School District of Lancaster

Audit SummaryFor the Year Ended June 30, 2019

2018 Pennsylvania School District Comprehensive Annual Financial Report

(“CAFR”) Award Recipients– 14 out of 501 school districts and 29 intermediate units in Pennsylvania received

award– Bucks County Schools Intermediate Unit No. 22– Great Valley School District – Kennett Consolidated School District– Mt. Lebanon School District– Neshaminy School District– Owen J. Roberts School District– Pocono Mountain School District– School District of Lancaster– School District of Pittsburgh– Solanco School District– South Western School District– The School District of Philadelphia– Upper Moreland Township School District– West Chester Area School District

Overview and Benefit of CAFR

– CAFR provides a broader and more robust presentation of GAAP financial statements

– CAFR is encouraged but not required– CAFR blends both financial and non-financial information – Transmittal letter – Introduction to CAFR– Statistical Section – Historical information typically trend information for past 10

years– CAFR program is sponsored by the Government Finance Officers Association

(“GFOA”) and the Association of School Business Officials (“ASBO”). SDOL participates in both programs

– Evidence of transparency and full disclosure to citizens and other stakeholders – Provides additional information that may be viewed positively by credit rating

agencies and other users of the financial statements – Promotes accountability

Independent Auditor’s Report– Report on the Financial Statements - outlines the scope of the audit and identifying

each opinion unit.

– Management's Responsibility - to prepare the financial statements in accordance with generally accepted accounting principles.

– Auditor’s Responsibility - express opinions on each opinion unit.• Conduct the audit in accordance with generally accepted auditing standards• Conduct the audit in accordance with government auditing standards

– Opinions - unmodified, which means that the financial statements are fairly presented, in all material respects, in accordance with accounting principles generally accepted in the United States of America.

– Required Supplementary Information - which is to perform limited procedures, such as comparing with financial statements, but not to provide an opinion.

– Supplementary Information – discusses the schedule of expenditures of federal awards which was included in our audit of the basic financial statements and are fairly presented.

– Other Reporting - references our report on internal control and compliance based on an audit conducted in accordance with government auditing standards

General Fund Revenues Budget vs. Actual - June 30, 2019

Budget Actual Variance Local Sources $ 83,672,945 $ 89,509,149 $ 5,836,204 State Sources $113,193,210 $113,505,116 $ 311,906 Federal Sources $ 16,944,994 $ 19,206,516 $ 2,261,522Total Revenues $213,811,149 $222,220,781 $ 8,409,632

Notes: Local revenue had a favorable variance of $5.8 million due to higher than anticipated interest income and the District recognized higher than anticipated delinquent real estate, ,real estate transfer tax and earned income taxes.

State revenue had a favorable variance of $311 thousand due to an additional $300 thousand in Pre-K grants

Federal revenue had a favorable variance of $2.3 million due to an additional $1.0 million from Title I A grant and a $600,000 Title I grant. In addition there were increased revenues from ACCESS Medicaid reimbursements.

General Fund Revenue ‐ June 30, 2019

Local Sources64%

State Sources33%

Federal Sources3%

SOURCES OF REVENUE – AVERAGE LANCASTER COUNTY SCHOOL DISTRICT

General Fund Revenue ‐ June 30, 2019

Local Sources31%

State Sources59%

Federal Sources10%

SOURCES OF REVENUE – SCHOOL DISTRICT OF LANCASTER

General Fund Expenditures Budget vs. Actual - June 30, 2019

Budget Actual Variance Instruction $129,933,557 $135,697,513 $(5,763,956)Support services $ 69,963,930 $ 68,561,518 $ 1,402,412Operation of

noninstructional services $ 2,319,427 $ 2,527,343 $ (207,916)

Facilities acquisition, construction, and improvement services $ 1,265,875 $ 1,299,709 $ (33,834)

Debt service $ 12,618,360 $ 14,519,492 $(1,901,132)Total Expenses $216,101,149 $222,605,575 $ (6,504,426)

Note:Total expenditures were approximately 3% more than budgeted amounts• Other instructional programs had an unfavorable variance of $946 thousand due to additional afterschool and summer

programs unanticipated grant funding.• Pre-Kindergarten programs had an unfavorable variance of $701 thousand due to an unanticipated increase in grant funding

to support additional pre-kindergarten classrooms.• Instructional staff services had a favorable variance of $2.9 million due to $1.6 million less spent in technology maintenance

and infrastructure due to more competitive pricing and $1.3 million less spent in curriculum materials and unfilled instructional coaching positions resulting in lower personnel costs.

General Fund Budget vs. Actual June 30, 2019

Budget Actual Variance Revenues $ 213,811,149 $ 222,220,781 $ 8,409,632 Expenditures $(216,101,149) $(222,605,575) $ (6,504,426)Other Financing Sources

(Uses) $ (135,000) $ 1,647,392 $ 1,782,392

Change in Fund Balance $ (2,425,000) $ 1,262,598 $ 3,687,598

Fund Balance, Beginning $ 29,102,425

Fund Balance, Ending $ 30,365,023

Note: Positive variance in other financing sources (uses) is related to unbudgeted proceeds from lease acquisition of $1.75 million.

General Fund – Fund BalanceJune 30, 2019

NonspendableInventories $ 200,150Prepaid items 31,004

CommittedSecurity Projects 1,000,000Technology Projects 2,500,000

Assigned toRepairs and maintenance contingency 2,750,000Student activities 138,476

Unassigned 23,745,393$30,365,023

General Fund – Fund BalanceJune 30, 2019

.

(10,000,000.00)

(5,000,000.00)

-

5,000,000.00

10,000,000.00

15,000,000.00

20,000,000.00

25,000,000.00

30,000,000.00

35,000,000.00

Fund Balance

Capital Projects Fund –Fund Balance June 30, 2019

Capital Reserve FundBalance June 30, 2018 $ 12,766,0832019 Net Change $ 275,865Balance June 30, 2019 $ 13,041,948

Capital Projects FundBalance June 30, 2018 $ 14,996,0612019 Net Change $ (10,998,757)Balance June 30, 2019 $ 3,997,304

Total Available for Future Capital ExpendituresJune 30, 2019 $ 17,039,252

Note: Current Capital Projects Fund available amounts are going to be used as part of thirdphase $90 million capital construction project to build a new elementary school (Buchanan)(K4-5) and renovation of Lincoln Middle School, Reynolds Middle School and WickershamElementary School. This may increase the district’s debt service in future years.

PSERS Net Pension Liability UpdateEffective 2014-2015, the District was required to comply withGASB Statement No. 68, Accounting and Financial Reportingfor Pensions. The major impact of GASB Statement No. 68 isto present, on the Statement of Financial Position, certain itemsrelated to the District’s proportionate liability from itsparticipation in the Commonwealth’s Public School EmployeesRetirement System ("PSERS").

Effective 2017-2018, the District was required to comply withGASB Statement No. 75, Accounting and Financial Reportingfor Postemployment Benefits Other Than Pensions. The majorimpact of GASB Statement No. 75 is to present, on theStatement of Financial Position, certain items related to theDistrict’s proportionate liability from its participation in theCommonwealth’s Public School Employees Retirement System("PSERS") healthcare insurance premium assistance program,which was not required to be presented in the prior years.

This liability increased to $293,742,000 as of June 30, 2019,representing a decrease of $5,107,000.

Employer Contribution Rates to “PSERS”

2016 - 2017 30.03%

2017 - 2018 32.57%

2018 - 2019 33.43%

2019 - 2020 34.29%

2020 - 2021 34.55%

2021 - 2022 35.19% *

2022 - 2023 35.84% *

* Projected, not yet certified

Schedule of Findings and Questioned Costs and Other Filing Deadlines

• No findings to report on internal control over financial reporting and oncompliance

• No management letter comments• Since the District spent more than $750,000 in federal funds, a Single Audit

was required– The major program tested was Title I

• Unmodified opinion on compliance• Internal controls over compliance were evaluated, also.• Financial Statements will be posted to EMMA within 180 days of year end

(December 27th)• Single Audit will be filed with Audit Clearinghouse by 9 months of year end

(March 31st)