Report No. 11639, School Board REPORT No . 11639
STATE OF FLORIDA
Office of the Auditor General
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REPORT ON AUDIT
OF THE
MONROE COUNTY
DISTRICT SCHOOL BOARD
FOR THE FISCAL YEAR ENDED JUNE 30, 1990
11639
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, 1990
DATED: MAY 21, 1991
MONROE COUNTY
DISTRICT SCHOOL BOARD
Table of Contents
Page
No .
LETTER OF TRANSMITTAL v
I AUDIT REPORT SUMMARY 1
A. Scope 1
B. Objectives 2
C. Methodology 3
D. Findings 3
II INDEPENDENT AUDITOR GENERAL 'S REPORT ON GENERAL
PURPOSE FINANCIAL STATEMENTS 9
III INDEPENDENT AUDITOR GENERAL 'S REPORT ON INTERNAL
CONTROL STRUCTURE 11
A. Electronic Data Processing Systems 15
IV INDEPENDENT AUDITOR GENERAL'S REPORT ON FINANCIAL
MANAGEMENT AND COMPLIANCE 17
A. State and Locally Financed Activities 18
1 . Budget Administration 18
2. Operating Expenditures 19
3. Purchasing Practices - Competitive
Bidding 21
4. Contractual Obligations 22
5. Employee Benefit Plan 22
B . Federally Financed Programs 23
V PRIOR AUDIT FINDINGS 27
VI STATEMENT FROM AUDITED OFFICIAL 27
VII EXHIBITS AND SCHEDULES 28
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1k STATE OF FLORIDA
Vn '!• OFFICE OF THE AUDITOR GENERAL
TALLAHASSEE
CHARLES L LESTER CPA. May 21, 1991
AUDITOR 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, 1990.
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:
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District
No.
Robert R. Padron, Vice-Chairman from 12-11-89 1
Frank Courtney 2
Lee George Ganim, Chairman from 12-11-89 3
Dr. Geraldine T. Caron, Vice-Chairwoman to 12-10-89 4
Ruth Alice Campbell, Chairwoman to 12-10-89 5
Dr. Armando 1. Henriques, Superintendent
The primary sources of funding for the District are State of
Florida Education Finance Program funds, Public Education Capital Outlay
moneys, local ad valorem taxes, and Federal grants and donations. During
the audit period, the District operated 13 schools and reported 8,468.69
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.
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My reports on the District's general purpose financial statements,
internal control structure, and compliance with laws, rules and regulations,
and grantor restrictions are presented herewith.
Respectfully submitted,
Charles
Lester,
Auditor General
Audit supervised by:
Gerald J. Schilling
Audit made by:
James A. Bell
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mow
FINANCIAL AND COMPLIANCE AUDIT
OF THE
MONROE COUNTY DISTRICT SCHOOL BOARD
FOR THE FISCAL YEAR ENDED JUNE 30, 1990
AUDIT REPORT SUMMARY
This audit report summary highlights the scope, objectives,
methodology, and findings of audit report No. 11639, dated May 21, 1991.
It is intended to present the general findings of our report in a condensed
fashion. The entire audit report should be read for a comprehensive
understanding of our audit findings.
SCOPE The Auditor General is responsible, as required by the
State Constitution and implementing law, for independent
financial and compliance audits of the District. Audit
responsibilities assigned to the Auditor General include
the presentation of a report on the District's general
purpose financial statements, an assessment of the
adequacy of the District's internal control structure, and
a determination of the District's compliance with Iegal
requirements.
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, 1990. 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 laws, rules and regulations, and restrictions imposed
by grantors of resources to the District. The proper
administration of public resources requires that District
management establish and maintain an internal control
structure that will reasonably assure the effective and
efficient conduct of their duties and responsibilities.
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t
Consequently, we identified and assessed control risk,
as well as evaluated selected control environment factors,
accounting system methods and records, and policies and
procedures of the District's internal control structure.
OBJECTIVES Our audit objectives were to determine whether the
Monroe County District School Board and its officers
with administrative and stewardship responsibilities for
District operations, as assigned by law, had:
• Presented the District's general purpose financial
statements in accordance with generally accepted
accounting principles;
• Established and implemented an adequate internal
control structure to provide for the proper
authorization of financial transactions, to provide
for the proper recording and reporting of the
District's financial operations, to adequately
safeguard the District's assets, and to promote and
encourage compliance with various provisions of
laws, rules and regulations, and grantor
restrictions;
• Complied with the various provisions of laws, rules
and regulations, and grantor restrictions governing
the conduct of its public affairs; and
• Corrected, or is in the process of correcting, all
deficiencies disclosed in the prior audit (report No.
11452, dated June 14, 1990).
Additionally, this audit report provides information the
Legislature may use to improve District operations and
allocate public resources.
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METHODOLOGY The methodology used to develop the findings in this
report included examination of pertinent records of the
District and the application of those other procedures
required by generally accepted auditing standards and
GOVERNMENT AUDITING STANDARDS issued by the
Comptroller General of the United States.
FINDINGS Financial Statements
We found that the District's general purpose financial
statements fairly presented its financial position and the
results of its operations and changes in financial position
of the Proprietary Fund Types for the fiscal year ended
June 30, 1990, except for the financial position and
results of operations of its Expendable Trust Funds.
Our audit did not, as contemplated by State Board of
Education Rule 6A-1.087, Florida Administrative Code,
extend to an examination of the District's school internal
funds, reported as Expendable Trust Funds in the
Fiduciary Funds. Accordingly, we do not express an
opinion on the financial position or results of operations
of those funds. (See paragraphs 1 through 5.)
Internal Control Structure
The District has established and implemented procedures
which generally provide for adequate internal control of
District operations; however, our examination of the
District's internal control structure disclosed a deficiency
which we considered to be a "reportable condition" as
defined by generally accepted auditing standards.
Although the reportable condition noted was not
considered to be a material weakness in the District's
internal control structure, it should be promptly
addressed by District management. The specific
deficiency noted was as follows:
I
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• The internal control structure for the Board's
electronic data processing operations could be
enhanced by limiting access to computer programs
and data files to only authorized persons who
require access in the performance of their duties.
(See paragraphs 17 and 18.)
Financial Management
and Compliance
The District has established and implemented procedures
which generally promote compliance with governing laws,
rules and regulations, and grantor restrictions except as
follows:
• Prior to Board approval of the final budget
amendments on July 2, 1990, six functional
expenditure categories for the General Fund, five
functional expenditure categories for the Special
Revenue Funds, and the operating transfers out
category in the Capital Projects Funds were
overspent, by $328,884.56, $36,380.70, and
$635,478.46, respectively. This is contrary to the
provisions of State Board of Education Rule
6A-1.006, Florida Administrative Code, and Section
237.02, Florida Statutes, which require that all
necessary budget amendments be adopted prior to
incurring the expenditures. (See paragraphs 23
through 26.)
• During the fiscal year 1989-90 the District received
$65,000 for a dropout prevention program which was
subsequently remitted in a lump-sum to a mental
health center. The District's public records did
not contain sufficient information documenting that
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the funds were used for an authorized public
purpose. (See paragraphs 27 through 31.)
• Contrary to the provisions of State Board of
Education Rule 6A-1.012(5), Florida Administrative
Code, the District entered into a contract for
services in excess of $4,500 without the benefit of
competitive bids. (See paragraphs 32 and 33.)
• District school boards are limited by law regarding
the conditions under which commitments extending
beyond the current fiscal period may be incurred.
The Board entered into a contract for management
services which was for a term of five years and
does not allow the Board to cancel the contract in
the event of nonappropriation of funds in
subsequent fiscal years or in the event the Board
determines it in the best interest of the District to
otherwise provide for these services. Thus, the
contract appears to restrict the Board's discretion
in determining whether the contract will be renewed
beyond the current fiscal period. (See paragraphs
34 and 35.)
• The District remitted amounts which represented the
Board's portion of the cost of fringe benefits
provided to employees and amounts withheld from
employees as their share of the cost of the fringe
benefits plan to an account of the Board
administered by an agent contracted to provide
ministerial services and assistance in administering
the plan. Employees of the agent were authorized
signatories for the account and drew checks for
payment to various insurance carriers, to vendors
providing benefits to Board employees, and to
participating employees for day-care and medical
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expense reimbursements. In response to a similar
situation at another school board, the Assistant
General Counsel of the Florida Board of Education
in a letter dated August 24, 1988, concluded that
such method of making disbursements was not
specifically authorized by law. (See paragraphs 36
through 38.)
• The District received Federal reimbursement for the
National School Lunch Program through the Florida
Department of Education based on the number of
student meals reported as served. Our verification
of the meals reported as served disclosed
differences between supporting documentation and
the number of meals reported for reimbursement
purposes. Our tests also disclosed one instance
where a student was reported as receiving a free
lunch on a day when an attendance roster indicated
that the student was absent and another instance
where the information shown on the application for
a student receiving free meals indicated eligibility
f or reduced-price meals. (See schedule 2,
paragraphs 2 and 3.)
• As required by 20 U.S.C. Section 2728(c)(2)(A),
the District had a policy to ensure equivalence
among schools in the allocation of funds for
curriculum materials and instructional supplies.
Our review of the amounts allocated for fiscal year
1989-90 disclosed that the required equivalency had
not been demonstrated. The failure to demonstrate
such equivalence could result in disallowed costs of
the Chapter 1 program. (See schedule 2,
paragraphs 4 through 6.)
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• Our review of expenditures charged to the Acquired
Immunodeficiency Syndrome (AIDS) Activity grant
and the Drug-Free Schools and Communities - State
Grants disclosed that payments for a workshop held
in August 1989 included expenditures totaling
$636.28 for items that did not appear to be
necessary and reasonable for the proper
administration of the grants. These charges are
subject to disallowance by the Florida Department of
Education. (See schedule 2, paragraph 7.)
• Our review of the development of the indirect cost
rate for fiscal 1989-90 disclosed questioned
allocations totaling $743,424.51 which may require
adjustment in future rate developments resulting in
a lower indirect cost rate in future periods. (See
schedule 2, paragraphs 8 through 11.)
The Superintendent's written response to the audit findings included in audit
report No. 11639 is presented as exhibit G.
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THIS PAGE INTENTIONALLY LEFT BLANK.
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FINANCIAL AND COMPLIANCE AUDIT
OF THE
MONROE COUNTY DISTRICT SCHOOL BOARD
FOR THE FISCAL YEAR ENDED JUNE 30, 1990
Par.
No.
INDEPENDENT AUDITOR GENERAL'S REPORT
ON GENERAL PURPOSE FINANCIAL STATEMENTS
(1) We have audited the general purpose financial statements of the
Monroe County District School Board as of June 30, 1990, and for the fiscal
year then ended, listed on page 28 of this report. These general purpose
financial statements are the responsibility of the District's management. Our
responsibility is to express an opinion on these general purpose financial
statements based on our audit.
(2) Except as discussed in the following paragraph, we conducted our
audit in accordance with generally accepted auditing standards and
GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of
the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the general purpose
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the general purpose financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall general purpose financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
(3) 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 in the Fiduciary Fund Types on the accompanying general purpose
financial statements. These financial activities represent approximately 99
Par.
No.
percent of assets and the entire fund balance of the Fiduciary Fund Types
at June 30, 1990.
(4) 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, 1990, and the results of its operations and the changes
in financial position of its 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.
(5) Our audit was made for the purpose of forming an opinion on the
general purpose financial statements of the Monroe County District School
Board taken as a whole. The accompanying schedule of Federal financial
assistance is presented for purposes of additional analysis and is not a
required part of the general purpose financial statements. The information
included in that schedule has been subjected to the auditing procedures
applied in the audit of the general purpose financial statements mentioned
above and, in our opinion, is fairly presented in all material respects in
relation to the general purpose financial statements taken as a whole.
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FINANCIAL AND COMPLIANCE AUDIT
OF THE
MONROE COUNTY DISTRICT SCHOOL BOARD
FOR THE FISCAL YEAR ENDED JUNE 30, 1990
Par.
No.
INDEPENDENT AUDITOR GENERAL'S REPORT
ON INTERNAL CONTROL STRUCTURE
(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, 1990, and have issued our report thereon included under the
heading INDEPENDENT AUDITOR GENERAL'S REPORT ON GENERAL
PURPOSE FINANCIAL STATEMENTS.
(7) We conducted our audit in accordance with generally accepted
auditing standards, GOVERNMENT AUDITING STANDARDS issued by the
Comptroller General of the United States, the Single Audit Act of 1984 (31
U.S.C. s. 7501-7507), and the United States Office of Management and
Budget (OMB) Circular A-128, "Audits of State and Local Governments."
Those standards, the Single Audit Act, and OMB Circular A-128 require that
we plan and perform the audit to obtain reasonable assurance about whether
the general purpose financial statements are free of material misstatement.
(8) In planning and performing our audit of the general purpose
financial statements of the Monroe County District School Board for the fiscal
year ended June 30, 1990, we considered the District's internal control
structure in order to determine our auditing procedures for the purpose of
expressing our opinion on the general purpose financial statements and not
to provide assurance on the internal control structure.
(9) The Board, as provided in Section 230.03(2), Florida Statutes, is
required to operate, control, and supervise all free public schools In the
District. Laws, rules and regulations, and grantor restrictions applicable to
the District's activities define, among other matters, the purposes for which
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Par.
No.
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.
(10) 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. To assure the
efficient and effective operation of the District School System in accordance
with applicable legal and contractual requirements, an adequate internal
control structure must be established and maintained.
(11) The Superintendent is responsible for establishing and maintaining
an internal control structure. In fulfilling this responsibility, estimates and
judgments by the Superintendent are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. The objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, that
transactions are executed in accordance with the Board's authorization and
recorded properly to permit the preparation of general purpose financial
statements in accordance with generally accepted accounting principles, and
that Federal financial assistance programs are managed in compliance with
applicable laws and regulations. Because of inherent limitations in any
internal control structure, errors, irregularities, or instances of
noncompliance may nevertheless occur and not be detected. Also, projection
of any evaluation of the internal control structure to future periods is
subject to the risk that procedures may become inadequate because of
changes in conditions or that the effectiveness of the design and operation
of policies and procedures may deteriorate.
(12) For the purpose of this report, we have classified the significant
internal control structure policies and procedures into the categories of
assets, liabilities, revenues, expenditures, equity balances, and financial
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Par.
No.
reporting. For all of the internal control structure categories listed, we
obtained an understanding of the design of relevant policies and procedures
and determined whether they had been placed in operation, and we assessed
control risk. Additionally, we evaluated the effectiveness of selected
internal control structure policies and procedures. Our procedures were
less in scope than would be necessary to render an opinion on these internal
control structure policies and procedures. Accordingly, we do not express
such an opinion.
(13) During the fiscal year ended June 30, 1990, the District expended
approximately 66 percent of its total Federal financial assistance under the
major Federal financial assistance programs identified in paragraph 39. In
addition to the categories listed above, we have classified the significant
internal control structure policies and procedures applicable to the various
Federal financial assistance programs into the categories of types of services
allowed; eligibility of program participants; matching requirements and levels
of effort; financial and other reporting; cost allocation; special program
requirements; claims for advances and reimbursements; amounts claimed or
used for matching; monitoring of subrecipients; and the general compliance
requirements which Include political activity, Davis-Bacon Act, civil rights,
cash management, relocation assistance and real property acquisitions,
Federal financial reports, allowable cost/cost principles, and drug-free
workplace. As required by the Single Audit Act of 1984 (31 U.S.C. s.
7501-7507) and the United States Office of Management and Budget Circular
A-128, our consideration of the internal control structure also included:
Tests of controls to evaluate the effectiveness of the design and
operation of internal control structure policies and procedures that we
considered relevant to preventing or detecting material noncompliance
with specific requirements, general requirements, and requirements
governing claims for advances and reimbursements and amounts claimed
or used for matching that are applicable to each of the District's major
Federal financial assistance programs. For all of the internal control
structure categories listed above, we obtained an understanding of the
design of relevant policies and procedures and determined whether they
had been placed in operation, and we assessed control risk. Our
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Par.
No.
procedures were less in scope than would be necessary to render an
opinion on these internal control structure policies and procedures.
Accordingly, we do not express such an opinion.
• Obtaining an understanding of (a) the design of internal control
structure policies and procedures that we considered relevant to
preventing or detecting material noncompliance with specific
requirements, general requirements, and requirements governing claims
for advances and reimbursements and amounts claimed or used for
matching that are applicable to the District's nonmajor Federal financial
assistance programs and (b) whether they had been placed in
operation.
(14) We noted certain matters involving the internal control structure
and its operation that we consider to be reportable conditions under
standards established by the American Institute of Certified Public
Accountants. These matters are discussed within paragraphs 17 and 18 and
in schedule 2. Reportable conditions involve matters coming to our attention
relating to significant deficiencies in the design or operation of the internal
control structure that, in our judgment, could adversely affect the District's
ability to record, process, summarize, and report financial data consistent
with the assertions of management in the general purpose financial statements
or administer Federal financial assistance programs in accordance with
applicable laws and regulations.
(15) A material weakness is a reportable condition in which the design
or operation of the specific internal control structure elements does not
reduce to a relatively low level the risk that errors or irregularities in
amounts that would be material in relation to the general purpose financial
statements being audited or noncompliance with laws and regulations that
would be material to a Federal financial assistance program may occur and
not be detected within a timely period by employees in the normal course of
performing their assigned functions.
(16) Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure that might
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Par.
No.
be reportable conditions and, accordingly, would not necessarily disclose all
reportable conditions that are also considered to be material weaknesses as
defined above. However, we believe none of the reportable conditions
referred to above is a material weakness.
Electronic Data Processing Systems
(17) In connection with our study and evaluations of the District's
internal control structure, we reviewed the general data processing controls
to determine whether the controls are operating effectively to provide
reliability of, and security over, data processed by its data processing
department. Access controls provide safeguards to assist in the prevention
or detection of errors. Errors may be caused by improper use or
manipulation of data files, unauthorized or incorrect use of computer
programs, and/or improper use of computer resources. Access controls
should limit access to data files and programs to authorized persons who
require them in the performance of their duties. Controls should provide
reasonable assurance that if errors occur they will be detected in a timely
manner. Our review disclosed that access controls over the data processing
system could be enhanced to further improve District operations as discussed
below:
1. Employees in the District's payroll and finance departments
performed various data processing functions from computer
terminals located at their desks; however, the levels of access
granted to these employees were not limited to only those
necessary in performing assigned duties. All employees in these
departments had been granted capability to update the electronic
data processing data files utilized by their respective departments.
The update capability granted to the payroll department employees
allowed them to enter new data or make changes to existing data
files such as rates of pay, leave balances, and Board contributions
for benefits. The update capability granted to the finance
department employees allowed them to enter new data or make
changes to existing data files such as vendor files, budgets, and
general ledger accounts. In addition, there was no documentation
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Par.
No.
to show that independent personnel reviewed computer activity
logs. A similar finding was noted in audit report No. 11952,
paragraphs 17 and 18, relative to access by payroll department
employees to the related electronic data processing payroll files.
Granting access to data files when such access is not necessary in
the performance of an employee's assigned duties creates an
increased risk that errors could occur without timely detection.
2. The Systems Analyst/Programmer and the Data Processing
Specialist had update access to all finance, payroll, and student
record data files and to the programs which utilize the data files.
This access included the ability to update the data files and the
programs. However, written authorizations were not always
required for changes to programs and files and there was no
documentation to show that computer activity logs generated by the
system were reviewed by persons independent of these access
capabilities. Under these circumstances, unauthorized
modifications to data files and programs could occur without timely
detection.
(18) Although our audit tests disclosed no discrepancies resulting from
the above control deficiencies, to assure the integrity of the District's
electronic data processing system and reliance thereon, we recommend that
update capabilities for employees of the payroll department and finance
department be restricted to only those employees needing such capabilities in
the performance of their assigned duties. We also recommend that the
District restrict the Systems Analyst/Programmer's and the Data Processing
Specialist's access to data files or provide appropriate compensating control
to monitor utilization of the various applications by these individuals. An
example of such a control would be documented periodic reviews of the
computer operations logs and error records by independent personnel.
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FINANCIAL AND COMPLIANCE AUDIT
OF THE
MONROE COUNTY DISTRICT SCHOOL BOARD
FOR THE FISCAL YEAR ENDED JUNE 30, 1990
Par.
No.
INDEPENDENT AUDITOR GENERAL'S REPORT
ON FINANCIAL MANAGEMENT AND COMPLIANCE
(19) 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, 1990, and have issued our report thereon included under the
heading INDEPENDENT AUDITOR GENERAL'S REPORT ON GENERAL
PURPOSE FINANCIAL STATEMENTS.
(20) We conducted our audit in accordance with generally accepted
auditing standards, GOVERNMENT AUDITING STANDARDS issued by the
Comptroller General of the United States, the Single Audit Act of 1989 (31
U.S.C. s. 7501-7507), and the United States Office of Management and
Budget (OMB) Circular A-128, "Audits of State and Local Governments."
Those standards, the Single Audit Act, and OMB Circular A-128 require that
we plan and perform the audit to obtain reasonable assurance about whether
the general purpose financial statements are free of material misstatement.
(21) Compliance with laws, rules and regulations, grantor restrictions,
and contractual agreements applicable to the Monroe County District School
Board is the responsibility of the Board and the Superintendent. As part of
obtaining reasonable assurance about whether the general purpose financial
statements are free of material misstatement, we performed tests of the
District's compliance with certain provisions of laws, rules and regulations,
grantor restrictions, and contractual agreements. However, except for the
specific requirements applicable to the major Federal financial assistance
programs identified in paragraph 39, our objective was not to provide an
opinion on the overall compliance with such provisions. Our findings related
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Par.
No.
to compliance are discussed in paragraphs 22 through 38, 43 through 48,
and in schedule 2.
State and Locally Financed Activities
(22) Except as described below, the results of our tests of compliance
indicated that, with respect to the items tested, the Monroe County District
School Board complied, in all material respects, with the provisions referred
to in paragraph 21 of this report. With respect to items not tested, nothing
came to our attention that caused us to believe that the Monroe County
District School Board had not complied, in all material respects, with those
provisions.
(23) Budget Administration. Original budgets were prepared and
approved in accordance with applicable laws and regulations; however,
certain deficiencies were noted in the Board's administration of its budgets
as discussed below.
(24) Budget preparation affords the District the opportunity to plan a
level of expenditures that will both meet the District's obligation to provide
for the educational needs of the District and at the same time remain within
its financial capability. By adjusting estimates of planned revenues and
expenditures throughout the year, the District can continually adjust the
planned expenditure level so that financial commitments can be met. 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.
(25) Final budget amendments for fiscal year 1989-90 were approved by
the Board on July 2, 1990, which was within the deadline established by the
Florida Department of Education. Our current review disclosed that at June
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Par.
No.
30, 1990, prior to Board approval of the final budget amendments, six
functional expenditure categories for the General Fund, five functional
expenditure categories for the Special Revenue Funds, and the operating
transfers out category of the Capital Projects Funds were overspent by
$328,884.56, $36,380.70, and $635,478.46, respectively. In addition, our
review of the final budget as amended compared with actual expenditures and
transfers disclosed that the operating transfers out category of the Capital
Projects Funds remained overexpended by $635,478.46.
(26) Similar findings were noted in audit reports No. 11267, paragraphs
17 through 20, and No. 11452, paragraphs 24 through 28. 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. We recommend that the
District implement procedures to ensure that all necessary budget
amendments are adopted by the Board in a timely manner to preclude
incurring expenditures which exceed budget authority.
(27) Operating Expenditures. The fiscal year 1989-90 General
Appropriations Act (Chapter 89-253, Laws of Florida) included an
appropriation of $65,000 from the State Educational Enhancement Trust Fund
for dropout prevention in Monroe County. During fiscal year 1989-90, the
District submitted a grant application for these funds to the Florida
Department of Education. According to the grant application, these funds
were to be used to expand services for high-risk adolescents to provide a
residential component for all of the Keys' children in need. The program
was to expand the School Board's peer counseling program and provide
evening group counseling services simultaneously for high-risk adolescents
and their parents in the Middle and Upper Keys. Additionally, the grant
application indicated the specific mental health center to be the provider of
the services.
(28) In a letter dated March 16, 1990, advising the Superintendent of
approval of the District's application for the grant, the Commissioner of
Education, Florida Department of Education, stated that encumbrances must
be made by August 31, 1990, outstanding obligations must be liquidated by
-19-
Par.
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September 30, 1990, and the District must submit a final report to the
Florida Department of Education Comptroller's Office on or before October
31, 1990. The report was to include an evaluation of the project and the
total project expenditures.
(29) Our review disclosed that, in April 1990, the District received the
$65,000, and remitted this amount in a lump-sum, to the mental health center
without a written agreement specifying the nature of the specific services to
be provided and the manner in which the delivery of these services would be
measured, such as number of students served, number of counseling
sessions, etc. In opinion No. 077-97, relative to the authority of a county
to pay moneys in a lump-sum to a mental health board to fund mental health
services, the Attorney General stated, in part, that ". . . some control over
the disbursement of county funds must be retained . . . to insure that
public funds are properly expended." Documentation supporting the $65,000
disbursement to the mental health center consisted only of a handwritten
invoice, prepared by an employee of the District's finance department, which
stated, "Expenditure of funds as set up in Drop-Out Prevention grant -
$65,030." The District cited no legal authority for making a lump-sum
disbursement of these moneys prior to receipt of required services. In
addition, our review disclosed that in implementing this grant the District
did not provide for adequate controls to ensure that the moneys were
expended for grant-related activities and functions resulting in the
accomplishment of grant objectives. The District did not obtain
documentation to evidence that the funds were properly spent for grant
activities nor did the District monitor of record the performance of the
mental health center to document the delivery of the services anticipated.
(30) Upon request, District personnel obtained a written agreement with
the mental health center dated December 12, 1990, identifying the services
which were to be provided to the District and a listing, dated December 26,
1990, of the categories in which the moneys were expended by the mental
health center such as teacher, teacher/counselor, psychiatric services, and
educational supplies for a total of $65,000. However, as of March 1991, the
final report required by the Commissioner of Education had not been filed.
-20-
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(31) We recommend that the Board document in its public records the
specific services provided by the mental health center in connection with the
above-referenced grant and file the final report required by the
Commissioner of Education. Additionally, in the future, District personnel
should ensure that prior to the disbursement of public funds adequate
documentation is on file showing the specific services received. Such
documentation is necessary to demonstrate that public funds are expended
for authorized purposes.
(32) Purchasing Practices - Competitive Bidding. State Board of
Education Rule 6A-1.012(5), Florida Administrative Code, effective June 27,
1989, requires that bids be requested from three or more sources for any
authorized purchase or contract for services exceeding $4,500. Our review
of purchases exceeding $4,500 disclosed that the Board entered into a
five-year contract for maintenance and custodial management services,
effective May 1, 1990. The contract terms provide that the District shall
make semi-monthly payments of $112,481 less the gross payroll for wages and
salaries of its maintenance and custodial support services employees
applicable to the period for which services are rendered in the training,
managing, directing, and evaluating of such support service employees. In
accordance with this contract, the District made payments totaling $119,944
for the period May 1, 1990, through June 30, 1990.
(33) Our review disclosed that this contract was entered into without
the benefit of competitive bids. Upon inquiry, District personnel indicated
that proposals for these management services were verbally requested from
two firms with only one responding. In addition, we were informed that the
contract for services was negotiated with the responding firm pursuant to an
opinion of the Florida Board of Education, General Counsel, dated September
24, 1986, which stated that the above-cited rule only required bids for
commodities, not for services. However, subsequent to the General
Counsel's opinion, State Board of Education Rule 6A-1.012(5), Florida
Administrative Code, was amended, effective June 27, 1989, to include bid
requirements for contracts for services, as well as commodities. We
recommend that the Board take necessary action to ensure that future
contracts for services are made in compliance with the above-mentioned rule.
-21-
Par.
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(34) Contractual Obligations. As noted in paragraph 32, the Board
entered Into a contract for maintenance and custodial management services,
effective May 1, 1990. The term of the contract was an initial period of five
years to be automatically renewed every five years for a period of five
years. Our review disclosed certain terms in this contract which may be
contrary to the operating authority of the Board and may serve to limit the
Board's authority to direct District operations as discussed in the following
paragraph.
(35) District school boards are limited by law regarding the conditions
under which commitments extending beyond the current fiscal (budget)
period may be incurred. We noted that the referenced contract could be
canceled by either party only at the end of any five-year period by written
notice to that effect sent via certified mall to the other party at least three
months prior to the end of said five-year period. The contract did not allow
the Board to cancel the contract in the event of nonappropriation of funds In
subsequent fiscal years or in the event the Board determines that the best
interest of the District would be served by otherwise providing for these
services. Rather, the contract contained a clause which allowed for an
adjustment to the contract amount through the negotiation of a mutually
acceptable modified services program during a 60-day period following
notification of insufficient appropriations. As such, the contract appears to
restrict the Board's discretion in determining whether the contract will be
renewed beyond the current fiscal period. We recommend that the Board
seek guidance from the General Counsel of the Florida Board of Education as
to the propriety of this contract.
(36) Employee Benefit Plan. The Board established an employees'
fringe benefit plan (cafeteria plan) in February 1985, under the provisions
of the Internal Revenue Code, Section 125, and contracted with an insurance
agency to function as plan manager. Benefits provided under this plan
included day-care and medical expense reimbursements. Under the
provisions of the plan, the Board established an interest-earning checking
account to which deposits were made which represented the Board's portion
of the cost of fringe benefits provided to employees and the amount withheld
from employees for their share of the cost of fringe benefits. As also noted
-22-
Par.
No.
in audit report No. 11452, paragraphs 31 through 33, employees of the plan
manager were authorized signatories for the account. Checks signed by
employees of the plan manager were drawn on the account for deposit into
the plan manager's Universal Disbursement Account. Checks were issued by
the plan manager from the Universal Disbursement Account for payment to
various insurance carriers, vendors providing benefits to Board employees,
and Board employees for day-care and medical expense reimbursements.
(37) Section 237.211(4), Florida Statutes, provides that all money drawn
from any district school depository shall be upon a check or warrant drawn
on authority of the school board and such check or warrant shall be signed
by the board chairman or the vice-chairman and the superintendent. While
we are aware that Section 237.211(6), Florida Statutes, authorizes a school
board to advance money to an approved self-insurance service agent for
deposit to a special checking account for paying claims against the school
board under its self-insurance program, we are unaware of any authority for
establishing such an account for an employees' fringe benefit plan.
(38) In response to a similar situation at another school board, the
Assistant General Counsel of the Florida Board of Education in a letter dated
August 24, 1988, stated that the fringe benefit plan established by the
District is not a self-insurance program and, consequently, does not come
within the purview of Section 237.211(6), Florida Statutes. Pursuant to our
recommendation in the previous audit, the District requested clarification
from the General Counsel of the Florida Board of Education as to the
authority of the Monroe County District School Board to disburse funds in
the above-mentioned manner. We were advised by the Board Attorney that
as of the date of completion of our audit field work, the requested
clarification was pending.
Federally Financed Programs
(39) 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
-23-
Par.
No.
year exceed the larger of $300,000 or 3 percent of such total Federal
financial assistance expenditures. Using this criteria, the following were
identified as major Federal financial assistance programs: (1) National School
Lunch Program; (2) Impact Aid - Maintenance and Operation; and (3)
Educationally Deprived Children - Local Educational Agencies. During the
fiscal year ended June 30, 1990, the District expended approximately 66
percent of its total Federal financial assistance under the major Federal
financial assistance programs identified above.
(40) Federal financial assistance expenditures during the audit period
are shown on schedule 1.
(41) We have audited the District's compliance with the requirements
governing types of services allowed or unallowed; eligibility; matching, level
of effort, or earmarking; reporting; applicable special provisions; claims for
advances and reimbursements; and amounts claimed or used for matching that
are applicable to each of the District's major Federal financial assistance
programs for the fiscal year ended June 30, 1990, which are identified
above. District management is responsible for the District's compliance with
those requirements. Our responsibility is to express an opinion on
compliance with those requirements based on our audit.
(42) We conducted our audit in accordance with generally accepted
auditing standards, GOVERNMENT AUDITING STANDARDS issued by the
Comptroller General of the United States, the Single Audit Act of 1984 (31
U.S.C. s. 7501-7507), and the United States Office of Management and
Budget (OMB) Circular A-128, "Audits of State and Local Governments."
Those standards, the Single Audit Act, and OMB Circular A-128 require that
we plan and perform the audit to obtain reasonable assurance about whether
material noncompliance with the requirements referred to above occurred.
An audit includes examining, on a test basis, evidence about the District's
compliance with those requirements. We believe that our audit provides a
reasonable basis for our opinion.
(43) The results of our audit procedures disclosed instances of
noncompliance which were not material with respect to the requirements
-24-
Par.
No.
referred to above. These instances are reported in schedule 2. We
considered these instances of noncompliance in forming our opinion on
compliance, which is expressed in the following paragraph.
(44) In our opinion, the District complied, in all material respects, with
the requirements governing types of services allowed or unallowed;
eligibility; matching, level of effort, or earmarking; reporting; applicable
special provisions; claims for advances and reimbursements; and amounts
claimed or used for matching that are applicable to each of its major Federal
financial assistance programs for the fiscal year ended June 30, 1990.
(45) We have applied procedures to test the District's compliance with
the general compliance requirements, identified in paragraph 13, applicable
to the District's major Federal financial assistance programs, identified in
paragraph 39. Our procedures were limited to the applicable procedures
described in the United States Office of Management and Budget's
COMPLIANCE SUPPLEMENT FOR SINGLE AUDITS OF STATE AND LOCAL
GOVERNMENTS. Our procedures were substantially less in scope than an
audit, the objective of which is the expression of an opinion on the District's
compliance with these requirements. Accordingly, we do not express such
an opinion.
(46) With respect to the items tested, the results of those procedures
disclosed no material instances of noncompliance with the general compliance
requirements. With respect to items not tested, nothing came to our
attention that caused us to believe that the District had not complied, in all
material respects, with those requirements. However, as reported in
schedule 2, the results of our procedures disclosed some instances of
noncompliance with those requirements.
(47) In connection with our audit of the fiscal year 1989-90 general
purpose financial statements of the District and our consideration of the
District's internal control structure used to administer Federal financial
assistance programs, as required by OMB Circular A-128, "Audits of State
and Local Governments," we selected certain transactions applicable to
certain nonmajor Federal financial assistance programs for the fiscal year
-25-
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ended June 30, 1990. As required by OMB Circular A-128, we have
performed auditing procedures to test compliance with the requirements that
are applicable to those transactions. Our procedures were substantially less
in scope than an audit, the objective of which is the expression of an
opinion on the District's compliance with the requirements applicable to these
nonmajor Federal financial assistance programs. Accordingly, we do not
express such an opinion.
(48) With respect to the items tested, the results of those procedures
disclosed no material instances of noncompliance with the applicable
requirements. With respect to items not tested, nothing came to our
attention that caused us to believe that the District had not complied, in all
material respects, with those requirements. However, as described in
schedule 2, the results of our procedures disclosed some instances of
noncompliance with those requirements.
-26-
FINANCIAL AND COMPLIANCE AUDIT
OF THE
MONROE COUNTY DISTRICT SCHOOL BOARD
FOR THE FISCAL YEAR ENDED TUNE 30, 1990
Par.
No.
PRIOR AUDIT FINDINGS
(49) Except as noted in the preceding paragraphs of the INDEPENDENT
AUDITOR GENERAL'S REPORT ON INTERNAL CONTROL STRUCTURE and
the INDEPENDENT AUDITOR GENERAL'S REPORT ON FINANCIAL
MANAGEMENT AND COMPLIANCE, and in schedule 2, the District corrected
the deficiencies cited in audit report No. 11452.
STATEMENT FROM AUDITED OFFICIAL
(50) In accordance with the provisions of Section 11.45(7)(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 as exhibit G.
(51) In his written response, the Superintendent submitted and made
reference to a document which is a public record of his office. This
document is not reproduced in this report.
-27-
EXHIBITS AND SCHEDULES
The following exhibits and schedules are attached to and form an
integral part of audit report No. 11639:
GENERAL PURPOSE FINANCIAL STATEMENTS
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.
SUPPLEMENTARY FINANCIAL INFORMATION
SCHEDULE - I Schedule of Federal Financial Assistance.
SUPPLEMENTARY SCHEDULE OF AUDIT FINDINGS
SCHEDULE - 2 Schedule of Findings and Questioned Costs - Federally
Financed Programs.
OFFICIAL'S RESPONSE TO AUDIT FINDINGS
EXHIBIT - G Statement from Audited Official.
-28-
THIS PAGE INTENTIONALLY LEFT BLANK.
I
-29-
E%HIBIT - A MONROE COUNTY
DISTRICT SCHOOL BOARD
COMBINED BALANCE SHEET - ALL FIND TYPES AND ACCOUNT GROUPS
June 30, 1990
Governmental Fund Types
General Special Debt Capital
Revenue Service Projects
ASSETS AND OTHER DEBITS
Cash 014,620,935.85 0559,260.16 $
Cash With Fiscal Agent 0 566,800.47
309,800.34
Investments
Accounts Receivable 330,946.55
Due from Other Funds 8,007.69
Due from Other A 274,300.49 118.05 30,052.43
genies 230,490.22 143,900.23 1,328.06
Due from Reinsurer
Inventory 265,479.52 95,405.12
Note Receivable
General Fixed Assets: 635,000.00
Land
Improvements Other Than Buildings
Buildings and Fixed Equipment
Furniture, Fixtures, and Equipment
Motor Vehicles
Amount Available for Debt Service
Amount to be Provided For:
Installment-Purchases
Retirement of General Long-Term Debt
Compensated Absences
TOTAL ASSETS Aiii OTHER DEBITS 815,509,014.11 0798,689.56 $330,946.55 01,253,180.96
LIABILITIES AND FIRM EQUITY
Liabilities:
Salaries and Wages Payable $ 137,763.56 $ $ p
Payroll Deductions and Withholdings 712,771.09
Accounts Payable 571,206.31 18,508.82
Due to Other Funds 30,134.71 172,492.50
Due to Other Agencies 14,920.98
1,838.]5
Deferred Revenue
Deferred Compensation Payable 68,232.00
Notes Payable 10,325,000.00
Bonds Payable
Liability for Estimated Arbitrage Rebate 50,000.00
Installment-Purchases Payable
Estimated Insurance Claims Payable
Compensated Absences Payable
Total Liabilities 11,897,006.42 191,001.32
Fund Equity: 14,920.98
Contributed Capital:
Contribution from General Fund
Investment in Fixed Assets
Retained Earnings
Fund Balances:
Reserved for State Categorical Programs 311,385.41
Reserved for Encumbrances 524,330.54 90,506.00
Reserved for Debt Service 32,709.11
Unreserved: 330,946.55
Designated for School Operations 384,810.90
Designated for Special Programs 262,121.27
Udesignated 2,129,359.57 517,182.24
1,185,550.87
Total Find EWily 3,612,007.69 60],688.24 330,946.55 1,218,259.98
TOTAL LIABILITIES AND FIRM EQUITY $15,509,014.11 $798,689.56 $330,946.55 01,233,180.96
The accompanying notes to the financial statements are an integral part of this statement.
-30-
EXHIBIT - A
Proprietary Fiduciary Account Groups Total
Fund Types Fund Types General General (Memorandum
Internal Trust and Fixed Long-Tern Only)
Service Agency Assets Deist
(Unaudited)
$1,345,526.94 0542,182.35 $ $ $17,634,711.77
109,800.34
7,280.69 338,227.24
8,007.69
1,154.35 305,625.32
375,718.51
49,159.24 49,159.24
360,884.64
635,000.00
2,640,248.69 2,640,248.69
1,306,115.02 1,306,115.02
39,215,266.90 39,215,266.90
5,587,893.87 5,587,893.87
2,557,277.11 2,557,277.11
330,446.55 330,946.55
72,853.00 72,853.00
839,053.45 839,053.45
673,600.21 673,600.21
$1,395,840.53 0549,463.04 051,306,801.59 $1,916,453.21 $73,040,389.55
0 0 0 S $ 137,763.56
712,771.09
166,608.13 756,383.26
40,638.46 258,186.65
1,838.75
68,232.00
7,280.69 7,280.69
10,325,000.00
1,170,000.00 1,170,000.00
50,000.00
72,853.00 72,853.00
I 768,215.00 768,215.00
6,439.63 673,600.21 680,039.84
981,901.22 7,280.69 1 673,600.21 680,039.84
916 453 21 15,008,563.84
' 601,680.82 601,680.82
51,306,801.59 51,306,801.59
(187,741.51) (187,741.51)
311,385.41
1 647,545.65
330,946.55
384,810.90
262,121.27
542,182.35 4,374,275.03
I 413,939.31 542,182.35 51,306,801.59 58,031,825.71
01,395,840.53 $549,463.04 051,306,801.59 01,916,453.21 $73,040,389.55
4 -31-
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-33-
EXHIBIT - C MONROE COUNTY
DISTRICT SCHOOL BOARD
COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GOVERNMENTAL FUND TYPES
For the Fiscal Year Ended June 30, 1990
Governmental Fund Types
General
Budget Actual Variance -
Favorable
__ (Unfavorable)
Revenues
Intergovernmental:
Federal Direct $ 942,657.00 $ 962,721.00 0 20,064.00
Federal Through Local
Federal Through State
State Sources 4,274,491.25 4,327,684.06 53,192.81
Local Sources 34,154,367.40 34,218,222.75 63,855.35
Total Revenues 39,371,515.65 39,508,627.81 137,112.16
Expenditures
Current - Education:
Instruction 22,480,847.00 20,671,313.14 1,809,533.86
Pupil Personnel Services 1,613,444.91 1,429,552.90 183,892.01
Instructional Media Services 781,999.50 701,147.06 80,832.44
Instruction and Curriculum Development
Services 524,489.44 441,575.44 82,914.00
Instructional Staff Training 374,706.55 296,993.78 77,712.77
Board of Education 232,464.01 227,343.41 5,120.60
General Administration 1,542,883.48 1,350,382.76 192,500.72
School Administration 2,512,500.55 2,438,317.54 74,183.01
Facilities Acquisition and Construction 511.05 511.05
Fiscal Services 492,684.12 482,402.86 10,281.26
Food Services
Central Services 1,135,493.81 880,210.04 255,283.77
Pupil Transportation Services 2,108,648.15 2,018,669.11 89,979.04
Operation of Plant 3,601,534.61 3,296,217.87 305,316.74
Maintenance of Plant 2,548,282.08 2,372,008.45 176,273.63
Community Services 279,397.85 158,464.43 120,933.42
Fixed Capital Outlay:
Facilities Acquisition and Construction 214,488.95 187,491.10 26,997.85
Other Capital Outlay 219,879.06 219,879.06
Debt Service:
Principal
Interest and Fiscal Charges 310,000.00 310,000.00
Total Expenditures 40,974,255.12 37,482,500.00 3,491,755.12
Excess (Deficiency) of Revenues Over
Expenditures (1,602,739.47) 2,026,127.81 3,628,867.28
Other Fine sing Sources (Uses)
Operating Transfers In 7,145.71 442,624.17 635,478.46
Insurance Loss Recoveries 465.00 465.00
Sale of Fixed Assets
Operating Transfers Out (283,274.25) (274,418.60) 8,855.65
Total Other Financing Sources (Uses) (276,128.54) 368,670.57 644,799.11
Excess (Deficiency) of Revenues end Other
Souses Over Expenditures end Other Uses (1,678,868.01) 2,394,798.38 4,273,666.39
Fund Balances, July 1, 1989 2,869,878.65 1,818,890.13 (1,050,988.52)
Residual Equity Transfer (601,680.82) (601,680.82)
Fund Balances, Jana 38, 1990 8 389,329.82 0 3,612,007.69 0 5,222,677.87
-34-
EXHIBIT - C
Governmental Fund Types
Special Revenue Debt Service
Budget Actual Variance - Budget Actual Variance -
Favorable Favorable
(Unfavorable) (Unfavorable)
$ 0 0 0 $ $
128,373.06 128,373.06
2,360,769.95 2,069,352.28 (291,417.67)
87,584.00 29,337.00 (58,247.00) 257,401.98 257,401.98
2,003,503.38 1,681,357.50 (322,145.88) 20.31 20.31
4,451,857.33 3,908,419.84 (543,437.491 257,422.29 257,422.29
1,323,834.74 1,134,553.74 189,281.00
324,624.78 320,689.68 3,935.10
1,724.40 1,724.40
22,861.18 12,991.64 9,869.54
46,791.27 46,490.13 301.14
132,135.84 123,360.40 8,775.44
3,011.00 3,011.00
9,725.49 0,725.49
2,351,759.57 2,080,181.03 271,578.54
23,860.83 19,120.83 4,740.00
1,503.41 1,409.47 93.94
51,386.41 51,386.41
200,000.00 200,000.00
68,556.08 68,556.08
4,293,218.92 3,801,633.22 491,585.70 268,556.08 268,556.08
158,638.41 106,786.62 (51,851.791 (11,133.79) (11,133.79)
279,963.06 274,418.60 (5,544.46)
(7,145.71) (7,145.71)
279,963.06 274,418.60 (5,544.46) (7,145.71) (7,145.71)
438,601.47 381,205.22 (57,396.25) (18,279.50) (18,279.50)
226,483.02 226,483.02 349,226.05 349,226.05
$ 665,004.49 $ 607,688.24 0 (57,396.25) $330,946.55 $330,946.55 0
-35-
EXHIBIT - C MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GOVERNMENTAL FUND TYPES
For the Fiscal Year Ended June 30, 1990
Governmental Fund Types
Capital Projects
Budget Actual Variance -
Favorable
(Unfavorable)
Revenues
Intergovernmental:
Federal Direct 0 0 e
Federal Through Local
Federal Through State
State Sources 1,318,651.78 1,318,651.78
Local Sources 969,342.94 1,038,458.10 69.115.16
Total Revenues 2,287,994.72 2,357,109.88 69,115.16
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
Facilities Acquisition end Construction 9,448.64 9,448.64
Fiscal Services
Food Services
Central Services
Pupil Transportation Services
Operation of Plant
Maintenance of Plant
Community Services
Fixed Capital Outlay:
Facilities Acquisition and Construction 2,222,791.40 1,390,168.12 832,623.28
Other Capital Outlay 148,996.00 148,996.00
Debt Service:
Principal
Interest and Fiscal Charges
Total Expenditures 2,381,236.04 1,548,612.76 832,623.28
Excess (Deficiency) of Revenues Over
Expenditures (93,241.32) 808,497.12 901,738.44
Other Financing Sources (Ups)
Operating Transfers In
Insurance Loss Recoveries
Sale of Fixed Assets 952,000.00 952,000.00
Operating Transfers Out (635,478.46) (635,478.46)
Total Other Financing Sources (Uses) 316,521.54 316,521.54
Excess (Deficiency) of Revenues end Other
Sources Over Expenditures end Other Uses (93,241.32) 1,125,018.66 1,218,259.98
Fund Balances, July 1, 1989 93,241.32 93,241.32
Residual Equity Transfer
Fund Balances, June 30, 1990 0 $1,218,259.98 $1,218,259.98
The accompanying notes to the financial statements are en integral part of this statement.
-36-
EXHIBIT - C
(Continued)
Total (Memorandum Only)
Budget Actual Variance -
Vavarable
(Unfavorable)
$ 942,657.00 0 962,721.00 $ 20,064.00
128,373.06 128,373.06
2,360,769.95 2,069,352.28 1291,417.671
5,938,129.01 5,933,074.82 (5,054.19)
37,127,234.03 36,938,058.66 1189,175.37)
46,368,789.99 46,031,579.82 (337,210.171
23,804,681.74 21,805,806.88 1,998,814.86
1,938,069.69 1,750,242.58 187,827.11
783,723.90 702,891.46 80,832.44
542,550.62 454,567.08 92,783.54
421,497.82 343,483.91 78,013.91
232,464.01 227,343.41 5,120.60
1,675,019.32 1,473,743.16 201,276.16
2,515,511.55 2,4311,317.54 77,194.01
19,685.18 19,605.18
492,684.12 482,402.86 10,281.26
2,351,759.57 2,080,181.03 271,578.54
1,159,354.64 899,330.87 260,023.77
2,108)648.15 2,018,669.11 89,979.04
3,603,038.02 3,297,627.34 305,410.68
2,548,282.08 2,372,008.45 176,273.63
279,397.85 158,464.43 120,933.42
2,437,280.35 1,577,659.22 859,621.13
420,261.47 420,261.47
200,000.00 200,000.00
378,556.08 378,556.08
47,917,266.16 43,101,302.06 4,815,964.10
11,548,476.171 2,930,277.76 4,478,753.93
287,108.77 917,042.77 629,934.00
465.00 465.00
952,000.00 952,000.00
(290,419.96) 1917,042.77) 1626,622.81)
(3,311.191 952,465.00 955,776.19
11,551,787.36) 3,082,742.76 5,434,530.12
5,538,829.04 2,487,040.52 11,050,988.52)
1601,640.821 1601,600.821
9 1,385,360.86 9 5,768,902.46 $ 4,3413,541.60
-37-
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, 1990
Internal
Service
Operating Revenues:
Premiums $2,047,375. 11
Miscellaneous 1,835.20
Total Operating Revenues 2,049,210. 31
Operating Expenses:
Insurance Claims 2,292,680.82
Insurance Premiums 119,002. 71
Salaries and Benefits 80,484. 93
Purchased Services 520.05
Materials and Supplies 1,580.03
Fees and Other 80,748.66
Total Operating Expenses 2,575,017.20
Operating Income (Loss) (525,806.89)
Nonoperating Revenues:
Interest Income 57, 737. 74
Insurance Recoveries 256,105.47
Total Nonoperating Revenues 313,843.21
Net Income (Loss) (211 ,963.68)
Retained Earnings, July 1, 1989 24,222. 17
Retained Earnings, June 30, 1990 $ (187, 741 .51)
The accompanying notes to the financial statements are an
integral part of this statement.
-38-
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, 1990
Internal
Service
( Sources of Working Capital:
Operations:
Net Loss $(211 ,963.68)
Contributed Capital 601,680.82
Net Increase in Working Capital $ 389,717. 14
Elements of Changes in Working Capital:
Cash $ 634,467.86
Due from Other Funds (85,856.73)
Due from Reinsurer 20,683.05
Salaries and Wages Payable (6,439.63)
Accounts Payable (69,790.82)
Due to Other Funds 46,039.41
Estimated Insurance Claims Payable (149,386.00)
Net Increase in Working Capital $ 389,717.14
The accompanying notes to the financial statements are an
integral part of this statement.
-39-
EXHIBIT - F MONROE COUNTY
DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
Although the Board is part of the Florida system of public education,
it is considered a separate entity for financial reporting because it has
direct responsibility for day-to-day operation and control of District
schools.
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. 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 Statutes.
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.
-40-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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:
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 the 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
insurance.
-41-
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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.
Agency Fund - to account for resources of the District's deferred
compensation program. The Agency Fund does not involve
measurement of results of operations.
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 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.
-42-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
C. Basis of Accounting
Basis of accounting refers to when revenues and expenditures or
expenses 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 and the Agency Fund 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 resources is
the prime factor for determining eligibility for Federal, State, and other
grant resources, 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.
D. Budgetary Basis Accounting
The Board follows these procedures, established by State statutes and
-43-
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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 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 the multiple financial institution collateral pool required by Sections
280.07 and 280.08, Florida Statutes. Included in reported cash of the
General Fund, Special Revenue Funds, and Internal Service Fund are
-44-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
certificates of deposit in the amounts of $12,325,994.25, $300,000, and
$1,014,810.17, respectively.
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. 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 aad
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 and the Special Revenue Funds
inventories of small equipment, nonfood items, and commodities. The
first-in, first-out method is used in pricing the Special Revenue Funds
food inventory.
II. 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;
-45-
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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.
Interest costs incurred during construction are not capitalized as 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 types 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 accrued as expenses when earned in the Internal
Service Fund which uses the accrual basis of accounting. In governmental
fund types, compensated absences are recorded 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.
-46-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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 Board 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 memberships reported for the fiscal years 1982-83 and 1983-84.
During fiscal year 1989-90 the Department determined that funding
adjustments resulting from their findings totaled $240,572. Normally, such
adjustments are treated as reductions of revenue of the year when the
adjustment is made. State funds allocated to the District for fiscal year
1990-91 will be reduced for these funding adjustments.
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 generally requires that categorical educational
program revenues be accounted for in the General Fund. A portion of the
fund balance of the General Fund is reserved for the unencumbered balance
of categorical educational program resources.
-47-
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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.
-48-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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.
Millages and taxes levied for the current year are presented in a
subsequent note.
L. Federal Revenue Sources
The District receives Federal financial assistance for the enhancement
of various educational programs. This assistance is generally received
based on applications submitted to and approved by various granting
agencies. For Federal financial assistance in which a claim to these grant
proceeds is based on incurring eligible expenditures, revenue is recognized
to the extent that eligible expenditures have been incurred.
M. 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.
-49-
EXHIBIT - F
(Continued) MONROE COUNTY
DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
2. INVESTMENTS
Generally accepted accounting principles require that the credit risk
of investments be classified into the following three categories:
1. Insured or registered, or securities held by the District or its agent
in the District's name.
2. Uninsured and unregistered, with securities held by the
counterparty's trust department or agent in the District's name.
3. Uninsured and unregistered, with securities held by the counterparty,
or by its trust department or agent but not in the District's name.
Certain investments cannot be categorized because the District's investments are
not evidenced by specific, Identifiable Investment securities, such as investments
managed by other governments and investments in the deferred compensation
program.
Section 218.407, Florida Statutes, authorizes the Board to participate
In the State Board of Administration investment pool. Section 236.24(2), Florida
Statutes, as well as other general laws of Florida, also authorizes the Board to
invest in obligations of the United States Treasury and United States agencies,
bonds of the district, and Florida Board of Education bonds. As more fully
described in note 5, moneys for employees are also placed in investments in a
deferred compensation program, authorized by Section 112.215, Florida Statutes,
at the direction of employees choosing to participate.
All investments at June 30, 1990, were in the State Board of
Administration investment pool with a carrying amount of $330,946.55, and the
deferred compensation plan with a carrying amount of $7,280.69.
-50-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
3. NOTE RECEIVABLE
The note receivable reported in the Capital Projects Funds is a
$635,000 promissory note dated September 21, 1989, which is secured by a
mortgage on certain real property (Douglas School facility) located in the City of
Key West. The promissory note was accepted by the Board as partial
consideration received for the sale of the facility to the City of Key West. The
promissory note provided for interest at the rate of ten percent (10$) payable in
monthly installments of $5,291.67 beginning November 1, 1989, and continuing
for six (6) months, with a final balloon payment of $635,000 due and payable on
April 1, 1990. At June 30, 1990, the note was in default for the principal
amount of $635,000 plus interest from the date of default. Subsequent to the
audit period, the District received a partial payment from the City as more fully
described in note 20.
4. CHANGES IN GENERAL FIXED ASSETS
Changes in general fixed assets are shown below:
Balance Additions Deletions Balance
7-1-89 6-30-90
Land $ 2,452,653.66 $ 199,865.00 $ 12,269.97 $ 2,640,248.69
Improvement Other Than Buildings 1,215,574.05 124,749.71 34,208.74 1,306,115.02
Buildings and Fixed Equipment 36,144,728.97 4,217,787.48 1,147,249.55 39,215,266.90
Furniture, Fixtures, and Equipment 5,358,833.31 359,445.06 130,384.50 5,587,893.87
Motor Vehicles 2,321,561.57 267,327.00 32,111.4e 2,557,277.11
Construction in Progress 2,174,327.39 1,167,873.23 3,342,200.62
Total 849,667,678.95 06,337,547.48 $4,698,424.84 851,306,801.59
5. DEFERRED COMPENSATION PROGRAM
A deferred compensation plan was adopted by the Board on August
28, 1989. The plan was created in accordance with Internal Revenue Code
-51-
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
Section 457 and permits employees to defer a portion of their salary until future
years. The deferred compensation is not available to employees until
termination, retirement, disability, death, or unforeseeable emergency.
All amounts of compensation deferred under the plan, all property and
rights purchased with those amounts, and all income attributable to those
amounts, property, or rights are solely the property and rights of the Board
(without being restricted to the provisions of benefits under the plan), subject
only to the claims of the Board's general creditors. Participants' rights under
the plan are equal to those of general creditors of the Board in an amount equal
to the fair market value of the deferred account for each participant.
The Board has no liability for losses under the plan but does have the
responsibility for due care that would be required of an ordinary prudent
investor. The Board accounts for this plan in the Agency Fund and believes
that it is unlikely that it will use these assets to satisfy the claims of general
creditors in the future.
Deferred compensation investments are reported at the estimated cash
value of life insurance policies and annuity contracts, which are the primary
investment vehicles for these plans. The reported value of all investments as of
June 30, 1990, was $7,280.69.
6. INSTALLMENT-PURCHASES PAYABLE
The Board acquired a sewage treatment plant for the Plantation Key
School in the amount of $105,685 during the 1989-90 fiscal year under an
installment-purchase contract.
The following is a schedule by years of future minimum payments
under the installment-purchase contract together with the present value of
installment payments as of June 30:
-52-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
Fiscal Year Ending June 30 Amount
1991 $39,720
1992 39,720
Total Minimum Lease Payments 79,440
Less, Interest and Finance Charges 6,587
Present Value of Minimum Installment Payments $72,853
The imputed interest rate was 8.65 percent.
7. TAX ANTICIPATION NOTES PAYABLE
Pertinent details of the tax anticipation notes issued during the
1989-90 fiscal year are as follows:
Series 1990
Amount Authorized $12,000,000
Amount Issued $10,325,000
Date of Issue May 1, 1990
Interest Rate, % 6.6
Maturity Date April 30, 1991
Date of Sale May 22, 1990
Denomination $5,000 and $100,000
Interest $681,450
Underwriters SunTrust Securities, Inc.
Proceeds:
Par Value of Notes $10,325,000.00
Add, Accrued Interest 39,751 .25
Total 10,364,751.25
Less, Fees and Expenses 17,450.00
Total $10,347,301 .25
-53-
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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, 1990, $120,000 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 (SBE) on
behalf of the District. 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.
-54-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
The following is a summary of bonds payable:
Balance at
6-30-90
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 $210,000
to $250,000 Semiannual Interest Payments
Range from $28,920 to $5,000 $1,170,000
Annual requirements to amortize all bonded debt outstanding as of
June 30, 1990, including interest of $172,720, are as follows:
Fiscal Year State
Ending June 30 School
Bonds
1991 $ 267,840
1992 271,920
1993 275,220
1994 267,740
1995 260,000
Total $1, 342,720
10. CHANGES IN GENERAL LONG-TERM DEBT
The following 1s a summary of changes in general long-term debt:
-55-
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
Description Balance Additions Deductions Balance
7-1-89 6-30-90
Installeent-Purchases Payable $ $72,853.00 $Compensated Absences Payable 675,614.89 8 73,600.21
Bonds Payable 1,370,000.00 202,004.08 673,600.21
0,000.00 1,170,000.00
Total $2,045,614.89 $72,853.00 8202014_68 $1,916,453.21
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. ARBITRAGE REBATE PAYABLE
The amount reported as estimated arbitrage rebate payable is the
estimated amount due to the United States Treasury for the arbitrage earnings
from the investment of proceeds from the 1988 Series Tax Anticipation Notes.
The Board's bond counsel has estimated a possible rebate liability for this issue
of between $40,000 and $120,000.
12. 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
1990-91 fiscal year budget as a result of purchase orders outstanding at June
30, 1990.
-56-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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, 1990, totaled
$153,878.76.
13. INTERFUND RECEIVABLES AND PAYABLES
The following is a summary of interfund receivables and payables:
Fund Interfund
Receivables Payables
General $274,300.49 $ 30,134. 71
Special Revenue:
Combined Grants 118.05 170,504.43
Food Service 1,988.07
Capital Projects:
Public Education Capital Outlay 14,920.98
Local Capital Improvement 30,052.43
Internal Service:
Health 1,154.35 40,638.46
Expendable Trust 47,438.67
Total $305,625. 32 $305,625. 32
The amount of $47,438.67 shown above as an interfund payable of the
Expendable Trust Fund, 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.
-57-
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
14. SCHEDULE OF STATE REVENUE SOURCES
The State provided approximately 12 percent of total revenues in fiscal
year 1989-90. The following is a schedule of State revenue sources and
amounts:
Sources
Amount
Florida Education Finance Program
Categorical Educational Programs $ 282,094.00
Gross Receipts Tax (Public Education 3,364,183.00
Capital Outlay)
Motor Vehicle License Tax (Capital 1,231,964.00
(
Outlay and Debt Service) pl
Pari-Mutuel Tax 312,442.00
Mobile Home License Tax 223,250.00
Interest on Investment of Bond Reserves 27,079.35
Food Service Supplement 27,079. 35
Interest on Undistributed Motor Vehicle 29,337.00
License Tax (Capital Outlay and Debt Service) 9,255.04
Miscellaneous
412,256.95
Total $5,933,074.82
Accounting policies relating to certain State revenue sources are
describe in note 1.J.
15. PROPERTY TAXES
The following is a summary of millages and taxes levied on the 1989
tax roll for the fiscal year 1989-90:
-58-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
Millaqes Taxes Levied
GENERAL FUND
Nonvoted School Tax:
Required Local Effort 5.655 $30,583, 359.66
Discretionary Local Effort .616 3,331,449.96
CAPITAL PROJECTS FUNDS
Nonvoted Tax:
Discretionary Capital Outlay .186 1,005,924.82
Total 6.457 $34,920,734.44
16. RESIDUAL EQUITY TRANSFERS
During the fiscal year 1989-90, the District transferred $601,680.82
from the General Fund to the Internal Service Fund. These funds were
determined by the District to be necessary for the limited self-insurance
programs for property and casualty, including workers' compensation coverage
and group medical insurance for its employees, retirees and their dependents.
17. STATE RETIREMENT PROGRAMS
All regular employees of the District are covered by State-administered
cost-sharing multiple-employer public employee defined benefit retirement plans.
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
-59-
•
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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 of 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 of 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 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
-60-
MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
are established by Chapters 121 and 122, 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 the 1989-90 fiscal year contribution rates were as follows:
Class or Plan Percent of Gross Salary
Employee Employer
(B) (A)(B)
Florida Retirement System, Regular 0.00 15.14
Florida Retirement System, County
Elected Officials 0.00 20.19
Teachers' Retirement System, Plan E 6.25 6.73
Florida Retirement System, Reemployed
Retiree 0.00 4.61
Notes: (A) Employer rates include 0.48 percent for the
post-retirement health insurance supplement.
Employer rates for Florida Retirement System, Regular
and County Elected Officials include increases in the
base rates on January 1, 1990, of 0.76 and 1.27
percent, respectively. The employer rate for Florida
Retirement System, Reemployed Retiree also includes
an increase in the base rate on January 1, 1990, of
0.76 percent.
(B) Employee and employer contribution rates are
established by Chapters 121, 122, 238, and Chapter
112, Part IV, Florida Statutes; and Florida
Retirement System Rules, Chapter 22B, Florida
Administrative Code.
The District's 1989-90 fiscal year payroll for all employees totaled
$26,766,142.85, including $25,957,250.50 paid to employees who were members of
the Florida Retirement System. Required contributions made to the Florida
Retirement System in the 1989-90 fiscal year totaled $3,837,642.54, including
$32,682.33 from employee contributions, which represents 14.78 and 0.13
percent, respectively, of covered payroll.
-61-
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
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 obligation.
Use of a standardized method by public employee retirement systems enables
financial statement readers to: (1) assess the funding status 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 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 obligation of the Florida Retirement
System as of July 1, 1990, was as follows:
( In Millions)
Total Pension Benefit Obligation $ 30,973
Net Assets Available for Benefits at
Cost (Market $21,691) (18,901)
Unfunded Pension Benefit Obligation $ 12,072
The unfunded pension benefit obligation is being amortized by a
portion of the required contributions from participating members. The District's
liability for the unfunded pension benefit obligation is limited to the payment of
the required contribution at the rates established by law on future payrolls of
the District.
Measurement of total pension benefit obligation is based on an actuarial
valuation as of July 1, 1989, updated as of July 1, 1990, using an assumed
-62-
1 MONROE COUNTY EXHIBIT - F
DISTRICT SCHOOL BOARD (Continued)
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
return on investments of 8 percent. Net assets available to pay pension
benefits are valued as of June 30, 1990.
The District's 1989-90 fiscal year 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 1989-90 fiscal
year 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 1989-90 fiscal year and as of June 30, 1990, the Florida
Retirement System held no securities issued by the District.
18. 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 contributes 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 $200,000 annually for each person. Maximum reimbursements
-63-
EXHIBIT - F MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
NOTES TO FINANCIAL STATEMENTS
June 30, 1990
for aggregate individual losses exceeding $200,000 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.
19. TRUST AND AGENCY FUNDS
The assets, liabilities, and fund balance at June 30, 1990, were as
follows:
Total Expendable Agency
Trust Funds Fund
(Unaudited)
Assets
Cash $542,182.35 $542,182.35 $
Investments 7,280.69
7.280.69
Total Assets $549,463.04 $542,182.35 $7,280.69
Liabilities and Fund Balance
Deferred Compensation Payable $ 7,280.69 $7,280.69
Fund Equity 542,182.35 542,182.35
Total Liabilities and Fund Balance $549,463.04 $542,182.35 $7,280.69
20. SUBSEQUENT EVENTS
On October 10, 1990, the District received $613,833.32 from the City
of Key West as partial payment towards the interest and principal due on the
$635,000 promissory note described in note 3.
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I
0
MONROE COUNTY SCHEDULE - 1
DISTRICT SCHOOL BOARD
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
For the Fiscal Year Ended June 30, 1990
Federal Grantor/Pass-Through Grantor/Program Title Catalog of Pass-Through Amount of
Federal Grantor Expenditures
Domestic Number
Assistance
Number
United States Department of Agriculture:
Indirect:
Florida Department of Health and Rehabilitative
Services:
Food Distribution 10.550 NONE $ 132,258.60
Florida Department of Education:
School Breakfast Program 10.553 321 64,339.83
National School Lunch Program 10.555 300 539,206.17
14,216.00
Nutrition Education and Training Program (NET) 10.564 341
Total United Steles Department of Agriculture 750,020.60
United Department of Health and Min Services:
Indirect:
Florida Department of Education:
Acquired Immunodeficiency Syndrome (AIDS) Activity 13.118 107 10,000.00
Collier County District School Board:
Administration for Children, Youth, and Families -
Head Start 13.600 N/A 128,373.06
Total United States Department of Health and Human Services 138,373.06
United State, Deportment of Energy:
Indirect:
Executive Office of the Governor:
Energy Conservation for Institutional Buildings 81.052 NONE 31,427.00
United States Department of Education:
Direct:
Impact Aid - Maintenance and Operation 84.041 N/A 892,174.00
Indirect:
Florida Department of Education:
Adult Education - State Administered Basic Grant Program 84.002 191 10,322.00
Educationally Deprived Children - Local Education
Agencies 84.010 212 678,248.90
Migrant Education - Basle State Formula Grant Program 84.011 217 58,154.97
Handicapped Early Childhood Education 84.024 267 55,906.39
Handicapped - State Grants 84.027 263 261,049.45
Vocational Education - Basic Grants to States 84.048 151, 159 120,514.47
Vocational Education - Consumer and Homemaking Education 84.049 155 3,878.00
Federal, State, and Local Partnerships for Educational
Improvement 84.151 113 63,351.63
Mathematics and Science Education 84.164 224 22,471.91
Drug-Free Schools and Communities - State Grants 84.186 103 35,453.96
Total United States Department of Education 2,201,505.68
United States Department of the Iit
Indirect:
Monroe County Board of County Commissioners:
Refuge Revenue Sharing NONE 70,547.00
Total Federal woe $3,191,873.34
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SCHEDULE - 2 MONROE COUNTY
DISTRICT SCHOOL BOARD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS -
FEDERALLY FINANCED PROGRAMS
For the Fiscal Year Ended June 30, 1990
(1) As required by the United States Office of Management and Budget
Circular A-128, paragraph 13.a(3), this schedule presents a summary of all
instances of noncompliance with applicable Federal laws and regulations noted
during the course of our audit. The Single Audit Act of 1984 and the United
States Office of Management and Budget Circular A-128 require that all
instances of noncompliance be reported without regard to the relative materiality
of the finding.
ELIGIBILITY DETERMINATION
(2) National School Lunch Program (Catalog of Federal Domestic
Assistance No. 10.555). The District received monthly Federal reimbursements
for the National School Lunch Program through the Florida Department of
Education based on the numbers of student meals reported as served in the
free, reduced-price, and full-price categories. Our audit procedures included
verifying, on a test basis, that meals reported as served for reimbursement
purposes on the daily cafeteria reports were properly supported by source
documentation, such as serving line cash register tapes and rosters showing the
students served. Our tests of 20 daily cafeteria reports disclosed that the
reported numbers of meals served on 9 of the daily cafeteria reports did not
agree with supporting source documentation. The errors noted on the daily
reports ranged from 1 to 14 free and/or reduced-price meals except for one
report which contained an overstatement of 75 full-priced lunches. Details of
the errors were furnished to District personnel who reported adjustments for
these errors on subsequent reimbursement claims for the National School Lunch
Program. We recommend that the District establish verification procedures to
ensure that the numbers of meals reported for reimbursement are in agreement
with source documents.
(3) Our review of approved applications for free and reduced-price meals
indicated genera] compliance with eligibility standards. However, two
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MONROE COUNTY SCHEDULE - 2
DISTRICT SCHOOL BOARD (Continued)
SCHEDULE OF FINDINGS AND QUESTIONED COSTS -
FEDERALLY FINANCED PROGRAMS
For the Fiscal Year Ended June 30, 1990
exceptions were noted from a test of 123 applications for students who were
reported as receiving free and reduced-price meals. In one instance, a student
was reported as receiving a free lunch on a day when the attendance roster
indicated that the student was absent. A similar finding was also noted in
audit report No. 11452, schedule 2, paragraph I. In the other instance, the
information shown on the application for a student receiving free meals indicated
eligibility for reduced-price meals. We recommend that District personnel
review free and reduced-price meal applications to determine proper eligibility
and ensure that meals served are properly recorded and reported for
reimbursement.
COMPARABILITY OF SERVICES
(4) Educationally Deprived Children - Local Educational Agencies (Catalog
of Federal Domestic Assistance No. 84.010). The District is required by 20
U.S.C. Section 2728(c)(2)(A), to file written assurances with the Florida
Department of Education in its project application that it has established a
Districtwide salary schedule; a policy to ensure equivalence among schools in
teachers, administrators, and auxiliary personnel; and a policy to ensure
equivalence among schools in the allocation of funds for curriculum materials
and instructional supplies. The Florida Department of Education in Technical
Assistance Paper 86-B effective July 1, 1986, established a methodology to be
used to demonstrate equivalency. This guidance provides that, lacking the
Department's approval of an alternative methodology, the elements to be used in
documenting equivalency in the provision of curriculum materials and
Instructional supplies would be the amount budgeted by the Board for Function
5100 (Basic, K-12), Object 510 (supplies), as established by application of a
rate to the full-time equivalent count within specific grade spans.
(5) As similarly noted in several prior audit reports, most recently audit
report No. 11452, schedule 2, paragraphs 4 through 7, our review disclosed
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SCHEDULE - 2 MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS -
FEDERALLY FINANCED PROGRAMS
For the Fiscal Year Ended June 30, 1990
that although the required written assurances were filed, the District was
unable to demonstrate equivalency in the provision of curriculum materials and
instructional supplies. For fiscal year 1989-90, the District's procedures
required that an equal amount per full-time equivalent student be budgeted for
the purchase of curriculum materials and instructional supplies at each school.
The District reported to the Florida Department of Education on the prescribed
forms (ESE 404), that as of October 20, 1989, the amount of $30.17 per
unweighted full-time equivalent student had been allocated for Function 5100,
Object 510, at each school. Instructions for preparing the forms provided that
funds budgeted in compliance with a specified minimum must either be expended
from this account or remain available within the account for the entire school
year and that such funds may not be rebudgeted into other accounts. Our
review for nine schools disclosed that these budgeted amounts were
subsequently reallocated at each school and the final budgeted amounts for
curriculum materials and instructional supplies ranged from $7.50 to $99.28 per
unweighted full-time equivalent student as shown in the following tabulation:
School Name Grade FTE Allocation Final Amount
Span Per FTE Amount Expended
Budgeted Per FIE
Per FTE
Chapter 1 Basic
Gerald Adams Elementary K-5 379.1 $30.17 $40.49 $43.07
Clynn Archer Elementary K-5 387.9 30.17 24.10 19.71
Stanley Switlik Elementary K-6 672.7 30.17 35.63 34.60
Key Largo School K-8 874.5 30.17 49.28 40.56
Horace O'Bryant Middle School 6-8 666.2 30.17 48.54 36.41
Non-Chapter 1 Basic
Poinciana Elementary K-5 455.3 30.17 33.61 26.55
Sigsbee Elementary K-5 469.3 30.17 7.50 10.42
Plantation Key School K-8 473.9 30.17 31.44 33.14
Sugarloaf School K-8 755.6 30.17 31.14 20.65
(6) During fiscal year 1989-90, in addition to the funds included in
the above tabulation, the District expended Chapter 1 funds totaling
$9,218.78 for curriculum materials and instructional supplies. The failure to
-68-
MONROE COUNTY SCHEDULE - 2
DISTRICT SCHOOL BOARD (Continued)
SCHEDULE OF FINDINGS AND QUESTIONED COSTS -
FEDERALLY FINANCED PROGRAMS
For the Fiscal Year Ended June 30, 1990
demonstrate equivalency in the allocation for curriculum materials and
instructional supplies could result in disallowed costs which must be
reimbursed to the Chapter 1 program. We recommend that the District
document to the Florida Department of Education how the methodology used
met the program requirements.
ALLOWABILITY OF COSTS
(7) Acquired Immunodeficiency Syndrome (AIDS) Activity and Drug-Free
Schools and Communities - State Grants (Catalog of Federal Domestic Assistance
Nos. 13.118 and 89.186, respectively). During fiscal year 1989-90, grant funds
totaling $27,736.98 (AIDS Activity - $8,062.99 and Drug-Free Schools and
Communities - State Grants - $19,673.99) were expended for a workshop held in
August 1989 at a resort in Key Largo to train teachers and students to help in
the elimination of AIDS and substance abuse among school-aged children of
Monroe County. Our review of expenditures relating to the workshop disclosed
+tj that although Invoices were approved for payment by the grant director,
payments made to the resort included $388.50 for alcoholic beverages, golf
course fees and equipment rental, ice, and telephone calls charged at the resort
by workshop participants. District payments also Included $247.78 for food,
beverages, and towels which were identified on the resort statements as items
charged by workshop participants; however, individual charge slips included
with the statements were signed by persons other than the indicated
participants. It was not evident from available documentation how the
expenditures for these items were proper uses of the grant funds necessary to
carry out the purposes of the grants. These amounts represent questioned
charges which are subject to disallowance by the Florida Department of
Education. District personnel indicated that all payments to the resort have
been reviewed and reimbursements have been requested for any charges made
by unauthorized persons and any charges made by workshop participants for
alcoholic beverages, personal telephone calls, and any personal items charged
-69-
1
SCHEDULE - 2 MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS -
FEDERALLY FINANCED PROGRAMS
For the Fiscal Year Ended June 30, 1990
which would not be proper uses of grant funds. We will review the disposition
of this matter in subsequent audits of the District.
(8) Indirect Costs. Circular A-87, issued by the United States Office of
Management and Budget, provides principles for determining allowable costs,
both direct and indirect, in order that Federally assisted programs assume their
fair share of costs recognized under those principles. In addition, 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.
(9) An indirect cost rate to be used in assessing the District's Federally
assisted programs with their fair share of indirect costs was approved by the
Florida Department of Education. The District reported recovery of indirect
costs In the amount of $23,019.25 during the fiscal year 1989-90. Our review
of the development of the indirect cost rate for fiscal year 1989-90 disclosed the
following:
1. Expenditures totaling $34,317 for the salaries and fringe benefits of
the Supervisor and Clerk Typist at the District's Transportation
Department were included as indirect type costs in the Pupil
Transportation function (7800). The Florida Department of Education
guidelines provide that the only items to be considered as indirect for
this function would be the Director, secretary under the Director,
and immediate clerical staff at the District-level, along with their
fringe benefits, travel, and supplies. The District had designated
-70-
MONROE COUNTY SCHEDULE - 2
DISTRICT SCHOOL BOARD (Continued)
SCHEDULE OF FINDINGS AND QUESTIONED COSTS -
FEDERALLY FINANCED PROGRAMS
For the Fiscal Year Ended June 30, 1990
one employee as the Director of Maintenance, Transportation, and
Custodians. His salary, the salary of his secretary, and their fringe
benefits were included as indirect costs of the Maintenance of Plant
function (8100) . Therefore, it appears that no Indirect costs should
be included for the Pupil Transportation function.
2. Expenditures totaling $304,205 for costs related to the District's
administration building (custodial, telephone, utilities, supplies, and
security), utilities of the District's transportation department, and
costs relating to the District's drug detection program, were included
as indirect costs in the Operation of Plant function (7900) . Guidance
provided by the Florida Department of Education indicates that the
only costs to be considered as indirect for this function would be a
director, secretary under the director, and immediate clerical staff
along with their fringe benefits, travel, and supplies.
3. The Central Services function (7700) includes the cost of operations
of the data processing, personnel, warehouse, purchasing, mailroom,
switchboard, and microfilm departments. The guidance from the
Department indicates that costs charged to the Central Services
function (which includes areas such as personnel, purchasing, and
data processing) should be allocated between direct and indirect
based upon a reasonable allocation method. Our review of the
District's indirect cost allocation plan and the associated indirect cost
rate computations disclosed that the District treated all noncapital
expenditures, totaling $404,902.51, charged to the Central Services
function (7700) as indirect in nature.
(10) The amounts questioned in the preceding paragraph, totaling
$743,424.51 of the total $1,414,049 included in the indirect cost pool, may
require adjustment in future rate developments resulting In lower indirect cost
-71-
SCHEDULE - 2 MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS -
FEDERALLY FINANCED PROGRAMS
For the Fiscal Year Ended June 30, 1990
rates in future periods. We recommend that the District review its procedures
for preparing the indirect cost plan to ensure that the amounts included as
indirect conform to the Florida Department of Education guidelines.
(11) In audit report No. 11452, schedule 2, paragraphs 9 through 12, we
questioned the treatment of certain costs as indirect in nature that were
charged to the Central Services function on the District's 1988-89 indirect cost
plan. During our current examination, we were advised by District personnel
that they had consulted with the Florida Department of Education to determine
what steps should be taken to correctly allocate the Central Services
expenditures between direct and indirect. The District was advised by the
Florida Department of Education that the questioned costs should be allocated
between direct and indirect based on a reasonable allocation method and the
1990-91 indirect cost plan amended to correct any overstatements of indirect
costs of the Central Services function. We will review the 1990-91 indirect cost
plan and its application in a subsequent audit of the District.
-72-
MONROE COUNTY EXHIBIT - G
DISTRICT SCHOOL BOARD
STATEMENT FROM AUDITED OFFICIAL
For the Fiscal Year Ended lune 30, 1990
The School Board of Monroe County, Florida
Members of the Ban
HN
A.J. HENRIQUEZ, Ph.D. " ""'I 2
SIWEWNTENDEM 144ANKIIIFICIN
PALLAGWIlLUASI
IMIRMAN
Ofl
May 14, 1991
! Mr. Charles L. Lester
Auditor General
State of Florida
P.O. Box 1735
11 Tallahassee, FL 32302
RE: Preliminary and Tentative Findings
July 1, 1989 to June 30, 1990
Dear Mr. Lester:
Thank you for the opportunity to comment on the list of
preliminary and tentative adverse findings which apply to the
period July 1, 1989 to June 30, 1990.
Attached is a statement of explanation concerning all of the
findings and what we propose to do to correct same.
Sincerely,
d'2o
A. J. Henriguez
/cda
• Encl.
xc: School Board Members
School Board Attorney
242 WHITE STREETS CO.HOX 1788❑Mil WEST FLORIDA 33041-1788013051200—(0523
HI:NCOM 4211—I 1 I O 0 FAX 305/206-3 135
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EXHIBIT - G MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
STATEMENT FROM AUDITED OFFICIAL
For the Fiscal Year Ended June 30, 1990
Audit
Report
Par.
No.
(17-18) Electronic Data Processing Systems:
Update capabilities for all payroll employees and
all finance employees have been restricted
through system security measures implemented in
early April. These restrictions are based upon
job responsibilities for each person as
recommended by the respective department heads.
It should be noted that this limits cross
training opportunities and restricts the ability
of employees to fill in for those absent or to
assist others with large tasks.
In an electronic data processing center with
limited staff, some personnel must have access to
all systems. Currently the Data Processing
Specialist has access to all systems, the
MIS/Computer Ed Specialist has complete access
only to student records data and the Systems
Analyst/Programmer has access to the
finance/payroll/personnel files and limited
student records data access through INNOVAK
security. INNOVAK does not provide ANY access to
the programs, only the data. Our overall system
security is currently very restrictive.
Beginning immediately, procedures will be
implemented to require written authorization for
changes to programs and their related files (see
attached form) . The requests will be maintained
in a file for documentation and signed off as
complete by the user requesting the change.
The production of on-demand reports and one time
requests for data that are based on reformatting
only the output of a program (changing a report
to sort by birthdate instead of name) do not
require formal written requests.
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MONROE COUNTY EXHIBIT - G
DISTRICT SCHOOL BOARD (Continued)
1 STATEMENT FROM AUDITED OFFICIAL
For the Fiscal Year Ended June 30, 1990
Audit Page 2
Report Audit Findings
Par• continued
No.
It is my opinion that for a data processing
operation of our size we have instituted adequate
(17-18) compensating controls to monitor use of the
system and still respond to the needs of the
1 system users in a timely manner.
(23-26) Budget Administration:
Finance has been monitoring all budgets and
amending monthly to ensure all budget amendments
are adopted by the Board in a timely manner to
preclude incurring expenditures which exceed
budget authority.
(27-31) Operating Expenditures:
The final evaluation report and documentation of
expenditures was sent to the Department of
Education April 30, 1991.
(32-33) Purchasing Practices - Competitive Bidding:
During the extensive period of researching and
surveying the feasibility and desirability of
entering into a contract for management services,
the State Board of Education Rules changed (June
27, 1989) . We had no knowledge of this change
prior to entering into this agreement.
Procedures have been implemented to ensure that
bids will be solicited for all contracts in
excess of $4500 where "sole source" or other
lawful requirements are not a factor.
(34-35) Contractual Obligations:
In regards to the referenced contract, it was the
intent of the Board that paragraph 2g would
permit the Board to terminate the contract at the
end of each fiscal year during the initial term
and during any renewal terms. An Addendum to the
contract has been prepared by the School Board
Attorney to more clearly reflect this intent. A
copy of the contract and addendum will be
forwarded to the General Counsel of the Florida
Department of Education for guidance.
(36-38) Employee Benefit Plan:
The District has requested clarification from the
General Counsel of the Florida Department of
Education as to the authority to disburse funds
in the employee' s fringe benefit plan as is now
being done. As of this date we have not received
an opinion. The School Board Attorney will
re-request clarification regarding this item.
-75-
EXHIBIT - G MONROE COUNTY
(Continued) DISTRICT SCHOOL BOARD
STATEMENT FROM AUDITED OFFICIAL
For the Fiscal Year Ended June 30, 1990
Audit Page 3
Report Audit Findings
Par• continued
/To.
Sch. 2, National School Lunch Program:
(2-3) The recommendation that the District establish
verification procedures to ensure that the number
of meals reported for reimbursement are in
agreement with source documents has been
implemented. Each report of numbers of meals
served must be checked and verified by two
individuals at the school site. Secondly, as
part of the Annual Accuclaim Review required by
the United States Department of Agriculture Food
and Nutrition Services, a minimum of 10 serving
days are verified by district staff using source
documents. Where problems are noted, the source
documents are reviewed continually until
procedures are in place at the school to minimize
errors.
The second recommendation was that District
personnel review free and reduced price meal
applications to determine proper eligibility and
ensure that meals are properly recorded and
reported for reimbursement. While Accuclaim
Reviews require that a minimum of 50% of the
total applications on file at the time of the
review be verified accuracy, 100% of the
applications are reviewed by the District Food
Service Director.
Sch. 2, Comparability of Services:
(4-6) In compliance with the Comparability
requirements, Monroe County has implemented a
policy of identifying a minimum allocation of
$30.17 per student for the purchase of curriculum
materials and instructional supplies at each
school.
This new policy was communicated to each school.
This was one of various new procedures that
schools were expected to follow during the year.
• Schools were also training personnel in the new
software procedures that have been implemented in
the district. When school budget printouts were
reviewed at the end of the year, it became
evident that most schools had followed district
comparability policy, but some had not.
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MONROE COUNTY EXHIBIT - G
DISTRICT SCHOOL BOARD (Continued)
STATEMENT FROM AUDITED OFFICIAL
For the Fisdal Year Ended June 30, 1990
Audit Page 4
Report Audit Findings
Par. continued
No.
The schools that were out of compliance had
rebudgeted their minimum allocation without
realizing the effect this would have on the
district' s comparability requirement. To avoid
any future difficulties with the minimum
expenditure requirement at individual schools,
the district has implemented at district level a
monitoring procedure to review each school' s 510
Sch. 2, expenditures on a monthly basis.
(4-6) The district' s comparability policy has been in
full compliance with the comparability
requirements. The issue, we believe, is the
degree to which individual school have followed
the policy. With the new district level
monitoring procedures that Monroe County has
implemented, the Department of Education will
find that all schools are now in full compliance
with the district' s comparability policy.
Sch. 2, Indirect Costs:
(8-11) A corrected Indirect cost plan has been submitted
to the State Department on February 12, 1991
correcting findings mentioned in this audit.
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