LAGRANGE SCHOOL DISTRICT 102 ANNUAL FINANCIAL REPORT … Financial... · 2019. 12. 5. · LAGRANGE SCHOOL DISTRICT 102 ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2016 CONTENTS Educational

LAGRANGE SCHOOL DISTRICT 102

ANNUAL FINANCIAL REPORT

YEAR ENDED JUNE 30, 2016

Report issued by:Lauri KearneyAssistant Superintendent of Finance / CSBO

LAGRANGE SCHOOL DISTRICT 102ANNUAL FINANCIAL REPORT


CONTENTS

FINANCIAL SECTION:

Independent Auditor's Report

Management's Discussion and Analysis

Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position - Modified Cash Basis

Statement of Activities - Modified Cash Basis

Fund Financial Statements:

Balance Sheet - Modified Cash Basis - Governmental Funds

Reconciliation of the Balance Sheet - Modified Cash Basis of GovernmentalFunds to the Statement of Net Position - Modified Cash Basis

Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit) -Modified Cash Basis - Governmental Funds

Reconciliation of the Statement of Revenues, Expenditures and Changes in FundBalances (Deficit) - Modified Cash Basis of Governmental Funds to theStatement of Activities - Modified Cash Basis

Statement of Assets and Liabilities - Modified Cash Basis - Fiduciary Fund -Student Activities Agency Fund

Notes to Basic Financial Statements

Combining and Individual Fund Financial Statements and Schedules:

Major Governmental Funds:

General Fund:

Combining Schedule of General Fund Balance Sheet Accounts - ModifiedCash Basis

Combining Schedule of General Fund Revenues, Expenditures and Changesin Fund Balances (Deficit) - Modified Cash Basis

I - III

IV -IX

2

3

4

5-6

7

8

9 - 38

39

40 - 41



CONTENTS

Educational Fund:

Balance Sheet - Modified Cash Basis 42

Schedule of Revenues, Expenditures and Changes in Fund Balance(Deficits) - Modified Cash Basis - Budget and Actual 43 - 44

Operations and Maintenance Fund:


Schedule of Revenues, Expenditures and Changes In Fund Balances -Modified Cash Basis - Budget and Actual 46

Tort Fund:


Schedule of Revenues, Expenditures and Changes 111 Fund Balances -Modified Cash Basis - Budget and Actual 48

Working Cash Fund:


Schedule of Revenues, Expenditures and Changes In Fund Balances -Modified Cash Basis - Budget and Actual 50

Debt Services Fund:


Schedule of Revenues, Expenditures and Changes 111 Fund Balances -Modified Cash Basis - Budget and Actual 52

Nonmajor Governmental Funds:

Combining Balance Sheet - Modified Cash Basis - Nonmajor GovernmentalFunds 53

Combining Statement of Revenues, Expenditures and Changes in Fund Deficits -Modified Cash Basis - Nonmajor Governmental Funds 54


YEAR ENDED JUNE 30,2016

CONTENTS

Special Revenue Funds:

Transportation Fund:


Schedule of Revenues, Expenditures and Changes III Fund Deficits -Modified Cash Basis - Budget and Actual 56

Municipal Retirement / Social Security Fund:


Schedule of Revenues, Expenditures and Changes III Fund Deficits -Modified Cash Basis - Budget and Actual 58

Capital Projects Fund:


Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficits)- Modified Cash Basis 60

Supplementary Information:

Schedule of Expenditures - Modified Cash Basis - Actual and Budget 61- 70

OTHER INFORMATION SECTION:

Employee Retirement and Postemployment Benefit Plan Information:

Teachers' Retirement System of the State of Illinois 71

Illinois Municipal Retirement Fund 72

Health Insurance Plan for Retired Employees 73

SINGLE AUDIT SECTION:

Independent Auditor's Report on Internal Control over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial StatementsPerformed in Accordance with Government Auditing Standards 74 - 75



CONTENTS

Schedule of Expenditures of Federal Awards:

Independent Auditor's Report on Compliance for Each Major Program and onInternal Control over Compliance Required by the Uniform Guidance

Schedule of Expenditures of Federal Awards

Notes to Schedule of Expenditures of Federal Awards

Schedule of Findings and Questioned Costs

76 -78

79 - 80

81

82 - 89

FINANCIAL SECTION

Certified Public Accountants&Trusted Advisors

To the Superintendent of Schools and Board of EducationLaGrange School District 102LaGrange Park, Illinois

INDEPENDENT AUDITOR'S REPORT

Report on the Financial Statements

We have audited the accompanying modified cash basis financial statements of the governmentalactivities, each major fund, the aggregate remaining fund information, and the fiduciary fund of LaGrangeSchool District 102, as of and for the year ended June 30, 2016, and the related notes to the financialstatements, which collectively comprise the District's basic financial statements as listed in the table ofcontents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements inaccordance with the modified cash basis of accounting described in Note I; this includes determining thatthe modified cash basis of accounting is an acceptable basis for the preparation of the financial statementsin the circumstances. Management is also responsible for the design, implementation, and maintenance ofinternal control relevant to the preparation and fair presentation of financial statements that are free frommaterial misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conductedour audit in accordance with auditing standards generally accepted in the United States of America and thestandards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessmentof the risks of material misstatement of the financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal control relevant to the entity's preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internalcontrol. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluating the overall presentation of the financial statements.

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

P:708-349-69991 F: 708-349-6639114300 RaviniaAve., Orland Park, IL 604621 mpscpa.com

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, therespective modified cash basis financial position of the governmental activities, each major fund, theaggregate remaining fund information, and the fiduciary fund of LaGrange School District 102 as of June30,2016, and the respective changes in modified cash basis financial position thereof for the year thenended in accordance with the modified cash basis of accounting described in Note I.

Basis of Accounting

We draw attention to Note I of the financial statements, which describes the basis of accounting. Thefinancial statements are prepared on the modified cash basis of accounting, which is a basis of accountingother than accounting principles generally accepted in the United States of America. Our opinions are notmodified with respect to this matter.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the District's basic financial statements. The accompanying supplementary information(combining and individual fund financial statements and schedules and schedule of expenditures) andother information (management's discussion and analysis and other information section) are presented forpurposes of additional analysis and are not a required part of the basic financial statements. The scheduleof expenditures of federal awards is presented for purposes of additional analysis as required by Title 2U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards, and is also not a required part of the basic financialstatements.

The combining and individual fund financial statements and schedules, schedule of expenditures, andschedule of expenditures of federal awards are the responsibility of management and were 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 basicfinancial statements and certain additional procedures, including comparing and reconciling suchinformation directly to the underlying accounting and other records used to prepare the basic financialstatements or to the basic financial statements themselves, and other additional procedures in accordancewith auditing standards generally accepted in the United States of America. In our opinion, the combiningand individual fund financial statements and schedules, schedule of expenditures, and schedule ofexpenditures of federal awards are fairly stated in all material respects in relation to the basic financialstatements as a whole.

The management's discussion and analysis and other information section have not been subjected to theauditing procedures applied in the audit of the basic financial statements, and accordingly, we do notexpress an opinion or provide any assurance on such information.

We also have previously audited, in accordance with auditing standards generally accepted in the UnitedStates of America, LaGrange School District 102's basic financial statements for the year ended June 30,2015, which are not presented with the accompanying financial statements and we expressed unmodifiedopinions on the respective financial statements of the governmental activities, each major fund, the

II

aggregate remaining fund information, and the fiduciary funds. That audit was conducted for the purposeof forming opinions on the financial statements that collectively comprise LaGrange School District 102'sbasic financial statements as a whole. The individual fund financial statements and schedules for the yearended June 30,2015, are presented for purposes of additional analysis and are not a required part of thebasic 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 June 30, 2015 basicfinancial statements. The information has been subjected to the auditing procedures applied in the audit ofthose basic financial statements and certain additional procedures, including comparing and reconcilingsuch information directly to the underlying accounting and other records used to prepare the basic financialstatements or to the basic financial statements themselves, and other additional procedures in accordancewith auditing standards generally accepted in the United States of America. In our opinion, the June 30,2015 individual fund financial statements and schedules are fairly stated in all material respects in relationto the basic financial statements from which they have been derived.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 14,2016, on our consideration of LaGrange School District 102' s internal control over financial reporting andon our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreementsand other matters. The purpose of that report is 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 internalcontrol over financial reporting or on compliance. That report is an integral part of an audit performed inaccordance with Government Auditing Standards in considering LaGrange School District 102's internalcontrol over financial reporting and compliance.

Orland Park, IllinoisNovember 14,2016

III

MANAGEMENT'S DISCUSSION AND ANALYSIS

LA GRANGE SCHOOL DISTRICT 102MANAGEMENT'S DISCUSSION AND ANALYSIS

as of and for the fiscal year ended June 30, 2016

As management of La Grange School District 102 (the District), we offer readers of the District's AnnualFinancial Report this narrative overview and analysis of the financial activities of the District for the fiscalyear ended June 30, 2016.

Financial Highlights

• The assets and deferred outflows of resources of the District exceeded its liabilities at the closeof the most recent fiscal year by $16,631,918 (net position).

• The total net position of the District decreased by $3,531,620 during fiscal year 2016 asoperational costs of the District increased in comparison with the prior year.

• The District's governmental funds reported combined fund balances of $14,735,086, a decreaseof $6,289,796 in comparison with the prior year. $1,775,947 is available for spending at theDistrict's discretion tunassigned fund balance).

• At the end of the current fiscal year, unrestricted fund balance (the total of the committed,assigned, and unassigned components of fund balance) for the General Fund was $1,775,947, orapproximately 4.1% of total General Fund expenditures.

• The District's long-term liabilities decreased by $1,419,745 to $45,564,183. This decrease wasthe net resu It of the normal repayment of bonds and debt certificates, offset by the add ition of anew installment contract.

Overview of the Financial Statements

The discussion and analysis provided here is intended to serve as an introduction to the District's basicfinancial statements. The basic financial statements consist of three components: I) government-widefinancial statements, 2) fund financial statements, and 3) the notes to basic financial statements. This reportalso contains combining and individual fund financial statements and schedules and other supplementaryinformation intended to furnish additional detail to support the basic financial statements themselves.

Government-wide Financial Statements

The government-wide financial statements are designed to provide the reader of the District's AnnualFinancial Report with a broad overview of the financial activities, in a manner similar to a private-sectorbusiness.

The statement of net position - modified cash basis presents information about all of the District's assets,deferred outflows of resources, and liabilities as reported using the modified cash basis of accounting. Thedifference between assets, deferred outflows of resources, and liabilities is reported as net position. Overtime, changes in net position may serve as a useful indicator of whether the financial position of the Districtis improving or deteriorating.

IV

The statement of activities - modified cash basis presents information showing how the net position of theDistrict changed during the current fiscal year. Changes in net position are recorded in the statement ofactivities using the modified cash basis of accounting.

The modified cash basis of accounting is described in the notes to basic financial statements.

Both of the government-wide financial statements distinguish functions of the District that are supportedfrom taxes and intergovernmental revenues (governmental activities). Governmental activities includeinstructional, pupil support, other support, transportation and administration.

The government-wide financial statements can be found on pages 1-2 of this report.

Fund Financial Statements

A fund is a grouping of related accounts that is used to maintain control over resources that have beensegregated for specific activities or objectives. The District, like other state and local governments, uses fundaccounting to ensure and demonstrate compliance with finance-related legal requirements. Fund financialstatements for the District include governmental and fiduciary funds.

Governmental funds

Governmental funds are used to account for essentially the same functions reported as governmentalactivities in the government-wide financial statements. However, unlike the government-wide statements,the governmental fund financial statements focus on near-term inflows and outflows of spendable resources,as well as on balances of spendable resources available at the end of the year. Such information may beuseful in evaluating financing requirements in the near term.

Because the focus of the governmental funds is narrower than that of the government-wide financialstatements, it is useful to compare the information presented for governmental funds with similar informationpresented for governmental activities in the government-wide financial statements. By doing so, readers maybetter understand the long-term impact of the District's near-term financing decisions. Both thegovernmental fund balance sheet - modified cash basis and the governmental fund statement of revenues,expenditures, and changes in fund balance - modified cash basis provide a reconciliation to facilitate thiscomparison between governmental funds and governmental activities.

The District maintains eight different governmental funds and subfunds. The major funds are the GeneralFund and Debt Services Fund. They are presented separately in the fund financial statements with theremaining nonmajor governmental funds labeled as "Other Governmental Funds." Fund information for thenonmajor funds is presented in the combining and individual fund financial statements and schedules sectionof this report.

The District adopts an annual budget for each of the governmental funds. The governmental funds'budgetary comparisons are reported in the combining and individual fund financial statements and schedulessection ofthis report.

The basic governmental fund financial statements can be found on pages 3-7 of this report.

v

Fiduciary fund

Fiduciary funds are used to account for resources held for the benefit of parties outside of the District.Fiduciary funds are not reported in the government-wide financial statements because the resources of thosefunds are not available to support the District's own programs. The fiduciary funds are reported using themodified cash basis of accounting.

The District maintains one fiduciary fund. The Student Activity Fund (an agency fund) accounts for assetsheld by the District as an agent for the students and teachers. The fund is custodial in nature and does notinvolve the measurement of results of operations.

The fiduciary fund financial statement can be found on page 8 of this report.

Notes to Basic Financial Statements

The notes to basic financial statements provide additional information that is essential to a full understandingof the data provided in the basic financial statements. The notes can be found on pages 9-38 of this report.

Government-wide Overall Financial Analysis

As noted earlier, net position over time may serve as a useful indicator of a government's financial position.In the case of the District, assets exceeded liabilities by $16,631,918 at the close of the most recent fiscalyear.

Assets:Current and other assetsCapital assets

Net Position - Modified Cash Basisas ofJune 30, 2016 and 2015

Government -wide2016

$ 15,192,064 $47,312,686

62,504.750

148,329

456,9783,690,763

41,873,420

46.021.161

24,947,6193,222,144

(11,537.845)

$ 166] I 918

Total assets

Deferred outflows of resources:Unamortized loss on refunding

Liabilities:Short-term liabilitiesLong-term liabilities, due within one yearNoncurrent liabilities

Total liabilities

Net position:Net investment in capital assetsRestrictedUnrestricted

Total net position

VI

2015

21,580,85945,962,389

67,543.248

160.195

555,9773,505,000

43,'178,928

47.5]9.905

23,944,6446,455,403

(10,236.509)

The largest portion of the District's net position reflects its investment in capital assets (e.g., land, landimprovements, buildings and equipment), less any related outstanding debt that was used to acquire thoseassets. The District uses these capital assets to provide a variety of services to its students and other membersof the community. Accordingly, these assets are not available for future spending. Although the District'sinvestment in capital assets is reported net of related debt, it should be noted that the resources used to repaythis debt must be provided from other sources, since the capital assets themselves cannot be used to liquidatethese liabilities.

An additional portion of the District's net position (19%) represents resources that are subject to externalrestrictions on how they may be used.

The District's overall net position decreased $3,531,620 from the prior fiscal year. The reasons for thisoverall decrease are discussed in the following section.

Government-wide Activities

Governmental activities decreased the net position of the District by $3,531,620, thereby accounting for theentire decrease in the net position of the District.

Changes in Net Position - Modified Cash Basisfor the fiscal years ended June 30, 2016 and 2015

Government-wide

2016 2015

Revenues:Program revenues:Charges for servicesOperating and capital grants and contributions

Total revenues

$ 1,027,336 $ 961,00015,023,266 9,684,887

29,566,731 28,120,158491,814 534,258495,177 236,43226,788 307,156

1.882,071 2,065,964

48,513,183 41.909.855

General revenues:Property taxesPersonal property replacement taxesInvestment earningsOther revenuesGeneral state aid

Expenses:Governmental activities:

InstructionalPupil supportOther supportTransportationAdministrationInterest

Total expenses

35,829,819 30,734,5002,183,287 1,887,4766,687,198 6,065,3861,300,389 1,305,9634,217,572 4,083,8441,826,538 1,904,814

52,044,803 45,981,983

(3,531,620) (4,072,128)

20,163,538 24.235,666

:I; $ 20 163 5.18.

Decrease in net position

Net position at beginning of year

Net position at end of year

vii

Key elements of the decrease in net position for governmental activities are as follows:

• Operating and capital grants and contributions increased during 2016 by $5,338,379, causedprimarily by an increase in on behalf revenue of$4,925,863.

• Instructional expenses increased during 2016 by $5,095,319, caused primarily by an increase in onbehalf expenses of $4,925,863 from the prior year. The increase was also the result of salaryincreases negotiated with the Educational Association and the addition of two additional staffmembers to address student enrollment.

• Other support service expenses increased during 2016 by $621,812. This increase was primarily dueto an increase in LADSE special education positions being brought back to the District andoutsourced special education costs.

Financial Analysis of the District's Funds

As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

The focus of the District's governmental funds is to provide information on near-term inflows, outflows, andbalances of spendable resources. Such information is useful in assessing the District's financingrequirements. In particular, unassigned fund balances may serve as a useful measure of a government'sresources available for discretionary use as they represent the portion of fund balance which has not yet beenlimited to use for a particular purpose by either an external party, the District itself, or a group or individualthat has been delegated authority to assign resources for use for particular purposes by the District's Board.

As of the end of the current fiscal year, the District's governmental funds reported a combined ending fundbalance of $14,735,086, a decrease of $6,289,796 in comparison with the prior year. Approximately 12% ofthis amount ($1,775,947) constitutes unassigned fund balance, which is available for spending at theDistrict's discretion. The remainder of the fund balance is either restricted or assigned to indicate that it isrestricted for particular purposes ($12,751,414), or assigned for particular purposes ($207,725).

The General Fund had a fund balance of $4,072,895 at June 30, 2016, a decrease of $7,404,707 from theprior year. The decrease was the result of current year expenditures that were $3,204,707 higher thanrevenues and transfers of $4,200,000 to other funds.

The Debt Services Fund, a major fund, had a $1,839,135 decrease in fund balance during the current year asdebt service expenditures exceeded revenues from local sources. A portion of the outstanding capitalappreciation bonds were paid with restricted investments held by the District.

General Fund Budgetary Highlights

The original budget was amended during the year.

The major components of the General Fund budget variance are as follows:• Property tax revenues were as expected. The District did not experience significant refunds in fiscal

year 2016.• On behalf revenues and expenditures were significantly more than anticipated. The State of Illinois

made greater employer pension contributions on behalf of the District due to the increase in requiredcontribution rates.

VIII

Capital Assets and Debt Administration

Capital Assets. The District's investment in capital assets for its governmental activities as of June 30, 2016amounted to $47,312,686 (net of accumulated depreciation). This investment in capital assets included land,land improvements, buildings and improvements, and equipment.

Capital Assets (net of accumulated depreciation)June 30, 2016 and 2015

Government-wide

20]6 2015

LandConstruction in progressBuildings and improvementsEquipment

$ 767,294o

46,310,098235,294

$ 7672942053,93442,863868

277,293

Total ,962.182

Additional information on the District's capital assets can be found in the notes to basic financial statementson page 20.

Long-term Liabilities. At June 30, 2016, the District had total long-term liabilities of $45,564,183.

Additional information on the District's long-term liabilities can be found in the notes to basic financialstatements on pages 21-30.

Economic Factors and Next Year's Budget

Expected expenditures will continue to outpace expected revenues for fiscal year 2017, causing a structuraldeficit. In August, the Board authorized a referendum to increase property tax revenue for November 8,2016, which was successful. The increase is expected to generate an additional $3 million in operatingrevenues for the District annually. The successful referendum in combination with cost management effortswill allow the District to begin to build its fund balances for the future.

The District continues to prepare a five-year financial forecast to use as a tool to manage its structural deficit.

Requests for Information

This financial report is designed to provide a general overview of the District's finances for all those with aninterest in the District. Questions concerning any of the information provided in this report or requests foradditional financial information should be addressed to:

Assistant Superintendent ofFinance/CSBOLa Grange School District 102

333 N. Park Rd.La Grange Park, IL 60526

IX

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

LAGRANGE SCHOOL DISTRICT 102STATEMENT OF NET POSITION - MODIFIED CASH BASIS

JUNE 30, 2016

ASSETS

Equity in pooled cash and investmentsRestricted investmentsCapital assets not being depreciated:

LandCapital assets net of accumulated depreciation:

Buildings and improvementsEquipment

$ 5,662,7949,529,270

767,294

46,310,098235,294

Total assets 62,504,750

DEFERRED OUTFLOWS OF RESOURCES

Unamortized loss on refunding 148,329

LIABILITIESPayroll withholdingsNoncurrent liabilities:

Due within one yearDue in more than one year

456,978

3,690,76341,873,420

Total liabilities 46,021,161

NET POSITION

Net investment in capital assetsRestricted for:

Debt serviceMunicipal retirementOperations and maintenanceTort immunityTransportation

Unrestri cted

24,947,619

Total net position

529,35941,946

1,667,323629,625353,891

(11,537,845)

$ 16,631,918

See notes to basic financial statements.

LAGRANGE SCHOOL DISTRICT 102STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS

YEAR ENDED JUNE 30,2016

Program Revenues Net (Expense)Revenue andChange inNet PositionExpenses

OperatingCharges for Grants andServices Contributions

Functions/programs:Governmental activities:

Instructional $ 35,829,819 $ 1,027,336 $ 14,383,196 $ (20,419,287)Pupil support 2,183,287 (2,183,287)Other support 6,687,198 162,235 (6,524,963)Transportation 1,300,389 477,835 (822,554)Administration 4,217,572 (4,217,572)Interest 1.826,538 (1.826.538)

Total governmental activities $ 52.044.803 $ 1.027.336 $ 15.023.266 (35.994.201)

General revenues:Taxes:

Property 29,566,731Personal property replacement 491,814

General state aid 1,882,071Earnings on investments 495,177Other income 26.788

Total general revenues 32.462.581

Change in net position (3,531,620)

Net position at beginning of year 20.163.538

Net position at end of year s 16.631.91K


2

FUND FINANCIAL STATEMENTS

LAGRANGE SCHOOL DISTRICT 102BALANCE SHEET - MODIFIED CASH BASIS - GOVERNMENTAL FUNDS

JUNE 30, 2016

TotalNonmajor Total

Debt Governmental GovernmentalGeneral Services Funds Funds

ASSETS

Equity in pooled cash and investments $ 4,529,873 $ 614,185 $ 518,736 $ 5,662,794Restricted investments 9.529.270 9.529.270

Total assets $ 4.529.873 $ 10.143.455 $ 518.736 $ 15.192.064

LIABILITIES AND FUND BALANCES

Liabilities:Payroll withholdings $ 456.978 $ $ $ 456.978

Fund balances:Restricted 2,296,948 10,058,629 395,837 12,751,414Assigned 84,826 122,899 207,725Unassigned 1.775,947 1,775,947

Total fund balances 4,072,895 10,143.455 518,736 14,735,086

Total liabilities and fund balances $ 4,529,873 $ 10.143.455 $ 518,736 $ 15.192,064


3

LAGRANGE SCHOOL DISTRICT 102RECONCILIATION OF THE BALANCE SHEET - MODIFIED CASH BASIS

OF GOVERNMENTAL FUNDS TO THE STATEMENTOF NET POSITION - MODIFIED CASH BASIS

JUNE 30, 2016

Amounts reported for governmental activities in the statement of net position - modified cash basis aredifferent because:

Total fund balances - governmental funds $ 14,735,086

Capital assets used in governmental activities are not financial resources and,therefore, are not reported as assets in the funds. 47,312,686

Unamortized loss on refunding is shown as a deferred outflow of resources on thestatement of net position. 148,329

Long-term liabilities, including bonds and debt certificates payable, are not due andpayable in the current year and, therefore, are not reported as liabilities in the funds.Long-term liabilities at year-end consist of:

Bonds and debt certificatesInstallment contractIssuance premiumAccreted interest on capital appreciation bonds

$ (36,734,933)(1,369,604)(390,488)

(7,069,158)

Total (45,564,183)

$ 16,631.918Total net position of governmental activities


4

LAGRANGE SCHOOL DISTRICT 102STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES (DEFICIT) - MODIFIED CASH BASIS - GOVERNMENTAL FUNDSYEAR ENDED JUNE 30, 2016

TotalNonmajor Total


Revenues:Local sources:

Property taxes $ 25,414,408 $ 2,525,916 $ 1,626,407 $ 29,566,731Investment income 89,114 402,715 3,348 495,177Other 1,396,803 113,800 1,510,603

Total local sources 26,900,325 2,928,631 1.743,555 31,572,511

State sources:General state aid 1,882,071 1,882,071Grants-in-aid 1.766,152 477,835 2,243,987

Total state sources 3,648,223 477,835 4,126,058

Federal sources:Grants-in-aid 955,228 955,228

On behalf revenues 11,824,051 11,824,051

Total revenues 43,327,827 2,928,631 2,221 ,390 48,477,848

Expenditures:Current:

Instruction 34,064,566 484,045 34,548,611Support services 10,809,590 1,858,424 12,668,014Community services 54,370 54,370

Payments to other districts andgovernment units 1,604,008 1,604,008

Capital outlay 2,658,224 2,658,224Debt service:

Principal 2,200,200 2,200,200Interest 2,560,641 2,560,641Service fees on bonds 6,925 6,925

Total expenditures 46,532,534 4.767,766 5,000,693 56,300,993

Deficiency of revenues over expenditures (3.204,707) 0,839,135) (2.779,303) (7,823,145)


5

TotalNonmajor Total


Other financing sources (uses):Installment contract 1,533,349 1,533,349Transfers in 5,000,000 4,200,000 9,200,000Transfers out (9,200,000) (9.200,000)

Total other financing sources (uses) (4,200,000) 5,733.349 1.533,349

Net changes in fund balances (deficit) (7,404,707) (1,839,135) 2,954,046 (6,289,796)

Fund balances (deficit) at beginning of year 11.477,602 11,982.590 (2.435.310) 21,024,882

Fund balances at end of year $ 4,072,895 $ 10,143.455 $ 518,736 $ 14,735,086

6

LAGRANGE SCHOOL DISTRICT 102RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES (DEFICIT) - MODIFIED CASH BASIS

OF GOVERNMENTAL FUNDS TO THE STATEMENT OFACTIVITIES - MODIFIED CASH BASIS


Amounts reported for governmental activities 111 the statement of activities - modified cash basis aredifferent because:

Net change in fund balances - total governmental funds $ (6,289,796)

Governmental funds report capital outlays as expenditures. However, in thestatement of activities - modified cash basis, the cost of those assets is allocatedover their estimated useful lives and reported as depreciation expense. This is theamount by which capital outlay additions ($2,289,157) exceeded depreciation($938,860) in the current period. 1,350,297

The issuance of long-term debt (e.g., bonds, debt certificates, installment contracts) providescurrent financial resources to governmental funds, while the repayment of the principal oflong-term debt uses current financial resources of governmental funds. Neither transaction,however, has any effect on net position. Also, governmental funds report the effect ofpremiums, discounts and similar items when the debt is first issued, whereas these amountsare deferred and amortized in the statement of activities. The net effect of these differences inthe treatment of long-term debt and related items is summarized as follows:

Installment contractRepayment of long-term debt principalAmortization of issuance premiumAmortization of unamortized loss on refunding

$ (1,533,349)2,200,200

29,425(11.866)

Total 684,410

Interest on long-term debt in the statement of activities - modified cash basis differsfrom the amount reported in the governmental funds because interest is recognizedas an expenditure in the funds when it is due, and thus requires the use of currentfinancial resources. In the statement of activities - modified cash basis, however,interest expense on capital appreciation bonds is recognized as the interest accrues,regardless of when it is due. The decrease in interest reported in the statement ofactivities - modified cash basis is the result of the net change in accumulatedaccreted interest. 723.469

Change in net position of governmental activities $ (3,531,620)


7

LAGRANGE SCHOOL DISTRICT 102STATEMENT OF ASSETS AND LIABILITIES - MODIFIED CASH BASIS -

FIDUCIARY FUND - STUDENT ACTIVITIES AGENCY FUNDJUNE 30, 2016

ASSETS

Cash $ 190,902

LIABILITIES

Due to student activity fund organizations $ 190,902


8

NOTES TO BASIC FINANCIAL STATEMENTS

LAGRANGE SCHOOL DISTRICT 102NOTES TO BASIC FINANCIAL STATEMENTS


I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Description of Government-wide Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement ofactivities) report information on all of the nonfiduciary activities of the primary government. All fiduciaryactivities are reported only in the fund financial statements. Governmental activities are generallysupported by taxes, intergovernmental revenues, and other nonexchange transactions.

B. Reporting Entity

LaGrange School District 102 is governed by the Board of Education and provides elementary education,transportation, cafeteria, building maintenance and general administrative services.

These financial statements include the District and its component units, entities for which the District isconsidered to be financially accountable. At June 30, 2016, no entities were considered component units ofthe District. At June 30, 2016, the District was not considered a component unit of any other entity.

C. Basis of Presentation - Government-wide Financial Statements

While separate government-wide and fund financial statements are presented, they are interrelated. Thegovernmental activities financial statements incorporate data from the governmental funds. Separatefinancial statements are provided for governmental funds and fiduciary funds, even though the latter areexcluded from the government-wide financial statements.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financialstatements.

D. Basis of Presentation - Fund Financial Statements

The fund financial statements provide information about the District's funds, including its fiduciary funds.Separate statements for each fund category - governmental and fiduciary - are presented. The emphasis offund financial statements is on major governmental funds. The major individual governmental funds arereported as separate columns in the fund financial statements. All remaining governmental funds areaggregated and reported as nonmajor funds.

The District reports the following major governmental funds:

The General Fund is the District's primary operating fund. It is comprised of four subfunds: theEducational Fund, the Operations and Maintenance Fund, the Tort Fund, and the Working CashFund. The General Fund accounts for all financial resources of the District, except those required tobe accounted for in another fund.

The Debt Services Fund is used to account for the accumulation of resources that are restricted,committed, or assigned for the payment of principal and interest on long-term obligations ofgovernmental funds.

9

LAGRANGE SCHOOL DISTRICT 102NOTES TO BASIC FINANCIAL STATEMENTSYEAR ENDED JUNE 30, 2016

The District has the following nonmajor governmental funds:

Special revenue fund type:This fund type is used to account for the proceeds of specific revenue sources that are restrictedby law or administrative action to expenditure for specific purposes other than debt service orcapital projects. The District's nonmajor special revenue funds are the Transportation Fund andMunicipal Retirement / Social Security Fund.

Capital projects fund type:This fund type accounts for the receipt and disbursement of monies used for the acquisition,construction or improvement of capital facilities. The District's Capital Projects Fund is anonmajor governmental fund.

Additionally, the District reports the following fiduciary fund type:

The Student Activities Agency Fund accounts for assets held by the District as an agent for thestudents and teachers. This fund is custodial in nature and does not involve the measurement ofresults of operations. The assets of the fund are equal to the liabilities.

During the course of operations the District has activity between funds for various purposes. In fundfinancial statements any residual balances outstanding at year end are reported as due from/to other fundsand advances to/from other funds.

Further, certain activity occurs during the year involving transfers of resources between funds. In fundfinancial statements these amounts are reported at gross amounts as transfers in/out.

E. Measurement Focus and Basis of Accounting

Measurement focus is a term used to describe what transactions or events are recorded within the variousfinancial statements. Basis of accounting refers to when and how transactions or events are recorded,regardless of the measurement focus applied.

1. Measurement Focus

In the government-wide statement of net position and statement of activities, governmental activities arepresented using the economic resources measurement focus, within the limitations of the modified cashbasis of accounting. The accounting objectives of this measurement focus are the determination of net(expense) revenue, change in net position, and net financial position. All assets, deferred outflows ofresources, liabilities, and deferred inflows of resources (whether current or noncurrent or financial ornonfinancial) associated with their activities are generally reported within the limitations of the modifiedcash basis of accounting.

10


Governmental funds utilize a current financial resources measurement focus within the limitations of themodified cash basis of accounting. Only current financial assets and liabilities are generally included ontheir balance sheets. Their operating statements present sources and uses of available spendable financialresources during a given period. These funds use fund balance as their measure of available spendablefinancial resources at the end of the period.

The agency fund is custodial in nature and does not involve the measurement of results of operations;therefore, it does not have a measurement focus.

2. Basis of Accounting

The financial statements are presented on the modified cash basis of accounting, which is a basis ofaccounting other than accounting principles generally accepted in the United States of America (GAAP) asestablished by the Governmental Accounting Standards Board. This basis of accounting involvesmodifications to the cash basis of accounting to report in the statements of net position or balance sheetscash transactions or events that provide a benefit or result in an obligation that covers a period greater thanthe period in which the cash transaction or event occurred. Such reported balances include investments,interfund receivables and payables, capital assets and related depreciation, and short-term and long-termliabilities arising from cash transactions or events.

This modified cash basis of accounting differs from GAAP primarily because certain assets and theirrelated revenues (such as accounts receivable and revenue for billed or provided services not yet collectedand other accrued revenue and receivables) and certain liabilities and their related expenses orexpenditures (such as accounts payable and expenses for goods or services received but not yet paid andother accrued expenses and liabilities) are not recorded in these financial statements. In addition, certainother economic assets and liabilities that do not arise from a cash transaction or event are not reported, andthe measurement of reported assets, other than the restricted investments, and liabilities does not involveadjustment to fair value.

If the District utilized the basis of accounting recognized as generally accepted in the United States ofAmerica, the fund financial statements for governmental funds would use the modified accrual basis ofaccounting. The government-wide and fiduciary fund financial statements would be presented on theaccrual basis of accounting.

F. Assets, Liabilities, Deferred OutflowslInflows of Resources, and Net PositionlFund Balance

1. Cash and Investments

Cash and investments of the District are pooled into a common pooled account in order to maximizeinvestment opportunities. Each fund whose monies are deposited into the pooled account has equitytherein, and interest earned on the investment of these monies is allocated based upon relative equity atmonth end. An individual fund's equity in the pooled account is available upon demand and is consideredto be a cash equivalent when preparing these financial statements. Each fund's portion of the pool isdisplayed on its respective balance sheet as "equity in pooled cash and investments." In addition, non-pooled cash equivalents and investments that are separately held are reflected in the respective funds as"cash" and "investments."

11


2. RestrictedInvestments

Restricted investments are comprised of the remaining proceeds from the Series 2012A and 2013A bondsheld in an escrow trust for the purpose of making future debt service payments on the Series 200 I capitalappreciation bonds. As the escrow trust invests in securities other than risk-free securities, as defined inGASB Statement No.7, an "in-substance" defeasance did not occur. As such, the "legally" defeased debtcontinues to be reported in the government-wide financial statements and the remaining proceeds from theSeries 2012A and 2013A bonds are reported as restricted investments in the government-wide and fundfinancial statements. Restricted investments are reported at fair value.

3. CapitalAssets

The District's modified cash basis of accounting reports capital assets (land, buildings, and equipment)resulting from cash transactions or certain events and reports depreciation, when appropriate. Theaccounting treatment over capital assets depends on whether they are reported in the government-wide orfund financial statements.

Capital assets reported in the government-wide financial statements are defined by the District as assetswith an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Asthe District constructs or acquires additional capital assets each period, they are capitalized and reported athistorical cost. The reported value excludes normal maintenance and repairs which are essentially amountsspent in relation to capital assets that do not increase the capacity or efficiency of the item or increase itsestimated useful life. Donated capital assets are recorded at their estimated fair value at the date ofdonation.

Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement ofactivities, with accumulated depreciation reflected in the statement of net position. Depreciation isprovided over the assets' estimated useful lives using the straight-line method of depreciation. The rangeof estimated useful lives by type of asset is as follows:

Assets Years

Land improvementsBuildingsEquipment

2090

5-20

In the fund financial statements, capital assets acquired for use in governmental fund operations areaccounted for as capital outlay expenditures of the governmental fund upon acquisition.

12


4. Deferred Outflows/Inflows of Resources

In addition to assets, the financial statements will sometimes report a separate section for deferredoutflows of resources. This separate financial statement element, deferred outflows of resources,represents a consumption of net position that applies to a future period and so will not be recognized as anoutflow of resources (expense/expenditure) until then. The District has only one type of item that qualifiesfor reporting in this category. Accordingly, the item, unamortized loss on refunding, is reported in thegovernment-wide statement of net position - modified cash basis. An unamortized loss on refunding resultsfrom the difference in the carrying value of refunded debt and its reacquisition price. This amount isdeferred and amortized over the shorter of the life of the refunded or refunding debt.

In addition to liabilities, the financial statements will sometimes report a separate section for deferredinflows of resources. This separate financial statement element, deferred inflows of resources, representsan acquisition of net position that applies to a future period and so will not be recognized as an inflow ofresources (revenues) until that time. The District currently does not have any items that qualify forreporting in this category.

5. Long-term Obligations

In the government-wide financial statements, long-term debt and other long-term obligations are reportedas liabilities in the statement of net position. Bond premiums and discounts, as well as gains (losses) onrefundings, are deferred and amortized over the life of the bonds. Bonds payable are reported net of theapplicable bond premium or discount. Gains (losses) on refundings are reported as deferred inflows(outflows) of resources. Bond issuance costs, whether or not withheld from the actual debt proceedsreceived, are reported as expenses.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as wellas bond issuance costs, during the current period. The face amount of debt issued is reported as otherfinancing sources. Premiums received on debt issuances are reported as other financing sources whilediscounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheldfrom the actual debt proceeds received, are reported as debt service expenditures.

6. Net Position Flow Assumption

Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted bondor grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted netposition and unrestricted net position in the government-wide financial statements, a flow assumption mustbe made about the order in which the resources are considered to be applied.

It is the District's policy to consider restricted net position to have been depleted before unrestricted netposition is applied.

13


7. Fund Balance Flow Assumptions

Sometimes the District will fund outlays for a particular purpose from both restricted and unrestrictedresources (the total of committed, assigned, and unassigned fund balance). In order to calculate theamounts to report as restricted, committed, assigned, and unassigned fund balance in the governmentalfund financial statements a flow assumption must be made about the order in which the resources areconsidered to be applied. It is the District's policy to consider restricted fund balance to have been depletedbefore using any of the components of unrestricted fund balance. Further, when the components ofunrestricted fund balance can be used for the same purpose, committed fund balance is depleted first,followed by assigned fund balance. Unassigned fund balance is applied last.

8. Fund Balance Policies

Fund balance of governmental funds is reported in various categories based on the nature of anylimitations requiring the use of resources for specific purposes. The District itself can establish limitationson the use of resources through either a commitment (committed fund balance) or an assignment (assignedfund balance).

The committed fund balance classification includes amounts that can be used only for the specificpurposes determined by a formal action of the District's highest level of decision-making authority. TheBoard of Education is the highest level of decision-making authority for the District that can, by adoptionof a resolution prior to the end of the fiscal year, commit fund balance. Once adopted, the limitationimposed by the resolution remains in place until a similar action is taken (the adoption of anotherresolution) to remove or revise the limitation.

Amounts in the assigned fund balance classification are intended to be used by the District for specificpurposes but do not meet the criteria to be classified as committed. The Board of Education may, byresolution, authorize an individual to assign fund balance. The Board of Education has not adopted such aresolution. The Board of Education may also assign fund balance as it does when appropriating fundbalance to cover a gap between estimated revenue and appropriations in the subsequent year's appropriatedbudget. Unlike commitments, assignments generally only exist temporarily. In other words, an additionalaction does not normally have to be taken for the removal of an assignment. Conversely, as discussedabove, an additional action is essential to either remove or revise a commitment.

G. Revenues

1. Program Revenues

Amounts reported as program revenues include 1) charges to individuals or entities that purchase, use, ordirectly benefit from goods, services, or privileges provided by a given function or segment and 2) grantsand contributions that are restricted to meeting the operational or capital requirements of a particularfunction or segment. All taxes, including those dedicated for specific purposes, and other internallydedicated resources are reported as general revenues rather than as program revenues.

14


2. Property Taxes

Property taxes are levied as of January 1 on property values assessed on the same date. The Board ofEducation approved the 2015 tax levy on November 12,2015. The tax levy is divided into two billings: thefirst billing (mailed on or about February 1) is an estimate of the current year's levy based on the prioryear's taxes; the second billing (mailed on or about August 1) reflects adjustments to the current year'sactual levy. The billings are considered past due 30 days after the respective billing date at which time theapplicable property is subject to lien and penalties and interest are assessed. The District receivessignificant distributions of tax receipts approximately one month after the due dates.

H. Estimates

Management uses estimates and assumptions in preparing financial statements. Those estimates andassumptions affect the reported amounts of assets, liabilities, and deferred outflows/inflows of resources;the disclosure of contingent assets and liabilities; and the reported revenues and expenses/expenditures.Actual results could differ from those estimates.

I. Comparative Data

Comparative data for the prior year have been presented in the individual fund financial statements andschedules in order to provide an understanding of the changes in the financial position and operations ofthese funds.

II. STEW ARDSHIP, COMPLIANCE AND ACCOUNTABILITY

A. Budgetary Information

The budget is prepared on the modified cash basis of accounting for all governmental funds, which is anacceptable method as prescribed by the Illinois State Board of Education, and is the same basis that is usedfor financial reporting. The budget appropriations lapse at the end of each fiscal year. The District does notutilize an encumbrance system. The District follows these procedures in establishing the budgetary datareflected in the financial statements.

1. The administration submits to the Board of Education a proposed operating budget for the fiscalyear commencing July 1. The operating budget includes proposed expenditures and the means offinancing them.

2. Public hearings are conducted and the proposed budget IS available for inspection to obtaintaxpayer comments.

3. Prior to September 30, the budget is legally adopted through passage of a resolution. Prior to thelast Tuesday in December, a tax levy resolution is filed with the County Clerk to obtain taxrevenues.

15

LAGRANGE SCHOOL DISTRICT 102NOTES TO BASIC FINANCIAL STATEMENTSYEAR ENDED JUNE 30,2016

4. The Superintendent is authorized to transfer up to 10% of the total budget between departmentswithin any fund; however, any revisions that alter the total expenditures of any fund must beapproved by the Board of Education. The level of control (level at which expenditures may notexceed budget/appropriations) is the fund.

5. Formal budgetary integration is employed as a management control device during the year.

6. The Board of Education may amend the budget (in other ways) by the same procedures required ofits original adoption. The budget was amended during the year ended June 30, 2016.

B. Excess of Expenditures over Budget

The following funds had an excess of actual expenditures over budgeted amounts for the year ended June30,2016:

Budget Actual Variance

Major governmental funds:General subfunds:

Educational Fund $Operations and Maintenance FundTort Fund

Debt Services FundNonmajor governmental funds:

Transportation FundMunicipal Retirement / Social Security FundCapital Projects Fund

1,297,400983,653

2,500,000

$ 43,190,382 $ 4,676,3372,997,397 66,958344,755 4,596

4,767,766 1,954,966

1,300,243 2,8431,042,226 58,5732,658,224 158,224

38,514,0452,930,439340,159

2,812,800

The overexpenditure in the Educational Fund was funded by greater than anticipated revenue and transfersin. The overexpenditure in the Operations and Maintenance Fund was funded by available fund balance.The overexpenditure in the Tort Fund was funded by greater than anticipated revenue. Theoverexpenditures in the Debt Services Fund and the Municipal Retirement / Social Security Fund werefunded by greater than anticipated revenue and available fund balance. The overexpenditures in theTransportation Fund and the Capital Projects Fund were funded by transfers in.

16


III. DETAILED NOTES ON ALL ACTIVITIES AND FUNDS

A. Deposits and Investments

Under the Custody of the Lyons Township School Treasurer

Under the Illinois Compiled Statutes, the Lyons Township School Treasurer is the lawful custodian of allschool funds. The Treasurer is appointed by the Township School Trustees, an independently elected body,to serve the school districts in the township. The Treasurer is the direct recipient of property taxes,corporate personal property replacement taxes, and most state and federal aid and disburses funds uponlawful order of each school district. The Treasurer invests excess funds at his discretion, subject to thelegal restrictions discussed below. For these purposes, the Treasurer is permitted to combine monies ofmore than one fund of a single district and to combine monies of more than one district in the township.Monies combined under these circumstances, as well as investment earnings, are accounted for separatelyfor each fund and district.

Cash and investments, other than student activity and convenience accounts, petty cash and imprest funds,are part of a common pool for all school districts within the township. The Treasurer maintains recordsthat segregate the cash and investment balance by district. Income from investments is distributed monthlybased upon each district's percentage participation in the pool.

All cash for all funds, including cash applicable to the Debt Services Fund and the Illinois MunicipalRetirement / Social Security Fund, is not deemed available for purposes other than those for which thesebalances are intended.

The Treasurer's investment policies are established by the Lyons Township School Trustees as prescribedby the Illinois School Code and the Illinois Compiled Statutes. The Treasurer is authorized to invest inobligations of the U.S. Treasury, backed by the full faith and credit of the U.S. Government, certificates ofdeposit issued by commercial banks and savings and loan associations, and commercial paper rated withinthe three highest classifications by at least two standard rating services (subject to certain limitations).

The Treasurer's office operates as a non-rated, external investment pool. The reported amount of theDistrict's investment in the Treasurer's pool is equal to the District's proportionate share of the cost of theinvestments held by the Treasurer's office.

The weighted average maturity of marketable pooled investments held by the Treasurer was 8.46 years atJune 30, 2016. The Treasurer also holds money market type investments, certificates of deposits and otherdeposits with financial institutions.

Because all cash and investments are pooled by a separate legal government agency (the Treasurer),categorization by risk category is not determinable. Further information about whether investments areinsured, collateralized or uncollateralized is available from the Treasurer's financial statements.

As of June 30, 2016, the District's proportionate share of the Treasurer's investment pool was $5,656,794.

17


In the Custody of the District - Deposits

Custodial credit risk for deposits is the risk that, in the event of a bank failure, the District's deposits mightnot be recovered. The District does not have a deposit policy for custodial credit risk. As of June 30, 2016,the District's bank balances were covered by federal depository insurance.

In the Custody of the District - Investments

The District had the following investments as of June 30, 2016:

Average WeightedCredit AverageQuality/ Years to

Type of Investment Fair Value Ratings (1) Maturity (2)

Restricted investments in escrow trust (3):Municipal bonds $ 8,282,273 Aa2-B2 1.28State and local government series

demand deposit 1.246.997 N/A N/A

Total restricted investments $ 9.529.270

(1) Ratings are provided where applicable to indicate associated Credit Risk. N/A indicates notapplicable.

(2) Interest Rate Risk is estimated using weighted average years to maturity.(3) Restricted investments are held in trust for the purpose of making future debt service payments on the

Series 2001 capital appreciation bonds.

Investment Policies

The District's investments are subject to the following risks:

Concentration of credit risk is the risk of loss attributed to the magnitude of the District's investmentin a single issuer. The District does not have an investment policy for this risk.

Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill itsobligations. State statutes limit the investments in specific investments based on their rating by oneof the nationally recognized statistical rating organizations. The District's investment policyincorporates the restrictions on investments as outlined in the Illinois Compiled Statutes Section235/2.5(a)(1 ).

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of aninvestment. The District's investment policy does not limit the investment maturities as a means ofmanaging its exposure to fair value losses from increasing interest rates.

18


Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty toa transaction, the District will not be able to recover the value of investment or collateral securitiesthat are in the possession of an outside party. The District's investment policy does not addresscustodial credit risk for investments.

B. Fair Value Measurements

The District's restricted investments are reported at fair value. The District categorizes its fair valuemeasurements within the fair value hierarchy established by generally accepted accounting principles. TheDistrict had the following recurring fair value measurements as of June 30, 2016:

Fair Value Measurements Usinz

Fair Value

QuotedPrices inActive

Markets forIdenticalAssets

(Levell)

SignificantOther

ObservableInputs

(Level 2)

SignificantUnobservable

Inputs(Level 3)

Restricted investments in escrowtrust:Municipal bondsState and local governmentseries demand deposit

$ 8,282,273 $ $ 8,282,273 $

1.246,997 1,246,997

Total $ 9,529.270 =$==== $ 9,529.270 =$====

The restricted investments are valued based on market prices reported by the escrow agent.

19


C. Capital Assets

Capital asset activity for the year ended June 30, 2016 was as follows:

Beginning Decreases / EndingBalance Increases Transfers Balance

Governmental activities:Capital assets, not being depreciated:

Land $ 767,294 $ $ $ 767,294Construction in progress 2,053,934 2,090,120 (4,144,054)

Total capital assets, not beingdepreciated 2,821,228 2,090,120 (4,144,054) 767,294

Capital assets, being depreciated:Land improvements 1,690,380 1,690,380Buildings and improvements 53,893,864 199,037 4,144,054 58,236,955Equipment 1,681,814 1.681.814

Total capital assets, beingdepreciated 57,266,058 199,037 ll,144,054 61,609,149

Less accumulated depreciation for:Land improvements (I ,690,3 80) (I ,690,3 80)Buildings and improvements (I 1,029,996) (896,861 ) (I 1,926,857)Equipment (],404,52l) (41,999) (1,446,520)

Total accumulated depreciation (] 4, 124,897) (938,860) (]5,063,757)

Total capital assets, beingdepreciated, net 43,141.161 (739,823) 4,144,054 46,545.392

Governmental activities capitalassets, net $ 45,962,389 $ 1,350,297 $ $ 47,312,686

Depreciation expense was charged to functions/programs as follows:

Governmental activities:InstructionalPupil supportOther supportAdministration

$ 756,62712,956

164,9584,319

Total depreciation expense -governmental activities 938,860

20


D. Long-term Debt

Schedules of debt outstanding at June 30,2016 are as follows:

General Obligation Capital Appreciation School Bonds, Series 2001Issued June 28, 2001

District Restricted InvestmentFiscal Year Due Principal Interest Principal Interest Total

2017 $ 378,831 $ 496,169 $ 800,958 $ 1,049,042 $ 2,725,0002018 391,626 563,374 734,043 1,055,957 2,745,0002019 347,637 547,363 825,393 1,299,607 3,020,0002020 332,949 572,051 785,466 1,349,534 3,040,0002021 317,099 592,901 750,931 1,404,069 3,065,000

Total $ 1.768.142 $ 2,771.858 $ 3,896,791 $ 6,158.209 $ 14,595,000

Denomination $5,000Bonds due each year December 1stInterest dates December 1st and June 1stInterest rate VariablePaying agent The Bank of New York Mellon Trust Company

Chicago, Illinois

Taxable General Obligation Limited Tax School Bonds (Build America Bonds), Series 2010AIssued February 26,2010

Fiscal Year Due Principal Interest

2017 $ $ 190,8582018 190,8582019 190,8582020 190,8582021 190,8582022 190,8582023 45,000 189,6782024 965,000 172,0722025 1,020,000 137,7632026 1,075,000 100,2082027 1,135,000 59,1852028 970,000 18,918

Total $ 5,210,000 $ 1,822,972

21

Total

$ 190,858190,858190,858190,858190,858190,858234,678

1,137,0721,157,7631,175,2081,194,185988.918

$ 7,032,972


DenominationBonds due each yearInterest datesInterest ratePaying agent

$5,000December 15thDecember 15th and June 15th5.45% - 6%Amalgamated Bank of Chicago, Illinois

General Obligation Limited Tax Refunding School Bonds, Series 2010BIssued February 26,2010


2017 $ 635,000 $ 180,5372018 680,000 160,8122019 715,000 l38,1002020 760,000 112,2882021 805,000 83,8942022 855,000 51,7002023 865,000 17,300

Total $ 5,315,000 $ 744,631

Total

$ 815,537840,812853,100872,288888,894906,700882,300

$ 6,059,631


$5,000December 15thDecember 15th and June 15th2.5% - 4%Amalgamated Bank of Chicago, Illinois

General Obligation School Debt Certificates, Series 2011Issued November 10,2011


2017 $ 195,000 $ 39,9382018 200,000 35,3062019 205,000 30,0562020 210,000 24,1622021 215,000 17,6002022 225,000 9,000

Total $ 1,250,000 $ 156,062


Total

$ 234,938235,306235,056234,162232,600234,000

$ 1,406,062

$5,000January 15thJanuary 15th and July 15th1% - 5%Amalgamated Bank of Chicago, Illinois

22


General Obligation Refunding School Bonds, Series 20J2AIssued December 20,2012

Fiscal Year Due Principal Interest Total

2017 $ $ 211,013 $ 211,0132018 211,013 211,0132019 211,013 211,0132020 211,013 211,0132021 211,013 211,0132022 650,000 204,513 854,5132023 660,000 191,413 851,4132024 635,000 176,875 811,8752025 630,000 160,275 790,2752026 635,000 142,881 777,8812027 640,000 125,350 765,3502028 635,000 107,025 742,0252029 640,000 87,900 727,9002030 645,000 68,625 713,6252031 650,000 49,200 699,2002032 655,000 29,625 684,6252033 660.000 9.900 669.900

Total $ 7.735.000 $ 2,408.647 $ 10,143.647

Denomination $5,000Bonds due each year December 1stInterest dates December 1st and June 1stInterest rate 2%-3%Paying agent Amalgamated Bank of Chicago, Illinois

23


General Obligation Limited School Bonds, Series 2012BIssued December 20, 2012


2017 $ $ 40,050 $ 40,0502018 40,050 40,0502019 40,050 40,0502020 40,050 40,0502021 40,050 40,0502022 40,050 40,0502023 40,050 40,0502024 40,050 40,0502025 40,050 40,0502026 40,050 40,0502027 40,050 40,0502028 230,000 36,600 266,6002029 LI05,000 16,575 1.121.575

Total $ 1,335,000 $ 493,725 $ 1,828,725

Denomination $5,000Bonds due each year December 1stInterest dates December 1st and June 1stInterest rate 3%Paying agent Amalgamated Bank of Chicago, IIIinois

24


General Obligation Refunding School Bonds, Series 2013AIssued March 28, 2013


2017 $ $ 194,041 $ 194,0412018 194,041 194,0412019 194,041 194,0412020 194,041 194,0412021 194,041 194,0412022 270,000 187,291 457,2912023 295,000 173,166 468,1662024 355,000 160,466 515,4662025 395,000 149,216 544,2162026 430,000 136,841 566,8412027 465,000 123,416 588,4162028 505,000 108,866 613,8662029 545,000 93,116 638,1162030 585,000 75,800 660,8002031 625,000 56,348 681,3482032 670,000 34,980 704,9802033 725,000 11,963 736,963

Total $ 5,865,000 $ 2,281,674 $ 8,146,674

Denomination $5,000Bonds due each year December 1stInterest dates December 1st and June 1stInterest rate 3%-5%Paying agent Amalgamated Bank of Chicago, Illinois

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General Obligation Limited School Bonds, Series 2013BIssued March 28, 2013


2017 $ $ 7,963 $ 7,9632018 7,963 7,9632019 7,963 7,9632020 7,963 7,9632021 7,963 7,9632022 7,963 7,9632023 7,963 7,9632024 7,963 7,9632025 7,963 7,9632026 7,963 7,9632027 7,963 7,9632028 7,963 7,9632029 160,000 5,363 165,3632030 85.000 1.381 86.381

Total $ 245.000 $ 102.300 $ 347.300

Denomination $5,000Bonds due each year December 1stInterest dates December 1st and June 1stInterest rate 3%Paying agent Amalgamated Bank of Chicago, Illinois

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General Obligation Limited School Bonds, Series 2015AIssued May 15, 2015

Fiscal Year Due Principal interest Total

2017 $ $ 117,000 $ 117,0002018 117,000 117,0002019 117,000 117,0002020 117,000 117,0002021 117,000 117,0002022 117,000 117,0002023 117,000 117,0002024 117,000 117,0002025 117,000 117,0002026 117,000 117,0002027 117,000 117,0002028 117,000 117,0002029 117,000 117,0002030 20,000 116,600 136,6002031 535,000 105,500 640,5002032 560,000 83,600 643,6002033 580,000 60,800 640,8002034 605,000 37,100 642,1002035 625,000 12,500 637,500

Total $ 2,925,000 $ 1,937,100 $ 4,862,100

Denomination $5,000Bonds due each year January 1stInterest dates January 1st and July 1stInterest rate 3.18 - 3.44%Paying agent Amalgamated Bank of Chicago, Illinois

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Taxable General Obligation Limited Refunding School Bonds, Series 2015BIssued May 15, 2015


2017 $ $ 46,517 $ 46,5172018 46,517 46,5172019 46,517 46,5172020 46,517 46,5172021 46,517 46,5172022 46,517 46,5172023 46,517 46,5172024 46,517 46,5172025 46,517 46,5172026 46,517 46,5172027 46,517 46,5172028 46,517 46,5172029 46,517 46,5172030 1,190,000 23,259 1,213,259

Total $ 1,190,000 $ 627,980 $ 1,817,980


$5,000January 1stJanuary 1st and July 1st3.909%Amalgamated Bank of Chicago, Illinois

Installment Contract

During the year ended June 30, 2016, the District entered into an installment contract for $1,533,349 tofinance the purchase of capital assets. The outstanding balance is due in annual installments of $174,463,including interest at 2.79%, with the final installment due in July, 2024. The agreement is collateralizedby certain equipment.


2017 $ 135,763 $ 38,7002018 139,600 34,8632019 143,545 30,9182020 147,601 26,8622021 151,772 22,6912022 156,061 18,4022023 160,471 13,9922024 165,006 9,4572025 169,785 4,795

Total $ 1,369,604 $ 200,680

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Total

$ 174,463174,463174,463174,463174,463174,463174,463174,463174,580

$ 1,570,284


Total annual debt service requirements to maturity for all debt outstanding are as follows:


2017 $ 2,145,552 $ 2,611,828 $ 4,757,3802018 2,145,269 2,657,754 4,803,0232019 2,236,575 2,853,487 5,090,0622020 2,236,016 2,892,339 5,128,3552021 2,239,802 2,928,597 5,168,3992022 2,156,061 873,294 3,029,3552023 2,025,471 797,079 2,822,5502024 2,120,006 730,400 2,850,4062025 2,214,785 663,579 2,878,3642026 2,140,000 591,460 2,731,4602027 2,240,000 519,481 2,759,4812028 2,340,000 442,889 2,782,8892029 2,450,000 366,471 2,816,4712030 2,525,000 285,665 2,810,6652031 1,810,000 211,048 2,021,0482032 1,885,000 148,205 2,033,2052033 1,965,000 82,663 2,047,6632034 605,000 37,100 642,1002035 625.000 12.500 637,500

Total $ 38.104.537 $ 19,705,'839 $ 57,810,376

Debt Service

Debt service of the Series 2001 bonds will be made with the Debt Services Fund's restricted investments of$9,529,270. Debt service of the other bonds and debt certificates will be made with available fund balancein the Debt Services Fund.

Prior Year Defeasance of Debt

In prior years, the District defeased various bond issues by placing proceeds of new bonds in irrevocabletrust funds to provide for future debt service payments on the old bonds. Accordingly, the trust accountassets and the liability for the defeased bonds are not included in the District's financial statements. AtJune 30, 2016, defeased bonds 0[$4,461,633 remain outstanding.

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Long-term liability activity for the year ended June 30, 2016 was as follows:

Beginning Ending Due WithinBalance Additions Reductions Balance One Year

Bonds and debt certificates $ 38,771,388 $ $ 2,036,455 $ 36,734,933 $ 2,009,789Installment contract 1,533,349 163,745 1,369,604 135,763Issuance premium 419,913 29,425 390,488Accreted interest on capital appreciation

bonds 7.792.627 745.076 1.468.545 7.069.158 1,545,211

Total s 46.983.928 $ 2.278.425 $ 3,698.170 $ 45,564,183 $ 3,690.763

Legal Debt Margin

The District's legal debt margin as ofJune 30, 2016 is calculated as follows:

Assessed valuation - 2015 tax year $ 743,339,03 L

Statutory debt limitation (6.9% of assessed valuation) $ 51,290,393

Debt:Bonds and debt certificates 36,734,933Installment contract 1,369,604Accreted interest on capital appreciation bonds 7,069,158

Total debt 45,173,695

Legal debt margin $ 6,116,698

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E. Fund Balances

As of June 30, 2016, fund balances were comprised of the following:

TotalNonmajor Total


Restricted:Operations and maintenance $ 1,667,323 $ $ $ 1,667,323Tort 629,625 629,625Debt service 10,058,629 10,058,629Transportation 353,891 353,891Municipal retirement 41.946 41,946

Total restricted 2.296.948 10.058.629 395,837 12,751,414

Assigned:Debt service 84,826 84,826Transportation 6,985 6,985Municipal retirement / Social Security 6,403 6,403Capital projects 109,511 109.511

Total assigned 84,826 122,899 207.725

Unassigned 1.775,947 1.775,947

Total fund balances $ 4.072,895 $ 10,143,455 $ 518,736 $ 14.735.086

IV. OTHER INFORMATION

A. Risk Management

The District is exposed to various risks of loss related to torts; thefts of, damage to and destruction ofassets; errors and omissions; natural disasters; and workers' compensation. The District is a member of aninsurance cooperative, with over 100 other school districts, that provides coverage in the areas notedabove. The Collective Liability Insurance Cooperative is a working pool that pays claims up to apredetermined limit and has excess insurance to pay claims when they exceed the limit on both theaggregate and individual basis. The Cooperative not only provides insurance protection, but it alsoprovides an active loss prevention program to help reduce exposure to the districts. It is also the policy ofthe District to purchase a portion of the medical insurance needed to cover its employees. The amount ofcoverage has not decreased nor have the amount of settlements exceeded coverage in the current year orthe past three years.

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B. Employee Retirement Systems and Plans

1. Teachers' Retirement System of the State of Illinois

Plan description. The District (employer) participates in the Teachers' Retirement System of the State ofIllinois (TRS). TRS is a cost-sharing multiple-employer defined benefit pension plan that was created bythe Illinois legislature for the benefit of Illinois public school teachers employed outside the city ofChicago. TRS members include all active nonannuitants who are employed by a TRS-covered employer toprovide services for which teacher licensure is required. The Illinois Pension Code outlines the benefitprovisions ofTRS, and amendments to the plan can be made only by legislative action with the Governor'sapproval. The TRS Board of Trustees is responsible for the System's administration.

TRS issues a publicly available financial report that can be obtained at http://I'rs.illinois.gov/pubs/cafr; bywriting to TRS at 2815 W. Washington, PO Box 19253, Springfield, IL 62794; or by calling (888) 877-0890, option 2.

Benefits provided. TRS provides retirement, disability, and death benefits. Tier I members have TRS orreciprocal system service prior to January 1, 2011. Tier I members qualify for retirement benefits at age 62with five years of service, at age 60 with 10 years, or age 55 with 20 years. The benefit is determined bythe average of the four highest years of creditable earnings within the last 10 years of creditable serviceand the percentage of average salary to which the member is entitled. Most members retire under a formulathat provides 2.2 percent of final average salary up to a maximum of 75 percent with 34 years of service.Disability and death benefits are also provided.

Tier II members qualify for retirement benefits at age 67 with 10 years of service, or a discounted annuitycan be paid at age 62 with 10 years of service. Creditable earnings for retirement purposes are capped andthe final average salary is based on the highest consecutive eight years of creditable service rather than thelast four. Disability provisions for Tier II are identical to those of Tier I. Death benefits are payable under aformula that is different from Tier I.

Essentially all Tier I retirees receive an annual three percent increase in the current retirement benefitbeginning January 1 following the attainment of age 61 or on January 1 following the member's firstanniversary in retirement, whichever is later. Tier II annual increases will be the lesser of three percent ofthe original benefit or one-half of the rate of inflation beginning January 1 following attainment of age 67or on January 1 following the member's first anniversary in retirement, whichever is later.

Contributions. The state of Illinois maintains the primary responsibility for funding TRS. The IllinoisPension Code, as amended by Public Act 88-0593 and subsequent acts, provides that for years 2010through 2045, the minimum contribution to the System for each fiscal year shall be an amount determinedto be sufficient to bring the total assets of the System up to 90 percent of the total actuarial liabilities of theSystem by the end of fiscal year 2045.

Contributions from active members and TRS contributing employers are also required by the IllinoisPension Code. The contribution rates are specified in the pension code. The active member contributionrate for the year ended June 30, 2016 was 9.4 percent of creditable earnings. The member contribution,which may be paid on behalf of employees by the employer, is submitted to TRS by the employer.

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On behalf contributions to TRS. The state of Illinois makes employer pension contributions on behalf ofthe employer. For the year ended June 30, 2016, state of Illinois contributions recognized by the employerwere based on the state's proportionate share of the collective net pension liability associated with theemployer, and the employer recognized revenue and expenditures of $11 ,608,645 in pension contributionsfrom the state oflllinois.

2.2 formula contributions. Employers contribute 0.58 percent of total creditable earnings for the 2.2formula change. The contribution rate is specified by statute. Contributions for the year ended June 30,2016 were $116,169.

Federal and special trust fund contributions. When TRS members are paid from federal and special trustfunds administered by the employer, there is a statutory requirement for the employer to pay an employerpension contribution from those funds. Under a policy adopted by the TRS Board of Trustees that has beenin effect since the fiscal year ended June 30, 2006, employer contributions for employees paid from federaland special trust funds will be the same as the state contribution rate to TRS. Public Act 98-0674 nowrequires the two rates to be the same.

For the year ended June 30, 2016, the employer pension contribution was 36.06 percent of salaries paidfrom federal and special trust funds. For the year ended June 30, 2016, salaries totaling $59,590 were paidfrom federal and special trust funds that required employer contributions of $21 ,488.

Employer retirement cost contributions. The employer is required to make a one-time contribution to TRSfor members retiring under the Early Retirement Option (ERO). The payments vary depending on themember's age and salary. The maximum employer ERO contribution under the current program is 146.5percent and applies when the member is age 55 at retirement. For the year ended June 30, 2016, theemployer paid $0 to TRS for employer ERO contributions.

The employer is also required to make a one-time contribution to TRS for members granted salaryincreases over six percent if those salaries are used to calculate a retiree's final average salary. A one-timecontribution is also required for members granted sick leave days in excess of the normal annual allotmentif those days are used as TRS service credit. For the year ended June 30, 2016, the employer paid $1,948 toTRS for employer contributions due on salary increases in excess of six percent and $0 for sick leave daysgranted in excess ofthe normal annual allotment.

2. Illinois Municipal Retirement Fund

IMRF plan description. The District's defined benefit pension plan for employees that are not in positionscovered by the Teachers' Retirement System of the State of Illinois provides retirement and disabilitybenefits, post-retirement increases, and death benefits to plan members and beneficiaries. The District'splan is managed by the Illinois Municipal Retirement Fund (IMRF), the administrator of a multi-employerpublic pension fund. A summary oflMRF's pension benefits is provided in the "Benefits Provided" sectionof this document. Details of all benefits are available from IMRF. Benefit provisions are established bystatute and may only be changed the General Assembly of the State of Illinois. IMRF issues a publiclyavailable Comprehensive Annual Financial Report that includes financial statements, detailed information

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LAGRANGE SCHOOL DISTRICT 102 ANNUAL FINANCIAL REPORT … Financial... · 2019. 12. 5. · LAGRANGE SCHOOL DISTRICT 102 ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2016 CONTENTS Educational