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MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
TABLE OF CONTENTSJUNE 30, 2016
FINANCIAL SECTIONIndependent Auditor's Report 2Management's Discussion and Analysis 5Basic Financial Statements
Government-Wide Financial StatementsStatement of Net Position 14Statement of Activities 15
Fund Financial StatementsGovernmental Funds - Balance Sheet 16Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 17Governmental Funds - Statement of Revenues, Expenditures, and Changes in Fund Balances 19Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, andChanges in Fund Balances to the Statement of Activities 20
Proprietary Funds - Statement of Net Position 22Proprietary Funds - Statement of Revenues, Expenses, and Changes in Fund Net Position 23Proprietary Funds - Statement of Cash Flows 24Fiduciary Funds - Statement of Net Position 25Fiduciary Funds - Statement of Changes in Net Position 26
Notes to Financial Statements 27
REQUIRED SUPPLEMENTARY INFORMATIONGeneral Fund - Budgetary Comparison Schedule 74Schedule of Other Postemployment Benefits (OPEB) Funding Progress 75Schedule of District's Proportionate Share of the Net Pension Liability 76Schedule of District Contributions 77Note to Required Supplementary Information 78
SUPPLEMENTARY INFORMATIONSchedule of Expenditures of Federal Awards 80Local Education Agency Organization Structure 81Schedule of Average Daily Attendance 82Schedule of Instructional Time 83Reconciliation of Annual Financial and Budget Report With Audited Financial Statements 84Schedule of Financial Trends and Analysis 85Combining Statements - Non-Major Governmental Funds
Combining Balance Sheet 86Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 87
Note to Supplementary Information 88
INDEPENDENT AUDITOR'S REPORTSReport on Internal Control Over Financial Reporting and on Compliance and Other MattersBased on an Audit of Financial Statements Performed in Accordance with Government AuditingStandards 91
Report on Compliance for Each Major Program and Report on Internal Control Over ComplianceRequired by the Uniform Guidance 93
Report on State Compliance 95
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
TABLE OF CONTENTSJUNE 30, 2016
SCHEDULE OF FINDINGS AND QUESTIONED COSTSSummary of Auditor's Results 99Financial Statement Findings 100Federal Awards Findings and Questioned Costs 101State Awards Findings and Questioned Costs 102Summary Schedule of Prior Audit Findings 103Management Letter 104
2
INDEPENDENT AUDITOR'S REPORT
Governing BoardManhattan Beach Unified School DistrictManhattan Beach, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-typeactivities, each major fund, and the aggregate remaining fund information of the Manhattan Beach Unified SchoolDistrict (the District) as of and for the year ended June 30, 2016, and the related notes to the financial statements,which collectively comprise the District's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordancewith accounting principles generally accepted in the United States of America; this includes the design,implementation, and maintenance of internal control relevant to the preparation and fair presentation of financialstatements that are free from material 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 conducted our auditin accordance with auditing standards generally accepted in the United States of America and the standardsapplicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and the 2015-2016 Guide for Annual Audits of K-12 Local Education Agencies and StateCompliance Reporting, issued by the California Education Audit Appeals Panel as regulations. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare 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 assessment of therisks of material misstatement of the financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the District's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we expressno such opinion. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of significant accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinions.
10681 Foothill Blvd., Suite 300 Rancho Cucamonga, CA 91730 Tel: 909.466.4410 www.vtdcpa.com Fax: 909.466.4431
Vavrinek, Trine, Day & Co., LLPCertified Public Accountants
VALUE THE D IFFERENCE
3
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respectivefinancial position of the governmental activities, business type activities, each major fund, and the aggregateremaining fund information of the Manhattan Beach Unified School District, as of June 30, 2016, and therespective changes in financial position and, where applicable, cash flows thereof for the year then ended inaccordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter – Correction of an Error
As discussed in Note 16 to the financial statements, in 2016, the District restated its beginning balance for netpension liability to more accurately reflect the implementation of GASB Statement No. 68, Accounting andFinancial Reporting for Pensions for its enterprise fund. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management'sdiscussion and analysis on pages 5 through 13, budgetary comparison schedule on page 74, schedule of otherpostemployment benefits funding progress on page 75, schedule of the district's proportionate share of net pensionliability on page 76, and the schedule of district contributions on page 77, be presented to supplement the basicfinancial statements. Such information, although not a part of the basic financial statements, is required by theGovernmental Accounting Standards Board who considers it to be an essential part of financial reporting forplacing 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 auditingstandards generally accepted in the United States of America, which consisted of inquiries of management aboutthe methods of preparing the information and comparing the information for consistency with management'sresponses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of thebasic financial statements. We do not express an opinion or provide any assurance on the information because thelimited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the Manhattan Beach Unified School District's basic financial statements. The accompanyingsupplementary information such as the combining and individual nonmajor fund financial statements andSchedule of Expenditures of Federal Awards, as required by Title 2 U.S. Code of Federal Regulations (CFR)Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awardsand the other supplementary information as listed on the table of contents are presented for purposes of additionalanalysis and are not a required part of the basic financial statements.
The accompanying supplementary 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. Suchinformation has been subjected to the auditing procedures applied in the audit of the basic financial statementsand certain additional procedures, including comparing and reconciling such information directly to theunderlying accounting and other records used to prepare the basic financial statements or to the basic financialstatements themselves, and other additional procedures in accordance with auditing standards generally acceptedin the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards and otheraccompanying supplementary information is fairly stated, in all material respects, in relation to the basic financialstatements as a whole.
4
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December 15, 2016, onour consideration of the Manhattan Beach Unified School District's internal control over financial reporting andon our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements andother matters. The purpose of that report is to describe the scope of our testing of internal control over financialreporting and compliance and the results of that testing, and not to provide an opinion on internal control overfinancial reporting or on compliance. That report is an integral part of an audit performed in accordance withGovernment Auditing Standards in considering Manhattan Beach Unified School District's internal control overfinancial reporting and compliance.
Rancho Cucamonga, CaliforniaDecember 15, 2016
Michael Matthews, Ed.D.Superintendent
Dawnalyn Murakawa-Leopard, Ed.D.Deputy Superintendent(310) 318-7345, Ext. 5943FAX: (310) 303-3823
Manhattan BeachUnified School District
Board of Trustees
Jennifer CochranChristine Cronin-HurstBill FournellKaren KomatinskyEllen Rosenberg
325 South Peck Avenue • Manhattan Beach • California 90266 • (310) 318-7345 • FAX (310) 303-3822
5
This section of Manhattan Beach Unified School District's (the District) annual financial report presents ourdiscussion and analysis of the District's financial performance during the fiscal year that ended on June 30, 2016.Please read it in conjunction with the District's financial statements, which immediately follow this section.
OVERVIEW OF THE FINANCIAL STATEMENTS
The Financial Statements
The financial statements presented herein include all of the activities of the District and its component units usingthe integrated approach as prescribed by Governmental Accounting Standards Board (GASB) Statement No. 34.
The Government-Wide Financial Statements present the financial picture of the District from the economicresources measurement focus using the accrual basis of accounting. They present governmental activities andbusiness-type activities separately. These statements include all assets of the District (including capital assets), aswell as all liabilities (including long-term obligations). Additionally, certain eliminations have occurred asprescribed by the statement in regards to interfund activity, payables, and receivables.
The Fund Financial Statements include statements for each of the three categories of activities: governmental,business-type, and fiduciary.
The Governmental Activities are prepared using the current financial resources measurement focus and modifiedaccrual basis of accounting.
The Business-Type Activities are prepared using the economic resources measurement focus and the accrual basisof accounting.
The Fiduciary Activities are prepared using the economic resources measurement focus and the accrual basis ofaccounting.
Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided toexplain the differences created by the integrated approach.
The Primary unit of the government is the Manhattan Beach Unified School District.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSISJUNE 30, 2016
6
REPORTING THE DISTRICT AS A WHOLE
The Statement of Net Position and the Statement of Activities
The Statement of Net Position and the Statement of Activities report information about the District as a whole andabout its activities. These statements include all assets and liabilities of the District using the accrual basis ofaccounting, which is similar to the accounting used by most private-sector companies. All of the current year'srevenues and expenses are taken into account regardless of when cash is received or paid.
These two statements report the District's net position and changes in them. Net position is the difference betweenassets and liabilities, which is one way to measure the District's financial health, or financial position. Over time,increases or decreases in the District's net position are one indicator of whether its financial health is improving ordeteriorating. Other factors to consider are changes in the District's property tax base and the condition of theDistrict's facilities.
The relationship between revenues and expenses is the District's operating results. Since the governing board'sresponsibility is to provide services to our students and not to generate profit as commercial entities do, one mustconsider other factors when evaluating the overall health of the District. The quality of the education and thesafety of our schools will likely be an important component in this evaluation.
In the Statement of Net Position and the Statement of Activities, we present the District activities as follows:
Governmental Activities - Most of the District's services are reported in this category. This includes theeducation of kindergarten through grade twelve students, adult education students, the operation of childdevelopment activities, and the on-going effort to improve and maintain buildings and sites. Property taxes, Stateincome taxes, user fees, interest income, Federal, State, and local grants, as well as general obligation bonds,finance these activities.
REPORTING THE DISTRICT'S MOST SIGNIFICANT FUNDS
Fund Financial Statements
The fund financial statements provide detailed information about the most significant funds - not the District as awhole. Some funds are required to be established by State law and by bond covenants. However, managementestablishes many other funds to help it control and manage money for particular purposes or to show that it ismeeting legal responsibilities for using certain taxes, grants, and other money that it receives from theU.S. Department of Education.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSISJUNE 30, 2016
7
Governmental Funds - Most of the District's basic services are reported in governmental funds, which focus onhow money flows into and out of those funds and the balances left at year-end that are available for spending.These funds are reported using an accounting method called modified accrual accounting, which measures cashand all other financial assets that can readily be converted to cash. The governmental fund statements provide adetailed short-term view of the District's general government operations and the basic services it provides.Governmental fund information helps determine whether there are more or fewer financial resources that can bespent in the near future to finance the District's programs. The differences of results in the governmental fundfinancial statements to those in the government-wide financial statements are explained in a reconciliationfollowing each governmental fund financial statement.
Proprietary Funds - When the District charges users for the services it provides, whether to outside customers orto other departments within the District, these services are generally reported in proprietary funds. Proprietaryfunds are reported in the same way that all activities are reported in the Statement of Net Position and theStatement of Revenues, Expenses, and Changes in Fund Net Position. In fact, the District's enterprise funds are thesame as the business-type activities we report in the government-wide statements, but provide more detail andadditional information, such as cash flows, for proprietary funds. We use internal service funds (the othercomponent of proprietary funds) to report activities that provide supplies and services for the District's otherprograms and activities, such as the District's Self-Insurance Fund. The internal service funds are reported withgovernmental activities in the government-wide financial statements.
THE DISTRICT AS A TRUSTEE
Reporting the District's Fiduciary Responsibilities
The District is the trustee, or fiduciary, for funds held on behalf of others, like our funds for associated studentbody activities, scholarships, employee retiree benefits, and pensions. The District's fiduciary activities arereported in the Fiduciary Funds - Statements of Net Position. We exclude these activities from the District's otherfinancial statements because the District cannot use these assets to finance its operations. The District isresponsible for ensuring that the assets reported in these funds are used for their intended purposes.
FINANCIAL HIGHLIGHTS
The Board of Trustees has increased the District's reserve in prior years for economic uncertainty (REU) fromthree percent to five percent. As a result, the District exceeds all State Department of Education requirements formaintenance of the REU.
The District has maintained a conservative approach to budgeting expenditures.
The District has expended approximately $5.8 million on construction during 2015-2016.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSISJUNE 30, 2016
8
To further its financial stability, the District continues to seek opportunities to reduce its long-term debtobligations. Passage of a General Obligation Bond in 2008-2009 (Measure BB) is an example of one financialvehicle used for this purpose as well as to improve District facilities. At the same time, the District issued 2013General Obligation Refunding Bonds, to prepay bonds issued under Series A of the Election of 2000. As ofJune 30, 2016, set aside money in an escrow account in the amount of $15 million will be used to liquidate SeriesA bonds that are no longer obligation of the District.
The Energy Saving Program was continued and the District has obtained a commercial loan with a local financialinstitution in the prior year for approximately $9.8 million. Combined with the Prop 39 funding the overall projectcosts will exceed $10 million. It is anticipated that the savings on electricity will be used to repay the loan over an18 year term.
The District offered early retirement incentive to qualified employees. Current obligation over the next five yearsas of June 30, 2016 was $1,327,314.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSISJUNE 30, 2016
9
THE DISTRICT AS A WHOLE
Net Position
The District's net position (deficit) was $(47,999,693) for the fiscal year ended June 30, 2016. Of this amount,$(40,425,779) was unrestricted. Restricted net position is reported separately to show legal constraints from debtcovenants and enabling legislation that limit the governing board's ability to use the net position for day-to-dayoperations. Our analysis below, in summary form, focuses on the net position (Table 1) and change in net position(Table 2) of the District's governmental and business-type activities.
Table 1
As restated As restated As restated
2016 2015 2016 2015 2016 2015
Assets
Current and other assets 43,298,578$ 49,289,526$ 1,830,152$ 1,899,333$ 45,128,730$ 51,188,859$
Capital assets 128,053,230 126,401,669 - - 128,053,230 126,401,669
Total Assets 171,351,808 175,691,195 1,830,152 1,899,333 173,181,960 177,590,528
Total Deferred
Outflows of
Resources 20,898,537 4,701,296 1,065,211 348,902 21,963,748 5,050,198
Liabilities
Current liabilities 8,313,596 9,633,027 225,064 212,151 8,538,660 9,845,178
Non-current long-term
obligations 158,206,417 161,479,245 - - 158,206,417 161,479,245
Aggregated net
pension liability 60,951,729 44,747,631 2,945,471 2,198,704 63,897,200 46,946,335
Total Liabilities 227,471,742 215,859,903 3,170,535 2,410,855 230,642,277 218,270,758
Total Deferred
Inflows of
Resources 11,828,976 11,943,681 674,148 677,303 12,503,124 12,620,984
Net Position
Investment in capital assets (26,962,959) 16,128,297 - - (26,962,959) 16,128,297
Restricted 19,389,045 23,015,178 - - 19,389,045 23,015,178
Unrestricted (deficit) (39,476,459) (86,554,568) (949,320) (839,923) (40,425,779) (87,394,491)
Total Net
Position (Deficit) (47,050,373)$ (47,411,093)$ (949,320)$ (839,923)$ (47,999,693)$ (48,251,016)$
Activities Activities Total
Governmental Business-Type
The $(40,425,779) in unrestricted net position (deficit) of governmental and business-type activities represents theaccumulated results of all past years' operations.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSISJUNE 30, 2016
10
Changes in Net Position
The results of this year's operations for the District as a whole are reported in the Statement of Activities onpage 15. Table 2 takes the information from the Statement, rounds off the numbers, and rearranges them slightlyso you can see our total revenues for the year.
Table 2
2016 2015 2016 2015 2016 2015
Revenues
Program revenues:
Charges for services 255,302$ 214,460$ -$ -$ 255,302$ 214,460$
Operating grants and
contributions 16,246,924 15,303,028 - - 16,246,924 15,303,028
General revenues:
Federal and State aid not
restricted 21,638,594 17,621,437 - - 21,638,594 17,621,437
Property taxes 43,871,347 40,407,595 - - 43,871,347 40,407,595
Other general revenues 8,748,778 9,897,663 4,590,311 4,364,336 13,339,089 14,261,999
Total Revenues 90,760,945 83,444,183 4,590,311 4,364,336 95,351,256 87,808,519
Expenses
Instructional 61,810,471 54,481,441 - - 61,810,471 54,481,441
Student support services 7,110,662 6,824,242 - - 7,110,662 6,824,242
Administration 4,902,779 5,502,783 - - 4,902,779 5,502,783
Maintenance and operations 8,039,282 8,053,314 - - 8,039,282 8,053,314
Other 8,537,031 8,179,844 4,699,708 4,448,417 13,236,739 12,628,261
Total Expenses 90,400,225 83,041,624 4,699,708 4,448,417 95,099,933 87,490,041
Change in Net Position 360,720$ 402,559$ (109,397)$ (84,081)$ 251,323$ 318,478$
Activities Activities District Activities
Governmental Business-Type Total School
Governmental Activities
As reported in the Statement of Activities on page 15, the cost of all of our governmental activities this year was$90,400,225. However, the amount that our taxpayers ultimately financed for these activities through local taxeswas only $43,871,347 because the cost was paid by those who benefited from the programs $(255,302) or byother governments and organizations who subsidized certain programs with grants and contributions$(16,246,924). We paid for the remaining "public benefit" portion of our governmental activities with$30,387,372 in Federal and State funds, and with other revenues, like interest and general entitlements.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSISJUNE 30, 2016
11
In Table 3, we have presented the cost and net cost of each of the District's largest functions: regular programinstruction, pupil transportation services, other pupil services, administration, maintenance and operations, andother outgo. As discussed above, net cost shows the financial burden that was placed on the District's taxpayers byeach of these functions. Providing this information allows our citizens to consider the cost of each function incomparison to the benefits they believe are provided by that function.
Table 3
2016 2015 2016 2015
Instruction 61,810,471$ 54,481,441$ 48,277,879$ 41,809,942$
Pupil transportation 457,210 317,192 371,770 208,981
Other pupil services 6,653,452 6,507,050 4,290,538 4,358,068
Administration 4,902,779 5,502,783 4,696,060 5,315,183
Maintenance and operations 8,039,282 8,053,314 7,783,819 7,707,555
Other outgo 8,537,031 8,179,844 8,477,933 8,124,407Total 90,400,225$ 83,041,624$ 73,897,999$ 67,524,136$
Total Cost of Services Net Cost of Services
Governmental
THE DISTRICT'S FUNDS
As the District completed this year, our governmental funds reported a combined fund balance of $35,276,565,which is a decrease of $4,715,055 from last year (Table 4).
Table 4
July 1, 2015 Revenues Expenditures June 30, 2016
General Fund (includes Fund 14) 13,394,968$ 74,662,446$ 74,442,651$ 13,614,763$
Special Reserve Fund for Other Than
Capital Outlay Projects 11,306,262 31,038 4,334,720 7,002,580
Bond Interest and Redemption Fund 11,095,334 10,638,827 10,972,832 10,761,329
Cafeteria Fund 1,614,382 2,275,776 2,220,574 1,669,584
Building Fund 1,457,637 9,034 1,202,529 264,142
Capital Facilities Fund 1,123,037 1,114,681 273,551 1,964,167Total 39,991,620$ 88,731,802$ 93,446,857$ 35,276,565$
Balances and Activity
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSISJUNE 30, 2016
12
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At June 30, 2016, the District had $128,053,230, in a broad range of capital assets (net of depreciation), includingland, buildings, furniture, and equipment. This amount represents a net increase (including additions, deductions,and depreciation) of $1,651,561, or 1.31 percent, from last year (Table 5).
Table 5
2016 2015
Land and construction in progress 11,272,178$ 61,481,964$
Buildings and improvements 116,265,004 64,391,896
Equipment 516,048 527,809Total 128,053,230$ 126,401,669$
Governmental Activities
This year's additions included continuing of the District's wireless project, resulting in wireless internetconnectivity for all school site common areas, classrooms, and offices and Phase III including a Band andOrchestra Building, Theater and Drama, and Student Quad Area.
Long-Term Obligations
At the end of this year, the District had $143,241,955 in bonds outstanding versus $147,408,521 last year, adecrease of $4,166,566 or 2.83 percent.
Table 6
2016 2015
General obligation bonds 143,241,955$ 147,408,521$
Premium on bonds 2,541,192 2,792,978
Compensated absences 549,399 501,659
Postemployment benefits 1,313,515 950,333
Equipment lease/purchase agreement 9,233,042 9,825,754
Supplemental retirement plan 1,327,314 -Total 158,206,417$ 161,479,245$
Governmental Activities
Other obligations include compensated absences payable, and other long-term obligations. We present moredetailed information regarding our long-term obligations in Note 9 of the financial statements.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSISJUNE 30, 2016
13
Net Pension Liability (NPL)
As of June 30, 2016 and 2015, the total net pension liability as required by GASB Statement No. 68 was$63,897,200 and $46,946,335 respectively.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
In considering the District Budget for the 2016-2017 year, the governing board and management used thefollowing criteria:
The key Average Daily Attendance (ADA) assumptions in our 2016-2017 revenue forecast under the new LocalControl Funding Formula (LCFF) are: ADA or the number of students used to calculate revenue was 6,627.91.LCFF Entitlement/Target revenue projection was $53,354,189 and Hold Harmless and GAP total fundingprojection of $51,635,589. Unrestricted lottery revenue is projected at $140 per ADA, with restricted lottery at$41 per ADA.
CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with ageneral overview of the District's finances and to show the District's accountability for the money it receives. Ifyou have questions about this report or need any additional financial information, contact the DeputySuperintendent for Administrative Services, at Manhattan Beach Unified School District, South 325 PeckAvenue, Manhattan Beach, California 90266.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
STATEMENT OF NET POSITIONJUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
14
Governmental Business-Type
Activities Activities Total
ASSETS
Deposits and investments 38,317,824$ 1,762,727$ 40,080,551$
Receivables 4,722,790 67,425 4,790,215
Stores inventories 41,150 - 41,150
Other current assets 216,814 - 216,814
Capital assets:
Land and construction in process 11,272,178 - 11,272,178
Other capital assets 166,278,292 - 166,278,292
Less: Accumulated depreciation (49,497,240) - (49,497,240)
Total Capital Assets 128,053,230 - 128,053,230
Total Assets 171,351,808 1,830,152 173,181,960
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to pensions 20,898,537 1,065,211 21,963,748
LIABILITIES
Accounts payable 7,377,781 225,064 7,602,845
Interest payable 380,780 - 380,780
Unearned revenue 555,035 - 555,035
Long-term obligations:
Current portion of long-term obligations 10,417,413 - 10,417,413
Noncurrent portion of long-term obligations 147,789,004 - 147,789,004
Total Long-Term Obligations 158,206,417 - 158,206,417
Net pension liability 60,951,729 2,945,471 63,897,200
Total Liabilities 227,471,742 3,170,535 230,642,277
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources related to pensions 11,828,976 674,148 12,503,124
NET POSITION
Net investment in capital assets (26,962,959) - (26,962,959)
Restricted for:
Debt service 10,380,549 - 10,380,549
Capital projects 8,672,858 - 8,672,858
Educational programs 335,638 - 335,638
Unrestricted (deficit) (39,476,459) (949,320) (40,425,779)
Total Net Position (Deficit) (47,050,373)$ (949,320)$ (47,999,693)$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
STATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
15
Charges for OperatingServices and Grants and
Functions/Programs Expenses Sales Contributions
Governmental Activities:
Instruction 53,255,408$ 152,140$ 11,618,477$
Instruction-related activities:
Supervision of instruction 2,975,857 16,639 625,294
Instructional library, media, and technology 2,113,531 - 939,867
School site administration 3,465,675 - 180,175
Pupil services:
Home-to-school transportation 457,210 7,066 78,374
Food services 2,116,404 - 208,478
All other pupil services 4,537,048 44,219 2,110,217
Administration:
Data processing 819,202 - -
All other administration 4,083,577 11,965 194,754
Plant services 8,039,282 - 255,463
Ancillary services 387,804 - 35,825
Enterprise services 27,332 - -
Interest on long-term obligations 6,883,416 - -
Other outgo 1,238,479 23,273 -
Total Governmental Activities 90,400,225 255,302 16,246,924
Business-Type Activities:
Enterprise services 4,699,708 - -
Total Business-Type Activities 4,699,708$ -$ -$
General revenues and subventions:
Property taxes, levied for general purposes
Property taxes, levied for debt service
Taxes levied for other specific purposes
Federal and State aid not restricted to specific purposes
Interest and investment earnings
Miscellaneous
Subtotal, General Revenues
Change in Net Position
Beginning Balance (As Restated)
Net Position (Deficit) - Ending
Program Revenues
15
Governmental Business-TypeActivities Activities Total
(41,484,791)$ -$ (41,484,791)$
(2,333,924) - (2,333,924)
(1,173,664) - (1,173,664)
(3,285,500) - (3,285,500)
(371,770) - (371,770)
(1,907,926) - (1,907,926)
(2,382,612) - (2,382,612)
(819,202) - (819,202)
(3,876,858) - (3,876,858)
(7,783,819) - (7,783,819)
(351,979) - (351,979)
(27,332) - (27,332)
(6,883,416) - (6,883,416)
(1,215,206) - (1,215,206)
(73,897,999) - (73,897,999)
- (4,699,708) (4,699,708)
- (4,699,708) (4,699,708)
33,281,313 - 33,281,313
10,573,951 - 10,573,951
16,083 - 16,083
21,638,594 - 21,638,594
179,118 9,293 188,411
8,569,660 4,581,018 13,150,678
74,258,719 4,590,311 78,849,030
360,720 (109,397) 251,323
(47,411,093) (839,923) (48,251,016)
(47,050,373)$ (949,320)$ (47,999,693)$
Net (Expenses) Revenues andChanges in Net Position
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
GOVERNMENTAL FUNDSBALANCE SHEETJUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
16
Special Reserve Bond Interest
Fund For and
General Capital Outlay Redemption
Fund Projects Fund
ASSETS
Deposits and investments 16,223,231$ 6,992,202$ 10,761,329$
Receivables 4,592,227 12,344 -
Due from other funds 139,999 - -
Stores inventories 24,035 - -
Other current assets 216,814 - -
Total Assets 21,196,306$ 7,004,546$ 10,761,329$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable 7,026,508$ 1,966$ -$
Due to other funds - - -
Unearned revenue 555,035 - -
Total Liabilities 7,581,543 1,966 -
Fund Balances:
Nonspendable 34,035 - -
Restricted 335,638 7,002,580 10,761,329
Assigned 89,357 - -
Unassigned 13,155,733 - -
Total Fund Balances 13,614,763 7,002,580 10,761,329
Total Liabilities and
Fund Balances 21,196,306$ 7,004,546$ 10,761,329$
16
Non Major Total
Governmental Governmental
Funds Funds
4,252,086$ 38,228,848$
117,998 4,722,569
- 139,999
17,115 41,150
- 216,814
4,387,199$ 43,349,380$
349,307$ 7,377,781$
139,999 139,999
- 555,035
489,306 8,072,815
19,360 53,395
1,971,656 20,071,203
1,906,877 1,996,234
- 13,155,733
3,897,893 35,276,565
4,387,199$ 43,349,380$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEETTO THE STATEMENT OF NET POSITION
JUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
17
Total Fund Balance - Governmental Funds 35,276,565$
Amounts Reported for Governmental Activities in the
Statement of Net Position are Different Because:
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported as assets in
governmental funds.
The cost of capital assets is: 177,550,470$
Accumulated depreciation is: (49,497,240)
Net Capital Assets 128,053,230
Expenditures relating to contributions made to pension plans were
recognized on the modified accrual basis, but are not recognized
on the accrual basis. 6,274,563
In governmental funds, unmatured interest on long-term obligations
is recognized in the period when it is due. On the government-wide
financial statements, unmatured interest on long-term obligations is
recognized when it is incurred. (380,780)
An internal service fund is used by the District's management to
charge the costs of the workers' compensation insurance
program to the individual funds. The assets and liabilities of the
Internal Service Fund are included with governmental activities. 89,197
The net change in proportionate share of net pension liability as of
the measurement date is not recognized as an expenditure under
the modified accrual basis, but are recognized on the accrual basis
over the expected remaining service life of members receiving
pension benefits. 8,033,623
The difference between projected and actual pension plan
investment earnings are not recognized on the modified accrual
basis, but are recognized on the accrual basis as an adjustment to
pension expense. (4,375,815)
The differences between expected and actual experience in the
measurement of the total pension liability are not recognized on the
modified accrual basis, but are recognized on the accrual basis over
the expected average remaining service life of members receiving
pension benefits. (92,437)
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEETTO THE STATEMENT OF NET POSITION, Continued
JUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
18
The changes of assumptions is not recognized as an expenditure
under the modified accrual basis, but is recognized on the accrual
basis over the expected average remaining service life of members
receiving pension benefits. (770,373)$
Net pension liability is not due and payable in the current period
and is not reported as a liability in the funds. (60,951,729)
Long-term obligations at year-end consist of:
Bonds payable 92,995,258$
Premium on bonds 2,541,192
Compensated absences 549,399
Net OPEB obligation 1,313,515
Equipment lease/ purchase agreement 9,233,042
Supplemental retirement plan 1,327,314
In addition, the District has issued "capital appreciation" General
Obligation bonds. The accretion of interest on the General
Obligation Bonds to date is: 50,246,697
Total Long-Term Obligations (158,206,417)Total Net Position (Deficit) - Governmental Activities (47,050,373)$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
GOVERNMENTAL FUNDSSTATEMENT OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
19
Special Reserve
Fund For
General Capital Outlay
Fund Projects
REVENUES
Local Control Funding Formula 49,973,564$ -$
Federal sources 1,634,126 -
Other State sources 11,890,084 -
Other local sources 11,164,672 31,038
Total Revenues 74,662,446 31,038
EXPENDITURES
Current
Instruction 48,374,430 -
Instruction-related activities:
Supervision of instruction 1,559,373 -
Instructional library, media and technology 2,021,631 -
School site administration 3,183,650 -
Pupil services:
Home-to-school transportation 277,544 -
Food services - -
All other pupil services 4,301,761 -
Administration:
Data processing 767,384 -
All other administration 3,572,648 -
Plant services 7,917,854 -
Facility acquisition and construction (102,731) 4,334,720
Ancillary services 381,241 -
Debt service
Principal 592,712 -
Interest and other 356,675 -
Total Expenditures 73,204,172 4,334,720
Excess (Deficiency) of Revenues
Over (Under) Expenditures 1,458,274 (4,303,682)
OTHER FINANCING SOURCES (USES)
Other uses (1,238,479) -
Net Financing Sources (Uses) (1,238,479) -
NET CHANGE IN FUND BALANCES 219,795 (4,303,682)
Fund Balances - Beginning 13,394,968 11,306,262
Fund Balances - Ending 13,614,763$ 7,002,580$
19
Bond Interest
and Non-Major Total
Redemption Governmental Governmental
Fund Funds Funds
-$ -$ 49,973,564$
- 304,401 1,938,527
34,412 6,891 11,931,387
10,604,415 3,088,199 24,888,324
10,638,827 3,399,491 88,731,802
- - 48,374,430
- - 1,559,373
- - 2,021,631
- - 3,183,650
- - 277,544
- 2,117,618 2,117,618
- - 4,301,761
- - 767,384
- 203,748 3,776,396
- - 7,917,854
- 1,375,288 5,607,277
- - 381,241
6,992,251 - 7,584,963
3,980,581 - 4,337,256
10,972,832 3,696,654 92,208,378
(334,005) (297,163) (3,476,576)
- - (1,238,479)
- - (1,238,479)
(334,005) (297,163) (4,715,055)
11,095,334 4,195,056 39,991,620
10,761,329$ 3,897,893$ 35,276,565$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OFREVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESTO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
20
Total Net Change in Fund Balances - Governmental Funds (4,715,055)$
Amounts Reported for Governmental Activities in the Statement
of Activities are Different Because:
Capital outlays to purchase or build capital assets are reported in
governmental funds as expenditures, however, for governmental
activities, those costs are shown in the Statement of Net Position
and allocated over their estimated useful lives as annual depreciation
expenses in the Statement of Activities.
This is the amount by which depreciation exceeds capital outlays
expense in the period.
Capital outlays 5,883,338$
Depreciation expense (4,231,777)
Net expense adjustment 1,651,561
In the Statement of Activities, Other Postemployment Benefits
Obligations (OPEB) are measured by an actuarially determined
Unfunded Frozen Actuarial Accrued Liability (UFAAL). In the
governmental funds, however, expenditures for these items are
measured by the amount of financial resources used (essentially,
the amounts actually paid). This year, amounts contributed toward
the OPEB obligation were more than the cost on net OPEB obligation
by $380,780. (363,182)
In the governmental funds, pension costs are based on employer
contributions made to pension plans during the year. However, in
the Statement of Activities, pension expense is the net effect of all
changes in the deferred outflows, deferred inflows and net pension
liability during the year. 107,848
In the Statement of Activities, certain operating expense - compensated
absences (vacation) are measured by the amounts earned during the year.
In the governmental funds, however, expenditures for this item are
measured by the amount of financial resources used (essentially, the
amounts actually paid). Vacation used was less than the amounts earned
by $47,740. (47,740)
Proceeds received from issuance of debt is a revenue in the governmental
funds, but it increases long-term obligations in the Statement of Net
Position and does not affect the Statement of Activities: (1,327,314)
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OFREVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESTO THE STATEMENT OF ACTIVITIES, Continued
FOR THE YEAR ENDED JUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
21
Repayment of bond principal is an expenditure in the governmental funds,
but it reduces long-term obligations in the Statement of Net Position and
does not affect the Statement of Activities:
General obligation bonds 9,615,000$
Equipment Lease/ purchase agreement 592,712
Under the modified basis of accounting used in the governmental funds,
expenditures are not recognized for transactions that are not normally
paid with expendable available financial resources. In the Statement of
Activities, however, which is presented on the accrual basis, expenses
and liabilities are reported regardless of when financial resources are
available. This adjustment combines the net changes of the following
balances:
Amortization of debt premium 251,786
Interest on long-term obligations in the Statement of Activities differs
from the amount reported in the governmental funds because interest is
recorded as an expenditure in the funds when it is due, and thus requires
the use of current financial resources. In the Statement of Activities,
however, interest expense is recognized as the interest accrues, regardless
of when it is due. The additional interest reported in the Statement of
Activities is the result of two factors. First, accrued interest decreased
by $27,739 and second, $5,448,434 of additional accumulated
interest was accreted on the District's "capital appreciation" general
obligation bonds. (5,420,695)
An Internal Service Fund is used by the District's management to charge
the costs of services to the individual funds. The net change in net assets
of the Internal Service Fund is reported with governmental activities. 15,799
Change in Net Position of Governmental Activities 360,720$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
PROPRIETARY FUNDSSTATEMENT OF NET POSITIONJUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
22
Governmental
Enterprise Fund Activities -
Community Internal
Preschool Service Fund
ASSETS
Current Assets
Deposits and investments 1,762,727$ 88,976$
Receivables 67,425 221
Total Current Assets 1,830,152 89,197
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to pensions 1,065,211 -
LIABILITIES
Current Liabilities
Accounts payable 225,064 -
Noncurrent Liabilities
Net pension liability 2,945,471 -
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources related to pensions 674,148 -
NET POSITION (DEFICIT)
Restricted (949,320) 89,197Total Net Position (Deficit) (949,320)$ 89,197$
Business-Type
Activities
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
PROPRIETARY FUNDSSTATEMENT OF REVENUES, EXPENSES, AND CHANGESIN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
23
Business-Type
Activities Governmental
Enterprise Fund Activities -
Community Internal
Preschool Service Fund
OPERATING REVENUES
Local and intermediate sources 4,535,758$ 20,888$
OPERATING EXPENSES
Payroll costs 3,224,555 -
Supplies and materials 298,652 5,607
Facility rental 1,172,603 -
Other operating costs 3,898 -
Total Operating Expenses 4,699,708 5,607
Operating Income (Loss) (163,950) 15,281
NON-OPERATING REVENUES
Interest income 9,293 518
Grants 45,260 -
Total Nonoperating
Revenues 54,553 518
Change in Net Position (109,397) 15,799
Total Net Position (Deficit) - Beginning (839,923) 73,398
Total Net Position (Deficit) - Ending (949,320)$ 89,197$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
PROPRIETARY FUNDSSTATEMENT OF CASH FLOWSFOR THE YEAR ENDED JUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
24
Business-Type
Activities
Enterprise Governmental
Fund Activities -
Community Internal
Preschool Service Fund
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from other local sources 4,506,772$ 20,888$
Cash payments for salaries and benefits (3,197,252) -
Cash payments for interfund services used, including
payments in lieu of taxes that are payments for, and
equivalent to, services provided (1,462,240) (5,838)
Net Cash Provided (Used) by Operating Activities (152,720) 15,050
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Nonoperating grants received 45,260 -
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 9,293 567
Net Change in Cash and Cash Equivalents (98,167) 15,617
Cash and Cash Equivalents - Beginning 1,860,894 73,359Cash and Cash Equivalents - Ending 1,762,727$ 88,976$
RECONCILIATION OF OPERATING REVENUE LOSS TO
NET CASH USED BY OPERATING ACTIVITIES:
Operating Income (loss) revenue (163,950)$ 15,281$
Adjustments to reconcile operating loss to net cash provided
(used) by operating activities:
Changes in assets and liabilities:
Receivables (28,986) -
Deferred outflows of resources (716,309) -
Account payable 12,913 (231)
Deferred inflows of resources (3,155) -
Net pension liability 746,767 -NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (152,720)$ 15,050$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
FIDUCIARY FUNDSSTATEMENT OF NET POSITIONJUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
25
Retiree
Benefits Agency
Trust Funds
ASSETS
Deposits and investments 272,304$ 179,096$
Receivables 908 -
Total Assets 273,212 179,096$
LIABILITIES
Accounts payable - 5,455$
Due to student groups - 173,641
Total Liabilities - 179,096$
NET POSITION
Unreserved 273,212$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
FIDUCIARY FUNDSSTATEMENT OF CHANGES IN NET POSITIONFOR THE YEAR ENDED JUNE 30, 2016
The accompanying notes are an integral part of these financial statements.
26
Retiree
Benefits
Trust
ADDITIONS
Interest 2,437$
DEDUCTIONS
Other expenditures 71,978
Change in Net Position (69,541)
Net Position - Beginning 342,753Net Position - Ending 273,212$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
27
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Reporting Entity
The Manhattan Beach Unified School District (the District) was established in 1912 and unified in 1993 under thelaws of the State of California. The District operates under a locally elected five-member Board form ofgovernment and provides educational services to grades K - 12 as mandated by the State and/or Federal agencies.The District operates five elementary schools, one middle school, and one high school.
A reporting entity is comprised of the primary government, component units, and other organizations that areincluded to ensure the financial statements are not misleading. The primary government of the District consists ofall funds, departments, boards, and agencies that are not legally separate from the District. For Manhattan BeachUnified School District, this includes general operations, food service, and student related activities of theDistrict.
Related Entity
The Manhattan Beach Education Foundation Inc. The Manhattan Beach Education Foundation Inc.(the Foundation) is a legally separate, tax-exempt entity. The Foundation's sole purpose is to provide financialsupport for Manhattan Beach Unified School District. Although the District does not control the timing or theamount of receipts of the Foundation, the majority of the resources held by the Foundation can only be used by, orfor the benefit, of the District. The Foundation is not considered a component unit of the District. During the yearended June 30, 2016, the Foundation contributed approximately $5,680,960 to the District. Current auditedfinancial information was not available at the time of the District's audit.
Basis of Presentation - Fund Accounting
The accounting system is organized and operated on a fund basis. A fund is defined as a fiscal and accountingentity with a self-balancing set of accounts, which are segregated for the purpose of carrying on specific activitiesor attaining certain objectives in accordance with special regulations, restrictions, or limitations. The District'sfunds are grouped into three broad fund categories: governmental, proprietary, and fiduciary.
Governmental Funds Governmental funds are those through which most governmental functions typically arefinanced. Governmental fund reporting focuses on the sources, uses, and balances of current financial resources.Expendable assets are assigned to the various governmental funds according to the purposes for which they mayor must be 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 District's major andnon-major governmental funds:
Major Governmental Funds
General Fund The General Fund is the chief operating fund for all districts. It is used to account for the ordinaryoperations of the District. All transactions except those accounted for in another fund are accounted for in thisfund.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
28
One fund currently defined as special revenue funds in the California State Accounting Manual (CSAM) does notmeet the GASB Statement No. 54 special revenue fund definition. Specifically, Fund 14, Deferred MaintenanceFund, is not substantially composed of restricted or committed revenue sources. While this fund is authorized bystatute and will remain open for internal reporting purposes, the fund function effectively as an extension of theGeneral Fund, and accordingly, has been combined with the General Fund for presentation in the audited financialstatements.
As a result, the General Fund reflects an increase in assets, fund balance, and revenues of $89,357, $89,357, and$698, respectively.
Cafeteria Fund The Cafeteria Fund is used to account separately for Federal, State, and local resources tooperate the food service program (Education Code Sections 38090-38093) and is used only for those expendituresauthorized by the governing board as necessary for the operation of the District's food service program (EducationCode Sections 38091 and 38100).
Special Reserve Fund for Capital Outlay Projects The Special Reserve Fund for Capital Outlay Projects existsprimarily to provide for the accumulation of General Fund monies for capital outlay purposes (Education CodeSection 42840).
Bond Interest and Redemption Fund The Bond Interest and Redemption Fund is used for the repayment ofbonds issued for a district (Education Code Sections 15125-15262).
Non-Major Governmental Funds
Special Revenue Funds The Special Revenue funds are used to account for the proceeds from specificrevenue sources (other than trusts, major capital projects, or debt service) that are restricted or committed toexpenditures for specified purposes and that compose a substantial portion of the inflows of the fund.Additional resources that are restricted, committed, or assigned to the purpose of the fund may also be reportedin the fund.
Capital Project Funds The Capital Project funds are used to account for and report financial resources that arerestricted, committed, or assigned to the acquisition or construction of major capital facilities and other capitalassets (other than those financed by proprietary funds and trust funds).
Building Fund The Building Fund exists primarily to account separately for proceeds from the sale of bonds(Education Code Section 15146) and may not be used for any purposes other than those for which the bondswere issued.
Capital Facilities Fund The Capital Facilities Fund is used primarily to account separately for moniesreceived from fees levied on developers or other agencies as a condition of approving a development(Education Code Sections 17620-17626). Expenditures are restricted to the purposes specified in GovernmentCode Sections 65970-65981 or to the items specified in agreements with the developer (Government CodeSection 66006).
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
29
Proprietary Funds Proprietary fund reporting focuses on the determination of operating income, changes in netposition, financial position, and cash flows. The District applies all GASB pronouncements, as well as theFinancial Accounting Standards Board pronouncements issued on or before November 30, 1989, unless thosepronouncements conflict with or contradict GASB pronouncements. Proprietary funds are classified as enterpriseor internal service. The District has the following proprietary funds:
Enterprise Fund Enterprise funds may be used to account for any activity for which a fee is charged toexternal users for goods or services. The only enterprise fund of the District accounts for the financialtransactions related to the Community Preschool of the District.Internal Service Fund Internal service funds may be used to account for any activity for which goods orservices are provided to other funds of the District on a cost-reimbursement basis. The District operates aSelf-Insurance Fund that is accounted for in an internal service fund.
Fiduciary Funds Fiduciary funds are used to account for assets held in trustee or agent capacity for others thatcannot be used to support the District's own programs. The fiduciary fund category is split into fourclassifications: pension trust funds, investment trust funds, private-purpose trust funds, and agency funds. The keydistinction between trust and agency funds is that trust funds are subject to a trust agreement that affects thedegree of management involvement and the length of time that the resources are held.
Trust funds are used to account for the assets held by the District under a trust agreement for individuals, privateorganizations, or other governments and are therefore, not available to support the District's own programs. TheDistrict's trust fund is a Retiree Benefits Trust Fund. Agency funds are custodial in nature (assets equal liabilities)and do not involve measurement of results of operations. Such funds have no equity accounts since all assets aredue to individuals or entities at some future time. The District's agency fund accounts for associated student bodyactivities (ASB).
Basis of Accounting - Measurement Focus
Government-Wide Financial Statements The government-wide financial statements are prepared using theeconomic resources measurement focus and the accrual basis of accounting. This is the same approach used in thepreparation of the proprietary fund financial statements, but differs from the manner in which governmental fundfinancial statements are prepared.
The government-wide Statement of Activities presents a comparison between expenses, both direct and indirect,and program revenues for each segment of the business-type activities of the District and for each governmentalfunction, and excludes fiduciary activity. Direct expenses are those that are specifically associated with a service,program, or department and are therefore, clearly identifiable to a particular function. The District does notallocate indirect expenses to functions in the Statement of Activities, except for depreciation. Program revenuesinclude charges paid by the recipients of the goods or services offered by the programs and grants andcontributions that are restricted to meeting the operational or capital requirements of a particular program.Revenues that are not classified as program revenues are presented as general revenues. The comparison ofprogram revenues and expenses identifies the extent to which each program or business segment is self-financingor draws from the general revenues of the District. Eliminations have been made to minimize the double countingof internal activities.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
30
Net position should be reported as restricted when constraints placed on net asset use are either externallyimposed by 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 activities result from special revenue funds and the restrictions on their net asset use.
Fund Financial Statements Fund financial statements report detailed information about the District. The focusof governmental and proprietary fund financial statements is on major funds rather than reporting funds by type.Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a singlecolumn.
Governmental Funds All governmental funds are accounted for using the flow of current financialresources measurement focus and the modified accrual basis of accounting. With this measurement focus,only current assets and current liabilities generally are included on the balance sheet. The Statement ofRevenues, Expenditures, and Changes in Fund Balances reports on the sources (revenues and other financingsources) and uses (expenditures and other financing uses) of current financial resources. This approach differsfrom the manner in which the governmental activities of the government-wide financial statements areprepared. Governmental fund financial statements, therefore, include reconciliations with brief explanationsto better identify the relationship between the government-wide financial statements, prepared using theeconomic resources measurement focus and the accrual basis of accounting, and the governmental fundfinancial statements, prepared using the flow of current financial resources measurement focus and themodified accrual basis of accounting.
Proprietary Funds Proprietary funds are accounted for using the flow of economic resources measurementfocus and the accrual basis of accounting. All assets and all liabilities associated with the operation of thisfund are included in the Statement of Net Position. The Statement of Changes in Fund Net Position presentsincreases (revenues) and decreases (expenses) in net total assets. The Statement of Cash Flows providesinformation about how the District finances and meets the cash flow needs of its proprietary fund.
Fiduciary Funds Fiduciary funds are accounted for using the flow of economic resources measurementfocus and the accrual basis of accounting. Fiduciary funds are excluded from the government-wide financialstatements because they do not represent resources of the District.
Revenues - Exchange and Non-Exchange Transactions Revenue resulting from exchange transactions, inwhich each party gives and receives essentially equal value, is recorded on the accrual basis when the exchangetakes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources aremeasurable and become available. Available means that the resources will be collected within the current fiscalyear or are expected to be collected soon enough thereafter, to be used to pay liabilities of the current fiscal year.Generally, available is defined as collectible within 45 or 60 days. However, to achieve comparability of reportingamong California districts and so as not to distort normal revenue patterns, with specific respect to reimbursementgrants and corrections to State-aid apportionments, the California Department of Education has defined availablefor districts as collectible within one year. The following revenue sources are considered to be both measurableand available at fiscal year-end: State apportionments, interest, certain grants, and other local sources.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
31
Non-exchange transactions, in which the District receives value without directly giving equal value in return,include property taxes, certain grants, entitlements, and donations. Revenue from property taxes is recognized inthe fiscal year in which the taxes are received. Revenue from certain grants, entitlements, and donations isrecognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirementsinclude time and purpose restrictions. On a modified accrual basis, revenue from non-exchange transactions mustalso be available before it can be recognized.
Unearned Revenue Unearned revenue arises when potential revenue does not meet both the "measurable" and"available" criteria for recognition in the current period or when resources are received by the District prior to theincurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, orwhen the District has a legal claim to the resources, the liability for unearned revenue is removed from the balancesheet and revenue is recognized.
Certain grants received before the eligibility requirements are met are recorded as unearned revenue. On thegovernmental fund financial statements, receivables that will not be collected within the available period are alsorecorded as unearned revenue.
Expenses/Expenditures On the accrual basis of accounting, expenses are recognized at the time they areincurred. 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 which therelated fund liability is incurred, if measurable, and typically paid within 90 days. Principal and interest on long-term obligations, which has not matured, are recognized when paid in the governmental funds as expenditures.Allocations of costs, such as depreciation and amortization, are not recognized in the governmental funds but arerecognized in the entity-wide statements.
Cash and Cash Equivalents
The District's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-terminvestments with original maturities of three months or less from the date of acquisition. Cash equivalents alsoinclude cash with county treasury balances for purposes of the Statement of Cash Flows.
Investments
Investments held at June 30, 2016, with original maturities greater than one year are stated at fair value. Fair valueis estimated based on quoted market prices at year-end. All investments not required to be reported at fair valueare stated at cost or amortized cost. Fair values of investments in county and State investment pools aredetermined by the program sponsor.
Stores Inventories
Inventories consist of expendable food and supplies held for consumption. Inventories are stated at cost, on thefirst-in, first-out basis. The costs of inventory items are recorded as expenditures in the governmental funds andexpenses in the proprietary funds when used.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
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Capital Assets and Depreciation
The accounting and reporting treatment applied to the capital assets associated with a fund are determined by itsmeasurement focus. Capital assets are long-lived assets of the District. The District maintains a capitalizationthreshold of $5,000. The District does not possess any infrastructure. Improvements are capitalized; the costs ofnormal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are notcapitalized, but are expensed as incurred.
When purchased, such assets are recorded as expenditures in the governmental funds and capitalized in thegovernment-wide Statement of Net Position. The valuation basis for capital assets is historical cost, or wherehistorical cost is not available, estimated historical cost based on replacement cost. Donated capital assets arecapitalized at estimated fair market value on the date donated.
Capital assets in the proprietary funds are capitalized in the fund in which they are utilized. The valuation basisfor proprietary fund capital assets is the same as those used for the capital assets of governmental funds.
Depreciation is computed using the straight-line method. Estimated useful lives of the various classes ofdepreciable capital assets are as follows: buildings, 20 to 50 years; improvements/infrastructure, 5 to 50 years;equipment, 2 to 20 years.
Compensated Absences
Compensated absences are accrued as a liability as the benefits are earned. The entire compensated absenceliability is reported on the government-wide Statement of Net Position. For governmental funds, the currentportion of unpaid compensated absences is recognized upon the occurrence of relevant events such as employeeresignations and retirements that occur prior to year-end that have not yet been paid with expendable availablefinancial resources. These amounts are reported in the fund from which the employees who have accumulatedleave are paid.
Sick leave is accumulated without limit for each employee at the rate of one day for each month worked. Leavewith pay is provided when employees are absent for health reasons; however, the employees do not gain a vestedright to accumulated sick leave. Employees are never paid for any sick leave balance at termination ofemployment or any other time. Therefore, the value of accumulated sick leave is not recognized as a liability inthe District's financial statements. However, credit for unused sick leave is applicable to all classified schoolmembers who retire after January 1, 1999. At retirement, each member will receive .004 year of service credit foreach day of unused sick leave. Credit for unused sick leave is applicable to all certificated employees and isdetermined by dividing the number of unused sick days by the number of base service days required to completethe last school year, if employed full-time.
Accrued Liabilities and Long-Term Obligations
All payables, accrued liabilities, and long-term obligations are reported in the government-wide and proprietaryfund financial statements. In general, governmental fund payables and accrued liabilities that, once incurred, arepaid in a timely manner and in full from current financial resources are reported as obligations of thegovernmental funds.
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NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
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However, claims and judgments, compensated absences, special termination benefits, and contractually requiredpension contributions that will be paid from governmental funds are reported as a liability in the governmentalfund financial statements only to the extent that they are due for payment during the current year. Bonds, capitalleases, and other long-term obligations are recognized as liabilities in the governmental fund financial statementswhen due.
Premiums
In the government-wide financial statements and in the proprietary fund type financial statements, long-termobligations are reported as liabilities in the applicable governmental activities, business-type activities, orproprietary fund statement of net position. Debt premiums and discounts, as well as issuance costs, related toprepaid insurance costs are amortized over the life of the bonds using the straight-line method.
In governmental fund financial statements, bond premiums and discounts, as well as debt issuance costs arerecognized in the current period. The face amount of the debt is reported as other financing sources. Premiumsreceived on debt issuance are also reported as other financing sources. Issuance costs, whether or not withheldfrom the actual debt proceeds, are reported as debt service expenditures.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position also reports deferred outflows of resources. This separatefinancial statement element represents a consumption of net position that applies to a future period and so will notbe recognized as an expense or expenditure until then. The District reports deferred outflows of resources forpension related items.
In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources.This separate financial statement element represents an acquisition of net position that applies to a future periodand so will not be recognized as revenue until then. The District reports deferred inflows of resources for pensionrelated items.
Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions,and pension expense, information about the fiduciary net position of the California State Teachers RetirementSystem (CalSTRS) and the California Public Employees' Retirement System (CalPERS) plan for schools (Plans)and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as theyare reported by CalSTRS and CalPERS. For this purpose, benefit payments (including refunds of employeecontributions) are recognized when due and payable in accordance with the benefit terms. Member contributionsare recognized in the period in which they are earned. Investments are reported at fair value.
Fund Balances - Governmental Funds
As of June 30, 2016, fund balances of the governmental funds are classified as follows:
Nonspendable - amounts that cannot be spent either because they are in nonspendable form or because they arelegally or contractually required to be maintained intact.
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NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
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Restricted - amounts that can be spent only for specific purposes because of constitutional provisions or enablinglegislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws orregulations of other governments.
Assigned - amounts that do not meet the criteria to be classified as restricted or committed but that are intended tobe used for specific purposes. Under the District's adopted policy, only the governing board or chief businessofficer/assistant superintendent of business services may assign amounts for specific purposes.
Unassigned - all other spendable amounts.
Spending Order Policy
When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available,the District considers restricted funds to have been spent first. When an expenditure is incurred for whichcommitted, assigned, or unassigned fund balances are available, the District considers amounts to have been spentfirst out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the governingboard has provided otherwise in its commitment or assignment actions.
Minimum Fund Balance Policy
The governing board adopted a minimum fund balance policy for the General Fund in order to protect the Districtagainst revenue shortfalls or unpredicted one-time expenditures. The policy requires a Reserve for EconomicUncertainties consisting of unassigned amounts equal to no less than three percent of General Fund expendituresand other financing uses.
Net Position
Net position represents the difference between assets and liabilities. Net position net investment in capital assets,consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowingsused for the acquisition, construction or improvement of those assets. The District has no related debt outstandingas of June 30, 2016. Net position is reported as restricted when there are limitations imposed on their use eitherthrough the enabling legislation adopted by the District or through external restrictions imposed by creditors,grantors, or laws or regulations of other governments. The District first applies restricted resources when anexpense is incurred for purposes for which both restricted and unrestricted net position is available. Thegovernment-wide financial statements report $19,389,045 of restricted net position.
Operating Revenues and Expenses
Operating revenues are those revenues that are generated directly from the primary activity of the proprietaryfunds. Operating expenses are necessary costs incurred to provide the good or service that are the primary activityof the fund. All revenues and expenses not meeting this definition are reported as non-operating revenues andexpenses.
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NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
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Interfund Activity
Transfers between governmental and business-type activities in the government-wide financial statements arereported in the same manner as general revenues.
Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses inthe purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment arereported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmentalfunds and after non-operating revenues/expenses in proprietary funds. Repayments from funds responsible forparticular expenditures/expenses to the funds that initially paid for them are not presented in the financialstatements. Interfund transfers are eliminated in the governmental and business-type activities columns of theStatement of Activities, except for the net residual amounts transferred between governmental and business-typeactivities.
Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptions that affect the amountsreported in the financial statements and accompanying notes. Actual results may differ from those estimates.
Budgetary Data
The budgetary process is prescribed by provisions of the California Education Code and requires the governingboard to hold a public hearing and adopt an operating budget no later than July 1st of each year. The Districtgoverning board satisfied these requirements. The adopted budget is subject to amendment throughout the year togive consideration to unanticipated revenue and expenditures primarily resulting from events unknown at the timeof budget adoption with the legal restriction that expenditures cannot exceed appropriations by major objectaccount.
The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts when theoriginal appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetarystatements reflect the amounts after all budget amendments have been accounted for. For budget purposes, onbehalf payments have not been included as revenue and expenditures as required under generally acceptedaccounting principles.
Property Tax
Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in twoinstallments on November 1 and February 1 and become delinquent on December 10 and April 10, respectively.Unsecured property taxes are payable in one installment on or before August 31. The County of Los Angeles billsand collects the taxes on behalf of the District. Local property tax revenues are recorded when received.
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NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
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Change in Accounting Principles
In February 2015, the GASB issued Statement No. 72, Fair Value Measurement and Application. This Statementaddresses accounting and financial reporting issues related to fair value measurements. The definition of fairvalue is the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date. This Statement provides guidance for determining a fairvalue measurement for financial reporting purposes. This Statement also provides guidance for applying fair valueto certain investments and disclosures related to all fair value measurements.
The District has implemented the provisions of this Statement as of June 30, 2016.
In June 2015, the GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions and RelatedAssets That Are Not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASBStatements No. 67 and No. 68. The objective of this Statement is to improve the usefulness of information aboutpensions included in the general purpose external financial reports of state and local governments for makingdecisions and assessing accountability. This Statement results from a comprehensive review of the effectivenessof existing standards of accounting and financial reporting for all postemployment benefits with regard toproviding decision-useful information, supporting assessments of accountability and inter-period equity, andcreating additional transparency.
This Statement establishes requirements for defined benefit pensions that are not within the scope of StatementNo. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes ofproviding those pensions. In addition, it establishes requirements for defined contribution pensions that are notwithin the scope of Statement No. 68. It also amends certain provisions of Statement No. 67, Financial Reportingfor Pension Plans, and Statement No. 68 for pension plans and pensions that are within their respective scopes.
The provisions in this Statement effective as of June 30, 2016, include the provisions for assets accumulated forpurposes of providing pensions through defined benefit plans and the amended provisions of Statements No. 67and No. 68. The District has implemented these provisions as of June 30, 2016. The provisions in this Statementrelated to defined benefit pensions that are not within the scope of Statement No. 68 are effective for periodsbeginning after June 15, 2016.
In June 2015, the GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principlesfor State and Local Governments. The objective of this Statement is to identify—in the context of the currentgovernmental financial reporting environment—the hierarchy of generally accepted accounting principles(GAAP). The "GAAP hierarchy" consists of the sources of accounting principles used to prepare financialstatements of state and local governmental entities in conformity with GAAP and the framework for selectingthose principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP andaddresses the use of authoritative and non-authoritative literature in the event that the accounting treatment for atransaction or other event is not specified within a source of authoritative GAAP.
This Statement supersedes Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles forState and Local Governments.
The District has implemented the provisions of this Statement as of June 30, 2016.
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NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
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In December 2015, the GASB issued Statement No. 79, Certain External Investment Pools and Pool Participants.This Statement addresses accounting and financial reporting for certain external investment pools and poolparticipants. Specifically, it establishes criteria for an external investment pool to qualify for making the electionto measure all of its investments at amortized cost for financial reporting purposes. An external investment poolqualifies for that reporting if it meets all of the applicable criteria established in this Statement. The specificcriteria address (1) how the external investment pool transacts with participants; (2) requirements for portfoliomaturity, quality, diversification, and liquidity; and (3) calculation and requirements of a shadow price.Significant noncompliance prevents the external investment pool from measuring all of its investments atamortized cost for financial reporting purposes. Professional judgment is required to determine if instances ofnoncompliance with the criteria established by this Statement during the reporting period, individually or in theaggregate, were significant.
If an external investment pool does not meet the criteria established by this Statement, that pool should apply theprovisions in paragraph 16 of Statement No. 31, Accounting and Financial Reporting for Certain Investments andfor External Investment Pools, as amended. If an external investment pool meets the criteria in this Statement andmeasures all of its investments at amortized cost, the pool's participants also should measure their investments inthat external investment pool at amortized cost for financial reporting purposes. If an external investment pooldoes not meet the criteria in this Statement, the pool's participants should measure their investments in that pool atfair value, as provided in paragraph 11 of Statement No. 31, as amended.
This Statement establishes additional note disclosure requirements for qualifying external investment pools thatmeasure all of their investments at amortized cost for financial reporting purposes and for governments thatparticipate in those pools. Those disclosures for both the qualifying external investment pools and theirparticipants include information about any limitations or restrictions on participant withdrawals.
The District has implemented the provisions of this Statement as of June 30, 2016.
New Accounting Pronouncements
In June 2015, the GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans OtherThan Pension Plans. The objective of this Statement is to improve the usefulness of information aboutpostemployment benefits other than pensions (other postemployment benefits or OPEB) included in the generalpurpose external financial reports of state and local governmental OPEB plans for making decisions and assessingaccountability. This Statement results from a comprehensive review of the effectiveness of existing standards ofaccounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providingdecision-useful information, supporting assessments of accountability and inter-period equity, and creatingadditional transparency.
This Statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other ThanPension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-EmployerPlans. It also includes requirements for defined contribution OPEB plans that replace the requirements for thoseOPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosuresfor Defined Contribution Plans, as amended, Statement No. 43, and Statement No. 50, Pension Disclosures.
The requirements of this Statement are effective for financial statements for periods beginning afterJune 15, 2016. Early implementation is encouraged.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
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In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for PostemploymentBenefits Other Than Pension. The primary objective of this Statement is to improve accounting and financialreporting by state and local governments for postemployment benefits other than pensions (other postemploymentbenefits or OPEB). It also improves information provided by state and local governmental employers aboutfinancial support for OPEB that is provided by other entities. This Statement results from a comprehensive reviewof the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits(pensions and OPEB) with regard to providing decision-useful information, supporting assessments ofaccountability and inter-period equity, and creating additional transparency.
This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting byEmployers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements byAgent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No. 74, Financial Reporting forPostemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reportingrequirements for OPEB plans.
The requirements of this Statement are effective for financial statements for periods beginning afterJune 15, 2017. Early implementation is encouraged.
In August 2015, the GASB issued Statement No. 77, Tax Abatement Disclosures. This Statement requiresgovernments that enter into tax abatement agreements to disclose the following information about the agreements:
Brief descriptive information, such as the tax being abated, the authority under which tax abatements areprovided, eligibility criteria, the mechanism by which taxes are abated, provisions for recapturing abatedtaxes, and the types of commitments made by tax abatement recipients.
The gross dollar amount of taxes abated during the period.
Commitments made by a government, other than to abate taxes, as part of a tax abatement agreement.
The requirements of this Statement are effective for financial statements for periods beginning afterDecember 15, 2015. Early implementation is encouraged.
In December 2015, the GASB issued Statement No. 78, Pensions Provided Through Certain Multiple-EmployerDefined Benefit Pension Plans. The objective of this Statement is to address a practice issue regarding the scopeand applicability of Statement No. 68, Accounting and Financial Reporting for Pensions. This issue is associatedwith pensions provided through certain multiple-employer defined benefit pension plans and to state or localgovernmental employers whose employees are provided with such pensions.
Prior to the issuance of this Statement, the requirements of Statement No. 68 applied to the financial statements ofall state and local governmental employers whose employees are provided with pensions through pension plansthat are administered through trusts that meet the criteria in paragraph 4 of that Statement.
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This Statement amends the scope and applicability of Statement No. 68 to exclude pensions provided toemployees of state or local governmental employers through a cost-sharing multiple-employer defined benefitpension plan that (1) is not a state or local governmental pension plan, (2) is used to provide defined benefitpensions both to employees of state or local governmental employers and to employees of employers that are notstate or local governmental employers, and (3) has no predominant state or local governmental employer (eitherindividually or collectively with other state or local governmental employers that provide pensions through thepension plan). This Statement establishes requirements for recognition and measurement of pension expense,expenditures, and liabilities; note disclosures; and required supplementary information for pensions that have thecharacteristics described above.
The requirements of this Statement are effective for reporting periods beginning after December 15, 2015. Earlyimplementation is encouraged.
In January 2016, the GASB issued Statement No. 80, Blending Requirements for Certain Component Units -amendment of GASB Statement No. 14. The objective of this Statement is to improve financial reporting byclarifying the financial statement presentation requirements for certain component units. This Statement amendsthe blending requirements established in paragraph 53 of Statement No. 14, The Financial Reporting Entity, asamended. The additional criterion requires blending of a component unit incorporated as a not-for-profitcorporation in which the primary government is the sole corporate member. The additional criterion does notapply to component units included in the financial reporting entity pursuant to the provisions of StatementNo. 39, Determining Whether Certain Organizations Are Component Units.
The requirements of this Statement are effective for reporting periods beginning after June 15, 2016. Earlyimplementation is encouraged.
In March 2016, the GASB issued Statement No. 81, Irrevocable Split-Interest Agreements. The objective of thisStatement is to improve accounting and financial reporting for irrevocable split-interest agreements by providingrecognition and measurement guidance for situations in which a government is a beneficiary of the agreement.
This Statement requires that a government that receives resources pursuant to an irrevocable split-interestagreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement.Furthermore, this Statement requires that a government recognize assets representing its beneficial interests inirrevocable split-interest agreements that are administered by a third party, if the government controls the presentservice capacity of the beneficial interests. This Statement requires that a government recognize revenue when theresources become applicable to the reporting period.
The requirements of this Statement are effective for financial statements for periods beginning afterDecember 15, 2016, and should be applied retroactively. Early implementation is encouraged.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
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In March 2016, the GASB issued Statement No. 82, Pension Issues - An Amendment of GASB Statements No. 67,No. 68, and No. 73. The objective of this Statement is to address certain issues that have been raised with respectto Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting forPensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not withinthe Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 andNo. 68. Specifically, this Statement addresses issues regarding (1) the presentation of payroll-related measures inrequired supplementary information, (2) the selection of assumptions and the treatment of deviations from theguidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification ofpayments made by employers to satisfy employee (plan member) contribution requirements.
The requirements of this Statement are effective for reporting periods beginning after June 15, 2016, except forthe requirements of this Statement for the selection of assumptions in a circumstance in which an employer'spension liability is measured as of a date other than the employer's most recent fiscal year-end. In thatcircumstance, the requirements for the selection of assumptions are effective for that employer in the firstreporting period in which the measurement date of the pension liability is on or after June 15, 2017. Earlyimplementation is encouraged.
NOTE 2 - DEPOSITS AND INVESTMENTS
Summary of Deposits and Investments
Deposits and investments as of June 30, 2016, are classified in the accompanying financial statements as follows:
Governmental activities 38,317,824$
Business-type activities 1,762,727
Fiduciary funds 451,400Total Deposits and Investments 40,531,951$
Deposits and investments as of June 30, 2016, consist of the following:
Cash on hand and in banks 4,857,606$
Cash in revolving 12,245
Investments 35,662,100Total Deposits and Investments 40,531,951$
Policies and Practices
The District is authorized under California Government Code to make direct investments in local agency bonds,notes, or warrants within the State; U.S. Treasury instruments; registered State warrants or treasury notes;securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of depositplaced with commercial banks and/or savings and loan companies; repurchase or reverse repurchase agreements;medium term corporate notes; shares of beneficial interest issued by diversified management companies,certificates of participation, obligations with first priority security; and collateralized mortgage obligations.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
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Investment in County Treasury - The District is considered to be an involuntary participant in an externalinvestment pool as the District is required to deposit all receipts and collections of monies with their CountyTreasurer (Education Code Section 41001). The fair value of the District's investment in the pool is reported inthe accounting financial statements at amounts based upon the District's pro-rata share of the fair value providedby the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio). The balanceavailable for withdrawal is based on the accounting records maintained by the County Treasurer, which isrecorded on the amortized cost basis.
General Authorizations
Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in theschedules below:
Maximum Maximum Maximum
Authorized Remaining Percentage Investment
Investment Type Maturity of Portfolio in One Issuer
Local Agency Bonds, Notes, Warrants 5 years None None
Registered State Bonds, Notes, Warrants 5 years None None
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Banker's Acceptance 180 days 40% 30%
Commercial Paper 270 days 25% 10%
Negotiable Certificates of Deposit 5 years 30% None
Repurchase Agreements 1 year None None
Reverse Repurchase Agreements 92 days 20% of base None
Medium-Term Corporate Notes 5 years 30% None
Mutual Funds N/A 20% 10%
Money Market Mutual Funds N/A 20% 10%
Mortgage Pass-Through Securities 5 years 20% None
County Pooled Investment Funds N/A None None
Local Agency Investment Fund (LAIF) N/A None None
Joint Powers Authority Pools N/A None None
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of aninvestment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value tochanges in market interest rates. The District does not have a formal investment policy that limits investmentmaturities as a means of managing its exposure to fair value losses arising from increasing interest rates. TheDistrict manages its exposure to interest rate risk by investing in the county pool longer term investments and bytiming cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenlyover time as necessary to provide the cash flow and liquidity needed for operations.
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Specific Identification
Information about the sensitivity of the fair values of the District's investments to market interest rate fluctuationis provided by the following schedule that shows the distribution of the District's investment by maturity:
Fair Weighted Average
Investment Type Value Days to MaturityLos Angeles County Investment Pool 36,274,428$ 608
Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.This is measured by the assignment of a rating by a nationally recognized statistical rating organization. TheDistrict's investment in the Los Angeles County Investment Pool is not required to be rated, nor has it been ratedas of June 30, 2016.
Custodial Credit Risk - Deposits
This is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The Districtdoes not have a policy for custodial credit risk for deposits. However, the California Government Code requiresthat a financial institution secure deposits made by State or local governmental units by pledging securities in anundivided collateral pool held by a depository regulated under state law (unless so waived by the governmentalunit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the totalamount deposited by the public agency. California law also allows financial institutions to secure public depositsby pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and lettersof credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secureddeposits. As of June 30, 2016, the District's bank balance of $9,863,952 was exposed to custodial credit riskbecause it was uninsured, but collateralized with securities held by the pledging financial institution's trustdepartment or agent, but not in the name of the District.
NOTE 3 - FAIR VALUE MEASUREMENTS
The District categorizes the fair value measurements of its investments based on the hierarchy established bygenerally accepted accounting principles. The fair value hierarchy, which has three levels, is based on thevaluation inputs used to measure an asset's fair value. The following provides a summary of the hierarchy used tomeasure fair value:
Level 1 - Quoted prices in active markets for identical assets that the District has the ability to access at themeasurement date. Level 1 assets may include debt and equity securities that are traded in an active exchangemarket and that are highly liquid and are actively traded in over-the-counter markets.
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Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets in activemarkets, quoted prices for identical or similar assets in markets that are not active, or other inputs that areobservable, such as interest rates and curves observable at commonly quoted intervals, implied volatilities,and credit spreads. For financial reporting purposes, if an asset has a specified term, a Level 2 input isrequired to be observable for substantially the full term of the asset.
Level 3 - Unobservable inputs should be developed using the best information available under thecircumstances, which might include the District's own data. The District should adjust that data if reasonableavailable information indicates that other market participants would use different data or certaincircumstances specific to the District are not available to other market participants.
Uncategorized - Investments in the Los Angeles County Treasury Investment Pool are not measured using theinput levels above because the District's transactions are based on a stable net asset value per share. Allcontributions and redemptions are transacted at $1.00 net asset value per share.
The District's fair value measurements are as follows at June 30, 2016:
Investment Type Fair Value UncategorizedLos Angeles County Investment Pool 36,274,428$ 36,274,428$
All assets have been valued using a market approach, with quoted market prices.
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NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
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NOTE 4 - RECEIVABLES
Receivables at June 30, 2016, consisted of intergovernmental grants, entitlements, interest, and other localsources. All receivables are considered collectible in full.
Special Reserve
Fund for Non-Major Total
General Capital Outlay Governmental Governmental Proprietary
Fund Projects Funds Activity Funds
Federal Government
Categorical aid 1,123,781$ -$ -$ 1,123,781$ -$
State GovernmentState principal
apportionment - - - - -
Categorical aid 1,222,318 - - 1,222,318 -
Lottery 769,344 - - 769,344 -
Local Government
Interest 67,970 12,344 54,897 135,211 3,881
Other Local Sources 1,408,814 - 63,101 1,471,915 63,765
Total 4,592,227$ 12,344$ 117,998$ 4,722,569$ 67,646$
NOTE 5 - INTERFUND TRANSACTIONS
Interfund Receivables/Payables (Due To/Due From)
Interfund receivable and payable balances arise from interfund transactions and are recorded by all funds affectedin the period in which transactions are executed. Interfund receivable and payable balances at June 30, 2016,between major and non-major governmental funds.
General
Due To FundsNon-Major Governmental Funds 139,999$
Due From
The balance of $139,999 due from Non-Major Building Fund to General Fund is for construction cost.
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NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
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NOTE 6 - CAPITAL ASSETS
Capital asset activity for the fiscal year ended June 30, 2016, was as follows:
Balance Balance
July 1, 2015 Additions Deductions June 30, 2016
Governmental Activities
Capital Assets Not Being Depreciated:
Land 3,909,383$ -$ -$ 3,909,383$
Construction in progress 57,572,581 4,508,727 54,718,513 7,362,795Total Capital Assets
Not Being Depreciated 61,481,964 4,508,727 54,718,513 11,272,178
Capital Assets Being Depreciated:
Land improvements 3,710,994 47,141 - 3,758,135
Buildings and improvements 101,949,666 55,950,414 - 157,900,080
Furniture and equipment 4,524,508 95,569 - 4,620,077Total Capital Assets Being
Depreciated 110,185,168 56,093,124 - 166,278,292
Total Capital Assets 171,667,132 60,601,851 54,718,513 177,550,470
Less Accumulated Depreciation:
Land improvements 2,870,394 84,381 - 2,954,775
Buildings and improvements 38,398,370 4,040,066 - 42,438,436
Furniture and equipment 3,996,699 107,330 - 4,104,029
Total Accumulated Depreciation 45,265,463 4,231,777 - 49,497,240
Governmental Activities
Capital Assets, Net 126,401,669$ 56,370,074$ 54,718,513$ 128,053,230$
Depreciation expense was charged as a direct expense to governmental functions as follows:
Governmental Activities
Instruction 2,895,805$
Supervision of instruction 50,781
Instructional library, media, and technology 75,326
School site administration 194,239
Home-to-school transportation 49,512
All other pupil services 235,287
Data processing 34,701
All other administration 293,685
Plant services 402,441Total Depreciation Expenses Governmental Activities 4,231,777$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
46
NOTE 7 - ACCOUNTS PAYABLE
Accounts payable at June 30, 2016, consisted of the following:
Special Reserve
Fund for Non-Major Total
General Capital Outlay Governmental Governmental Business-Type Agency
Fund Projects Funds Activities Activities Funds
Vendor payables 1,365,963$ 1,966$ 150,052$ 1,517,981$ 16,351$ 5,455$State principal
apportionment 676,578 - - 676,578 - -
Salaries and benefits 4,983,967 - 199,255 5,183,222 208,713 -
Total 7,026,508$ 1,966$ 349,307$ 7,377,781$ 225,064$ 5,455$
NOTE 8 - UNEARNED REVENUE
Unearned revenue at June 30, 2016, consisted of the following:
Governmental
Activities
General
Fund
Federal financial assistance 25,919$
Other local 529,116Total 555,035$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
47
NOTE 9 - LONG-TERM OBLIGATIONS
Summary
The changes in the District's long-term obligations during the year consisted of the following:
Balance Balance Due in
July 1, 2015 Additions Deductions June 30, 2016 One Year
General obligation bonds 147,408,521$ 5,448,434$ 9,615,000$ 143,241,955$ 9,685,000$
Premium on bonds 2,792,978 - 251,786 2,541,192 -
Compensated absences 501,659 47,740 - 549,399 -Equipment lease/
purchase Agreement 9,825,754 - 592,712 9,233,042 466,950
Supplementary retirement plan - 1,327,314 - 1,327,314 265,463
Other postemployment benefits 950,333 381,044 17,862 1,313,515 -161,479,245$ 7,204,532$ 10,477,360$ 158,206,417$ 10,417,413$
Payments for General Obligation Bonds are made in the Bond Interest and Redemption Fund.
Payments for Compensated Absences are typically liquidated in the General Fund and the Non-MajorGovernmental Funds.
Payments for Other Postemployment Benefits are typically made in the General Fund.
Payments for equipment lease/purchase agreement are made in the General Fund.
Payments for supplementary retirement plan are made in the General Fund.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
48
Bonded Debt
The outstanding general obligation bonded debt is as follows:
Bonds Bonds
Issue Maturity Interest Original Outstanding Outstanding
Date Date Rate Issue July 1, 2015 Issued Accretion Redeemed June 30, 2016
1996 2021 3.60 - 5.65% 25,184,723$ 14,742,083$ -$ 719,157$ 2,605,000$ 12,856,240$
1998 2024 4.50 - 5.25% 6,000,501 12,960,171 - 686,196 485,000 13,161,367
1999 2025 3.50 - 5.87% 5,000,040 7,084,494 - 416,193 390,000 7,110,687
2001 2026 3.00 - 5.33% 5,148,769 8,044,192 - 432,830 390,000 8,087,022
2001 2027 4.00 - 5.69% 21,513,829 10,997,712 - 694,897 - 11,692,609
2002 2027 3.00 - 5.57% 4,485,101 4,147,597 - 244,078 115,000 4,276,675
2002 2027 3.10 - 5.57% 5,940,925 9,492,619 - 546,290 190,000 9,848,909
2009 2032 6.39 - 6.73% 7,651,589 11,428,562 - 793,693 - 12,222,255
2010 2046 6.33 - 6.71% 9,738,877 13,501,091 - 915,100 - 14,416,191
2011 2025 2.00 - 5.00% 12,270,000 9,940,000 - - 675,000 9,265,000
2012 2020 0.59 - 2.61% 5,260,000 3,725,000 - - 710,000 3,015,000
2012 2025 2.00 - 4.50% 9,930,000 9,675,000 - - 285,000 9,390,000
2013 2025 2.00 - 4.00% 22,625,000 20,865,000 - - 1,850,000 19,015,000
2013 2020 0.44 - 2.01% 11,255,000 10,805,000 - - 1,920,000 8,885,000
147,408,521$ -$ 5,448,434$ 9,615,000$ 143,241,955$
1995 Election, 1996 Series A Capital Appreciation Bonds
On February 20, 1996, the District issued $12,165,000, Series A Current Interest Bonds, and $13,019,723,Series A Capital Appreciation Bonds. Proceeds from the bonds will be used for the purpose to modernizefacilities within the District. The bonds mature on September 1, 2020, and yield an interest rate of 3.60 percent to5.65 percent. At June 30, 2016, the principal balance outstanding was $12,856,240.
The bonds mature through 2021 as follows:
Principal
Including Accreted Accreted
Fiscal Year Interest to Date Interest Total
2017 2,665,575$ 24,425$ 2,690,000$
2018 2,623,992 176,008 2,800,000
2019 2,566,003 328,997 2,895,000
2020 2,514,960 485,040 3,000,000
2021 2,485,710 649,290 3,135,000Total 12,856,240$ 1,663,760$ 14,520,000$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
49
1995 Election, 1998 Series B Capital Appreciation Bonds
On February 27, 1998, the District issued $6,000,501, Series B Capital Appreciation Bonds. Proceeds from thebonds will be used for the purpose to modernize facilities within the District. The bonds mature onSeptember 1, 2023, and yield an interest rate of 4.50 percent to 5.25 percent. At June 30, 2016, the principalbalance outstanding was $13,161,367.
The bonds mature through 2024 as follows:
Principal
Including Accreted Accreted
Fiscal Year Interest to Date Interest Total
2017 570,187$ 4,813$ 575,000$
2018 612,603 37,397 650,000
2019 675,571 79,429 755,000
2020 726,767 128,233 855,000
2021 759,034 180,966 940,000
2022-2024 9,817,205 3,712,795 13,530,000Total 13,161,367$ 4,143,633$ 17,305,000$
1995 Election, 1999 Series C Current Interest, and Capital Appreciation Bonds
On September 23, 1999, the District issued $990,000, Series C Current Interest Bonds, and $4,010,040, Series CCapital Appreciation Bonds. Proceeds from the bonds will be used for the purpose to modernize facilities withinthe District. The bonds mature on September 1, 2024, and yield an interest rate of 3.50 percent to 5.87 percent. AtJune 30, 2016, the principal balance outstanding was $7,110,687.
The bonds mature through 2025 as follows:
Principal
Including Accreted Accreted
Fiscal Year Interest to Date Interest Total
2017 401,035$ 3,965$ 405,000$
2018 391,822 28,178 420,000
2019 377,941 52,059 430,000
2020 368,494 76,506 445,000
2021 354,973 100,027 455,000
2022-2025 5,216,422 3,283,578 8,500,000Total 7,110,687$ 3,544,313$ 10,655,000$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
50
1995 Election, 2001 Series D Current Interest, and Capital Appreciation Bonds
On January 23, 2001, the District issued $885,000, Series D Current Interest Bonds, and $4,263,769, Series DCapital Appreciation Bonds. Proceeds from the bonds will be used for the purpose to modernize facilities withinthe District. The bonds mature on September 1, 2025, and yield an interest rate of 3.00 percent to 5.33 percent. AtJune 30, 2016, the principal balance outstanding was $8,087,022.
The bonds mature through 2026 as follows:
Principal
Including Accreted Accreted
Fiscal Year Interest to Date Interest Total
2017 431,098$ 3,902$ 435,000$
2018 450,440 29,560 480,000
2019 475,399 59,601 535,000
2020 496,440 93,560 590,000
2021 521,871 133,129 655,000
2022-2026 5,711,774 3,433,226 9,145,000Total 8,087,022$ 3,752,978$ 11,840,000$
2000 Election, Series A Current Interest and Capital Appreciation Bonds
On May 3, 2001, the District issued $16,885,000, Series A Current Interest Bonds, and $4,628,829, Series ACapital Appreciation Bonds. Proceeds from the bonds were used for the purpose to modernize the high schoolwithin the District. The bonds have a final maturity date of September 1, 2026, and yield an interest rate of4.00 percent to 5.69 percent. On March 2004, the District issued $18,400,000 of General Obligation RefundingBonds to advance refund the $16,885,000 Current Interest Bonds. As a result, the $16,885,000 Series A CurrentInterest Bonds are considered to be defeased and the liability for these bonds has been removed from theaccompanying financial statements. At June 30, 2016, the principal balance outstanding for the Bonds was$11,692,609.
The bonds mature through 2027 as follows:
Principal
Including Accreted Accreted
Fiscal Year Interest to Date Interest Total
2021 2,064,069$ 600,931$ 2,665,000$
2022-2026 8,746,165 4,858,835 13,605,000
2027 882,375 712,625 1,595,000Total 11,692,609$ 6,172,391$ 17,865,000$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
51
2000 Election, 2002 Series B Current Interest and Capital Appreciation Bonds
On January 23, 2002, the District issued $2,545,000, Series B Current Interest Bonds, and $1,940,101, Series BCapital Appreciation Bonds. Proceeds from the bonds will be used for the purpose to modernize one of theelementary schools within the District. The bonds mature on September 1, 2026, and yield an interest rate of3.00 percent to 5.57 percent. At June 30, 2016, the principal balance outstanding was $4,276,675.
The bonds mature through 2027 as follows:
Principal
Including Accreted Accreted
Fiscal Year Interest to Date Interest Total
2017 138,656$ 1,344$ 140,000$
2018 158,810 11,190 170,000
2019 180,636 24,364 205,000
2020 191,161 38,839 230,000
2021 145,031 39,969 185,000
2022-2026 1,719,472 835,528 2,555,000
2027 1,742,909 1,417,091 3,160,000Total 4,276,675$ 2,368,325$ 6,645,000$
1995 Election, 2002 Series E Current Interest, and Capital Appreciation Bonds
On January 23, 2002, the District issued $1,415,000, Series E Current Interest Bonds, and $4,525,925, Series ECapital Appreciation Bonds. Proceeds from the bonds will be used for the purpose to modernize one of theelementary schools within the District. The bonds mature on September 1, 2026, and yield an interest rate of3.10 percent to 5.57 percent. At June 30, 2016, the principal balance outstanding was $9,848,909.
The bonds mature through 2027 as follows:
Principal
Including Accreted Accreted
Fiscal Year Interest to Date Interest Total
2017 178,320$ 1,680$ 180,000$
2018 149,756 10,244 160,000
2019 128,224 16,776 145,000
2020 100,259 19,741 120,000
2021 78,936 21,064 100,000
2022-2026 4,931,044 3,273,956 8,205,000
2027 4,282,370 3,352,630 7,635,000Total 9,848,909$ 6,696,091$ 16,545,000$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
52
2008 Election, 2009 Series A Capital Appreciation Bonds
On June 23, 2009, the District issued $7,651,589 in 2009 Series A, Capital Appreciation Bonds. Proceeds fromthe bonds will be used for the purpose to finance the rehabilitation of District buildings, and prepayment of certainlease payments related to Certificates of Participation. The bonds mature on September 1, 2031, and yield aninterest rate of 6.39 percent to 6.73 percent. At June 30, 2016, the principal balance outstanding was $12,222,255.
The bonds mature through 2032 as follows:
Principal
Including Accreted Accreted
Fiscal Year Interest to Date Interest Total
2027-2031 9,838,303$ 13,241,697$ 23,080,000$
2032 2,383,952 4,121,048 6,505,000Total 12,222,255$ 17,362,745$ 29,585,000$
2008 Election, 2010 Series B Capital Appreciation Bonds
On June 23, 2010, the District issued $9,738,877 in 2010 Series B, Capital Appreciation Bonds. Proceeds fromthe bonds will be used for the purpose to finance the rehabilitation of District buildings and prepayment of certainlease payments related to Certificates of Participation. The bonds mature on September 1, 2045, and yield aninterest rate of 6.33 percent to 6.71 percent. At June 30, 2016, the principal balance outstanding was $14,416,191.
The bonds mature through 2046 as follows:
Principal Current
Including Accreted Interest to Accreted
Fiscal Year Interest to Date Maturity Interest Total
2027-2031 45,501$ 4,186,000$ 64,499$ 4,296,000$
2032-2036 2,472,394 5,232,500 5,512,606 13,217,500
2037-2041 2,932,735 5,232,500 10,607,265 18,772,500
2042-2046 8,965,561 3,821,025 10,429,439 23,216,025Total 14,416,191$ 18,472,025$ 26,613,809$ 59,502,025$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
53
2008 Election, 2011 Series C Current Interest Bonds
On June 30, 2011, the District issued $12,270,000, Series C Current Interest Bonds. Proceeds from the bonds willbe used for the purpose to finance the rehabilitation of Mira Costa High School and the payment of certain leasepayments to the Certificate of Participation Series A of 2011. The bonds mature on September 1, 2024, and yieldan interest rate of 2.00 percent to 5.00 percent. At June 30, 2016, the principal balance outstanding was$9,265,000.
The bonds mature through 2025 as follows:
Fiscal Year Principal Interest Total
2017 755,000$ 319,838$ 1,074,838$
2018 835,000 292,638 1,127,638
2019 905,000 275,938 1,180,938
2020 995,000 248,788 1,243,788
2021 1,085,000 218,938 1,303,938
2022-2025 4,690,000 467,400 5,157,400Total 9,265,000$ 1,823,540$ 11,088,540$
2008 Election, 2012 Series D Current Interest Bonds
On February 29, 2012, the District issued $5,260,000, Series D Current Interest Bonds. Proceeds from the bondswill be used for the purpose to finance improvements to the District's high school and to defease the District'soutstanding Certificate of Participation Series A of 2011. The bonds mature on September 1, 2019, and yield aninterest rate of 0.59 percent to 2.61 percent. At June 30, 2016, the principal balance outstanding was $3,015,000.
The bonds mature through 2020 as follows:
Fiscal Year Principal Interest Total
2017 720,000$ 63,862$ 783,862$
2018 745,000 51,119 796,119
2019 760,000 37,733 797,733
2020 790,000 20,587 810,587Total 3,015,000$ 173,301$ 3,188,301$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
54
2008 Election, 2012 Series E Current Interest Bonds
On February 29, 2012, the District issued $9,930,000, Series E Current Interest Bonds. Proceeds from the bondswill be used for the purpose to finance improvements to the District's high school and to defease the District'soutstanding Certificate of Participation Series A of 2011. The bonds mature on September 1, 2024, and yield aninterest rate of 2.00 percent to 4.50 percent. At June 30, 2016, the principal balance outstanding was $9,390,000.
The bonds mature through 2025 as follows:
Fiscal Year Principal Interest Total
2017 320,000$ 275,100$ 595,100$
2018 360,000 265,500 625,500
2019 400,000 254,700 654,700
2020 445,000 242,700 687,700
2021 1,380,000 229,350 1,609,350
2022-2025 6,485,000 574,950 7,059,950Total 9,390,000$ 1,842,300$ 11,232,300$
2008 Election, Series F Current Interest Bonds
On May 23, 2013, the District issued $22,625,000, Series F Current Interest Bonds. Proceeds from the bonds willbe used for the purpose to finance improvements to the District's high school. The bonds mature onSeptember 1, 2024, and yield an interest rate of 2.00 percent to 4.00 percent. At June 30, 2016, the principalbalance outstanding was $19,015,000.
The bonds mature through 2025 as follows:
Fiscal Year Principal Interest Total
2017 1,435,000$ 522,350$ 1,957,350$
2018 1,570,000 493,650 2,063,650
2019 1,715,000 462,250 2,177,250
2020 1,875,000 422,950 2,297,950
2021 2,035,000 366,700 2,401,700
2022-2025 10,385,000 787,775 11,172,775Total 19,015,000$ 3,055,675$ 22,070,675$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
55
2013 General Obligation Refunding Bonds
On May 23, 2013, the District issued $11,255,000, 2013 General Obligation Refunding Bonds. Proceeds from thebonds will be used for the purpose to finance improvements to the District's high school. The bonds mature onSeptember 1, 2019, and yield an interest rate of 0.44 percent to 2.01 percent. At June 30, 2016, the principalbalance outstanding was $8,885,000.
The bonds mature through 2020 as follows:
Fiscal Year Principal Interest Total
2017 2,030,000$ 130,667$ 2,160,667$
2018 2,145,000 113,290 2,258,290
2019 2,280,000 84,942 2,364,942
2020 2,430,000 48,892 2,478,892Total 8,885,000$ 377,791$ 9,262,791$
Accumulated Unpaid Employee Vacation
The long-term portion of accumulated unpaid employee vacation for the District at June 30, 2016, amounted to$549,399.
Equipment lease/ purchase agreement
On July 25, 2014, the District issued entered into an equipment lease/ purchase agreement with Banc Of AmericaPublic Capital Corp in the amount of $9,825,754. Proceeds from the loan will be used to lease and acquire certainequipment for the District. The loan mature on July 25, 2032, and yield an interest rate of 3.63 percent. AtJune 30, 2016, the principal balance outstanding was $9,233,042.
Future lease payments are as follows:
Fiscal Year Principal Interest Total
2017 466,950$ 335,159$ 802,109$
2018 502,670 318,209 820,879
2019 540,601 299,962 840,563
2020 580,868 280,338 861,206
2021 282,308 259,253 541,561
2022-2026 1,976,562 1,116,284 3,092,846
2027-2031 3,179,028 675,855 3,854,883
2032-2033 1,704,055 94,051 1,798,106Total 9,233,042$ 3,379,111$ 12,612,153$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
56
PARS Supplemental Retirement Plan
The District offered an early retirement incentive to qualified employees under a qualified plan of Section 403(b)of the Internal Revenue Code. Currently, there are 27 employees participating in this plan and the District'sobligation to those retirees as of June 30, 2016, is $1,327,314.
Fiscal Year Repayment
2017 265,463$
2018 265,463
2019 265,463
2020 265,463
2021 265,462Total 1,327,314$
Other Postemployment Benefits (OPEB) Obligation
The District's annual required contribution for the year ended June 30, 2016, was $403,872, and contributionsmade by the District during the year were $17,862. Interest on the net OPEB obligation and adjustments to theannual required contribution were $38,013 and $(60,841), respectively, which resulted in an increase to the netOPEB obligation of $363,182. As of June 30, 2016, the net OPEB obligation was $1,313,515. See Note 11 foradditional information regarding the OPEB obligation and the postemployment benefits plan.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
57
NOTE 10 - FUND BALANCES
Fund balances are composed of the following elements:
Bond Interest
Special Reserve and Non-Major
General Capital Outlay Redemption Governmental
Fund Fund Fund Funds Total
Nonspendable
Revolving cash 10,000$ -$ -$ 2,245$ 12,245$
Stores inventories 24,035 - - 17,115 41,150
Total Nonspendable 34,035 - - 19,360 53,395
Restricted
Legally restricted
programs 335,638 - - - 335,638
Capital projects - 7,002,580 - 1,971,656 8,974,236
Debt service - - 10,761,329 - 10,761,329
Total Restricted 335,638 7,002,580 10,761,329 1,971,656 20,071,203
Assigned
Other 89,357 - - 1,906,877 1,996,234
Unassigned
Reserve for economic
uncertainties 13,155,733 - - - 13,155,733
Total 13,614,763$ 7,002,580$ 10,761,329$ 3,897,893$ 35,276,565$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
58
NOTE 11 - POSTEMPLOYMENT HEALTH CARE PLAN AND OTHER POSTEMPLOYMENTBENEFITS (OPEB) OBLIGATION
Plan Description
The Postemployment Benefits Plan (the Plan) is a single-employer defined benefit healthcare plan administeredby the District. The Plan provides medical and dental insurance benefits to eligible retirees and their spouses.Membership of the Plan consists of 38 retirees and beneficiaries currently receiving benefits.
The District is no longer offering postemployment health care benefits to its employees. There are certain pastemployees of the District who are entitled to receive various postemployment health care benefits as describedbelow, which are payable from its General Fund. The District pays these amounts on a pay-as-you-go basis. TheDistrict has conducted an actuarial study for these benefits but because both the number of employees and thedollar amount of the contribution is capped.
The District provides postemployment health care benefits, in accordance with District employment contracts, toall employees who retire from the District on or after attaining age 55 with at least 15 years of service. Currently,nine employees meet those eligibility requirements. The District contributes $400 per year for premiums incurredby retirees and their dependents and the retiree contributes the remainder. Expenditures for postemploymentbenefits are recognized on a pay-as-you-go basis. During the year, expenditures of $3,600 were recognized forretirees' health care benefits.
A third category of postemployment benefits was inherited from the South Bay Union High School District whenthe District was unified in 1993. Employees from this district came with lifetime postemployment benefits, paidby their own Retiree Benefits Fund, separate from the District's General Fund. Membership of the Plan consists of20 retirees currently receiving benefits. As of June 30, 2016, the Retiree Benefit Fund contained $273,212.
Contribution Information
The contribution requirements of plan members and the District are established and may be amended by theDistrict and the Teachers Association (CEA), the local California Service Employees Association (CSEA), andunrepresented groups. The required contribution is based on projected pay-as-you-go financing requirements. Forfiscal year 2015-2016, the District contributed $71,978 to the Plan, all of which was used for current premiums.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
59
Annual OPEB Cost and Net OPEB Obligation
The District's annual OPEB cost (expense) is calculated based on the annual required contribution of the employer(ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. TheARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each yearand amortize any unfunded actuarial accrued liabilities (UAAL) (or funding excess) over a period not to exceed30 years. The following table shows the components of the District's annual OPEB cost for the year, the amountactually contributed to the Plan, and changes in the District's net OPEB obligation to the Plan:
Annual required contribution 403,872$
Interest on net OPEB obligation 38,013
Adjustment to annual required contribution (60,841)
Annual OPEB cost (expense) 381,044
Contributions made (17,862)
Decrease in net OPEB obligation 363,182
Net OPEB obligation, beginning of year 950,333Net OPEB obligation, end of year 1,313,515$
Trend Information
Trend information for annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the netOPEB obligation is as follows:
Annual Actual
Year Ended OPEB Employer Percentage Net OPEB
June 30, Cost Contribution Contributed Obligation
2014 600,476$ 44,311$ 7.38% 595,196$
2015 381,044$ 17,862$ 4.69% 1,313,515$
2016 381,044$ 17,862$ 4.69% 1,313,515$
Funded Status and Funding Progress
A schedule of funding progress as of the most recent actuarial valuation is as follows:
Actuarial
Accrued
Liability Unfunded UAAL as a
Actuarial Actuarial (AAL) - AAL Funded Percentage of
Valuation Value of Unprojected (UAAL) Ratio Covered Covered Payroll
Date Assets (a) Unit Credit (b) (b - a) (a / b) Payroll (c) ([b - a] / c)
July 1, 2014 -$ 4,321,268$ 4,321,268$ 0.00% 35,245,351$ 12.26%
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
60
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions aboutthe probability of occurrence of events far into the future. Examples include assumptions about futureemployment, investment returns, mortality, and the healthcare cost trend. Amounts determined regarding thefunded status of the Plan and the annual required contributions of the employer are subject to continual revision asactual results are compared with past expectations and new estimates are made about the future. The schedule offunding progress, presented as required supplementary information following the notes to the financial statements,presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasingover time relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understoodby the employer and the plan members) and include the types of benefits provided at the time of each valuationand the 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.
In the July 1, 2014, actuarial valuation, the unprojected unit credit method was used. The actuarial assumptionsincluded a five percent investment rate of return (net of administrative expenses), based on the plan being fundedin an irrevocable employee benefit trust invested in a combined equity and fixed income portfolio. Healthcare costtrend rates ranged from an initial ten percent to an ultimate rate of five percent. The UAAL is being amortized at alevel dollar method. The remaining amortization period at July 1, 2014, was 23 years. The actuarial value ofassets was not determined in this actuarial valuation.
NOTE 12 - RISK MANAGEMENT
Property and Liability
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errorsand omissions; injuries to employees and natural disasters. During fiscal year ending June 30, 2016, the Districtcontracted with Alliance of Schools for Cooperative Insurance Programs (ASCIP) for property and liabilityinsurance coverage. Settled claims have not exceeded this commercial coverage in any of the past three years.There has not been a significant reduction in coverage from the prior year.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
61
Workers' Compensation
For fiscal year 2016, the District participated in the Schools' Excess Liability Fund (SELF), an insurancepurchasing pool. The intent of SELF is to achieve the benefit of a reduced premium for the District by virtue of itsgrouping and representation with other participants in SELF. The workers' compensation experience of theparticipating districts is calculated as one experience and a common premium rate is applied to all districts inSELF. Each participant pays its workers' compensation premium based on its individual rate. Total savings arethen calculated and each participant's individual performance is compared to the overall savings. A participantwill then either receive money from or be required to contribute to the "equity-pooling fund". This "equitypooling" arrangement insures that each participant shares equally in the overall performance of SELF.Participation in SELF is limited to districts that can meet SELF's selection criteria. The third party administratorprovides administrative, cost control and actuarial services to the JPA.
NOTE 13 - EMPLOYEE RETIREMENT SYSTEMS
Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agenciesof the State of California. Academic employees are members of the California State Teachers' Retirement System(CalSTRS) and classified employees are members of the California Public Employees' Retirement System(CalPERS).
For the fiscal year ended June 30, 2016, the District reported net pension liabilities, deferred outflows ofresources, deferred inflows of resources, and pension expense for each of the above plans as follows:
Collective
Collective Net Deferred Outflows Collective Deferred Collective
Pension Plan Pension Liability of Resources Inflows of Resources Pension Expense
CalSTRS 49,516,734$ 16,608,308$ 8,765,309$ 4,911,480$
CalPERS 14,380,466 5,355,440 3,737,815 1,615,848Total 63,897,200$ 21,963,748$ 12,503,124$ 6,527,328$
The details of each plan are as follows:
California State Teachers' Retirement System (CalSTRS)
Plan Description
The District contributes to the State Teachers Retirement Plan (STRP) administered by the California StateTeachers' Retirement System (CalSTRS). STRP is a cost-sharing multiple-employer public employee retirementsystem defined benefit pension plan. Benefit provisions are established by State statutes, as legislatively amended,within the State Teachers' Retirement Law.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
62
A full description of the pension plan regarding benefit provisions, assumptions (for funding, but not accountingpurposes), and membership information is listed in the June 30, 2014, annual actuarial valuation report, DefinedBenefit Program Actuarial Valuation. This report and CalSTRS audited financial information are publicallyavailable reports that can be found on the CalSTRS website under Publications at:http://www.calstrs.com/member-publications.
Benefits Provided
The STRP provides retirement, disability and survivor benefits to beneficiaries. Benefits are based on members'final compensation, age, and years of service credit. Members hired on or before December 31, 2012, withfive years of credited service are eligible for the normal retirement benefit at age 60. Members hired on or afterJanuary 1, 2013, with five years of credited service are eligible for the normal retirement benefit at age 62. Thenormal retirement benefit is equal to 2.0 percent of final compensation for each year of credited service.
The STRP is comprised of four programs: Defined Benefit Program, Defined Benefit Supplement Program, CashBalance Benefit Program, and Replacement Benefits Program. The STRP holds assets for the exclusive purposeof providing benefits to members and beneficiaries of these programs. CalSTRS also uses plan assets to defrayreasonable expenses of administering the STRP. Although CalSTRS is the administrator of the STRP, the state isthe sponsor of the STRP and obligor of the trust. In addition, the state is both an employer and nonemployercontributing entity to the STRP.
The District contributes exclusively to the STRP Defined Benefit Program, thus disclosures are not included forthe other plans.
The STRP provisions and benefits in effect at June 30, 2016, are summarized as follows:
Hire date
On or before
December 31, 2012
On or after
January 1, 2013
Benefit formula 2% at 60 2% at 62
Benefit vesting schedule 5 years of service 5 years of service
Benefit payments Monthly for life Monthly for life
Retirement age 60 62
Monthly benefits as a percentage of eligible compensation 2.0% - 2.4% 2.0% - 2.4%
Required employee contribution rate 9.20% 8.56%
Required employer contribution rate 10.73% 10.73%
Required state contribution rate 7.12589% 7.12589%
STRP Defined Benefit Program
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
63
Contributions
Required member, District and State of California contributions rates are set by the California Legislature andGovernor and detailed in Teachers' Retirement Law. The contributions rates are expressed as a level percentage ofpayroll using the entry age normal actuarial method. In accordance with AB 1469, employer contributions into theCalSTRS will be increasing to a total of 19.1 percent of applicable member earnings phased over a seven-yearperiod. The contribution rates for each plan for the year ended June 30, 2016, are presented above and theDistrict's total contributions were $5,307,727.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows ofResources Related to Pensions
At June 30, 2016, the District reported a liability for its proportionate share of the net pension liability thatreflected a reduction for State pension support provided to the District. The amount recognized by the District asits proportionate share of the net pension liability, the related state support and the total portion of the net pensionliability that was associated with the District were as follows:
49,516,734$
26,188,894
75,705,628$
Total net pension liability, including State share:
District's proportionate share of net pension liability
State's proportionate share of the net pension liability associated with the District
Total
The net pension liability was measured as of June 30, 2015. The District's proportion of the net pension liabilitywas based on a projection of the District's long-term share of contributions to the pension plan relative to theprojected contributions of all participating school districts and the State, actuarially determined. The District'sproportionate share for the measurement period June 30, 2015 and June 30, 2014, respectively was 0.0735 percentand 0.0617 percent, resulting in a net increase in the proportionate share of 0.0118 percent.
For the year ended June 30, 2016, the District recognized pension expense of $4,911,480. In addition, the Districtrecognized pension expense and revenue of $2,028,624 for support provided by the State. At June 30, 2016, theDistrict reported deferred outflows of resources and deferred inflows of resources related to pensions from thefollowing sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
5,307,727$ -$
7,399,127 -
- 827,43616,608,308$ 8,765,309$Total
Pension contributions subsequent to measurement date
Difference between projected and actual earnings
on pension plan investments 3,901,454 7,937,873
Net change in proportionate share of net pension liability
Differences between expected and actual experience in
the measurement of the total pension liability
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
64
The deferred outflows of resources related to pensions resulting from District contributions subsequent to themeasurement date will be recognized as a reduction of the net pension liability in the subsequent fiscal year. Thedeferred outflows/(inflows) of resources related to the difference between projected and actual earnings onpension plan investments will be amortized over a closed five-year period and will be recognized in pensionexpense as follows:
Deferred
Year Ended Outflows/(Inflows)
June 30, of Resources
2017 (1,670,594)$
2018 (1,670,594)
2019 (1,670,594)
2020 975,363
Total (4,036,419)$
The deferred outflows/(inflows) of resources related to the net change in proportionate share of net pensionliability and differences between expected and actual experience in the measurement of the total pension liabilitywill be amortized over the Expected Average Remaining Service Life (EARSL) of all members that are providedbenefits (active, inactive, and retirees) as of the beginning of the measurement period. The EARSL for the2014-2015 measurement period is seven years and will be recognized in pension expense as follows:
Deferred
Year Ended Outflows/(Inflows)
June 30, of Resources
2017 1,095,282$
2018 1,095,282
2019 1,095,282
2020 1,095,282
2021 1,095,282
Thereafter 1,095,281
Total 6,571,691$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
65
Actuarial Methods and Assumptions
Total pension liability for STRP was determined by applying update procedures to a financial reporting actuarialvaluation as of June 30, 2014, and rolling forward the total pension liability to June 30, 2015. The financialreporting actuarial valuation as of June 30, 2014, used the following methods and assumptions, applied to all priorperiods included in the measurement:
Valuation date June 30, 2014Measurement date June 30, 2015Experience study July 1, 2006 through June 30, 2010Actuarial cost method Entry age normalDiscount rate 7.60%Investment rate of return 7.60%Consumer price inflation 3.00%Wage growth 3.75%
CalSTRS uses custom mortality tables to best fit the patterns of mortality among its members. These customtables are based on RP2000 series tables adjusted to fit CalSTRS experience.
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. The best estimate ranges weredeveloped using capital market assumptions from CalSTRS general investment consultant. Based on the modelfor CalSTRS consulting actuary's investment practice, a best estimate range was determined by assuming theportfolio is re-balanced annually and that the annual returns are lognormally distributed and independent fromyear to year to develop expected percentiles for the long-term distribution of annualized returns. The assumedasset allocation is based on Teacher's Retirement Board of the California State Teachers' Retirement System(board) policy for target asset allocation in effect on February 2, 2012, the date the current experience study wasapproved by the board. Best estimates of 10-year geometric real rates of return and the assumed asset allocationfor each major asset class used as input to develop the actuarial investment rate of return are summarized in thefollowing table:
Long-Term
Assumed Asset Expected Real
Asset Class Allocation Rate of Return
Global equity 47% 4.50%
Private equity 12% 6.20%
Real estate 15% 4.35%
Inflation sensitive 5% 3.20%
Fixed income 20% 0.20%
Cash/liquidity 1% 0.00%
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
66
Discount Rate
The discount rate used to measure the total pension liability was 7.60 percent. The projection of cash flows usedto determine the discount rate assumed the contributions from plan members and employers will be made atstatutory contribution rates. Projected inflows from investment earnings were calculated using the long-termassumed investment rate of return (7.60 percent) and assuming that contributions, benefit payments andadministrative expense occurred midyear. Based on these assumptions, the STRP's fiduciary net position wasprojected to be available to make all projected future benefit payments to current plan members. Therefore, thelong-term assumed investment rate of return was applied to all periods of projected benefit payments to determinetotal pension liability.
The following presents the District's proportionate share of the net pension liability calculated using the currentdiscount rate as well as what the net pension liability would be if it were calculated using a discount rate that isone percent lower or higher than the current rate:
Net Pension
Discount Rate Liability
1% decrease (6.60%) 74,766,415$
Current discount rate (7.60%) 49,516,734$
1% increase (8.60%) 28,532,213$
California Public Employees Retirement System (CalPERS)
Plan Description
Qualified employees are eligible to participate in the School Employer Pool (SEP) under the California PublicEmployees' Retirement System (CalPERS), a cost-sharing multiple-employer public employee retirement systemdefined benefit pension plan administered by CalPERS. Benefit provisions are established by State statutes, aslegislatively amended, within the Public Employees' Retirement Law.
A full description of the pension plan regarding benefit provisions, assumptions (for funding, but not accountingpurposes), and membership information is listed in the June 30, 2014 annual actuarial valuation report, SchoolsPool Actuarial Valuation, 2014. This report and CalPERS audited financial information are publically availablereports that can be found on the CalPERS website under Forms and Publications at:https://www.calpers.ca.gov/page/forms-publications.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
67
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefitsto plan members, who must be public employees and beneficiaries. Benefits are based on years of service credit, abenefit factor and the member's final compensation. Members hired on or before December 31, 2012, withfive years of total service are eligible to retire at age 50 with statutorily reduced benefits. Members hired on orafter January 1, 2013, with five years of total service are eligible to retire at age 52 with statutorily reducedbenefits. All members are eligible for non-duty disability benefits after five years of service. The Basic DeathBenefit is paid to any member's beneficiary if the member dies while actively employed. An employee's eligiblesurvivor may receive the 1957 Survivor Benefit if the member dies while actively employed, is at least age 50 (or52 for members hired on or after January 1, 2013), and has at least five years of credited service. The cost ofliving adjustments for each plan are applied as specified by the Public Employees' Retirement Law.
The CalPERS provisions and benefits in effect at June 30, 2016, are summarized as follows:
Hire date
On or before
December 31, 2012
On or after
January 1, 2013
Benefit formula 2% at 55 2% at 62Benefit vesting schedule 5 years of service 5 years of service
Benefit payments Monthly for life Monthly for life
Retirement age 55 62
Monthly benefits as a percentage of eligible compensation 1.1% - 2.5% 1.0% - 2.5%
Required employee contribution rate 7.000% 6.000%
Required employer contribution rate 11.847% 11.847%
School Employer Pool (CalPERS)
Contributions
Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contributionrates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1following notice of a change in the rate. Total plan contributions are calculated through the CalPERS annualactuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costsof benefits earned by employees during the year, with an additional amount to finance any unfunded accruedliability. The District is required to contribute the difference between the actuarially determined rate and thecontribution rate of employees. The contributions rates are expressed as percentage of annual payroll. Thecontribution rates for each plan for the year ended June 30, 2016, are presented above and the total Districtcontributions were $1,254,959.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
68
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows ofResources Related to Pensions
As of June 30, 2016, the District reported net pension liabilities for its proportionate share of the CalPERS netpension liability totaling $14,380,466. The net pension liability was measured as of June 30, 2015. The District'sproportion of the net pension liability was based on a projection of the District's long-term share of contributionsto the pension plan relative to the projected contributions of all participating school districts, actuariallydetermined. The District's proportionate share for the measurement period June 30, 2015 and June 30, 2014,respectively was 0.0976 percent and 0.0959 percent, resulting in a net increase in the proportionate share of0.0017 percent.
For the year ended June 30, 2016, the District recognized pension expense of $1,615,848. At June 30, 2016, theDistrict reported deferred outflows of resources and deferred inflows of resources related to pensions from thefollowing sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
1,254,959$ -$
916,777 -
821,865 -
- 883,577
5,355,440$ 3,737,815$
Pension contributions subsequent to measurement date
Difference between projected and actual earnings on
pension plan investments 2,361,839 2,854,238
Total
Net change in proportionate share of net pension liability
Differences between expected and actual experience in
the measurement of the total pension liability
Changes of assumptions
The deferred outflows of resources related to pensions resulting from District contributions subsequent to themeasurement date will be recognized as a reduction of the net pension liability in the subsequent fiscal year. Thedeferred outflows/(inflows) of resources related to the difference between projected and actual earnings onpension plan investments will be amortized over a closed five-year period and will be recognized in pensionexpense as follows:
Deferred
Year Ended Outflows/(Inflows)
June 30, of Resources
2017 (360,953)$
2018 (360,953)
2019 (360,953)
2020 590,460
Total (492,399)$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
69
The deferred outflows/(inflows) of resources related to the net change in proportionate share of net pensionliability, changes of assumptions, and differences between expected and actual experience in the measurement ofthe total pension liability will be amortized over the Expected Average Remaining Service Life (EARSL) of allmembers that are provided benefits (active, inactive, and retirees) as of the beginning of the measurement period.The EARSL for the 2014-2015 measurement period is 3.9 years and will be recognized in pension expense asfollows:
Deferred
Year Ended Outflows/(Inflows)
June 30, of Resources
2017 408,765$
2018 408,764
2019 37,536
Total 855,065$
Actuarial Methods and Assumptions
Total pension liability for the SEP was determined by applying update procedures to a financial reportingactuarial valuation as of June 30, 2014, and rolling forward the total pension liability to June 30, 2015. Thefinancial reporting actuarial valuation as of June 30, 2014, used the following methods and assumptions, appliedto all prior periods included in the measurement:
Valuation date June 30, 2014Measurement date June 30, 2015Experience study July 1, 1997 through June 30, 2011Actuarial cost method Entry age normalDiscount rate 7.65%Investment rate of return 7.65%Consumer price inflation 2.75%Wage growth Varies by entry age and service
Mortality assumptions are based on mortality rates resulting from the most recent CalPERS experience studyadopted by the CalPERS Board. For purposes of the post-retirement mortality rates, those revised rates includefive years of projected ongoing mortality improvement using Scale AA published by the Society of Actuaries.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
70
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-termmarket return expectations as well as the expected pension fund cash flows. Using historical returns of all thefunds' asset classes, expected compound returns were calculated over the short-term (first ten years) and thelong-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-termand long-term, the present value of benefits was calculated for each fund. The expected rate of return was set bycalculating the single equivalent expected return that arrived at the same present value of benefits for cash flowsas the one calculated using both short-term and long-term returns. The expected rate of return was then setequivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of onepercent. The target asset allocation and best estimates of arithmetic real rates of return for each major asset classare summarized in the following table:
Long-TermAssumed Asset Expected Real
Asset Class Allocation Rate of Return
Global equity 51% 5.25%
Global fixed income 19% 0.99%
Private equity 10% 6.83%
Real estate 10% 4.50%
Inflation sensitive 6% 0.45%
Infrastructure and Forestland 2% 4.50%
Liquidity 2% -0.55%
Discount Rate
The discount rate used to measure the total pension liability was 7.65 percent. The projection of cash flows usedto determine the discount rate assumed the contributions from plan members and employers will be made atstatutory contribution rates. Based on these assumptions, the School Employer Pool fiduciary net position wasprojected to be available to make all projected future benefit payments to current plan members. Therefore, thelong-term assumed investment rate of return was applied to all periods of projected benefit payments to determinetotal pension liability.
The following presents the District's proportionate share of the net pension liability calculated using the currentdiscount rate as well as what the net pension liability would be if it were calculated using a discount rate that isone percent lower or higher than the current rate:
Net PensionDiscount rate Liability
1% decrease (6.65%) 23,405,408$
Current discount rate (7.65%) 14,380,466$
1% increase (8.65%) 6,875,625$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
71
On Behalf Payments
The State of California makes contributions to CalSTRS on behalf of the District. These payments consist of StateGeneral Fund contributions to CalSTRS in the amount of $2,072,817 (7.12589 percent of annual payroll).Contributions are no longer appropriated in the annual Budget Act for the legislatively mandated benefits toCalPERS. Therefore, there is no on behalf contribution rate for CalPERS. Under accounting principles generallyaccepted in the United States of America, these amounts are to be reported as revenues and expenditures.Accordingly, these amounts have been recorded in these financial statements. On behalf payments have beenexcluded from the calculation of available reserves, and have not been included in the budgeted amounts reportedin the General Fund - Budgetary Comparison Schedule.
NOTE 14 - COMMITMENTS AND CONTINGENCIES
Grants
The District received financial assistance from Federal and State agencies in the form of grants. The disbursementof funds received under these programs generally requires compliance with terms and conditions specified in thegrant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from suchaudits could become a liability of the General Fund or other applicable funds. However, in the opinion ofmanagement, any such disallowed claims will not have a material adverse effect on the overall financial positionof the District at June 30, 2016.
Litigation
District is involved in various litigation arising from the normal course of business. In the opinion of managementand legal counsel, the disposition of all litigation pending is not expected to have a material adverse effect on theoverall financial position of the District at June 30, 2016.
NOTE 15 - PARTICIPATION IN PUBLIC ENTITY RISK POOLS, JOINT POWERS AUTHORITIESAND OTHER RELATED PARTY TRANSACTIONS
The District is a member of the Alliance of Schools for Cooperative Insurance Programs (ASCIP), Schools'Excess Liability Fund (SELF), and the Centinela South Bay Self-Insurance Authority (CSBSIA) joint powersauthorities (JPA's). The District pays an annual premium to the applicable entity for its health, workers'compensation, and property liability coverage. The relationships between the District, the pools, and the JPA's aresuch that they are not component units of the District for financial reporting purposes.
These entities have budgeting and financial reporting requirements independent of member units and theirfinancial statements are not presented in these financial statements; however, fund transactions between theentities and the District are included in these statements. Audited financial statements are generally available fromthe respective entities.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTSJUNE 30, 2016
72
During the year ended June 30, 2016, the District made payments of $1,675,450 and $22,432 to ASCIP andSELF, respectively.
NOTE 16 - RESTATEMENT OF PRIOR YEAR NET POSITION
The District adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions, in the currentyear. As a result, the effect on the current fiscal year is as follows:
Statement of Net Position - Governmental Activities
Net Position - Beginning (49,938,198)$
Inclusion of net pension liability from the adoption of GASB Statement No. 68 2,198,704
Inclusion of deferred inflows of resources from the adoption of GASB Statement No. 68 677,303
Inclusion of deferred outflows of resources from the adoption of GASB Statement No. 68 (348,902)
Net Position - Beginning as Restated (47,411,093)$
Statement of Net Position - Business-Type Activities and Statement of
Revenues, Expenses, and Changes in Fund Net Position - Proprietary
Funds
Net Position - Beginning 1,687,182$
Inclusion of net pension liability from the adoption of GASB Statement No. 68 (2,198,704)
Inclusion of deferred inflows of resources from the adoption of GASB Statement No. 68 (677,303)
Inclusion of deferred outflows of resources from the adoption of GASB Statement No. 68 348,902
Net Position - Beginning as Restated (839,923)$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
GENERAL FUNDBUDGETARY COMPARISON SCHEDULEFOR THE YEAR ENDED JUNE 30, 2016
See accompanying note to required supplementary information.
74
Variances -
Positive
(Negative)
Actual Final
Original Final (GAAP Basis) to Actual
REVENUES
Local Control Funding Formula 50,449,599$ 49,944,100$ 49,973,564$ 29,464$
Federal sources 1,679,246 1,793,736 1,634,126 (159,610)
Other State sources 8,417,319 9,265,888 11,890,084 2,624,196
Other local sources 7,653,071 11,424,649 11,164,672 (259,977)
Total Revenues1
68,199,235 72,428,373 74,662,446 2,234,073
EXPENDITURES
Current
Certificated salaries 31,677,981 33,061,996 32,771,923 290,073
Classified salaries 10,210,665 11,082,385 10,870,458 211,927
Employee benefits 12,470,982 12,995,967 14,723,615 (1,727,648)
Books and supplies 2,596,075 5,234,451 4,774,369 460,082
Services and operating
expenditures 9,581,183 10,729,976 8,986,129 1,743,847
Capital outlay - 128,290 128,291 (1)
Other outgo 2,345,995 2,117,143 - 2,117,143
Debt service
Principal - - 592,712 (592,712)
Interest - - 356,675 (356,675)
Total Expenditures1
68,882,881 75,350,208 73,204,172 2,146,036Excess (Deficiency) of Revenues
Over (Under) Expenditures (683,646) (2,921,835) 1,458,274 4,380,109
OTHER FINANCING USES
Other uses - - (1,238,479) (1,238,479)
NET CHANGE IN FUND BALANCE (683,646) (2,921,835) 219,795 3,141,630
Fund Balance - Beginning 13,394,968 13,394,968 13,394,968 -
Fund Balance - Ending 12,711,322$ 10,473,133$ 13,614,763$ 3,141,630$
Budgeted Amounts
1On behalf payments of $2,072,817 are included in the actual revenues and expenditures, but have not been included in the budgetedamounts. In addition, due to the consolidation of Fund 14, Deferred Maintenance Fund, for reporting purposes into the General Fund,additional revenues and expenditures pertaining to these other funds are included in the Actual (GAAP Basis) revenues and expenditures,however are not included in the original and final General Fund budgets.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS (OPEB) FUNDINGPROGRESS
FOR THE YEAR ENDED JUNE 30, 2016
See accompanying note to required supplementary information.
75
Actuarial
Accrued
Liability Unfunded UAAL as a
Actuarial Actuarial (AAL) - AAL Funded Percentage of
Valuation Value of Unprojected (UAAL) Ratio Covered Covered Payroll
Date Assets (a) Unit Credit (b) (b - a) (a / b) Payroll (c) ([b - a] / c)
July 1, 2014 -$ 4,321,268$ 4,321,268$ 0.00% 35,245,351$ 12.26%
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NETPENSION LIABILITYFOR THE YEAR ENDED JUNE 30, 2016
See accompanying note to required supplementary information.
76
2016 2015
CalSTRS
District's proportion of the net pension liability 0.0735% 0.0617%
District's proportionate share of the net pension liability 49,516,734$ 36,053,713$
State's proportionate share of the net pension liability associated
with the District 26,188,894 21,770,788
Total 75,705,628$ 57,824,501$
District's covered - employee payroll 31,719,583$ 27,479,891$
District's proportionate share of the net pension liability as a
percentage of its covered - employee payroll 156.11% 131.20%
Plan fiduciary net position as a percentage of the total pension liability 74% 77%
CalPERS
District's proportion of the net pension liability 0.0976% 0.0959%
District's proportionate share of the net pension liability 14,380,466$ 10,892,622$
District's covered - employee payroll 9,620,495$ 10,074,082$
District's proportionate share of the net pension liability as a
percentage of its covered - employee payroll 149.48% 108.13%
Plan fiduciary net position as a percentage of the total pension liability 79.00% 83.38%
Note : In the future, as data become available, ten years of information will be presented.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
SCHEDULE OF DISTRICT CONTRIBUTIONSFOR THE YEAR ENDED JUNE 30, 2016
See accompanying note to required supplementary information.
77
2016 2015
CalSTRS
Contractually required contribution 5,307,727$ 2,816,699$
Contributions in relation to the contractually required contribution 5,307,727 2,816,699
Contribution deficiency (excess) -$ -$
District's covered - employee payroll 49,466,234$ 31,719,583$
Contributions as a percentage of covered - employee payroll 10.73% 8.88%
CalPERS
Contractually required contribution 1,254,959$ 1,132,332$
Contributions in relation to the contractually required contribution 1,254,959 1,132,332Contribution deficiency (excess) -$ -$
District's covered - employee payroll 10,593,053$ 9,620,495$
Contributions as a percentage of covered - employee payroll 11.85% 11.77%
Note : In the future, as data become available, ten years of information will be presented.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
NOTE TO REQUIRED SUPPLEMENTARY INFORMATIONJUNE 30, 2016
78
NOTE 1 - PURPOSE OF SCHEDULES
Budgetary Comparison Schedule
This schedule presents information for the original and final budgets and actual results of operations, as well asthe variances from the final budget to actual results of operations.
Schedule of Other Postemployment Benefits (OPEB) Funding Progress
This schedule is intended to show trends about the funding progress of the District's actuarially determinedliability for postemployment benefits other than pensions.
Schedule of the District's Proportionate Share of the Net Pension Liability
This schedule presents information on the District's proportionate share of the net pension liability (NPL), theplans' fiduciary net position and, when applicable, the State's proportionate share of the NPL associated with theDistrict. In the future, as data becomes available, ten years of information will be presented.
Schedule of District Contributions
This schedule presents information on the District's required contribution, the amounts actually contributed, andany excess or deficiency related to the required contribution. In the future, as data becomes available, ten years ofinformation will be presented.
Changes in Benefit Terms
There were no changes in benefit terms since the previous valuation for either CalSTRS and CalPERS.
Changes in Assumptions
The CalSTRS plan rate of investment return assumption was not changed from the previous valuation. TheCalPERS plan rate of investment return assumption was changed from 7.50 percent to 7.65 percent since theprevious valuation.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
See accompanying note to supplementary information.
80
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFOR THE YEAR ENDED JUNE 30, 2016
Pass-Through
Entity
Federal Grantor/Pass-Through CFDA Identifying Program
Grantor/Program Number Number Expenditures
U.S. DEPARTMENT OF EDUCATION
Passed through California Department of Education (CDE):
No Child Left Behind Act (NCLB):Title I, Part A, Grants to Local Educational
Agencies 84.010 14329 216,710$Title I, Part G, Advance Placement (AP) Test Fee
Reimbursement Program Agencies 84.330 14831 2,419
Title II, Part A, Improving Teacher Quality 84.367 14341 56,043
Individuals with Disabilities Education Act (IDEA)
Special Education (IDEA) Cluster:Basic Local Assistance Entitlement, Part B,
Section 611 84.027 13379 895,445Local Assistance Entitlement, Part B, Section 611
Private School ISP's 84.027 10115 48,249
Preschool Grants, Part B, Section 619 (Age 3-4-5) 84.173 13430 31,657Mental Health Allocation Plan, Part B, Sec 611 84.027A 14468 318,699Preschool Local Entitlement, Part B, Section 611
(Age 3-4-5) 84.027A 13682 64,752
Preschool Staff Development, Part B, Section 619 84.173A 13431 152
Total Special Education (IDEA) Cluster 1,358,954
Total U.S. Department of Education 1,634,126
U.S. DEPARTMENT OF AGRICULTURE
Passed through CDE:
Child Nutrition Cluster:
National School Lunch Program 10.555 13524 161,298
Basic Breakfast 10.553 13525 40,289
Food Distribution 10.555 13389 102,814
Total U.S. Department of Agriculture 304,401Total Federal Programs 1,938,527$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
See accompanying note to supplementary information.
81
LOCAL EDUCATION AGENCY ORGANIZATION STRUCTUREJUNE 30, 2016
ORGANIZATION
The Manhattan Beach Unified School District was established in 1912, and unified in 1993, and consists of anarea comprising approximately 3.88 square miles in the southwestern portion of the County of Los Angeles, andis conterminous with the City of Manhattan Beach. The District operates five elementary schools, one middleschool, and one high school. There were no boundary changes during the year.
GOVERNING BOARD
MEMBER OFFICE TERM EXPIRES
Ellen Rosenberg President December 2017
Jennifer Cochran Vice President December 2017
Karen Komatinsky Clerk December 2019
Christine Cronin-Hurst Member December 2017
Bill Fournell Member December 2019
ADMINISTRATION
Michael Matthews, Ed.D Superintendent
Dawnalyn Murakawa-Leopard, Ed. D Deputy Superintendent, Business Services
Brett Geithman, Ed. D Assistant Superintendent, Educational Services
Megan Atkins Assistant Superintendent, Student Services
Brian Lucus Assistant Superintendent, Human Resources
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
See accompanying note to supplementary information.
82
SCHEDULE OF AVERAGE DAILY ATTENDANCEFOR THE YEAR ENDED JUNE 30, 2016
Second Period Annual
Report Report
Regular ADA
Transitional kindergarten through third 1,728.08 1,729.88
Fourth through sixth 1,445.87 1,447.15
Seventh and eighth 1,036.62 1,035.51
Ninth through twelfth 2,373.73 2,355.24
Total Regular ADA 6,584.30 6,567.78
Extended Year Special Education
Transitional kindergarten through third 2.54 2.54
Fourth through sixth 1.59 1.59
Seventh and eighth 0.61 0.61
Ninth through twelfth 0.74 0.74Total Extended Year
Special Education 5.48 5.48
Special Education, Nonpublic, Nonsectarian Schools
Fourth through sixth 3.43 3.38
Seventh and eighth 7.32 6.86
Ninth through twelfth 26.80 25.98Total Special Education,
Nonpublic, Nonsectarian
Schools 37.55 36.22
Extended Year Special Education,
Nonpublic, Nonsectarian Schools
Fourth through sixth 0.27 0.27
Seventh and eighth 0.63 0.63
Ninth through twelfth 2.19 2.19Total Extended Year Special
Education, Nonpublic, Nonsectarian
Schools 3.09 3.09Total ADA 6,630.42 6,612.57
Final Report
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
See accompanying note to supplementary information.
83
SCHEDULE OF INSTRUCTIONAL TIMEFOR THE YEAR ENDED JUNE 30, 2016
1986-87 2015-16 Number of Days
Minutes Actual Traditional Multitrack
Grade Level Requirement Minutes Calendar Calendar Status
Kindergarten 36,000 36,000 180 - Complied
Grades 1 - 3 50,400
Grade 1 50,860 180 - Complied
Grade 2 50,860 180 - Complied
Grade 3 50,860 180 - Complied
Grades 4 - 6 54,000
Grade 4 54,820 180 - Complied
Grade 5 54,820 180 - Complied
Grade 6 62,660 180 - Complied
Grades 7 - 8 54,000
Grade 7 62,660 180 - Complied
Grade 8 62,660 180 - Complied
Grades 9 - 12 64,800
Grade 9 64,801 180 - Complied
Grade 10 64,801 180 - Complied
Grade 11 64,801 180 - Complied
Grade 12 64,801 180 - Complied
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
See accompanying note to supplementary information.
84
RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT WITHAUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2016
Summarized below are the fund balance reconciliations between the Unaudited Actual Financial Report and theaudited financial statements.
General Building
Fund Fund
FUND BALANCE
Balance, June 30, 2016, Unaudited Actuals 13,474,764$ 404,141$
Increase in:
Due from other funds 139,999 -
Due to other funds - (139,999)Balance, June 30, 2016, Audited Financial Statements 13,614,763$ 264,142$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
See accompanying note to supplementary information.
85
SCHEDULE OF FINANCIAL TRENDS AND ANALYSISFOR THE YEAR ENDED JUNE 30, 2016
(Budget)
20171
2016 2015 2014
GENERAL FUND4
Revenues 70,256,892$ 74,661,748$ 67,502,631$ 62,311,657$
Expenditures 73,596,399 73,204,172 67,474,124 59,565,421
Other uses and transfers out - 1,238,479 1,560,496 1,225,854Total Expenditures and
Other Uses 73,596,399 74,442,651 69,034,620 60,791,275
INCREASE (DECREASE)CHANGE IN FUND BALANCE (3,339,507)$ 219,097$ (1,531,989)$ 1,520,382$
ENDING FUND BALANCE 10,185,899$ 13,525,406$ 13,306,309$ 14,838,298$
AVAILABLE RESERVES2
8,107,029$ 13,105,091$ 11,089,922$ 13,146,879$
AVAILABLE RESERVES AS A
PERCENTAGE OF TOTAL OUTGO3
11.02% 18.10% 16.46% 22.13%
LONG-TERM OBLIGATIONS N/A 158,206,417$ 161,479,245$ 155,296,922$
K-12 AVERAGE DAILY
ATTENDANCE AT P-2 6,623 6,630 6,715 6,688
The General Fund balance has decreased by $1,312,892 over the past two years. The fiscal year 2016-2017 budgetprojects a decrease of $3,339,507 (24.69 percent). For a district this size, the State recommends available reservesof at least three percent of total General Fund expenditures, transfers out, and other uses (total outgo).
The District has incurred operating surpluses in two of the past three years and anticipates incurring an operatingdeficit during the 2016-2017 fiscal year. Total long-term obligations have increased by $2,909,495 over the pasttwo years.
Average daily attendance has decreased by 58 over the past two years. Additional decline of seven ADA isanticipated during fiscal year 2016-2017.
1Budget 2017 is included for analytical purposes only and has not been subjected to audit.
2Available reserves consist of all unassigned fund balances including all amounts reserved for economic uncertainties contained with theGeneral Fund.
3On behalf payments of $2,027,557, $1,523,144, and $1,390,593, has been excluded from the calculation of available reservesfor the fiscal years ending June 30, 2016, 2015, and 2014, respectively.
4General Fund amounts do not include activity related to the consolidation of the Deferred Maintenance Fund as required byGASB Statement No. 54.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
See accompanying note to supplementary information.
86
NON-MAJOR GOVERNMENTAL FUNDSCOMBINING BALANCE SHEETJUNE 30, 2016
Total
Capital Non-Major
Cafeteria Building Facilities Governmental
Fund Fund Fund Funds
ASSETS
Deposits and investments 1,771,524$ 558,031$ 1,922,531$ 4,252,086$
Receivables 66,389 2,941 48,668 117,998
Stores inventories 17,115 - - 17,115
Total Assets 1,855,028$ 560,972$ 1,971,199$ 4,387,199$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable 185,444$ 156,831$ 7,032$ 349,307$
Due to other funds - 139,999 - 139,999
Total Liabilities 185,444 296,830 7,032 489,306
Fund Balances:
Nonspendable 19,360 - - 19,360
Restricted - 7,489 1,964,167 1,971,656
Assigned 1,650,224 256,653 - 1,906,877
Total Fund Balances 1,669,584 264,142 1,964,167 3,897,893
Total Liabilities and
Fund Balances 1,855,028$ 560,972$ 1,971,199$ 4,387,199$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
See accompanying note to supplementary information.
87
NON-MAJOR GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2016
Total
Capital Non-Major
Cafeteria Building Facilities Governmental
Fund Fund Fund Funds
REVENUES
Federal sources 304,401$ -$ -$ 304,401$
Other State sources 6,891 - - 6,891
Other local sources 1,964,484 9,034 1,114,681 3,088,199
Total Revenues 2,275,776 9,034 1,114,681 3,399,491
EXPENDITURES
Current
Pupil services:
Food services 2,117,618 - - 2,117,618
Administration:
All other administration 102,956 - 100,792 203,748
Facility acquisition and construction - 1,202,529 172,759 1,375,288
Total Expenditures 2,220,574 1,202,529 273,551 3,696,654
NET CHANGE IN FUND BALANCES 55,202 (1,193,495) 841,130 (297,163)
Fund Balances - Beginning 1,614,382 1,457,637 1,123,037 4,195,056
Fund Balances - Ending 1,669,584$ 264,142$ 1,964,167$ 3,897,893$
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
88
NOTE TO SUPPLEMENTARY INFORMATIONJUNE 30, 2016
NOTE 1 - PURPOSE OF SCHEDULES
Schedule of Expenditures of Federal Awards
The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant activity of the Districtand is presented on the modified accrual basis of accounting. The information in this schedule is presented inaccordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore,some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, thefinancial statements. The District has not elected to use the ten percent de minimis cost rate as covered in Section200.414 Indirect (F&A) costs of the Uniform Guidance.
Local Education Agency Organization Structure
This schedule provides information about the District's boundaries and schools operated, members of thegoverning board, and members of the administration.
Schedule of Average Daily Attendance (ADA)
Average daily attendance (ADA) is a measurement of the number of pupils attending classes of the District. Thepurpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments ofState funds are made to school districts. This schedule provides information regarding the attendance of studentsat various grade levels and in different programs.
Schedule of Instructional Time
The District has received incentive funding for increasing instructional time as provided by the Incentives forLonger Instructional Day. The District neither met nor exceeded its target funding. This schedule presentsinformation on the amount of instructional time offered by the District and whether the District complied with theprovisions of Education Code Sections 46200 through 46206.
Districts must maintain their instructional minutes at the 1986-87 requirements, as required by Education CodeSection 46201.
Reconciliation of Annual Financial and Budget Report With Audited Financial Statements
This schedule provides the information necessary to reconcile the fund balance of all funds reported on theUnaudited Actual Financial Report to the audited financial statements.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
89
NOTE TO SUPPLEMENTARY INFORMATIONJUNE 30, 2016
Schedule of Financial Trends and Analysis
This schedule discloses the District's financial trends by displaying past years' data along with current year budgetinformation. These financial trend disclosures are used to evaluate the District's ability to continue as a goingconcern for a reasonable period of time.
Non-Major Governmental Funds - Balance Sheet and Statement of Revenues, Expenditures, and Changesin Fund Balances
The Non-Major Governmental Funds Combining Balance Sheet and Combining Statement of Revenues,Expenditures, and Changes in Fund Balances is included to provide information regarding the individual fundsthat have been included in the Non-Major Governmental Funds column on the Governmental Funds BalanceSheet and Statement of Revenues, Expenditures, and Changes in Fund Balances.
91
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Governing BoardManhattan Beach Unified School DistrictManhattan Beach, California
We have audited, in accordance with the auditing standards generally accepted in the United States of Americaand the standards applicable to financial audits contained in Government Auditing Standards issued by theComptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Manhattan Beach UnifiedSchool District (the District) as of and for the year ended June 30, 2016, and the related notes to the financialstatements, which collectively comprise Manhattan Beach Unified School District's basic financial statements,and have issued our report thereon dated December 15, 2016.
Emphasis of Matter – Correction of an Error
As discussed in Note 16 to the financial statements, in 2016, the District restated its beginning balance for netpension liability to more accurately reflect the implementation of GASB Statement No. 68, Accounting andFinancial Reporting for Pensions for its enterprise fund. Our opinion is not modified with respect to this matter.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Manhattan Beach Unified SchoolDistrict's internal control over financial reporting (internal control) to determine the audit procedures that areappropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but notfor the purpose of expressing an opinion on the effectiveness of Manhattan Beach Unified School District'sinternal control. Accordingly, we do not express an opinion on the effectiveness of Manhattan Beach UnifiedSchool District's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management oremployees, 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 internalcontrol, such that there is a reasonable possibility that a material misstatement of the District's financial statementswill not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or acombination of deficiencies, in internal control that is less severe than a material weakness, yet important enoughto merit attention by those charged with governance.
10681 Foothill Blvd., Suite 300 Rancho Cucamonga, CA 91730 Tel: 909.466.4410 www.vtdcpa.com Fax: 909.466.4431
Vavrinek, Trine, Day & Co., LLPCertified Public Accountants
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Our consideration of internal control was for the limited purpose described in the first paragraph of this sectionand was not designed to identify all deficiencies in internal control that might be material weaknesses orsignificant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internalcontrol that we consider to be material weaknesses. However, material weaknesses may exist that have not beenidentified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Manhattan Beach Unified School District's financialstatements are free from material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and materialeffect on the determination of financial statement amounts. However, providing an opinion on compliance withthose provisions was not an objective of our audit, and accordingly, we do not express such an opinion. Theresults of our tests disclosed no instances of noncompliance or other matters that are required to be reported underGovernment Auditing Standards.
We noted certain matters that we reported to management of Manhattan Beach Unified School District in aseparate letter dated December 15, 2016.
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 District's internal control or oncompliance. This report is an integral part of an audit performed in accordance with Government AuditingStandards in considering the District's internal control and compliance. Accordingly, this communication is notsuitable for any other purpose.
Rancho Cucamonga, CaliforniaDecember 15, 2016
93
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOREACH MAJOR PROGRAM AND ON INTERNAL CONTROL
OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
Governing BoardManhattan Beach Unified School DistrictManhattan Beach, California
Report on Compliance for Each Major Federal Program
We have audited Manhattan Beach Unified School District's compliance with the types of compliancerequirements described in the OMB Compliance Supplement that could have a direct and material effect on eachof Manhattan Beach Unified School District's (the District) major Federal programs for the year endedJune 30, 2016. Manhattan Beach Unified School District's major Federal programs are identified in the summaryof auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the federal statutes, regulations, and the terms and conditions ofits Federal awards applicable to its Federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Manhattan Beach Unified School District'smajor Federal programs based on our audit of the types of compliance requirements referred to above. Weconducted our audit of compliance in accordance with auditing standards generally accepted in the United Statesof America; the standards applicable to financial audits contained in Government Auditing Standards, issued bythe Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements forFederal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan andperform the audit to obtain reasonable assurance about whether noncompliance with the types of compliancerequirements referred to above that could have a direct and material effect on a major Federal program occurred.An audit includes examining, on a test basis, evidence about Manhattan Beach Unified School District'scompliance with those requirements and performing such other procedures as we considered necessary in thecircumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federalprogram. However, our audit does not provide a legal determination of Manhattan Beach Unified School District'scompliance.
10681 Foothill Blvd., Suite 300 Rancho Cucamonga, CA 91730 Tel: 909.466.4410 www.vtdcpa.com Fax: 909.466.4431
Vavrinek, Trine, Day & Co., LLPCertified Public Accountants
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Opinion on Each Major Federal Program
In our opinion, Manhattan Beach Unified School District complied, in all material respects, with the types ofcompliance requirements referred to above that could have a direct and material effect on each of its majorFederal programs for the year ended June 30, 2016.
Report on Internal Control Over Compliance
Management of Manhattan Beach Unified School District is responsible for establishing and maintaining effectiveinternal control over compliance with the types of compliance requirements referred to above. In planning andperforming our audit of compliance, we considered Manhattan Beach Unified School District's internal controlover compliance with the types of requirements that could have a direct and material effect on each major Federalprogram to determine the auditing procedures that are appropriate in the circumstances for the purpose ofexpressing an opinion on compliance for each major Federal program and to test and report on internal controlover compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion onthe effectiveness of internal control over compliance. Accordingly, we do not express an opinion on theeffectiveness of Manhattan Beach Unified School District's internal control over compliance.
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, toprevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on atimely basis. A material weakness in internal control over compliance is a deficiency, or combination ofdeficiencies, in internal control over compliance, such that there is a reasonable possibility that materialnoncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected andcorrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or acombination of deficiencies, in internal control over compliance with a type of compliance requirement of aFederal program that is less severe than a material weakness in internal control over compliance, yet importantenough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraphof this 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 UniformGuidance. Accordingly, this report is not suitable for any other purpose.
Rancho Cucamonga, CaliforniaDecember 15, 2016
95
INDEPENDENT AUDITOR'S REPORT ON STATE COMPLIANCE
Governing BoardManhattan Beach Unified School DistrictManhattan Beach, California
Report on State Compliance
We have audited Manhattan Beach Unified School District's compliance with the types of compliancerequirements as identified in the 2015-2016 Guide for Annual Audits of K-12 Local Education Agencies and StateCompliance Reporting that could have a direct and material effect on each of the Manhattan Beach UnifiedSchool District's State government programs as noted below for the year ended June 30, 2016.
Management's Responsibility
Management is responsible for compliance with the requirements of State laws, regulations, and the terms andconditions of its State awards applicable to its State programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance of each of the Manhattan Beach Unified SchoolDistrict's State programs based on our audit of the types of compliance requirements referred to above. Weconducted our audit in accordance with auditing standards generally accepted in the United States of America; thestandards applicable to financial audits contained in Government Auditing Standards, issued by the ComptrollerGeneral of the United States; and the 2015-2016 Guide for Annual Audits of K-12 Local Education Agencies andState Compliance Reporting. These standards require that we plan and perform the audit to obtain reasonableassurance about whether noncompliance with the compliance requirements referred to above that could have amaterial effect on the applicable government programs noted below. An audit includes examining, on a test basis,evidence about Manhattan Beach Unified School District's compliance with those requirements and performingsuch other procedures as we considered necessary in the circumstances. We believe that our audit provides areasonable basis for our opinions. Our audit does not provide a legal determination of Manhattan Beach UnifiedSchool District's compliance with those requirements.
Unmodified Opinion on Each of the Programs
In our opinion, Manhattan Beach Unified School District complied, in all material respects, with the compliancerequirements referred to above that are applicable to the government programs noted below that were audited forthe year ended June 30, 2016.
10681 Foothill Blvd., Suite 300 Rancho Cucamonga, CA 91730 Tel: 909.466.4410 www.vtdcpa.com Fax: 909.466.4431
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In connection with the audit referred to above, we selected and tested transactions and records to determine theManhattan Beach Unified School District's compliance with the State laws and regulations applicable to thefollowing items:
ProceduresPerformed
LOCAL EDUCATION AGENCIES OTHER THAN CHARTER SCHOOLSAttendance YesTeacher Certification and Misassignments YesKindergarten Continuance YesIndependent Study No, see belowContinuation Education No, see belowInstructional Time YesInstructional Materials YesRatios of Administrative Employees to Teachers YesClassroom Teacher Salaries YesEarly Retirement Incentive No, see belowGann Limit Calculation YesSchool Accountability Report Card YesJuvenile Court Schools No, see belowMiddle or Early College High Schools No, see belowK-3 Grade Span Adjustment YesTransportation Maintenance of Effort Yes
SCHOOL DISTRICTS, COUNTY OFFICES OF EDUCATION, ANDCHARTER SCHOOLS
Educator Effectiveness YesCalifornia Clean Energy Jobs Act YesAfter School Education and Safety Program:
General Requirements No, see belowAfter School No, see belowBefore School No, see below
Proper Expenditure of Education Protection Account Funds YesUnduplicated Local Control Funding Formula Pupil Counts YesLocal Control Accountability Plan YesIndependent Study - Course Based No, see belowImmunizations Yes, see below
CHARTER SCHOOLSAttendance No, see belowMode of Instruction No, see belowNon Classroom-Based Instruction/Independent Study for Charter Schools No, see belowDetermination of Funding for Non Classroom-Based Instruction No, see belowAnnual Instruction Minutes Classroom-Based No, see belowCharter School Facility Grant Program No, see below
97
The District's Independent Study Program is below the level required for testing; therefore, we did not performprocedures related to the Independent Study Program.
The District does not offer a Continuation Education Attendance Program; therefore, we did not performprocedures related to the Continuation Education Attendance Program.
The District did not offer an Early Retirement Incentive Program during the current year; therefore, we did notperform procedures related to the Early Retirement Incentive Program.
The District does not have any Juvenile Court Schools; therefore, we did not perform any procedures related toJuvenile Court Schools.
The District does not have any Middle or Early College High Schools; therefore, we did not perform anyprocedures related to Middle or Early College High Schools.
The District does not offer an After School Education and Safety Program; therefore, we did not perform anyprocedures related to the After School Education and Safety Program.
The District does not offer an Independent Study - Course Based Program; therefore, we did not perform anyprocedures related to the Independent Study - Course Based Program.
The District did not have any schools listed on the immunization assessment reports; therefore, we did notperform the remaining procedures.
The District does not have any Charter Schools; therefore, we did not perform any procedures for Charter SchoolPrograms.
Rancho Cucamonga, CaliforniaDecember 15, 2016
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
SUMMARY OF AUDITOR'S RESULTSFOR THE YEAR ENDED JUNE 30, 2016
99
FINANCIAL STATEMENTS
Unmodified
NoNone Reported
No
FEDERAL AWARDS
NoNone Reported
Unmodified
No
CFDA Numbers Name of Federal Program or Cluster
84.027, 84.173,
84.027A, 84.173A Special Education (IDEA) Cluster
750,000$
Auditee qualified as low-risk auditee? Yes
STATE AWARDS
Unmodified
Any audit findings disclosed that are required to be reported in accordance
with Section 200.516(a) of the Uniform Guidance?
Dollar threshold used to distinguish between Type A and Type B programs:
Type of auditor's report issued on compliance for programs:
Noncompliance material to financial statements noted?
Internal control over major Federal programs:
Material weakness identified?Significant deficiency identified?
Type of auditor's report issued on compliance for major Federal programs:
Identification of major Federal programs:
Type of auditor's report issued:
Internal control over financial reporting:
Material weakness identified?Significant deficiency identified?
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
FINANCIAL STATEMENT FINDINGSFOR THE YEAR ENDED JUNE 30, 2016
100
None reported.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTSFOR THE YEAR ENDED JUNE 30, 2016
101
None reported.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
STATE AWARDS FINDINGS AND QUESTIONED COSTSFOR THE YEAR ENDED JUNE 30, 2016
102
None reported.
MANHATTAN BEACH UNIFIED SCHOOL DISTRICT
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGSFOR THE YEAR ENDED JUNE 30, 2016
103
There were no audit findings reported in the prior year's schedule of financial statement findings.
104
Governing BoardManhattan Beach Unified School DistrictManhattan Beach, California
In planning and performing our audit of the financial statements of Manhattan Beach Unified School District, forthe year ended June 30, 2016, we considered its internal control structure in order to determine our auditingprocedures for the purpose of expressing our opinion on the financial statements and not to provide assurance onthe internal control structure.
However, during our audit we noted matters that are opportunities for strengthening internal controls andoperating efficiency. The following items represent conditions noted by our audit that we consider importantenough to bring to your attention. This letter does not affect our report dated December 15, 2016 on thegovernment-wide financial statements of the District.
2015-2016 Observation and Recommendation
Internal Controls – Cash Receipting
Observations
During cash receipt testing, auditor noted the following deficiencies:
Clearing account bank reconciliations are not being performed in a timely manner.
Cash in the clearing account was not cleared to the County on a timely basis. As a result, a balance as ofJune 30, 2016, in the clearing account was noted.
Recommendation
We recommend the District implement procedures to ensure that internal controls over cash collections are inplace and operating effectively.
We will review the status of the current year comments during our next audit engagement.
Rancho Cucamonga, CaliforniaDecember 15, 2016
10681 Foothill Blvd., Suite 300 Rancho Cucamonga, CA 91730 Tel: 909.466.4410 www.vtdcpa.com Fax: 909.466.4431
Vavrinek, Trine, Day & Co., LLPCertified Public Accountants
VALUE THE D IFFERENCE