FULLERTON SCHOOL DISTRICT AUDIT REPORT For the Fiscal …€¦ · Standards Board Statement No. 68, "Accounting and Financial Reporting for Pensions‐An Amendment of GASB Statement

FULLERTONSCHOOLDISTRICT

AUDITREPORT

FortheFiscalYearEndedJune30,2015

FULLERTONSCHOOLDISTRICTFortheFiscalYearEndedJune30,2015TableofContents

FINANCIALSECTION Page

IndependentAuditors’Report..................................................................................................................................................................1Management’sDiscussionandAnalysis...............................................................................................................................................3BasicFinancialStatements:

Government‐wideFinancialStatements:StatementofNetPosition..........................................................................................................................................................16StatementofActivities................................................................................................................................................................17

GovernmentalFundsFinancialStatements:BalanceSheet–GovernmentalFunds..................................................................................................................................18ReconciliationoftheGovernmentalFundsBalanceSheettotheStatementofNetPosition......................19StatementofRevenues,Expenditures,andChangesinFundBalances................................................................20ReconciliationoftheGovernmentalFundsStatementofRevenues,Expenditures, andChangesinFundBalancestotheStatementofActivities.........................................................................21

ProprietaryFundFinancialStatements:StatementofNetPosition..........................................................................................................................................................22StatementofRevenues,Expenses,andChangesinNetPosition..............................................................................23StatementofCashFlows............................................................................................................................................................24

FiduciaryFundsFinancialStatement:StatementofFiduciaryNetPosition.....................................................................................................................................25

NotestoFinancialStatements...............................................................................................................................................................26

REQUIREDSUPPLEMENTARYINFORMATIONBudgetaryComparisonSchedule–GeneralFund.........................................................................................................................55BudgetaryComparisonSchedule–CafeteriaFund......................................................................................................................56ScheduleofFundingProgress...............................................................................................................................................................57ScheduleofProportionateShareoftheNetPensionLiability................................................................................................58ScheduleofContributions.......................................................................................................................................................................59NotestotheRequiredSupplementaryInformation....................................................................................................................60

SUPPLEMENTARYINFORMATIONLocalEducationalAgencyOrganizationStructure.......................................................................................................................61ScheduleofAverageDailyAttendance..............................................................................................................................................62ScheduleofInstructionalTime.............................................................................................................................................................63ScheduleofFinancialTrendsandAnalysis......................................................................................................................................64ReconciliationofAnnualFinancialandBudgetReportwithAuditedFinancialStatements.....................................65ScheduleofExpendituresofFederalAwards.................................................................................................................................66NotetotheSupplementaryInformation...........................................................................................................................................67

FULLERTONSCHOOLDISTRICTFortheFiscalYearEndedJune30,2015TableofContents

OTHERINDEPENDENTAUDITORS’REPORTS Page

IndependentAuditors'ReportonInternalControloverFinancialReportingandonCompliance andOtherMattersBasedonanAuditofFinancialStatementsPerformedinAccordancewith GovernmentAuditingStandards.....................................................................................................................................................68IndependentAuditors'ReportonStateCompliance...................................................................................................................70IndependentAuditors'ReportonComplianceForEachMajorFederalProgramandon InternalControlOverComplianceRequiredbyOMBCircularA‐133...........................................................................72

FINDINGSANDQUESTIONEDCOSTS

ScheduleofAuditFindingsandQuestionedCosts: SummaryofAuditors'Results......................................................................................................................................................74 CurrentYearAuditFindingsandQuestionedCosts...........................................................................................................75 SummaryScheduleofPriorAuditFindings...........................................................................................................................79ManagementLetter....................................................................................................................................................................................80

FinancialSection

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INDEPENDENTAUDITORS’REPORTBoardofTrusteesFullertonSchoolDistrictFullerton,CaliforniaReportontheFinancialStatementsWehaveauditedtheaccompanyingfinancialstatementsofthegovernmentalactivities,eachmajorfund,andtheaggregateremainingfundinformationofFullertonSchoolDistrict,asofandforthefiscalyearendedJune30, 2015, and the relatednotes to the financial statements,which collectively comprise theDistrict's basicfinancialstatementsaslistedinthetableofcontents.Management’sResponsibilityfortheFinancialStatementsManagement is responsible for the preparation and fair presentation of these financial statements inaccordancewithaccountingprinciplesgenerallyaccepted in theUnitedStatesofAmerica; this includes thedesign,implementation,andmaintenanceofinternalcontrolrelevanttothepreparationandfairpresentationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.Auditors'ResponsibilityOurresponsibilityistoexpressopinionsonthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica,thestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards,issuedbytheComptrollerGeneralof the United States, and the 2014‐15 Guide for Annual Audits ofK‐12 Local Education Agencies and StateComplianceReporting. Those standards require that we plan and perform the audit to obtain reasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances,butnot for thepurposeofexpressinganopinionontheeffectivenessoftheentity’s internalcontrol. Accordingly,we express no suchopinion.An audit also includes evaluating the appropriatenessofaccountingpoliciesusedandthereasonablenessofsignificantaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinions.OpinionsInouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,therespectivefinancial position of the governmental activities, each major fund, and the aggregate remaining fundinformationofFullertonSchoolDistrict,asofJune30,2015,andtherespectivechangesinfinancialpositionand, where applicable, cash flows thereof for the fiscal year then ended in accordance with accountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.

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EmphasisofMatterAsdiscussedinNote1.I.tothebasicfinancialstatements,theDistricthaschangeditsmethodforaccountingand reporting for pensions during fiscal year 2014‐15 due to the adoption of Governmental AccountingStandardsBoardStatementNo.68,"AccountingandFinancialReportingforPensions‐AnAmendmentofGASBStatementNo.27"andNo.71,"PensionTransitionforContributionsMadeSubsequenttotheMeasurementDate‐AnAmendmentofGASBStatementNo.68".Theadoptionofthesestandardsrequiredretrospectiveapplicationresultingina$109,933,538reductionofpreviouslyreportednetpositionatJuly1,2014.Ouropinionisnotmodifiedwithrespecttothismatter.OtherMattersRequiredSupplementaryInformationAccounting principles generally accepted in the United States of America require that the management’sdiscussion and analysis on pages 3 through 15, budgetary comparison information on pages 55 and 56,scheduleoffundingprogressonpage57,scheduleofproportionateshareofthenetpensionliabilityonpage58,andscheduleofcontributionsonpage59bepresentedtosupplementthebasicfinancialstatements.Suchinformation,althoughnotapartofthebasicfinancialstatements,isrequiredbytheGovernmentalAccountingStandardsBoard,whoconsidersittobeanessentialpartoffinancialreportingforplacingthebasicfinancialstatements in anappropriateoperational, economic, orhistorical context. Wehaveapplied certain limitedprocedures to the required supplementary information in accordance with auditing standards generallyacceptedintheUnitedStatesofAmerica,whichconsistedofinquiriesofmanagementaboutthemethodsofpreparing the informationandcomparing the information forconsistencywithmanagement’s responses toourinquiries,thebasicfinancialstatements,andotherknowledgeweobtainedduringourauditofthebasicfinancialstatements.Wedonotexpressanopinionorprovideanyassuranceontheinformationbecausethelimitedproceduresdonotprovideuswithsufficientevidencetoexpressanopinionorprovideanyassurance.OtherInformationOur audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprisetheDistrict’sbasicfinancialstatements.Thesupplementaryinformationispresentedforpurposesofadditionalanalysisandisnotarequiredpartofthebasicfinancialstatements.ThescheduleofexpendituresoffederalawardsispresentedforpurposesofadditionalanalysisasrequiredbyU.S.OfficeofManagementandBudget Circular A‐133,Audits of States, LocalGovernments, andNon‐ProfitOrganizations, and is also not arequired part of thebasic financial statements. The supplementary information onpages 62 to 65 and theschedule of expenditures of federal awards on page 66 are the responsibility of management and werederived from and relate directly to the underlying accounting andother records used toprepare thebasicfinancialstatements.Suchinformationhasbeensubjectedtotheauditingproceduresappliedintheauditofthe basic financial statements and certain additional procedures, including comparing andreconciling suchinformation directly to the underlying accounting and other records used to prepare the basic financialstatements or to the basic financial statements themselves, and other additional procedures in accordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.Inouropinion,theinformationisfairlystatedinallmaterialrespectsinrelationtothebasicfinancialstatementsasawhole.Theinformationonpage 61 has not been subjected to the auditing procedures applied in the audit of the basic financialstatementsandaccordingly,wedonotexpressanopinionorprovideanyassuranceonit.OtherReportingRequiredbyGovernmentAuditingStandardsInaccordancewithGovernmentAuditingStandards,wehavealsoissuedourreportdatedDecember15,2015on our consideration of the District's internal control over financial reporting and on our tests of itscompliancewithcertainprovisionsof laws,regulations,contracts,andgrantagreementsandothermatters.Thepurposeofthatreportistodescribethescopeofourtestingofinternalcontroloverfinancialreportingandcomplianceandtheresultsofthattesting,andnottoprovideanopiniononinternalcontroloverfinancialreporting or on compliance. That report is an integral part of an audit performed in accordance withGovernment Auditing Standards in considering the District's internal control over financial reporting andcompliance.

Murrieta,CaliforniaDecember15,2015

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FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015INTRODUCTIONThe following discussion and analysis provides an overview of the financial position and activities of theDistrictfortheyearendedJune30,2015.Thisdiscussionhasbeenpreparedbymanagementandshouldbereadinconjunctionwiththefinancialstatementsandnotestheretowhichfollowthissection.The Fullerton School District is a large suburban school district offering instruction to students fromkindergartenthrougheighthgrade,includingprogramsforpreschoolandspecialeducation.Duringthe2014‐15 school year, the District operated fifteen elementary schools, two K‐8 schools, and three junior highschools, on the traditional August through May schedule, for the instruction of approximately 13,678students.MISSIONSTATEMENTThemission of the Fullerton School District is to work collaboratively with the community to provide aninnovative, high‐quality educational program for all students in a safe learning environment. Our motto,“Great Schools ‐ Successful Kids” exemplifies the belief that all students will achieve academic excellence,acquire interpersonal skills, and develop technological expertise to contribute as productive citizens in ademocraticsociety.

FocusingonExcellenceStudentLearning Develop and implement rigorous and innovative instructional programs within a safe and positive

learning environment to help shape character, develop intellect, promote 21st Century learning skills,encouragecollaboration,fostercreativity,andprovideforthejoysofartisticexpression.

CurriculumandAssessment Provide a standards‐based academic program that focuses on utilizing research‐based instructional

strategies with effective and timely feedback that allows staff and parents to work together to makeinstructionaldecisionsthatpromotesuccessforallstudents.

BudgetandResources Maximize all existing funds and resources to enhance learning opportunities for all students while

maintainingfiscalsolvencyandseekingnewsourcesforrevenueenhancement.Staffing Activelyrecruit,retainandvaluehighlyqualified,well‐trainedstaffmembers.ParentsandCommunity Promote service, partnerships and increased involvement among theDistrict, schools, parents and the

communityofFullertontoactivelysupportourschools.StaffDevelopment Encourageandsupportgrowthbyimplementingresearch‐basedprofessionaldevelopmenttoguidework

andaligntrainingopportunitiestoDistrictgoals,sitegoalsandstudentneeds.Technology Empower all students and staff to effectively integrate state‐of‐the‐art technology in all facets of the

instructionalandoperationalprogramsoftheDistrict.

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FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015MISSIONSTATEMENT(continued)Leadership Sustain a professional cutting edge leadership team thatworks together to promote collaboration and

fosterapositivelearningandworkingenvironmentforallstudentsandstaff.Facilities Maintainandimprovefacilitiestoprovideasafe,attractive,positivelearningandworkingenvironment

forallstudentsandstaff.FINANCIALHIGHLIGHTSDistrictwideFinancialStatements AsofJune30,2015,theDistrict’soverallfinancialconditiondroppedfromJune30,2014,asNetPosition

decreased$2.7million.ThelargestchangeintheBalanceSheetitemswasadecreaseinnetcapitalassetsof$4.5million,whichrepresentsmainlydepreciationexpense.

Overallrevenuesincreased$9.0million,to$134.3million.ThelargestcategoryofrevenuetotheDistrictistheLocalControlFundingFormula(LCFF),whichmakesup$93.2million(69%)oftotalrevenues.

Overall expenditures increased $14.8million, to $137.0million. Themajority of expenditures ($101.7million)wereforinstructionandinstruction‐relatedservices.

Sinceexpendituresincreasedmorethanrevenues,thechangeinnetpositionshowedadecreaseof$2.7

million.ThisamountrepresentsadecreaseintheDistrict’sreserves.

Total District‐wide expenseswere $137.0million. Because a portion of these costswas paid forwithcharges,fees,andfederalandstatecategoricalprograms,thenetcostthatrequiredtaxpayerfundingwas$108.3million.

GeneralFundFinancialStatements TheDistrict’sGeneralFundagainrecordedanetincreasetotheendingFundBalancefortheyear.Actual

resultswerebetterthantheoriginalandrevisedoperatingbudgetsfortheyear. Thispositivevariancecameaboutprimarilybecauseofunderspendingacrossallprograms.

Revenuesof$115.8million($96.9millionUnrestricted,$18.9millionRestricted)werereceived. Expendituresof$115.3million($85.5millionUnrestricted,$29.8millionRestricted)weremade.

Netinterfundtransfersinof$0.9millionwerereceived. Thenet result of operationswas an increase to the ending fundbalance of $1.4million. ($2.5million

increaseinUnrestricted,$1.1milliondecreaseinRestricted)

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FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015FINANCIALHIGHLIGHTS(continued)GeneralFundFinancialStatements(continued)ThisprovidedtheDistrictwithaGeneralFundendingbalanceof$31.7million.Thiswascomprisedof:

ReservedAmounts $88,844LegallyRestrictedBalances 2,973,908BoardDesignated 1,511,761DesignatedforEconomicUncertainties 27,153,195

Total $31,727,708The actual amounts reported above are for the General Fund only, and do not agree with the amountsreportedontheStatementofRevenues,Expenditures,andChangesinFundBalancesbecausetheamountsonthatscheduleincludethefinancialactivityoftheDeferredMaintenanceFund,SpecialReserveFundforOtherThanCapitalOutlayProjects,andSpecialReserveFundforPostemploymentBenefits,inaccordancewiththefundtypedefinitionspromulgatedbyGASBStatementNo.54.LCFFandAverageDailyAttendance(ADA)ThemajorityoftheDistrict’sunrestrictedrevenuesarereceivedfromtheStatethroughtheLCFF.TheStateswitchedtotheLCFFfundingformulainthe2013‐14fiscalyear.The State’s 2013‐14 budget presented an extraordinary change in California school district funding. TheRevenuelimitsandmostcategoricalprogramswhichhaveexistedsincethe1970’sSerranovs.Priestdecisionwere eliminated. Instead, the State implemented theLocal Control FundingFormula (LCFF). UnderLCFF,insteadoftheStateallocatingfundsandrequiringtheDistrictstospendmoneyonprogramsandservicetheStatedeterminesareapriority,thenewfundingformulagiveslocalboardscontroloverhowtousefundsandresources in a way that improves outcomes and opportunities for all students. The new funding modelspecificallyaddressesstudentswithgreaterneeds–suchasEnglishlearners,low‐incomeandfosteryouth–withinputfromthecommunityandwithspecificstudentoutcomeinmind.School district leaders have conjectured that LCFF presents an historic opportunity to focus on improvingstudentoutcomes,closingachievementgaps,andincreasingthelevelofcommunicationbetweenschoolsandtheircommunities. Further,theState’sshiftawayfromcomplexcategoricalfundingwillrequireDistrictstobestrategicandcollaborativewheninvestingresourcesanddeliveringinstructionalprogramstobestservestudents.

WhilethemaindriversoftheRevenueLimitwereAverageDailyAttendance(ADA)andState‐fundedCostofLivingAdjustment(COLA),LCFFaddstwoadditionalfactors:

UnduplicatedPercentagesofUnderservedStudents ‐definedasthosestudentsenrolledintheFreeand Reduced Lunch program, English Language Learners, and Foster Youth. Due to the widelydifferingunduplicatedcountpercentagesindifferentschooldistricts,theamountsreceivedinLCFFfundingwillvarywidelybyDistrictwillbecomeevenmoredisparateastimegoeson.

PercentageofGapFundingduringTransition:FullimplementationoftheLCFFisbeyondtheState’s

current financialmeans. Therefore, the State intends to fully implement LCFF over an eight‐yearperiod.Eachyear,aspartofthebudgetprocess,theLegislatureandGovernor(withconsiderationofthe COLA and Proposition 98 requirements) will determine the amount of the gap funding toimplementinthecurrentbudgetyear.

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FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015FINANCIALHIGHLIGHTS(continued)LCFFandAverageDailyAttendance(ADA)(continued)TheDistrictcalculatesitsLCFFapportionmentbaseduponaformulaincorporatingtheseinputs.TheDistrictreceivesitsshareoflocalpropertytaxes,andtheStateprovidesApportionmentRevenuetomakeupthetotalLCFFearned.AverageDailyAttendance(ADA)VirtuallyalloftheDistrict’sfundingisbaseduponthenumberofstudentsinattendanceatDistrictschools,orAverageDailyAttendance(ADA).ADAiscalculatedbasedupontheactualnumberofdaysastudentattendsschool,dividedbythetotalpossibleinstructionaldays(180daysforafullschoolyear).Thus,astudentwhoattendsclasseverydayoftheschoolyear,withnoabsences,earnsoneADA.TheDistrict’smainsourceoffunding,theLocalControlFundingFormula(LCFF)iscalculatedbasedupontheDistrict’sSecondPeriod(“P‐2”)ADA.Ifadistrictisinadecliningenrollmentsituation(likeFullertonSchoolDistrict),LCFFiscalculatedbaseduponthehigher,prior‐yearADA.TheDistrict’senrollmentmostrecentlypeakedin2013‐14.Therefore,eventhoughenrollmentdecreasedbyapproximately150students infiscal2014‐15,theDistrictstillearnedLCFFbaseduponthehigher2013‐14ADA. ThelowerADAfor2014‐15willbereflectedinthe2015‐16LCFF. Thisone‐yearlagwillcontinueaslongastheDistrictdeclinesinenrollment.P‐2apportionment‐earningADAusedinthecalculationoftheRevenueLimit/LCFFforthepastfiveyears,andtheestimatedLCFFADAforthecurrentyear,isasfollows: 2010‐11 13,338 2011‐12 13,405 2012‐13 13,520 2013‐14 13,558 2014‐15 13,565 2015‐16(est.) 13,395

13,200

13,300

13,400

13,500

13,600

2010‐11 2011‐12 2012‐13 2013‐14 2014‐15 2015‐16(est.)

FullertonSchoolDistrictLCFFADA

P‐2 ADA

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FigureA‐1.OrganizationofFullertonSchoolDistrict’sAnnualFinancialReport

FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015OVERVIEWOFTHEFINANCIALSTATEMENTSThis annual report consists of three parts – management discussion and analysis (this section), the basicfinancial statements, and required supplementary information. The basic financial statements include twokindsofstatementsthatpresentdifferentviewsoftheDistrict: The first two statements aredistrict‐wide financial statements that provide both short‐term and long‐

terminformationabouttheDistrict’soverallfinancialstatus. The remaining statements are fund financial statements that focus on individual parts of the District,

reportingtheDistrict’soperationsinmoredetailthanthedistrict‐widestatements. Thegovernmental fundsstatementstellhowbasicservices likeregularandspecialeducationwere

financedintheshorttermaswellaswhatremainsforfuturespending. Short and long‐term financial information about the activities of the District that operate like

businesses(self‐insurancefunds)areprovidedintheproprietaryfundsstatements. Fiduciary funds statement provides information about the financial relationships in which the

Districtactssolelyasatrusteeoragentforthebenefitofotherstowhomtheresourcesbelong.Thefinancialstatementsalsoinclude notes that explainsome of the information inthe statements and providemore detailed data. FigureA‐1 shows how the variousparts of this annual reportare arranged and related tooneanother.

Management’sDiscussionandAnalysis

BasicFinancial

Information

RequiredSupplementaryInformation

FundFinancialStatements

District‐WideFinancialStatements

NotestoFinancialStatements

SUMMARY DETAIL

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FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015OVERVIEWOFTHEFINANCIALSTATEMENTS(continued)FigureA‐2summarizesthemajorfeaturesoftheDistrict’s financialstatements, includingtheportionoftheDistrict’sactivitiestheycoverandthetypesofinformationtheycontain.

FigureA‐2.MajorFeaturesoftheDistrict‐WideandFundFinancialStatements

TypeofStatements

District‐Wide GovernmentalFunds

ProprietaryFunds

FiduciaryFunds

Scope EntireDistrict,exceptfiduciaryactivities

TheactivitiesoftheDistrictthatarenotproprietaryorfiduciary,suchasspecialeducationandbuildingmaintenance

ActivitiesoftheDistrictthatoperatelikeabusiness,suchasself‐insurancefunds

InstancesinwhichtheDistrictadministersresourcesonbehalfofsomeoneelse,suchasscholarshipprogramsandstudentactivitiesmonies

Requiredfinancialstatements

StatementofNetPosition

StatementofActivities

BalanceSheet

StatementofRevenues,Expenditures&ChangesinFundBalances

StatementofNetPosition

StatementofRevenues,Expenses,&ChangesinNetPosition

StatementofCashFlows

StatementofFiduciaryNetPosition

Accountingbasisandmeasurementfocus

Accrualaccountingandeconomicresourcesfocus

Modifiedaccrualaccountingandcurrentfinancialresourcesfocus



Typeofasset/liabilityinformation

Allassetsandliabilities,bothfinancialandcapital,short‐termandlong‐term

Onlyassetsexpectedtobeusedupandliabilitiesthatcomedueduringtheyearorsoonthereafter;nocapitalassetsincluded

Allassetsandliabilities,bothshort‐termandlong‐term;TheDistrict’sfundsdonotcurrentlycontainnonfinancialassets,thoughtheycan

Allassetsandliabilities,bothshort‐termandlong‐term;TheDistrict’sfundsdonotcurrentlycontainnonfinancialassets,thoughtheycan

Typeofinflow/outflowinformation

Allrevenuesandexpensesduringyear,regardlessofwhencashisreceivedorpaid

Revenuesforwhichcashisreceivedduringorsoonaftertheendoftheyear;expenditureswhengoodsorserviceshavebeenreceivedandpaymentisdueduringtheyearorsoonthereafter

Allrevenuesandexpensesduringtheyear,regardlessofwhencashisreceivedorpaid

Allrevenuesandexpensesduringtheyear,regardlessofwhencashisreceivedorpaid

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FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015OVERVIEWOFTHEFINANCIALSTATEMENTS(continued)Theremainderofthisoverviewsectionofmanagement’sdiscussionandanalysishighlightsthestructureandcontentsofeachofthestatements.District‐WideStatementsThe district‐wide statements report information about the District as a whole using accounting methodssimilartothoseusedbyprivate‐sectorcompanies.ThestatementofnetpositionincludesalloftheDistrict’sassetsand liabilities. Allof thecurrentyear’srevenuesandexpensesareaccountedfor inthestatementofactivitiesregardlessofwhencashisreceivedorpaid.Thetwodistrict‐widestatementsreporttheDistrict’snetpositionandhowithaschanged.Netposition–thedifferencebetweentheDistrict’sassetsanddeferredoutflowsofresourcesandliabilitiesanddeferredinflowsofresources–isonewaytomeasuretheDistrict’sfinancialhealth,orposition. Overtime,increasesanddecreasesintheDistrict’snetpositionareanindicatorofwhetheritsfinancial

positionisimprovingordeteriorating,respectively. ToassesstheoverallhealthoftheDistrict,youneedtoconsideradditionalnonfinancial factorssuchas

changesintheDistrict’sdemographicsandtheconditionofschoolbuildingsandotherfacilities. In the district‐wide financial statements, the District’s activities are categorized as Governmental

Activities. Mostof theDistrict’sbasicservicesare includedhere,suchasregularandspecialeducation,transportation,andadministration.Propertytaxesandstateaidfinancemostoftheseactivities.

FundFinancialStatementsThefundfinancialstatementsprovidemoredetailedinformationabouttheDistrict’smostsignificantfunds–nottheDistrictasawhole.FundsareaccountingdevicestheDistrictusestokeeptrackofspecificsourcesoffundingandspendingonparticularprograms: SomefundsarerequiredbyStatelawandbybondcovenants. TheDistrictestablishesotherfundstocontrolandmanagemoneyforparticularpurposes(likerepaying

itslong‐termdebt)ortoshowthatitisproperlyusingcertainrevenues.TheDistricthasthreekindsoffunds: Governmental funds –Most of the District’s basic services are included in governmental funds,which

generallyfocuson(1)howcashandotherfinancialassetsthatcanreadilybeconvertedtocashflowinand out and (2) the balances left at year‐end that are available for spending. Consequently, thegovernmental funds statementsprovideadetailed short‐termview thathelpsyoudeterminewhethertherearemoreorfewerfinancialresourcesthatcanbespentinthenearfuturetofinancetheDistrict’sprograms. Becausethisinformationdoesnotencompasstheadditionallong‐termfocusofthedistrict‐widestatements,weprovideadditionalinformationonaseparatereconciliationpagethatexplainstherelationship(ordifferences)betweenthem.

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FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015FundFinancialStatements(continued) Proprietary funds –When the District charges other District funds for the services it provides, these

services are reported in proprietary funds. Proprietary funds are reported in the sameway that allactivitiesarereportedintheStatementofNetPositionandStatementofActivities.Infact,theDistrict’sinternal service fund is included within the governmental activities reported in the district‐widestatementsbutprovidesmoredetailandadditionalinformation,suchascashflows.TheDistrictusestheinternal service fund to report activities that relate to theDistrict’s self‐insuredprogram forworkers’compensationclaimsandpropertyandliabilitylosses.

Fiduciary funds – TheDistrict is the trustee, or fiduciary, for assets that belong to others, namely, the

studentactivitiesfunds.TheDistrictisresponsibleforensuringthattheassetsreportedinthesefundsareusedonlyfortheirintendedpurposesandbythosetowhomtheassetsbelong.AlloftheDistrict’sfiduciary activities are reported in a separate statement of fiduciary net position. We exclude theseactivities from the district‐wide financial statements because the District cannot use these assets tofinanceitsoperations.

FINANCIALANALYSISOFTHEDISTRICTASAWHOLENetPosition.TheDistrict’scombinednetpositionwasloweronJune30,2015,thanitwastheyearbefore–decreasing10.0%to$(30.1)million(SeeTableA‐1).TableA‐1

VarianceIncrease

2015 2014* (Decrease)Currentassets 53,593,297$ 52,542,319$ 1,050,978$Capitalassets 87,920,254 92,383,441 (4,463,187)Totalassets 141,513,551 144,925,760 (3,412,209)Totaldeferredoutflows 8,879,816 8,110,192 769,624

Currentliabilities 6,547,184 6,941,387 (394,203)Long‐termliabilities 149,148,328 173,420,777 (24,272,449)Totalliabilities 155,695,512 180,362,164 (24,666,652)Totaldeferredinflows 24,753,707 ‐ 24,753,707

NetpositionNetinvestmentincapitalassets 46,362,668 48,451,328 (2,088,660)Restricted 15,005,287 14,570,080 435,207Unrestricted (91,423,807) (90,347,620) (1,076,187)Totalnetposition (30,055,852)$ (27,326,212)$ (2,729,640)$

*Asrestated

GovernmentalActivities

Changesinnetposition,governmentalactivities. TheDistrict’stotalrevenuesincreased7.2%to$134.3million(SeeTableA‐2).Theincreaseisdueprimarilytoincreasesinstateaid.The total cost of all programsand services increased12.1% to$137.0million. TheDistrict’s expensesarepredominantlyrelatedtoeducatingandcaringforstudents,82.4%.ThepurelyadministrativeactivitiesoftheDistrictaccountedforjust4.3%oftotalcosts.Asignificantcontributortotheincreaseincostswasincreasedspendingoninstructionandinstructionrelatedservices.

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FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015FINANCIALANALYSISOFTHEDISTRICTASAWHOLE(continued)TableA‐2

VarianceIncrease

2015 2014 (Decrease)Totalrevenues 134,306,043$ 125,298,632$ 9,007,411$Totalexpenses 137,035,683 122,272,859 14,762,824Increase(decrease)innetposition (2,729,640)$ 3,025,773$ (5,755,413)$


FINANCIALANALYSISOFTHEDISTRICT’SFUNDSTheGovernmentalFundsfinancialstatementsreportthefinancialactivitiesoftheDistrictnetoftheeffectoflong‐term items such as capital assets, long‐term debt, and other multi‐year commitments. Rather, theGovernmental Funds statements generallypresent only financial transactions related to current assets andliabilities. Thesestatements focusoncashreceivedandspent inoneyear,andwhatassetsareavailableatyearendthatcanbespentonexpensesandliabilitiesthatwillbepaidwithinonefiscalyear.At June30,2015, theDistrictreportedacombinedfundbalanceof$46.3million forallof itsgovernmentalfunds, which represents an increase of $1.4 million to last year’s ending fund balance of $44.9 million.Althoughoverallexpendituresincreasedduetocompensationraisesandnormalinflationaryincreasestoallexpenditureaccounts,revenues,primarilyLCFFrevenuefromtheState,increasedatafasterrate,resultinginnetincomeandanincreasetotheendingfundbalance.GeneralFundBudgetaryHighlightsTheDistrict’sprimaryoperatingfund,andthefundwherethemajorityofitsfinancialtransactionstakeplace,istheGeneralFund.TheoverallfinancialhealthoftheDistrictisgenerallydeterminedbythestateofitsGeneralFund.Thisfundreflects the effects on the District’s finances caused by increased funding or cuts imposed by the State onpublic education funding. It is also the fundwhere the District Board and administration have themostflexibilitytoadjustexpenditurestomatchchangesinStateandFederalfunding.TheDistrictfirstpublishedanestimatedGeneralFundbudgetforthe2014‐15fiscalyearinJune2012,aspartofthethreeyearprojectionincludedwithits2012‐13budget.Sincethattime,theprojectionhasbeenrevisedmanytimestoreflectchangesinprojectedfundinglevels,aswellasanticipatedDistrictexpenditures.

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FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015FINANCIALANALYSISOFTHEDISTRICT’SFUNDS(continued)GeneralFundBudgetaryHighlights(continued)The 2014‐15 “Final” budgetwas officially approved by the Board of Trustees on June 24, 2014. Over thecourse of the year, the District revised the annual operating budget several times. The major budgetamendmentsfallintothesecategories:

Revenues–increasedby$3.8millionprimarilytoreflectincreasesinfederal,state,andlocalrevenueestimates. OtherFederalandStaterevenueadjustmentsreflectdifferencesbetweenestimatedandactual carryovers for June 30, 2014 (more revenue was carried over than expected so budgetsincreasedfor2014‐15).Increasesinotherlocalrevenuesreflectdonationsreceivedduringtheyear.The District does not budget revenues and expenditures related to donations until the actualdonationisreceived.

Expenses – budget increased $11.1million, primarily to reflect employee compensation increasesnegotiated in the fallof2014,aswellas theadjustment to thebudget toreflect theexpenditureofcarryoveramounts.

WhiletheDistrict’sfinalbudgetfortheGeneralFundanticipatedthatexpenditureswouldexceedrevenuesbyabout$7.0million,theactualresultsfortheyearshowthatrevenuesexceededexpendituresbyroughly$0.5million. Actualrevenueswere$52,704morethananticipated,andexpenditureswere$7.4millionlessthanbudgeted.ThatamountconsistsprimarilyofrestrictedcategoricalprogramdollarsthatwerenotspentasofJune30,2015thatwillbecarriedoverintothe2015‐16budget.CAPITALASSETANDDEBTADMINISTRATIONCapitalAssetsBy the end of 2014‐15 the District had invested $0.6 million in new capital assets, related to siteimprovements. (More detailed information about capital assets can be found in Note 6 to the financialstatements).Totaldepreciationexpensefortheyearexceeded$5.0million.TableA‐3:CapitalAssetsatYearEnd,NetofDepreciation

VarianceIncrease

2015 2014 (Decrease)Land 9,198,655$ 9,198,655$ ‐$Improvementofsites 2,728,479 2,500,791 227,688Buildingsandimprovements 72,734,499 77,054,835 (4,320,336)Machineryandequipment 3,258,621 3,629,160 (370,539)Total 87,920,254$ 92,383,441$ (4,463,187)$


13

FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015CAPITALASSETANDDEBTADMINISTRATION(continued)Long‐TermDebtAtyear‐end theDistricthad$149.1million ingeneralobligationbonds,netpension liability, certificatesofparticipation,RDAloans,capitalleasesandemploymentbenefits–anetdecreaseof14.0%fromlastyear–asshowninTableA‐4.(MoredetailedinformationabouttheDistrict’slong‐termliabilitiesispresentedinNote7tothefinancialstatements).TableA‐4:OutstandingLong‐TermDebtatYear‐End

VarianceIncrease

2015 2014* (Decrease)Generalobligationbonds 40,872,799$ 42,320,715$ (1,447,916)$Certificatesofparticipation 5,840,000 6,160,000 (320,000)RDAloans 314,602 346,062 (31,460)Capitalleases 293,838 620,050 (326,212)Earlyretirementincentives ‐ 443,624 (443,624)Compensatedabsences 1,290,030 1,060,118 229,912Netpensionliability 93,400,044 116,546,354 (23,146,310)Otherpostemploymentbenefits 7,137,015 5,923,854 1,213,161Total 149,148,328$ 173,420,777$ (24,272,449)$

*Asrestated


FACTORSBEARINGONTHEDISTRICT’SFUTUREOverviewOn June 16, 2015, the Governor, the Senate President pro Tempore, and the Speaker of the Assemblyannouncedabudgetagreement.TheLegislaturepassedthebudgetbillandrelatedlegislationonFriday,June19.Thebudgetagreementreliesontheadministration’sMay2015estimatesof(1)GeneralFundrevenues,(2)theProposition98minimumguaranteeforschoolsandcommunitycolleges,and(3)budgetreserveanddebtpaymentrequirementsunderProposition2.Schoolandcommunitycollegefundingisthecenterpieceofthe agreement, as administration estimates of the Proposition 98 minimum guarantee have increasedsubstantially over June 2014 levels. With savings resulting from (1) rejection of various administrationproposals,(2)anerrorintheadministration’sMedi‐Calestimates,(3)legislativechangesmadetotheMiddle‐Class Scholarship Program, and (4) other legislative actions, the agreement makesmodest augmentationsoutsideofProposition98aboveMayRevisionlevels.2015‐16toEndWith$4.6BillioninEstimatedTotalReservesThebudgetagreementassumes$115billioninrevenues,a3.3percentincreaseover2014‐15.(Thistotalisnetofthe$1.9billiondepositintheProposition2BudgetStabilizationAccount[BSA].)Thestate’s“bigthree”General Fund taxes—the personal income tax, sales and use tax, and corporation tax—are estimated toincrease at a slightlyhigher rate (4percent). General Fund revenue growthwasmuchhigher in2014‐15,increasing at a very healthy 7.7 percent rate. General Fund spending is largely flat across 2014‐15 and2015‐16,increasingatonly0.8percent. Growthinongoingprogrammaticspending,however,ismaskedbyvarious one‐time actions, including one‐time spending in 2014‐15ondebtpayments andmandatebacklogclaims,andtheendofthe“tripleflip”mechanismusedtofinancethestate’spriordeficitfinancingbonds.Thebudgetends2015‐16with$4.6billioninestimatedtotalreserves, including$1.1billionintheSpecialFundforEconomicUncertainties—thestate’straditionalbudgetreserve—and$3.5billionintheBSA.

14

FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015FACTORSBEARINGONTHEDISTRICT’SFUTURE(continued)Proposition98SubstantialUpwardRevisionstoEstimatesofProposition98MinimumGuaranteeState budgeting for preschool, elementary and secondary schools, and the California Community Colleges(CCC) is based primarily on Proposition 98, approved by voters in 1988. Proposition 98 established aminimumfundingrequirementcommonlycalledtheminimumguarantee. Theestimateofthe2013‐14and2014‐15minimumguaranteeshaveincreased$612millionand$5.4billion,respectivelyfromtheJune2014estimates.Theestimateofthe2015‐16minimumguaranteeis$7.6billion(12percent)higherthanthe2014‐15BudgetAct level. Theseincreasesintheguaranteearedueprimarilytostaterevenuesbeinghigherthanassumedinlastyear’sbudgetpackage. Thebudgetpackagefundsattheselatestestimatesoftheminimumguarantees.LargeUpward2014‐15AdjustmentsResultinRelativelyModestYear‐Over‐YearGrowthGrowthfromtherevised2014‐15levelto2015‐16is$2.1billion(3percent).Thisrelativelymodestgrowthisduetothelargeupwardrevisionto2014‐15notedabove.In2015‐16,totalProposition98fundingis$68.4billion. Of this amount, $49.4 billion is General Fund and $19 billion is local property tax revenue. Thenotable increase in localpropertytaxrevenuefrom2014‐15to2015‐16($2.3billion,14percent) isdue inlargeparttotheendofthetripleflipandtheshiftofassociatedlocalpropertytaxrevenuebackfromcities,counties,andspecialdistrictstoschoolandcommunitycollegedistricts.Growthinlocalpropertytaxrevenueis slightly greater thangrowth in theProposition98minimumguarantee, resulting ina slight reduction inProposition98GeneralFundfrom2014‐15to2015‐16.Per‐StudentFundingIncreasesSignificantlyUnderthebudgetpackage,K‐12per‐studentfundingincreasesfromthe2014‐15BudgetActlevelof$8,931to$9,942in2015‐16—anincreaseof$1,011(11percent).BudgetPackageContainsManySpendingChangesThebudgetaccountsforhigherLocalControlFundingFormula(LCFF)costsandusestheremainingfundingincrease for paying down the K‐14 mandate backlog. In addition to these changes, the budget packageincludes a $256 million settle‐up payment related to meeting the Proposition 98minimum guarantee for2006‐07 and 2009‐10 and $207 million in unspent prior‐year Proposition 98 funds that have beenrepurposed.PackageNotablyReducesOutstandingK‐14ObligationsThe budget package includes the following K‐14 actions, all of which reduce the state’s outstanding K‐14obligations.

Pays DownMandate Backlog. The budget package includes $3.8 billion to pay down the K‐14mandatebacklog ($3.2billion is for theK‐12backlogand$632million for theCCCbacklog). Afteraccountingforthesepayments,theLAOestimatestheoutstandingK‐14mandatebacklogtobe$1.5billion($1.2billionforschoolsandabout$300millionforcommunitycolleges).

RetiresAllK‐14PaymentDeferrals.Asrequiredbytrailerlegislationenactedlastyear,thebudgetpackageprovides$992milliontoeliminateallremainingK‐14paymentdeferrals. Thebudgetyearwillbethefirstfiscalyearsince2000‐01thatthestateissettomakeallK‐14paymentsontime.

PaysOffEmergencyRepairProgram(ERP)Obligation. Thebudgetincludes$273millionforthefinalERPpayment.Statuterequiresthestatetoprovideatotalof$800milliontoschooldistrictsforemergency facility repairs, and the state has provided $527million to date. (Of the $273million,$145 million comes from a settle‐up payment and $128 million comes from unspent prior‐yearProposition98funds.)

15

FULLERTONSCHOOLDISTRICTManagement’sDiscussionandAnalysis(Unaudited)FortheFiscalYearEndedJune30,2015

FACTORSBEARINGONTHEDISTRICT’SFUTURE(continued)K‐12EducationLargeIncreaseforLocalControlFundingFormula(LCFF)The largest single augmentation in the state budget is $6.0 billion for implementing the LCFF for schooldistrictsandcharterschools—bringingtotalLCFFfundingto$52billion.Thisreflectsa13percentyear‐over‐year increase in LCFF funding. The administration estimates this funding will close 52 percent of theremaining gap to LCFF target rates. The budget funds 90 percent of the estimated statewide full LCFFimplementationcost.SchooldistrictsandcharterschoolsmayuseLCFFmoniesforanyeducationalpurpose,includingimplementationoftheirLocalControlandAccountabilityPlans.NewSecondarySchoolCareerTechnicalEducation(CTE)CompetitiveGrantProgramThebudgetpackageincludes$900millioninone‐timefundingforathree‐yearcompetitivegrantprogramtopromotehigh‐qualityCTE.Ofthisamount,$400millionisprovidedin2015‐16,$300millionin2016‐17,and$200million in2017‐18. Schooldistricts,countyofficesofeducation(COEs),charterschools,andRegionalOccupational Centers and Programs operated by joint powers agencies (JPAs) may apply for grants,individually or in consortia. Theprogramprovides separatepoolsof funding for large,medium‐sized, andsmallapplicants,basedonapplicants’averagedailyattendance(ADA)ingrades7‐12.Specifically,88percentofthefundingisreservedforapplicantswithADAgreaterthan550,8percentisreservedforapplicantswithADA between 140 and 550, and 4 percent is reserved for applicants with less than 140 ADA. TheSuperintendentofPublicInstruction(SPI), incollaborationwiththeexecutivedirectoroftheStateBoardofEducation(SBE),willdeterminethenumberofgrantstobeawardedandspecificgrantamounts.PackageofSpecialEducationActionsThebudgetincludes$67millionforapackageofspecialeducation‐relatedactivities.Ofthe$67million,$52million is ongoing and $15 million is one time. The largest ongoing augmentation in this package is forexpandingservicesforinfants,toddlers,andpreschoolerswithdisabilitiesaswellasrequiringpreschoolstafftraining and parent education relating to identifying andmeetingpreschoolers’ special needs. The largestone‐timeaugmentationisforoneortwoCOEstodevelopstatewideresourcesandtrainingopportunitiesforaddressingstudents’diverseinstructionalandbehavioralneeds.SecondRoundofInternetInfrastructureGrantsThe budget includes $50 million in one‐time funding for the second round of Broadband InternetInfrastructureGrants. TheK‐12HighSpeedNetwork is to awardgrants to schools that cannotadministeronlinetestsorcanonlyadministerthetestsbyshuttingdownotheressentialonlineactivitiessuchasemail.Grantsmay be used to purchase Internet infrastructure. TheDepartment of Finance (DOF)must approveprojectsresultingincostsexceeding$1,000pertest‐takingpupil.AllofthesefactorswereconsideredinpreparingtheFullertonSchoolDistrictbudgetforthe2015‐16fiscalyear.CONTACTINGTHEDISTRICT’SFINANCIALMANAGEMENTThisfinancialreportisdesignedtoprovideourcitizens,taxpayers,customers,investorsandcreditorswithageneraloverviewof theDistrict’s financesandtodemonstrate theDistrict’saccountability for themoney itreceives.Ifyouhaveanyquestionsaboutthisreportorneedadditionalfinancialinformation,contactSusanCrossHume,CPA,CIA,CGMA,AssistantSuperintendent,BusinessServicesat(714)447‐7412.

Thenotestofinancialstatementsareanintegralpartofthisstatement. 16

FULLERTONSCHOOLDISTRICTStatementofNetPositionJune30,2015

TotalGovernmentalActivities

ASSETSCash 48,154,485$Accountsreceivable 5,328,621Inventories 76,463Prepaidexpenses 33,728Non‐depreciableassets 9,198,655Depreciableassets 163,764,201Lessaccumulateddepreciation (85,042,602)

Totalassets 141,513,551

DEFERREDOUTFLOWSOFRESOURCESPensioncontributionssubsequentto

measurementdate 7,223,233Adjustmentduetodifferencesinproportions 110,881Deferredamountsonrefunding 1,545,702

Totaldeferredoutflowsofresources 8,879,816

LIABILITIESAccountspayable 6,264,588Unearnedrevenue 282,596Long‐termdebt:

Portiondueorpayablewithinoneyear 3,156,128Portiondueorpayableafteroneyear 145,992,200

Totalliabilities 155,695,512

DEFERREDINFLOWSOFRESOURCESNetdifferencesbetweenprojectedandactualearnings

onplaninvestments 24,753,707

NETPOSITIONNetinvestmentincapitalassets 46,362,668Restrictedfor:

Capitalprojects 5,438,728Debtservice 3,141,455Categorical,childcare,andnutritionprograms 6,425,104

Unrestricted (91,423,807)

Totalnetposition (30,055,852)$


FULLERTONSCHOOLDISTRICTStatementofActivitiesFortheFiscalYearEndedJune30,2015

Net(Expense)

Operating RevenueandChargesfor Grantsand Changesin

Expenses Services Contributions NetPosition


InstructionalServices:Instruction 86,239,419$ 61,194$ 17,885,079$ (68,293,146)$Instruction‐RelatedServices:

Supervisionofinstruction 2,944,763 5,969 1,545,690 (1,393,104)Instructionallibrary,mediaandtechnology 3,742,416 152 197,005 (3,545,259)Schoolsiteadministration 8,777,467 90 846,696 (7,930,681)

PupilSupportServices:Home‐to‐schooltransportation 1,940,886 ‐ ‐ (1,940,886)Foodservices 5,022,731 367,103 3,923,601 (732,027)Allotherpupilservices 4,301,639 6,146 1,452,537 (2,842,956)

GeneralAdministrationServices:Othergeneraladministration 5,879,550 8 613,216 (5,266,326)

Plantservices 9,694,757 ‐ 58,779 (9,635,978)Debtissuancecosts 177,471 ‐ ‐ (177,471)Interestonlong‐termdebt 2,293,769 ‐ ‐ (2,293,769)Otheroutgo 986,257 7,174 1,763,976 784,893Depreciation(unallocated) 5,034,558 ‐ ‐ (5,034,558)TotalGovernmentalActivities 137,035,683$ 447,836$ 28,286,579$ (108,301,268)$

GeneralRevenues:

Propertytaxes 41,525,680Federalandstateaidnotrestrictedtospecificpurpose 59,701,929Interestandinvestmentearnings 151,530Miscellaneous 4,192,489

Totalgeneralrevenues 105,571,628

Changeinnetposition (2,729,640)

Netposition‐July1,2014,asoriginallystated 82,607,326

Adjustmentforrestatement(Note1.I.) (109,933,538)

Netposition‐July1,2014,asrestated (27,326,212)

Netposition‐June30,2015 (30,055,852)$

Functions/Programs

ProgramRevenues


FULLERTONSCHOOLDISTRICTBalanceSheet–GovernmentalFundsJune30,2015

GeneralFund

CafeteriaFund

Non‐MajorGovernmental

Funds

TotalGovernmental

FundsASSETS

Cash 30,908,901$ 2,853,571$ 11,201,643$ 44,964,115$Accountsreceivable 4,879,886 371,379 75,996 5,327,261Duefromotherfunds 215,468 ‐ 14,475 229,943Inventories 8,970 67,493 ‐ 76,463Prepaidexpenditures 29,874 3,854 ‐ 33,728

TotalAssets 36,043,099$ 3,296,297$ 11,292,114$ 50,631,510$

LIABILITIESANDFUNDBALANCESLiabilities

Accountspayable 2,870,504$ 769,094$ 132,777$ 3,772,375$Duetootherfunds 38,488 ‐ 212,286 250,774Unearnedrevenue 98,732 135,344 48,520 282,596

TotalLiabilities 3,007,724 904,438 393,583 4,305,745

FundBalancesNonspendable 88,844 72,167 ‐ 161,011Restricted 2,973,908 2,319,692 10,898,531 16,192,131Assigned 2,819,428 ‐ ‐ 2,819,428Unassigned 27,153,195 ‐ ‐ 27,153,195

TotalFundBalances 33,035,375 2,391,859 10,898,531 46,325,765

TotalLiabilitiesandFundBalances 36,043,099$ 3,296,297$ 11,292,114$ 50,631,510$


FULLERTONSCHOOLDISTRICTReconciliationoftheGovernmentalFundsBalanceSheettotheStatementofNetPositionJune30,2015Totalfundbalances‐governmentalfunds 46,325,765$

Capitalassetsathistoricalcost 172,962,856Accumulateddepreciation (85,042,602)

Net: 87,920,254

(460,418)

1,545,702

Generalobligationbondspayable 40,872,799Certificatesofparticipationpayable 5,840,000FullertonRDAloanpayable 314,602Capitalleasespayable 293,838Compensatedabsencespayable 1,290,030Netpensionliability 93,400,044Otherpostemploymentbenefitspayable 7,137,015 (149,148,328)

Ingovernmentalfunds,deferredoutflowsandinflowsofresourcesrelatingtopensionsarenotreportedbecausetheyareapplicabletofutureperiods.Inthestatementofnetposition,deferredoutflowsandinflowsofresourcesrelatingtopensionsarereported.Deferredoutflowsandinflowsofresourcesrelatingtopensionsconsistof:

Deferredoutflows 7,334,114Deferredinflows (24,753,707) (17,419,593)

1,180,766

Totalnetposition‐governmentalactivities (30,055,852)$

Internalservicefundsareusedtoconductcertainactivitiesforwhichcostsarechargedtootherfundsonafullcost‐recoverybasis.Becauseinternalservicefundsarepresumedtooperateforthebenefitofgovernmentalactivities,assetsandliabilitiesofinternalservicefundsarereportedwithgovernmentalactivitiesinthestatementofnetposition.Netpositionforinternalservicefundsis:

Capitalassetsusedingovernmentalactivitiesarenotfinancialresourcesandthereforearenotreportedasassetsingovernmentalfunds.Thenetofcapitalassetsanddepreciationatyear‐endis:

Ingovernmentalfunds,interestonlong‐termdebtisnotrecognizeduntiltheperiodinwhichitmaturesandispaid.Inthegovernment‐widestatementofactivities,itisrecognizedintheperiodthatitisincurred.Theadditionalliabilityforunmaturedinterestowingattheendoftheperiodwas:

Long‐termliabilities,includingbondspayable,arenotdueandpayableinthecurrentperiodandthereforearenotreportedasliabilitiesinthefundfinancialstatements.Long‐termliabilitiesatyear‐endconsistof:

Deferredamountsonrefundingrepresentamountspaidtoanescrowagentinexcessoftheoutstandingdebtatthetimeofthepaymentforrefundedbondswhichhavebeendefeased.Inthegovernment‐widestatementstheyarerecognizedasadeferredoutflowofresources.Theremainingdeferredamountsonrefundingattheendoftheperiodwere:


FULLERTONSCHOOLDISTRICTStatementofRevenues,Expenditures,andChangesinFundBalances–GovernmentalFundsFortheFiscalYearEndedJune30,2015

GeneralFund

CafeteriaFund


Funds

TotalGovernmental

FundsREVENUES

LCFFSources 93,228,792$ ‐$ ‐$ 93,228,792$FederalSources 5,853,420 4,276,576 72,054 10,202,050OtherStateSources 9,870,382 255,474 1,457,972 11,583,828OtherLocalSources 9,637,284 1,131,837 7,428,139 18,197,260

TotalRevenues 118,589,878 5,663,887 8,958,165 133,211,930

EXPENDITURESCurrent:

Instruction 80,680,958 ‐ 2,701,689 83,382,647Instruction‐relatedservices:

Supervisionofinstruction 3,055,624 ‐ 17,097 3,072,721Instructionallibrary,mediaandtechnology 3,702,111 ‐ ‐ 3,702,111Schoolsiteadministration 7,849,660 ‐ 594,668 8,444,328

Pupilsupportservices: ‐Home‐to‐schooltransportation 1,920,379 ‐ ‐ 1,920,379Foodservices ‐ 5,061,878 ‐ 5,061,878Allotherpupilservices 4,136,644 ‐ 70,416 4,207,060

Generaladministrationservices:Othergeneraladministration 6,159,219 ‐ ‐ 6,159,219

Plantservices 9,270,244 33,163 373,790 9,677,197Transfersofindirectcosts (360,534) 220,525 140,009 ‐

Capitaloutlay 147,326 24,747 399,298 571,371Intergovernmental 1,305,494 ‐ ‐ 1,305,494Debtservice:

Issuancecost ‐ ‐ 177,471 177,471Principal 320,000 ‐ 2,427,672 2,747,672Interest 206,720 ‐ 1,343,161 1,549,881

TotalExpenditures 118,393,845 5,340,313 8,245,271 131,979,429

Excess(Deficiency)ofRevenuesOver(Under)Expenditures 196,033 323,574 712,894 1,232,501

OTHERFINANCINGSOURCES(USES)Interfundtransfersin ‐ ‐ 107,793 107,793Interfundtransfersout (107,793) ‐ ‐ (107,793)Bondissuancepremium ‐ ‐ 782,710 782,710Allothersources ‐ ‐ 7,028 7,028Transfertoescrowagentfordefeaseddebt ‐ ‐ (6,685,239) (6,685,239)Proceedsfromrefundingbond ‐ ‐ 6,080,000 6,080,000

TotalOtherFinancingSourcesandUses (107,793) ‐ 292,292 184,499

NetChangeinFundBalances 88,240 323,574 1,005,186 1,417,000

32,947,135 2,068,285 9,893,345 44,908,765

FundBalances,June30,2015 33,035,375$ 2,391,859$ 10,898,531$ 46,325,765$

FundBalances,July1,2014


FULLERTONSCHOOLDISTRICTReconciliationoftheGovernmentalFundsStatementofRevenues,Expenditures, andChangesinFundBalancestotheStatementofActivitiesFortheFiscalYearEndedJune30,2015

Totalnetchangeinfundbalances‐governmentalfunds 1,417,000$

Amountsreportedforgovernmentalactivitiesinthestatementofactivitiesaredifferentbecause:

Expendituresforcapitaloutlay 571,371Depreciationexpense (5,034,558)

Netexpenseadjustment: (4,463,187)

9,147,672

48,326

(6,862,710)

322,840

(482,214)

(1,213,161)

149,109

(886,099)

213,712

(120,928)

Changeinnetposition‐governmentalactivities (2,729,640)$

Ingovernmentalfunds,pensioncostsarerecognizedwhenemployercontributionsaremade.Inthestatementofactivitiespensioncostsarerecognizedontheaccrualbasis.Thisyear,thedifferencebetweenaccrual‐basispensioncostsandactualemployercontributionswas:

Theinternalservicefundisusedbymanagementtochargethecostofself‐insuranceactivities.Thenetrevenue(expense)oftheinternalservicefundisreportedwithgovernmentalactivities.

Inthestatementofactivities,certainoperatingexpenses‐compensatedabsencesandearlyretirementincentives,forexamplearemeasuredbytheamountsearnedduringtheyear.Inthegovernmentalfunds,however,expendituresfortheseitemsaremeasuredbytheamountoffinancialresourcesused(essentially,theamountsactuallypaid).Thisyear,amountspaidexceededamountsearnedby:

Ingovernmentalfunds,postemploymentbenefitcostsarerecognizedasexpendituresintheperiodtheyarepaid.Inthegovernment‐widestatements,postemploymentbenefitcostsarerecognizedintheperiodthattheyareincurred.TheincreaseinthenetOPEBliabilityattheendoftheperiodwas:

Ingovernmentalfunds,interestonlong‐termdebtisrecognizedintheperiodthatitbecomesdue.Inthegovernment‐widestatementofactivities,itisrecognizedintheperiodthatitisincurred.Unmaturedinterestowingattheendoftheperiod,lessmaturedinterestpaidduringtheperiodbutowingfromthepriorperiod,was:

Ingovernmentalfunds,accretedinterestoncapitalappreciationbondsisnotrecordedasanexpenditurefromcurrentresources.Inthegovernment‐widestatementofactivities,however,thisisrecordedasinterestexpensefortheperiod:

Ingovernmentalfunds,ifdebtisissuedatapremiumoratadiscount,thepremiumordiscountisrecognizedasanotherfinancingsourceoranotherfinancinguseintheperioditisincurred.Inthegovernment‐widestatements,thepremiumordiscountisamortizedasinterestoverthelifeofthedebt.

Ingovernmentalfunds,thecostsofcapitalassetsarereportedasexpendituresintheperiodwhentheassetsareacquired.Inthestatementofactivities,costsofcapitalassetsareallocatedovertheirestimatedusefullivesasdepreciationexpense.Thedifferencebetweencapitaloutlayexpendituresanddepreciationexpensefortheperiodis:

Ingovernmentalfunds,repaymentsoflong‐termdebtarereportedasexpenditures.Inthegovernment‐widestatements,repaymentsoflong‐termdebtarereportedasareductionofliabilities.Expendituresforrepaymentoftheprincipalportionoflong‐termdebtwere:

Theamountspaidtotherefundedbondescrowagentinexcessoftherefundedbondatthetimeofpaymentarerecordedasdeferredamountsonrefundingandareamortizedtointerestexpenseoverthelifeoftheliability.Deferredamountsincurred,lessamortizationofthisamountduringtheyearwas:

Ingovernmentalfunds,proceedsfromdebtarerecognizedasotherfinancingsources.Inthegovernment‐widestatements,proceedsfromdebtarereportedasanincreasetoliabilities.Amountsrecognizedingovernmentalfundsasproceedsfromdebt,netofissuepremiumordiscount,were:


FULLERTONSCHOOLDISTRICTStatementofNetPosition–ProprietaryFundsJune30,2015


InternalServiceFund

ASSETSCash 3,190,370$Accountsreceivable 1,360Duefromotherfunds 24,013

Totalassets 3,215,743

LIABILITIESAccountspayableandaccruedliabilities 13,364Duetootherfunds 3,182EstimatedliabilityforopenclaimsandIBNR 2,018,431

Totalliabilities 2,034,977

NETPOSITIONRestricted 1,180,766$


FULLERTONSCHOOLDISTRICTStatementofRevenues,Expenses,andChangesinFundNetPosition–ProprietaryFundsFortheFiscalYearEndedJune30,2015


InternalServiceFund

OPERATINGREVENUESChargestootherfunds 1,575,047$Otherfeesandcontracts 33,583

Totaloperatingrevenues 1,608,630

OPERATINGEXPENSESCurrent:Classifiedsalaries 116,755Employeebenefits 52,740Booksandsupplies 192,421Servicesandotheroperatingexpenditures 1,377,926

Totaloperatingexpenses 1,739,842

OperatingIncome(Loss) (131,212)

NON‐OPERATINGREVENUESInterestincome 10,284

Changeinnetposition (120,928)

Netposition,July1,2014 1,301,694

Netposition,June30,2015 1,180,766$


FULLERTONSCHOOLDISTRICTStatementofCashFlows‐ProprietaryFundsFortheFiscalYearEndedJune30,2015


InternalServiceFund

CASHFLOWSFROMOPERATINGACTIVITIESCashreceivedfromself‐insurancepremiums 1,564,252$Cashreceivedfromothersources 33,583Cashpaidforoperatingexpenses (1,774,165)

Netcashprovided(used)byoperatingactivities (176,330)

CASHFLOWSFROMINVESTINGACTIVITIESInterestoninvestments 9,748

Netincrease(decrease)incash (166,582)

Cash,July1,2014 3,356,952

Cash,June30,2015 3,190,370$

Operatingincome(loss) (131,212)$Adjustmentstoreconcileoperatingincome(loss)tonetcashprovided(used)byoperatingactivities:

(Increase)decreaseinoperatingassets:Induefromotherfunds (10,795)

Increase(decrease)inoperatingliabilities:Inaccountspayableandaccruedliabilities (34,747)Induetootherfunds 1,504Inunearnedrevenues (1,080)

Netcashprovided(used)byoperatingactivities (176,330)$

byoperatingactivities:Reconciliationofoperatingincome(loss)tonetcashprovided(used)


FULLERTONSCHOOLDISTRICTStatementofFiduciaryNetPositionJune30,2015

Associated DebtServiceStudent FundforSpecial

BodyFunds TaxBonds TotalASSETS

Cash 376,370$ 16,789$ 393,159$Investments ‐ 2,486,425 2,486,425Accountsreceivable ‐ 7 7

TotalAssets 376,370$ 2,503,221$ 2,879,591$

LIABILITIESAccountspayable ‐$ 8,489$ 8,489$Unearnedrevenue ‐ 1,926,599 1,926,599Duetostudentgroups 376,370 ‐ 376,370Duetobondholders ‐ 568,133 568,133

TotalLiabilities 376,370$ 2,503,221$ 2,879,591$

AgencyFunds

26

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE1–SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESFullertonSchoolDistrict(the"District")accountsforitsfinancialtransactionsinaccordancewiththepoliciesand procedures of the California Department of Education's California School Accounting Manual. TheaccountingpoliciesoftheDistrictconformtoaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericaasprescribedbytheGovernmentalAccountingStandardsBoard.Thefollowingisasummaryofthemoresignificantpolicies:A. ReportingEntity

A reporting entity is comprised of the primary government, component units, and other organizationsthatareincludedtoensurethefinancialstatementsarenotmisleading.TheprimarygovernmentoftheDistrictconsistsofallfunds,departments,andagenciesthatarenotlegallyseparatefromtheDistrict.ForFullertonSchoolDistrict, this includesgeneraloperations, foodservice,andstudentrelatedactivitiesoftheDistrict.Component units are legally separate organizations for which the District is financially accountable.Componentunitsmayalso includeorganizations thatare fiscallydependenton theDistrict, in that theDistrict approves their budget, the issuance of their debt or the levying of their taxes. In addition,component units are other legally separate organizations for which the District is not financiallyaccountablebutthenatureandsignificanceoftheorganization'srelationshipwiththeDistrictissuchthatexclusionwouldcausetheDistrict'sfinancialstatementstobemisleadingorincomplete.Forfinancialreportingpurposes,thecomponentunitshaveafinancialandoperationalrelationshipwhichmeets the reporting entity definition criteria of theGovernmentalAccounting StandardsBoard (GASB)StatementNo.14,TheFinancialReportingEntity,andthusareincludedinthefinancialstatementsusingtheblendedpresentationmethodasiftheywerepartoftheDistrict'soperationsbecausethegoverningboardofthecomponentunitsisessentiallythesameasthegoverningboardoftheDistrictandbecausetheirpurposeistofinancetheconstructionoffacilitiestobeusedforthedirectbenefitoftheDistrict.The Fullerton School District Capital Facilities Corporation (the Corporation) financial activity arepresentedinthefinancialstatementsastheCapitalProjectsforBlendedComponentUnitsFundandtheDebtService forBlendedComponentUnitsFund. Certificatesofparticipationandotherdebt issuedbythe Corporation are included as long‐term liabilities in the government‐wide financial statements.IndividuallypreparedfinancialstatementsarenotpreparedfortheCorporation.TheFullertonSchoolDistrictCommunityFacilitiesDistricts(CFDs) financialactivity ispresented inthefinancialstatementsastheCapitalProjectsFundforBlendedComponentUnitsandintheFiduciaryFundsStatementastheDebtServiceFundforSpecialTaxBonds.SpecialTaxBondsissuedbytheCFDsarenotincluded in the long‐termobligationsof theStatementofNetPositionas theyarenotobligationsof theDistrict.IndividuallypreparedfinancialstatementsarenotpreparedforeachoftheCFDs.

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FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE1–SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)B. BasisofPresentation,BasisofAccounting

1. BasisofPresentationGovernment‐WideFinancialStatementsThestatementofnetpositionandthestatementofactivitiesdisplayinformationabouttheprimarygovernment (the District). These statements include the financial activities of the overallgovernment, except for fiduciary activities. Eliminations have beenmade tominimize the double‐counting of internal activities. Governmental activities generally are financed through taxes,intergovernmentalrevenues,andothernonexchangetransactions.ThestatementofactivitiespresentsacomparisonbetweendirectexpensesandprogramrevenuesforeachfunctionoftheDistrict'sgovernmentalactivities.Directexpensesarethosethatarespecificallyassociatedwithaprogramorfunctionand,therefore,areclearlyidentifiabletoaparticularfunction.Program revenues include (a) fees, fines, and charges paid by the recipients of goods or servicesoffered by the programs and (b) grants and contributions that are restricted to meeting theoperational or capital requirements of a particular program. Revenues that are not classified asprogramrevenues,includingalltaxes,arepresentedasgeneralrevenues.FundFinancialStatementsThefundfinancialstatementsprovide informationabouttheDistrict's funds, including its fiduciaryfunds. Separate statements for each fund category ‐governmental,proprietary, and fiduciary ‐ arepresented. The emphasis of fund financial statements is on major governmental funds, eachdisplayed inaseparatecolumn. Allremaininggovernmental fundsareaggregatedandreportedasnonmajorfunds.Proprietaryfundoperatingrevenues,suchaschargesforservices,resultfromexchangetransactionsassociatedwith the principal activity of the fund. Exchange transactions are those inwhich eachpartyreceivesandgivesupessentiallyequalvalues. Nonoperatingrevenues,suchassubsidiesandinvestmentearnings,resultfromnonexchangetransactionsorancillaryactivities.MajorGovernmentalFundsTheDistrictmaintainsthefollowingmajorgovernmentalfunds:

GeneralFund:ThisfundisthegeneraloperatingfundoftheDistrict.Itisusedtoaccountforallfinancialresourcesexceptthoserequiredtobeaccountedforinanotherfund.TheDistrictalsomaintainedaDeferredMaintenanceFund,aSpecialReserveFundforOtherThanCapitalOutlayProjects, and a Special Reserve Fund for Postemployment Benefits. Under the flexibilityprovisionsofcurrentstatutethatallowcertainformerlyrestrictedrevenuestobeusedforanyeducationalpurpose, theDeferredMaintenanceFunddoesnotcurrentlymeet thedefinitionofspecialrevenuefundsasitisnolongerprimarilycomposedofrestrictedorcommittedrevenuesources. In addition, the SpecialReserveFund forOtherThanCapitalOutlayProjects and theSpecialReserveFundforPostemploymentBenefitsarenotsubstantiallycomposedofrestrictedorcommittedrevenuesources.BecausethesefundsdonotmeetthedefinitionofspecialrevenuefundsunderGASB54,theactivityinthosefundsisbeingreportedwithintheGeneralFund.CafeteriaFund: This fundisusedtoaccountforrevenuesreceivedandexpendituresmadetooperatetheDistrict'sfoodserviceoperations.

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FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE1–SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)

B. BasisofPresentation,BasisofAccounting(continued)

1. BasisofPresentation(continued)

Non‐MajorGovernmentalFundsTheDistrictmaintainsthefollowingnon‐majorgovernmentalfunds:

SpecialRevenueFund:

ChildDevelopmentFund: This fund isused to account for resources committed to childdevelopmentprogramsmaintainedbytheDistrict.

CapitalProjectsFunds:

Building Fund: This fund is used to account for the acquisition of major governmentalcapitalfacilitiesandbuildingsfromthesaleofgeneralobligationbonds.CapitalFacilitiesFund:ThisfundisusedtoaccountforresourcesreceivedfromdeveloperimpactfeesassessedunderprovisionsoftheCaliforniaEnvironmentalQualityAct.SpecialReserveFundforCapitalOutlayProjects: ThisfundisusedtoaccountforfundssetasideforBoarddesignatedconstructionprojects.

DebtServiceFund:

BondInterestandRedemptionFund:Thisfundisusedtoaccountfortheaccumulationofresourcesfor,andtherepaymentof,Districtbonds,interest,andrelatedcosts.

ProprietaryFundsProprietary fund reporting focuses on the determination of operating income, changes in NetPosition,financialposition,andcashflows.Proprietaryfundsareclassifiedasenterpriseorinternalservice.TheDistricthasthefollowingproprietaryfund:

Self‐Insurance Fund: This fundmay be used to account for any activity forwhich goods orservices are provided to other funds of the District in return for a fee to cover the cost ofoperations. TheDistrictoperates aworkers’ compensationprogram that is accounted for inaself‐insuranceservicefund.

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1. BasisofPresentation(continued)

FiduciaryFundsFiduciary fund reporting focuses onnet position and changes in net position. Fiduciary funds areusedtoreportassetsheldinatrusteeoragencycapacityforothersandthereforecannotbeusedtosupport the District’s own programs. The fiduciary fund category includes pension (and otheremployeebenefit)trustfunds,investmenttrustfunds,private‐purposetrustfunds,andagencyfunds.TheDistrictmaintainsthefollowingfiduciaryfunds:

DebtServiceFundforSpecialTaxBonds:Thisfundisusedtoaccountfortheaccumulationofresources for thepaymentofprincipalandinterestonbondsissuedbyMello‐RoosCommunityFacilitiesDistrictsthatareconsideredblendedcomponentunitsoftheDistrict.AgencyFunds:TheDistrictmaintainsaseparateagency fund foreachschool thatoperatesanAssociatedStudentBody(ASB)Fund,whetheritisorganizedornot.

2. MeasurementFocus,BasisofAccounting

Government‐Wide,Proprietary,andFiduciaryFundFinancialStatementsThe government‐wide, proprietary, and fiduciary fund financial statements are reported using theeconomicresourcesmeasurementfocusandtheaccrualbasisofaccounting.Revenuesarerecordedwhenearnedandexpensesarerecordedat thetime liabilitiesare incurred,regardlessofwhentherelated cash flows take place. Nonexchange transactions, inwhich theDistrict gives (or receives)valuewithoutdirectlyreceiving(orgiving)equalvalue inexchange, includepropertytaxes,grants,entitlements,anddonations. Onanaccrualbasis,revenuefrompropertytaxes isrecognizedinthefiscalyearinwhichalleligibilityrequirementshavebeensatisfied.GovernmentalFundFinancialStatementsGovernmental fundsarereportedusingthecurrent financialresourcesmeasurement focusandthemodifiedaccrualbasisofaccounting.Underthismethod,revenuesarerecognizedwhenmeasurableand available. Expenditures are recorded when the related fund liability is incurred, except forprincipalandinterestongenerallong‐termdebt,claimsandjudgments,andcompensatedabsences,whicharerecognizedasexpenditurestotheextenttheyhavematured.Capitalassetacquisitionsarereportedasexpendituresingovernmentalfunds. Proceedsofgenerallong‐termdebtandfinancingfromcapitalleasesarereportedasotherfinancingsources.

3. Revenues‐ExchangeandNon‐ExchangeTransactionsRevenue resulting from exchange transactions, in which each party gives and receives essentiallyequalvalue,isrecordedontheaccrualbasiswhentheexchangetakesplace. Onamodifiedaccrualbasis, revenue is recorded in the fiscal year in which the resources are measurable and becomeavailable. Available means that the resources will be collected within the current fiscal year.Generally, available is defined as collectiblewithin 60days. However, to achieve comparability ofreportingamongCaliforniadistrictsandsoasnot todistortnormalrevenuepatterns,withspecificrespect to reimbursement grants and corrections to state‐aid apportionments, the CaliforniaDepartment of Education has defined available for districts as collectible within one year. Thefollowing revenue sources are considered to be bothmeasurable and available at fiscal year‐end:Stateapportionments,interest,certaingrants,andotherlocalsources.

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3. Revenues‐ExchangeandNon‐ExchangeTransactions(continued)

Non‐exchangetransactions,inwhichtheDistrictreceivesvaluewithoutdirectlygivingequalvalueinreturn, includepropertytaxes,certaingrants,entitlements,anddonations. Revenuefrompropertytaxes isrecognized inthe fiscalyear inwhichthetaxesarereceived. Revenuefromcertaingrants,entitlements,anddonationsisrecognizedinthefiscalyearinwhichalleligibilityrequirementshavebeen satisfied. Eligibility requirements include time and purpose requirements. On a modifiedaccrual basis, revenue from non‐exchange transactions must also be available before it can berecognized.

C. BudgetaryDataThe budgetary process is prescribed by provisions of the California Education Code and requires thegoverningboardtoholdapublichearingandadoptanoperatingbudgetnolaterthanJuly1ofeachyear.TheDistrictgoverningboardsatisfiedtheserequirements.Theadoptedbudgetissubjecttoamendmentthroughouttheyeartogiveconsiderationtounanticipatedrevenueandexpendituresprimarilyresultingfromeventsunknownatthetimeofbudgetadoptionwiththelegalrestrictionthatexpenditurescannotexceedappropriationsbymajorobjectaccount.Theamountsreportedastheoriginalbudgetedamountsinthebudgetarystatementsreflecttheamountswhentheoriginalappropriationswereadopted.Theamountsreportedasthefinalbudgetedamountsinthebudgetarystatementsreflecttheamountsafterallbudgetamendmentshavebeenaccountedfor.Forbudgetpurposes,onbehalfpaymentshavenotbeen includedasrevenueandexpendituresasrequiredundergenerallyacceptedaccountingprinciples.

D. EncumbrancesEncumbranceaccounting isused inallbudgeted funds toreserveportionsofapplicableappropriationsforwhichcommitmentshavebeenmade.Encumbrancesarerecordedforpurchaseorders,contracts,andother commitmentswhen they arewritten. Encumbrances are liquidatedwhen the commitments arepaid.AllencumbrancesareliquidatedasofJune30.

E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and NetPosition1. CashandCashEquivalents

The District considers cash and cash equivalents to be cash on hand and demand deposits. Inaddition, because theTreasuryPool is sufficiently liquid to permitwithdrawal of cash at any timewithoutpriornoticeorpenalty,equityinthepoolisalsodeemedtobeacashequivalent.

2. InventoriesandPrepaidItemsInventoriesarevaluedatcostusingthefirst‐in/first‐out(FIFO)method.Thecostsofgovernmentalfund‐typeinventoriesarerecordedasexpenditureswhenconsumedratherthanwhenpurchased.Certainpaymentstovendorsreflectcostsapplicabletofutureaccountingperiodsandarerecordedasprepaiditems.

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FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE1–SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net

Position(continued)

3. CapitalAssetsPurchased or constructed capital assets are reported at cost or estimatedhistorical cost. Donatedfixed assets are recorded at their estimated fair value at thedateofdonation. The costofnormalmaintenanceandrepairs thatdonotaddtothevalueof theassetormateriallyextendassets' livesarenotcapitalized.Capital assets are depreciated using the straight‐line method over the following estimated usefullives:

Description EstimatedLives

BuildingsandImprovements 25‐50yearsFurnitureandEquipment 15‐20yearsVehicles 8years

4. UnearnedRevenue

Unearned revenue arises when potential revenue does not meet both the "measurable" and"available" criteria for recognition in the current period or when resources are received by theDistrict prior to the incurrence of qualifying expenditures. In subsequent periods, when bothrevenue recognition criteria are met, or when the District has a legal claim to the resources, theliability for unearned revenue is removed from the combined balance sheet and revenue isrecognized.Certaingrantsreceivedthathavenotmeteligibilityrequirementsarerecordedasunearnedrevenue.On the governmental fund financial statements, receivables that will not be collected within theavailableperiodarealsorecordedasunearnedrevenue.

5. DeferredOutflows/InflowsofResourcesIn addition to assets, the statement of net position will sometimes report a separate section fordeferred outflows of resources. This separate financial statement element, deferred outflows ofresources,representsaconsumptionofnetpositionthatappliestoafutureperiodandsowillnotberecognizedasanoutflowofresources(expense/expenditure)untilthen.TheDistricthasthreeitemsthat qualify for reporting in this category. Two items are to recognize contributionsmade to thepension plan after the measurement date of the net pension liability and account for the Districtchangeinproportionateshare.Thethirdisdeferredamountsonrefunding,whichresultedfromthedifferenceinthecarryingvalueofrefundeddebtanditsreacquisitionprice.Thisamountisshownasdeferredandamortizedovertheshorterofthelifeoftherefundedorrefundingdebt.Inaddition to liabilities, the statementofnetpositionwill sometimes reporta separate section fordeferred inflows of resources. This separate financial statement element, deferred inflows ofresources, represents an acquisition of net position that applies to a future period andwill not berecognized as an inflow of resources (revenue) until that time. The District has one item that isreportedasdeferredinflowsofresources.ThatitemistorecognizetheDistrict'sproportionateshareof the deferred inflows of resources related to its pension plans as more fully described in thefootnoteentitled"PensionPlans".

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Position(continued)

6. CompensatedAbsencesThe liability for compensated absences reported in the government‐wide statements consists ofunpaid, accumulated annual vacation leave balances. The liability has been calculated using thevestingmethod, inwhich leave amounts for both employeeswho currently are eligible to receivetermination payments and other employees who are expected to become eligible in the future toreceivesuchpaymentsuponterminationareincluded.

7. PensionsFor purposes of measuring the net pension liability and deferred outflows/inflows of resourcesrelated to pensions, and pension expense, information about the fiduciary net position of theDistrict's California State Teachers Retirement System (CalSTRS) and California Public Employees'RetirementSystem(CalPERS)plansandadditionto/deductionsfromthePlans'fiduciarynetpositionhave been determined on the same basis as they are reported by CalSTRS and CalPERS. For thispurpose,benefitpayments(includingrefundsofemployeecontributions)arerecognizedwhendueandpayableinaccordancewiththebenefitterms.Investmentsarereportedatfairvalue.

8. FundBalancesThefundbalanceforgovernmentalfundsisreportedinclassificationsbasedontheextenttowhichthegovernment isboundtohonorconstraintsonthespecificpurposesforwhichamounts inthosefundscanbespent.Nonspendable: Fund balance is reported as nonspendable when the resources cannot be spentbecausetheyareeitherinanonspendableformorlegallyorcontractuallyrequiredtobemaintainedintact.Resourcesinnonspendableformincludeinventoriesandprepaidassets.Restricted: Fund balance is reported as restricted when the constraints placed on the use ofresourcesareeitherexternallyimposedbycreditors,grantors,contributors,orlawsorregulationsofothergovernments;orimposedbylawthroughconstitutionalprovisionorbyenablinglegislation.Committed:TheDistrict'shighestdecision‐makinglevelofauthorityrestswiththeDistrict'sBoard.Fund balance is reported as committed when the Board passes a resolution that places specifiedconstraints on how resources may be used. The Board can modify or rescind a commitment ofresourcesthroughpassageofanewresolution.Assigned:ResourcesthatareconstrainedbytheDistrict'sintenttousethemforaspecificpurpose,but are neither restricted nor committed, are reported as assigned fund balance. Intent may beexpressedbyeithertheBoard,committees(suchasbudgetorfinance),orofficialstowhichtheBoardhasdelegatedauthority.Unassigned: Unassigned fund balance represents fund balance that has not been restricted,committed,orassignedandmaybeutilizedbytheDistrictforanypurpose.Whenexpendituresareincurred,andbothrestrictedandunrestrictedresourcesareavailable,itistheDistrict'spolicytouserestrictedresourcesfirst,thenunrestrictedresourcesintheorderofcommitted,assigned,andthenunassigned,astheyareneeded.

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Position(continued)

9. NetPositionNet position is classified into three components: net investment in capital assets; restricted; andunrestricted.Theseclassificationsaredefinedasfollows: Net investment in capitalassets ‐ This component of net position consists of capital assets,

including restricted capital assets, net of accumulated depreciation and reduced by theoutstandingbalancesofanybonds,mortgages,notes,orotherborrowingsthatareattributabletothe acquisition, construction, or improvement of those assets. If there are significant unspentrelateddebtproceedsatyear‐end,theportionofthedebtattributabletotheunspentproceedsarenotincludedinthecalculationofnetinvestmentincapitalassets.Rather,thatportionofthedebtisincludedinthesamenetpositioncomponentastheunspentproceeds.

Restricted ‐This componentofnetposition consistsof constraintsplacedonnetpositionusethroughexternal constraints imposedby creditors (suchas throughdebt covenants), grantors,contributors,orlawsorregulationsofothergovernmentsorconstraintsimposedbylawthroughconstitutionalprovisionsorenablinglegislation.

Unrestrictednetposition‐Thiscomponentofnetpositionconsistsofnetpositionthatdoesnotmeetthedefinitionof"netinvestmentincapitalassets"or"restricted".

Whenbothrestrictedandunrestrictedresourcesareavailableforuse,itistheDistrict'spolicytouserestrictedresourcesfirst,thenunrestrictedresourcesastheyareneeded.

F. MinimumFundBalancePolicy

Duringthe2010‐11fiscalyear,pursuanttoGASBStatementNo.54,theDistrictadoptedaminimumfundbalance policy for the General Fund in order to protect the District against revenue shortfalls orunpredicted expenditures. The policy requires a Reserve for Economic Uncertainties consisting ofunassigned amounts equal to no less than threepercent of total General Fund expenditures andotherfinancinguses.Whenanexpenditureisincurredforpurposesforwhichbothrestrictedandunrestrictedfundbalanceisavailable, the District considers restricted funds to have been spent first. When an expenditure isincurredforwhichcommitted,assigned,orunassignedfundbalancesareavailable,theDistrictconsidersamounts to have been spent first out of committed funds, then assigned funds, and finally unassignedfunds, asneededunless thegoverningboardhasprovidedotherwise in its commitmentorassignmentactions.

G. PropertyTaxCalendar

The County is responsible for the assessment, collection, and apportionment of property taxes for alljurisdictions including the schools and special districts within the County. The Board of Supervisorslevies property taxes as of September 1 on property values assessed on July 1. Secured property taxpaymentsaredueintwoequalinstallments.ThefirstisgenerallydueNovember1andisdelinquentwithpenaltiesonDecember10,andthesecondisgenerallydueonFebruary1andisdelinquentwithpenaltiesonApril10.SecuredpropertytaxesbecomealienonthepropertyonJanuary1.

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FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE1–SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)H. UseofEstimates

The preparation of financial statements in conformity with generally accepted accounting principlesrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatementsandthereportedamountsofrevenuesandexpendituresduringthereportedperiod. Actualresultscoulddifferfromthoseestimates.

I. NewGASBPronouncements

Duringthe2014‐15fiscalyear,thefollowingGASBPronouncementsbecameeffective:1. StatementNo.68,AccountingandFinancialReporting forPensions ‐AnAmendmentofGASB

StatementNo.27(Issued06/12)TheprimaryobjectiveofthisStatementistoimproveaccountingandfinancialreportingbystateandlocal governments for pensions. It also improves information provided by state and localgovernmentalemployersaboutfinancialsupportforpensionsthatisprovidedbyotherentities.ThisStatement results from a comprehensive review of the effectiveness of existing standards ofaccountingandfinancialreportingforpensionswithregardtoprovidingdecision‐usefulinformation,supporting assessments of accountability and interperiod equity, and creating additionaltransparency.ThisStatementreplacestherequirementsofStatementNo.27,AccountingforPensionsbyStateandLocalGovernmentalEmployers,aswellastherequirementsofStatementNo.50,PensionDisclosures,as they relate to pensions that are provided through pension plans administered as trusts orequivalentarrangements(hereafterjointlyreferredtoastrusts)thatmeetcertaincriteria.ThisStatementestablishesstandardsformeasuringandrecognizingliabilities,deferredoutflowsofresources, and deferred inflows of resources, and expense/expenditures. For defined benefitpensions, this Statement identifies the methods and assumptions that should be used to projectbenefitpayments,discountprojectedbenefitpaymentstotheiractuarialpresentvalue,andattributethatpresentvaluetoperiodsofemployeeservice.Cost‐SharingEmployersInfinancialstatementspreparedusingtheeconomicresourcesmeasurementfocusandaccrualbasisofaccounting,acost‐sharingemployerthatdoesnothaveaspecial fundingsituation isrequiredtorecognize a liability for its proportionate share of the net pension liability (of all employers forbenefits provided through the pension plan)—the collective net pension liability. An employer’sproportion is required to be determined on a basis that is consistent with the manner in whichcontributions to the pension plan are determined, and consideration should be given to separaterates, if any, related to separate portions of the collective net pension liability. The use of theemployer’s projected long‐term contribution effort as compared to the total projected long‐termcontribution effort of all employers as the basis for determining an employer’s proportion isencouraged.

A cost‐sharingemployer is required to recognizepensionexpenseandreportdeferredoutflowsofresources and deferred inflows of resources related to pensions for its proportionate shares ofcollective pension expense and collective deferred outflows of resources and deferred inflows ofresourcesrelatedtopensions.

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FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE1–SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)I. NewGASBPronouncements(continued)

2. StatementNo.71,PensionTransition forContributionsMadeSubsequent to theMeasurement

Date‐AnAmendmentofGASBStatementNo.68(Issued11/13)The objective of this Statement is to address an issue regarding application of the transitionprovisionsofStatementNo.68,AccountingandFinancialReportingforPensions.Theissuerelatestoamounts associated with contributions, if any, made by a state or local government employer ornonemployercontributingentitytoadefinedbenefitpensionplanafterthemeasurementdateofthegovernment'sbeginningnetpensionliability.Statement68requiresastateorlocalgovernmentemployer(ornonemployercontributingentityinaspecial funding situation) to recognize a net position liability measured as of a date (themeasurement date) no earlier than the end of its prior fiscal year. If a state or local governmentemployerornonemployercontributingentitymakesacontributiontoadefinedbenefitpensionplanbetweenthemeasurementdateofthereportednetpensionliabilityandtheendofthegovernment'sreportingperiod,Statement68requiresthatthegovernmentrecognizeitscontributionasadeferredoutflow of resources. In addition, Statement 68 requires recognition of deferred outflows ofresourcesanddeferredinflowsofresourcesforchangesinthenetpensionliabilityofastateorlocalgovernmentemployerornonemployercontributingentitythatarisefromothertypesofevents. AttransitiontoStatement68,ifitisnotpracticalforanemployerornonemployercontributingentitytodetermine the amounts of all deferred outflows of resources and deferred inflows of resourcesrelated to pensions, paragraph137of Statement 68 required that beginning balances for deferredoutflowsofresourcesanddeferredinflowsofresourcesnotbereported.Consequently,ifitisnotpracticaltodeterminetheamountsofalldeferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensions,contributionsmadeafterthemeasurementdateofthebeginningnetpensionliabilitycouldnothavebeenreportedasdeferredoutflowsofresourcesattransition.Thiscouldhaveresultedinasignificantunderstatementofanemployerornonemployercontributingentity'sbeginningnetpositionandexpenseintheinitialperiodofimplementation.ThisStatementamendsparagraph137ofStatement68torequirethat,at transition,agovernmentrecognize a beginning deferred outflow of resources for its pension contributions, if any, madesubsequent to the measurement date of the beginning net pension liability. Statement 68, asamended,continuestorequirethatbeginningbalancesforotherdeferredoutflowsofresourcesanddeferred inflowsof resources related topensionsbe reported at transitiononly if it ispractical todetermineallsuchamounts.The provisions of this Statement are required to be applied simultaneouslywith the provisions ofStatement68.

3. CumulativeEffectofChangeinAccountingPrinciple

Accounting changes adopted to conform to the provisions of these statements should be appliedretroactively.TheresultoftheimplementationofthesestandardswastodecreasethenetpositionatJuly 1, 2013 by $109,933,538, which is the amount of net pension liability, net of the deferredoutflowsofresourcesrelatedtopensionsatJuly1,2014.

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FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE2–CASHANDINVESTMENTSCashandinvestmentsatJune30,2015,arereportedatfairvalueandconsistedofthefollowing:

RatingGovernmental

FundsProprietary

Fund TotalFiduciaryFunds

PooledFunds:CashinCountyTreasury 41,916,944$ 3,065,370$ 44,982,314$ ‐$

TotalPooledFunds 41,916,944 3,065,370 44,982,314 ‐

Deposits:Cashonhandandinbanks 2,852,751 ‐ 2,852,751 393,159Cashinrevolvingfund 50,820 125,000 175,820 ‐Cashwithfiscalagent 143,600 ‐ 143,600 ‐

TotalDeposits 3,047,171 125,000 3,172,171 393,159

TotalCash 44,964,115$ 3,190,370$ 48,154,485$ 393,159$

Investments:U.S.Bank‐MoneyMarket N/A 2,486,425$


PooledFundsIn accordancewithEducationCodeSection41001, theDistrictmaintains substantiallyallof its cash in theCounty Treasury. The County pools and invests the cash. These pooled funds are carried at cost whichapproximatesfairvalue.Interestearnedisdepositedannuallytoparticipatingfunds.Anyinvestmentlossesareproportionatelysharedbyallfundsinthepool.Because theDistrict's deposits aremaintained in a recognizedpooled investment fundunder the careof athirdpartyandtheDistrict'sshareofthepooldoesnotconsistofspecific,identifiableinvestmentsecuritiesownedbytheDistrict,nodisclosureoftheindividualdepositsandinvestmentsorrelatedcustodialcreditriskclassificationsisrequired.Inaccordancewithapplicablestate laws, theCountyTreasurermay invest inderivativesecuritieswith theState of California. However, at June 30, 2015, the County Treasurer has represented that the PooledInvestmentFundcontainednoderivativesorotherinvestmentswithsimilarriskprofiles.CustodialCreditRisk–DepositsCustodialcreditriskistheriskthatintheeventofabankfailure,theDistrict’sdepositsmaynotbereturnedtoit.TheDistrictdoesnothaveapolicyforcustodialcreditriskfordeposits.Cashbalancesheldinbanksareinsuredupto$250,000bytheFederalDepositoryInsuranceCorporation(FDIC)andarecollateralizedbytherespective financial institutions. In addition, the California Government Code requires that a financialinstitutionsecuredepositsmadebyStateorlocalgovernmentalunitsbypledgingsecuritiesinanundividedcollateralpoolheldbyadepositoryregulatedunderStatelaw(unlesssowaivedbythegovernmentalunit).

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FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE2–CASHANDINVESTMENTS(continued)CustodialCreditRisk–Deposits(continued)Themarketvalueofthepledgedsecuritiesinthecollateralpoolmustequalatleast110percentofthetotalamount deposited by the public agencies. California law also allows financial institutions to secure publicdeposits by pledging first trust deedmortgage notes having a value of 150 percent of the secured publicdepositsandlettersofcredit issuedbytheFederalHomeLoanBankofSanFranciscohavingavalueof105percentofthesecureddeposits.AsofJune30,2015,$3,127,136oftheDistrict’sbankbalancewasexposedtocustodialcreditriskbecauseitwasuninsuredandcollateralizedwithsecuritiesheldbythepledgingfinancialinstitution’strustdepartmentoragency,butnotinthenameoftheDistrict.Investments–InterestRateRiskTheDistrict'sinvestmentpolicylimitsinvestmentmaturitiesasameansofmanagingitsexposuretofairvaluelossesarisingfromincreasinginterestrates.TheDistrict'sinvestmentpolicylimitsinvestmentpurchasestoinvestmentswithatermnottoexceedthreeyears.InvestmentspurchasedwithmaturitytermsgreaterthanthreeyearsrequireapprovalbytheBoardofEducation.InvestmentspurchasedwithmaturitiesgreaterthanoneyearrequirewrittenapprovalbytheSuperintendentpriortocommitment.MaturitiesofinvestmentsheldatJune30,2015,consistofthefollowing:

OneYearFair LessThan ThroughValue OneYear FiveYears

Investmentmaturities:U.S.Bank‐MoneyMarket 2,486,425$ 2,486,425$ ‐$

Maturity

Investments–CreditRiskTheDistrict's investmentpolicy limits investmentchoices toobligationsof local, stateandfederalagencies,commercialpaper,certificatesofdeposit, repurchaseagreements,corporatenotes,bankeracceptances,andother securities allowed by State Government Code Section 53600. At June 30, 2015, all investmentsrepresented governmental securitieswhichwere issued, registered and held by the District's agent in theDistrict'sname.Investments–ConcentrationofCreditRiskTheDistrictdoesnotplacelimitsontheamountitmayinvestinanyoneissuer.AtJune30,2015,theDistricthadthefollowinginvestmentthatrepresentsmorethanfivepercentoftheDistrict'snetinvestments.

U.S.Bank‐MoneyMarket 100%

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FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE3–ACCOUNTSRECEIVABLEAccountsreceivableasofJune30,2015,consistedofthefollowing:

GeneralFund

CafeteriaFund


Funds

TotalGovernmental

FundsProprietary

FundFederalGovernment:Categoricalaidprograms 1,778,919$ 344,422$ 1,852$ 2,125,193$ ‐$

StateGovernment:LCFFSourcesLottery 1,209,090 ‐ ‐ 1,209,090 ‐Categoricalaidprograms 580,439 26,623 35,577 642,639 ‐

Local:Specialeducation 156,584 ‐ ‐ 156,584 ‐Interest 9,475 ‐ 2,206 11,681 ‐Otherlocal 389,163 ‐ 36,361 425,524 ‐Miscellaneous 708,890 334 ‐ 709,224 1,360

Total 4,879,886$ 371,379$ 75,996$ 5,327,261$ 1,360$

47,326 ‐ ‐ 47,326 ‐

NOTE4–INTERFUNDTRANSACTIONSA. BalancesDueTo/FromOtherFunds

Balancesdueto/fromotherfundsatJune30,2015,consistedofthefollowing:

Non‐Major TotalGeneral Governmental Governmental ProprietaryFund Funds Funds Funds Total

GeneralFund ‐$ 14,475$ 14,475$ 24,013$ 38,488$Non‐MajorGovernmentalFunds 212,286 ‐ 212,286 ‐ 212,286ProprietaryFunds 3,182 ‐ 3,182 ‐ 3,182‐Total 215,468$ 14,475$ 229,943$ 24,013$ 253,956$

ChildDevelopmentFundduetoGeneralFundforpayroll,programandindirectcosts 101,979$Self‐InsuranceFundduetoGeneralFundforpayrollexpense 3,182GeneralFundduetoChildDevelopmentFundforrevenues,indirectcosts,andexpenditurereimbursement 14,475GeneralFundduetoSelf‐InsuranceFundforworkers'compensationexpense 24,013CapitalFacilitiesFundduetoGeneralFundforpayrollexpenseandprogramcosts 32,648BuildingFundduetoGeneralFundforlaptopdebtserviceexpense 77,659

Total 253,956$

DueFromOtherFunds

B. TransfersTo/FromOtherFunds

Transfersto/fromotherfundsforthefiscalyearendedJune30,2015consistedofthefollowing:GeneralFundtransfertoBuildingFundforlaptopfeescollectedintheGeneralFund 107,793$

39

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE5–FUNDBALANCESAtJune30,2015,fundbalancesoftheDistrict’sgovernmentalfundswereclassifiedasfollows:

Non‐Major

General Cafeteria GovernmentalFund Fund Funds Total

Nonspendable:Revolvingcash 50,000$ 820$ ‐$ 50,820$Storesinventories 8,970 67,493 ‐ 76,463Prepaidexpenditures 29,874 3,854 ‐ 33,728

TotalNonspendable 88,844 72,167 ‐ 161,011Restricted:

Categoricalprograms 2,973,908 ‐ ‐ 2,973,908Childdevelopmentprogram ‐ ‐ 1,059,337 1,059,337Childnutritionprogram ‐ 2,319,692 ‐ 2,319,692Capitalprojects ‐ ‐ 6,697,739 6,697,739Debtservice ‐ ‐ 3,141,455 3,141,455

TotalRestricted 2,973,908 2,319,692 10,898,531 16,192,131Assigned:

ResponsetoIntervention 241,644 ‐ ‐ 241,644Sitediscretionary 356,689 ‐ ‐ 356,689InstructionalmaterialsK‐8 913,429 ‐ ‐ 913,429Deferredmaintenanceprogram 1,307,666 ‐ ‐ 1,307,666

TotalAssigned 2,819,428 ‐ ‐ 2,819,428Unassigned:

Reserveforeconomicuncertainties 3,461,292 ‐ ‐ 3,461,292Remainingunassignedbalances 23,691,903 ‐ ‐ 23,691,903

TotalUnassigned 27,153,195 ‐ ‐ 27,153,195

Total 33,035,375$ 2,391,859$ 10,898,531$ 46,325,765$

40

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE6–CAPITALASSETSANDDEPRECIATIONCapitalassetactivityfortheyearendedJune30,2015,wasasfollows:

Balance, Balance,July1,2014 Additions Retirements June30,2015

Capitalassetsnotbeingdepreciated:Land 9,198,655$ ‐$ ‐$ 9,198,655$Totalcapitalassetsnotbeingdepreciated 9,198,655 ‐ ‐ 9,198,655Capitalassetsbeingdepreciated:Improvementofsites 19,680,289 436,706 ‐ 20,116,995Buildingsandimprovements 130,389,540 ‐ ‐ 130,389,540Machineryandequipment 13,136,849 134,665 13,848 13,257,666Totalcapitalassetsbeingdepreciated 163,206,678 571,371 13,848 163,764,201Accumulateddepreciationfor:Improvementofsites (17,179,498) (209,018) ‐ (17,388,516)Buildingsandimprovements (53,334,705) (4,320,336) ‐ (57,655,041)Machineryandequipment (9,507,689) (505,204) (13,848) (9,999,045)Totalaccumulateddepreciation (80,021,892) (5,034,558) (13,848) (85,042,602)Totalcapitalassetsbeingdepreciated,net 83,184,786 (4,463,187) ‐ 78,721,599

Governmentalactivitycapitalassets,net 92,383,441$ (4,463,187)$ ‐$ 87,920,254$

NOTE7–GENERALLONG‐TERMDEBTChangesinlong‐termdebtfortheyearendedJune30,2015,wereasfollows:

Balance, Balance, AmountDueJuly1,2014* Additions Deductions June30,2015 WithinOneYear

GeneralObligationBonds:Principalpayments 35,910,458$ 6,080,000$ 8,470,000$ 33,520,458$ 2,345,000$Accretedinterest 4,022,429 482,214 ‐ 4,504,643 ‐Unamortizedissuancepremium 2,387,828 782,710 322,840 2,847,698 247,175TotalGeneralObligationBonds 42,320,715 7,344,924 8,792,840 40,872,799 2,592,175CertificatesofParticipation 6,160,000 ‐ 320,000 5,840,000 330,000FullertonRDALoan 346,062 ‐ 31,460 314,602 31,460CapitalLeases 620,050 ‐ 326,212 293,838 202,493EarlyRetirementIncentive 443,624 ‐ 443,624 ‐ ‐CompensatedAbsences 1,060,118 229,912 ‐ 1,290,030 ‐NetPensionLiability 116,546,354 ‐ 23,146,310 93,400,044 ‐OtherPostemploymentBenefits 5,923,854 1,213,161 ‐ 7,137,015 ‐Totals 173,420,777$ 8,787,997$ 33,060,446$ 149,148,328$ 3,156,128$

*BeginningbalancehasbeenrestatedinaccordancewiththeimplementationofGASBStatementNo.68.

PaymentsforgeneralobligationbondsaremadebytheBondInterestandRedemptionFund.CertificatesofParticipation payments aremade by theGeneral Fund. Capital leases payments aremade by theBuildingFund.RDALoanpaymentsaremadefromtheCapitalFacilitiesFund.Accumulatedvacation,earlyretirementincentives,pensions,andotherpostemploymentbenefitswillbepaidforbythefundforwhichtheemployeeworked.

41

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE7–GENERALLONG‐TERMDEBT(continued)A. GeneralObligationBonds

OnMarch5,2002,aspecialelectionwasheldatwhichmorethan55percentofthevotersintheDistrictapprovedMeasure “CC”,which authorized the issuance and sale of $49.7million of general obligationbonds.ThebondsaregeneralobligationsoftheDistrict,andtheCountyisobligatedtoannuallylevyadvaloremtaxesforthepaymentoftheintereston,andtheprincipalofthebonds.Thebondswereissuedto finance the construction of new facilities, such as multipurpose rooms, and renovation andimprovementatexisting schoolsand to fundaportionof thecostof constructionofanewelementaryschool.2010GeneralObligationRefundingBondsOnDecember1,2010,theDistrictissued$27,645,000of2010GeneralObligationRefundingBonds.Thebondsconsistofserialbondsbearingfixedratesrangingfrom2.0%to5.0%withannualmaturitiesfromAugust2011 throughAugust2026.Thenetproceedsof$30,215,831 (after issuancecostsof$389,721,plus premium of $2,960,552) were used to advance refund $27,645,000 of the District’s outstandingElectionof2002,SeriesAGeneralObligationBonds,inadditiontopayingthecostsofissuanceassociatedwiththerefundingbonds.Amountspaidtotherefundedbondescrowagentinexcessoftheoutstandingdebtatthetimeofpaymentarerecordedasdeferredamountsontherefundingonthestatementofnetposition and are amortized to interest expense over the life of the liability. Deferred amounts on therefunding of $1,256,887 remain to be amortized. As of June 30, 2015, all principal balance on thedefeaseddebtwaspaid.2014RefundingGeneralObligationBondsOnSeptember18,2014,theDistrictissued$6,080,000ofGeneralObligationRefundingBonds.Thebondsbear fixed interest ratesbetween3.0%and5.0%withannualmaturities fromAugust1,2015 throughAugust 1, 2026. The net proceeds of $6,685,239 (after premiums of $782,710 and issuance costs of$177,471)wereusedtoprepaytheDistrict’soutstandingGeneralObligationBonds.ThenetproceedswereusedtopurchaseU.S.governmentsecurities.Thosesecuritiesweredepositedintoan irrevocabletrustwithanescrowagenttoprovide for futuredebtservicepaymentsontherefundedbonds. As a result, the refundedbonds are considered tobedefeased, and the related liability for thebondshasbeenremovedfromtheDistrict'sliabilities.Amountspaidtotheescrowagentinexcessoftheoutstandingdebtatthetimeofpaymentarerecordedasdeferredchargesonrefundingonthestatementof net assets and are amortized to interest expense over the life of the liability. Deferred amounts onrefundingof$162,116remaintobeamortized.AsofJune30,2015,theprincipalbalanceoutstandingonthedefeaseddebtamountedto$6,400,000.TherefundingdecreasedtheDistrict'stotaldebtservicepaymentsby$891,640.Thetransactionresultedin an economic gain (differencebetween thepresent valueof thedebt serviceon theoldand thenewbonds)of$788,538.Asummaryofoutstandinggeneralobligationbondsissuedispresentedbelow:

Issue Maturity Interest Original Balance, Advance BalanceDate Date Rate Issue July1,2014 Additions Deductions Refundings June30,2015

7/3/2002 8/1/2023 3.25%‐5.375% 40,000,458$ 4,545,458$ ‐$ ‐$ ‐$ 4,545,458$8/23/2005 8/1/2026 3.9%‐4.5% 9,699,542 7,230,000 ‐ 400,000 6,400,000 430,00012/1/2010 8/1/2026 2.0%‐5.0% 27,645,000 24,135,000 ‐ 1,670,000 ‐ 22,465,0009/18/2014 8/1/2026 3.0%‐5.0% 6,080,000 ‐ 6,080,000 ‐ ‐ 6,080,000

83,425,000$ 35,910,458$ 6,080,000$ 2,070,000$ 6,400,000$ 33,520,458$

42

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE7–GENERALLONG‐TERMDEBT(continued)A. GeneralObligationBonds(continued)

The annual requirements to amortize all general obligation bonds payable outstanding as of June 30,2015wereasfollows:

FiscalYear Principal Interest Total

2015‐16 2,345,000$ 1,287,320$ 3,632,320$2016‐17 2,445,000 1,187,550 3,632,5502017‐18 2,660,000 1,091,475 3,751,4752018‐19 2,885,000 987,000 3,872,0002019‐20 3,135,000 858,675 3,993,6752020‐25 10,845,458 13,527,761 24,373,2192025‐27 9,205,000 639,025 9,844,025

Total 33,520,458$ 19,578,806$ 53,099,264$

B. CertificatesofParticipation

2011RefundingCertificatesofParticipationOn November 10, 2011, the District issued $6,935,000 of Refunding Certificates of Participation. TheCertificatesbear fixed interest ratesaveraging3.4%withannualmaturities from June1,2012 throughJune1,2029.Thenetproceedsof$6,832,899(afterissuancecostsof$102,101)wereusedtoprepaytheDistrict’soutstandingCertificatesofParticipation.ThenetproceedswereusedtopurchaseU.S.governmentsecurities.Thosesecuritiesweredepositedintoan irrevocabletrustwithanescrowagenttoprovide for futuredebtservicepaymentsontherefundedcertificates.Asaresult, therefundedcertificatesareconsideredtobedefeased,andtherelatedliabilityforthecertificateshasbeenremovedfromtheDistrict'sliabilities.Amountspaidtotheescrowagentinexcessoftheoutstandingdebtatthetimeofpaymentarerecordedasdeferredamountsonrefundingonthestatementofnetpositionandareamortizedtointerestexpenseoverthelifeoftheliability.Deferredamountsonrefundingof$126,699remaintobeamortized.AsofJune30,2015,theannualrequirementstoamortizeallcertificateswereasfollows:


2015‐16 330,000$ 195,755$ 525,755$2016‐17 345,000 184,365 529,3652017‐18 355,000 172,635 527,6352018‐19 365,000 160,480 525,4802019‐20 380,000 147,985 527,9852020‐25 2,105,000 534,820 2,639,8202025‐29 1,960,000 152,830 2,112,830

Total 5,840,000$ 1,548,870$ 7,388,870$

43

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE7–GENERALLONG‐TERMDEBT(continued)

C. FullertonRedevelopmentAgencyLoan

AnagreementwasenteredintoMay16,2000fortheFullertonRedevelopmentAgencytoloan$1,320,000totheDistrictfortheexpansionofMapleElementarySchool.TheDistrictreceivedtheproceedsfromtheloanJuly,2000.Theloandoesnotaccrueinterest.PaymentsaredueeachJulybeginningin2001for25years.ThepaymentamountisbasedontheoutstandingloanbalanceateachJune30.RepaymentrequirementsontheJune30,2015balanceareasfollows:

FiscalYear Principal

2015‐16 31,460$2016‐17 31,4602017‐18 31,4602018‐19 31,4602019‐20 31,4602020‐25 157,302Total 314,602$

D. CapitalLeases

TheDistrict leasesequipmentvaluedat$654,250underagreements thatprovide for title topassuponexpirationoftheleaseperiod.Futureminimumleasepaymentsareasfollows:


2015‐16 202,493$ 7,631$ 210,124$2016‐17 91,345 2,307 93,652

Total 293,838$ 9,938$ 303,776$

TheDistrictwillreceivenosubleaserentalrevenuesnorpayanycontingentrentalsfortheequipment.E. EarlyRetirementIncentives

The District has entered into an agreement for early retirement incentives for eligible employees.Eligibility requirements are that employeesmustbeage55with10yearsofDistrict serviceor age50with30yearsofDistrictservice.Thefinalpaymentof$443,624wasmadeduringthe2014‐15year.

F. Non‐ObligatoryDebt

Non‐obligatorydebt relates todebt issuancesby theCommunityFacilityDistricts,asauthorizedby theMello‐RoosCommunityFacilitiesActof1982asamended,andtheMark‐RoosLocalBondPoolingActof1985, and are payable from special taxes levied on propertywithin the Community FacilitiesDistrictsaccordingtoamethodologyapprovedbythevoterswithintheDistrict. NeitherthefaithandcreditnortaxingpoweroftheDistrictispledgedtothepaymentofthebonds.Reserveshavebeenestablishedfromthebondproceedstomeetdelinquenciesshouldtheyoccur.Ifdelinquenciesoccurbeyondtheamountsheld inthosereserves, theDistricthasnodutytopaythedelinquencyoutofanyavailablefundsoftheDistrict.TheDistrictactssolelyasanagentforthosepayingtaxesleviedandthebondholders,andmayinitiateforeclosureproceedings.

44

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015

NOTE7–GENERALLONG‐TERMDEBT(continued)

F. Non‐ObligatoryDebt(continued)

OnAugust 8, 2013, the Fullerton SchoolDistrict FinancingAuthority issued $16,475,000 in special taxrevenuerefundingbonds.ThebondswereissuedtorefundtwooutstandingbondspreviouslyissuedbytheCommunityFacilitiesDistricts formedbyFullertonSchoolDistrict. Thebondscarrystated interestratesrangingbetween2.00‐5.25%andfullymatureinSeptember2031.Specialassessmentdebtof$15,850,000asofJune30,2015,doesnotrepresentdebtoftheDistrictand,assuch,doesnotappearinthefinancialstatements.

NOTE8–JOINTPOWERSAGREEMENTSThe Fullerton SchoolDistrict participates in two joint ventures under a joint powers agreement (JPA), theSchools Excess Liability Fund (SELF) andAlliance of Schools for Cooperative Insurance Programs (ASCIP).TherelationshipbetweentheFullertonSchoolDistrictandtheJPAsissuchthattheJPAsarenotacomponentunitoftheDistrictforfinancialreportingpurposesasexplainedbelow:SELFarrangesforandprovidesaself‐fundedexcessliabilityfundforapproximately1,100publiceducationalagencies. ASCIParranges forandprovidespropertyand liability insurance for itsmemberschooldistricts.The JPAsaregovernedbyboardsconsistingof representatives fromcertainmemberdistricts. TheBoardscontrol the operation of the JPAs, including selection of management and approval of operating budgets,independentofanyinfluencebythemembersbeyondtheirrepresentationoftheBoard.Eachmemberpaysan annual contribution based upon that calculated by the JPAs’ Boards and shares surpluses and deficitsproportionatelytoitsparticipationintheJPAs.The Fullerton School District also participates in a JPA that meets the definition of a component unit, asdescribedbelow:The Fullerton School District Financing Authority is a joint exercise of powers agency comprised of theFullertonSchoolDistrictandCommunityFacilitiesDistrictNo.2000‐1.Itspurposeistoprovidefinancingandrefinancingforpubliccapitalimprovements.

Condensedfinancialinformationisasfollows:

Audited Unaudited UnauditedSELF ASCIP FSDFinanceAuthority

June30,2014 June30,2015 June30,2015TotalAssets 162,746,000$ 362,899,069$ 1,695,727$TotalLiabilities 118,853,000 205,813,855 ‐NetPosition 43,893,000$ 157,085,214$ 1,695,727$

TotalRevenues 9,874,000$ 227,006,438$ 1,625,443$TotalExpenses 4,199,000 214,534,538 1,305,466TotalNon‐OperatingRevenues 1,938,000 ‐ ‐ChangeinNetPosition 7,613,000$ 12,471,900$ 319,977$

45

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE9–COMMITMENTSANDCONTINGENCIESA. StateandFederalAllowances,Awards,andGrants

TheDistricthasreceivedstateandfederalfundsforspecificpurposesthataresubjecttoreviewandauditbythegrantoragencies.Althoughsuchauditscouldgenerateexpendituredisallowancesundertermsofthegrants,itisbelievedthatanyrequiredreimbursementwillnotbematerial.

B. Litigation

The District is the defendant in a number of lawsuits arising principally in the normal course ofoperations.Intheopinionoftheadministration,theoutcomeoftheselawsuitswillnothaveamateriallyadverse effect on the accompanying financial statements and accordingly, no provision for losses hasbeen recorded beyond claims payable and incurred but not reported reserves established in the Self‐InsuranceInternalServiceFund.

NOTE10–RISKMANAGEMENTPropertyandLiabilityTheDistrictisexposedtovariousrisksoflossrelatedtotorts;theftof,damageto,anddestructionofassets;errorsandomissions; injuriestoemployeesandnaturaldisasters. DuringfiscalyearendingJune30,2015,theDistrictwasself‐insuredforpropertyandliabilitylosseswithspecificdeductibles,butparticipatedintheASCIPpublic entity risk pool for excess property and liability insurance coverage. Settled claimshavenotexceededthiscommercialcoverageinanyofthepastthreeyears.Workers’CompensationForfiscalyear2015,theDistrictwasself‐fundedforworkerscompensation,withcoveragepurchasedfromaprivateinsurerforclaimsinexcessofthe$1.0millionretentionamount.EmployeeMedicalBenefitsTheDistricthascontractedthroughSelf‐InsuredSchoolsofCalifornia(SISC),AnthemBlueCrossandKaiserPermanente to provide employeemedical and surgical benefits,DeltaDental andDeltacareUSA for dentalbenefitsandVisionServicePlan(VSP).ClaimsLiabilityThe District records an estimated liability for workers’ compensation claims against the District. Claimsliabilitiesarebasedonestimatesof theultimatecostofreportedclaims(including futureclaimadjustmentexpenses)andanestimateforclaimsincurredbutnotreportedbasedonhistoricalexperience.UnpaidClaimsLiabilitiesTheDistrictestablishesaliabilityforbothreportedandunreportedevents,whichincludesestimatesofbothfuture payments of losses and related claim adjustment expenses. The following represent the changes inapproximateaggregateliabilitiesfortheDistrictfromJuly1,2013toJune30,2015:

Workers'Compensation

LiabilityBalance,July1,2013 2,056,554$Claimsandchangesinestimates 1,250,447Claimspayments (1,281,859)

LiabilityBalance,June30,2014 2,025,142Claimsandchangesinestimates 1,371,215Claimspayments (1,377,926)

LiabilityBalance,June30,2015 2,018,431$

AssetsavailabletopayclaimsatJune30,2015 3,215,743$

46

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE11–PENSIONPLANSQualified employees are covered under multiple‐employer defined benefit pension plans maintained byagencies of the State of California. Certificated employees are members of the California State Teachers’Retirement System (CalSTRS), and classified employees are members of California Public Employees’RetirementSystem(CalPERS).A. GeneralInformationaboutthePensionPlans

PlanDescriptionsThe District contributes to the California State Teachers’ Retirement System (CalSTRS), a cost‐sharingmultiple‐employer public employee retirement system defined benefit pension plan administered byCalSTRS. Benefit provisions under the Plan are established by State statute and District resolution.CalSTRS issues publicly available reports that include a full description of the pension plan regardingbenefitprovisions,assumptions,andmembershipinformationthatcanbefoundontheCalSTRSwebsite.The District also contributes to the School Employer Pool under the California Public Employees’Retirement System (CalPERS), a cost‐sharing multiple‐employer public employee retirement systemdefinedbenefitpensionplanadministeredbyCalPERS.BenefitprovisionsunderthePlanareestablishedby State statute and District resolution. CalPERS issues publicly available reports that include a fulldescriptionofthepensionplanregardingbenefitprovisions,assumptions,andmembershipinformationthatcanbefoundontheCalPERSwebsite.BenefitsProvidedCalSTRS provides retirement, disability, and death benefits. Retirement benefits are determined as 2percentoffinalcompensationforeachyearofcreditedserviceatage60formembersunderCalSTRS2%at60,orage62formembersunderCalSTRS2%at62,increasingtoamaximumof2.4percentatage63formembers under CalSTRS 2% at 60, or age 65 formembers underCalSTRS 2% at 62. The normalretirement eligibility requirements are age 60 for members under CalSTRS 2% at 60, or age 62 formembersunderCalSTRS2%at62,withaminimumof fiveyearsofservicecreditedunder theDefinedBenefitProgram,whichcanincludeservicepurchasedfromteachinginanout‐of‐stateorforeignpublicschool.Employeesareeligibleforservice‐relateddisabilitybenefitsafterfiveyearsofservice,unlessthememberisdisabledduetoanunlawfulactofbodilyinjurycommittedbyanotherpersonwhileworkinginCalSTRScoveredemployment,inwhichcasetheminimumisoneyear.Disabilitybenefitsareequaltofiftypercent of final compensation regardless of age and service credit. Designated recipients of CalSTRSretiredmembersreceivea$6,163lump‐sumdeathpayment. Thereisa2percentsimpleincreaseeachSeptember1followingthefirstanniversaryofthedateonwhichthemonthlybenefitbegantoaccrue.Theannual 2 percent increase is applied to all continuing benefits other thanDefined Benefit Supplementannuities.However,ifthememberretireswithaReducedBenefitElection,theincreasedoesnotbegintoaccrueuntilthememberreachesage60andisnotpayableuntilthememberreceivesthefullbenefit.Thisincreaseisalsoknownastheimprovementfactor.

47

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE11–PENSIONPLANS(continued)A. GeneralInformationaboutthePensionPlans(continued)

BenefitsProvided(continued)CalPERSalsoprovidesretirement,disability,anddeathbenefits.Retirementbenefitsaredeterminedas1.1percentoffinalcompensationforeachyearofcreditedserviceatage50formembersunder2%at55,or1.0percentatage52formembersunder2%at62,increasingtoamaximumof2.5percentatage63formembersunder2%at55,orage67formembersunder2%at62.Tobeeligibleforserviceretirement,membersmustbeatleastage50andhaveaminimumoffiveyearsofCalPERS‐creditedservice.Membersjoiningonorafter January1,2013mustbeat leastage52. Disabilityretirementhasnominimumagerequirementandthedisabilitydoesnothavetobejobrelated.However,membersmusthaveaminimumoffiveyearsofCalPERSservicecredit.Pre‐retirement death benefits range from a simple return of member contributions plus interest to amonthlyallowanceequaltohalfofwhatthememberwouldhavereceivedatretirementpaidtoaspouseor domestic partner. To be eligible for any type ofmonthly pre‐retirement death benefit, a spouse ordomestic partner must have been either married to the member or legally registered before theoccurrenceoftheinjuryortheonsetoftheillnessthatresultedindeath,orforatleastoneyearpriortodeath.Cost‐of‐livingadjustmentsareprovidedbylawandarebasedontheConsumerPriceIndexforallUnited States cities. Cost‐of‐living adjustments are paid the second calendar year of the member’sretirementontheMay1checkandtheneveryyearthereafter.Thestandardcost‐of‐livingadjustmentisamaximumof2percentperyear.ContributionsActiveCalSTRSplanmemberswererequiredtocontribute8.15%oftheirsalaryin2014‐15.Therequiredemployer contribution rate for fiscal year 2014‐15 was 8.88% of annual payroll. The contributionrequirementsof theplanmembersareestablishedbyState statute. ActiveCalPERSplanmembersarerequired to contribute 7.0% of their salary and the District is required to contribute an actuariallydeterminedrate.Theactuariallydeterminedrateistheestimatedamountnecessarytofinancethecostsof benefits earned by employees during the year, with an additional amount to finance any unfundedaccrued liability. The required employer contribution for fiscal year 2014‐15 was 11.771%. ThecontributionrequirementsoftheplanmembersareestablishedbyStatestatute.ForthefiscalyearendedJune30,2015,thecontributionsrecognizedaspartofpensionexpenseforeachPlanwereasfollows:

CalSTRS CalPERSEmployercontributions 7,945,393$ 2,134,352$Employeecontributionspaidbyemployer ‐$ ‐$

48

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE11–PENSIONPLANS(continued)B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to

Pensions

As of June30, 2015, theDistrict reportednetpension liabilities for itsproportionate sharesof thenetpensionliabilityofeachPlanasfollows:

ProportionateShareofNetPensionLiability

CalSTRS 75,383,730$CalPERS 18,016,314

TotalNetPensionLiability 93,400,044$

TheDistrict’snetpensionliabilityforeachPlanismeasuredastheproportionateshareofthenetpensionliability. The net pension liability of each of the Plans is measured as of June 30, 2014, and the totalpensionliabilityforeachPlanusedtocalculatethenetpensionliabilitywasdeterminedbyanactuarialvaluation as of June 30, 2013 rolled forward to June 30, 2014 using standard update procedures. TheDistrict’s proportion of the net pension liability was based on a projection of the District’s long‐termshare of contributions to the pension plans relative to the projected contributions of all participatingemployers,actuariallydetermined.TheDistrict’sproportionateshareofthenetpensionliabilityforeachPlanasofJune30,2013and2014wasasfollows:

CalSTRS* CalPERSProportion‐June30,2013 0.1290% 0.1579%Proportion‐June30,2014 0.1290% 0.1587%

Change‐Increase(Decrease) 0.0000% 0.0008%

*TheDistrict'sproportionatesharepercentagewasnotseparatelydeterminedforJune30,2013,sotheJune30,2014,percentagewasusedtocalculatethebeginningamounts.

For the year ended June 30, 2015, the District recognized pension expense of $8,109,332. At June 30,2015, theDistrict reporteddeferredoutflowsofresourcesanddeferred inflowsofresourcesrelated topensionsfromthefollowingsources:

DeferredOutflows DeferredInflowsofResources ofResources

Pensioncontributionssubsequenttomeasurementdate 7,223,233$ ‐$Adjustmentduetodifferencesinproportions 110,881 ‐Netdifferencesbetweenprojectedandactualearningsonplaninvestments ‐ (24,753,707)

7,334,114$ (24,753,707)$

49


Pensions(continued)The total amount of $7,223,233 reported as deferred outflows of resources related to contributionssubsequenttothemeasurementdatewillberecognizedasareductionofthenetpensionliabilityintheyear ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferredinflowsofresourcesrelatedtopensionswillberecognizedaspensionexpenseasfollows:

YearEndedJune30, Amount2016 (5,232,552)$2017 (5,232,552)$2018 (5,232,552)$2019 ‐$2020 ‐$

Thereafter ‐$ Actuarial Assumptions – The total pension liabilities in the June 30, 2013 actuarial valuations weredeterminedusingthefollowingactuarialassumptions:

CalSTRS CalPERSValuationDate June30,2013 June30,2013MeasurementDate June30,2014 June30,2014ActuarialCostMethod Entryagenormal EntryagenormalActuarialAssumptions:DiscountRate 7.60% 7.50%Inflation 3.00% 2.75%WageGrowth 3.75% 3.00%Post‐retirementBenefitIncrease 2.00% ‐InvestmentRateofReturn 7.60% 7.50%

CalSTRS uses custommortality tables to best fit the patterns ofmortality among itsmembers. ThesecustomtablesarebasedonRP2000seriestablesadjustedtofitCalSTRSexperience.RP2000seriestablesareanindustrystandardsetofmortalityratespublishedbytheSocietyofActuaries.SeeCalSTRSJuly1,2006‐June30,2010ExperienceAnalysisformoreinformation. Theunderlyingmortalityassumptionsand all other actuarial assumptions used in the CalPERS June 30, 2013 valuation were based on theresultsofa January2014actuarialexperiencestudyfortheperiod1997to2011.FurtherdetailsoftheExperienceStudycanfoundontheCalPERSwebsite.DiscountRate–forCalSTRSThediscount rateused tomeasure the totalpension liabilitywas7.60percent. Theprojectionof cashflowsusedtodeterminethediscountrateassumedthatcontributionsfromplanmembersandemployerswillbemadeatstatutorycontributionratesinaccordancewiththerateincreaseperAssemblyBill1469.Projected inflows from investment earnings were calculated using the long‐term assumed investmentrate of return (7.60 percent) and assuming that contributions, benefit payments, and administrativeexpenseoccurmidyear.Basedonthoseassumptions,theSTRP'sfiduciarynetpositionwasprojectedtobeavailabletomakeallprojectedfuturebenefitpaymentstocurrentplanmembers.

50


Pensions(continued)DiscountRate–forCalSTRS(continued)Therefore, the long‐term assumed investment rate of return was applied to all periods of projectedbenefitpaymentstodeterminethetotalpensionliability.DiscountRate–forCalPERSThe discount rate used to measure the total pension liability was 7.50% for CalPERS. To determinewhether the municipal bond rate should be used in the calculation of a discount rate for each plan,CalPERSstresstestedplansthatwouldmostlikelyresultinadiscountratethatwouldbedifferentfromtheactuariallyassumeddiscountrate. Basedon the testing,noneof the testedplansrunoutofassets.Therefore, the current 7.50 percent discount rate is adequate and the use of themunicipal bond ratecalculationisnotnecessary. Thelongtermexpecteddiscountrateof7.50percentwillbeappliedtoallplansinthePublicEmployeesRetirementFund(PERF).ThestresstestresultsarepresentedinadetailedreportthatcanbeobtainedfromtheCalPERSwebsite.According toParagraph30ofStatement68, the long‐termdiscountrateshouldbedeterminedwithoutreductionforpensionplanadministrativeexpense.The7.50percentinvestmentreturnassumptionusedinthisaccountingvaluationisnetofadministrativeexpenses.Administrativeexpensesareassumedtobe15basispoints.Aninvestmentreturnexcludingadministrativeexpenseswouldhavebeen7.65percent.Using this lowerdiscount ratehas resulted ina slightlyhigherTotalPensionLiabilityandNetPensionLiability.CalPERScheckedthematerialitythresholdforthedifferenceincalculationanddidnotfindittobeamaterialdifference. CalPERSisscheduledtoreviewallactuarialassumptionsaspartofitsregularAssetLiabilityManagement(ALM)reviewcyclethatisscheduledtobecompletedinFebruary2018.Anychanges to the discount rate will require Board action and proper stakeholder outreach. For thesereasons,CalPERSexpects tocontinueusingadiscountratenetofadministrativeexpenses forGASB67and 68 calculations through at least the 2017‐18 fiscal year. CalPERS will continue to check thematerialityofthedifferenceincalculationuntilsuchtimeaswehavechangedourmethodology.The long‐term expected rate of return on pension plan investmentswas determined using a building‐blockmethodinwhichbest‐estimaterangesofexpectedfuturerealratesofreturn(expectedreturns,netofpensionplan investment expenseand inflation)aredeveloped foreachmajorasset class. Thebest‐estimate ranges were developed using capital market assumptions from CalSTRS general investmentconsultant (Pension Consulting Alliance‐PCA) as an input to the process. Based on the model fromCalSTRS consulting actuary's (Milliman) investmentpractice, a best estimate rangewasdeterminedbyassumingtheportfolio isre‐balancedannuallyandthatannualreturnsare lognormallydistributedandindependent from year to year to develop expected percentiles for the long‐term distribution ofannualized returns. The assumed asset allocation by PCA is based on board policy for target assetallocation in effect on February 2, 2012, the date the current experience study was approved by theboard.In determining the long‐term expected rate of return, CalPERS took into account both short‐term andlong‐termmarketreturnexpectationsaswellastheexpectedpensionfundcashflows. Usinghistoricalreturnsofall the funds’ asset classes, expectedcompoundreturnswerecalculatedover theshort‐term(first 10 years) and the long‐term (11‐60 years) using a building‐block approach. Using the expectednominalreturnsforbothshort‐termandlong‐term,thepresentvalueofbenefitswascalculatedforeachfund.

51


Pensions(continued)DiscountRate–forCalPERS(continued)Theexpectedrateofreturnwassetbycalculatingthesingleequivalentexpectedreturnthatarrivedatthesamepresentvalueofbenefits forcashflowsastheonecalculatedusingbothshort‐termandlong‐termreturns.Theexpectedrateofreturnwasthensetequivalenttothesingleequivalentratecalculatedaboveandroundeddowntothenearestonequarterofonepercent.Thetablebelowreflectsthelong‐termexpectedrealrateofreturnbyassetclass.Therateofreturnwascalculated using the capital market assumptions applied to determine the discount rate and assetallocation.Theseratesofreturnarenetofadministrativeexpenses.

AssetClass CalSTRS CalPERS CalSTRS CalPERSGlobalEquity 47% 47% 4.5% 5.7%GlobalFixedIncome N/A 19% N/A 2.4%InflationSensitive 5% 6% 3.2% 3.4%PrivateEquity 12% 12% 6.2% 7.0%RealEstate 15% 11% 4.4% 5.1%InfrastructureandForestland N/A 3% N/A 5.1%FixedIncome 20% N/A 0.2% N/ALiquidity 1% 2% 0.0% ‐1.1%

100% 100%

Long‐TermExpectedTargetAllocation RateofReturn

SensitivityoftheProportionateShareoftheNetPensionLiabilitytoChangesintheDiscountRateThe following presents the District’s proportionate share of the net pension liability for each Plan,calculatedusingthediscountrateforeachPlan,aswellaswhattheDistrict’sproportionateshareofthenetpensionliabilitywouldbeifitwerecalculatedusingadiscountratethatis1‐percentagepointloweror1‐percentagepointhigherthanthecurrentrate:

CalSTRS CalPERS1%Decrease 6.60% 6.50%NetPensionLiability 117,503,520$ 31,604,728$

CurrentDiscountRate 7.60% 7.50%NetPensionLiability 75,383,730$ 18,016,314$

1%Increase 8.60% 8.50%NetPensionLiability 40,263,480$ 6,661,825$

PensionPlanFiduciaryNetPositionDetailedinformationabouteachpensionplan’sfiduciarynetpositionisavailableintheseparatelyissuedCalSTRSandCalPERSfinancialreports.

52

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE11–PENSIONPLANS(continued)

C. PayabletothePensionPlans

AtJune30,2015,theDistrictreportedapayableof$41,999and$51,642fortheoutstandingamountofcontributionstotheCalSTRSandCalPERSpensionplans,respectively,requiredforthefiscalyearendedJune30,2015.

NOTE12–OTHERPOSTEMPLOYMENTBENEFITSFullertonSchoolDistrictadministersasingle‐employerdefinedbenefitotherpostemploymentbenefit(OPEB)plan thatprovidesmedical,dental andvision insurancebenefits toeligible retireesand their spouses. TheDistrict implemented Governmental Accounting Standards Board Statement #45,Accounting and FinancialReportingbyEmployersforPostemploymentBenefitPlansOtherThanPensionPlans,in2008‐09.Membershipintheplanconsistedofthefollowing:

Retireesandbeneficiariesreceivingbenefits* 123Activeplanmembers* 988Total 1,111

*AccordingtotheJuly1,2013,actuarialvaluation PlanDescriptionsandContributionInformationTheDistrict has entered into an agreementwith its retired employees that theDistrictwill providehealthbenefitsasfollows:The medical plan options consist of a PPO and HMO offered by Blue Shield of California, and KaiserPermanenteHMO.EffectiveJanuary1,2014,thesecoveragesareofferedthroughtheSelf‐InsuredSchoolsofCalifornia(SISCIII).ThisvaluationisbasedontheSISCratesandmedicalplanselectionsasofJanuary,2014,adjusted to the valuation date at the medical trend rate. As of July 1, 2013, Delta Dental and VSP visioninsurance were provided through the Metropolitan Employees Benefits Association (MEBA). EffectiveJanuary1,2014,theDistrictcontracteddirectlywithDeltaDentalfordentalinsurance,andvisioninsuranceisprovided throughKaiser formemberswithKaisermedical coverage, and throughAlamedaCountySchoolsInsuranceGroup(ACSIG)forallothermembers.Certificated, Classified and Management employees may retire with District‐paid health benefits aftercompletingatleast10yearsofDistrictserviceandattainmentofage55.Certificatedemployeesmusthave10yearsof full‐timeservicewith theDistrict inorder tobeeligible.Classifiedemployeesmaybecomeeligiblebased on part‐time service, with their District contributions pro‐rated for full‐time equivalency less than100%.Managementemployeesmayhaveup to fiveyearsofmanagementwork inanotherdistrictcreditedtowardsthe10yearrequirement.CertificatedretireesreceiveaDistrictcontributionequaltothesingle‐partymedicalpremiumanddentalPPOpremium. Spousesmay be covered at the retiree's expense; however, if the retiree elects one of theHMOoptions, theDistrictwill contribute towards spousal coverage inanamountequal to theexcessof thePPOpremiumoverthesinglepremiumfortheselectedHMO.

53

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE12–OTHERPOSTEMPLOYMENTBENEFITS(continued)PlanDescriptionsandContributionInformation(continued)ClassifiedretireesreceiveaDistrictcontributionequaltothesingle‐partymedicalanddentalpremiumsandthetwo‐partyvisionpremium.SpousesmaybecoveredandtheDistrictwillcontributeanamountequalonbehalf of the spouse equal to the excess of the average of the HMO two‐party premiums over the singlepremiumforthecoverageselected.Districtcontributionsarepro‐ratedforpart‐timeservice.Management retirees receive a District contribution equal to the single‐party medical, dental and visionpremiums.SpousesmaybecoveredandtheDistrictwillcontributeanamountonbehalfofthespouseequaltotheexcessofthehighesttwo‐partyHMOpremiumoverthesinglepremiumforthecoverageselected.The District's contribution ends at age 65 in all cases, except that one retired Superintendent is receivinglifetimetwo‐partysupplementalcoverage,andthreeManagementretireesoverage65arecurrentlyreceivingademinimisDistrict contributionequal to theexcessof theMEBAvision rateover the singleCOBRArate.Retired Superintendents and Assistant Superintendents have slightly different provisions apply but in allcasesexceptthefourmentionedabove,benefitsendatage65.FundingPolicyTheDistrict'sfundingpolicyisbasedontheprojectedpay‐as‐you‐gofinancingrequirements,withadditionalamounts to prefundbenefits asdetermined annuallyby the governingboard. For fiscal year2014‐15, theDistrictcontributed$1,434,392.Thistotalincludes$489,345toadjustfortheimplicitratesubsidy.AnnualOPEBCostandNetOPEBObligationTheDistrict’sannualOPEBcost iscalculatedbasedon theAnnualRequiredContribution(ARC),anamountactuariallydeterminedinaccordancewiththeparametersofGASBStatement45.TheARCrepresentsalevelof funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize anyunfundedactuarialliabilities(orfundingexcess)overaperiodnottoexceedthirtyyears.ThefollowingtableshowsthecomponentsoftheDistrict’sannualOPEBcostfortheyear,theamountactuallycontributedtotheplan,andchangesintheDistrict’snetOPEBobligation:

Annualrequiredcontribution(ARC) 2,753,176$InterestonnetOPEBobligation 236,954AdjustmenttoARC (342,577)AnnualOPEBcost 2,647,553Contributionsmade:Implicitratesubsidy (489,345)

Contributionsforpay‐as‐you‐gocosts (945,047)Totalcontributionsmade (1,434,392)IncreaseinnetOPEBobligation 1,213,161NetOPEBobligation‐July1,2014 5,923,854NetOPEBobligation‐June30,2015 7,137,015$

54

FULLERTONSCHOOLDISTRICTNotestoFinancialStatementsJune30,2015NOTE12–OTHERPOSTEMPLOYMENTBENEFITS(continued)AnnualOPEBCostandNetOPEBObligationTheDistrict’sannualOPEBcost,thepercentageofannualOPEBcostcontributedtotheplan,andthenetOPEBobligationfor2014‐15andtheprecedingtwoyearsareasfollows:

NetYearEnded Annual Percentage OPEBJune30, OPEBCost Contributed Obligation2013 2,195,042$ 59% 4,767,990$2014 2,668,162$ 57% 5,923,854$2015 2,647,553$ 54% 7,137,015$

FundedStatusandFundingProgress–OPEBPlansAs of July 1, 2013, themost recent actuarial valuation date, the District did not have a funded plan. Theactuarial accrued liability (AAL) forbenefitswas$22.2millionand theunfundedactuarial accrued liability(UAAL)was$22.2million.Actuarialvaluationsofanongoingplaninvolveestimatesofthevalueofreportedamountsandassumptionsabouttheprobabilityofoccurrenceofeventsfarintothefuture.Examplesincludeassumptionsaboutfutureemployment, mortality, and the healthcare cost trend. Actuarially determined amounts are subject tocontinualrevisionasactualresultsarecomparedwithpastexpectationsandnewestimatesaremadeaboutthe future. The schedules of funding progress present multiyear trend information about whether theactuarial values of plan assets are increasing or decreasing over time relative to the actuarial accruedliabilitiesforbenefits.ActuarialMethodsandAssumptionsProjections of benefits for financial reporting purposes are based on the substantive plan (the plan asunderstoodbytheemployerandplanmembers)andincludethetypesofbenefitsprovidedatthetimeofeachvaluationand thehistoricalpatternofsharingofbenefitcostsbetweentheemployerandplanmembers tothatpoint.Theactuarialmethodsandassumptionsusedincludetechniquesthataredesignatedtoreducetheeffectsofshort‐termvolatilityinactuarialaccruedliabilitiesandtheactuarialvalueofassets,consistentwiththelong‐termperspectiveofthecalculations.Additionalinformationasofthelatestactuarialvaluationfollows:

ValuationDate July1,2013ActuarialCostMethod ProjectedUnitCreditAmortizationMethod Open,LevelDollarMethodRemainingAmortizationPeriod 30yearsAssetValuation N/AActuarialAssumptions:Discountrate 4.0%Long‐termhealthcarecosttrendrates:

Medical 5.0‐8.0%DentalandVision 4.0%

RequiredSupplementaryInformation


Seeaccompanyingnotetorequiredsupplementaryinformation. 55

FULLERTONSCHOOLDISTRICTBudgetaryComparisonSchedule–GeneralFundFortheFiscalYearEndedJune30,2015

VariancewithActual* FinalBudget‐

Original Final (BudgetaryBasis) Pos(Neg)Revenues

LocalControlFundingFormulaSources 92,418,917$ 92,962,281$ 93,228,792$ 266,511$FederalSources 5,230,866 6,586,870 5,853,420 (733,450)OtherStateSources 5,815,362 6,857,701 7,048,540 190,839OtherLocalSources 8,412,495 9,302,559 9,631,363 328,804

TotalRevenues 111,877,640 115,709,411 115,762,115 52,704Expenditures

Current:CertificatedSalaries 56,181,941 58,491,500 57,917,756 573,744ClassifiedSalaries 17,212,621 18,294,717 17,707,520 587,197EmployeeBenefits 23,555,008 24,506,545 23,415,127 1,091,418BooksandSupplies 5,594,939 11,185,866 7,072,674 4,113,192ServicesandOtherOperatingExpenditures 7,622,824 8,609,046 7,536,511 1,072,535TransfersofIndirectCost (403,258) (400,574) (360,534) (40,040)

CapitalOutlay 117,552 147,730 147,326 404Intergovernmental 1,186,282 1,352,514 1,305,494 47,020DebtService:Interest 206,720 206,720 206,720 ‐Principal 320,000 320,000 320,000 ‐

TotalExpenditures 111,594,629 122,714,064 115,268,594 7,445,470

Excess(Deficiency)ofRevenuesOver(Under)Expenditures 283,011 (7,004,653) 493,521 7,498,174

OtherFinancingSourcesandUsesInterfundTransfersIn 1,001,568 1,001,606 1,001,606 ‐InterfundTransfersOut (185,452) (107,793) (107,793) ‐

TotalOtherFinancingSourcesandUses 816,116 893,813 893,813 ‐

NetchangesinFundBalances 1,099,127 (6,110,840) 1,387,334 7,498,174FundBalance,July1,2014 24,861,015 30,340,374 30,340,374 ‐

FundBalance,June30,2015 25,960,142$ 24,229,534$ 31,727,708$ 7,498,174

*

Onbehalfpaymentsof$2,821,842havebeenincludedintheStatementofRevenues,ExpendituresandChangesinFundBalancebutarenotincludedintheactualamountsabove.

BudgetedAmounts

TheactualamountsreportedinthisschedulearefortheGeneralFundonly,anddonotagreewiththeamountsreportedontheStatementofRevenues,Expenditures,andChangesinFundBalancesbecausetheamountsonthatscheduleincludethefinancialactivityoftheDeferredMaintenanceFund,SpecialReserveFundforOtherThanCapitalOutlayProjects,andSpecialReserveFundforPostemploymentBenefits,inaccordancewiththefundtypedefinitionspromulgatedbyGASBStatementNo.54.


FULLERTONSCHOOLDISTRICTBudgetaryComparisonSchedule–CafeteriaFundFortheFiscalYearEndedJune30,2015

VariancewithActual FinalBudget‐

Original Final (BudgetaryBasis) Pos(Neg)Revenues

FederalSources 4,429,657$ 4,297,308$ 4,276,576$ (20,732)$OtherStateSources 256,298 256,298 255,474 (824)OtherLocalSources 1,257,283 1,144,337 1,131,837 (12,500)

TotalRevenues 5,943,238 5,697,943 5,663,887 (34,056)Expenditures

Current:ClassifiedSalaries 1,844,229 1,849,994 1,743,177 106,817EmployeeBenefits 718,791 745,287 662,340 82,947BooksandSupplies 2,939,925 2,700,304 2,544,831 155,473ServicesandOtherOperatingExpenditures 138,548 150,349 142,550 7,799TransfersofIndirectCost 250,165 250,165 220,525 29,640

CapitalOutlay 275,000 45,500 26,890 18,610TotalExpenditures 6,166,658 5,741,599 5,340,313 401,286

Excess(Deficiency)ofRevenuesOver(Under)Expenditures (223,420) (43,656) 323,574 (435,343)

FundBalance,July1,2014 1,657,889 2,068,285 2,068,285 ‐

FundBalance,June30,2015 1,434,469$ 2,024,629$ 2,391,859$ (367,230)$

BudgetedAmounts


FULLERTONSCHOOLDISTRICTScheduleofFundingProgressFortheFiscalYearEndedJune30,2015

Actuarial UAALasaActuarial Accrued Unfunded PercentageofValuation Valueof Liability AAL Funded Covered CoveredDate Assets (AAL) (UAAL) Ratio Payroll Payroll

July1,2009 ‐$ 17,237,044$ 17,237,044$ 0.0% 68,130,297$ 25.3%July1,2011 ‐$ 18,367,142$ 18,367,142$ 0.0% 63,252,787$ 29.0%July1,2013 ‐$ 22,214,849$ 22,214,849$ 0.0% 65,484,362$ 33.9%


FULLERTONSCHOOLDISTRICTScheduleofProportionateShareoftheNetPensionLiabilityFortheFiscalYearEndedJune30,2015

2014

District'sproportionofthenetpensionliability(asset):

CalSTRS 0.1290%CalPERS 0.1587%

District'sproportionateshareofthenetpensionliability(asset):

CalSTRS 75,383,730$CalPERS 18,016,314$

District'scovered‐employeepayroll:CalSTRS 53,572,921$CalPERS 17,467,785$

District'sproportionateshareofthenetpensionliability(asset)asapercentageofitscovered‐employeepayroll:


Planfiduciarynetpositionasapercentageofthetotalpensionliability:


* Thisscheduleisrequiredtoshowinformationfortenyears;however,untilafulltenyeartrendiscompiled,informationispresentedforthoseyearsforwhichinformationisavailable.

LastTenFiscalYears*


FULLERTONSCHOOLDISTRICTScheduleofContributionsFortheFiscalYearEndedJune30,2015

2014

Actuariallydeterminedcontribution:CalSTRS 4,419,766$CalPERS 1,998,664$

Contributionsinrelationtotheactuariallydeterminedcontribution:

CalSTRS 4,419,766$CalPERS 1,998,664$

Contributiondeficiency(excess):CalSTRS ‐$CalPERS ‐$

District'scovered‐employeepayroll:CalSTRS 53,572,921$CalPERS 17,467,785$

Contributionsasapercentageofcovered‐employeepayroll:


* Thisscheduleisrequiredtoshowinformationfortenyears;however,untilafulltenyeartrendiscompiled,informationispresentedforthoseyearsforwhichinformationisavailable.

LastTenFiscalYears*

60

FULLERTONSCHOOLDISTRICTNotestotheRequiredSupplementaryInformationFortheFiscalYearEndedJune30,2015

NOTE1–PURPOSEOFSCHEDULESBudgetaryComparisonScheduleThis schedule is required by GASB Statement No. 34 as required supplementary information (RSI) for theGeneral Fund and for each major special revenue fund that has a legally adopted annual budget. Thebudgetarycomparisonschedulepresentsboth(a)theoriginaland(b)thefinalappropriatedbudgetsforthereportingperiodaswellas(c)actualinflows,outflows,andbalances,statedontheDistrict’sbudgetarybasis.A separate column to report the variance between the final budget and actual amounts is also presented,althoughnotrequired.ScheduleofFundingProgressThis schedule is required by GASB Statement No. 45 for all sole and agent employers that provide otherpostemploymentbenefits(OPEB).Theschedulepresents,forthemostrecentactuarialvaluationandthetwoprecedingvaluations, informationabout the fundingprogressof theplan, including, foreachvaluation, theactuarial valuation date, the actuarial value of assets, the actuarial accrued liability, the total unfundedactuarial liability (or funding excess), the actuarial valueof assets as apercentageof the actuarial accruedliability(fundedratio), theannualcoveredpayroll,andtheratioof thetotalunfundedactuarial liability(orfundingexcess)toannualcoveredpayroll.ScheduleofProportionateShareoftheNetPensionLiabilityThis schedule is required by GASB Statement No. 68 and is required for all employers in a cost‐sharingpensionplan.Theschedulereportsthefollowinginformation:

Theproportion(percentage)ofthecollectivenetpensionliability(similartothenotedisclosure) Theproportionateshare(amount)ofthecollectivenetpensionliability Theemployer'scovered‐employeepayroll The proportionate share (amount) of the collective net pension liability as a percentage of the

employer'scovered‐employeepayroll Thepensionplan'sfiduciarynetpositionasapercentageofthetotalpensionliability

ScheduleofContributionsThis schedule is required by GASB Statement No. 68 and is required for all employers in a cost‐sharingpensionplan.Theschedulereportsthefollowinginformation:

If an employer's contributions to the plan are actuarially determined or based on statutory orcontractual requirements: the employer's actuarially determined contribution to the pension plan(or, if applicable, its statutorily or contractually required contribution), the employer's actualcontributions, the difference between the actual and actuarially determined contributions (orstatutorily or contractually required), and a ratio of the actual contributions divided by covered‐employeepayroll.

NOTE2–EXCESSOFEXPENDITURESOVERAPPROPRIATIONSAtJune30,2015,theDistrictincurredthefollowingexcessofexpendituresoverappropriationsinindividualmajorfundspresentedintheBudgetaryComparisonSchedule:

GeneralFund

TransfersofIndirectCost 40,040$

SupplementaryInformation


61

FULLERTONSCHOOLDISTRICTLocalEducationalAgencyOrganizationStructureJune30,2015TheFullertonSchoolDistrictwasestablishedin1888.TheDistrictboundariesencompassapproximately26squaremilesinOrangeCounty. TherewerenochangesintheboundariesoftheDistrictduringthecurrentyear. TheDistrict iscurrentlyoperating15elementaryschools(K‐6),twocombinedK‐8schools,andthreejuniorhighschools.

BOARDOFTRUSTEESMember Office TermExpires

ChrisThompson President November30,2018

LynnThornley Vice‐President November30,2016

HildaSugarman Clerk November30,2016

JannyMeyer Member November30,2018

BeverlyBerryman Member November30,2018

DISTRICTADMINISTRATORS

RobertPletka,Ed.D.,Superintendent

CraigBertsch,Ed.D.,

AssistantSuperintendent,PersonnelServices

EmyFlores,Ed.D.,AssistantSuperintendent,EducationalServices

SusanCrossHume,CPA,CIA,CGMA

AssistantSuperintendent,BusinessServices

Seeaccompanyingnotetosupplementaryinformation. 62

FULLERTONSCHOOLDISTRICTScheduleofAverageDailyAttendanceFortheFiscalYearEndedJune30,2015

SecondPeriod AnnualReport Report

CertificateNo. CertificateNo.(4AA4A152) (27A0A118)

Regular&ExtendedYearADA:TransitionalKindergartenthroughThird 5,911.32 5,906.25FourththroughSixth 4,496.36 4,489.89SevenththroughEighth 2,932.96 2,930.21

TotalRegular&ExtendedYearADA 13,340.64 13,326.35

SpecialEducation,Nonpublic,NonsectarianSchools:TransitionalKindergartenthroughThird 0.99 1.24FourththroughSixth 2.57 2.95SevenththroughEighth 0.35 0.49

TotalSpecialEducation,Nonpublic,NonsectarianSchools 3.91 4.68

TotalADA 13,344.55 13,331.03


FULLERTONSCHOOLDISTRICTScheduleofInstructionalTimeFortheFiscalYearEndedJune30,2015

2014‐15 NumberofDaysPreviously Actual Traditional

GradeLevel Required Reduced* Minutes Calendar Status

Kindergarten 36,000 35,000 35,100 180 CompliedGrade1 50,400 49,000 52,544 180 CompliedGrade2 50,400 49,000 52,740 180 CompliedGrade3 50,400 49,000 53,320 180 CompliedGrade4 54,000 52,500 54,785 180 CompliedGrade5 54,000 52,500 54,785 180 CompliedGrade6 54,000 52,500 54,785 180 CompliedGrade7 54,000 52,500 62,326 180 CompliedGrade8 54,000 52,500 62,316 180 Complied

*AmountsreducedaspermittedbyEducationCodeSection46201.2(a).

1986‐87Minutes


FULLERTONSCHOOLDISTRICTScheduleofFinancialTrendsandAnalysisFortheFiscalYearEndedJune30,2015

(Budget)GeneralFund 20162 20153 2014 2013

Revenuesandotherfinancingsources 120,214,343$ 116,763,721$ 110,462,759$ 103,542,578$

Expenditures 120,167,344 115,268,594 106,488,383 98,984,816Otherusesandtransfersout 84,287 107,793 342,099 353,594

Totaloutgo 120,251,631 115,376,387 106,830,482 99,338,410

Changeinfundbalance(deficit) (37,288) 1,387,334 3,632,277 4,204,168

Endingfundbalance 31,690,420$ 31,727,708$ 30,340,374$ 26,708,097$

Availablereserves1 27,869,748$ 27,153,195$ 24,272,471$ 19,877,267$

Availablereservesasapercentageoftotaloutgo 23.2% 23.5% 22.7% 20.0%

Totallong‐termdebt4 145,992,200$ 149,148,328$ 173,420,777$ 58,404,941$

AveragedailyattendanceatP‐2 13,345 13,345 13,511 13,477

TheGeneralFundbalancehasincreasedby$5.0millionoverthepasttwoyears.Thefiscalyear2015‐16adoptedbudgetprojectsadecreaseof$37,288.Foradistrictofthissize,thestaterecommendsavailablereservesofatleast3%oftotalgeneralfundexpenditures,transfersout,andotheruses(totaloutgo).

TheDistricthasincurredoperatingsurplusesineachofthepastthreeyears,butanticipatesanoperatingdeficitforthe2015‐16fiscalyear.Thetotallong‐termdebthasincreasedapproximately$90.7millionoverthepasttwoyears.ForfurtherinformationseeNote1.I.

Averagedailyattendancehasdecreasedby132overthepasttwoyears.TheDistrictanticipatesnochangeinADAforthe2015‐16fiscalyear.

1AvailablereservesconsistofallunassignedfundbalancesintheGeneralFund.

2BudgetasofSeptember,2015.

3TheactualamountsreportedinthisschedulearefortheGeneralFundonly,anddonotagreewiththeamountsreportedontheStatementofRevenues,Expenditures,andChangesinFundBalancesbecausetheamountsonthatscheduleincludethefinancialactivityoftheDeferredMaintenanceFund,SpecialReserveFundforOtherThanCapitalOutlayProjects,andSpecialReserveFundforPostemploymentBenefits,inaccordancewiththefundtypedefinitionspromulgatedbyGASBStatementNo.54.

Onbehalfpaymentsof$2,821,842havebeenincludedintheStatementofRevenues,ExpendituresandChangesinFundBalancebutarenotincludedintheactualamountsabove.

4June30,2014,longtermdebtshownasrestated.SeeNote1.I.


FULLERTONSCHOOLDISTRICTReconciliationofAnnualFinancialandBudgetReportwithAuditedFinancialStatementsFortheFiscalYearEndedJune30,2015

TherewerenodifferencesbetweentheAnnualFinancialandBudgetReportandtheAuditedFinancialStatementsinanyfunds.


FULLERTONSCHOOLDISTRICTScheduleofExpendituresofFederalAwardsFortheFiscalYearEndedJune30,2015

Federal Pass‐ThroughFederalGrantor/Pass‐Through CFDA EntityIdentifying Cluster FederalGrantor/ProgramorClusterTitle Number Number Expenditures ExpendituresFederalPrograms:

U.S.DepartmentofAgriculture:PassedthroughCaliforniaDept.ofEducation(CDE):

ChildNutritionCluster:EspeciallyNeedyBreakfastProgram 10.553 13526 407,357$NationalSchoolLunchProgram 10.555 13391 2,777,662SummerFoodProgram 10.559 13004 19,697USDA‐DonatedFoods 10.555 N/A 367,103SubtotalChildNutritionCluster 3,571,819

ChildandAdultCareFoodProgram 10.558 13394 704,757

TotalU.S.DepartmentofAgriculture 4,276,576

U.S.DepartmentofEducation:PassedthroughCaliforniaDept.ofEducation(CDE):

NoChildLeftBehindAct(NCLB):TitleI,PartA,LowIncomeandNeglected 84.010 14329 2,029,104TitleII,PartA,ImprovingTeacherQualityLocalGrants 84.367 14341 445,727TitleII,PartB,CaliforniaMathematicsandSciencePartnerships 84.366 14512 26,656EnglishLanguageAcquisitionGrantsCluster:TitleIII,ImmigrantEducationProgram 84.365 14334 9,431TitleIII,LimitedEnglishProficient(LEP)StudentProgram 84.365 14346 428,953SubtotalEnglishLanguageAcquisitionGrantsCluster 438,384

ArtsinEducation‐CREATEArtGrant 84.351D N/A 4,131IndividualswithDisabilitiesEducationAct(IDEA):SpecialEducationCluster:

BasicLocalAssistanceEntitlement,PartB,Sec611 84.027 13379 2,254,606PreschoolGrants,PartB,Section619(Age3‐4‐5) 84.173 13430 76,241PreschoolLocalEntitlement,PartB,Section611(Age3‐4‐5) 84.027A 13682 206,664SubtotalSpecialEducationCluster 2,537,511

TotalU.S.DepartmentofEducation 5,481,513

U.S.DepartmentofHealth&HumanServices:PassedthroughCaliforniaDept.ofEducation(CDE):ChildCareandDevelopmentCluster:

FederalGeneralandStatePreschoolMatching 93.596 13609 46,481FederalGeneralandStatePreschoolDiscretionary 93.575 15136 25,573

SubtotalChildCareandDevelopmentFund 72,054

PassedthroughCaliforniaDept.ofHealthServices:Medi‐CalBillingOption&AdministrativeActivities 93.778 10013 377,400

TotalU.S.DepartmentofHealth&HumanServices 449,454

TotalExpendituresofFederalAwards 10,207,543$

67

FULLERTONSCHOOLDISTRICTNotetotheSupplementaryInformationJune30,2015NOTE1–PURPOSEOFSCHEDULESScheduleofAverageDailyAttendance(ADA)Averagedailyattendance(ADA) isameasurementof thenumberofpupilsattendingclassesof theDistrict.The purpose of attendance accounting from a fiscal standpoint is to provide the basis on whichapportionmentsofStatefundsaremadetoschooldistricts.Thisscheduleprovidesinformationregardingtheattendanceofstudentsatvariousgradelevelsandindifferentprograms.ScheduleofInstructionalTimeTheDistrict has participated in the Incentives for Longer InstructionalDay and Longer Instructional Year.TheDistricthasnotmetitstargetfunding.ThisschedulepresentsinformationontheamountofinstructionaltimeofferedbytheDistrictandwhethertheDistrictcompliedwiththeprovisionsofEducationCodeSections46200through46206.Districts must maintain their instructional minutes at the 1986‐87 requirement, as reduced by EducationCodeSection46201.2(a).ScheduleofFinancialTrendsandAnalysisThisscheduledisclosestheDistrict’s financial trendsbydisplayingpastyears’dataalongwithcurrentyearbudgetinformation.ThesefinancialtrenddisclosuresareusedtoevaluatetheDistrict’sabilitytocontinueasagoingconcernforareasonableperiodoftime.ReconciliationofAnnualFinancialandBudgetReportwithAuditedFinancialStatementsThisscheduleprovidestheinformationnecessarytoreconcilethefundbalanceofall fundsreportedontheUnauditedActualfinancialreporttotheauditedfinancialstatements.ScheduleofExpendituresofFederalAwardsThe schedule of expenditures of Federal awards includes the Federal grant activity of the District and ispresented on the modified accrual basis of accounting. The information in this schedule is presented inaccordancewiththerequirementsoftheUnitedStatesofAmericaOfficeofManagementandBudgetCircularA‐133,AuditsofStates,LocalGovernments,andNon‐ProfitOrganizations.Therefore,someamountspresentedinthisschedulemaydifferfromamountspresentedin,orusedinthepreparationofthefinancialstatements.SubrecipientsOf the Federal expenditures presented in the schedule, the District provided no Federal awards tosubrecipients.


OtherIndependentAuditors'Reports


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INDEPENDENTAUDITORS'REPORTONINTERNALCONTROLOVERFINANCIALREPORTINGANDONCOMPLIANCEANDOTHERMATTERSBASEDONANAUDITOFFINANCIALSTATEMENTSPERFORMEDINACCORDANCE

WITHGOVERNMENTAUDITINGSTANDARDSBoardofTrusteesFullertonSchoolDistrictFullerton,California

We have audited, in accordance with the auditing standards generally accepted in the United States ofAmericaandthestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards issuedbytheComptrollerGeneraloftheUnitedStates,thefinancialstatementsofthegovernmentalactivities,eachmajorfund,andtheaggregateremainingfundinformationofFullertonSchoolDistrictasofandfortheyearendedJune30,2015,andtherelatednotestothefinancialstatements,whichcollectivelycompriseFullertonSchoolDistrict'sbasicfinancialstatements,andhaveissuedourreportthereondatedDecember15,2015.InternalControlOverFinancialReportingInplanningandperformingourauditof the financial statements,weconsideredFullertonSchoolDistrict’sinternal control over financial reporting (internal control) to determine the audit procedures that areappropriateinthecircumstancesforthepurposeofexpressingouropinionsonthefinancialstatements,butnot for thepurposeofexpressinganopinionon theeffectivenessof theFullertonSchoolDistrict’s internalcontrol. Accordingly, we do not express an opinion on the effectiveness of the Fullerton School District’sinternalcontrol.Adeficiencyininternalcontrolexistswhenthedesignoroperationofacontroldoesnotallowmanagementoremployees, in the normal course of performing their assigned functions, to prevent, or detect and correctmisstatements on a timely basis. Amaterialweakness is a deficiency, or a combination of deficiencies, ininternal control such that there is a reasonable possibility that a material misstatement of the District'sfinancialstatementswillnotbeprevented,ordetectedandcorrectedonatimelybasis.Asignificantdeficiencyis a deficiency, or a combination of deficiencies, in internal control that is less severe than a materialweakness,yetimportantenoughtomeritattentionbythosechargedwithgovernance.Our consideration of internal control was for the limited purpose described in the first paragraph of thissectionandwasnotdesignedtoidentifyalldeficienciesininternalcontrolthatmightbematerialweaknessesor significantdeficiencies. Given these limitations,duringourauditwedidnot identifyanydeficiencies ininternalcontrolthatweconsidertobematerialweaknesses. However,materialweaknessesmayexistthathavenotbeenidentified.

69

ComplianceandOtherMattersAspartofobtainingreasonableassuranceaboutwhetherFullertonSchoolDistrict’sfinancialstatementsarefree of material misstatement, we performed tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements, noncompliancewithwhich could have a direct andmaterialeffecton thedeterminationof financial statementamounts. However,providinganopiniononcompliancewiththoseprovisionswasnotanobjectiveofouraudit,andaccordingly,wedonotexpresssuchanopinion.The results of our tests disclosed instances of noncompliance or other matters that are required to bereported underGovernmentAuditing Standards andwhich are described in the accompanying schedule offindingsandquestionedcostsasFindings2015‐1and2015‐2.FullertonSchoolDistrict’sResponsestoFindingsFullertonSchoolDistrict’sresponsestothefindingsidentifiedinourauditaredescribedintheaccompanyingschedule of findings andquestioned costs. Fullerton SchoolDistrict’s responseswerenot subjected to theauditingproceduresappliedintheauditofthefinancialstatementsand,accordingly,weexpressnoopiniononthem.PurposeofthisReportThepurposeofthisreportissolelytodescribethescopeofourtestingofinternalcontrolandcomplianceandtheresultsofthattesting,andnottoprovideanopinionontheeffectivenessoftheDistrict'sinternalcontrolor on compliance. This report is an integral part of an audit performed in accordance with GovernmentAuditing Standards in considering the District's internal control and compliance. Accordingly, thiscommunicationisnotsuitableforanyotherpurpose.


70

INDEPENDENTAUDITORS’REPORTONSTATECOMPLIANCEBoardofTrusteesFullertonSchoolDistrictFullerton,CaliforniaReportonStateComplianceWehaveauditedFullertonSchoolDistrict'scompliancewiththetypesofcompliancerequirementsdescribedinthe2014‐15GuideforAnnualAuditsofK‐12LocalEducationAgenciesandStateComplianceReportingthatcouldhaveadirectandmaterialeffectoneachoftheFullertonSchoolDistrict'sstategovernmentprogramsasnotedonthefollowingpageforthefiscalyearendedJune30,2015.Management'sResponsibilityManagementisresponsibleforcompliancewiththerequirementsoflaws,regulations,contracts,andgrantsapplicabletoitsStateprograms.Auditors'ResponsibilityOur responsibility is to express an opinion on compliance for each of Fullerton School District's Stateprogramsbasedonourauditofthetypesofcompliancerequirementsreferredtobelow.WeconductedourauditofcomplianceinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica;the standards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States; and 2014‐15 Guide for Annual Audits of K‐12 Local EducationAgenciesand StateComplianceReporting. Those standards require thatwe plan and perform the audit toobtain reasonable assurance about whether noncompliance with the types of compliance requirementsreferred to below occurred. An audit includes examining, on a test basis, evidence about Fullerton SchoolDistrict’s compliance with those requirements and performing such other procedures as we considerednecessaryinthecircumstances.WebelievethatourauditprovidesareasonablebasisforouropiniononcomplianceforeachStateprogram.However,ourauditdoesnotprovidealegaldeterminationofFullertonSchoolDistrict’scompliance.

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Inconnectionwiththeauditreferredtoonthepriorpage,weselectedandtestedtransactionsandrecordstodeterminetheDistrict'scompliancewiththeStatelawsandregulationsapplicabletothefollowingitems:UnmodifiedOpiniononCompliancewithStateProgramsIn our opinion, Fullerton School District complied, in all material respects, with the types of compliancerequirementsreferredtoabovefortheyearendedJune30,2015.OtherMattersThe results of our auditing procedures disclosed instances of noncompliance with the compliancerequirements referred to above, which are required to be reported in accordancewith 2014‐15Guide forAnnualAuditsofK‐12LocalEducationAgenciesandStateComplianceReporting,andwhicharedescribed intheaccompanyingscheduleoffindingsandquestionedcostsasFindings2015‐1and2015‐2.District'sResponsestoFindingsFullertonSchoolDistrict's responses to thecompliance findings identified inourauditaredescribed in theaccompanying schedule of findings and questioned costs. Fullerton School District's responses were notsubjectedtotheauditingprocedures intheauditofcomplianceand,accordingly,weexpressnoopinionontheresponses.


Description

ProceduresPerformed

Attendance YesTeacherCertificationandMisassignments YesKindergartenContinuance YesIndependentStudy NotApplicableContinuationEducation NotApplicableInstructionalTime YesInstructionalMaterials YesRatioofAdministrativeEmployeestoTeachers YesClassroomTeacherSalaries YesEarlyRetirementIncentive NotApplicableGannLimitCalculation YesSchoolAccountabilityReportCard YesJuvenileCourtSchools NotApplicableMiddleorEarlyCollegeHighSchools NotApplicableK‐3GradeSpanAdjustment YesTransportationMaintenanceofEffort YesRegionalOccupationCentersorProgramsMaintenanceofEffort NotApplicableAdultEducationMaintenanceofEffort NotApplicableCaliforniaCleanEnergyJobsAct YesAfterSchoolEducationandSafetyProgram YesProperExpenditureofEducationProtectionAccountFunds YesCommonCoreImplementationFunds YesUnduplicatedLocalControlFundingFormulaPupilCounts YesLocalControlandAccountabilityPlan YesCharterSchools:

Attendance NotApplicableModeofInstruction NotApplicableNonclassroom‐BasedInstruction/IndependentStudy NotApplicableDeterminationofFundingforNonclassroom‐BasedInstruction NotApplicableAnnualInstructionalMinutes– ClassroomBased NotApplicableCharterSchoolFacilityGrantProgram NotApplicable

72

INDEPENDENTAUDITORS'REPORTONCOMPLIANCEFOR

EACHMAJORFEDERALPROGRAMANDONINTERNALCONTROLOVERCOMPLIANCEREQUIREDBYOMBCIRCULARA‐133

BoardofTrusteesFullertonSchoolDistrictFullerton,CaliforniaReportonComplianceforEachMajorFederalProgramWehaveauditedFullertonSchoolDistrict'scompliancewiththetypesofcompliancerequirementsdescribedin the OMB Circular A‐133Compliance Supplement that could have a direct andmaterial effect on each ofFullerton School District's major federal programs for the year ended June 30, 2015. Fullerton SchoolDistrict’s major federal programs are identified in the summary of auditors’ results section of theaccompanyingscheduleoffindingsandquestionedcosts.Management'sResponsibilityManagementisresponsibleforcompliancewiththerequirementsoflaws,regulations,contracts,andgrantsapplicabletoitsfederalprograms.Auditors'ResponsibilityOurresponsibilityistoexpressanopiniononcomplianceforeachofFullertonSchoolDistrict'smajorfederalprogramsbasedonourauditofthetypesofcompliancerequirementsreferredtoabove.WeconductedourauditofcomplianceinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica;the standards applicable to financial audits contained in Government Auditing Standards, issued by theComptrollerGeneralof theUnitedStates;andOMBCircularA‐133,AuditsofStates,LocalGovernments,andNon‐ProfitOrganizations. Those standards and OMB Circular A‐133 require thatwe plan and perform theaudit to obtain reasonable assurance about whether noncompliance with the types of compliancerequirements referred to above that could have a direct and material effect on a major federal programoccurred.Anauditincludesexamining,onatestbasis,evidenceaboutFullertonSchoolDistrict’scompliancewith those requirements and performing such other procedures as we considered necessary in thecircumstances.Webelievethatourauditprovidesareasonablebasisforouropiniononcomplianceforeachmajorfederalprogram. However, our audit does not provide a legal determination of Fullerton School District’scompliance.OpiniononEachMajorFederalProgramIn our opinion, Fullerton School District complied, in all material respects, with the types of compliancerequirements referred to above that could have a direct and material effect on each of its major federalprogramsfortheyearendedJune30,2015.

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ReportonInternalControlOverComplianceManagement of Fullerton School District is responsible for establishing andmaintaining effective internalcontrol over compliance with the types of compliance requirements referred to above. In planning andperforming our audit of compliance, we considered Fullerton School District’s internal control overcompliancewiththetypesofrequirementsthatcouldhaveadirectandmaterialeffectoneachmajorfederalprogramtodeterminetheauditingproceduresthatareappropriateinthecircumstancesforthepurposeofexpressing an opinion on compliance for each major federal program and to test and report on internalcontrol over compliance in accordancewithOMBCircularA‐133, butnot for thepurposeof expressing anopinionontheeffectivenessofinternalcontrolovercompliance.Accordingly,wedonotexpressanopinionontheeffectivenessoftheDistrict’sinternalcontrolovercompliance.A deficiency in internal control over compliance exists when the design or operation of a control overcompliance does not allowmanagement or employees, in the normal course of performing their assignedfunctions,toprevent,ordetectandcorrect,noncompliancewithatypeofcompliancerequirementofafederalprogram on a timely basis. Amaterialweakness in internal control over compliance is a deficiency, or acombination of deficiencies, in internal control over compliance, such that there is a reasonablepossibilitythat material noncompliance with a type of compliance requirement of a federal program will not beprevented, or detected and corrected, on a timely basis. A significant deficiency in internal control overcomplianceisadeficiency,oracombinationofdeficiencies,ininternalcontrolovercompliancewithatypeofcompliancerequirementofafederalprogramthatislessseverethanamaterialweaknessininternalcontrolovercompliance,yetimportantenoughtomeritattentionbythosechargedwithgovernance.Our consideration of internal control over compliance was for the limited purpose described in the firstparagraphofthissectionandwasnotdesignedtoidentifyalldeficienciesininternalcontrolovercompliancethatmightbematerialweaknessesorsignificantdeficiencies.Wedidnotidentifyanydeficienciesininternalcontrolover compliance thatweconsider tobematerialweaknesses,asdefinedabove. However,materialweaknessesmayexistthathavenotbeenidentified.ThepurposeofthisreportoninternalcontrolovercomplianceissolelytodescribethescopeofourtestingofinternalcontrolovercomplianceandtheresultsofthattestingbasedontherequirementsofOMBCircularA‐133.Accordingly,thisreportisnotsuitableforanyotherpurpose.


FindingsandQuestionedCosts


74

FULLERTONSCHOOLDISTRICTScheduleofAuditFindingsandQuestionedCostsFortheFiscalYearEndedJune30,2015SECTIONI‐SUMMARYOFAUDITORS'RESULTS

FinancialStatements

Typeofauditors'reportissued UnmodifiedInternalcontroloverfinancialreporting:

Materialweakness(es)identified? NoSignificantdeficiency(s)identifiednotconsideredtobematerialweaknesses? Nonereported

Noncompliancematerialtofinancialstatementsnoted? No

FederalAwards

Internalcontrolovermajorprograms:Materialweakness(es)identified? NoSignificantdeficiency(s)identifiednotconsideredtobematerialweaknesses? Nonereported

Typeofauditors'reportissuedoncomplianceformajorprograms: Unmodified

Anyauditfindingsdisclosedthatarerequiredtobereported inaccordancewithCircularA‐133,Section.510(a) NoIdentificationofmajorprograms:

CFDANumbers NameofFederalProgramorCluster

84.010 TitleI,PartA,BasicGrants84.367 TitleII,PartA,ImprovingTeacherQuality84.365 EnglishLanguageAcquistionGrantsCluster

DollarthresholdusedtodistinguishbetweenTypeAandTypeBprograms: 306,226$

Auditeequalifiedaslow‐riskauditee? Yes

StateAwards

Typeofauditors'reportissuedoncomplianceforstateprograms: Unmodified

75

FULLERTONSCHOOLDISTRICTScheduleofAuditFindingsandQuestionedCostsFortheFiscalYearEndedJune30,2015SECTIONII‐FINANCIALSTATEMENTFINDINGSThis section identifies the significant deficiencies, material weaknesses, and instances of noncompliancerelatedtothefinancialstatementsthatarerequiredtobereportedinaccordancewithGovernmentAuditingStandards.Pursuant toAssemblyBill (AB)3627,allaudit findingsmustbe identifiedasoneormoreof thefollowingcategories:

FiveDigitCode AB3627FindingTypes10000 Attendance20000 InventoryofEquipment30000 InternalControl40000 StateCompliance42000 CharterSchoolFacilitiesPrograms50000 FederalCompliance60000 Miscellaneous61000 ClassroomTeacherSalaries62000 LocalControlAccountabilityPlan70000 InstructionalMaterials71000 TeacherMisassignments72000 SchoolAccountabilityReportCard

Therewerenofinancialstatementfindingsin2014‐15.

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FULLERTONSCHOOLDISTRICTScheduleofAuditFindingsandQuestionedCostsFortheFiscalYearEndedJune30,2015SECTIONIII‐FEDERALAWARDFINDINGSANDQUESTIONEDCOSTSThis section identifies the audit findings required to be reported by Circular A‐133, Section .510(a) (e.g.,significantdeficiencies,materialweaknesses,andinstancesofnoncompliance,includingquestionedcosts).Therewerenofederalawardfindingsorquestionedcostsin2014‐15.

77

FULLERTONSCHOOLDISTRICTScheduleofAuditFindingsandQuestionedCostsFortheFiscalYearEndedJune30,2015SECTIONIV‐STATEAWARDFINDINGSANDQUESTIONEDCOSTSThis section identifies the audit findings pertaining to noncompliance with state program rules andregulations.Finding2015‐1:UnduplicatedPupilCount(40000)Criteria: Supplemental and concentration grant amounts are calculated based on the percentage of"unduplicated pupils" enrolled in the LEA on Census Day (first Wednesday in October). The percentageequals:

Unduplicatedcountofpupilswho(1)areEnglishlearners,(2)meetincomeorcategoricaleligibilityrequirements for freeorreduced‐pricemealsundertheNationalSchoolLunchProgram,or(3)arefosteryouth."Unduplicatedcount"meansthateachpupiliscountedonlyonceevenifthepupilmeetsmorethanoneofthesecriteria(ECsections2574(b)(2)and42238.02(b)(1)).

DividedbytotalenrollmentintheLEA(ECsections2574(b)(1)and42238.02(b)(5)).Allpupilcounts

arebasedonFall1certifiedenrollmentreportedintheCALPADSasofCensusDay.Condition:DuringourtestingofEnglishLearnerstudentsreportedintheCALPADS1.17and1.18reports,wenoted that one student thatwas reported as eligible did not have supporting documentation to justify thedesignation.Context:Wenotedtheerroratoneoffiveschoolstested.Cause: The isolated error was made when the student met the reclassification requirement but was notreclassified.QuestionedCosts:$221. Thisamountwasdeterminedbycalculating thedifferencebetweentheDistrict'soriginal total LCFF revenues and the LCFF revenues adjusted for the decrease in the unduplicated pupilcounts.Effect:TheunduplicatedpupilcountsreportedintheCALPADS1.17and1.18reportsshouldbeadjustedforthefollowingchangesasaresultoftheproceduresperformed:

Adjustedbasedoneligibilityfor:

SchoolSite CALPADSReported EL AdjustedTotalFernDriveElementary 218 (1) 217Aggregateremainingschoolsites 6,888 ‐ 6,888

District‐wide 7,106 (1) 7,105

Theenrollmentcountof13,678wasnotimpactedasaresultoftheproceduresperformed.DistrictResponse: DistrictpersonnelwillbemonitoringtheCALPADSreportsaftereveryupdatefromourattendancesoftware.Districtstaffwillbeworkingtovalidateandconfirmalldatabeforeitgetstothestate.

78

FULLERTONSCHOOLDISTRICTScheduleofAuditFindingsandQuestionedCostsFortheFiscalYearEndedJune30,2015SECTIONIV‐STATEAWARDFINDINGSANDQUESTIONEDCOSTS(continued)Finding2015‐2:InstructionalMaterials(70000)Criteria: California Education Code Section 60119 requires the District to hold a public hearing prior tomakingadetermination througha resolutionas to the sufficiencyof textbooksand instructionalmaterials.Thepublichearingmustbeheldonorbeforethe8thweekofschool.Condition: The District's sufficiency of instructional materials public hearing was held on November 18,2014.Thiswasafterthe8thweekofschoolwhichbeganonAugust11,2014.ThehearingwouldhaveneededtobeheldonorpriortotheweekofSeptember21st.Context:Theexceptionislimitedtothe2014‐15schoolyear.QuestionedCost:Thereisnofinancialpenaltyassociatedwithnoncompliance.Cause:TheDistrict failedtoholdthepublichearingforinstructionalmaterialsonorbeforethe8thweekofschool.Effect:ThepublichearingwasnothelduntilNovember18.Recommendation:WerecommendthattheDistrictensurethattheinstructionalmaterialspublichearingiscompletedonorbeforethe8thweekofschool.District Response: The District has placed into action processes and procedures that will ensure therequiredpublichearingbeheldwithinthefirsteightweeksoftheschoolyear.Thiswasanoversightin2014‐15anditwasnotmissedin2015‐16.

79

FULLERTONSCHOOLDISTRICTSummaryScheduleofPriorAuditFindingsFortheFiscalYearEndedJune30,2015Therewerenoauditfindingsin2013‐14.

80

BoardofTrusteesFullertonSchoolDistrictFullerton,CaliforniaIn planning and performing our audit of the basic financial statements of Fullerton School District for thefiscal year ending June 30, 2015, we considered its internal control structure in order to determine ourauditingprocedures for thepurposeofexpressingouropinionon thebasic financialstatementsandnot toprovideassuranceontheinternalcontrolstructure.However,duringourauditwenotedmattersthatareanopportunityforstrengtheninginternalcontrolsandoperatingefficiency.Thefollowingitemsrepresentconditionsnotedbyourauditthatweconsiderimportantenough tobring toyourattention. This letterdoesnotaffectour reportdatedDecember15,2015,on thefinancialstatementsofFullertonSchoolDistrict.DISTRICTOFFICEObservation: During a test of cash disbursements, we identified 4 invoices out of 47 that were notpreapproved. We also identified a credit card expenditure for a hotel stay during a conference that wasapproximatelytwicetheapprovedamount.Althoughthehotelwasoverthepre‐approvedamount,thetotalforalltheconferenceexpensesdidnotgooverthetotalamountapproved.Anadditionalexpenditurewasforthepurchaseofacellphoneforwhichthereisnospecificwrittenpolicyastoitsuse.Recommendation: We recommend the District approve in advance all purchases to ensure theappropriatenessofthedisbursementandtodetermineifthepurchasemeetsbudgetaryguidelines.Further,werecommendtheDistrictinvestigateallcreditcardpurchasestomakesuretheyadheretoDistrictpolicy.Finally,we recommend theDistrict fashionapolicy for cellphonepurchasesand theirappropriateuse forbusinesspurposes.ASSOCIATEDSTUDENTBODY(ASB)FUNDSObservation:At Ladera Vista Jr. High,we noted that some cash receiptswere not supported by adequatedocumentation.Cashcollectedfordanceslackedasupportingticketcontrolworksheetthatwouldprovideareconciliation for amounts collected and subsequently deposited in the bank. Without supportingdocumentation,wecouldnotverifywhethertheamountscollectedatthedancesweredepositedintact.Recommendation:Werecommendthesiteusesoundinternalcontrolpracticesinordertodiscouragetheftof ASB funds and protect those that handle the cash. It is important that reconciling methods enable theproceedsfromthespecificeventtobeverifiedfromthepointofcollectiontodepositinthebank.Wewillreviewthestatusofthecurrentyearcommentsduringournextauditengagement.


Documents

FULLERTON SCHOOL DISTRICT AUDIT REPORT For the Fiscal …€¦ · Standards Board Statement No. 68, "Accounting and Financial Reporting for Pensions‐An Amendment of GASB Statement