, $260,000 of bonds outstanding are considered defeased. 9. BONDS PAYABLE The following is a description of bonded debt issues: State School Bonds These bonds are issued by the State Board of Education on behalf of the District and are generally referred to as "SBE Bonds. " The bonds mature serially and are secured by a pledge of the District' s portion of the State-assessed motor vehicle license tax. The State' s full faith and credit is also pledged as security for the bonds. Principal and interest payments, investment of Debt Service Fund resources, and compliance with reserve requirements are administered by the State Board of Education and State Board of Administration. -31- EXHIBIT - F MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 The following is a summary of bonds payable: Balance at 6-30-88 State School Bonds Series 1974-A, $2,990, 000, Issued 1-1-74, Matures Serially to 1-1-95, With Interest Rates Ranging from 4.0 to 5.5 Percent. The Remaining Balance is Payable in Future Annual Installments Ranging from $275, 220 to $260, 000. Semiannual Interest Payments Range from $39,060 to $5,000 f^1, 560,000 Annual requirements to amortize all bonded debt outstanding as of June 30, 1988, including interest of $319, 080, are as follows: Fiscal Year State Ending June 30 School Bonds 1989 $ 268, 120 1990 268,240 1991 267,840 1992 271, 920 1993 275, 220 Later Years 527J740 Total j 879,080 10. CHANGES IN GENERAL LONG-TERM DEBT The following is a summary of changes in general long-term debt: -32- MONROE COUNTY EXHIBIT - F DISTRICT SCHOOL BOARD (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 1988 Description Balance Additions Deductions Balance 7-1-87 6-30-88 Compensated Absences Payable $ 458,007. 73 $59,170. 11 $ $ 517,177.84 Bonds Payable 2.085,000.00 525,000.00 1,560,000.00 Total $2,543,007.73 $59,170. 11 $525,000.00 $2,077,177.84 Records kept for compensated absences relate only to hours earned, used, and available. Accordingly, only the net change in compensated absences payable is shown. 11. RESERVE FOR ENCUMBRANCES Appropriations in governmental fund types are encumbered upon issuance of purchase orders for goods and/or services. Even though appropriations lapse at the end of the fiscal year, unfilled purchase orders of the current year are carried forward and the next year' s appropriations are likewise encumbered. The Florida Department of Education requires that fund balances be reserved at year-end to report an amount likely to be expended from the fiscal year 1988-89 budget as a result of purchase orders outstanding at June 30, 1988. Because revenues of grants accounted for in Special Revenue Funds are not recognized until expenditures are incurred, these grant funds generally do not accumulate fund balances. Accordingly, no reserve for encumbrances is reported for grant funds. However, purchase orders outstanding for grants accounted for in the Special Revenue Funds at June 30, 1988, totaled $3,922 .80. 12 . INTERFUND RECEIVABLES AND PAYABLES The following is a summary of interfund receivables and payables: -33- EXHIBIT - F MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 Fund Interfund _ Receivables Payables General $1, 241, 696. 39 $1,008, 648. 16 Special Revenue: Combined Grants 43 , 662 . 67 15, 635 . 47 Food Service 111. 75 1, 195. 67 Capital Projects: Public Education Capital Outlay 76, 910.91 78, 127 .37 Capital Outlay and Debt Service 223, 250.00 Section 237 . 161, Florida Statutes, Loan 1, 185, 735. 57 Local Capital Improvement 159,355 . 62 Internal Service 917, 063 .05 50, 000.00 Expendable Trust 3,996.91 Total $2, 502, 694.77 $2, 502, 694. 77 The amount of $3,996.91, shown above as an interfund payable of the Expendable Trust Funds, does not appear on exhibit A as a Due to Other Funds in the Expendable Trust Funds because these funds are reported on the cash basis of accounting and, accordingly, accruals are not reported. 13 . SCHEDULE OF STATE REVENUE SOURCES The State provided approximately 25 percent of total revenues in fiscal year 1987-88. The following is a schedule of State revenue sources and amounts: 34- MONROE COUNTY EXHIBIT - F DISTRICT SCHOOL BOARD (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 1988 Sources Amount Florida Education Finance Program $4, 879,358.00 Categorical Educational Programs 2, 500,981 .00 Gross Receipts Tax (Public Education Capital Outlay) 1,583, 557.00 Motor Vehicle License Tax (Capital Outlay and Debt Service) 312,442.00 Pari-Mutuel Tax 223,250.00 Mobile Home License Tax 50,849. 83 Food Service Supplement 30, 737 .00 Interest on Investment of Bond Reserves 28,239.35 Interest on Undistributed Motor Vehicle License Tax (Capital Outlay and Debt Service) 4,728.90 Miscellaneous 259, 110.20 Total $9,873,253 .28 Accounting policies relating to certain State revenue sources are described in note 1. J. 14. PROPERTY TAXES The following is a summary of millages and taxes levied on the 1987 tax roll for the fiscal year 1987-88: Millage Taxes Levied Levied GENERAL FUND Nonvoted School Tax: Required Local Effort 5.047 $20, 100, 141.90 Discretionary Local Effort .819 3,261,742.86 CAPITAL PROJECTS FUNDS Nonvoted Tax: Discretionary Capital Outlay . 199 792,535 . 81 Total 6.065 $24, 154,420. 57 35- EXHIBIT - F MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 15. ADJUSTMENT TO FUND BALANCELRETAINED EARNINGS The adjustment to decrease the beginning fund balance of the General Fund by $2, 254.01 represents corrections for prior year errors. The adjustment to decrease retained earnings of the Internal Service Fund by $382, 718.29 is to reclassify amounts received as residual equity transfers in prior years to contributed capital. 16. RESIDUAL EQUITY TRANSFER During the fiscal year 1987-88 the District transferred $772,903 . 44 from the Internal Service Fund to the Capital Projects Fund for the Key Largo Elementary School construction project. These funds represent the return of funds previously contributed by the General Fund for the self-insurer program and were determined by the District to be in excess of the self-insurance needs. 17 . STATE PUBLIC EMPLOYEE RETIREMENT SYSTEM All regular employees of the District are covered by the Florida Retirement System which is a State-administered cost-sharing multiple-employer public employee defined benefit retirement system. Participating employers include all State departments, counties, district school boards, and community colleges. Many municipalities and special districts have elected to be participating employers. Employees who earn benefit credits while employed by one participating employer may transfer the credits to any other participating employer. Essentially all regular employees of participating employers are eligible and must enroll as members of the Florida Retirement System. A member' s retirement pension benefit vests after 10 years of service. Members are eligible for normal retirement benefits at age 62 with 10 years of service or at any age after 30 years of service which may include up to 4 years credit for military service. For normal retirement, benefit payments are based on the member' s best 5-year average annual salary (average final compensation) times the number of years service, multiplied by a percentage ranging from 1. 60 percent at either age 62 or with 30 years of service to 1 . 68 percent at age 65 or with 33 years of service. Members may individually elect to receive decreased monthly benefits during their lifetime in order to provide survivor benefits to a spouse or dependent. Members are eligible for early retirement after 10 years of service but -36- MONROE COUNTY EXHIBIT - F DISTRICT SCHOOL BOARD (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 1988 before age 62; however, normal benefits are reduced by 5 percent for each year a member retires before age 62 . The Florida Retirement System provides benefits in addition to the retirement pension described above. Benefits include post-retirement payments for health-care insurance, cost-of-living supplements and, for certain retirees, a supplement to cover social security benefits lost by virtue of retirement system membership. Members are eligible for in-line-of-duty disability benefits from their first day of employment and for regular (not in-line-of-duty) disability benefits after 10 years of service. Disability benefit payments are calculated in the same manner as retirement benefits, except that disability benefits are not less than 42 percent of the member' s average final compensation for disability incurred in the line of duty and not less than 25 percent of average final compensation for regular disability. Survivors of members who die in the line of duty are entitled to a monthly benefit equal to one-half the member' s monthly salary at death. Survivors of members whose death is other than in the line of duty may elect to either receive benefits as if the member had retired on the date of death and had opted to provide survivor benefits or defer benefits to a later date and receive payments as if the member had retired at that later date. Benefits described above are in summary form and accordingly not all conditions, limitations, and restrictions are mentioned. Benefit provisions are established by Chapter 121, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida Statutes; and Florida Retirement System Rules, Chapter 22B, Florida Administrative Code, wherein benefits are defined and described in detail. During fiscal year 1987-88 contribution rates were as follows: -37- EXHIBIT - F MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 Class of Plan Percent of Gross Salary Employee Employer _(1)__.._ Florida Retirement System, Regular 0.00 13 . 38 Florida Retirement System, County Elected Officials 0. 00 17 . 43 Teachers' Retirement System, Plans A, B, C, and D (2) (2 ) Teachers' Retirement System, Plan E 6.25 6. 49 State and County Officers and Employees' Retirement System, Plan A 6.00 6. 24 State and County Officers and Employees' Retirement System, Plan B 4.00 4.24 Florida Retirement System, Reemployed Retirees 0.00 6. 15 Notes: ( 1) Employer rates include an increase of 0.24 percent on October 1, 1987, to finance the post-retirement health insurance supplement which became effective January 1, 1988. (2) Employee rates for members of these plans were set on the date each was employed and based on the employee' s age at that time. Employer rates are the same as employee rates, except for the additional 0.24 percent discussed in note 1 . The District' s fiscal year 1987-88 payroll for all employees totaled $22,428, 442 . 68, including $21,955, 017.09 paid to employees who were members of the Florida Retirement System. Required contributions made to the Florida Retirement System in the fiscal year 1987-88 totaled $2,926, 020. 46, including $27,396.67 from employee contributions, which represents 13 .33 and 0. 12 percent, respectively, of covered payroll. The Governmental Accounting Standards Board has established the actuarial present value of credited projected benefits as the standardized measure that a public employee retirement system such as the Florida Retirement System must use to determine the amount of its total pension benefit obligations. Use of a standardized method by public employee retirement systems enables financial statement readers to: ( 1 ) assess the funding statute on a going-concern basis; (2 ) assess progress made in accumulating assets to pay benefits when due; and (3) make comparisons with other systems and other employers. The actuarial-present-value-of-credited-projected-benefits valuation method reflects the present value of estimated pension benefits -38- MONROE COUNTY EXHIBIT - F DISTRICT SCHOOL BOARD (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 1988 that will be paid in future years as a result of employee member services performed to date, and is adjusted for the effects of projected salary increases. The total unfunded pension benefit obligations of the Florida Retirement System as of June 30, 1988, were as follows: ( In Millions) Total Pension Benefit Obligations $ 23, 429 Net Assets Available for Benefits at Cost (Market $14, 555) _(14,029) Unfunded Pension Benefit Obligations $ 9,400 Measurement of total pension benefit obligations is based on an actuarial valuation as of July 1, 1987, updated to July 1, 1988, using an assumed return on investments of 8 percent whereas a 9 percent investment return was assumed in the previous valuation. Net assets available to pay pension benefits are valued as of June 30, 1988. The District' s fiscal year 1987-88 required contribution to the Florida Retirement System represents 0.21 percent of the total current-year actuarially determined contribution requirements for all participating employers. Ten-year historical trend information is presented in the fiscal year 1987-88 annual financial report of the Florida Retirement System. The information is useful in assessing the accumulation of assets to pay pension benefits as they become due. During the fiscal year 1987-88 and as of June 30, 1988, the Florida Retirement System held no securities issued by the District. 18. CONSTRUCTION CONTRACT COMMITMENTS The following is a summary of major construction contract commitments remaining at year-end: -39- EXHIBIT - F MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD NOTES TO FINANCIAL STATEMENTS June 30, 1988 Project Contract Completed Balance Amount to Date Committed Key Largo Elementary, Middle School Addition, and Alterations: Construction Manager and Various Contractors $4,162,846.05 $3,388,946.81 $773,899. 24 Architect _ .. 2559600.00 249 296.00 _100 304_00 Total $4,422,446.05 13,638,242.81 1784,203.24 19. SELF-INSURANCE PROGRAMS The Board has established limited self-insurance programs for property and casualty, including workers' compensation coverage and group medical insurance for its employees, retirees, and their dependents. The self-insurance programs are administered by an insurance agent and are accounted for in an Internal Service Fund. Under the plan for property and casualty, including workers' compensation, the Board' s liability is limited to various per occurrence amounts between $25,000 and $300,000, depending on the peril, and an aggregate liability of $600, 000 per year. The plan for group medical insurance provides that the Board contribute employee premiums as a fringe benefit to employees. The Board also contributes for dependent coverage for several administrative employees. Dependent coverage for other employees and coverage for retirees and their dependents is by prepaid premium. Liability under the group medical plan is limited to $30,000 annually for each person. Maximum reimbursements for aggregate individual losses exceeding $30, 000 were limited to $1, 000,000 per year. Liability in excess of the limitations of the property and casualty, including workers' compensation and group medical programs is covered under various insurance policies purchased by the Board. -40- MONROE COUNTY SCHEDULE - 1 DISTRICT SCHOOL BOARD SUPPLEMENTARY SCHEDULE OF FEDERAL ASSISTANCE For the Fiscal Year Ended June 30, 1988 Federal Grantor/Pass-Through Grantor/Program Title Catalog of Pass-Thrash Amount of Federal Grantor Expenditures Domestic Fanner Assistance Mather Ignited States Department of Agriculture: Indirect: Florida Department of Health and Rehabilitative Services: 10.550 None 8 150,792.48 Food Distribution Florida Department of Education: School Breakfast Program 10.553 321 43,329.77 National School Lunch Program 10.555 500 426,890.59 Total United States Department of Agriculture 621,012.84 United States Department of Education: Direct: Impact Aid - Maintenance and Operation 84.041 N/A 567,276.85 Indirect: Florida Department of Education: Adult Education - State-Administered Program 84.002 191 13,332.70 Educationally Deprived Children - Local Educational Agencies 84.010 212 ]]6,633.74 Migrant Education - Basic State Formula Grant Program 84.011 217 80,207.24 Handicapped Early Childhood Education 84.173 267 12,958.92 Handicapped - State Grants 84.027 263 222,070.00 Vocational Education - Basic Grants to States 84.048 151, 152, 159 142,315.09 Vocational Education - Consumer and Homemaking Education 84.049 155 3,700.00 Transition Program for Refugee Children 84.146 123 485.00 Improving School Programs - State Block Grants B4.151 112, 113 207,838.97 State Grants for Strengthening the Skills of Teachers and Instruction in Mathematics, Science, Foreign Languages, and Computer Learning 84,164 224 1,959.70 Drug-Free Schools and Communities - State Grants 84.186 103 15,117.22 Total United States Department of Education 2,043,895.43 United States Deperbant of the Interior: Indirect: Monroe Canty Board of Canty Commissioners: Refuge Revenue Sharing None 51,430.00 Total Federal Assistance 82,716,338.27 -41- SCHEDULE - 2 MONROE COUNTY DISTRICT SCHOOL BOARD SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL PROGRAMS For the Fiscal Year Ended June 30, 1988 APPLICATION FOR FEDERAL FUNDS (1) Impact Aid - Maintenance and Operation (Catalog of Federal Domestic Assistance No. 84.041) . During fiscal year 1987-88 the District received Federal Impact Aid money totaling $567, 276.85. Our review of the District' s 1987-88 Application for School Assistance in Federally Affected Areas disclosed that expenditures for fiscal year 1986-87, reported on Table 8-1 of the application, improperly included expenditures of approximately $1, 738,000 for debt service, capital outlay, community services, and adult education. This error was brought to the attention of the District' s Finance Director who, on April 10, 1989, submitted a corrected Table 8-1 to the Florida Department of Education. COMPARABILITY OF SERVICES (2) Educationally Deprived Children - Local Educational Agencies (Catalog of Federal Domestic Assistance No. 84.010) . Pursuant to the provisions of Title V, Subtitle D, of Public Law 97-35, as amended, cited as the Education Consolidation and Improvement Act of 1981 (ECIA) , Section 558(c) (2) , the Board filed written assurances with the Florida Department of Education in its project application that it had a Districtwide salary schedule; a policy to ensure equivalence among schools in teachers, administrators, and auxiliary personnel; and a policy to ensure equivalence in the provision of curriculum materials and instructional supplies. Our review of Board policies disclosed that the Board had adopted a Districtwide salary schedule and policies to ensure equivalence in the provision of curriculum materials and instructional supplies. We determined that equivalency among schools in teachers, administrators, and auxiliary personnel was achieved through the use of procedures which assigned staff on a per student basis. (3) Our review of the procedures employed by District staff in allocating funds to each school for curriculum materials and instructional supplies disclosed that the allocation of funds for general school operations was made on an equitable, full-time equivalent generated basis, that provided for equivalency among schools in the amounts allocated. However, as similarly noted in audit report No. 11063, schedule 2, paragraphs 8 through 10, these funds were allocated within each school by the school ' s principal to provide for salaries, custodial materials, library books, -42- MONROE COUNTY SCHEDULE - 2 DISTRICT SCHOOL BOARD (Continued) SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL PROGRAMS For the Fiscal Year Ended June 30, 1988 classroom supplies, travel, capital outlay, and other expenditures for school operations. (4) Our review of the amounts allocated for curriculum materials and instructional supplies at nine of the District' s schools disclosed that the allocations made by the school principals ranged from $16. 15 to $44. 32 per full-time equivalent student. This indicates that the required equivalency in the provision of curriculum materials and instructional supplies had not been demonstrated due to the substantial difference in the amounts allocated between the schools. The failure to demonstrate such equivalence could result in disallowed costs. We recommend that the District document to the Florida Department of Education how the methodology used met the program requirements. ALLOWABILITY OF COSTS (5) National School Lunch Program (Catalog of Federal Domestic Assistance No. 10.555) . Title 7, Part 210.7(b) , Code of Federal Regulations, provides that revenues received by a nonprofit school food service program shall be used only for the operation or improvement of such food services. As similarly noted in audit report No. 11063, schedule 2, paragraph 11, the District' s purchasing department included 3 employees of the school food service program with assigned duties and responsibilities for both the school food service program and purchasing department. Although these employees performed job activities for both school food service and purchasing, their salaries, which totaled approximately $70,000 for fiscal year 1987-88, were paid entirely from funds of the District' s school food service program. (6) Since the purchasing department provides purchasing services for all of the District' s schools and departments, the personnel expenses for these employees should have been paid on a prorated basis from the restricted resources of the school food service program and the resources of the General Fund which are available for the general financial requirements of the District. Because detailed records of actual work performed were not maintained for the employees noted, we were unable, on postaudit, to determine the correct amount of salaries that should have been allocated to the District' s school food service program. Our review of the payroll records of these employees for fiscal year 1988-89 disclosed that procedures had been established to document work performed and their salaries were being paid from funds of -43- SCHEDULE - 2 MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL PROGRAMS For the Fiscal Year Ended June 30, 1988 the food service program and from resources of the General Fund on a prorated basis. INDIRECT COST RATE (7) To provide the basis for a uniform approach to the determination of allowable costs of Federally funded programs, the United States Office of Management and Budget has issued Circular A-87. This circular provides principles for determining allowable costs, both direct and indirect, in order that Federally assisted programs bear their fair share of costs recognized under those principles. Additionally, the Florida Department of Education has provided guidance for use in developing the indirect cost plan in a publication entitled SUGGESTED DISTRICT LEVEL INDIRECT COST. Indirect costs are costs which are incurred for a common or joint purpose, benefiting more than one cost objective, and which are not readily assignable to the cost objectives specifically benefited without effort disproportionate to the result achieved. The charging of indirect costs to Federal grants requires the prior preparation of cost allocation plans and an indirect cost proposal from which an indirect cost rate is developed. (8) The District' s indirect cost rate for the fiscal year 1987-88 was approved by the Florida Department of Education to be used in assessing the District' s Federally assisted programs with their fair share of indirect costs. The District recovered $57,599. 69 in indirect costs in fiscal year 1987-88. Our review of the indirect cost allocation plan and the indirect cost rate computations disclosed the following: 1 . Expenditures totaling $120, 395. 55 for legal services furnished by a law firm providing services for labor related relations and related negotiations and litigations were included as indirect type costs in the General Administration function (7200) . Circular A-87 states that the cost of legal expenses required in the administration of grant programs is allowable; however, the cost of other legal services is unallowable. The Florida Department of Education guidance for use in developing the indirect cost plan notes that . if legal services do not relate to Federal programs these type costs are general governance costs and should not be treated as indirect type costs. " Although requested, District personnel were unable to furnish us with documentation showing that the expenditures for legal services were required in the administration of grant -44 MONROE COUNTY SCHEDULE - 2 DISTRICT SCHOOL BOARD (Continued) SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL PROGRAMS For the Fiscal Year Ended June 30, 1988 programs. In the absence of documentation, we were unable to determine if such expenditures were allowable as indirect type costs. 2 . Expenditures totaling $248,888.97 for insurance coverage charged to the General Administration function (7200) , including builders risk insurance, blanket policy insurance, employee position bonds insurance, comprehensive general liability, workers' compensation, and high risk insurance, were treated as expenditures of an indirect nature. The District included the contributions for these insurance coverages as indirect instead of allocating these costs between direct and indirect. Our review of guidance provided by the Florida Department of Education indicates that these costs should be allocated between direct and indirect using an appropriate allocation method. Therefore, we question whether these costs may be treated entirely as indirect. (9) The matters discussed above resulted in questioned costs totaling $369,284.52 included in the total indirect cost base of $1, 606, 379. We recommend that District personnel seek guidance from the Florida Department of Education to determine if the above-questioned items result in the overrecovery of indirect costs from Federally funded programs requiring a refund of any part of the $57, 599. 69 in indirect costs charged to the Federally funded programs during the fiscal year 1987-88. -45- THIS PAGE INTENTIONALLY LEFT BLANK. -46- MONROE COUNTY EXHIBIT - G DISTRICT SCHOOL BOARD STATEMENT FROM AUDITED OFFICIAL For the Fiscal Year Ended June 30, 1988 The School Board of Monroe County, Florida MIAMI e,the Board DISTRICT NO I ROBERT R PADRON DISTRICT NO 2 A.J. HENR Ph.D. PRANK ICTNO.COURTNEY SUPERINTENDENT 3 LEE 4 CANNA DISTRICT NO.• O VICE—CHAIRMAN RM N DISTRICT NO.S. RU H LICECANPBELL CHJOHN R.COLLINS SCHOOL BOARD ATTORNEY June 29 , 1989 Mr. Charles L. Lester Auditor General State of Florida P.O. Box 1735 Tallahassee, FL 32302 + July 1, 1987 to June 30 Subject: Preliminary and Tentative 1988 dings Dear Mr. Lester: Thank you for the opportunity to comment on the lliste t of preliminary and tentative adverse findings which apply to 1987 to June 30, 1988. Attached is a statement of explanation concerning all of the findings and what we. propose to do to correct same. Sincerely, 111 AJH:cda Encl. xc: School Board Members School Board Attorney 242 WHITE STREET O P.O.ROX 1788 0 KEY WEST FLORIDA 330M 1—I788 O 13O5 2O6-6623 SIMCONI 420—I 110 0 FAX 30A/206-313Fr -47- EXHIBIT - C MONROE COUNTY (Continued) DISTRICT SCHOOL BOARD STATEMENT FROM AUDITED OFFICIAL For the Fiscal Year Ended June 30, 1988 MONROE COUNTY DISTRICT SCHOOL BOARD PROPOSED CORRECTIVE ACTION COVERING PRELIMINARY & TENTATIVE AUDIT FINDINGS July 1, 1987 to June 30, 1988 Audit Report Par. No. (17-20) Budget Administration: Every effort will be made to process budget amendments prior to June 30th of each year. However, book entries from the Department of Education usually are not received until after June 30. These book entries usually require budget amendments. Sch. 2, Impact Aid• (1) An error in reporting improperly included expenditures for debt service, capital outlay, community services and adult education. This was corrected through the Florida Department of Education but no written notification was submitted to federal authorities. As recommended by the auditor, procedures will be implemented ith the Florida tDepartment fof e Education ral ointthe eventies alongofwany error in the future. Sch. 2, Comparability of Services (2-4) It is felt that the district's procedures used to allocate funds for curriculum materials and instructional supplies is equitable. Each school is allocated the dollar amount per FTE. Our system is modelled after the state 's procedure for FTE allocation. A rationale will be submitted to the Department of Education describing how our methodology met the program requirement. -48- MONROE COUNTY EXHIBIT - G DISTRICT SCHOOL BOARD (Continued) STATEMENT FROM AUDITED OFFICIAL For the Fiscal Year Ended June 30, 1988 Page 2 Audit Findings continued Audit Report Par. No. Sch. 2, Allowability of Costs: (5-6) Procedures were implemented beginning with the 1988-89 school year to pro-rate the salaries of the three purchasing department employees who work in school food service and the purchasing department. As noted by the auditor, "our review of the payroll records of these employees for fiscal year 1988-89 disclosed that procedures had been established to document work performed and their salaries were being paid from funds of the school food service program and from resources of the General Fund on a prorated basis" . Sch. 2, Indirect Cost Rate: (7-9) As recommended by the auditor, district personnel will contact Mr. Dudley Brewton, Financial Management Section, Department of Education seeking clarification on the procedures we use regarding computing the indirect cost rate. -49- c,�P` OF FLOP, it 't 0 sit F �i ��c' O <, F �NDE/E$DENCE of WE AUDR&�