Early Learning Coalition of St. Lucie County, Inc.

FINANCIAL STATEMENTS

June 30, 2016

Early Learning Coalition of St. Lucie County, Inc.

FINANCIAL STATEMENTS

For the Fiscal Year Ended June 30, 2016

TABLE OF CONTENTS

Page Number REPORT OF INDEPENDENT AUDITORS 1-2 Statement of Financial Position 3 Statement of Activities 4 Statement of Cash Flows 5 Notes to Financial Statements 6-13 SUPPLEMENTARY INFORMATION Schedule of Expenses of Federal Awards and State Projects 14 Notes to Schedule of Expenses of Federal Awards and State Projects 15 Schedule of Findings and Questioned Cost – Federal Programs and State Projects 16-17 Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 18-19 Independent Auditor’s Report on Compliance for Each Major Federal Program and State Award; Report on Internal Control over Compliance Required by the Uniform Guidance and Chapter 10.650 Rules of the Auditor General 20-22 Management Letter 23-24

EARLY LEARNING COALITION OF ST. LUCIE COUNTY INC.STATEMENT OF FINANCIAL POSITION

June 30, 2016

See accompanying notes to financial statements.

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Current AssetsCash and cash equivalents 449,268$ Accounts receivable 1,051,397 Prepaid expenses 9,840

TOTAL CURRENT ASSETS 1,510,505

Property and EquipmentProperty and equipment 121,879 Accumulated depreciation (88,877)

33,002

TOTAL ASSETS 1,543,507$

Current LiabilitiesAccounts payable 1,344,057$ Accrued expenses 125,135 Deferred revenues 5,260

TOTAL CURRENT LIABILITIES 1,474,452

Temporarily restricted net assets 13,000 Unrestricted 56,055

TOTAL NET ASSETS 69,055

TOTAL LIABILITES AND NET ASSETS 1,543,507$

LIABILITIES

NET ASSETS

ASSETS

EARLY LEARNING COALITION OF ST. LUCIE COUNTY, INC.STATEMENT OF ACTIVITIES

For the Year Ended June 30, 2016

See accompanying notes to financial statements.

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Support and RevenuesGrants:

Florida Office of Early Learning 14,590,805$ Local Support

Children's Services Council of St. Lucie County 362,817United Way of St. Lucie County 29,202Others 43,854

Total Support and Revenues 15,026,678

ExpensesProgram Services

School Readiness 8,861,498 Voluntary Prekindergarten 5,557,256

Total Programs 14,418,754 Supporting Services

General and administrative 633,694 Total Expenses 15,052,448

Change in Net Assets (25,770)

Net Assets, July 1, 2015 94,825

Net Assets, June 30, 2016 69,055$

EARLY LEARNING COALITION OF ST. LUCIE COUNTY, INC.STATEMENT OF CASH FLOWS

For the Year Ended June 30, 2016

See accompanying notes to financial statements.

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Cash Flows From Operating Activities

Change in Net Assets (25,770)$

Adjustments to reconcile change in net assets tonet cash (used) by operating activities

Depreciation and amortization 9,183 (Increase) decrease in:

Accounts receivable (460,332) Prepaid expenses 20,204

Increase (decrease) in:Accounts payable 607,437 Accrued expenses 21,555 Deferred revenues 392 Net Cash Used in Operating Activities 172,669

Cash Flows From Investing ActivitiesPurchases of property and equipment (7,550)

Net Increase in Cash 165,119

284,149

449,268$

Cash July 1, 2015

Cash June 30, 2016

Early Learning Coalition of St. Lucie County, Inc. NOTES TO FINANCIAL STATEMENTS

June 30, 2016

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NOTE 1 ─ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Early Learning Coalition of St. Lucie County, Inc. (the Coalition) was incorporated on March 1, 2000 in the State of Florida for the purpose of providing childcare assistance for qualifying participants at contracted childcare center and educating parents about the importance of their involvement in their children learning. The "Coalition" prepares children from birth to age 5 or until the child enters kindergarten through a comprehensive program of readiness services. These programs are to provide assistance and opportunities for children to develop physically, intellectually, socially, emotionally and creatively through child centered active learning environments and also provides parental support programs. Significant Accounting Policies The Coalition prepares its financial statements in accordance with generally accepted accounting principles promulgated in the United States of America (U.S. GAAP) for not-for-profit Coalitions. The significant accounting and reporting policies used by the Coalition are described subsequently to enhance the usefulness and understandability of the financial statements. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period and the reported amounts of assets and liabilities at the date of the financial statements. The Coalition's management believes that the estimates and assumption are reasonable under the circumstances; however, the actual results could different from those estimates.

Financial Statement Presentation The financial statements are presented in accordance with FASB ASC 958 Financial Statements of Not-For-Profit Organizations. Under ASC 958, the Coalition is required to report information regarding its financial position and activities according to three classes of net assets (unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets) based upon the existence or absence of donor-imposed restrictions.. As required by the FASB ASC 958, Revenue Recognition, the Coalition accounts for contributions received as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions.

Early Learning Coalition of St. Lucie County, Inc. NOTES TO FINANCIAL STATEMENTS

June 30, 2016

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NOTE 1 ─ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Assets Unrestricted net assets are resources available to support the operations of the Coalition. The only limits on the use of unrestricted net assets are the broad limits resulting from the nature of the Coalition, the environment in which it operates, the purposes specified in its corporate documents and its application for tax exempt status, and any limits resulting from the grant agreements or contractual agreements with creditor and others that are entered into the course of its operations. Temporarily restricted nets assets are resources that are restricted by a donor for use for a particular purpose or in a particular future period. The Coalitions' unspent contributions are classified in this class if the document limited their use for a specific period. When the donors restrictions is satisfied, either by using the resources in the manner specific by the donor or by the passage of time, the expiration of the restriction is reported in he financial statements by reclassifying the net assets from temporarily restricted to unrestricted net assets. Net assets restricted for acquisition of building or equipments (or less commonly, the contributions of these assets directly) are reported as temporarily restricted until the specified assets is placed in service by the Coalition, unless the donor provides more specific directions about the period of its use. Permanently restricted net assets are resources whose use by the Coalition is limited by donors imposed restrictions that neither expire by being used in accordance with a donors restrictions nor by the passage of time. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, cash in bank, and money market deposits. They consist of short-term, highly liquid investments, which are readily convertible into cash within ninety (90) days of purchase. Accounts Receivable The Coalition’s accounts receivable are comprised of Grants receivables mainly which are balances considered to be collectible and accordingly do not consider any allowance for doubtful accounts. Fair Value Measurements The Coalition reports its financial assets and liabilities using a three level hierarchy that prioritizes the inputs used to measure fair value as required by FASB ASC 820, Fair Value Measurements and Disclosures. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements), and the lowest priority to unobservable inputs (level 3 measurements).

Early Learning Coalition of St. Lucie County, Inc. NOTES TO FINANCIAL STATEMENTS

June 30, 2016

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NOTE 1 ─ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fair Value Measurements (Continued) The three levels of inputs used to measure fair value are as follows:

Level 1 – Quoted prices for identical assets or liabilities in active markets to which the Coalition has access at the measurement date.

Level 2 – Inputs other than quoted prices, included in level 1 that are observable for the

asset or liability, either directly or indirectly. Level 2 inputs include: • quoted prices for similar assets or liabilities in active markets; • quoted prices for identical or similar assets in markets that are not active; • observable inputs other than quoted prices for the asset or liability (for

example, interest rates and yield curves); and • inputs derived principally from, or corroborated by, observable market

data, observable market data by correlation or by others means. Level 3 – Unobservable inputs for the asset or liability. Unobservable inputs should be

used to measure the fair value to the extent that observable inputs are not available.

A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The primary uses of fair value measurement in the Coalitions' financial statements are:

• Initial measurement of non cash gifts, including gifts of investment assets and unconditional promises to give.

• Recurring measurement of short term investments. • Recurring measurement of endowment investments.

Property, Plant and Equipment, Property, plant and equipment are stated at cost less accumulated depreciation. Donated property and equipment is recorded at fair value at the date of donation. If donors stipulate how long the assets must be used, the contribution is recorded as restricted. In the absence of such stipulations, contributions are recorded as unrestricted. When assets are retired or otherwise disposed of, the asset’s cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the period. Maintenance and repairs are charged to expense as incurred; significant renewals and betterments are capitalized. Depreciation is provided for property, plant and equipment using the straight-line method based on estimated useful lives of 2-5 years. It is the Coalition's policy to capitalize property, plant and equipment over $1,000 and depreciate using the straight-line method.

Early Learning Coalition of St. Lucie County, Inc. NOTES TO FINANCIAL STATEMENTS

June 30, 2016

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NOTE 1 ─ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Accounting for Contributions In accordance with FASB ASC 958-605-15, Revenue Recognition - Contributions Received, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Contributions, including unconditional promises to give, are recognized when received. All contributions are reported as increases in unrestricted net assets unless use of the contributed assets is specifically restricted by the donor. Amounts received that are restricted by the donor to use in future periods or for specific purposes are reported as increases in either temporarily restricted or permanently restricted net assets, consistent with the nature of the restriction. Unconditional promises with payments due in future years have an implied restriction to be used in the year the payment is due, and therefore are reported as temporarily restricted until the payment is due unless the contribution is clearly intended to support activities of the current fiscal year or is received with permanent restrictions. Conditional promises, such as matching grants, are not recognized until they become unconditional, that is, until all conditions on which they depend are substantially met.

Functional Allocation of Expenses

The costs of providing the various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. The cost of providing the Coalitions' programs and other activities is summarized on a functional basis. Expenses that can be identified with a specific program or support service are charged directly to that program or support service. Costs common to multiple functions have been allocated among the various functions benefited. Support expenses include those costs that are not directly identifiable with any specific program, but which provide the overall support and direction of the Coalition.

Early Learning Coalition of St. Lucie County, Inc. NOTES TO FINANCIAL STATEMENTS

June 30, 2016

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NOTE 1 ─ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Tax Status The Coalition is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code (IRC), though it would be subject to tax on income unrelated to its exempt purpose (unless that income is otherwise excluded by the IRC). The Coalition is not classified as a private foundation within the meaning of Section 509(a) and qualifies for deductible contributions as provided in Section 170(b)(1)(A)(VI). The Coalition’s open audit periods are for the years ended June 30, 2012, 2013 and 2014. The Coalition has adopted the provisions of FASB ASC 740-10 (formerly known as FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes). Under this section, an Academy must recognize the tax benefit associated with tax taken for tax return purposes when it is more likely than not the position will be sustained. There was no impact to the Coalition's financial statements as a result of the implementation of ASC 740-10. Promises to Give Contributions are recognized when the donor makes a promise to give to the Coalition that is, in substance, unconditional. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donor restricted contributions are reported as increases in temporarily or permanent restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted assets.

NOTE 2 ─ CASH AND CASH EQUIVALENTS Cash and cash equivalents as reported on the Statement of Financial Position, includes the following:

Checking 42,156$ Petty cash 57 Money market 407,055

Total Cash 449,268$

As of June 30, 2016, the Coalition had $449,268 on deposits at various financial institutions, of which $177.772 was not insured by the Federal Deposit Insurance Corporation (FDIC). The Coalition has not experienced any losses in such accounts and management believes it is not exposed to any significant credit risk on cash.

Early Learning Coalition of St. Lucie County, Inc. NOTES TO FINANCIAL STATEMENTS

June 30, 2016

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NOTE 3 ─ PROPERTY AND EQUIPMENT An analysis of property and equipment for the year is as follows:

2015 Additions Deletions 2016

Furniture and fixtures 27,627$ -$ -$ 27,627$ Equipment 86,702 7,550 - 94,252 Total Cost 114,329 7,550 - 121,879 Less: accumulated depreciation (79,694) (9,183) - (88,877)

34,635$ (1,633)$ -$ 33,002$

Depreciation expense for the year was $9,183. NOTE 4 - CONCENTRATION OF RISK The Coalition received $14,590,805 of funding from the Florida Office of Early Learning that individually comprises over ninety percent of total revenue and support for the year ended June 30, 2016. As of June 30, 2016, the Coalition had receivables from the Florida Office of Early Learning of $978,511. NOTE 5 - ACCOUNTS RECEIVABLE Account receivable is mainly comprised of grants receivables. The entire receivable balance is considered collectible and accordingly, no allowance for doubtful accounts has been recorded. All of the accounts receivable balances at June 30, 2016 had been outstanding less than 30 days. NOTE 6 - PROVIDER PAYMENTS The Coalition has contracted for services with various agencies to provide child care services to pre-school children on a subcontract basis. Provider payments amount to $13,224,960 inclusive of Voluntary Pre-Kindergarten (VPK) and School Readiness (SR) programs. NOTE 7 - DEFERRED REVENUE Deferred revenue at June 30, 2016, consists primarily of VPK funds advanced to providers and unearned local match.

Early Learning Coalition of St. Lucie County, Inc. NOTES TO FINANCIAL STATEMENTS

June 30, 2016

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NOTE 8 - OPERATING LEASES The Coalition leases office space and a copier under various operating leases. A summary of future minimum lease payments for the years following June 30, 2016 is as follow:

Fiscal year ending June 30 Copiers Office Total2017 7,125$ 54,000$ 61,125$ 2018 7,125 72,000 79,125 2019 7,125 72,000 79,125 2020 7,125 72,000 79,125 2021 7,125 72,000 79,125

Thereafter 2,375 - 2,375 38,000$ 342,000$ 380,000$

NOTE 9 - RETIREMENT PLAN The Coalition has a defined contribution annuity plan. The plan's eligibility requirements are that a participant must have completed one year of service. The contributions made by the Coalition include elected deferral amounts of salary made by the employee, a matching amount paid by the Coalition not to exceed 3%, plus a discretionary non matching amount determine by the Coalition on a yearly basis. The employer contributed $11,722 for the year ended June 30, 2016. NOTE 10 – FUNCTIONAL EXPENSES Expenses have been allocated between program expenses and supporting services as follows:

School Readiness

Voluntary Pre Kindergarten

Total Program Services

General and Administrative Total Expenses

Provider payments 7,678,045$ 5,546,915$ 13,224,960$ -$ 13,224,960$ Salaries and wages 825,930 - 825,930 469,285 1,295,215 Professional services 162,854 3,581 166,435 41,095 207,530 Occupancy 83,057 - 83,057 37,120 120,177 Program supplies 46,532 5,483 52,015 11,062 63,077 Supplies 10,715 - 10,715 18,770 29,485 Small equipment 17,543 720 18,263 4,163 22,426 Telephone 13,539 - 13,539 8,687 22,226 Travel 9,119 - 9,119 10,916 20,035 Licenses and other fees 2,106 - 2,106 15,328 17,434 Insurance 9,034 - 9,034 1,166 10,200 Depreciation - - - 9,183 9,183 Miscellaneous expense - - - 6,240 6,240 Advertising and marketing 2,387 557 2,944 68 3,012 Postage and printing 637 - 637 611 1,248

8,861,498$ 5,557,256$ 14,418,754$ 633,694$ 15,052,448$

Supporting ServicesProgram Services

Early Learning Coalition of St. Lucie County, Inc. NOTES TO FINANCIAL STATEMENTS

June 30, 2016

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NOTE 11 - RELATED PARTY The Coalition contracted with other entities that had individuals associated with those entities who also served on the Board of Directors of the Coalition. The total amount paid to some of these agencies for the fiscal year include:

Included in Expenses

Payable at Year End

Agricultural and Labor Program, Inc (ALPI) 926,646$ 1,605$ Community United Methodist Preschool 191,608 21,221 Destiny Learning Center 124,125 14,633 Gingerbread Lane South 175,098 23,127 Indian River State College 43,759 969 St. Lucie County Chamber of Commerce 550 - St. Lucie County Health Department 103,673 1,337 St. Lucie County School Board 877,862 - Workforce Solutions 5,541 3,000

2,448,862$ 65,892$

Services provided by these agencies include coordinated childcare, nursing salaries, computer support, and other inclusion services among others. NOTE 12 - SUBSEQUENT EVENTS Subsequent events has been evaluated through January 24, 2017 which is the date the financial statements were available to be issued. Events occurring after the date have not been evaluated to determine whether a change in the financial statements would be required.

SUPPLEMENTARY INFORMATION

EARLY LEARNING COALITION OF ST. LUCIE COUNTY, INC.SCHEDULE OF EXPENSES OF FEDERAL AWARDS AND STATE PROJECTS

Year ended June 30, 2016

See accompanying notes to schedule of expenditures of federal awards and state financial assistance.

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DESCRIPTION CFDA Contract/ ExpendituresCSFA Grant

No NumberFederal:

UNITED STATES DEPT OF HEALTH & HUMAN SERVICESPassed Through Florida Office of Early Learning

Temporary Assistance for Needy Families 93.558 SR486 2,453,357$ Child Care Mandatory and Matching Funds of the Child Care and Development Fund 93.596 SR486 2,737,718 Child Care and Development Block Grant 93.575 SR486 3,140,496 Social Services Block Grant 93.667 SR486 7,506 Total Federal Expenditures 8,339,077$

State:FLORIDA DEPARTMENT OF EDUCATIONPassed Through Florida Office of Early Learning

Voluntary Prekindergarten Grant 48.108 SV486 6,270,507$ Voluntary Prekindergarten Outreach & Awareness 48.108 OA486 6,991 Total State Expenditures 6,277,498$

EARLY LEARNING COALITION OF ST. LUCIE COUNTY, INC. NOTES TO SCHEDULE OF EXPENSES OF

FEDERAL AWARDS AND STATE PROJECTS June 30, 2016

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NOTE 1 - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of Early Learning Coalition of St. Lucie County, Inc. and is presented on the cash basis of accounting. The information in the schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. NOTE 2 – SUB-RECIPIENT MONITORING The Early Learning Coalition of St. Lucie County, Inc. has provided no federal awards to subrecipients. NOTE 3 – CONTINGENCIES Amounts received, or receivable, from grantor agencies are subject to audit and adjustment by grantor agencies. If any expenditures are disallowed as a result of these audits, the claims for reimbursement to the grantor agency would become a liability of the Early Learning Coalition of St. Lucie County, Inc. In the opinion of Management, any such adjustment would not be significant.

Early Learning Coalition of St. Lucie County, Inc. Schedule of Findings and Questioned Costs –

Federal Programs and State Projects June 30, 2016

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SECTION I – SUMMARY OF AUDITOR’S RESULTS Financial Statements Type of auditor's report issued: Unmodified Internal control over financial reporting: Material weakness(es) identified? ____ yes X no Significant deficiency(ies) identified?____ yes X none reported Noncompliance material to financial statements noted? ____ yes X no Federal Awards Internal Control over major programs: Material weakness(es) identified? ____ yes X no Significant deficiency(ies) identified?____ yes X none reported Type of auditor's report issued on compliance for major programs: Unmodified Any audit findings disclosed that were required to be reported in accordance with Circular A-133, Section .510(a)? ____ yes X no Identification of Major Programs/Projects: Federal Programs CFDA Number(s) Name of Federal Program(s) or Cluster

93.575 Child Care and Development Block Grant 93.596 Child Care Mandatory Matching Funds of the Child Care and Development Fund 93.558 Temporary Assistance for Needy Families

State Programs CSDA Number(s) Name of Federal Program(s) or Cluster 48.108 Voluntary Prekindergarten Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? _X yes _ no SECTION II - FINANCIAL STATEMENT FINDINGS There are no findings relating to the financial statement which are required to be reported in accordance with Government Auditing Standards

Early Learning Coalition of St. Lucie County, Inc. Schedule of Findings and Questioned Costs –

Federal Programs and State Projects June 30, 2016

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SECTION III – FEDERAL AWARD AND STATE FINANCIAL ASSISTANCE FINDINGS AND

QUESTIONED COSTS No findings or questioned costs are reported in the current year as defined in OMB Circular A-133, Section 510 or State Assistance as defined in Rule 10.654(1)(g)4, Rules of the Florida Auditor General. SECTION IV – SUMMARY OF SCHEDULE OF PRIOR AUDIT FINDINGS No prior audit findings. SECTION V - OTHER MATTERS We confirm that the Coalition staff performs the monthly reconciliation of its financial records to the statewide School Readiness data and reporting systems monthly; the Coalition has processes in place to identify and correct errors noted during the monthly reconciliation process; and the Coalition's financial records and the EFS records were reconciled and in agreement as of the annual program year end. The Audit work papers include documentation to verify that these tasks have been performed and such work papers are available for review by the Florida Office of Early Learning staff upon request.