INDEX [dashboard.eidexinsights.com]...statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion We do not express

INDEX

AUDITORS' REPORT

PAGE

INDEPENDENT AUDITORS' REPORT 1 - 2

MANAGEMENT'S DISCUSSION AND ANALYSIS 3 - 8

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

STATEMENT OF NET POSITION 9

STATEMENT OF ACTIVITIES 10

FUND FINANCIAL STATEMENTS

BALANCE SHEET - GOVERNMENTAL FUNDS 11

RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES TO NET POSITION OFGOVERNMENTAL ACTIVITIES 12

STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES -GOVERNMENTAL FUNDS 13

RECONCILIATION OF THE STATEMENT OF REVENUE, EXPENDITURES AND CHANGES INFUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 14

STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES - FIDUCIARY FUND 15

NOTES TO FINANCIAL STATEMENTS 16 - 43

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF THE SCHOOL DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSIONLIABILITY 44

SCHEDULE OF THE SCHOOL DISTRICT'S PENSION CONTRIBUTIONS 45

SCHEDULE OF THE SCHOOL DISTRICT'S PROPORTIONATE SHARE OF THE NET OPEB LIABILITY 46

SCHEDULE OF THE SCHOOL DISTRICT'S OPEB CONTRIBUTIONS 47

STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL - GENERAL FUND 48

OTHER INFORMATION

COMBINING STATEMENTS - NONMAJOR FUNDS

COMBINING BALANCE SHEET - OTHER GOVERNMENTAL FUNDS 49

COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES -OTHER GOVERNMENTAL FUNDS 50

INDIVIDUAL FUND SCHEDULES

GENERAL FUND - DETAILS OF REVENUE COMPARED TO BUDGET 51

GENERAL FUND - DETAILS OF EXPENDITURES COMPARED TO BUDGET 52 - 57

Board of EducationOscoda Area SchoolsSeptember 13, 2019Page 2

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management's discussion andanalysis, budgetary comparison information, and required pension and other postemployment benefit (OPEB) schedules bepresented to supplement the basic financial statements. Such information, although not a part of the basic financialstatements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financialreporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We haveapplied certain limited procedures to the required supplementary information in accordance with auditing standards generallyaccepted in the United States of America, which consisted of inquiries of management about the methods of preparing theinformation and comparing the information for consistency with management's responses to our inquiries, the basic financialstatements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinionor provide any assurance on the information because the limited procedures do not provide us with sufficient evidence toexpress an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the OscodaArea Schools' basic financial statements. The combining nonmajor fund financial statements and individual fund schedules arepresented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining nonmajor fund financial statements and individual fund schedules are the responsibility of management andwere derived from and relate directly to the underlying accounting and other records used to prepare the basic financialstatements. Such information has been subjected to the auditing procedures applied in the audit of the basic financialstatements and certain additional procedures, including comparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the basic financial statements or to the basic financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the United States of America. Inour opinion, the combining nonmajor fund financial statements and individual fund schedules are fairly stated, in all materialrespects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September 13, 2019, included in theSingle Audit Report issued under a separate cover, on our consideration of the Oscoda Area Schools' internal control overfinancial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grantagreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control overfinancial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of OscodaArea Schools' internal control over financial reporting or on compliance. That report is an integral part of an audit performed inaccordance with Government Auditing Standards in considering the Oscoda Area Schools' internal control over financialreporting and compliance.

4

Net Position Summary District -Wide Activities

June 30, 2019 June 30, 2018 Deferred Inflows of Resources $ 3,861,980 $ 2,149,243 Net Position Net Investment in Capital Assets 4,785,962 2,882,679 Restricted 227,206 1,001,563 Unrestricted (Deficit ) (Restated) (20,298,059) (19,709,651 ) Total Net Position $ (15,284,891) $ (15,825,409 ) Analysis of Financial Position: During the fiscal year ended June 30, 2019, the District’s net position increased by $540,518 . Some of the significant factors affecting net position during the year are discussed below. A reconciliation of the change in fund balance and the change in net position can be found in the Reconciliation of the Statement of Revenue , Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities in this report. 1. Change in Fund Balance The change in fund balance for the district’s governmental funds was a decrease of $796,098. This was mainly the result of the District spending down Sinking Fund dollars. Expenditures exceeded revenue in the Sinking Fund by about $845,000, offset by a transfer in from Other Governmental Funds of $973,716. This as well as various smaller fluctuations in other District funds in the current year account for the decrease noted above. The change in the General Fund was a decrease of $99,746, which was primarily due to approximately $66,000 in one time training costs for turnover in Central Office and almost $20,000 in wrecker repairs. The change in the Other Governmental Funds was a decrease of $823,303, which was primarily due to the 2018 Sinking Fund Bond Debt Retirement Fund transferring $973,716 to the Sinking Fund Capital Projects Fund. 2. Capital Outlay Acquisitions Actual capital outlay acquisitions for the fiscal year were $1,544,222 plus $137,552 of prior year construction in progress , funded from the Sinking Fund and the General Fund. These acquisitions consisted of:

Water Connection Project $ 133,940 Elementary Roof 178,175 Elementary Boiler Room, Bathrooms, Fountains, Etc. 779,379 High School Bathrooms 369,395 Phone System 54,331 Elementary Intercom System 12,400 School Bus 58,900 Wrecker Rebuild 19,207 Floor Scrubbers 14,222 Central Office and Board Room Flooring 14,438 Pool Boiler 13,606 Dugout 12,081 Back Circle Lot Drain System 12,500 High School Entrance Ramp 9,200 $ 1,681,774

5

In the Statement of Activities , the cost of capitalized expenses is allocated over the estimated life of the asset.

3. Depreciation GASB 34 requires school districts to maintain a record of annual depreciation expense and accumulated depreciation. The net increase in accumulated depreciation is a reduction in net position . For the fiscal year ended June 30, 2019 the depreciation expense was $626,089 . 4. Repayment of Principal The repayment of debt decreases the District’s long-term obligations and increases net position . The amount of debt principal repayment during the fiscal year was $1,025,000. Results of Operations: For the fiscal years ended June 30, 2019 and June 30, 2018, the District-wide results of operations were:

2019 2018 General Revenues: Property Taxes levied for General Purposes $ 6,213,127 $ 6,142,535 Property Taxes levied for Debt Services 1,293,784 1,382,439 Property Taxes – Sinking Fund 392,167 298,307 State of Michigan Aid – Unrestricted 2,768,390 2,689,671 Gain (Loss) on Disposal of Capital Assets (4,885) (11,661) Investme nt Earnings and Miscellaneous 88,168 60,487 Total General Revenues 10,750,751 10,561,778 Program Revenues: Charges for Services 488,962 590,450 Operating Grants and Contributions 3,495,309 3,158,518 Capital Grants and Contributions 130,656 0 Total Program Revenues 4,114,927 3,748,968 Total Revenues 14,865,678 14,310,746 Expenses: Instruction 7,967,733 7,714,936 Support Services 4,894,000 4,531,298 Community Services 57,054 61,320 Athletics 423,203 377,484 Food Services 755,944 730,451 Interest on Long-Term Debt 227,226 228,784 Bond Issuance Costs 0 20,784 Total Expenses 14,325,160 13,665,057 Increase (Decrease) in Net Position Before Special Items 540,518 645,689 Special Item 0 (1,714,438 ) Increase (Decrease) In Net Position $ 540,518 $ (1,068,749 ) 1. Property Taxes The District levies 18 mills of property taxes on non-homestead property. Commercial property is exempt for 6 of the 18 mills. This revenue is one component of the total per pupil foundation allowance set by the State of Michigan. As noted in the Results of Operations, the property taxes generated General Fund revenue of a little over $6.2 million during the fiscal year ended June 30, 2019.

6

The District levied 1.82 mills for debt service on the 2016 Refunding Bond, 2015 Refunding Bond, and the 2015 Athletic Bond. The debt service revenue generated was $1,077,114 and was included in debt service funds. In addition, the District levied 1.00 mills for Sinking Fund Activities . The sinking fund revenue generated was $608,837 of which $216,670 was dedicated for Sinking Fund debt retirement and $392,167 was for allowable Sinking Fund capital projects activity . 2. State of Michigan Aid, Unrestricted The State of Michigan pays a portion of the foundation allowance as unrestricted aid based upon the following variables: the per pupil foundation allowance, student enrollment and the District’s non-homestead property tax levy. The non-homestead property taxes are deducted from the calculated total foundation allowance to determine the amount paid by the State of Michigan. As noted in the Results of Operations above, Unrestricted State Aid was $2.77 million . The portion of the foundation allowance payment that is restricted for special education was $0.39 million and is included under Program Revenue. a. State of Michigan State Aid Act- per pupil foundation allowance. The stated foundation allowance was $7,871 per pupil. b. Student Enrollment-The District’s blended pupil count for the 2018-19 was 1,149 students. This was a reduction of 12 pupils from the prior year blended count. This reflected the average of the blended counts for fiscal 2017-2019. The average membership of 1,149, multiplied by the foundation allowance resulted in a total foundation allowance of about $9.0 million. Total Revenues The total revenues of the District were over $14.8 million, an increase of about $.55 million from the previous year. This increase was primarily due to an increase in State Aid foundation revenue of about $143,000, new Federal Rural and Low-Income revenue of about $41,000, an increase in Title IV of just over $19,000, we also received $80,656 for a Water Recovery Grant and $50,000 for a Community Facilities Grant to hook up the schools to the municipal water system, an increase in Medicaid Fees for Service of about $27,000, an increase in food service revenues of about $150,000 due to more meals being served during the year and because the entire district being eligible for the Community Eligibility Provision which made all of meals free for students. Program specific revenues in the form of charges for services, grants and contributions accounted for $4.11 million or 28% of the total. As noted on the Statement of Activities of this report, general revenues including unrestricted state aid and property taxes provided 72% of the total. General Fund Budget and Actual Results The Uniform Budgeting and Accounting Act of the State of Michigan requires that the Board of Education approve the original budget for the fiscal year prior to July 1, before student enrollment counts, approved federal grant awards and other information is known. Therefore, it is expected that there will be changes between the initial budget and subsequent amendments, as more information becomes available . The budget was amended in December , April and June. Page 48 of the Audit summarizes the comparative budget and actual results. General Fund Revenue – Actual vs. Budget Total General Fund revenue was $36,793 less than budgeted . This was primarily due to receiving $32,268 less in federal grant revenue than what was budgeted for in 2019. A detailed comparison of local, state and federal sources for budget and actual revenues can be found in the General Fund Details of Revenue Compared to Budget statement in this report. General Fund Expenditures – Actual vs. Budget Total expenditures were $160,535 less than budgeted . This was primarily due to support service expenses being significantly less than budgeted, $32,268 of which was due to Federal Grant expenditures that were not spent before year end, as well as various changes in expenditures that were less than expected.

7

A detailed comparison of budgeted and actual expenditures can be found in the General Fund Details of Expenditures Compared to Budget statement in this report. Revenue Expenditures General Fund: Original Budget $ 12,129,514 $ 12,463,591 Final Budget 12,435,425 12,712,226 Actual 12,398,632 12,551,691 Variance $ 36,793 $ 160,535 % of Budget 0.30% 1.26% Capital Asset and Long-Term Liability Administration Capital Assets At the end of the fiscal year 2019, the District had $24.22 million invested in land and buildings, site improvements, furniture and equipment and vehicles and buses measured at historical cost. Of this amount, $12.65 million has been depreciated. Net book value was $11.5 million at the end of the fiscal year 2019, an increase of about $0.9 million from the previous year. Capital asset purchases totaled $1,681,774 and are detailed out on page 4, under Capital Outlay Acquisitions . Capital asset disposals during the year consisted primarily of the disposal of two buses for $14,000 and a forklift for $12,455, as well as the transfer of construction in progress, which had a carrying value of $137,552 , as the project s had been completed. These disposals resulted in a loss on sale of capital assets of $312. Additional information on the District’s capital assets can be found in Note 5 of this report. Long-Term Debt At June 30, 2019, the District had $6.95 million in principal outstanding on long-term bonds. The bond principal payments for the year of $1,025,000 make up the decrease in the Districts long-term debt obligations. Additional information on the District’s long-term debt can be found in Note 7 of this report. Net Pension Liability At June 30, 2019, the District’s Net Pension Liability amounted to $20,879,280 . This constitutes their unfunded pension benefit obligation as of the measurement date of the Michigan Public School Employees Retirement System Plan. Additional information on the District’s Net Pension Liability can be found in Note 10 of this report. Net OPEB Liability At June 30, 2019, the District’s Net OPEB Liability amounted to $5,653,896 . This constitutes their unfunded OPEB obligation as of the measurement date of the Michigan Public School Employees Retirement System Plan. Additional information on the District’s Net OPEB Liability can be found in Note 11 of this report. Economic Factors and Next Year’s Budgets The General Fund Budget for 2019-20 was adopted in June 2019 based upon estimates of fall enrollment and state aid payments. Approximately 74% of total General Fund revenue for Oscoda Area Schools is from the foundation allowance. Under State law, the school district cannot assess additional property tax revenue for general operations. Accordingly, the District is heavily dependent upon the State’s ability to fund the appropriations to local schools. The District will amend the budget periodically to reflect final student counts, state aid payments and other funding and expenditure changes.

8

Requests for Information This financial report is designed to provide a general overview of the District’s finances . Questions concerning any of the information provided in this report or requests for additional information should be addressed to:

Oscoda Area Schools Business Office 3550 River Road

Oscoda, MI 48750 (989) 739-2033

OSCODA AREA SCHOOLSIosco County, Michigan

STATEMENT OF NET POSITIONJune 30, 2019

GovernmentalActivities

AssetsCash and Cash Equivalents (Note 3) $ 2,963,150Cash with Fiscal Agent (Note 3) 1,682Receivables:

Accounts, Net 9,770Due from Other Governmental Units 1,155,507

Inventory: Supplies 22,593Building Trades Homes 58,045

Prepaid Items 29,015Noncurrent Assets:

Capital Assets Not Being Depreciated (Note 5) 94,533Capital Assets Being Depreciated (Note 5) 11,477,353

Total Assets 15,811,648

Deferred Outflows of ResourcesDeferred Charge on Refunding 279,460Deferred Amount on Pension Expense Related to Net Pension Liability (Note 10) 6,801,305Deferred Amount on OPEB Expense Related to Net OPEB Liability (Note 11) 1,110,627

Total Deferred Outflows of Resources 8,191,392

LiabilitiesAccounts Payable 128,297Due to Other Units 63,278Interest Payable 25,324Payroll Deductions and Withholdings 95,585Accrued Expenses 415,036Salaries Payable 777,441Unearned Revenue (Note 8) 68,120Long-Term Liabilities

Due Within One Year (Note 7) 1,385,861Due in More Than One Year (Note 7) 5,933,833Net Pension Liability (Note 10) 20,879,280Net OPEB Liability (Note 11) 5,653,896

Total Liabilities 35,425,951

Deferred Inflows of ResourcesDeferred Amount on Net Pension Liability (Note 10) 2,582,237Deferred Amount on Net OPEB Liability (Note 11) 1,279,743

Total Deferred Inflows of Resources 3,861,980

Net PositionNet Investment in Capital Assets 4,785,962Restricted For:

Debt Retirement 100,254Capital Projects 126,952

Unrestricted (Deficit) (20,298,059)

Total Net Position $ (15,284,891)

The accompanying notes to financial statements are an integral part of this statement.

- 9 -


STATEMENT OF ACTIVITIESFor the Year Ended June 30, 2019

Program Revenues

Net(Expenses)

Revenue andChange in

Net Position

Functions/Programs ExpensesCharges for

Services

OperatingGrants and

Contributions

CapitalGrants and

Contributions

GovernmentType

Activities

Instruction $ 7,967,733 $ 1,893 $ 1,655,431 $ 0 $ (6,310,409)Support Services 4,894,000 323,662 1,016,774 130,656 (3,422,908)Community Services 57,054 45,255 12,558 0 759Athletics 423,203 61,905 28,752 0 (332,546)Food Services 755,944 56,247 781,794 0 82,097Interest on Long-Term Debt 227,226 0 0 0 (227,226)

Total $ 14,325,160 $ 488,962 $ 3,495,309 $ 130,656 (10,210,233)

General Revenues:Property Taxes, Levied for General Purposes 6,213,127Property Taxes, Levied for Debt Purposes 1,293,784Property Taxes, Levied for Sinking Fund Purposes 392,167State School Aid - Unrestricted 2,768,390Investment Earnings 74,500Gain (Loss) on Disposal of Assets (4,885)Miscellaneous 13,668

Total General Revenues and Special Items 10,750,751

Change in Net Position 540,518

Net Position - Beginning (15,825,409)

Net Position - Ending $ (15,284,891)


- 10 -


BALANCE SHEETGOVERNMENTAL FUNDS

June 30, 2019

Capital ProjectsFund

General Fund Sinking Fund

OtherGovernmental

Funds

TotalGovernmental

FundsAssetsCash and Cash Equivalents (Note 3) $ 1,677,234 $ 994,210 $ 291,706 $ 2,963,150Cash with Fiscal Agent (Note 3) 1,682 0 0 1,682Receivables:

Accounts, Net 9,770 0 0 9,770Due From Other Governmental Units 1,155,507 0 0 1,155,507

Due from Other Funds (Note 4) 946,109 113,494 191,492 1,251,095Inventory:

Supplies 18,996 0 3,597 22,593Building Trades Homes 58,045 0 0 58,045

Prepaid Items 29,015 0 0 29,015

Total Assets $ 3,896,358 $ 1,107,704 $ 486,795 $ 5,490,857

LiabilitiesAccounts Payable $ 62,773 $ 57,273 $ 8,251 $ 128,297Due to Other Units 63,168 0 110 63,278Due to Other Funds (Note 4) 191,492 923,479 136,124 1,251,095Payroll Deductions and Withholdings 95,585 0 0 95,585Accrued Expenditures 415,036 0 0 415,036Salaries Payable 777,441 0 0 777,441Unearned Revenue (Note 8) 66,893 0 1,227 68,120

Total Liabilities 1,672,388 980,752 145,712 2,798,852

Fund EquityFund Balances:

Nonspendable:Inventory 77,041 0 3,597 80,638Prepaid Items 29,015 0 0 29,015

Restricted For:Debt Retirement 0 0 100,254 100,254Capital Projects 0 126,952 0 126,952

Committed To:Community Education Programs 88,380 0 0 88,380

Assigned to:Food Service 0 0 237,232 237,232Next Fiscal Year's Budget Expenditures 215,721 0 0 215,721Employee Vacation and Sick Day

Buyouts 254,310 0 0 254,310Unassigned 1,559,503 0 0 1,559,503

Total Fund Equity 2,223,970 126,952 341,083 2,692,005

Total Liabilities and Fund Equity $ 3,896,358 $ 1,107,704 $ 486,795 $ 5,490,857


- 11 -


RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCESTO NET POSITION OF GOVERNMENTAL ACTIVITIES

June 30, 2019

Total Governmental Fund Balances $ 2,692,005

Amounts reported for governmental activities in the statement ofnet position are different because:

Capital assets used in governmental activities are not financial resourcesand, therefore, are not reported as assets in governmental funds. Capitalassets at the year end consist of:

Capital Asset Cost $ 24,216,985Capital Asset Accumulated Depreciation (12,645,099)

11,571,886

Certain liabilities are not due and payable in the current period and are notreported in the funds:

Accrued Interest on Long-term Liabilities (25,324)

Deferred outflows and inflows of resources related to pensions and OPEB areapplicable to future periods and, therefore, are not reported in the funds:

Deferred outflows of resources from pension expenses subsequent to the measurement date of net pension liability 6,801,305Deferred inflows of resources resulting from net pension liability (2,582,237)Deferred outflows of resources from OPEB expenses subsequent to the measurement date of net OPEB liability 1,110,627Deferred inflows of resources resulting from net OPEB liability (1,279,743)

4,049,952

Long-term liabilities are not due and payable in the current period, andtherefore, are not reported as liabilities in the governmental funds.Long-term liabilities at year end consist of:

Bonds Payable (Net of Unamortized Bond Premium) (7,065,384)Compensated Absences Payable (254,310)Deferred Charge on Refunding 279,460Net Pension Liability (20,879,280)Net OPEB Liability (5,653,896)

(33,573,410)

Total Net Position - Governmental Activities $ (15,284,891)


- 12 -


STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS

For the Year Ended June 30, 2019

Capital ProjectsFund

General Fund Sinking Fund

OtherGovernmental

Funds

TotalGovernmental

Funds

RevenueLocal Sources $ 6,734,431 $ 413,149 $ 1,359,338 $ 8,506,918State Sources 4,860,553 0 27,482 4,888,035Federal Sources 803,648 0 754,312 1,557,960

Total Revenue 12,398,632 413,149 2,141,132 14,952,913

ExpendituresCurrent:

Instruction 7,304,066 0 0 7,304,066Support Services 4,526,059 0 0 4,526,059Community Services 85,084 0 0 85,084Food Services 0 0 683,591 683,591Athletics 350,283 0 0 350,283

Capital Outlay 286,199 1,259,914 33,045 1,579,158Debt Service:

Principal Retirement 0 0 1,025,000 1,025,000Interest and Fees on Long-Term Debt 0 0 191,197 191,197

Total Expenditures 12,551,691 1,259,914 1,932,833 15,744,438

Excess of Revenue Over (Under)Expenditures (153,059) (846,765) 208,299 (791,525)

Other Financing Sources (Uses)Loss on Sale of Assets (4,573) 0 0 (4,573)Operating Transfers In (Note 9) 57,886 973,716 0 1,031,602Operating Transfers Out (Note 9) 0 0 (1,031,602) (1,031,602)

Total Other Financing Sources (Uses) 53,313 973,716 (1,031,602) (4,573)

Net Change in Fund Balances (99,746) 126,951 (823,303) (796,098)

Fund Balances - Beginning of Year 2,323,716 1 1,164,386 3,488,103

Fund Balances - End of Year $ 2,223,970 $ 126,952 $ 341,083 $ 2,692,005


- 13 -


RECONCILIATION OF THE STATEMENT OF REVENUE, EXPENDITURESAND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIESFor the Year Ended June 30, 2019

Total Net Change in Fund Balances - Governmental Funds $ (796,098)

Amounts reported for governmental activities in the statement of activitiesare different because:

Governmental funds report capital outlays as expenditures. However, in thestatement of activities, the cost of those assets is allocated over theirestimated useful lives as depreciation expense.

Current Year Depreciation Expense $ (626,089)Capital Outlays Reported in the Governmental Funds 1,544,222Gain (Loss) on Disposal of Capital Assets (312)

917,821

Repayment of the debt principal is an expenditure in the governmental funds,but the repayment reduces long-term liabilities in the statement of net position.This is the amount of repayments reported as expenditures in thegovernmental funds.

Bonds Payable 1,025,000

Governmental funds report district pension and OPEB contributions asexpenditures. However, in the statement of activities, the cost of pension orOPEB benefits earned, net of employee contributions, is reported as pensionor OPEB expense. The following amounts represent the current year netchanges:

Net Pension Liability (3,028,927)Net OPEB Liability 479,092Actual Pension Contributions and the Cost of Benefits Earned, net of

Employee Contributions 2,886,393Deferred Inflows on Net Pension Liability (651,190)Actual Pension Contributions and the Cost of Benefits Earned, net of

Employee Contributions 763,876Deferred Inflows on Net OPEB Liability (1,061,547)

(612,303)

Governmental funds report the effect of refunding charges, discounts, andpremiums when debt is first issued, whereas these amounts are deferred andamortized in the statement of activities. The net effect of these differences inthe treatment of general obligation bonds and related items is as follows:

Amortization of Deferred Charge on Refunding and Bond Premiums (Net) (39,538)

Expenses are reported on the accrual method in the statement of activities, andrecorded as an expenditure when financial resources are used in thegovernmental funds. The effect of the treatment of these activities is as follows:

Interest 3,509Compensated Absences 42,127

45,636

Change in Net Position of Governmental Activities $ 540,518


- 14 -


STATEMENT OF FIDUCIARY ASSETS AND LIABILITIESFIDUCIARY FUND

June 30, 2019

StudentActivity

Assets

Cash and Cash Equivalents (Note 3) $ 87,888

Liabilities

Due to Student Groups $ 87,888


- 15 -


NOTES TO FINANCIAL STATEMENTSFor the Year Ended June 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the Oscoda Area Schools (School District) conform to accounting principles generallyaccepted in the United States of America (GAAP) applicable to governments. The School District is considered tobe a local government unit. The following is a summary of the significant accounting policies:

A. Reporting Entity

The School District operates under an elected School Board (seven members) and provides services tostudents in grades K-12. The board is responsible for adopting and amending budgets and for administeringthe school programs in accordance with governing laws.

The accompanying basic financial statements have been prepared in accordance with accounting principlesgenerally accepted (GAAP) in the United States of America as applied to governmental units. TheGovernmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishinggovernmental accounting and financial reporting principles. The School District's reporting entity applies allrelevant GASB pronouncements for determining the various governmental organizations to be included in thereporting entity. Oscoda Area Schools' Board of Education (Board) is the primary government which hasoversight responsibility and control over all activities related to public school education in the area served bythe Oscoda Area Schools. The Board receives funding from local, state, and federal government sources andmust comply with the requirements of these funding source entities. As such, the Board is not included in anyother governmental "reporting entity" as defined in GASB pronouncements since the Board members are apublicly elected governing body that has separate legal standing and is fiscally independent of othergovernmental entities.

B. Fund Accounting

The School District uses funds to maintain its financial records during the fiscal year. Fund accounting isdesigned to demonstrate legal compliance and to aid management by segregating transactions related tocertain School District functions or activities. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. The various funds of the School District are grouped into the categoriesgovernmental and fiduciary.

Governmental Funds

Governmental funds focus on the sources, uses and balances of current financial resources. Expendableassets are assigned to the various governmental funds according to the purposes for which they may or mustbe used. Current liabilities are assigned to the fund from which they will be paid. The difference betweengovernmental fund assets and liabilities is reported as fund balance. The following are the School District’smajor governmental funds:

General Fund - The General Fund is the general operating fund of the School District. It is used to accountfor all financial resources except those required to be accounted for in another fund.

Sinking Fund – The Sinking Fund accounts for the acquisition or construction of major capital facilities.

The other governmental funds of the School District account for grants and other resources whose use isrestricted for a particular purpose; the accumulation of resources for, and the payment of debt; and theacquisition or construction of major capital facilities.

- 16 -



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

B. Fund Accounting (Continued)

Fiduciary Funds

Fiduciary fund reporting focuses on net position and changes in net position. The School District’s fiduciaryfunds consist of agency funds which are custodial in nature (assets equal liabilities) and do not involvemeasurement of results of operations. The agency funds are used to account for amounts held for student andemployee groups.

C. Basis of Presentation

Government-wide Financial Statements:

The statement of net position and the statement of activities display information about the School District as awhole. These statements include the financial activities of the primary government, except for fiduciary funds.The statements distinguish between those activities of the School District that are governmental and those thatare considered business-type activities. The School District does not currently have any business-typeactivities.

The government-wide statements are prepared using the economic resources measurement focus. Thisdiffers from the manner in which governmental fund financial statements are prepared. Governmental fundfinancial statements therefore include reconciliations with brief explanations to better identify the relationshipbetween the government-wide statements and the statements for governmental funds.

The government-wide statement of activities presents a comparison between direct expenses and programrevenues for each function or program of the School District’s governmental activities. Direct expenses arethose that are specifically associated with a service, program or department and are therefore clearlyidentifiable to a particular function. Program revenues include charges paid by the recipient of the goods orservices offered by the program and grants and contributions that are restricted to meeting the operational orcapital requirements of a particular program. Revenues that are not classified as program revenues arepresented as general revenues of the School District, with certain limited exceptions. The comparison of directexpenses with program revenues identifies the extent to which each governmental function is self-financing ordraws from the general revenues of the School District.

Net position is reported as restricted when constraints placed on net position use are either externally imposedby creditors (such as through debt covenants), grantors, contributors, or laws or regulations of othergovernments or imposed by law through constitutional provisions or enabling legislation. The net positionrestricted for other purposes result from special revenue funds and the restrictions on their net position use.Restricted assets are used first to fund appropriations before unrestricted assets are used.

Separate financial statements are provided for governmental funds and fiduciary funds, even though the latterare excluded from the government-wide financial statements. Major individual governmental funds arereported as separate columns in the fund financial statements.

Fund Financial Statements:

Fund financial statements report detailed information about the School District. The focus of governmentalfund financial statements is on major funds rather than reporting funds by type. Each major fund is presentedin a separate column. Nonmajor funds are aggregated and presented in a single column. Fiduciary funds arereported by fund type.

- 17 -




C. Basis of Presentation (Continued)

The accounting and reporting treatment applied to a fund is determined by its measurement focus. Allgovernmental fund types are accounted for using the modified accrual basis of accounting and the currentfinancial resources measurement focus. The financial statements for governmental funds are a balance sheet,which generally includes only current assets and current liabilities, and a statement of revenue, expendituresand changes in fund balances, which reports on the sources (i.e., revenues and other financing sources) anduses (i.e., expenditures and other financing uses) of current financial resources.

D. Basis of Accounting

Basis of accounting determines when transactions are recorded in the financial records and reported on thefinancial statements. Government-wide financial statements are prepared using the accrual basis ofaccounting. Governmental funds use the modified accrual basis of accounting. Fiduciary funds use theaccrual basis of accounting.

Revenues – Exchange and Non-exchange Transactions:

Revenues resulting from exchange transactions, in which each party receives essentially equal value, isrecorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenues arerecorded in the fiscal year in which the resources are measurable and available. Available means that theresources will be collected within the current fiscal year or are expected to be collected soon enough thereafterto be used to pay liabilities of the current fiscal year. For the School District, available means expected to bereceived within 60 days of the fiscal year-end.

Nonexchange transactions, in which the School District receives value without directly giving equal value inreturn, include property taxes, grants, entitlements and donations. On an accrual basis, revenue from propertytaxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements anddonations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibilityrequirements include timing requirements, which specify the year when the resources are required to be usedor the fiscal year when use is first permitted, matching requirements, in which the School District must providelocal resources to be used for a specified purpose, and expenditure requirements, in which the resources areprovided to the School District on a reimbursement basis. On a modified accrual basis, revenues fromnonexchange transactions must also be available before they can be recognized.

Under the modified accrual basis, the following revenue sources are considered to be both measurable andavailable at fiscal year-end: property taxes available in advance, interest, tuition, grants, student fees andrentals.

Deferred Outflows/Inflows of Resources:

In addition to assets, the statement of financial position will sometimes report a separate section for deferredoutflows of resources. This separate financial statement element, deferred outflows of resources, represents aconsumption of net position that applies to a future period(s) and so will not be recognized as an outflow ofresources (expense/expenditure) until that time.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferredinflows of resources. This separate financial statement element, deferred inflows of resources, represents anacquisition of net position that applies to a future period(s) and so will not be recognized as an inflow ofresources (revenue) until that time.

- 18 -




D. Basis of Accounting (Continued)

Expenses/Expenditures:

On the accrual basis of accounting, expenses are recognized at the time they are incurred. The fair value ofdonated commodities used during the year is reported in the operating statement as an expense with a likeamount reported as donated commodities revenue.

The measurement focus of governmental fund accounting is on decreases in net financial resources(expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in whichthe related fund liability is incurred, if measurable. Allocations of cost, such as depreciation, are not recognizedin governmental funds.

E. Cash and Cash Equivalents

During the fiscal year ended June 30, 2019, investments included the Michigan Liquid Asset Fund (MILAF).MILAF is an investment pool managed by PFM Asset Management, which allows school districts within theState of Michigan to pool their funds for investment purposes. Investments in MILAF are valued at cost whichequals market value.

For presentation on the financial statements, investments in the cash management pools and investments withan original maturity of three months or less at the time they are purchased by the School District areconsidered to be cash equivalents. Investments with an initial maturity of more than three months are reportedas investments.

F. Receivables

Receivables generally consist of grants, state aid, and other. All receivables are net of estimated uncollectibleaccounts. Receivables are recognized to the extent the amounts are determined material and substantiated,not only by supporting documentation but also by a reasonable systematic method of determining theirexistence, completeness, valuation, and collectability.

The allowance for doubtful accounts at June 30, 2019 was $0.

G. Due From Other Governmental Units

This represents amounts receivable from the State of Michigan and other governmental units for federal, stateand local reimbursable programs.

H. Prepaid Items

Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items inboth the government-wide and fund financial statements.

I. Inventory – Supplies

Inventory consists of expendable supplies held for consumption. Inventory is stated at cost and recorded as anexpenditure/expense in the governmental and government-wide financial statements when used.

J. Inventory – Building Trades Home and Lots

Inventory represents the cost of property purchased for future building sites.

- 19 -




K. Capital Assets

General capital assets are those assets not specifically related to activities reported in proprietary funds.These assets generally result from expenditures in the governmental funds. These assets are reported in thegovernmental activities column of the government-wide statement of net position but are not reported in thefund financial statements.

All capital assets are capitalized at cost (or estimated historical cost) using a $5,000 capitalization thresholdand updated for additions and retirements during the year. Donated fixed assets are recorded at their fairmarket values as of the date received. The School District does not possess any infrastructure. Improvementsare capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset ormaterially extend an asset’s life are not.

All reported capital assets are depreciated. Improvements are depreciated over the remaining useful lives ofthe related capital assets. Depreciation is computed using the straight-line method over the following usefullives:

DescriptionsGovernmental Activities

Estimated Lives

Buildings and Improvements 20 - 50 yearsSite Improvements 5 - 25 yearsFurniture, Fixtures and Equipment 5 - 20 yearsVehicles and Buses 5 - 8 years

L. Interfund Balances

On fund financial statements, receivables and payables resulting from short-term interfund loans are classifiedas “due from/to other funds”. These amounts are eliminated in the governmental columns of the statement ofnet position.

M. Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities and long-term obligations are reported in the government-wide financialstatements. In general, payables and accrued liabilities that will be paid from governmental funds are reportedas a liability in the fund financial statements at the time they are incurred, to the extent that they will be paidfrom current, expendable, financial resources. In general, payments made within 60 days after year end areconsidered to have been made with current available financial resources. However, bonds and other long-termobligations, compensated absences, claims and judgments, contractually required pension contributions andspecial termination benefits that will be paid from governmental funds are recognized as a liability in the fundfinancial statements when they become due for payment.

N. Compensated Absences

The School District reports compensated absences in accordance with the provisions of GASB Statement No.16, “Accounting for Compensated Absences.” Sick leave benefits are accrued as a liability using the vestingmethod. An accrual for earned sick leave is made based on accumulated sick leave and wage rates at year-end, taking into consideration limits specified in the School District’s termination policy.

- 20 -




N. Compensated Absences (Continued)

The entire compensated absences liability is reported on the government-wide financial statements. For thegovernmental fund financial statements, the current portion of unpaid compensated absences is the amountexpected to be paid using expendable available resources. These amounts, if any, are recorded in the account“compensated absences payable” in the fund from which the employees who have accumulated unpaid leaveare paid. The noncurrent portion of the liability is not reported in the governmental fund financial statements.

No liability amounts were recorded in governmental fund statements, in accordance with GASB 33, due to thefact that there was a legally enforceable document that set a date for payment of vested benefits subsequent toJune 30, 2019.

O. Net Pension Liability

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows ofresources related to pensions, and pension expense, information about the fiduciary net position of theMichigan Public School Employees Retirement System (MPSERS) and additions to/deductions from MPSERSfiduciary net position have been determined on the same basis as they are reported by MPSERS. For thispurpose, benefit payments (including refunds of employee contributions) are recognized when due and payablein accordance with the benefit terms. Investments are reported at fair value.

P. Postemployment Benefits Other Than Pensions

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows ofresources related to OPEB, and OPEB expense, information about the fiduciary net position of the MichiganPublic School Employees Retirement System (MPSERS) and additions to/deductions from MPSERS fiduciarynet position have been determined on the same basis as they are reported by MPSERS. For this purpose,benefit payments (including refunds of employee contributions) are recognized when due and payable inaccordance with the benefit terms. Investments are reported at fair value.

Q. Net Position

Net position represents the difference between assets and deferred outflows of resources less liabilities anddeferred inflows of resources. The School District reports three categories of net position as follows:

Net investment in capital assets - consists of net capital assets reduced by outstanding balances of anyrelated debt obligations and deferred inflows of resources attributable to the acquisition, construction, orimprovement of those assets and increased by balances of deferred outflows of resources related to thoseassets.

Restricted net position - net position is considered restricted if their use is constrained to a particular purpose.Restrictions are imposed by external organizations such as federal or state laws or buyers of the SchoolDistrict 's bonds. Restricted net position is reduced by liabilities and deferred inflows of resources related tothe restricted assets.

Unrestricted net position - consists of all other net position that does not meet the definition of the above twocomponents and is available for general use by the School District.

When an expense is incurred for purposes for which both restricted and unrestricted net position are available,management applies restricted net position first, unless a determination is made to use unrestricted netposition. The School District's policy concerning which to apply first varies with the intended use and legalrequirements. Management typically makes this decision on a transactional basis at the incurrence of theexpenditure.

- 21 -




R. Fund Balances

In the fund financial statements, governmental funds report aggregate amounts for five classifications of fundbalances based on the constraints imposed on the use of these resources. The nonspendable fund balanceclassification includes amounts that cannot be spent because they are either (a) not in spendable form—pre-paid items or inventories; or (b) legally or contractually required to be maintained intact.

The spendable portion of the fund balance comprises the remaining four classifications: restricted, committed,assigned, and unassigned.

Restricted fund balance. This classification reflects the constraints imposed on resources either (a) externallyby creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by lawthrough constitutional provisions or enabling legislation.

Committed fund balance. These amounts can only be used for specific purposes pursuant to constraintsimposed by formal school board action—the District’s highest level of decision making authority. Thosecommitted amounts cannot be used for any other purpose unless the school board removes the specified useby taking the same type of action imposing the commitment. This classification also includes contractualobligations to the extent that existing resources in the fund have been specifically committed for use insatisfying those contractual requirements.

Assigned fund balance. This classification reflects the amounts constrained by the District’s “intent” to beused for specific purposes, but are neither restricted nor committed. The school board or personnelauthorized by the school board have the authority to assign amounts to be used for specific purposes.Assigned fund balances include all remaining amounts (except negative balances) that are reported ingovernmental funds, other than the General Fund, that are not classified as nonspendable and are neitherrestricted nor committed.

Unassigned fund balance. This fund balance is the residual classification for the General Fund. It is alsoused to report negative fund balances in other governmental funds.

When both restricted and unrestricted resources are available for use, it is the District’s policy to use externallyrestricted resources first, then unrestricted resources—committed, assigned, and unassigned—in order asneeded.

S. Property Taxes

The School District levies its property taxes on July 1 and various municipalities collect its property taxes andremit them to the School District through February. The delinquent real property taxes of the School Districtare purchased by the County, and delinquent personal property taxes continue to be collected by themunicipalities and recorded as revenue as they are collected. The County sells tax notes, the proceeds ofwhich have been used to pay the School District for these delinquent real property taxes. These delinquentreal property taxes have been recorded as revenue in the current year.

T. Foundation Revenue

The State of Michigan has adopted a foundation grant approach which provides for a specific annual amount ofrevenue per student based on a state-wide formula. The foundation allowance is funded from state and localsources. Revenues from state sources are primarily governed by the School Aid Act and the School Code ofMichigan. The Michigan Department of Education administers the allocation of state funds to school districtsbased on information supplied by the School District. For the year ended June 30, 2019, the foundationallowance was based on the average of the calendar years 2016, 2017, and 2018 blended pupil membershipcounts.

- 22 -




T. Foundation Revenue (Continued)

The state portion of the foundation allowance is provided primarily by a state education property tax millage of6 mills and an allocated portion of state sales and other taxes. The local portion of the foundation is fundedprimarily by non-prequalified property taxes which may be levied at a rate of up to 18 mills. The state revenueis recognized during the foundation period (currently the fiscal year) and is funded through 11 payments fromOctober, 2018 - August, 2019. The local revenue is recognized as outlined in Note 1 Accounting for PropertyTaxes.

U. State Categorical Revenue

The School District also receives revenue from the state to administer certain categorical education programs.State rules require that revenue earmarked for these programs be expended for its specific purpose.Categorical funds received which are not expended by the close of the fiscal year are recorded as unearnedrevenue.

V. Interfund Activity

Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another without a requirement forrepayment are reported as interfund transfers. Interfund transfers are reported as other financingsources/uses in governmental funds. Repayments from funds responsible for particular expenditures/expenses to the funds that initially paid for them are not presented on the financial statements.

W. Extraordinary and Special Items

Extraordinary items are transactions or events that are both unusual in nature and infrequent in occurrence.Special items are transactions or events that are within the control of the Board of Education and that are eitherunusual in nature or infrequent in occurrence. Neither type of transaction occurred during the fiscal year endedJune 30, 2019.

X. Economic Dependency

The School District received approximately 33% of their revenue from the Michigan Department of Education.Due to the significance of this revenue source to the School District, the School District is considered to beeconomically dependent.

Y. Use of Estimates

The process of preparing financial statements in conformity with accounting principles generally accepted inthe United States of America requires the use of estimates and assumptions that affect the amounts reportedin the financial statements and accompanying notes. Such estimates primarily relate to unsettled transactionsand events as of the date of the financial statements. Accordingly, upon settlement, actual results may differfrom estimated amounts.

Z. Budgetary Policies and Data

The State of Michigan adopted a Uniform Budgeting and Accounting Act (Act) applicable to all localgovernmental entities in the state. The law requires appropriation acts to be adopted for General and SpecialRevenue Funds and an informational study for Capital Project Funds of school districts prior to the expenditureof monies in a fiscal year in accordance with GAAP.

- 23 -




Z. Budgetary Policies and Data (Continued)

Oscoda Area Schools follows these procedures in establishing the budgetary data reflected in the financialstatements.

1. The School District's Superintendent submits to the Board a proposed budget prior to July 1 of eachyear. The budget includes proposed expenditures and the means of financing them.

2. A public hearing is conducted to obtain taxpayer comments.

3. Budgeted amounts are as originally adopted, or as amended by the Board throughout the year.Individual amendments were not material in relation to the original appropriations.

4. Appropriations lapse at year-end and therefore cancel all encumbrances. These appropriations are re-established at the beginning of the following year.

AA. Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

NOTE 2 - CHANGE IN ACCOUNTING PRINCIPLES

For 2020, the School District will be required to implement GASB Statement No. 84 "Fiduciary Activities". GASBStatement No. 84 improves guidance regarding the identification of fiduciary activities for accounting and financialreporting purposes and how those activities should be reported.

NOTE 3 - DEPOSITS AND INVESTMENTS

At year-end, the School District’s deposits and investments were reported in the basic financial statements in thefollowing categories:

GovernmentalActivities

FiduciaryFunds

Total PrimaryGovernment

Cash and Cash Equivalents $ 2,963,150 $ 87,888 $ 3,051,038Cash with Fiscal Agents 1,682 0 1,682

Total $ 2,964,832 $ 87,888 $ 3,052,720

The breakdown between deposits and investments is as follows:

PrimaryGovernment

Bank Deposits (Checking and Savings Accountsand Certificates of Deposit)

$ 454,988

Investments in Financial Institution Pooled Funds 2,596,050Cash with Fiscal Agents 1,682

Total $ 3,052,720

- 24 -



NOTE 3 - DEPOSITS AND INVESTMENTS (CONTINUED)

As of June 30, 2019, the School District had the following investments.

Investment TypeFair

ValueSpecific Identification

Maturities

Investment pools $ 2,596,050 Daily

Interest Rate Risk

In accordance with its investment policy, the School District will minimize interest rate risk, which is the risk thatthe market value of securities in the portfolio will fall due to changes in market interest rates, by; structuring theinvestment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoidingthe need to sell securities in the open market; and, investing operating funds primarily in shorter-term securities,liquid asset funds, money market mutual funds, or similar investment pools, and limiting the average maturity inaccordance with the School District’s cash requirements.

Credit Risk

State law authorizes investments in investment pools as authorized by the Surplus Funds Investment Pool Act, ActNo. 367 of the Public Acts of 1982, being sections 129.111 to 129.118 of the Michigan Compiled Laws, composedentirely of instruments that are legal for direct investment by a school district. As of June 30, 2019, the SchoolDistrict ’s investment in the MILAF investment pool was rated AAAm by Standard & Poor's.

Concentration of Credit Risk

The School District will minimize concentration of credit risk, which is the risk of loss attributed to the magnitude ofthe School District’s investment in a single issuer, by diversifying the investment portfolio so that the impact ofpotential losses from any one type of security or issuer will be minimized. Investments in U.S. Treasury securitiesand those other securities completely guaranteed by the Treasury as to payment of principal and interest may bepurchased in any dollar amount or up to 100% of the available reserves.

Investments in other types of authorized securities may be made with the provision that no more than fifty percentof the total current investment portfolio consists of one type of security.

Custodial Credit Risk - Deposits

In the case of deposits, this is the risk that in the event of a bank failure, the School District’s deposits may not bereturned to it. As of June 30, 2019, $327,576 of the School District's bank balance of $579,259 was exposed tocustodial credit risk because it was uninsured and uncollateralized.

Custodial Credit Risk – Investments

For an investment, this is the risk that, in the event of the failure of the counterparty, the School District will not beable to recover the value of its investments or collateral securities that are in the possession of an outside party.

The School District will minimize custodial credit risk, which is the risk of loss due to the failure of the securityissuer or backer, by; limiting investments to the types of securities approved in the District’s Investment policywhich is in accordance with State law; and pre-qualifying the financial institutions, broker/dealers, intermediariesand advisors with which the School District will do business.

Foreign Currency Risk

The School District is not authorized to invest in investments which have this type of risk.

- 25 -



NOTE 4 - INTERFUND RECEIVABLES AND PAYABLES

The amounts of interfund receivables and payables as of June 30, 2019 were as follows:

DUE FROM

DUE TO General Fund Sinking Fund

Non-majorGovernmental

Funds Total

General Fund $ 0 $ 923,479 $ 22,630 $ 946,109Sinking Fund 0 0 113,494 113,494Non-major Governmental Funds 191,492 0 0 191,492

$ 191,492 $ 923,479 $ 136,124 $ 1,251,095

These balances result from the time lag between the dates that interfund goods and services are provided,transactions are recorded in the accounting system, and payments between funds are made.

NOTE 5 - CAPITAL ASSETS

Capital asset activity for the fiscal year ended June 30, 2019, was as follows:

Balance BalanceJuly 1, 2018 Additions Deletions June 30, 2019

Governmental Activities

Capital Assets Not Being Depreciated:Land $ 94,533 $ 0 $ 0 $ 94,533Construction in Progress 137,552 0 (137,552) 0Capital Assets Not Being

Depreciated 232,085 0 (137,552) 94,533

Capital Assets Being DepreciatedBuildings and Improvements 15,453,136 1,407,302 0 16,860,438Site Improvements 4,002,948 100,975 0 4,103,923Furniture, Fixtures and Equipment 1,997,564 95,390 (12,455) 2,080,499Vehicles and Buses 1,013,485 78,107 (14,000) 1,077,592

Subtotal 22,467,133 1,681,774 (26,455) 24,122,452

Less Accumulated Depreciation for:Buildings and Improvements (6,958,743) (341,006) 0 (7,299,749)Site Improvements (2,535,353) (191,683) 0 (2,727,036)Furniture, Fixtures and Equipment (1,619,148) (69,219) 12,455 (1,675,912)Vehicles and Buses (931,909) (24,181) 13,688 (942,402)

Subtotal (12,045,153) (626,089) 26,143 (12,645,099)

Capital Assets Being Depreciated 10,421,980 1,055,685 (312) 11,477,353

Governmental Activities TotalCapital Assets - Net of Depreciation $ 10,654,065 $ 1,055,685 $ (137,864) $ 11,571,886

- 26 -



NOTE 5 - CAPITAL ASSETS (CONTINUED)

Depreciation expense was charged to activities of the School District as follows:

Governmental Activities

Instruction $ 353,848Support Services 217,342Community Services 2,534Food Services 33,571Athletics 18,794

$ 626,089

NOTE 6 - SHORT-TERM DEBT

The School District has various options for short-term financing including tax anticipation notes, state aidanticipation notes and lines of credit.

The School District did not enter into any short-term financing arrangements during the fiscal year ending June 30,2019.

NOTE 7 - LONG-TERM LIABILITIES

A. Bonds Payable

Date ofContract

PrincipalDue Interest

TotalObligation

2018 School Improvement Bonds:

The bonds dated June 5, 2018 whichbear interest at 2.39% and are dueserially each May 1 through 2021. 2018 $ 880,000 $ 31,548 $ 911,548

2015 Refunding Bonds:

The bonds dated March 5, 2015 whichbear interest at 2% are due seriallyeach May 1 through 2023. 2015 2,995,000 151,700 3,146,700

2015 School Building and Site Bonds:

The bonds dated June 24, 2015 whichbear interest at 2.05% to 2.30% aredue serially each May 1 through 2020. 2015 205,000 4,715 209,715

2016 Refunding Bonds:

The bonds dated February 4, 2016which bear interest at 0.00 to 2.50%are due serially each May 1 through2026. 2016 2,870,000 389,500 3,259,500

Total Bonds Payable $ 6,950,000 $ 577,463 $ 7,527,463

- 27 -



NOTE 7 - LONG-TERM LIABILITIES (CONTINUED)

The annual principal and interest requirements for long-term debt for the years after June 30, 2019 are asfollows:

Government ActivitiesPrincipal Interest Total

2020 $ 1,365,000 $ 151,947 $ 1,516,9472021 1,255,000 122,316 1,377,3162022 830,000 95,500 925,5002023 855,000 78,900 933,9002024 865,000 61,800 926,8002025 - 2026 1,780,000 67,000 1,847,000

Total $ 6,950,000 $ 577,463 $ 7,527,463

B. Compensated Absences Payable

The School District has an employee benefit plan that allows employees to accumulate a limited amount of sickpay days based on contracts and an unlimited amount of vacation pay days. The amount of accumulated sickand vacation pay liability, recorded in the government-wide statements, for the School District was $254,310 atJune 30, 2019, of which $0 was the estimated current portion.

C. Defeasance of Debt

On April 26, 2005, the School District defeased certain general obligation bonds by placing the proceeds ofnew bonds in an irrevocable trust to provide for future debt service payments on the old bonds beginning in2015 and ending in 2023. Accordingly, the trust account assets and the liability for the defeased bonds are notincluded in the School District’s financial statements. At June 30, 2019, $3,145,000 of bonds outstanding areconsidered defeased.

On March 30, 2006 the School District defeased certain general obligation bonds by placing the proceeds ofnew bonds in an irrevocable trust to provide for future debt service payments on the old bonds beginning in2012 and ending in 2026. Accordingly, the trust account assets and the liability for the defeased bonds are notincluded in the School District's financial statements. At June 30, 2019, $2,795,000 of bonds outstanding areconsidered defeased.

On March 4, 2015 the School District defeased certain general obligation bonds by placing the proceeds of newbonds in an irrevocable trust to provide for future debt service payments on the old bonds beginning in 2016and ending in 2023. Accordingly, the trust account assets and the liability for the defeased bonds are notincluded in the School District's financial statements. At June 30, 2019, $3,120,000 of bonds outstanding areconsidered defeased.

On February 4, 2016 the School District defeased certain general obligation bonds by placing the proceeds ofnew bonds in an irrevocable trust to provide for future debt service payments on the old bonds beginning in2016 and ending in 2026. Accordingly, the trust account assets and the liability for the defeased bonds are notincluded in the School District's financial statements. At June 30, 2019, $2,855,000 of bonds outstanding areconsidered defeased.

- 28 -



NOTE 7 - LONG-TERM LIABILITIES (CONTINUED)

D. Changes in Long-Term Liabilities

The following is a summary of long-term debt transactions of the School District for the year ended June 30,2019:

Balance July 1, 2018 Increase Decrease

Balance June 30, 2019

AmountDue in

One YearGovernmental Activities

Bonds $ 7,975,000 $ 0 $ (1,025,000) $ 6,950,000 $ 1,365,000Deferred Amounts for Issuance

Premium 136,245 0 (20,861) 115,384 20,861Total Bonds Payable, Net 8,111,245 0 (1,045,861) 7,065,384 1,385,861

Compensated Absences 296,437 0 (42,127) * 254,310 0

Total Long-Term Liabilities $ 8,407,682 $ 0 $ (1,087,988) $ 7,319,694 $ 1,385,861

*Represents net of additions and retirements for the year.

The payment dates of compensated absences payable are undeterminable.

The interest expense on long-term obligations for the year was $227,226 .

Compensated absences for the governmental funds are generally liquidated by the General and Food ServiceFunds.

NOTE 8 - UNEARNED REVENUE

Governmental funds and Governmental Activities defer revenue recognition in connection with resources that havebeen received but not yet earned. At the end of the current fiscal year, the various components of unearnedrevenue are as follows:

General Fund:Early Literacy $ 11,824At Risk 51,069Canine Donation 4,000

Food Service Fund:Meal Cards 1,227

Total $ 68,120

- 29 -



NOTE 9 - OPERATING TRANSFERS

During the year ended June 30, 2019, the following transfers were made:

TRANSFERFROM

TRANSFER TO

Non-majorGovernmental

Funds

General Fund $ 57,886Sinking Fund 973,716

$ 1,031,602

Transfers are used to move revenues from the fund that statute or budget requires to collect them to the fund thatstatute or budget requires to expend them, and use unrestricted revenues collected in the general fund to financevarious programs accounted for in other funds in accordance with budgetary authorizations.

NOTE 10 - DEFINED BENEFIT PLAN

General Information About the Michigan Public School Employees' Retirement System (MPSERS) PensionPlan

Plan Description

The Michigan Public School Employees' Retirement System (System or MPSERS) is a cost-sharing, multipleemployer, state-wide, defined benefit public employee retirement plan governed by the State of Michigan (State)originally created under Public Act 136 of 1945, recodified and currently operating under the provisions of PublicAct 300 of 1980, as amended. Section 25 of this act establishes the board's authority to promulgate or amend theprovisions of the System. The board consists of twelve members - eleven appointed by the Governor and theState Superintendent of Instruction, who serves as an ex-officio member.

The System's pension plan was established by the State to provide retirement, survivor and disability benefits topublic school employees. In addition, the System's health plan provides all retirees with the option of receivinghealth, prescription drug, dental and vision coverage under the Michigan Public School Employees' Retirement Act(1980 PA 300 as amended).

The System is administered by the Office of Retirement Services (ORS) within the Michigan Department ofTechnology, Management & Budget. The Department Director appoints the Office Director, with whom the generaloversight of the System resides. The State Treasurer serves as the investment officer and custodian for theSystem.

The System's financial statements are available on the ORS website at www.michigan.gov/orsschools.

Benefits Provided

Benefit provisions of the defined benefit pension plan are established by State statute, which may be amended.Public Act 300 of 1980, as amended, establishes eligibility and benefit provisions for the defined benefit (DB)pension plan. Depending on the plan option selected, member retirement benefits are determined by final averagecompensation, years of service, and a pension factor ranging from 1.25 percent to 1.50 percent. DB members areeligible to receive a monthly benefit when they meet certain age and service requirements. The System alsoprovides disability and survivor benefits to DB plan members.

- 30 -



NOTE 10 - DEFINED BENEFIT PLAN (CONTINUED)

General Information about the Michigan Public School Employees' Retirement System (MPSERS) PensionPlan (Continued)

Benefits Provided (Continued)

A DB plan member who leaves Michigan public school employment may request a refund of his or her membercontributions to the retirement system account if applicable. A refund cancels a former member's rights to futurebenefits. However, returning members who previously received a refund of their contributions may reinstate theirservice through repayment of the refund upon satisfaction of certain requirements.

Contributions

Employers are required by Public Act 300 of 1980, as amended, to contribute amounts necessary to finance thecoverage of active and retired members. Contribution provisions are specified by State statute and may beamended only by action of the State Legislature.

Employer contributions to the System are determined on an actuarial basis using the entry age normal actuarialcost method. Under this method, the actuarial present value of the projected benefits of each individual included inthe actuarial valuation is allocated on a level basis over the service of the individual between entry age andassumed exit age. The portion of this cost allocated to the current valuation year is called the normal cost. Theremainder is called the actuarial accrued liability. Normal cost is funded on a current basis. The unfunded(overfunded) actuarial accrued liability as of the September 30, 2018 valuation will be amortized over a 20 yearperiod for the 2018 fiscal year.

The schedule below summarizes pension contribution rates in effect for fiscal year ended September 30, 2018.

Pension Contribution Rates

Benefit Structure Member EmployerBasic 0.0 - 4.0% 17.89%Member Investment Plan 3.0 - 7.0 17.89Pension Plus 3.0 - 6.4 16.61Pension Plus 2 6.2 19.74Defined Contribution 0.0 13.54

Required contributions to the pension plan from the School District were $1,891,261 for the year endedSeptember 30, 2018.

Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of ResourcesRelated to Pensions

At June 30, 2019, the School District reported a liability of $20,879,280 for its proportionate share of the MPSERSnet pension liability. The net pension liability was measured as of September 30, 2018, and the total pensionliability used to calculate the net pension liability was determined by an actuarial valuation rolled forward fromSeptember 2017. The School District's proportionate share of the net pension liability was determined by dividingeach employer's statutorily required pension contributions to the system during the measurement period by thepercent of pension contributions required from all applicable employers during the measurement period. AtSeptember 30, 2018, the School District's proportionate share percent was 0.06945%, which was an increase of0.00057% from its proportion measured as of September 30, 2017.

For the year ended June 30, 2019, the School District recognized pension expense of $2,724,603 . At June 30,2019, the School District reported deferred outflows of resources and deferred inflows of resources related topensions from the following sources:

- 31 -




Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of ResourcesRelated to Pensions (Continued)

Deferred Outflowsof Resources

Deferred Inflowsof Resources

Differences between expected and actual experience $ 96,884 $ 151,726

Change of assumptions 4,835,624 0

Net difference between projected and actual earnings onpension plan investments 0 1,427,612

Changes in proportion and differences between SchoolDistrict contributions and proportionate share ofcontributions

254,879 217,627

School District contributions subsequent to themeasurement date 1,613,918 0

Total $ 6,801,305 $ 1,796,965

In addition to the deferred inflows of resources noted above, the District also has $785,272 in deferred inflowsrelated to the 147(C) UAAL Stabilization allocation from the State of Michigan at year end.

$828,646 reported as deferred outflows of resources related to pensions resulting from employer contributionssubsequent to the measurement date will be recognized as a reduction of the net pension liability in the yearended June 30, 2020. Total amounts reported as deferred outflows of resources and deferred inflows of resourcesrelated to pensions will be recognized in pension expense as follows:

Deferred (Inflows) and Deferred Outflows of Resources by Year(To Be Recognized in Future Pension Expenses)

Amount2019 $ 2,262,9702020 973,8042021 685,3502022 296,944

$ 4,219,068

Actuarial Valuations and Assumptions

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

- 32 -




Actuarial Valuations and Assumptions (Continued)

Additional information as of the latest actuarial valuation follows:

Summary of Actuarial Assumptions:

λ Valuation Date: September 30, 2017

λ Actuarial Cost Method: Entry Age, Normal

λ Wage Inflation Rate: 2.75%

λ Investment Rate of Returns:

- MIP and Basic Plans: 7.05%

- Pension Plus Plan: 7.00%

- Pension Plus 2 Plan: 6.00%

λ Projected Salary Increases: 2.75 - 11.55%, including wage inflation at 2.75%

λ Cost-of-Living Pension Adjustments: 3% Annual Non-Compounded for MIP Members

Mortality: For retirees: RP-2014 Male and Female Healthy Annuitant Mortality Tables, scaled by 82% for malesand 78% for females and adjusted for mortality improvements using projection scale MP-2017 from 2006. Foractive members: RP-2014 Male and Female Employee Annuitant Mortality Tables, scaled 100% and adjustedfor mortality improvements using projection scale MP-2017 from 2006.

Notes:

Assumption changes as a result of an experience study for the periods 2012 through 2017 have been

adopted by the System for use in the annual pension valuations beginning with the September 30,

2017 valuation. The total pension liability as of September 30, 2018 is based on the results of an

actuarial valuation date of September 30, 2017, and rolled forward using generally accepted actuarial

procedures, including the experience study.

Recognition period for liabilities is the average of the expected remaining service lives of all employees

in years: 4.5304

λ Recognition period for assets in years is 5.0000

Full actuarial assumptions are available in the 2018 MPSERS Comprehensive Annual Financial Report

found on the ORS website at www.michigan.gov/orsschools.

- 33 -




Long-Term Expected Rate of Return On Plan Assets

The long-term expected rate of return on pension plan investments was determined using a building-block methodin which best-estimate ranges of expected future real rates of return (expected returns, net of pension planinvestment expense and inflation) are developed for each major asset class. These ranges are combined toproduce the long-term expected rate of return by weighting the expected future real rates of return by the targetasset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return foreach major asset class included in the pension plan’s target asset allocation as of September 30, 2018, aresummarized in the following table:

Investment Category Target AllocationLong-term ExpectedReal Rate of Return*

Domestic Equity Pools 28.0% 5.7%% Alternative Investment 18.0 9.2International Equity 16.0 7.2Fixed Income Pools 10.5 5.0Real Estate and Infrastructure Pools 10.0 3.9Absolute Return Pools 15.5 5.2Short Term Investment Pools 2.0 0.0

100.0%

*Long-term rate of return does not include 2.3% inflation.

Rate of Return

For the fiscal year ended September 30, 2018, the annual money-weighted rate of return on pension planinvestment, net of pension plan investment expense, was 13.24%. The money-weighted rate of return expressesinvestment performance, net of investment expense, adjusted for the changing amounts actually invested.

Discount Rate

A discount rate of 7.05% was used to measure the total pension liability (7.0% for the Pension Plus plan, 6.0% forthe Pension Plus 2 plan). This discount rate was based on the long term expected rate of return on pension planinvestments of 7.05% (7.0% for the Pension Plus plan, 6.0% for the Pension Plus 2 plan). The projection of cashflows used to determine this discount rate assumed that plan member contributions will be made at the currentcontribution rate and that employer contributions will be made at rates equal to the difference between actuariallydetermined contribution rates and the member rate. Based on these assumptions, the pension plan’s fiduciary netposition was projected to be available to make all projected future benefit payments of current plan members.Therefore, the long-term expected rate of return on pension plan investments was applied to all periods ofprojected benefit payments to determine the total pension liability.

Sensitivity of the School District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the School District’s proportionate share of the net pension liability, calculated using adiscount rate of 7.05% (7.0% for the Hybrid Plan), as well as what the School District’s proportionate share of thenet pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher:

- 34 -




Sensitivity of the School District’s Proportionate Share of the Net Pension Liability to Changes in the DiscountRate (Continued)

1% Decrease6.05% / 6.0% / 5.0%

Current Single DiscountRate Assumption

7.05% / 7.0% / 6.0%1% Increase

8.05% / 8.0% / 7.0%

$ 27,412,881 $ 20,879,280 $ 15,450,918

Michigan Public School Employees' Retirement System (MPSERS) Fiduciary Net Position

Detailed information about the pension plan's fiduciary net position is available in the separately issued MPSERSCAFR, available on the ORS website at www.michigan.gov/orsschools.

Payables to the Michigan Public School Employees' Retirement System (MPSERS)

At June 30, 2019, there were reported payables to MPSERS of $349,004, which accounts for the total outstandingcontributions for all retirement plans, including the 147(C) UAAL Stabilization dollars.

NOTE 11 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB)

General Information About the Michigan Public School Employees' Retirement System (MPSERS) OPEB Plan

Plan Description

The Michigan Public School Employees' Retirement System (System or MPSERS) is a cost-sharing, multipleemployer, state-wide, defined benefit public employee retirement plan governed by the State of Michigan (State)originally created under Public Act 136 of 1945, recodified and currently operating under the provisions of PublicAct 300 of 1980, as amended. Section 25 of this act establishes the board's authority to promulgate or amend theprovisions of the System. The board consists of twelve members - eleven appointed by the Governor and theState Superintendent of Instruction, who serves as an ex-officio member.

The System's health plan provides all eligible retirees with the option of receiving health, prescription drug, dentaland vision coverage under the Michigan Public School Employees' Retirement Act (1980 PA 300 as amended).

The System is administered by the Office of Retirement Services (ORS) within the Michigan Department ofTechnology, Management & Budget. The Department Director appoints the Office Director, with whom the generaloversight of the System resides. The State Treasurer serves as the investment officer and custodian for theSystem.

The System's financial statements are available on the ORS website at www.michigan.gov/orsschools.

- 35 -



NOTE 11 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) (CONTINUED)

General Information about the Michigan Public School Employees' Retirement System (MPSERS) PensionPlan (Continued)

Benefits Provided

Benefit provisions of the postemployment healthcare plan are established by State statute, which may beamended. Public Act 300 of 1980, as amended, establishes eligibility and benefit provisions. Retirees have theoption of health coverage, which, through 2012, was funded on a cash disbursement basis. Beginning fiscal year2013, it is funded on a prefunded basis. The System has contracted to provide the comprehensive group medical,prescription drug, dental and vision coverage for retirees and beneficiaries. A subsidized portion of the premium ispaid by the System with the balance deducted from the monthly pension of each retiree healthcare recipient. Formembers who first worked before July 1, 2008, (Basic, MIP-Fixed, and MIP Graded plan members) the subsidy isthe maximum allowed by statute. To limit future liabilities of Other Postemployment Benefits, members who firstworked on or after July 1, 2008 (MIP-Plus plan members) have a graded premium subsidy based on career lengthwhere they accrue credit towards their insurance premiums in retirement, not to exceed the maximum allowableby statute. Public Act 300 of 2012 sets the maximum subsidy at 80% beginning January 1, 2013; 90% for thoseMedicare eligible and enrolled in the insurances as of that date. Dependents are eligible for healthcare coverage ifthey meet the dependency requirements set forth in Public Act 300 of 1980, as amended.

Public Act 300 of 2012 granted all active members of the Michigan Public School Employees Retirement System,who earned service credit in the 12 months ending September 3, 2012 or were on an approved professionalservices or military leave of absence on September 3, 2012, a voluntary election regarding their retirementhealthcare. Any changes to a member’s healthcare benefit are effective as of the member’s transition date, whichis defined as the first day of the pay period that begins on or after February 1, 2013.

Under Public Act 300 of 2012, members were given the choice between continuing the 3% contribution to retireehealthcare and keeping the premium subsidy benefit described above, or choosing not to pay the 3% contributionand instead opting out of the subsidy benefit and becoming a participant in the Personal Healthcare Fund (PHF), aportable, tax-deferred fund that can be used to pay healthcare expenses in retirement. Participants in the PHF areautomatically enrolled in a 2% employee contribution into their 457 account as of their transition date, earningthem a 2% employer match into a 401(k) account. Members who selected this option stop paying the 3%contribution to retiree healthcare as of the day before their transition date, and their prior contributions weredeposited into their 401(k) account.

Contributions

Employers are required by Public Act 300 of 1980, as amended, to contribute amounts necessary to finance thecoverage of active and retired members. Contribution provisions are specified by State statute and may beamended only by action of the State Legislature.

Employer OPEB contributions to the System are determined on an actuarial basis using the entry age normalactuarial cost method. Under this method, the actuarial present value of the projected benefits of each individualincluded in the actuarial valuation is allocated on a level basis over the service of the individual between entry ageand assumed exit age. The portion of this cost allocated to the current valuation year is called the normal cost.The remainder is called the actuarial accrued liability. Normal cost is funded on a current basis. The unfunded(overfunded) actuarial accrued liability as of the September 30, 2018 valuation will be amortized over a 20 yearperiod for the 2018 fiscal year.

The schedule below summarizes OPEB contribution rates in effect for fiscal year ended September 30, 2018.

- 36 -




Contributions (Continued)

OPEB Contribution Rates

Benefit Structure Member EmployerPremium Subsidy 3.00% 6.44%Personal Healthcare Fund (PHF) 0.00 6.13

Required contributions to the OPEB plan from the School District were $461,687 for the year ended September30, 2018.

OPEB Liabilities, OPEB Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Relatedto OPEB

At June 30, 2019, the School District reported a liability of $5,653,896 for its proportionate share of the MPSERSnet OPEB liability. The net OPEB liability was measured as of September 30, 2018, and the total OPEB liabilityused to calculate the net OPEB liability was determined by an actuarial valuation rolled forward from September2017. The School District's proportion of the net OPEB liability was determined by dividing each employer'sstatutorily required OPEB contributions to the system during the measurement period by the percent of OPEBcontributions required from all applicable employers during the measurement period. At September 30, 2018, theSchool District's proportion was 0.07114%, which was an increase of 0.00188% from its proportion measured asof October 1, 2017.

For the year ended June 30, 2019, the School District recognized OPEB expense of $303,776 . At June 30, 2019,the School District reported deferred outflows of resources and deferred inflows of resources related to OPEBfrom the following sources:

Deferred Outflowsof Resources

Deferred Inflowsof Resources

Differences between expected and actual experience $ 0 $ 1,052,335

Changes of assumptions 598,751 0

Net difference between projected and actual earnings onOPEB plan investments 0 217,293

Changes in proportion and differences between SchoolDistrict contributions and proportionate share ofcontributions 140,716 10,115

School District contributions subsequent to themeasurement date 371,160 0

Total $ 1,110,627 $ 1,279,743

- 37 -




OPEB Liabilities, OPEB Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Relatedto OPEB (Continued)

$371,160 reported as deferred outflows of resources related to OPEB resulting from employer contributionssubsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year endedJune 30, 2019. Total amounts reported as deferred outflows of resources and deferred inflows of resourcesrelated to OPEB will be recognized in pension expense as follows:

Deferred (Inflows) and Deferred Outflows of Resources by Year(To Be Recognized in Future OPEB Expenses)

Amount2019 $ 233,2672020 (137,893)2021 (137,893)2022 (92,268)2023 (34,329)

$ (169,116)

Actuarial Valuations and Assumptions

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

Additional information as of the latest actuarial valuation follows:

Summary of Actuarial Assumptions:

λ Valuation Date: September 30, 2017

λ Actuarial Cost Method: Entry Age, Normal

λ Wage Inflation Rate: 2.75%

λ Investment Rate of Return: 7.15%

λ Projected Salary Increases: 2.75 - 11.55%, including wage inflation at 2.75%

λ Healthcare Cost Trend Rate: 7.5% Year 1 graded to 3.0% Year 12

Mortality: For Retirees: RP-2014 Male and Female Healthy Annuitant Mortality Tables, scaled by 82% formales and 78% for females and adjusted for mortality improvements using projection scale MP-2017 from2006. For Active Members: RP-2014 Male and Female Employee Annuitant Mortality Tables, scaled 100%and adjusted for mortality improvements using projection scale MP-2017 from 2006.

- 38 -




Actuarial Valuations and Assumptions (Continued)

λ Other Assumptions:

Opt Out Assumption: 21% of eligible participants hired before July 1, 2008 and 30% of those hired

after June 30, 2008 are assumed to opt out of the retiree health plan.

Survivor Coverage: 80% of male retirees and 67% of female retirees are assumed to have

coverages continuing after the retiree's death.

Coverage Election at Retirement: 75% of male and 60% of female future retirees are assumed to

elect coverage for 1 or more dependents.

Notes:

Assumption changes as a result of an experience study for the periods 2012 through 2017 have been

adopted by the System for use in the annual OPEB valuations beginning with the September 30, 2017

valuation. The total OPEB liability as of September 30, 2018 is based on the results of an actuarial

valuation date of September 30, 2017, and rolled forward using generally accepted actuarial

procedures, including the experience study.

Recognition period for liabilities is the average of the expected remaining service lives of all employees

in years: 5.6018

λ Recognition period for assets in years is 5.0000

Full actuarial assumptions are available in the 2018 MPSERS Comprehensive Annual Financial Report

found on the ORS website at www.michigan.gov/orsschools.

Long-Term Expected Rate of Return On Plan Assets

The long-term expected rate of return on OPEB plan investments was determined using a building-block methodin which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB planinvestment expense and inflation) are developed for each major asset class. These ranges are combined toproduce the long-term expected rate of return by weighting the expected future real rates of return by the targetasset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return foreach major asset class included in the OPEB plan’s target asset allocation as of September 30, 2018, aresummarized in the following table:

- 39 -




Long-Term Expected Rate of Return on Plan Assets (Continued)

Asset Class Target AllocationLong-term ExpectedReal Rate of Return*

Domestic Equity Pools 28.0% 5.7%Private Equity Pools 18.0 9.2International Equity 16.0 7.2Fixed Income Pools 10.5 0.5Real Estate and Infrastructure Pools 10.0 3.9Absolute Return Pools 15.5 5.0Short Term Investment Pools 2.0 0.0

100.0%

*Long-term rate of return does not include 2.3% inflation.

Rate of Return

For the fiscal year ended September 30, 2018, the annual money-weighted rate of return on OPEB planinvestment, net of OPEB plan investment expense, was 10.75%. The money-weighted rate of return expressesinvestment performance, net of investment expense, adjusted for the changing amounts actually invested.

Discount Rate

A discount rate of 7.15% was used to measure the total OPEB liability. This discount rate was based on the longterm expected rate of return on OPEB plan investments of 7.15%. The projection of cash flows used to determinethis discount rate assumed that plan member contributions will be made at the current contribution rate and thatemployer contributions will be made at rates equal to the difference between actuarially determined contributionrates and the member rate. Based on these assumptions, the OPEB plan’s fiduciary net position was projected tobe available to make all projected future benefit payments of current plan members. Therefore, the long-termexpected rate of return on OPEB plan investments was applied to all periods of projected benefit payments todetermine the total OPEB liability.

Sensitivity of the School District’s Proportionate Share of the Net OPEB Liability to Changes in the Discount Rate

The following presents the School District’s proportionate share of the net OPEB liability, calculated using adiscount rate of 7.15%, as well as what the School District’s proportionate share of the net OPEB liability would beif it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher:

1% Decrease6.15%

Current Discount Rate7.15%

1% Increase8.15%

$ 6,787,387 $ 5,653,896 $ 4,700,492

Sensitivity of the School District’s Proportionate Share of the Net OPEB Liability to Healthcare Cost Trend Rate

The following presents the School District’s proportionate share of the net OPEB liability, calculated usingassumed trend rates, as well as what the School District’s proportionate share of the net OPEB liability would be ifit were calculated using a trend rate that is 1-percentage-point lower or 1-percentage-point higher:

- 40 -




Sensitivity of the School District’s Proportionate Share of the Net OPEB Liability to Healthcare Cost Trend Rate(Continued)

1% DecreaseCurrent Healthcare Cost

Trend Rate 1% Increase

$ 4,650,267 $ 5,653,896 $ 6,805,263

OPEB Plan Fiduciary Net Position

Detailed information about the OPEB plan's fiduciary net position is available in the separately issued 2018MPSERS CAFR, available on the ORS website at www.michigan.gov/orsschools.

NOTE 12 - DEFERRED COMPENSATION PLANS

The School District offers its employees participation in the Tax-Deferred Payments (TDP) program throughMPSERS. The program, available to all full-time employees who are members of the retirement system, permitsthem to defer a portion of their salary until future years for the purchase of additional years of service credit.Employees are eligible to voluntarily participate from the date of employment, however once an employee beginspayments in the program, they must continue until completion of the purchase of the service credit or terminationof employment from Oscoda Area Schools. Payments into the program are vested once 10 years of service credithave been earned through the MPSERS. Employee contributions to the TDP program totaled $4,107 for the yearended June 30, 2019.

The School District also offers its employees a deferred compensation plan created in accordance with InternalRevenue Service Code Section 403(b). The plan, available to all full-time employees, permits them to defer aportion of their salary until future years. Employees are eligible to voluntarily participate from the date ofemployment and are vested immediately upon participation. Employee contributions to the Section 403(b) plantotaled $58,938 for the year ended June 30, 2019. The assets of the plan are administered and held by 403(b)ASP, a third party administrator.

NOTE 13 - DEFINED CONTRIBUTION PLAN

Plan Description

The School District's defined contribution pension plan (DC) provides retirement benefits to plan members andbeneficiaries. The plan covers employees hired on or after July 1, 2010. The plan is affiliated with the MichiganPublic School Employee's Retirement System (MPSERS) Pension Plus Plan of Michigan. Also effective February2013, former Basic/MIP members could elect to participate in the defined benefit contribution pension plan. PublicAct 300 of 1980 of the State of Michigan, as amended, assigns the authority to establish and amend benefitprovisions to the MPSERS Board. The plan services are provided by The Office of Retirement Services,exclusively through ING as the plan administrator. MPSERS issues a publicly available financial report thatincludes financial statements and required supplementary information for MPSERS. The report may be obtainedby writing to MPSERS, 7150 Harris Drive, P.O. Box 30673, Lansing, Michigan 48909-8103.

Funding Policy

Prior to February 2013, the School District employees who were part of the PPP were required to contribute 2% oftheir earnings for the plan year, unless they elected out of the plan, subject to the limitations of sections 457 of theInternal Revenue Code. Employees could elect to contribute more than 2% in full percent increments. Foremployees that elected to participate, the employer would match 50% of the contribution up to 1%. Employercontributions were considered a section 401(a) contribution.

- 41 -



NOTE 13 - DEFINED CONTRIBUTION PLAN (CONTINUED)

Funding Policy (Continued)

Beginning February 2013 and after, the rates vary depending on which plan the active member is a participant of.The School District employees that are part of the PPP with Premium Subsidy or a Personal Healthcare Fund(PHF) are not required to contribute. If they do contribute they can contribute in full percent increments and theemployer will match 50% of the contribution up to 1%. For the PPP with PHF the employee and employercontribution is 2% for the PHF.

The following are the DC pension and PHF contribution requirements for each applicable plan option:

For any new employees hired after September 3, 2012 that elect DC with PHF, the employer pension

contribution is 3% and the employee contribution is 6%. For the PHF, both the employee and employer

contribution is 2%.

For Basic, Basic 4%, MIP-Fixed, MIP-Graded and MIP 7% plan members that elect the PHF, the

employee and employer contributions are 2% for the PHF only.

For former Basic/MIP members that elected DC with Premium Subsidy the employer contribution is 4% for

the pension only. Employees are not required to contribute, but may, in 1% increments.

For former Basic/MIP members that elected DC with a PHF, the employer contribution is 4% for the

pension. Employees are not required to contribute for pension, but may, in 1% increments. Employee and

employer contributions are 2% for the PHF.

Vesting

Employees become 100% vested after four years of service.

Plan Contributions

During the year ended June 30, 2019, the School District contributed $69,335 on behalf of eligible employees.Employee contributions amounted to $94,911 for eligible employees.

NOTE 14 - UNEMPLOYMENT COMPENSATION

The School District is subject to the Michigan Employment Security Act and has elected the reimbursementmethod of financing. Under this method, the School District must reimburse the Employment Agency for allbenefits charged against the School District. Accrued unemployment compensation was $0 as of June 30, 2019.

NOTE 15 - SINKING FUND

The Sinking Fund, a capital projects fund, includes capital project activities funded with a Sinking Fund millage.For this fund, the School District has complied with the applicable provisions of §1212(1) of the Revised SchoolCode and the applicable section of the revised bulletin for School District Audits of Bonded Construction Fundsand Sinking Funds in Michigan.

- 42 -



NOTE 16 - RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction ofassets; errors and omissions; injuries to employees and natural disasters. The School District participates in twodistinct pools of educational institutions within the State of Michigan for self-insuring property, casualty andworkers’ disability compensation. The pools are considered public entity risk pools. The School District paysannual premiums to each pool for the respective insurance coverage. In the event a pool’s total claims andexpenses for a policy year exceed the total normal annual premiums for said years, all members of the specificpool’s policy year may be subject to special assessment to make up the deficiency. Each of the pools maintainreinsurance claims in excess of $500,000 for each occurrence with the overall maximum coverage beingunlimited. The School District has not been informed of any special assessments being required.

The School District continues to carry commercial insurance for other risks of loss, including employee health andaccident insurance. Settled claims for the commercial insurance have not exceeded the amount of insurancecoverage in any of the past three years.

NOTE 17 - GOVERNMENTAL REGULATION

Substantially all of the School District’s facilities are subject to federal, state and local provisions regulating thedischarge of materials into the environment. Compliance with these provisions has not had, nor does the SchoolDistrict expect such compliance to have, any material effect upon the capital expenditures, net revenue in excessof expenditures or financial condition of the School District. Management believes that its current practices andprocedures for the control and disposition of such wastes comply with applicable federal and state requirements.

NOTE 18 - CONTINGENCIES

The School District participates in a number of federally assisted grant programs which are subject to programcompliance audits. The audits of these programs for and including the year ended June 30, 2019, have beenconducted and have been reported in this audit report. However, the compliance audit reports have not yet beenaccepted by the grantors. The amount, if any, of expenditures which may be disallowed by the granting agenciescannot be determined at this time; although the School District expects such amounts, if any, to be immaterial.

NOTE 19 - COMMITMENTS

The School District has contractual commitments in the amount of $298,420 outstanding at June 30, 2019 for theconstruction related to Sinking Fund Renovation Projects.

Construction contracts

As of June 30, 2019, the School District had the following construction contracts in progress:

Project Total Contract

Remaining ConstructionCommitment at June 30, 2019

Contract Payable atJune 30, 2019

B & B General Contracting, Inc. -Building Renovations $ 1,434,569 $ 298,420 $ 57,273

In addition, in February of 2014 the District approved a contract with WTA Architects to pay them 7% of all SinkingFund activity, for overseeing the Sinking Fund projects. There was no related construction in progress andcontracts payable to WTA Architects at year end.

- 43 -

REQUIRED SUPPLEMENTARY INFORMATION


SCHEDULE OF THE SCHOOL DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITYMICHIGAN PUBLIC SCHOOL EMPLOYEES RETIREMENT PLAN

(Amounts were determined as of 9/30 of the fiscal year)

2019 2018 2017 2016 2015

School District's proportion of netpension liability (%) %0.06945 %0.06888 %0.07018 %0.06963 %0.06682

School District's proportionate share ofnet pension liability $ 20,879,280 $ 17,850,353 $ 17,510,276 $ 17,008,373 $ 14,718,838

School District's covered-employeepayroll $ 6,051,274 $ 5,715,311 $ 5,987,495 $ 5,827,964 $ 5,776,637

School District's proportionate share ofnet pension liability as a percentage ofits covered-employee payroll %345.04 %312.33 %292.45 %291.84 %254.80

Plan fiduciary net position as apercentage of pension liability %62.36 %64.21 %63.27 %63.17 %66.20

Notes to the Schedule of the School District's Proportionate Share of the Net Pension Liability:

Changes of benefit terms: There were no changes of benefit terms in 2018.

Changes of assumptions: There were no changes of benefit assumptions in 2018.

- 44 -


SCHEDULE OF THE SCHOOL DISTRICT'S PENSION CONTRIBUTIONSMICHIGAN PUBLIC SCHOOL EMPLOYEES RETIREMENT PLAN

(Amounts determined as of 6/30 of each year)

2019 2018 2017 2016 2015

Statutorily required contributions $ 1,874,510 $ 1,757,672 $ 1,615,739 $ 1,543,203 $ 1,320,083

Contributions in relation to statutorilyrequired contributions* 1,874,510 1,757,672 1,615,739 1,543,203 1,320,083

Contribution deficiency (excess) $ 0 $ 0 $ 0 $ 0 $ 0

School District's covered-employeepayroll $ 6,240,350 $ 5,978,217 $ 5,668,214 $ 5,794,223 $ 5,908,620

Contributions as a percentage ofcovered-employee payroll %30.04 %29.40 %28.51 %26.63 %22.34

*Contributions in relation to statutorily required pension contributions are the contributions a reporting unit actually made to the System, as distinct from thestatutorily required contributions.

Notes to the Schedule of the School District's Pension Contributions:



- 45 -


SCHEDULE OF THE SCHOOL DISTRICT'S PROPORTIONATE SHARE OF THE NET OPEB LIABILITYMICHIGAN PUBLIC SCHOOL EMPLOYEES RETIREMENT PLAN

(Amounts were determined as of 9/30 of the fiscal year)

2019 2018

School District's proportion of net OPEB liability (%) %0.07114 %0.06926

School District's proportionate share of net OPEB liability $ 5,653,896 $ 6,132,988

School District's covered-employee payroll (OPEB) $ 6,051,274 $ 5,715,311

School District's proportionate share of net OPEB liability as a percentage of its covered-employee payroll %93.43 %107.31

Plan fiduciary net position as a percentage of total OPEB liability %42.95 %36.39

Notes to the Schedule of the School District's Proportionate Share of the Net OPEB Liability:



- 46 -


SCHEDULE OF THE SCHOOL DISTRICT'S OPEB CONTRIBUTIONSMICHIGAN PUBLIC SCHOOL EMPLOYEES RETIREMENT PLAN

(Amounts determined as of 6/30 of each year)

2019 2018

Statutorily required OPEB contributions $ 487,394 $ 429,765

OPEB contributions in relation to statutorily required contributions* 487,394 429,765

Contribution deficiency (excess) $ 0 $ 0

School District's covered-employee payroll (OPEB) $ 6,240,350 $ 5,978,217

OPEB contributions as a percentage of covered-employee payroll %7.81 %7.19

*Contributions in relation to statutorily required OPEB contributions are the contributions a reporting unit actually made to the OPEB Plan, as distinct from thestatutorily required contributions.

Notes to the Schedule of the School District's OPEB Contributions:



- 47 -


STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL

GENERAL FUNDFor the Year Ended June 30, 2019

OriginalBudget

FinalAmended

Budget Actual

Variance -Favorable

(Unfavorable)Revenue

Local Sources $ 6,632,792 $ 6,740,419 $ 6,734,431 $ (5,988)State Sources 4,845,682 4,859,090 4,860,553 1,463Federal Sources 651,040 835,916 803,648 (32,268)

Total Revenue 12,129,514 12,435,425 12,398,632 (36,793)


Instruction 7,391,268 7,352,937 7,304,066 48,871Support Services 4,633,623 4,617,337 4,526,059 91,278Community Services 102,873 88,501 85,084 3,417Athletics 335,827 363,882 350,283 13,599

Capital Outlay 0 289,569 286,199 3,370Total Expenditures 12,463,591 12,712,226 12,551,691 160,535

Excess of Revenue Over (Under) Expenditures (334,077) (276,801) (153,059) 123,742

Other Financing Sources (Uses)Sale of Capital Assets 0 7,263 0 (7,263)Loss on Sale of Assets 0 0 (4,573) (4,573)Operating Transfers In 49,183 61,696 57,886 (3,810)Operating Transfers Out (500) 0 0 0

Total Other Financing Sources (Uses) 48,683 68,959 53,313 (15,646)

Net Change in Fund Balances (285,394) (207,842) (99,746) 108,096

Fund Balances - Beginning of Year 2,323,716 2,323,716 2,323,716 0

Fund Balances - End of Year $ 2,038,322 $ 2,115,874 $ 2,223,970 $ 108,096

- 48 -

OTHER INFORMATION


COMBINING BALANCE SHEETOTHER GOVERNMENTAL FUNDS

June 30, 2019

SpecialRevenue Fund Debt Retirement Funds

CapitalProjects Fund

Food ServiceFund

Sinking FundBond

2015Refunding

Bond

2016Refunding

Bond

2015 AthleticBond Debt

Service Fund2018 SinkingFund Bond

2018 CapitalProjects Fund

Total OtherGovernmental

Funds

AssetsCash and Cash Equivalents $ 181,939 $ 30,943 $ 25,464 $ 35,992 $ 13,948 $ 3,420 $ 0 $ 291,706Due from Other Funds 64,881 1,430 43,422 1,623 0 80,136 0 191,492Inventory:

Supplies 3,597 0 0 0 0 0 0 3,597

Total Assets $ 250,417 $ 32,373 $ 68,886 $ 37,615 $ 13,948 $ 83,556 $ 0 $ 486,795

LiabilitiesAccounts Payable $ 8,251 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 8,251Due to Other Units 110 0 0 0 0 0 0 110Due to Other Funds 0 31,676 0 8,682 13,948 81,818 0 136,124Unearned Revenue 1,227 0 0 0 0 0 0 1,227

Total Liabilities 9,588 31,676 0 8,682 13,948 81,818 0 145,712

Fund EquityFund Balances:

Nonspendable:Inventory 3,597 0 0 0 0 0 0 3,597

Restricted For:Debt Retirement 0 697 68,886 28,933 0 1,738 0 100,254

Assigned to:Food Service 237,232 0 0 0 0 0 0 237,232

Total Fund Equity 240,829 697 68,886 28,933 0 1,738 0 341,083

Total Liabilities and Fund Equity $ 250,417 $ 32,373 $ 68,886 $ 37,615 $ 13,948 $ 83,556 $ 0 $ 486,795

- 49 -


COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCESOTHER GOVERNMENTAL FUNDSFor the Year Ended June 30, 2019

SpecialRevenue Fund Debt Retirement Funds

CapitalProjects Fund

Food ServiceFund

Sinking FundBond

2015Refunding

Bond

2016Refunding

Bond

2015 AthleticBond Debt

Service Fund2018 SinkingFund Bond

2018 CapitalProjects Fund

Total OtherGovernmental

Funds

RevenueLocal Sources $ 59,987 $ 697 $ 820,289 $ 59,959 $ 199,638 $ 218,768 $ 0 $ 1,359,338State Sources 27,482 0 0 0 0 0 0 27,482Federal Sources 754,312 0 0 0 0 0 0 754,312

Total Revenue 841,781 697 820,289 59,959 199,638 218,768 0 2,141,132


Food Services 683,591 0 0 0 0 0 0 683,591Capital Outlay 22,299 0 0 0 0 0 10,746 33,045Debt Service:

Principal Retirement 0 0 705,000 0 205,000 115,000 0 1,025,000Interest and Fees on Long-Term

Debt 0 0 88,499 67,830 12,833 22,035 0 191,197

Total Expenditures 705,890 0 793,499 67,830 217,833 137,035 10,746 1,932,833

Excess of Revenue Over (Under)Expenditures 135,891 697 26,790 (7,871) (18,195) 81,733 (10,746) 208,299

Other Financing Sources (Uses)

Operating Transfers Out (57,886) 0 0 0 0 (973,716) 0 (1,031,602)

Net Change in Fund Balances 78,005 697 26,790 (7,871) (18,195) (891,983) (10,746) (823,303)

Fund Balances - Beginning of Year 162,824 0 42,096 36,804 18,195 893,721 10,746 1,164,386

Fund Balances - End of Year $ 240,829 $ 697 $ 68,886 $ 28,933 $ 0 $ 1,738 $ 0 $ 341,083

- 50 -

INDIVIDUAL FUND SCHEDULES


GENERAL FUNDDETAILS OF REVENUE COMPARED TO BUDGET

For the Year Ended June 30, 2019With Comparative Totals for the Year Ended June 30, 2018

2019Amended

Budget2019Actual

2018Actual

Local SourcesCurrent Property Taxes $ 6,180,411 $ 6,213,127 $ 6,142,535Transportation Fees 64,950 64,736 62,540Gate Receipts 50,307 50,278 46,292Interest 74,161 44,211 40,735Rents 61,534 61,534 78,655Athletics Donations 11,998 4,420 27,027Medicaid Fee for Service 65,000 67,074 40,056Miscellaneous Local Sources 232,058 229,051 251,567

6,740,419 6,734,431 6,689,407

State SourcesState Aid Foundation Allowance 2,707,468 2,706,061 2,633,482Isolated Districts 57,195 57,648 52,762At Risk 611,703 604,236 595,328Early Literacy 29,853 28,684 7,225Special Education Grant 396,488 396,488 385,570First Robotics 10,600 10,600 11,500Water Recovery Grant 80,656 80,656 0MPSERS Cost Offset 151,810 151,809 117,209MPSERS UAAL Rate Stabilization 785,272 785,272 844,893MPSERS Reforms - Defined Contribution 11,919 20,223 5,748Miscellaneous State Sources 16,126 18,876 6,635

4,859,090 4,860,553 4,660,352

Federal SourcesTitle I, Part A 474,699 460,136 495,030Title II, Part A 162,328 151,227 118,379Rural and Low-Income Schools 40,903 40,903 0Title IV, Part A 31,486 25,725 6,644Medicaid Outreach 1,500 1,174 762Schools and Roads Grant Funds 75,000 74,483 75,650Community Facilities Grant 50,000 50,000 0Other Federal Revenues 0 0 1,200

835,916 803,648 697,665

Other Financing SourcesSale of Capital Assets 7,263 0 6,178Operating Transfers In 61,696 57,886 48,138

68,959 57,886 54,316

Total Revenue and Other Financing Sources $ 12,504,384 $ 12,456,518 $ 12,101,740

- 51 -


GENERAL FUNDDETAILS OF EXPENDITURES COMPARED TO BUDGET


2019Amended

Budget2019Actual

2018Actual

InstructionBasic Programs:

ElementarySalaries $ 1,748,273 $ 1,747,145 $ 1,655,568Employee Benefits 1,227,169 1,219,124 1,177,596Purchased Services 64,254 58,254 65,453Supplies, Materials and Other 82,038 73,346 45,208

3,121,734 3,097,869 2,943,825

Junior High SchoolSalaries 445,400 437,890 366,329Employee Benefits 335,316 326,123 281,826Purchased Services 12,661 12,231 9,543Supplies, Materials and Other 9,202 8,500 3,728

802,579 784,744 661,426

High SchoolSalaries 751,074 755,910 807,955Employee Benefits 511,077 507,895 578,933Purchased Services 171,366 168,684 172,054Supplies, Materials and Other 52,111 46,694 38,493

1,485,628 1,479,183 1,597,435

PreschoolSalaries 32,060 29,503 21,989Employee Benefits 7,181 6,034 8,597Purchased Services 0 0 926Supplies, Materials and Other 1,000 92 722

40,241 35,629 32,234

Summer SchoolSalaries 8,879 8,879 9,563Employee Benefits 4,042 4,041 4,311Supplies, Materials and Other 0 0 493

12,921 12,920 14,367

Total Basic Programs 5,463,103 5,410,345 5,249,287

Added Needs:Special Education

Salaries 577,730 576,209 547,170Employee Benefits 416,406 414,701 413,806Purchased Services 69,430 84,519 57,451Supplies, Materials and Other 2,300 2,445 36

1,065,866 1,077,874 1,018,463

- 52 -




2019Amended

Budget2019Actual

2018Actual

Instruction (Continued)Added Needs: (Continued)

Compensatory EducationSalaries $ 504,845 $ 502,358 $ 522,218Employee Benefits 313,796 309,224 333,596Purchased Services 3,800 3,434 7,355Supplies, Materials and Other 1,527 831 385

823,968 815,847 863,554

Career and Technical\Vocational EducationPurchased Services 0 0 146,900

Total Added Needs 1,889,834 1,893,721 2,028,917

Total Instruction 7,352,937 7,304,066 7,278,204

Support ServicesPupil Services:

Guidance ServicesSalaries 54,765 54,763 52,793Employee Benefits 32,638 32,287 31,915Purchased Services 9,050 9,050 9,050

96,453 96,100 93,758

Health ServicesPurchased Services 21,050 29,773 19,119Supplies, Materials and Other 0 0 990

21,050 29,773 20,109

Psychological ServicesPurchased Services 9,575 9,575 10,975

SpeechSalaries 64,785 64,782 63,523Employee Benefits 44,885 44,512 44,532

109,670 109,294 108,055

Social WorkSalaries 12,210 11,128 7,594Employee Benefits 3,495 3,183 2,350Purchased Services 57,000 57,000 52,000Supplies, Materials and Other 252 265 0

72,957 71,576 61,944

- 53 -




2019Amended

Budget2019Actual

2018Actual

Support Services (Continued)Pupil Services: (Continued)

Pupil Support ServicesSalaries $ 11,730 $ 11,729 $ 43,311Employee Benefits 5,415 5,340 28,269

17,145 17,069 71,580

Total Pupil Services 326,850 333,387 366,421

Instructional Staff:Instructional Improvement

Salaries 52,408 48,826 36,012Employee Benefits 19,532 17,439 12,062Purchased Services 49,045 51,241 37,741Supplies, Materials and Other 300 0 94

121,285 117,506 85,909

Computer Assisted InstructionSalaries 41,000 40,159 36,580Employee Benefits 20,175 19,952 18,970Purchased Services 28,000 27,280 41,560Supplies, Materials and Other 149,073 142,300 102,639

238,248 229,691 199,749

Academic Student AssessmentSalaries 23,100 20,045 22,916Employee Benefits 10,120 8,860 9,823Purchased Services 11,915 11,915 17,669Supplies, Materials and Other 5,425 4,878 1,717

50,560 45,698 52,125

Total Instructional Staff 410,093 392,895 337,783

General Administration:Board of Education

Salaries 1,600 1,530 1,950Employee Benefits 125 117 149Purchased Services 55,310 52,980 57,523Supplies, Materials and Other 5,300 4,675 4,519

62,335 59,302 64,141

Executive AdministrationSalaries 195,045 194,460 166,719Employee Benefits 146,233 142,220 117,093Purchased Services 19,530 19,062 17,645Supplies, Materials and Other 5,800 4,734 3,299

366,608 360,476 304,756

- 54 -




2019Amended

Budget2019Actual

2018Actual

Support Services (Continued)General Administration: (Continued)Total General Administration $ 428,943 $ 419,778 $ 368,897

School Administration:Office of the Principal

Salaries 522,945 523,957 432,143Employee Benefits 353,680 346,062 297,013Purchased Services 14,450 12,438 11,032Supplies, Materials and Other 10,700 8,713 6,479

901,775 891,170 746,667

Director of InstructionSalaries 58,650 56,813 57,885Employee Benefits 21,527 20,859 22,001Purchased Services 500 256 208Supplies, Materials and Other 325 0 0

81,002 77,928 80,094

Other AdministrationSupplies, Materials and Other 1,700 1,219 2,298

Total School Administration 984,477 970,317 829,059

Business:Business Services

Purchased Services 10,048 10,048 10,162Supplies, Materials and Other 44,300 44,317 33,928

54,348 54,365 44,090

Fiscal ServicesSalaries 116,050 115,947 102,669Employee Benefits 86,923 83,356 77,716Purchased Services 1,540 1,671 927Supplies, Materials and Other 3,300 4,258 2,902

207,813 205,232 184,214

Total Business 262,161 259,597 228,304

Operations and Maintenance:Salaries 318,388 316,966 295,701Employee Benefits 230,551 223,365 215,298Purchased Services 189,329 186,575 175,959Supplies, Materials and Other 372,700 367,735 434,057

1,110,968 1,094,641 1,121,015

- 55 -




2019Amended

Budget2019Actual

2018Actual

Support Services (Continued)Transportation:

Salaries $ 372,243 $ 363,488 $ 367,669Employee Benefits 217,688 198,943 212,012Purchased Services 74,724 79,318 69,815Supplies, Materials and Other 210,820 202,498 203,785

875,475 844,247 853,281

Central Services:Staff and Personnel Services

Salaries 12,825 12,750 10,517Employee Benefits 10,152 9,640 7,825Purchased Services 12,500 11,912 11,156Supplies, Materials and Other 1,165 1,092 426

36,642 35,394 29,924

TechnologySalaries 61,975 61,951 59,386Employee Benefits 32,813 31,868 33,439Purchased Services 24,135 23,837 24,273Supplies, Materials and Other 27,800 23,940 2,233

146,723 141,596 119,331

Pupil Accounting:Salaries 16,600 16,472 11,072Employee Benefits 11,160 10,490 6,268Purchased Services 7,245 7,245 7,239

35,005 34,207 24,579

Total Central Services 218,370 211,197 173,834

Total Support Services 4,617,337 4,526,059 4,278,594

- 56 -




2019Amended

Budget2019Actual

2018Actual

Community ServicesCommunity Recreation

Salaries $ 3,814 $ 3,558 $ 5,723Employee Benefits 1,751 1,614 2,871Other Purchased Services 5,998 9,202 14,150Other Supplies 51,636 51,239 46,424Other Expenses 11,828 9,405 18,462

75,027 75,018 87,630

Community Activities:Salaries 0 0 200Employee Benefits 0 0 89Purchased Services 6,205 6,180 6,671Supplies, Materials and Other 6,694 3,811 4,459

12,899 9,991 11,419

Welfare ActivitiesSupplies, Materials and Other 575 75 142

Total Community Services 88,501 85,084 99,191

AthleticsSalaries 183,028 171,434 150,134Employee Benefits 95,794 88,115 74,152Equipment and Supplies 36,210 34,153 33,833Purchased Services 41,850 49,933 37,017Other Expenditures 7,000 6,648 6,065

Total Athletics 363,882 350,283 301,201

Capital OutlaySupport Services 289,569 286,199 103,678Athletics 0 0 11,331

Total Capital Outlay 289,569 286,199 115,009

Other Financing UsesLoss on Sale of Assets 0 4,573 0

Operating Transfers OutFood Service Fund 0 0 372

Total Expenditures and Transfers $ 12,712,226 $ 12,556,264 $ 12,072,571

- 57 -

INDEX

PAGE

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGAND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIALSTATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

1 - 2

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM ANDON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

3 - 5

SCHEDULE OF FINDINGS AND QUESTIONED COSTS 6

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 7 - 9

DISTRICT PREPARED DOCUMENTS

SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS

Board of EducationOscoda Area SchoolsSeptember 13, 2019Page Two

Purpose of this Report

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

- 2 -

Board of EducationOscoda Area SchoolsSeptember 13, 2019Page Two

Report on Internal Control Over Compliance

Management of Oscoda Area Schools is responsible for establishing and maintaining effective internal control overcompliance with the types of compliance requirements referred to above. In planning and performing our audit ofcompliance, we considered Oscoda Area Schools' internal control over compliance with the types of requirementsthat could have a direct and material effect on each major federal program to determine the auditing proceduresthat are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each majorfederal program and to test and report on internal control over compliance in accordance with the UniformGuidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance.Accordingly, we do not express an opinion on the effectiveness of Oscoda Area Schools' internal control overcompliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliancedoes not allow management or employees, in the normal course of performing their assigned functions, to prevent,or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis.A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internalcontrol over compliance, such that there is a reasonable possibility that material noncompliance with a type ofcompliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Asignificant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internalcontrol over compliance with a type of compliance requirement of a federal program that is less severe than amaterial weakness in internal control over compliance, yet important enough to merit attention by those charged withgovernance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph ofthis section and was not designed to identify all deficiencies in internal control over compliance that might bematerial weaknesses or significant deficiencies. We did not identify any deficiencies in internal control overcompliance that we consider to be material weaknesses. However, material weaknesses may exist that have notbeen identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing ofinternal control over compliance and the results of that testing based on the requirements of the Uniform Guidance.Accordingly, this report is not suitable for any other purpose.

- 4 -

Board of EducationOscoda Area SchoolsSeptember 13, 2019Page Three

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

We have audited the financial statements of the governmental activities, each major fund and the aggregateremaining fund information of Oscoda Area Schools as of and for the year ended June 30, 2019, and the relatednotes to the financial statements, which collectively comprise Oscoda Area Schools' basic financial statements. Weissued our report thereon dated September 13, 2019, which contained unmodified opinions on those financialstatements. Our audit was conducted for the purpose of forming opinions on the financial statements thatcollectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awardsis presented for the purposes of additional analysis as required by the Uniform Guidance, and is not a required partof the basic financial statements. Such information is the responsibility of management and was derived from andrelates directly to the underlying accounting and other records used to prepare the basic financial statements. Theinformation has been subjected to the auditing procedures applied in the audit of the financial statements andcertain additional procedures, including comparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the basic financial statements or to the basic financial statementsthemselves, and other additional procedures in accordance with auditing standards generally accepted in the UnitedStates of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all materialrespects in relation to the basic financial statements as a whole.

- 5 -


SCHEDULE OF FINDINGS AND QUESTIONED COSTSFor the Year Ended June 30, 2019

Summary of Auditors' Results

1. The auditors' report expresses unmodified opinions on the financial statements of Oscoda AreaSchools .

2. No material weaknesses in internal control relating to the audit of the financial statements arereported in the Independent Auditors' Report on Internal Control over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial Statements Performed inAccordance with Government Auditing Standards.

3. No instances of noncompliance material to the financial statements of Oscoda Area Schools, whichare required to be reported in accordance with Government Auditing Standards, were disclosedduring the audit.

4. No material weaknesses relating to the audit of internal control over major federal award programsare reported in the Independent Auditors’ Report on Compliance For Each Major Program and onInternal Control Over Compliance Required by the Uniform Guidance.

5. The auditors’ report on compliance for the major federal award programs for Oscoda Area Schoolsexpresses an unmodified opinion.

6. No audit findings relative to the major federal award programs for Oscoda Area Schools arereported in this schedule.

7. The programs tested as major programs included: Title I, CFDA #84.010

8. The threshold used for distinguishing between Type A and B programs was $750,000.

9. Oscoda Area Schools was determined to be a low-risk auditee.

Findings - Financial Statement Audit

There were no findings related to the financial statements which were required to be reported in accordancewith generally accepted government auditing standards for the year ended June 30, 2019.

Findings and Questioned Costs - Major Federal Award Programs Audit

There were no findings or questioned costs related to the major federal award program audit for the yearended June 30, 2019.

- 6 -

Accrued AccruedFederal Approved (Memo Only) (Deferred) Current Year (Deferred)

Federal Grantor or Pass Through Grantor CFDA Grant Award Prior Year Revenue Current Year Receipts RevenueProgram Title/Grantor's Number Number Amount Expenditures July 1, 2018 Expenditures (Cash Basis) June 30, 2019

U.S. Department of AgriculturePassed through Michigan Department of Education:

Child Nutrition Cluster:Non-Cash Assistance (Commodities):

Food Distribution55030 Entitlement Commodities 10.555 49,902$ 0$ 0$ 49,902$ 49,902$ 0$

Cash Assistance:National School Breakfast Program

181970 2017-2018 10.553 160,391 160,391 0 24,831 24,831 0 191970 2018-2019 197,635 0 0 197,635 182,469 15,166

358,026 160,391 0 222,466 207,300 15,166

National School Lunch ProgramSection 11 - Free and Reduced

181960 2017-2018 10.555 369,829 318,730 0 51,099 51,099 0 191960 2018-2019 415,510 0 0 415,510 384,623 30,887

785,339 318,730 0 466,609 435,722 30,887

Cash Assistance Subtotal 1,143,365 479,121 0 689,075 643,022 46,053

Total Child Nutrition Cluster 1,193,267 479,121 0 738,977 692,924 46,053

Passed through Michigan Department of Education:Child and Adult Care Food Program:

191920 2019-2020 10.558 14,319 0 0 14,319 11,906 2,413 192010 2019-2020 1,016 0 0 1,016 845 171

15,335 0 0 15,335 12,751 2,584

Passed through Alcona County:Schools and Roads Grant Funds 10.665 16,426 0 0 16,426 16,426 0

Passed through Iosco County:Schools and Roads Grant Funds 58,057 0 0 58,057 114 57,943

74,483 0 0 74,483 16,540 57,943

Direct Program

Community Facilities Grant 10.766 50,000 0 0 50,000 50,000 0

Total U.S. Department of Agriculture 1,333,085 479,121 0 878,795 772,215 106,580

The accompanying notes are an integral part of this schedule.

OSCODA AREA SCHOOLSIosco and Alcona Counties, Michigan

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFor the Year Ended June 30, 2019

- 7 -

Accrued AccruedFederal Approved (Memo Only) (Deferred) Current Year (Deferred)

Federal Grantor or Pass Through Grantor CFDA Grant Award Prior Year Revenue Current Year Receipts RevenueProgram Title/Grantor's Number Number Amount Expenditures July 1, 2018 Expenditures (Cash Basis) June 30, 2019



U.S. Department of Education

Passed through Michigan Department of Education:Title I:

Title I - Grants to Local Educational AgenciesPart A Imp Basic Pro 181530 2017-2018 84.010 508,489$ 479,784$ 479,784$ 13,541$ 493,325$ 0$ Part A Imp Basic Pro 192010 2018-2019 457,641 0 0 446,595 335,857 110,738

966,130 479,784 479,784 460,136 829,182 110,738

Passed through Michigan Department of Education:Title VI, Part B, Subpart 2

Rural and Low-Income Schools 190660 2018-2019 84.358 40,957 0 0 40,903 40,903 0

Passed through Michigan Department of Education:Title II Part A

Improving Teacher Quality 180520 2017-2018 84.367 185,222 116,090 116,090 25,770 141,860 0 Improving Teacher Quality 190520 2018-2019 118,450 0 0 106,792 74,238 32,554 Teacher and Leader Instruction Support 180532 2019 20,000 0 0 18,665 17,600 1,065

323,672 116,090 116,090 151,227 233,698 33,619

Passed through Michigan Department of Education:Title IV Part A

Student Support and Academic Enrichment 180750 2017-2018 84.424 10,000 6,644 6,644 0 6,644 0 Student Support and Academic Enrichment 190750 2018-2019 . 37,921 0 0 25,725 0 25,725

47,921 6,644 6,644 25,725 6,644 25,725

Total U.S. Department of Education 1,378,680 602,518 602,518 677,991 1,110,427 170,082

U.S. Department of Health and Human ServicesPassed through Iosco Regional Educational Service Agency

as Fiscal Agent:Medical Assistance Program Title XIX

Medicaid Outreach Claims - 2019 93.778 1,174 0 0 1,174 1,174 0

Total Federal Financial Awards 2,712,939$ 1,081,639$ 602,518$ 1,557,960$ 1,883,816$ 276,662$

- 8 -The accompanying notes are an integral part of this schedule.

Note 1 - Basis of Presentation

A.

Note 2 - Summary of Significant Accounting Policies

A.

B.

C.

D.

E.

F.

Note 3 - Reconciliation to financial statements:

General Fund 803,648$ Special Revenue Funds: Food Service Fund 754,312

1,557,960$

The Schedule of Expenditures of Federal Awards is a summary of the cash activity of the Organization's federalawards and does not present transactions that would be included in financial statements of the Organizationpresented on the accrual basis of accounting, as contemplated by accounting principles generally accepted in theUnited States of America.



The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Oscoda Area Schools under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Oscoda Area Schools, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Oscoda Area Schools.

Expenditures on this schedule reconcile with amounts reported in the financial statements and the financial reportssubmitted to the Michigan Department of Education.

The amounts reported on the Recipient Entitlement Balance Report, or PAL Report, agree with this schedule forUSDA donated food commodities and are reported in the Cash Receipts column.

Expenditures include spoilage or pilferage.

Oscoda Area Schools did not elect to use a flat de minimis rate of 10% of modified total direct costs for their indirectcost rate.

The amounts reported on the R7120, Grants Section Auditors' Report, reconcile with this schedule.

- 9 -

APPENDIX I COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE

Significant Audit Matters Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Oscoda Area Schools are described in Note 1 to the financial statements. No new accounting policies were adopted an the application of existing policies was not changed during 2019. We noted no transactions entered into by the School District during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting Oscoda Area Schools‘ financial statements were:

Management’s estimate of the Net Pension Liability and Net OPEB Liability are based on actuarial valuations audited by the Auditor General. We evaluated the key factors and assumptions used to develop the Net Pension Liability and Net OPEB Liability in determining that it is reasonable in relation to the financial statements taken as a whole.

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. The adjustments identified during the audit have been communicated to management. A summary of audit differences, both adjusted and unadjusted was provided to and accepted by management on September 13, 2019. Management has determined that the effects of the unadjusted audit differences are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated September 13, 2019. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting

principle to Oscoda Area Schools’ financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

APPENDIX I COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE

Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Oscoda Area Schools’ auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to the Management’s Discussion and Analysis, Budgetary Comparison Information, and the Required pension and OPEB Schedules, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining nonmajor fund financial statements and individual fund schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.

APPENDIX II MANAGEMENT COMMENTS

In planning and performing our audit of the financial statements of the governmental activities, each major fund and the aggregate remaining fund information of Oscoda Area Schools as of and for the year ended Sunday, June 30, 2019, in accordance with auditing standards generally accepted in the United States of America, we considered Oscoda Area Schools’ internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Oscoda Area Schools’ internal control. Accordingly, we do not express an opinion on the effectiveness of Oscoda Area Schools’ internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. Given these limitations during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. During our audit, we also became aware of the following deficiency in internal control other than a significant deficienc y or material weaknesses, or other matter that is an opportunit y for strengthening internal controls and operating efficiency. ATHLETIC EXPENSE DOCUMENTATION During the audit, we noted that proper supporting documentation for disbursements paid out of athletic gate receipts were not being provided with the report. By not matching each expense with a receipt or having the individuals receiving the payment sign off on the form confirming how much they received, the District runs the risk of receipts being misappropriated and going undetected. We recommend that when cash is paid out of the gate receipts for scorekeepers, announcers, referees, etc., the individuals receiving the cash sign off in ink on the report with their name and the amount being paid to them. The cumulative amounts of cash being paid to each individual should then be tracked to ensure proper reporting to the Internal Revenue Service at the end of the calendar year. In addition, we noted that although management currently has a good recap report for tracking and verifying the completeness of athletic receipts, the report was not always filled out completely or in ink. Without accurate and complete reports being utilized consistently, completeness of the athletic deposits cannot be assured. We recommend that management remind the employees in charge of the various events of the importance that all reports be filled out completely, in ink, containing two independent signatures, and with the above expense documentation being included. Managem ent should then spot check various events to ensure that the reports are complete and take appropriate corrective action when they are not.

Documents

INDEX [dashboard.eidexinsights.com]...statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion We do not express