comprehensive annual financial reportc-3 budget-to-gaap reconciliation 59 other supplementary...

Comprehensive Annual Financial Report

of the

Borough of Wildwood Crest

Board of Education

Wildwood Crest, New Jersey

For the Year Ended June 30, 2012

Page

INTRODUCTORY SECTION

Letter of Transmittal 1-4

Organizational Chart 5

Roster of Officials 6

Consultants and Advisors 7

FINANCIAL SECTION

Independent Auditor's Report 8-9

Required Supplementary Information - Part I

Management's Discussion and Analysis 10-18

Basic Financial Statements

A. District-wide Statements

A-1 Statement of Net Assets 19

A-2 Statement of Activities 20

B. Fund Financial Statements:

Governmental Funds:B-1 Balance Sheet 21B-2 Comparative Statement of Revenues, Expenditures and

Changes in Fund Balance 22B-3 Reconciliation of the Statement of Revenues, Expenditures, and Changes

in Fund Balances of Governmental Funds to the Statement of Activities 23

Proprietary Funds:B-4 Statement of Net Assets 24B-5 Statement of Revenues, Expenses, and Changes in Net Assets 25B-6 Statement of Cash Flows 26

Fiduciary Funds:B-7 Statement of Fiduciary Net Assets 27B-8 Statement of Changes in Fiduciary Net Assets 28

Notes to the Financial Statements 29-47

TABLE OF CONTENTS

Page

Required Supplementary Information - Part II

C. Budgetary Comparison Schedules

C-1 Budgetary Comparison Schedule - General Fund 48-57C-2 Budgetary Comparison Schedule - Special Revenue Fund 58

Notes to Required Supplementary Information

C-3 Budget-to-GAAP Reconciliation 59

Other Supplementary Information

D. School Level Schedules N/A

E. Special Revenue Fund

E-1 Combining Schedule of Revenues and ExpendituresSpecial Revenue Fund - Budgetary Basis 60-61

E-2 Preschool Education Aid Schedule of Expenditures - Budgetary Basis 62

F. Capital Projects Fund:

F-1 Summary Schedule of Project Revenues, Expenditures, and Changes 63in Fund Balance - Budgetary Basis

F-1a Schedule of Project Revenues, Expenditures, Project Balance and& F-1b Project Status 64-65

F-2 Summary Statement of Project Expenditures 66

G. Proprietary Funds:

Enterprise Funds:G-1 Combining Statement of Net Assets N/AG-2 Combining Statement of Revenues, Expenses, and

Changes in Fund Net Assets N/AG-3 Combining Statement of Cash Flows N/A

Internal Service Fund:G-4 Combining Statement of Net Assets N/AG-5 Combining Statement of Revenues, Expenses, and

Changes in Fund Net Assets N/AG-6 Combining Statement of Cash Flows N/A

TABLE OF CONTENTS (Continued)

PageH. Fiduciary Funds:

H-1 Combining Statement of Fiduciary Net Assets 67H-2 Combining Statement of Changes in Fiduciary Net Assets 68H-3 Student Activity Agency Fund Schedule of Receipts and Disbursements 69H-4 Payroll Agency Fund Schedule of Receipts and Disbursements 70

I. Long-Term Debt:

I-1 Schedule of Serial Bonds N/AI-2 Schedule of Obligations under Capital Leases N/AI-3 Debt Service Fund Budgetary Comparison Schedule N/A

STATISTICAL SECTION (Unaudited)

Financial TrendsJ-1 Net Assets by Component 71J-2 Changes in Net Assets 72-73J-3 Fund Balances - Governmental Funds 74J-4 Changes in Fund Balances - Governmental Funds 75J-5 General Fund Other Local Revenue by Source 76

Revenue CapacityJ-6 Assessed Value and Estimated Actual Value of Taxable Property 77J-7 Direct and Overlapping Property Tax Rates 78J-8 Principal Property Taxpayers 79

J-9 Property Tax Levies and Collections 80Debt Capacity

J-10 Ratios of Outstanding Debt by Type 81J-11 Ratios of General Bonded Debt Outstanding 82J-12 Direct and Overlapping Governmental Activities Debt 83J-13 Legal Debt Margin 84

Demographic and Economic InformationJ-14 Demographic and Economic Statistics 85J-15 Principal Employers 86

Operating InformationJ-16 Full-time Equivalent District Employees by Function/Program 87J-17 Operating Statistics 88J-18 School Building Information 89J-19 Schedule of Required Maintenance Expenditures by School Facility 90J-20 Insurance Schedule 91


PageSINGLE AUDIT SECTION

K-1 Report on Internal Control over Financial Reporting and on Compliance andOther Matters Based on an Audit of Financial Statements - Statutory BasisPerformed in Accordance with Government Auditing Standards 92-93

K-2 Report on Compliance with Requirements Applicable to EachMajor Program and Internal Control over Compliance inAccordance with OMB Circular A-133 and New Jersey OMB Circular 04-04 94-95

K-3 Schedule of Expenditures of Federal Awards, Schedule A 96K-4 Schedule of Expenditures of State Financial Assistance, Schedule B 97K-5 Notes to Schedules of Awards and Financial Assistance 98-99K-6 Schedule of Findings and Questioned Costs 100-111K-7 Summary Schedule of Prior Audit Findings 112


Introductory Section

SCHOOL DISTRICT OF WILDWOOD CREST BOARD OF EDUCATION

9100 Pacific Avenue Wildwood Crest, NJ 08260

December 5, 2012 Honorable President and Members of the Board of Education Borough of Wildwood Crest School District County of Cape May, New Jersey Dear Board Members: The Comprehensive Annual Financial Report of the Borough of Wildwood Crest School District for the fiscal year ended June 30, 2012 is hereby submitted. Responsibility for both the accuracy of the data and completeness and fairness of the presentation, including all disclosures, rests with the management of the Board of Education. To the best of our knowledge and belief, the data presented in this report is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the District. All disclosures necessary to enable the reader to gain an understanding of the District's financial activities have been included. The Comprehensive Annual Financial Report is presented in four sections: Introductory, Financial, Statistical and Single Audit. The Introductory section includes this transmittal letter, the District's organizational chart and a list of principal officials. The Financial section includes the basic financial statements and schedules, as well as the auditor's report thereon. The Statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The District is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and the U.S. Office of Management and Budget Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations" and New Jersey OMB’s Circular 04-04, "Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid." Information related to this Single Audit, including the auditor's report on the internal control structure and compliance with applicable laws and regulations and findings and recommendations, is included in the single audit section of this report. REPORTING ENTITY AND ITS SERVICES: The Borough of Wildwood Crest School District is an independent reporting entity within the criteria adopted by the GASB Statement No. 14 as established by NCGA Statement No. 3. All funds of the District are included in this report. The Borough of Wildwood Crest Board of Education and all its schools constitute the District's reporting entity. Students in grades K to 8 attend the Wildwood Crest Board of Education’s Memorial School, and students in grades 9 through 12 attend the Wildwood High School as tuition students. All of the District’s students, regardless of their location, receive a full range of educational services appropriate to grade levels K through 12. These include regular, vocational, as well as special education for handicapped youngsters. The District’s total enrollment (including students in high school, the technical school, etc.) in fiscal year 2012 was 309 students. The total enrollment at the Crest Memorial School (grades K-8) was 273.

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The following details the changes in the total student enrollment of the District over the last ten years:

Memorial % ChangeFiscal Total School of TotalYear Enrollment Enrollment Enrollment

2011-12 309 273 -0.64%

2010-11 311 263 -10.63%

2009-10 348 300 -4.92%

2008-09 366 271 6.09%

2007-08 345 259 -1.43%

2006-07 350 262 10.41%

2005-06 317 289 -9.69%

2004-05 351 320 -12.25%

2003-04 400 323 -10.51%2002-03 447 346 3.71%

ECONOMIC CONDITION AND OUTLOOK: The Wildwood Crest community has an economy based on tourism. Due to the national and regional recession the community is undergoing a contraction in jobs. Additionally, some property owners are now renting their properties as a means of keeping the home. Combined these have contributed to a decline in enrollment and changes in the demographics of the school's population. State cuts in school aid is also having an impact on the school resulting in fewer instructional staff and fewer instructional options.

MAJOR INITIATIVES: Over the course of the fiscal year 2011 the Board of Education continued several major initiatives.

Due to loss of state aid the District eliminated any large maintenance projects. They have maintained their on-going preventative maintenance to the best of their ability. The District secured a Regular Operating District ("ROD") grant from the New Jersey Department of Education for the replacement of the school's roof. The Board of Education has been exploring ways to secure the remainder of the needed funding for that project without adding to the local tax levy. Currently they are exploring the use of solar power to generate SRECs to offset the local cost of this project.

INTERNAL ACCOUNTING CONTROLS: Management of the District is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the District are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Internal control is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. As a recipient of federal and state financial assistance, the District is also responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is also subject to periodic evaluation by the District's Management. As part of the District's single audit described earlier, tests are made periodically to determine the adequacy of the internal control structure, including that portion related to federal and state financial assistance programs, as well as to determine that the District has complied with applicable laws and regulations.

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BUDGETARY CONTROLS: In addition to internal accounting controls, the District maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the voters of the municipality. Annual appropriated budgets are adopted for the general fund, the special revenue fund, and the debt service fund. Project-length budgets are approved for the capital improvements accounted for in the capital projects fund. The final budget amount as amended for the fiscal year is reflected in the financial section. An encumbrance accounting system is used to record outstanding purchase commitments on a line item basis. Open encumbrances at year-end are either canceled or are included as reappropriations of fund balance in the subsequent year. Those amounts to be reappropriated are reported as reservations of fund balance as of June 30, 2012. ACCOUNTING SYSTEM AND REPORTS: The District's accounting records reflect accounting principles generally accepted in the United States of America, as promulgated by the Governmental Accounting Standards Board (GASB). The accounting system of the District is organized on the basis of funds. These funds are explained in the "Notes to the Financial Statements," Note 1. FINANCIAL INFORMATION AT FISCAL YEAR END: As demonstrated by the various statements and schedules included in the financial section of this report, the District continues to meet its responsibility for sound financial management. DEBT ADMINISTRATION: At June 30, 2012, the District had no outstanding debt. CASH MANAGEMENT: The investment policy of the District is guided in large part by state statute as detailed in "Notes to Financial Statements," Note 3. The District has adopted a cash management plan that requires it to deposit public funds in public depositories protected from loss under the provisions of the Governmental Unit Deposit Protection Act ("GUDPA"). GUDPA was enacted in 1980 to protect governmental units from a loss of funds on deposit with a failed banking institution in New Jersey. The law requires governmental units to deposit funds only in public depositories located in New Jersey, where the funds are secured in accordance with the Act. RISK MANAGEMENT: The Board carries various forms of insurance, including but not limited to general liability, automobile liability and comprehensive/collision, hazard and theft insurance on property and contents, and fidelity bonds. OTHER INFORMATION:

A. Independent Audit - State statutes require an annual audit by independent certified public accountants or registered municipal accountants. The accounting firm of Ford, Scott & Associates, L.L.C., CPAs was selected by the Board. In addition to meeting the requirements set forth in state statutes, the audit also was designed to meet the requirements of the Single Audit Act of 1984 and the related OMB Circular A-133 and New Jersey OMB Circular 04-04. The auditor's report on the financial statements and combining and individual fund statements and schedules is included in the financial section of this report. The auditor's reports related specifically to the single audit are included in the single audit section of this report.

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ACKNOWLEDGMENTS: We would like to express our appreciation to the members of the Wildwood Crest Board of Education for their concern in providing fiscal accountability to the citizens and taxpayers of the school district and thereby contributing their full support to the development and maintenance of our financial operation. Respectfully submitted,

Dennis J. Anderson Anne Marie Fala

Dennis J. Anderson Anne Marie Fala Superintendent Business Administrator/ Board Secretary

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BOROUGH OF WILDWOOD CREST BOARD OF EDUCATION COUNTY OF CAPE MAY NEW JERSEY

ROSTER OF OFFICIALS JUNE 30, 2012

Members of the Board of Education Term Expires Frank Accardi, Jr., President 2012 Judy Huber, Vice-President 2012 Lisa Fitzpatrick 2013 Joseph Schiff 2014 Will Morey 2013 Other Officials Dennis J. Anderson, Superintendent Gregory S. Rohrman, Business Administrator/Board Secretary Steven Ritchie, Treasurer Will Donio, Esq., Solicitor

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BOROUGH OF WILDWOOD CREST BOARD OF EDUCATION CONSULTANTS AND ADVISORS

AUDIT FIRM

Ford, Scott & Associates, L.L.C. Certified Public Accountants

1535 Haven Avenue P.O. Box 538

Ocean City, New Jersey 08226-0538

ATTORNEY

Will Donio, Esq. Cooper, Levenson, Attorneys At Law

1125 Atlantic Avenue Atlantic City, N.J. 08401

OFFICIAL DEPOSITORY

Crest Savings Bank 9800 Pacific Avenue

Wildwood Crest, New Jersey 08260

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Financial Section

INDEPENDENT AUDITOR’S REPORT The Honorable President and Members of the Board of Education Borough of Wildwood Crest School District County of Cape May, New Jersey We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Board of Education of the Borough of Wildwood Crest School District, in the County of Cape May, State of New Jersey, as of and for the fiscal year ended June 30, 2012, which collectively comprise the District’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Borough of Wildwood Crest School District Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and audit requirements as prescribed by the Division of Finance, Department of Education, State of New Jersey. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund and the aggregate remaining fund information of the Borough of Wildwood Crest School District Board of Education, in the County of Cape May, State of New Jersey, as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 5, 2012 on our consideration of the Borough of Wildwood Crest School District Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance with the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of our audit performed in accordance with Government Auditing Standards and should be considering is assessing the results of our audit.

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Accounting principles generally accepted in the United States of America require that the Management Discussion and Analysis and Budgetary Comparison Information identified in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying introductory section, combining statements, and related major fund supporting statements and schedules, and statistical information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements. The schedule of expenditures of federal and state awards is presented for purposes of additional analysis as required by the U.S Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and New Jersey Office of Management and Budget Circular 04-04 and is also not a required part of the basic financial statements. The introductory section, combining statements, and related major fund supporting statements and schedules, and statistical information listed in the table of contents and the schedule of expenditures of federal and state awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The combining statements and major fund supporting statements and schedules have been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Ford, Scott & Associates, L.L.C.

FORD, SCOTT & ASSOCIATES, L.L.C. CERTIFIED PUBLIC ACCOUNTANTS

Glen J. Ortman Glen J. Ortman Certified Public Accountant Licensed Public School Accountant No. 853 December 5, 2012

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Required Supplementary Information – Part I

WILDWOOD CREST SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012

UNAUDITED

The discussion and analysis of Wildwood Crest School District's financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2012. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the basic financial statements and notes to enhance their understanding of the School District's financial performance. Financial Highlights Key financial highlights for 2012 are as follows:

In total, net assets increased $1,019,401.27, which represents a 21 percent increase from 2011. General revenues accounted for $6,924,861.60 in revenue or 85 percent of all revenues.

Program specific revenues in the form of charges for services, operating grants and contributions, and capital grant and contributions accounted for $1,177,167.12 or 15 percent of total revenues of $8,102,028.72.

Total assets of governmental activities increased by $920,904.58 as cash and cash equivalents

increased by $176,090.07, and capital assets decreased by $513,389.61.

The School District had $7,082,627.45 in expenses; only $1,177,167.12 of these expenses was offset by program specific charges for services, grants or contributions, or Capital Grants & Contributions. General revenues (primarily taxes) of $6,924,861.60 did not sufficiently offset the cost of these programs.

Among governmental funds, the General Fund had $7,522,304.27 in revenues and

$6,829,423.49 in expenditures. The General Fund's fund balance increased $21,418.28 from 2011.

Using this Comprehensive Annual Financial Report (CAFR) This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Wildwood Crest School District as a financial whole, an entire operating entity. The statements then proceed to provide an increasingly detailed look at specific financial activities. The Statement of Net Assets and Statement of Activities provide information about the activities of the whole School district, presenting both an aggregate view of the School district's finances and a longer-term view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the School district's most significant funds with all other non-major funds presented in total in one column. In the case of Wildwood Crest School District, the General Fund is by far the most significant fund.

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UNAUDITED (CONTINUED)

Reporting the School District as a Whole Statement of Net Assets and the Statement of Activities While this document contains the large number of funds used by the School District to provide programs and activities, the view of the School District as a whole looks at all financial transactions and asks the question, "How did we do financially during 2012?" The Statement of Net Assets and the Statement of Activities answer this question. These statements include all assets and liabilities using the accrual basis of accounting similar to the accounting used by most private-sector businesses. This basis of accounting takes into consideration all of the current year's revenues and expenses regardless of when cash is received or paid. These two statements report the School District's net assets and changes in those assets. This change in net assets is important because it tells the reader that, for the school district as a whole, the financial position of the School district has improved or diminished. The causes of this change may be the result of many factors, some financial and some not. Non-financial factors include the School District's property tax base, current laws in New Jersey restricting revenue growth, facility condition, required educational programs and other factors. In the Statement of Net Assets and the Statement of Activities, the School District is divided into two distinct kinds of activities:

Governmental Activities - All of the School District's programs and services are reported here including instruction, support services, operation and maintenance of plant facilities, pupil transportation and extracurricular activities.

Business-Type Activity - This service is provided on a charge for goods or services basis to

recover all the expenses of the goods or services provided. The Food Service enterprise fund is reported as a business activity.

Reporting the School District's Most Significant Funds Fund Financial Statements Fund financial reports provide detailed information about the School District's funds. The School District uses many funds to account for a multitude of financial transaction. The School District's governmental funds are the General Fund, Special Revenue Fund, Capital Projects Fund, and Debt Service Fund. Governmental Funds The School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in the future years. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School district's general government operations and the basic services it provides. Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the financial statements.

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Reporting the School District's Most Significant Funds (Continued) Enterprise Fund The enterprise fund uses the same basis of accounting as business-type activities; therefore, these statements are essentially the same. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the District-wide and fund financial statements. The notes to the financial statements can be found on pages 29-47 of this report. The School District as a Whole Recall that the Statement of Net Assets provides the perspective of the School District as a whole. Net assets may serve over time as a useful indicator of a government's financial position. The District's financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. Table 1 provides a summary of the School District's net assets for 2011 and 2012.

Table 1

Net Assets

2011 2012Assets

Current and Other Assets $ 439,214.04 $ 844,771.53 Capital Assets 4,702,511.87 5,212,514.80

Total Assets $ 5,141,725.91 $ 6,057,286.33

LiabilitiesLong-Term Liabilities $ 469,375.98 $ 267,294.04 Other Liabilities 6,551.96 104,793.05

Total Liabilities $ 475,927.94 $ 372,087.09

Net AssetsInvested in Capital Assets, Net of Debt $ 4,702,511.87 $ 5,212,514.80 Restricted 213,843.22 359,331.00 Unrestricted (250,557.12) 113,353.44

Total Net Assets $ 4,665,797.97 $ 5,685,199.24

The District's combined net assets were $5,685,199.24 on June 30, 2012. This was an increase of 21 percent from the prior year.

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The School District as a Whole (Continued) Table 2 shows changes in net assets for fiscal years 2011 and 2012.

Table 2 Changes in Net Assets

2011 2012

RevenuesProgram Revenues:

Charges for Services $ 23,147.65 $ 86,373.67 Operating Grants and Contributions 859,144.20 737,726.45 Capital Grants and Contributions - 353,067.00

General Revenues:Property Taxes 6,048,533.00 6,169,504.00 Grants and Entitlements 226,425.08 570,899.40 Gain on Disposal of Assets - 134,800.00 Other 300,818.29 49,658.20

Total Revenues 7,458,068.22 8,102,028.72

Program ExpensesInstruction 3,417,397.11 3,376,464.60 Support Services:

Pupils and Instructional Staff 2,389,914.36 2,098,494.15 General Administration, School Administration, Business Operations and Maintenance of Facilities 1,036,591.22 1,129,538.43 Pupil Transportation 126,836.81 173,371.99 Unallocated Depreciation 161,667.56 154,632.89 Transfer to Charter School 119,317.00 84,861.00

Food Service 52,001.25 65,264.39 Loss on Disposal of Assets 11,656.60 - Total Expenses 7,315,381.91 7,082,627.45

Increase/(Decrease) in Net Assets $ 142,686.31 $ 1,019,401.27

Governmental Activities The unique nature of property taxes in New Jersey creates the legal requirements to annually seek voter approval for the School District operations. Property taxes made up 76.1 percent of revenues for governmental activities for the Wildwood Crest School District for fiscal year 2012. The District's total revenues were $8,111,308.49 for the year ended June 30, 2012. Federal, state, and local grants accounted for another 20.1 percent of revenue.

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Governmental Activities (Continued)

Federal/State Grants20.1%

Property Taxes76.1%

Other3.9%

Revenue for Fiscal Year 2012

The total cost of all program and services was $7,017,363.06. Instruction comprises 48.1 percent of District expenses.

Instruction48.1%

Tuition18.1%

Student Support Services11.8%

Administration6.2%

Maintenance & Operations

9.9%

Transportation2.5%

Other 3.4%

Expenses for Fiscal Year 2012

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Business-Type Activities Revenues for the District's business-type activities (food service program) were comprised of charges for services and federal and state reimbursements.

Food service expenses exceeded revenues by $9,077.06.

Charges for services represent $20,282.67 of revenue. This represents amounts paid by patrons for daily food service.

Federal and state reimbursement for meals, including payments for free and reduced lunches and

breakfast was $30,560.50. Governmental Activities The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows the total cost of services and the net cost of services. The net cost shows the financial burden that was placed on the District's taxpayers by each of these functions.

Table 3 Total Cost of Net Cost of Total Cost of Net Cost ofServices 2011 Services 2011 Services 2012 Services 2012

Instruction $ 3,417,397.11 $ 2,774,851.79 $ 3,376,464.60 $ 2,789,065.36 Support Services:

Pupils and Instructional Staff 2,389,914.36 2,304,121.93 2,098,494.15 2,008,808.14 General Administration, Business Operation and Maintenance of Facilities 1,036,591.22 990,074.22 1,129,538.43 680,299.73 Pupil Transportation 126,836.81 74,133.74 173,371.99 173,371.99 Other 280,984.56 280,984.56 239,493.89 239,493.89

Total Expenses $ 7,251,724.06 $ 6,424,166.24 $ 7,017,363.06 $ 5,891,039.11

Instruction expenses include activities directly dealing with the teaching of pupils and the interaction between teacher and student, including extracurricular activities. Pupils and instructional staff include the activities involved with assisting staff with the content and process of teaching to students, including curriculum and staff development. General administration, school administration, and business include expenses associated with administrative and financial supervision of the District. Operation and maintenance of facilities involve keeping the school grounds, buildings, and equipment in an effective working condition. Pupil transportation includes activities involved with the conveyance of students to and from school, as well as to and from school activities, as provided by State law.

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The School District's Funds All governmental funds (i.e., general fund, special revenue fund, capital projects, and debt service fund presented in the fund-based statements) are accounted for using the modified accrual basis of accounting. Total revenues amounted to $8,111,308.49 and expenditures were $7,793,034.61. The net positive change in fund balance for the year was most significant in the capital projects fund, an increase of $287,307.00. As demonstrated by the various statements and schedules included in the financial section of this report, the District continues to meet its responsibility for sound financial management. The following schedules present a summary of the revenues of the governmental funds for the fiscal year ended June 30, 2012, and the amount and percentage of increases and decreases in relation to prior year revenues.

Increase Percent ofPercent of (Decrease) Increase

Revenue Amount Total from 2011 (Decrease)

Local Sources $ 6,481,968.76 79.91% $ 132,652.06 2.09%State Sources 1,424,584.73 17.56% 543,317.00 61.65%Federal Sources 204,755.00 2.52% 32,039.83 18.55%

Total $ 8,111,308.49 $ 708,008.89

The following schedule represents a summary of general fund, special revenue fund, capital projects and debt service fund expenditures for the fiscal year ended June 30, 2012, and the percentage of increases and decreases in relation to prior year amounts.

Increase Percent ofPercent of (Decrease) Increase

Expenditures Amount Total from 2011 (Decrease)

Current expense:Instruction $ 2,586,186.07 33.19% $ 3,525.76 0.14%Undistributed expenditures 4,427,031.12 56.81% (157,708.07) -3.44%

Capital Outlay 779,817.42 10.01% 735,591.99 0.00%Total $ 7,793,034.61 $ 581,409.68

Page 16



General Fund Budgeting Highlights The School District's budget is prepared according to New Jersey law, and is based on accounting for certain transactions on a basis of cash receipts, disbursements, and encumbrances. The most significant budgeted fund is the General Fund. Over the course of the year, the District revised the annual operating budget several times. Revisions in the budget were made to recognize revenues that were not anticipated and to prevent over-expenditures in specific line item accounts. Several of these revisions bear notation:

TPAF, which is the state's contribution to the pension fund, is neither a revenue item nor an expenditure item to the district but is required to be reflected in the financial statements.

Salaries of regular instruction overall were near anticipated levels. Transfers were made during

the year from regular instructional salary accounts to redistribute budgeted amounts closer to actual expenditures.

Capital Assets At the end of the fiscal year 2012, the School District had $5,212,514.80 invested in land, land improvements, buildings, infrastructure and machinery and equipment. Table 4 shows fiscal year 2012 balances compared to 2011.

Table 4 Capital Assets (Net of Depreciation) at June 30,

2011 2012

Land $ 890,450.00 $ 830,250.00 Construction in Process - 728,222.50 Land Improvements 32,531.20 23,664.10 Buildings 3,726,722.61 3,587,859.29 Machinery and Equipment 52,808.06 42,518.91

Total $ 4,702,511.87 $ 5,212,514.80

Overall capital assets increased $510,002.93 from fiscal year 2011 to fiscal year 2012 due primarily to construction in progress of the Rod Grant Roof Project. For more detailed information, please refer to the Notes to the Financial Statements.

Page 17



Debt Administration At June 30, 2012, the School District had $267,294.04 of outstanding debt. The full amount is for compensated absences.

Table 5 Outstanding Debt at June 30,

2011 2012

Compensated Absences $ 469,375.98 $ 267,294.04 Total $ 469,375.98 $ 267,294.04

For the Future The Wildwood Crest School District is in good financial condition presently. The School District is proud of its community support of the public schools. A major concern is the continued reliance on local property taxes coupled with flat funding by the State for the past several years. The real prospect of declining state funding is a significant financial concern to the District. In conclusion, the Wildwood Crest School District has committed itself to financial excellence for many years. In addition, the School District's system for financial planning, budgeting, and internal financial controls are well regarded. The School District plans to continue its sound fiscal management to meet the challenges of the future. Contacting the School District's Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional information, contact Anne-Marie Fala, Business Administrator/Board Secretary at Borough of Wildwood Crest Board of Education, 9100 Pacific Avenue, Wildwood Crest, N.J. 08260, (609) 729-9312.

Page 18

Basic Financial Statements

DISTRICT – WIDE FINANCIAL STATEMENTS

The statement of net assets and the statement of activities display information about the District. These statements include the financial activities of the overall District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business – type activities of the District.

A-1

Governmental Business-TypeActivities Activities Total

ASSETSCash and Cash Equivalents 461,588.36$ 4,524.48$ 466,112.84$ Receivables, Net (Note 3) 372,315.13 1,344.40 373,659.53 Due from Other Funds (804.18) 804.18 (0.00) Due from Fiduciary Funds 4,999.16 4,999.16 Capital Assets, not Depreciable 1,558,472.50 1,558,472.50 Capital Assets, Depreciable, Net 3,623,642.33 30,399.97 3,654,042.30

Total Assets 6,020,213.30 37,073.03 6,057,286.33

LIABILITIESDeferred Revenue 38,703.03 38,703.03 Accounts Payable 66,087.06 2.96 66,090.02 Noncurrent Liabilities

Due Beyond One Year 267,294.04 267,294.04 Total Liabilities 372,084.13 2.96 372,087.09

NET ASSETSInvested in Capital Assets, Net of Related Debt 5,182,114.83 30,399.97 5,212,514.80 Restricted for:

Capital Projects 353,067.00 353,067.00 Other Purposes 6,264.00 6,264.00

Unrestricted 106,683.34 6,670.10 113,353.44

Total Net Assets 5,648,129.17$ 37,070.07$ 5,685,199.24$

Statement of Net AssetsBOROUGH OF WILDWOOD CREST SCHOOL DISTRICT

June 30, 2012

The accompanying Notes to Financial Statements are an integral part of this statement

Page 19

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Page 20

FUND FINANCIAL STATEMENTS

The individual Fund statements and schedules present more detailed information for the individual fund in a format that segregates information by fund type.

B-1

Special Capital TotalGeneral Revenue Projects Governmental

Fund Fund Fund FundsASSETS

Cash and Cash Equivalents 431,293.33$ 30,295.03$ 461,588.36$ Interfund Receivables 102,000.00$ 102,000.00 Receivables, Net 4,191.00 2,000.00 6,191.00 Receivables from Other Governments 12,135.13 922.00 353,067.00 366,124.13

Total Assets 447,619.46$ 33,217.03$ 455,067.00$ 935,903.49$

LIABILITIES AND FUND BALANCESLiabilities:

Interfund Payable 97,805.02$ 97,805.02$ Accounts Payable 66,087.06 66,087.06 Deferred Revenue 38,703.03 38,703.03

Total Liabilities 163,892.08 38,703.03 - 202,595.11

Fund Balances:Restricted for:

Capital Projects Fund 353,067.00 353,067.00 Excess Surplus 6,264.00 6,264.00

Assigned to:Other Purposes 11,163.38 102,000.00 113,163.38 Subsequent Year's Expenditures 53,282.00 53,282.00

Unassigned, Reported in:Special Revenue Fund (5,486.00) (5,486.00) General Fund 213,018.00 213,018.00

Total Fund Balances 283,727.38 (5,486.00) 455,067.00 733,308.38

Total Liabilities and Fund Balances 447,619.46$ 33,217.03$ 455,067.00$

Amounts reported for governmental activities in the statement ofnet assets (A-1) are different because:

Capital assets used in governmental activities are not financial resourcesand therefore are not reported in the funds. The cost of the assetsis $8,027,824.46 and the accumulated depreciation is $2,845,709.63. 5,182,114.83

Long-term liabilities, including bonds, capital lease payable, and compensated absences are not due and payable in the current period and therefore are not reported as liabilities in the funds. (267,294.04)

Net assets of governmental activities 5,648,129.17$

Governmental FundsBalance Sheet

BOROUGH OF WILDWOOD CREST SCHOOL DISTRICT

June 30, 2012


Page 21

B-2

Special Capital TotalGeneral Revenue Projects Governmental

Fund Fund Fund FundsREVENUES

Local Sources:Local Tax Levy 6,169,504.00$ -$ -$ 6,169,504.00$ Tuition 66,091.00 66,091.00 Interest 3,341.79 3,341.79 Miscellaneous 241,239.35 1,792.62 243,031.97

Total Local Sources 6,480,176.14 1,792.62 - 6,481,968.76 State Sources 1,016,109.13 55,408.60 353,067.00 1,424,584.73 Federal Sources 26,019.00 178,736.00 204,755.00

Total Revenues 7,522,304.27 235,937.22 353,067.00 8,111,308.49

EXPENDITURESCurrent:

Regular Instruction 1,884,263.78 220,067.62 2,104,331.40 Special Education Instruction 380,874.00 380,874.00 Other Instruction 100,980.67 100,980.67 Support Services:

Tuition 1,271,120.66 1,271,120.66 Student & Instruction Related Serv. 618,401.56 15,321.00 633,722.56 Other Administrative Services 157,759.29 157,759.29 Plant Operation and Maintenance 491,068.73 491,068.73 Pupil Transportation 173,371.99 173,371.99 Business and Other Support Serv. 176,817.38 176,817.38 Employee Benefits 1,438,309.51 1,438,309.51

Capital Outlay 51,594.92 728,222.50 779,817.42 Transfer to Charter Schools 84,861.00 84,861.00

Total Expenditures 6,829,423.49 235,388.62 728,222.50 7,793,034.61

Excess (Deficiency) of RevenuesOver Expenditures 692,880.78 548.60 (375,155.50) 318,273.88

OTHER FINANCING SOURCES (USES)Transfer in 662,462.50 662,462.50 Transfer out (671,462.50) (671,462.50)

Total Other Financing Sources and Uses (671,462.50) - 662,462.50 (9,000.00)

Net Changes in Fund Balance 21,418.28 548.60 287,307.00 309,273.88

Fund Balance - July 1 262,309.10 (6,034.60) 167,760.00 424,034.50

Fund Balance - June 30 283,727.38$ (5,486.00)$ 455,067.00$ 733,308.38$

Governmental FundsStatement of Revenues, Expenditures, and Changes in Fund Balance




Page 22

B-3

Total Net Change in Fund Balance - Governmental Funds (from B-2) 309,273.88$

Amounts reported for governmental activities in the statement ofactivities (A-2) are different because:

Capital outlays are reported in governmental funds as expenditures.However, on the statement of activities, the cost of those assets isallocated over their estimated useful lives as depreciation expense.

This amount is the sum of depreciation expenses, plus the net effectof disposal of assets:

Depreciation expense (154,632.89) Capital Outlays 728,222.50

573,589.61

In the statement of activities, only the loss on the disposal of fixedassets is reported, whereas in the governmental funds there is nodecrease in financial resources. Thus the change in net assets will differfrom the change in fund balance by the net cost of the asset removed. (60,200.00)

In the statement of activities, certain operating expenses,e.g., compensated absences (vacations) are measured by the amounts earned during the year. In the governmental funds,however, expenditures for these items are reported in the amountof financial resources used (paid). When the earned amountexceeds the paid amount, the difference is a reduction in thereconciliation (-); when the paid amount exceeds the earnedamount, the difference is an addition to the reconciliation (+). 202,081.94

Change in Net Assets of Governmental Activities 1,024,745.43$

of Governmental Funds to the Statement of ActivitiesReconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance




Page 23

B-4

FoodServiceFund

ASSETSCurrent Assets:

Cash and Cash Equivalents 4,524.48$ Interfund Receivable 804.18 Intergovernmental Accounts Receivable:

Federal 1,309.57 State 34.83 Total Current Assets 6,673.06

Noncurrent Assets:Furniture, Machinery & Equipment 57,303.12

Less: Accumulated Depreciation (26,903.15) Total Noncurrent Assets 30,399.97

Total Assets 37,073.03$

LIABILITIESCurrent Liabilities:

Intergovernmental Accounts Payable:Federal 2.96$ Total Current Liabilities 2.96

NET ASSETSInvested in Capital Assets Net of

Related Debt 30,399.97 Unrestricted 6,670.10

Total Net Assets 37,070.07$

BOROUGH OF WILDWOOD CREST SCHOOL DISTRICTProprietary Funds

Statement of Net AssetsJune 30, 2012


Page 24

B-5

FoodServiceFund

Operating Revenues:Charges for Services:

Daily Sales 20,282.67$ Total Operating Revenue 20,282.67

Operating Expenses:Cost of Sales 40,557.71 Salaries 21,320.00 Depreciation 3,386.68

Total Operating Expenses 65,264.39 Operating Income (Loss) (44,981.72)

Nonoperating Revenues (Expenses):State Sources:

School Lunch Program 786.12 Federal Sources:

National School Lunch Program 29,026.98 School Breakfast Program 747.40

Interest and Investment Income 77.06 Total Nonoperating Revenues (Expenses) 30,637.56

Income (Loss) before Contributions & Transfers (14,344.16)

Transfers In (Out) 9,000.00

Changes in Net Assets (5,344.16)

Total Net Assets-Beginning 42,414.23

Total Net Assets - Ending 37,070.07$


For the Year Ended June 30, 2012Statement of Revenues, Expenses, and Changes in Fund Net Assets

Proprietary Funds


Page 25

B-6

FoodServiceFund

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from Customers 20,282.67$ Payments to Employees (21,320.00) Payments for Cost of Sales (40,557.71)

Net Cash Provided by (Used for) OperatingActivities (41,595.04)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESState Sources 800.09 Federal Sources 30,134.71 Operating Subsidies and Transfers to Other Funds 9,000.00

Net Cash Provided by (Used for) NoncapitalFinancing Activities 39,934.80

CASH FLOW FROM INVESTING ACTIVITIESInterest and Dividends 77.06

Net Cash Provided by (Used for) InvestingActivities 77.06

Net Increase (Decrease) in Cash and CashEquivalents (1,583.18)

Balance - Beginning of Year 6,107.66 Balance - End of Year 4,524.48$

Reconciliation of Operating Income (Loss) to NetCash Provided (Used) by Operating Activities:

Operating Income (Loss) (44,981.72)$ Adjustments to Reconcile Operating Income(Loss) toNet Cash Provided by (Used for) Operating Activities:

Depreciation and Net Amortization 3,386.68 Total Adjustments 3,386.68

Net Cash Provided by (Used for) Operating Activities (41,595.04)$


For the Year Ended June 30, 2012Statement of Cash Flows

Proprietary Funds


Page 26

B-7

Unemployment Private Purpose AgencyCompensation Scholarship Fund Fund

ASSETSCash and Cash Equivalents 15,020.02$ 564.01$ 22,432.95$ Intrafund Receivable -

Total Assets 15,020.02 564.01 22,432.95

LIABILITIESInterfund Payable 4,999.16 Payroll Deductions

and Withholdings 1,303.20 Payable to Student Groups 16,130.59

Total Liabilities - - 22,432.95$

NET ASSETSHeld in Trust for Unemployment

Claims and Other Purposes 15,020.02$

Reserved for Scholarships 564.01$

Statement of Net AssetsFiduciary Funds


June 30, 2012


Page 27

B-8

Unemployment Private PurposeCompensation Scholarship Fund

ADDITIONSContributions:

Plan Members 16,188.87$ -$ Total Contributions 10,000.00 Board of Education 26,188.87 -

Investment Earnings:Interest 42.78 2.73

Less: Investment ExpenseNet Investment Earnings 42.78 2.73

Total Additions 26,231.65 2.73

DEDUCTIONSUnemployment Claims 22,494.80

Total Deductions 22,494.80 -

Changes in Net Assets 3,736.85 2.73

Net Assets - Beginning of the Year 11,283.17 561.28

Net Assets - End of the Year 15,020.02$ 564.01$

BOROUGH OF WILDWOOD CREST SCHOOL DISTRICTFiduciary Funds

Statement of Changes in Fiduciary Net AssetsFor the Year Ended June 30, 2012


Page 28

BOROUGH OF WILDWOOD CREST SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2012

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Board of Education (Board) of Borough of Wildwood Crest School District (District) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Board’s accounting policies are described below. A. Reporting Entity The District is an instrumentality of the State of New Jersey, established to function as an educational institution. The Board consists of elected officials and is responsible for the fiscal control of the District. A superintendent is appointed by the Board and is responsible for the administrative control of the District. The purpose of the district is to educate students in grades K-8. The District operates a combined elementary and middle school located in Borough of Wildwood Crest. The primary criterion for including activities within the District’s reporting entity, as set forth in Section 2100 of the GASB Codification of Governmental Accounting and Financial Reporting Standards, is whether:

the organization is legally separate (can sue or be sued in their own name); the District holds the corporate powers of the organization; the District appoints a voting majority of the organization’s board; the District is able to impose its will on the organization; the organization has the potential to impose a financial benefit/burden on the District; there is a fiscal dependency by the organization on the District;

Based on the aforementioned criteria, the District has no component units. B. Basis of Presentation, Measurement Focus and Basis of Accounting Basis of Presentation The School District’s basic financial statements consist of District-wide statements (i.e. statement of net assets and a statement of activities) and fund financial statements, which provide a more detailed level of financial information. District-Wide Financial Statements: The statement of net assets and the statement of activities display information about the district as a whole. These statements report the financial activities of the overall District, except for fiduciary activities. Individual funds are not displayed but the statements distinguish governmental activities, generally supported by property taxes, intergovernmental revenues, and other non-exchange transactions from business-type activities, generally financed in whole or in part with fees charged to external parties.

Page 29


FOR THE YEAR ENDED JUNE 30, 2012 (CONTINUED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B. Basis of Presentation, Measurement Focus and Basis of Accounting - Continued Basis of Presentation - Continued The statement of net assets presents the financial condition of the governmental and business-type activity of the School District at fiscal year end. The statement of activities presents a comparison between direct expenses and program revenues for the business-type activity of the District and for each function of the District’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges and fees paid by the recipients of goods or services offered by the programs; and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including taxes, are presented as general revenues. The comparison of direct expenses with program revenues identifies the extent to which each governmental function or business segment is self-financing, or draws from the general revenues of the School District. Fund Financial Statements: During the fiscal year, the School District segregates transactions related to certain School District functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. The fund financial statements provide information about the District’s funds, including its fiduciary funds. Separate statements for each fund category – governmental, proprietary, and fiduciary - are presented. The New Jersey Department of Education (“Department”) has elected to require New Jersey districts to treat each governmental fund as a major fund in accordance with the option noted in GASB No. 34, paragraph 76. The Department believes that the presentation of all funds as major is important for public interest and to promote consistency among district financial reporting models. Governmental Funds The District reports the following governmental funds:

General Fund - The General Fund is the general operating fund of the District and is used to account for all expendable financial resources except those required to be accounted for in another fund. Included are certain expenditures for vehicles and movable instructional or non-instructional equipment, which are classified in the capital outlay sub-fund. As required by the New Jersey State Department of Education, the District includes budgeted capital outlay in this fund. Generally accepted accounting principles, as they pertain to governmental entities, state that general fund resources may be used to directly finance capital outlays for long-lived improvements as long as the resources in such cases are derived exclusively from unrestricted revenues. Resources for budgeted capital outlay purposes are normally derived from State of New Jersey Aid, district taxes and appropriated fund balance. Expenditures are those that result in the acquisition of or additions to fixed assets for land, existing buildings, improvements of grounds, construction of buildings, additions to or remodeling of buildings and the purchase of built-in equipment. These resources can be transferred from and to Current Expense by board resolution.

Special Revenue Fund - The Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes.

Page 30



NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B. Basis of Presentation, Measurement Focus and Basis of Accounting - Continued

Capital Projects Fund - The Capital Projects Fund is used to account for all financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds). The financial resources are derived from temporary notes or serial bonds that are specifically authorized by the voters as a separate question on the ballot either during the annual election or at a special election.

Debt Service Fund - The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, principal and interest on bonds issued to finance major property acquisition, construction and improvement programs.

Proprietary Funds The District reports the following proprietary fund:

Enterprise Funds - Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business operations – where the intent of the District is that the costs of providing goods or services be financed or recovered primarily through user charges. The District's Enterprise Fund is comprised of the Food Service Fund, which accounts for all revenues and expenses pertaining to the District’s cafeteria operations.

Fiduciary Funds

Trust and Agency Funds - The Trust and Agency Funds are used to account for assets held by the District in a trustee capacity or as an agent for individuals, private organizations, other governments and/or other funds.

Expendable Trust Fund - An Expendable Trust Fund is accounted for in essentially the same manner as the governmental fund types, using the same measurement focus and basis of accounting. Expendable Trust Funds account for assets where both the principal and interest may be spent. Expendable Trust Funds include the Unemployment Compensation Fund.

Nonexpendable Trust Fund - A Nonexpendable Trust Fund is used to account for assets held under the terms of a formal trust agreement, whereby the District is under obligation to maintain the trust principal. The District maintains the Harper Memorial Fund as a Nonexpendable Trust Fund. Agency Funds - Agency funds are used to account for the assets that the District holds on behalf of others as their agent. Agency funds are custodial in nature and do not involve measurement of results of operations. Agency funds include payroll and student activities funds.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B. Basis of Presentation, Measurement Focus and Basis of Accounting - Continued Measurement Focus and Basis of Accounting Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements. The District-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting as are the proprietary fund and the fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year in which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Net assets (total assets less total liabilities) are used as a practical measure of economic resources and the operating statement includes all transactions and events that increased or decreased net assets. Depreciation is charged as expense against current operations and accumulated depreciation is reported on the statement of net assets. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available is they are collected within 60 days of the end of the fiscal year. Revenue from federal, state and other grants designated for payment of specific school district expenditures is recognized when the related expenditures are incurred; accordingly, when such funds are received, they are recorded as deferred revenues until earned. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. The District applies only those applicable pronouncements of the Financial Accounting Standards Board issued on or before November 30, 1989 in accounting and reporting for its proprietary operations.

C. Budgets/Budgetary Control Annual appropriated budgets are prepared in the spring of each year for the general, special revenue, and debt service funds. The budgets are submitted to the county office for approval and are voted upon at the annual school election on the third Tuesday in April. Budgets are prepared using the modified accrual basis of accounting, except for special revenue funds. The legal level of budgetary control is established at line item accounts within each fund. Line item accounts are defined as the lowest (most specific) level of detail as established pursuant to the minimum chart of accounts referenced in N.J.A.C. 6A:23-2.2(g). All budget amendments/transfer must be approved by School Board resolution. All budget amounts presented in the accompanying supplementary information reflect the original budget and the amended budget (which have been adjusted for legally authorized revisions of the annual budgets during the year. Appropriations, except remaining project appropriations, encumbrances and unexpended grant appropriations, lapse at the end of each fiscal year. The capital projects fund presents the remaining project appropriations compared to current year expenditures.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued C. Budgets/Budgetary Control - Continued Formal budgetary integration into the accounting system is employed as a management control device during the year. For governmental funds there are no substantial differences between the budgetary basis of accounting and generally accepted accounting principles with the exception of the legally mandated revenue recognition of the last state aid payment for budgetary purposes only and the special revenue fund as noted below. Encumbrance accounting is also employed as an extension of formal budgetary integration in the governmental fund types. Unencumbered appropriations lapse at fiscal year end. The accounting records of the special revenue fund are maintained on the grant accounting budgetary basis. The grant accounting budgetary basis differs from GAAP in that the grant accounting budgetary basis recognizes encumbrances as expenditures and also recognizes the related revenues, whereas the GAAP basis does not. Sufficient supplemental records are maintained to allow for the presentation of GAAP basis financial reports. D. Encumbrance Accounting Under encumbrance accounting, purchase orders, contracts and other commitments for the expenditure of resources are recorded to reserve a portion of the applicable appropriation. Open encumbrances in governmental funds other than the special revenue fund are reported as reservations of fund balances at fiscal year end as they do not constitute expenditures or liabilities but rather commitments related to unperformed contracts for goods and services. Open encumbrances in the special revenue fund for which the District has received advances are reflected in the balance sheet as deferred revenues at fiscal year end. The encumbered appropriation authority carries over into the next fiscal year. An entry will be made at the beginning of the next fiscal year to increase the appropriation reflected in the certified budget by the outstanding encumbrance amount as of the current fiscal year end. E. Assets, Liabilities and Equity Cash, Cash Equivalents and Investments Cash and cash equivalents include petty cash, change funds, bank deposits and all highly liquid investments with a maturity of three months or less at the time of purchase and are stated at cost plus accrued interest. U.S. Treasury and agency obligations and certificates of deposit with maturities of one year or less when purchased are stated at cost. All other investments are stated at fair value. New Jersey school districts are limited as to the types of investments and types of financial institutions they may invest in. New Jersey statute 18A:20-37 provides a list of permissible investments that may be purchased by New Jersey school districts. Additionally, the District has adopted a cash management plan that requires it to deposit public funds in public depositories protected from loss under the provisions of the Governmental Unit Deposit Protection Act ("GUDPA"). GUDPA was enacted in 1970 to protect governmental units from a loss of funds on deposit with a failed banking institution in New Jersey.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued E. Assets, Liabilities and Equity - Continued Cash, Cash Equivalents and Investments - Continued N.J.S.A. 17:9-41 et. seq. establishes the requirements for the security of deposits of governmental units. The statute requires that no governmental unit shall deposit public funds in a public depository unless such funds are secured in accordance with the Act. Public depositories include savings and loan institutions, banks (both state and national banks) and savings banks the deposits of which are federally insured. All public depositories must pledge collateral, having a market value at least equal to five percent of the average daily balance of collected public funds, to secure the deposits of Governmental Units. If a public depository fails, the collateral it has pledged, plus the collateral of all other public depositories, is available to pay the full amount of their deposits to the governmental units. Interfund Transactions Transfers between governmental and business-type activities on the District-wide statements are reported in the same manner as general revenues. Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after non-operating revenues/expenses in the Enterprise Fund. Repayments from funds responsible for particular expenditure/expenses to the funds that initially paid for them are not presented on the financial statements. Inventories Inventories, other than those recorded in the enterprise fund, are recorded as expenditures during the year of purchase. Inventories in the Enterprise Fund are recorded at cost, computed on a first-in, first out method. Capital Assets The District has established a formal system of accounting for its capital assets. Purchased or constructed capital assets are reported at cost. Donated assets are recorded as capital assets at their estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. The capitalization threshold used by school districts in the State of New Jersey is $2,000. All reported capital assets except for land and construction in progress, are depreciated. Depreciation is computed using the straight-line method over their estimated useful lives. Useful lives vary from 20 to 50 years for land improvements and buildings, and 5 to 15 years for equipment. The District does not possess any material amounts of infrastructure capital assets, such as sidewalks and parking lots. Such items are considered to be part of the cost of buildings or other improvable property.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued E. Assets, Liabilities and Equity - Continued Compensated Absences The District accounts for compensated absences (e.g., unused sick, vacation leave) as directed by Governmental Accounting Standards Board Statement No. 16 (GASB 16), “Accounting for Compensated Absences”. A liability for compensated absences that are attributable to services already rendered, and that are not contingent on a specific event that is outside the control of the District and its employees, is accrued as the employees earn the rights to the benefits. Compensated absences that relate to future services, or that are contingent on a specific event that is outside the control of the District and its employees, are accounted for in the period in which such services are rendered or in which such events take place. District employees are granted varying amounts of vacation and sick leave in accordance with the District’s personnel policies. Upon termination, employees are paid for accrued vacation. The District’s policy permits employees to accumulate unused sick leave and carry forward the full amount to subsequent years. Upon retirement, employees shall be paid by the District for the unused sick leave in accordance with the District’s agreements with the various employee unions. The liability for compensated absences was accrued using the termination payment method, whereby the liability is calculated based on the amount of sick leave that is expected to become eligible for payment upon termination. The District estimates its accrued compensated absences liability based on the accumulated sick and vacation days at the balance sheet date by those employees who are currently eligible to receive termination payments. For the District-wide Statements, the current portion is the amount estimated to be used in the following year. In accordance with GAAP, for the governmental funds, in the Fund Financial Statements, all of the compensated absences are considered long-term and therefore, are not a fund liability and represents a reconciling item between the fund level and District-wide presentations. Deferred Revenue Deferred revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and entitlements received in the Special Revenue Fund before they have been earned are recorded as deferred revenue. Accrued Liabilities and Long-Term Obligations All payables, accrued liabilities, and long-term obligations are reported on the District-wide financial statements. In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources are reported as obligations of the funds. However, contractually required pension contributions and compensated absences that are paid from governmental funds are reported as liabilities on the fund financial statements only to the extent that they are due for payment during the current year. Bonds are recognized as a liability on the fund financial statements when due.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued E. Assets, Liabilities and Equity - Continued Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any borrowing used for the acquisition, construction, or improvement of those assets. Net assets are reported as restricted when there are limitations imposed on their use, either through the enabling legislation adopted by the School District, or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. The School District’s policy is to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. Fund Balance Reserves In accordance with Governmental Accounting Standards Board Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions, the District classified governmental fund balances as follows;

Non-spendable – Includes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual restraints.

Restricted – Includes fund balance amounts that are constrained for specific purposes which are externally imposed by providers such as creditors or amounts constrained due to constitutional provisions or enabling legislation.

Committed – Includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority and does not lapse at year end.

Assigned – Includes fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. Fund Balance may be assigned by the Board of Education, Superintendent or Business Administrator.

Unassigned – Includes positive fund balance within the General Fund which has not been classified within the above mentioned categories and negative fund balances in other governmental funds.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued E. Assets, Liabilities and Equity - Continued Revenues – Exchange and Nonexchange Transactions Revenues resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On the modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means the resources will be collected within the current fiscal year, or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District, available means within sixty days of the fiscal year end. Nonexchange transactions, in which the School District receives value without directly giving equal value in return, include property taxes, grants, entitlements and donations. On the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from income taxes is recognized in the period in which the income is earned. Revenue from grants, entitlement, and donations is recognized in the period in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the fiscal year when use is first permitted; matching requirements, in which the School District must provide local resources to be used for a specific purpose; and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis. On the modified accrual basis, revenue from nonexchange transactions must also be available before it can be recognized. Under the modified accrual basis, the following revenue sources are considered to be both measurable and available at fiscal year end: property taxes as an advance, interest and tuition. Operating Revenues and Expenses Operating revenues are those revenues that are generated directly from the primary activity of the enterprise fund. For the School District, these revenues are sales for food service. Operating expenses are necessary costs incurred to provide the service that is the primary activity of the enterprise fund. Allocation of Indirect Expenses The District reports all direct expenses by function in the Statement of Activities. Direct expenses are those that are clearly identifiable with a function. Indirect expenses are allocated to functions but are reported separately in the Statement of Activities. Employee benefits, including the employer’s share of social security, workers compensation, and medical and dental benefits, were allocated based on salaries of that program. Depreciation expense, where practicable, is specifically identified by function and is included in the direct expense column of the Statement of Activities. Depreciation expense that could not be attributed to a specific function is considered an indirect expense and is reported separately on the Statement of Activities. Interest on long-term debt is considered an indirect expense and is reported separately on the Statement of Activities.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued E. Assets, Liabilities and Equity - Continued Extraordinary and Special Items Extraordinary items are transactions or events that are unusual in nature and infrequent in occurrence. Special items are transactions or events that are within control of management and are either unusual in nature or infrequent in occurrence. Neither of these types of transactions occurred during the fiscal year. Management 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 expenditures/expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 – DEPOSITS AND INVESTMENTS Deposits The District’s deposits are insured through either the Federal Deposit Insurance Corporation (FDIC) or New Jersey’s Governmental Unit Deposit Protection Act (GUDPA). GUDPA requires all banks doing business in the State of New Jersey to maintain additional collateral in the amount of 5% of the average public deposits and to deposit these amounts with the Federal Reserve Bank for all deposits not covered by FDIC. Bank balances are insured up to $250,000.00 in the aggregate by the FDIC for each bank. Operating cash, in the form various checking, savings and certificates of deposit, are held in the District’s name by commercial banking institutions. At June 30, 2012, the carrying amount of the District’s deposits was $504,129.82 and the bank balance was $646,520.20. Of the bank balance, $63,639.03 was uninsured and uncollateralized. Pursuant to GASB Statement No. 40, “Deposit and Investment Risk Disclosures” (“GASB 40”), the District’s bank accounts are profiled in order to determine exposure, if any, to Custodial Credit Risk (risk that in the event of failure of the counterparty the District would not be able to recover the value of its deposits or investment). Deposits are considered to be exposed to custodial credit risk if they are: uncollateralized (securities not pledged to the depositor), collateralized with securities held by the pledging financial institution, or collateralized with securities held by the financial institution’s trust department or agent but not in the government’s name. The District does not have a policy for custodial credit risk. Investments The District had no investments at June 30, 2012.

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NOTE 3 – RECEIVABLES Receivables at June 30, 2012, consisted of accounts (tuition and other), interfund, and intergovernmental. All receivables are considered collectible in full. A summary of the principal items of intergovernmental receivables follows:

Governmental GovernmentFund Wide

Financial FinancialStatements Statements

State & Federal Aid $ 366,124.09 $ 367,468.49 Other 6,191.04 6,191.04 Interfund Receivables 102,000.00 4,999.16

Gross Receivables 474,315.13 378,658.69 Less: Allowance for Uncollectibles

Total Receivables, Net $ 474,315.13 $ 378,658.69

NOTE 4 – INTERFUND TRANSFERS AND BALANCES Transfers between funds are used to (1) repay expenses paid by another fund; (2) move funds to the Capital Projects Fund to pay for construction services; and (3) make a Board contribution to the Enterprise Fund. The following interfund balances remained on the fund financial statements at June 30, 2012:

Interfund InterfundFund Receivable Payable

General Fund $ - $ 97,805.02 Capital Projects Fund 102,000.00 Special Revenue Fund - - Food Service 804.18 - Agency Funds - 4,999.16

Total $ 102,804.18 $ 102,804.18

The general fund payable is comprised of mainly two interfunds. The first is due to the capital projects fund in the amount of $97,805.02. The second interfund represents payments totaling $4,999.16 due to the Payroll and Payroll Agency fund.

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NOTE 5 – LONG-TERM OBLIGATIONS Changes in long-term obligations for the year ended June 30, 2012 are as follows:

Amounts DueBalance Issues or Payments or Balance Within

June 30, 2011 Additions Expenditures June 30, 2012 One Year

Compensated Absences $ 469,375.98 $ $ 202,081.94 $ 267,294.04 $ -

$ 469,375.98 $ - $ 202,081.94 $ 267,294.04 $ -

Compensated absences have been liquidated in the General Fund. Bonds Payable Bonds are authorized in accordance with State law by the voters of the municipality through referendums. All bonds are retired in serial installments within the statutory period of usefulness. Bonds issued by the District are general obligation bonds. As of June 30, 2012, the Board had no outstanding bonded debt obligations. Capital Leases As of June 30, 2012, the Board had no capital leases payable.

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NOTE 6 – CAPITAL ASSETS Capital asset activity for the year ended June 30, 2012, was as follows:

Beginning EndingBalance Additions Deletions Balance

Governmental activities:

Capital assets,not being depreciated:Land $ 890,450.00 $ $ 60,200.00 $ 830,250.00 Construction in Progress - 728,222.50 728,222.50

Total capital assets not being depreciated 890,450.00 - 60,200.00 1,558,472.50

Capital assets being depreciated:Land Improvements 265,960.16 - 265,960.16 Buildings 6,081,115.56 6,081,115.56 Infrastructure - - - Machinery & Equipment 134,428.24 - - 134,428.24

Total capital assets being depreciated at

historical cost 6,496,641.09 - - 6,481,503.96 Less accumulated depreciation for:

Land Improvements (233,428.96) - 8,867.10 (242,296.06) Buildings (2,354,392.95) - 138,863.32 (2,493,256.27) Machinery & Equipment (115,406.83) - 6,902.47 (122,309.30)

Total capital assets being depreciated,

net of accumulated depreciation 3,793,412.35 - 154,632.89 3,623,642.33

Governmental activity capital assets, net $ 4,840,180.01 $ - $ 214,832.89 $ 5,182,114.83

Business-type activities:Capital assets being depreciated:

Equipment $ 57,303.12 $ $ $ 57,303.12 Less accumulated depreciation (23,516.47) - 3,386.68 (26,903.15)

Enterprise Fund capital assets, net $ 40,693.78 $ - $ 3,386.68 $ 30,399.97

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NOTE 7 – PENSION PLANS Description of Plans - All required employees of the District are covered by either the Public Employees' Retirement System or the Teachers' Pension and Annuity Fund which have been established by state statute and are administered by the New Jersey Division of Pension and Benefits (Division). According to the State of New Jersey Administrative Code, all obligations of both Systems will be assumed by the State of New Jersey should the Systems terminate. The Division issues a publicly available financial report that includes the financial statements and required supplementary information for the Public Employees Retirement System and the Teachers' Pension and Annuity Fund. These reports may be obtained by writing to the Division of Pensions and Benefits, PO Box 295, Trenton, New Jersey, 08625. Teachers' Pension and Annuity Fund (TPAF) - The Teachers' Pension and Annuity Fund was established as of January 1, 1955, under the provisions of N.J.S.A. 18A:66 to provide retirement benefits, death, disability and medical benefits to certain qualified members. The Teachers' Pension and Annuity Fund is considered a cost-sharing multiple-employer plan with a special funding situation, as under current statute, all employer contributions are made by the State of New Jersey on behalf of the District and the system's other related non-contributing employers. Membership is mandatory for substantially all teachers or members of the professional staff certified by the State Board of Examiners, and employees of the Department of Education who have titles that are unclassified, professional and certified. Public Employees' Retirement System (PERS) - The Public Employees' Retirement System (PERS) was established as of January 1, 1955 under the provisions of N.J.S.A. 43:15A to provide retirement, death, disability and medical benefits to certain qualified members. The Public Employees' Retirement System is a cost-sharing multiple-employer plan. Membership is mandatory for substantially all full-time employees of the State of New Jersey or any county, municipality, school district, or public agency, provided the employee is not required to be a member of another state-administered retirement system or other state or local jurisdiction. Defined Contribution Retirement Program (DCRP)- The Defined Contribution Retirement Program (DCRP) was established as of July 1, 2007 under the provisions of Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007 (N.J.S.A. 43:15C-1 et seq.). The DCRP is a cost-sharing multiple-employer defined contribution pension fund. The DCRP provides eligible members, and their beneficiaries with a tax-sheltered, defined contribution retirement benefit, along with life insurance and disability coverage. Vesting and benefit provisions are established by N.J.S.A. 43:15C-1 et seq. The contribution requirements of plan members are determined by state statute. In accordance with Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007, plan members are required to contribute 5.5% of their annual covered salary. The State Treasurer has the right under current law to make temporary reductions in member rates based on the existence of surplus plan assets in the retirement system; however statute also requires the return to the normal rate when such surplus pension assets no longer exist. In addition to the employee contributions, the School District’s contribution amounts for each pay period are required to be transmitted to Prudential Financial not later than the fifth business day after the date on which the employee is paid for that pay period. The School District has no employees enrolled in the Defined Contribution Retirement Program (DCRP) during the fiscal year ended June 30, 2012.

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NOTE 7 – PENSION PLANS - Continued Vesting and Benefit Provisions - The vesting and benefit provisions for PERS are set by N.J.S.A. 43:15A and 43.3B, and N.J.S.A. 18A:6C for TPAF. All benefits vest after eight to ten years of service, except for medical benefits that vest after 25 years of service. Retirement benefits for age and service are available at age 60 and are generally determined to be 1/60 of the final average salary for each year of service credit, as defined. Final average salary equals the average salary for the final three years of service prior to retirement (or highest three years' compensation if other than the final three years). Members may seek early retirement after achieving 25 years of service credit or they may elect deferred retirement after achieving eight to ten years of service in which case benefits would begin the first day of the month after the member attains normal retirement age. The TPAF and PERS provides for specified medical benefits for members who retire after achieving 25 years of qualified service, as defined, or under the disability provisions of the System. Members are always fully vested for their own contributions and, after three years of service credit, become vested for 2% of related interest earned on the contributions. In the case of death before retirement, members' beneficiaries are entitled to full interest credited to the members' accounts. Contribution Requirements - The contribution policy is set by N.J.S.A. 43:15A, Chapter 62, P.L. of 1994, Chapter 115, P.L. of 1997 and N.J.S.A. 18:66, and requires contributions by active members and contributing employers. Plan member and employer contributions may be amended by State of New Jersey legislation. TPAF and PERS provide for employee contributions of 5.5% of employees’ annual compensation, as defined. Employers are required to contribute at an actuarially determined rate in both TPAF and PERS. The actuarially determined contribution includes funding for cost-of-living adjustments, noncontributory death benefits, and post-retirement medical premiums. Under current statute the District is a non-contributing employer of the TPAF. The School District’s contributions to TPAF for the years ending June 30, 2012, 2011 and 2010 were $0, $0, and $0 respectively, and normally paid by the State of New Jersey on behalf of the board. The State of New Jersey did not make the required contributions for the last three years. The School District’s contributions to PERS for the years ending June 30, 2012, 2011, 2010 were $9,456.12, $57,195.00, and $45,852.00 respectively, equal to the required contributions for each year. During the fiscal years ended June 30, 2012, 2011 and 2010, the State of New Jersey contributed $280,724.00, $188,046.00, and $216,493.00, respectively, to the TPAF for post-retirement medical benefits on behalf of the Board. Also, in accordance with NJSA 18A:66-66 the State of New Jersey reimbursed the Board $190,504.73, $197,930.73, and $220,904.23 during the same fiscal years for the employer’s share of social security contributions for TPAF members as calculated on their base salaries. These amounts, which are not required to be budgeted, have been included in the financial statements, and the combining and individual fund and account group statements and schedules as revenues and expenditures in accordance in GASB 27.

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NOTE 8 – POST-RETIREMENT BENEFITS The School District contributes to the New Jersey State Health Benefits Program (“the SHBP”), a cost sharing multiple-employer defined benefit post-employment healthcare plan administered by the State of New Jersey Division of Pensions and Benefits. SHBP provides medical, prescription drug, mental health/substance abuse and Medicare Part B reimbursement to retirees and their covered dependents. The State Health Benefits Program is found in the New Jersey Statutes Annotated, Title 52, Article 17.25 et seq. Rules governing the operation and administration of the program are found in Title 17, Chapter 9 of the New Jersey Administrative Code. The Division of Pension and Benefits issues a publicly available financial report that includes the financial statements and required supplementary information for the Public Employees Retirement System and the Teachers' Pension and Annuity Fund. These reports may be obtained by writing to the Division of Pensions and Benefits, PO Box 295, Trenton, New Jersey, 08625. Chapter 384 of Public Laws 1987 and Chapter 6 of Public Laws 1990 required TPAF and PERS, respectively, to fund post-retirement medical benefits for those State employees who retire after accumulating 25 years of credited service or on a disability retirement. P.L. 2007, C. 103 amended the law to eliminate the funding and payment of post-retirement medical benefits for retired state employees through TPAF and PERS. It created separate funds outside of the pension plans for the funding and payment of post-retirement medical benefits for retired state employees and retired educational employees. As of June 30, 2011, there were 93,323 retirees eligible for post-retirement medical benefits. The cost of these benefits is funded through contributions by the State in accordance with P.L. 1994, c.62. Funding of post-retirement medical premiums changed from a pre-funding basis to a pay-as-you-go basis beginning in fiscal year 1994. The State is also responsible for the cost attributable to P.L. 1992 c. 126, which provides free health benefits to members of PERS and the Alternate Benefit Program who retired from a board of education or county college with 25 years of service. The State paid $144 million toward Chapter 126 benefits for 15,709 eligible retired members in Fiscal Year 2011. NOTE 9 – COMPENSATED ABSENCES The liability for vested compensated absences for the governmental fund types is recorded in current and long-term liabilities. The current portion of the compensated absences balance of the governmental funds is not considered material to the applicable funds total liabilities, and therefore is not shown separately from the long-term liability of compensated absences. The liability for vested compensated absences of the proprietary fund types is recorded within those funds as the benefits accrue to employees. As of June 30, 2012, no liability existed for compensated absences in the Food Service Enterprise Fund.

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NOTE 10 – DEFERRED COMPENSATION The District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 403(b). The plans, which are administered by the entities listed below, permit participants to defer a portion of their salary until future years. Amounts deferred under the plans are not available to employees until termination, retirement, death or unforeseeable emergency. The plan administrators are as follows:

Thomas Seely Agency, Inc. Nationwide Lincoln National Metropolitan Life VanGuard MFS Putnam Fund

NOTE 11 – RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Property and Liability Insurance - The District maintains commercial insurance coverage for property, liability and surety bonds. A complete schedule of insurance coverage can be found in the Statistical Section of this Comprehensive Annual Financial Report. New Jersey Unemployment Compensation Insurance - The District has elected to fund its New Jersey Unemployment Compensation Insurance under the "Benefit Reimbursement Method". Under this plan, the District is required to reimburse the New Jersey Unemployment Trust Fund for benefits paid to its former employees and charged to its account with the State. The District is billed quarterly for amounts due to the State. The following is a summary of District contributions, employee contributions, reimbursements to the State for benefits paid and the ending balance of the District's expendable trust fund for the current and prior year:

Fiscal District Employee Amount EndingYear Contributions Contributions Reimbursed Balance

2011-2012 $ 10,042.78 $ 16,188.87 $ 22,494.80 $ 15,020.02 2010-2011 None 9,111.42 19,232.13 11,283.17

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NOTE 12 – CONTINGENT LIABILITIES Federal and State Grants The District participates in a number of federal and state grant programs. The grant programs are subject to program compliance audits by the grantors or their representatives. The District is potentially liable for expenditures which may be disallowed pursuant to the terms of these grant programs. Management is not aware of any material items of noncompliance would result in the disallowance of program expenditures. NOTE 13 – ECONOMIC DEPENDENCY The District receives support from the federal government and from the state government through local school districts. A significant reduction in the level of support, if this were to occur, would have an effect on the District’s programs and activities. NOTE 14 – FUND BALANCE APPROPRIATED Restrictions of funds balances of governmental funds are established to either (1) satisfy legal covenants that require a portion of the fund balance to be segregated or (2) identify the portion of the fund balance that is not appropriate for future expenditures. The District uses restricted/committed amounts to be spent first when both restricted an unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as a grant agreement requiring dollar for dollar spending. Additionally, the District does not have a formal fund balance spending policy therefore the default spending order requires committed, assigned and then unassigned to be used be spent first when expenditures are made. The District follows the State of New Jersey’s minimum fund balance policy for New Jersey Regular Public School Districts (N.J.S.A. 18A:7F-7). Pursuant to that policy, an undesignated fund balance of 2% of the general fund budget or $250,000, whichever is greater may be maintained. Specific classifications of fund balance are summarized below; Non-Spendable Fund Balance – The District had no non-spendable fund balance at June 30, 2012. Restricted Fund Balance

Capital Projects Fund - As of June 30, 2012, the restricted balance in the capital projects fund was $353,067.00. Excess Surplus –As of June 30, 2012, the restricted balance for Excess Surplus was $6,264.00. .

Committed Fund Balance - The District has no committed fund balance at June 30, 2012. Assigned Fund Balance – The District assigned fund balance in the general fund for other purposes of $113,163.38. This represents encumbrances resulting from issuing purchase orders as a result of normal purchasing activities approved by District officials. The District also has $53,282.00 reserved for Subsequent Year’s Expenditures.

Page 46



NOTE 14 – FUND BALANCE APPROPRIATED - Continued Unassigned Fund Balance – At June 30, 2012, the District has $213,018.00 of unassigned fund balance in the general fund and ($5,486.00) in the Special Revenue fund. NOTE 15 – DEFICIT FUND BALANCES The District has a deficit fund balance of $5,486.00 in the Special Revenue Fund as of June 30, 2012 as reported in the fund statements (modified accrual basis). P.L. 2004, c. 97 provides that in the event a state school aid payment is not made until the following school budget year, districts must record the last payment as revenue, for budget purposes only, in the current school budget year. For intergovernmental transactions, GASB Statement No. 33 requires that recognition (revenue, expenditure, asset, liability) should be in symmetry i.e., if one government recognizes an asset, the other government recognizes a liability. Since the State is recording the last state aid payment in the subsequent fiscal year, the school district cannot recognize the last state aid payment on the GAAP financial statements until the year the state records the payable. Due to the timing difference of recording the last state aid payment, the Special Revenue Fund balance deficit does not alone indicate that the district is facing financial difficulties. Pursuant to N.J.S.A. 18A:22-44.2 any negative unreserved, undesignated general fund balance that is reported as a direct result from a delay in the payment of state aid until the following fiscal year, is not considered a violation of New Jersey statute and regulation nor in need of corrective action. The District deficit in the Special revenue fund in the GAAP fund statements is equal to the last state aid payment for that fund. NOTE 16 – SUBSEQUENT EVENTS Management has reviewed and evaluated all events and transactions that occurred from June 30, 2012 through December 5, 2012, the date that the financial statements were issued for possible disclosure and recognition in the financial statements, and no items have come to the attention of the District that would require disclosure. NOTE 17 – COMMITMENTS The District does not have encumbrance policy for the fiscal year end to determine significant encumbrances. All encumbrances are classified as either Assigned Fund Balance in the General Fund. Significant encumbrances at June 30th are as follows;

Fund AmountGeneral Fund Encumbered Orders 11,163.38$

11,163.38$

Page 47

Required Supplementary Information – Part II

Budgetary Comparison Schedules

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Page 56

C-1

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23,4

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.00

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Ed

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Page 57

C-2

Orig

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12,2

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792.

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(9,4

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54,8

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185,

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252,

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23

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9,47

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Exc

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(Def

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-$

-$

-$

-$

-$

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30, 2

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Page 58

Notes to the Required Supplementary Information

C-3

Note A - Explanation of Differences Between Budgetary Inflows andOutflows GAAP Revenue and Expenditures

SpecialGeneral Revenue

Fund FundSources / inflows of resources

Actual amounts (budgetary basis) "revenue"from the budgetary comparison schedule [C-1] 7,538,944.87$ [C-2] 235,388.62$

Difference - budget to GAAP:Grant accounting budgetary basis differs from GAAP in that

encumbrances are recognized as expenditures, and the relatedrevenue is recognized.

Current YearPrior Year

Prior year final State Aid payment was delayed until July 2011and is recorded as revenue in current year under GAAP. 20,341.40 6,034.60

Final State Aid payment delayed until July 2012 is recordedas budgetary revenue but is not recognized under GAAP. (36,982.00) (5,486.00)

[B-2] 7,522,304.27$ [B-2] 235,937.22$

Uses / outflows of resourcesActual amounts (budgetary basis) "total outflows" from the

budgetary comparison schedule [C-1] 6,829,423.49$ [C-2] 235,388.62$

Difference - budget to GAAP:Encumbrances for supplies and equipment ordered but

not received are reported in the year the order is placed forbudgetary purposes, but in the year the supplies are receivedfor GAAP financial reporting purposes. Current Year Prior Year

Total expenditures as reported on the statement of revenues, expenditures and changes in fund balance - governmental funds [B-2] 6,829,423.49$ [B-2] 235,388.62$

Note to RSI

Required Supplementary InformationBOROUGH OF WILDWOOD CREST SCHOOL DISTRICT


Budget-to-GAAP Reconciliation

Page 59

Other Supplementary Information

SPECIAL REVENUE FUND DETAIL STATEMENTS

Special revenue funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to expenditures for specific purposes.

E-1

Tot

alB

roug

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60.0

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736.

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al R

even

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90,6

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54

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25

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Page 60

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2.62

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al In

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1,

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00

1,79

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90

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Sup

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al S

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30, 2

012

Page 61

E-2

Budgeted Actual VarianceEXPENDITURES:

Instruction:Salaries of Teachers 51,898.00$ 51,898.00$ -$ General Supplies -

Total Instruction 51,898.00 51,898.00 -

Support Services:Personal Services - Employee Benefits 2,962.00 2,962.00 -

Total Support Services 2,962.00 2,962.00 -

Total Expenditures 54,860.00$ 54,860.00$ -$

Total revised 2011-12 Preschool Education Aid Allocation 54,860.00$ Add: Actual ECPA Carryover June 30, 2012

Add: Budgeted Transfer from the General Fund 2011-2012

Total Preschool Education Aid Funds Available for 2010-11 Budget 54,860.00

Less: 2010-11 Budgeted Preschool Education Aid(Including prior year budgeted carryover) (54,860.00)

Available & Unbudgeted Preschool Education Aid Funds as of June 30, 2012 (54,860.00)

Add: June 30, 2012 Unexpended Preschool Education Aid - 2011-2012 Carryover-Preschool Education Aid -$

2011-2012 Preschool Education Aid Carryover

CALCULATION OF BUDGET & CARRYOVER

Budgetary Basis

Special Revenue FundBOROUGH OF WILDWOOD CREST SCHOOL DISTRICT


Schedule of Preschool Education Aid

Total

Page 62

CAPITAL PROJECTS FUND DETAIL STATEMENT

The Capital Projects Fund is used to account for the acquisition and construction of major capital facilities and equipment purchases other than those financed by proprietary funds.

F-1

Revenues and Other Financing Sources:State Sources:

SDA Grant $ 353,067.00 Local Sources:

Transfer from Capital Outlay 662,462.50 Total Revenues 1,015,529.50

Expenditures and Other Financing Uses:Construction services 830,222.50

Total Expenditures 830,222.50

Excess (deficiency) of revenues over (under) expenditures 185,307.00

Other Financing Sources (Uses):Transfer from General Fund

Excess (Deficiency) of revenues and other financing sourcesover (under) expenditures and other financing sources (uses) 185,307.00

Fund balance - beginning 167,760.00

Fund balance - ending $ 353,067.00


BOROUGH OF WILDWOOD CREST SCHOOL DISTRICTCapital Projects Fund

Summary Schedule of Revenues, Expenditures and Changes in Fund Balance - Budgetary Basis

Page 63

F-1a

RevisedAuthorized

Prior Periods Current Year Totals CostsREVENUES AND OTHER FINANCINGSOURCES:

State Sources:SCC Grant -$ -$

Local SourcesTransfer from Capital Reserve 195,000.00 195,000.00 195,000.00

Total Revenues 195,000.00 - 195,000.00 195,000.00

EXPENDITURES AND OTHERFINANCING USES:

Purchased professional/technical services - - Construction services 27,240.00 167,760.00 195,000.00 195,000.00 Equipment purchases - -

Total Expenditures 27,240.00 167,760.00 195,000.00 195,000.00

Excess (Deficiency) of RevenuesOver Expenditures 167,760.00 (167,760.00) - -

Other Financing Sources (Uses):Transfer from General Fund -

Excess (Deficiency) of revenues and other financing sources over (under) expendituresand other financing sources (uses) 167,760.00 (167,760.00) - -

ADDITIONAL PROJECT INFORMATION:Project Number -Grant Date -Bond Authorization Date N/ABonds Authorized N/ABonds Issued N/AOriginal Cost Authorized 195,000.00$ Additional Authorized CostRevised Authorized Cost 195,000.00

Percentage Increase over OriginalAuthorized Cost 0%

Percentage Completion 100%Original Target Completion Date June 2011Revised Target Completion Date 2012

Schedule of Project Revenues, Expenditures, Project Balance and Project Status - Budgetary BasisCapital Projects Fund


From Inception and for the Year Ended June 30, 2012Improvements to Crest Memorial Elementary School - Roof and Solar Project

Page 64

F-1b

RevisedAuthorized

Prior Periods Current Year Totals CostsREVENUES AND OTHER FINANCINGSOURCES:

State Sources:SDA Grant 353,067.00$ 353,067.00$ 568,910.00$

Local SourcesTransfer from Capital Outlay 662,462.50 662,462.50 853,366.00

Total Revenues - 1,015,529.50 1,015,529.50 1,422,276.00

EXPENDITURES AND OTHERFINANCING USES:

Purchased professional/technical services - - Construction services 662,462.50 662,462.50 1,422,276.00 Equipment purchases - -

Total Expenditures - 662,462.50 662,462.50 1,422,276.00

Excess (Deficiency) of RevenuesOver Expenditures - 353,067.00 353,067.00 -

Other Financing Sources (Uses):Transfer from General Fund -

Excess (Deficiency) of revenues and other financing sources over (under) expendituresand other financing sources (uses) - 353,067.00 353,067.00 -

ADDITIONAL PROJECT INFORMATION:Project Number 5800-030-10-G0VWGrant Date 3/26/2012Bond Authorization Date N/ABonds Authorized N/ABonds Issued N/AOriginal Cost Authorized 1,422,276.00$ Additional Authorized CostRevised Authorized Cost 1,422,276.00

Percentage Increase over OriginalAuthorized Cost 0%

Percentage Completion 65%Original Target Completion Date 2012Revised Target Completion Date 2012

Schedule of Project Revenues, Expenditures, Project Balance and Project Status - Budgetary BasisCapital Projects Fund


From Inception and for the Year Ended June 30, 2012Rod Grant Roof Project

Page 65

F-2

Une

xpen

ded

Orig

inal

Prio

rC

urre

ntB

alan

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ate

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ropr

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ears

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rsJu

ne 3

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ovem

ent t

o C

rest

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oria

l Sch

ool

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f and

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000.

00

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0.00

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f Gra

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00

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00

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.00

$

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222.

50

$

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813.

50

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Exp

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tem

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res

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ject

s F

un

ds

Page 66

PROPRIETARY FUND DETAIL STATEMENTS

Proprietary funds are used to account for operations that are financed and operated in a manner similar to private business enterprises - where the intent of the district's board is that the costs of providing goods or services be financed through user charges. Food Service Fund - This fund provides for the operation of food services in all schools within the school district.

THIS SECTION HAS ALREADY BEEN INCLUDED IN STATEMENTS

B-4, B-5 AND B-6.

FIDUCIARY FUNDS DETAIL STATEMENTS

Fiduciary Funds are used to account for funds received by the school district for a specific purpose. Unemployment Compensation Fund - This Trust Fund is an expendable trust fund and limits expenses set aside for this purpose in current and prior budgets and contributions from employee withholding in prior years.

Agency funds are used to account for assets held by the school district as an agent for individuals, private organizations, other governments and/or other funds. Student Activity Fund - This agency fund is used to account for student funds held at the schools. Payroll Fund - This agency fund is used to account for the payroll transactions of the school district.

H-1

Unemployment PrivateCompensation Purpose Agency

Trust Trust Funds Totals

ASSETSCash and Cash Equivalents $ 15,020.02 $ 564.01 $ 22,432.95 $ 38,016.98

Total Assets 15,020.02 564.01 22,432.95 38,016.98

LIABILITIESInterfund Payable 4,999.16 4,999.16 Payroll Deductions

and Withholdings 1,303.20 1,303.20 Payable to Student Groups 16,130.59 16,130.59

Total Liabilities - - 22,432.95 22,432.95

NET ASSETSHeld in Trust for Unemployment

Claims and Other Purposes $ 15,020.02 15,020.02 Reserve for Scholarships $ 564.01 564.01

Total Net Assets 15,584.03

Total Liabilities and Net Assets $ 38,016.98

Combining Statement of Fiduciary Net AssetsFiduciary Funds


June 30, 2012

Page 67

H-2

Unemployment PrivateCompensation Purpose

Trust Trust TotalsADDITIONS

Contributions:Plan Member $ 16,188.87 $ $ 16,188.87 Board Contribution 10,000.00 10,000.00

Total Contributions 26,188.87 - 26,188.87

Investments Earnings:Interest 42.78 2.73 45.51

Net Investment Earnings 42.78 2.73 45.51 Total Additions 26,231.65 2.73 26,234.38

DeductionsUnemployment Claims 22,494.80 22,494.80

Total Deductions 22,494.80 - 22,494.80

Change in Net Assets 3,736.85 2.73 3,739.58

Net Assets - Beginning of the Year 11,283.17 561.28 11,844.45

Net Assets - End of the Year $ 15,020.02 $ 564.01 $ 15,584.03

Combining Statement of Changes in Fiduciary Net AssetsFiduciary Funds



Page 68

H-3

Balance BalanceJuly 1, 2011 Additions Deletions June 30, 2012

Crest Memorial School $ 10,660.99 $ 6,929.87 $ 1,460.27 $ 16,130.59

Total All Schools $ 10,660.99 $ 6,929.87 $ 1,460.27 $ 16,130.59

Schedule of Receipts and DisbursementsStudent Activity Agency Fund


As of June 30, 2012

Page 69

H-4

Balance BalanceJuly 1, 2011 Additions Deletions June 30, 2012

ASSETS:Cash and Cash Equivalents $ 8,356.59 $ 3,954,938.29 $ 3,956,992.52 $ 6,302.36

Total Assets $ 8,356.59 $ 3,954,938.29 $ 3,956,992.52 $ 6,302.36

LIABILITIES:Payroll Deductions & Withholdings $ 1,381.18 $ 1,659,042.98 $ 1,659,120.96 $ 1,303.20 Net Payroll - 2,295,895.31 2,295,895.31 - Due to Governmental Funds 6,313.04 1,313.88 4,999.16 Due to Other Trust Funds 662.37 662.37 0.00

Total Liabilities $ 8,356.59 $ 3,954,938.29 $ 3,956,992.52 $ 6,302.36

Schedule of Receipts and DisbursementsPayroll Agency Fund


As of June 30, 2012

Page 70

Statistical Section

Bo

rou

gh

of

Wild

wo

od

Cre

st S

cho

ol D

istr

ict

Exh

ibit

J-1

Net

Ass

ets

by

Co

mp

on

ent,

Las

t N

ine

Fis

cal Y

ears

(acc

rual

bas

is o

f acc

ount

ing)

2004

2005

2006

2007

2008

2009

2010

2011

2012

Gov

ernm

enta

l act

iviti

esIn

vest

ed in

cap

ital a

sset

s, n

et o

f rel

ated

deb

t12

,609

,970

.86

$

12,4

62,7

00.3

2$

12

,210

,708

.79

$

5,30

4,84

4.41

$

5,

141,

973.

11$

4,99

1,07

6.56

$

4,

829,

049.

38$

4,66

8,72

5.22

$

5,

182,

114.

83$

Res

tric

ted

456,

668.

74

12

1,55

3.47

82,1

50.5

5

4,

196.

74

4,19

6.74

4,

196.

74

23,5

38.1

7

21

3,84

3.22

359,

331.

00

U

nres

tric

ted

(566

,562

.90)

(5

67,2

68.2

8)

(577

,100

.99)

(6

94,9

30.8

5)

(740

,394

.72)

(4

51,6

08.2

2)

(358

,122

.75)

(2

59,1

84.7

0)

106,

683.

34

T

otal

gov

ernm

enta

l act

iviti

es n

et a

sset

s12

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,076

.70

$

12,0

16,9

85.5

1$

11

,715

,758

.35

$

4,61

4,11

0.30

$

4,

405,

775.

13$

4,54

3,66

5.08

$

4,

494,

464.

80$

4,62

3,38

3.74

$

5,

648,

129.

17$

Bus

ines

s-ty

pe a

ctiv

ities

Inve

sted

in c

apita

l ass

ets,

net

of r

elat

ed d

ebt

1,55

7.30

$

1,

038.

20$

519.

10$

48

,002

.28

$

44,3

48.0

3$

40

,693

.78

$

37,1

73.3

2$

33

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.65

$

30,3

99.9

7$

R

estr

icte

dU

nres

tric

ted

(2,1

72.2

0)

12,8

54.6

2

(3

48.1

5)

8,

302.

34

8,25

9.83

19

,374

.20

(8,5

26.4

6)

8,62

7.58

6,

670.

10

Tot

al b

usin

ess-

type

act

iviti

es n

et a

sset

s(6

14.9

0)$

13

,892

.82

$

170.

95$

56

,304

.62

$

52,6

07.8

6$

60

,067

.98

$

28,6

46.8

6$

42

,414

.23

$

37,0

70.0

7$

Dis

tric

t-w

ide

Inve

sted

in c

apita

l ass

ets,

net

of r

elat

ed d

ebt

12,6

11,5

28.1

6$

12

,463

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.52

$

12,2

11,2

27.8

9$

5,

352,

846.

69$

5,18

6,32

1.14

$

5,

031,

770.

34$

4,86

6,22

2.70

$

4,

702,

511.

87$

5,21

2,51

4.80

$

R

estr

icte

d45

6,66

8.74

121,

553.

47

82

,150

.55

4,19

6.74

4,

196.

74

4,19

6.74

23

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.17

213,

843.

22

35

9,33

1.00

Unr

estr

icte

d(5

68,7

35.1

0)

(554

,413

.66)

(5

77,4

49.1

4)

(686

,628

.51)

(7

32,1

34.8

9)

(432

,234

.02)

(3

66,6

49.2

1)

(250

,557

.12)

11

3,35

3.44

Tot

al d

istr

ict n

et a

sset

s12

,499

,461

.80

$

12,0

30,8

78.3

3$

11

,715

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.30

$

4,67

0,41

4.92

$

4,

458,

382.

99$

4,60

3,73

3.06

$

4,

523,

111.

66$

4,66

5,79

7.97

$

5,

685,

199.

24$

Sou

rce:

CA

FR

Sch

edul

e A

-1

Fis

cal Y

ear

End

ing

June

30,

Page 71

Bo

rou

gh

of

Wild

wo

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Cre

st S

cho

ol D

istr

ict

Exh

ibit

J-2

Ch

ang

es in

Net

Ass

ets,

Las

t N

ine

Fis

cal Y

ears

(acc

rual

bas

is o

f acc

ount

ing)

2004

2005

2006

2007

2008

2009

2010

2011

2012

Exp

ense

sG

over

nmen

tal a

ctiv

ities

:In

stru

ctio

n:R

egul

ar2,

746,

304.

71$

2,

690,

886.

14$

2,

980,

261.

69$

2,

787,

446.

69$

3,

148,

389.

92$

2,

562,

984.

56$

2,

889,

448.

35$

2,

685,

887.

12$

2,

747,

366.

31$

S

peci

al e

duca

tion

174,

654.

79

272,

418.

80

324,

644.

63

381,

621.

29

375,

311.

35

450,

662.

70

614,

435.

30

502,

856.

22

497,

260.

27

Oth

er s

peci

al e

duca

tion

192,

294.

59

303,

498.

50

171,

228.

47

256,

866.

73

354,

510.

46

202,

049.

76

271,

352.

21

228,

653.

77

131,

838.

02

Sup

port

Ser

vice

s:T

uitio

n1,

146,

299.

40

87

4,17

3.25

1,

045,

311.

25

1,

091,

969.

48

1,

361,

421.

52

1,

633,

607.

19

1,

708,

195.

72

1,

418,

700.

08

1,

271,

120.

66

S

tude

nt &

inst

ruct

ion

rela

ted

serv

ices

863,

556.

56

987,

268.

77

736,

281.

06

970,

648.

41

956,

709.

13

831,

454.

59

925,

650.

49

971,

214.

28

827,

373.

49

Sch

ool a

dmin

istr

ativ

e se

rvic

es70

,339

.26

3,50

4.13

O

ther

adm

inis

trat

ive

serv

ices

285,

709.

73

235,

372.

78

264,

387.

81

236,

648.

70

183,

107.

84

186,

708.

05

199,

770.

97

187,

018.

07

205,

966.

87

Pla

nt o

pera

tions

and

mai

nten

ance

546,

250.

64

563,

269.

19

627,

594.

62

916,

906.

14

631,

892.

28

581,

630.

30

650,

016.

07

717,

429.

90

692,

722.

88

Pup

il tr

ansp

orta

tion

106,

933.

50

130,

078.

27

136,

056.

75

113,

831.

13

98,5

48.5

2

12

2,15

2.25

14

3,92

8.11

12

6,83

6.81

17

3,37

1.99

B

usin

ess

and

othe

r su

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t ser

vice

s15

7,89

0.25

18

1,24

1.37

18

1,38

1.16

16

2,03

8.34

13

5,35

2.39

15

3,24

2.42

17

4,45

3.69

13

2,14

3.25

23

0,84

8.68

O

ther

19

4,01

7.55

17

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1.69

28

0,98

4.56

23

9,49

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T

otal

gov

ernm

enta

l act

iviti

es e

xpen

ses

6,29

0,23

3.43

6,24

1,71

1.20

6,46

7,14

7.44

6,91

7,97

6.91

7,24

5,24

3.41

6,91

8,50

9.37

7,75

0,09

2.60

7,25

1,72

4.06

7,01

7,36

3.06

Bus

ines

s-ty

pe a

ctiv

ities

:F

ood

serv

ice

60,1

77.3

4

63

,677

.74

65,6

87.2

0

54

,071

.22

63,6

07.8

5

59

,712

.37

87,8

29.0

3

52

,001

.25

65,2

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9

T

otal

bus

ines

s-ty

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exp

ense

s60

,177

.34

63,6

77.7

4

65

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.20

54,0

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2

63

,607

.85

59,7

12.3

7

87

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.03

52,0

01.2

5

65

,264

.39

Tot

al d

istr

ict e

xpen

ses

6,35

0,41

0.77

$

6,30

5,38

8.94

$

6,53

2,83

4.64

$

6,97

2,04

8.13

$

7,30

8,85

1.26

$

6,97

8,22

1.74

$

7,83

7,92

1.63

$

7,30

3,72

5.31

$

7,08

2,62

7.45

$

Pro

gra

m R

even

ues

Gov

ernm

enta

l act

iviti

es:

Ope

ratin

g gr

ants

and

con

trib

utio

ns51

1,80

6.08

$

50

9,86

2.20

$

49

5,18

8.00

$

1,

402,

153.

21$

1,

372,

975.

35$

80

4,66

8.69

$

98

8,74

8.50

$

82

7,55

7.82

$

70

7,16

5.95

$

C

harg

es fo

r S

ervi

ces

66,0

91.0

0

C

apita

l gra

nts

and

cont

ribut

ions

353,

067.

00

Tot

al g

over

nmen

tal a

ctiv

ities

pro

gram

rev

enue

s51

1,80

6.08

50

9,86

2.20

49

5,18

8.00

1,

402,

153.

21

1,

372,

975.

35

80

4,66

8.69

98

8,74

8.50

82

7,55

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1,

126,

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95

Bus

ines

s-ty

pe a

ctiv

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:C

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r se

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es:

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d se

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,827

.15

$

16,7

63.2

5$

19

,913

.55

$

17,3

79.2

0$

19

,778

.75

$

25,7

14.7

2$

26

,218

.90

$

23,1

47.6

5$

20

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.67

$

Ope

ratin

g gr

ants

and

con

trib

utio

ns20

,405

.37

24,0

46.2

3

22

,915

.31

17,9

19.4

1

20

,044

.23

26,5

49.9

7

30

,103

.81

31,5

86.3

8

30

,560

.50

Tot

al b

usin

ess-

type

act

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es p

rogr

am r

even

ue37

,232

.52

40,8

09.4

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42

,828

.86

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1

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54,7

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3

50

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al d

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9,03

8.60

$

55

0,67

1.68

$

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8,01

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1,

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1,

412,

798.

33$

85

6,93

3.38

$

1,

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071.

21$

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2,29

1.85

$

1,

177,

167.

12$

Fis

cal Y

ear

End

ing

June

30,

Page 72

Bo

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Exh

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Net

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t N

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Fis

cal Y

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(acc

rual

bas

is o

f acc

ount

ing)

2004

2005

2006

2007

2008

2009

2010

2011

2012

Fis

cal Y

ear

End

ing

June

30,

Net

(E

xpen

se)/

Rev

enu

eG

over

nmen

tal a

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(5,7

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5)$

(5

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(5,9

71,9

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4)$

(5

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(5,8

72,2

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6)$

(6

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(6,7

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(6

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(2

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(2

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6)$

(5

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$

(5,5

34,5

96.3

1)$

(5

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.93)

$

(6,1

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88.3

6)$

(6

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$

(6,4

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6)$

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$

Gen

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2,11

5.00

$

5,44

3,80

0.00

$

5,66

1,55

2.00

$

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$

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8,53

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$

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gov

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:In

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s22

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5,

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564,

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924,

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in N

et A

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nmen

tal a

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ities

115,

653.

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137,

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200.

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$

128,

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Bus

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102,

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$

142,

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31$

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1.27

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Sou

rce:

CA

FR

Sch

edul

e A

-2

Page 73

Bo

rou

gh

of

Wild

wo

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Cre

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cho

ol D

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Exh

ibit

J-3

Fu

nd

Bal

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Ten

Fis

cal Y

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(mod

ified

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bas

is o

f acc

ount

ing)

*

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Gen

eral

Fun

dR

estr

icte

d-

$

-

$

-

$

-

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-

$

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926.

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1,11

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482,

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$

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All

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53

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167,

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Sou

rce:

CA

FR

Sch

edul

e B

-1

Fis

cal Y

ear

End

ing

June

30,

Page 74

Bo

rou

gh

of

Wild

wo

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Cre

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cho

ol D

istr

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Exh

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J-4

Ch

ang

es in

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Bal

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rnm

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l Fu

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Ten

Fis

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2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Rev

enu

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ax L

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5,61

6,94

7

7,

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344

6,04

7,27

8

6,

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203

6,71

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8

7,

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6,96

3,71

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1,62

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of r

even

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over

(und

er)

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458,

104

(5

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(2

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(3

5,35

9)

(94,

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107,

556

15

1,47

4

191,

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)

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ther

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ses)

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)

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000)

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8)

(12,

923)

(2

6,60

0)

(20,

063)

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8)

(46)

(11,

000)

(9

,000

)

Net

cha

nge

in fu

nd b

alan

ces

255,

498

$

(6

08,4

57)

$

(2

88,6

58)

$

(4

8,28

2)$

(121

,132

)$

(35,

186)

$

92

,688

$

151,

428

$

18

0,67

5$

309,

274

$

Deb

t ser

vice

as

a pe

rcen

tage

of

nonc

apita

l exp

endi

ture

s0.

00%

0.00

%0.

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%0.

00%

0.00

%0.

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0.00

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0.00

%

Sou

rce:

CA

FR

Sch

edul

e B

-2

Page 75

Borough of Wildwood Crest School District Exhibit J-5General Fund Other Local Revenue by Source,Last Ten Fiscal YearsUnaudited

Fiscal Year Interest on Tuition Sale ofEnded June 30, Investments Revenue Real Property Miscellaneous Totals

2003 $ 4,912.23 $ 13,750.00 $ $ 77,591.16 $ 96,253.39 2004 13,455.06 22,550.00 379,850.00 5,571.57 421,426.63 2005 8,935.49 20,350.00 25,408.25 54,693.74 2006 16,567.42 1,375.00 16,374.38 34,316.80 2007 16,527.55 - 6,651.65 23,179.20 2008 9,523.51 50,800.00 11,312.65 71,636.16 2009 3,410.61 46,000.00 19,360.17 68,770.78 2010 3,326.38 60,225.00 194,835.00 8,248.11 266,634.49 2011 3,939.84 62,100.00 194,835.00 39,908.86 300,783.70 2012 3,341.79 66,091.00 195,000.00 46,239.35 310,672.14

Source: District Records

Page 76

Bo

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2003

28,8

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00

920,

178,

900

270,

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17,5

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1,

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34

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11,1

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1,46

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nava

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Page 77

Bo

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Page 78

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2003

Page 79

Borough of Wildwood Crest School District Exhibit J-9Property Tax Levies and Collections,Last Ten Fiscal Years

FiscalYear Collections in

Ended Taxes Levied for Percentage SubsequentJune 30, the Fiscal Year Amount of Levy Years

2003 4,393,000.00$ 4,029,545.50$ 92% 363,454.50$ 2004 4,444,993.00 4,444,993.00 100% - 2005 4,457,187.00 4,457,187.00 100% - 2006 4,831,458.00 4,831,458.00 100% - 2007 5,042,115.00 5,042,115.00 100% - 2008 5,443,800.00 5,443,800.00 100% - 2009 5,661,552.00 5,661,552.00 100% - 2010 5,888,014.00 5,888,013.96 100% 0.04 2011 6,048,533.00 6,048,533.00 100%2012 6,169,504.00 6,169,503.96 100% 0.04

Source: District records including the Certificate and Report of School Taxes (A4F form)

Collected within the Fiscal Yearof the Levy

Page 80

Borough of Wildwood Crest School District Exhibit J-10Ratios of Outstanding Debt by Type,Last Ten Fiscal Years

Business-TypeActivities

Fiscal BondYear General Certificates Anticipation

Ended Obligation of Capital Notes CapitalJune 30, Bonds Participation Leases (BANs) Leases Total District

2003200420052006200720082009201020112012

Note: The District did not carry any debt for the years listed.*Data is not available.

Source: District CAFR Schedules I-1, I-2

Governmental Activities

Page 81

Borough of Wildwood Crest School District Exhibit J-11Ratios of Net General Bonded Debt Outstanding,Last Ten Fiscal Years

FiscalYear General Net General

Ended Obligation Bonded DebtJune 30, Bonds Deductions Outstanding

2003 - - - 2004 - - - 2005 - - - 2006 - - - 2007 - - - 2008 - - - 2009 - - - 2010 - - - 2011 - - - 2012

Note: The District did not carry any debt for the years listed.*Data is not available.

Governmental Activities

Page 82

Borough of Wildwood Crest School District Exhibit J-12Direct and Overlapping Governmental Activities Debt,As of December 31, 2011

EstimatedEstimated Share of

Debt Percentage OverlappingGovernmental Unit Outstanding Applicable Debt

Debt Repaid with Property Taxes

Borough of Wildwood Crest 29,071,653.00$ 100.00% 29,071,653.00$

Other Debt

County of Cape May 133,812,537.00 4.44% 5,945,668.58

Subtotal, Overlapping Debt 35,017,321.58

Wildwood Crest School District Direct Debt 100.00% -

Total Direct and Overlapping Debt 35,017,321.58$

Sources: Borough of Wildwood Crest; County of Cape May.

Page 83

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Page 84

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Page 85

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Page 86

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inst

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35

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Page 87

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19

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1:

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25

4

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9

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Page 88

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of

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cho

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Exh

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J-1

8S

cho

ol B

uild

ing

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rmat

ion

,L

ast

Ten

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cal Y

ears

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Dis

tric

t B

uild

ing

s

Ele

men

tary

Cre

st M

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ial S

choo

l (19

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are

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60

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60

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60

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C

apac

ity (

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ents

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6

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nrol

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264

Num

ber

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t Jun

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, AS

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Page 89

Bo

rou

gh

of

Wild

wo

od

Cre

st S

cho

ol D

istr

ict

Exh

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J-1

9G

ener

al F

un

dS

ched

ule

of

Req

uir

ed M

ain

ten

ance

fo

r S

cho

ol F

acili

ties

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ast

Ten

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cal Y

ears

(Una

udite

d)

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dis

trib

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d E

xpen

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ure

s -

Req

uir

ed M

ain

ten

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fo

r S

cho

ol F

acili

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Sch

ool F

acili

ties

Pro

ject

# (

s)20

0320

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st M

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$

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256

$

Sou

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Dis

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t R

ecor

ds

Page 90

Borough of Wildwood Crest School District Exhibit J-20Insurance ScheduleFor the Fiscal Year Ended June 30, 2012(Unaudited)

Amount ofCompany Coverage Deductible

New Jersey School Boards Association Insurance Group School Package Policy Property

Blanket Loss Limit of Liability $ 3,000,000,000 $ 5,000 Blanket Extra Expense 50,000,000 5,000 Blanket Valuable Papers and Records 10,000,000 5,000 Demolition and Increased Cost of Construction 10,000,000 Fire Department Service Charge 10,000 Arson Award 10,000 Pollutant Cleanup and Removal 250,000 Flood Zone Prefix A & V 10,000,000 500,000 Flood Zone B ) NJSBAIG aggregate 10,000,000 10,000 Earthquake 5,000,000 Terrorism 1,000,000 Terrorism (TRIA) 20,000,000

Electronic Data ProcessingBlanket Hardware/Software 500,000 1,000 Transit 25,000 Loss of Income 10,000 Flood 1,000,000 10,000

Boiler and MachineryCombined Single Limit per Accident, Property Damage 100,000,000 1,000

CrimePublic Employee Dishonesty 100,000 1,000 Theft, Disappearance and Destruction 5,000 500 Board Secretary Bond 90,000 500 Treasurer Bond 200,000 1,000

Comprehensive General LiabilityBodily Injury and Property Damage 6,000,000 Sexual Abuse 6,000,000 Personal Injury 6,000,000 Employee Benefits Liability 6,000,000 1000Premises Medical Payments 10,000 100Terrorism 1,000,000

Automobile 6,000,000

Source: District Records

Type of Coverage

Page 91

Single Audit Section

K-1 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 The Honorable President and Members of Board of Education Borough of Wildwood Crest School District County of Cape May Wildwood Crest, New Jersey We have audited the basic financial statements of the Board of Education of Borough of Wildwood Crest School District, State of New Jersey, as of and for the fiscal year ended June 30, 2012, and have issued our report thereon dated December 5, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and audit requirements presented by the Division of Finance, Department of Education, State of New Jersey. Internal Control Over Financial Reporting Management of the District is responsible for establishing and maintaining internal control over financial reporting. In planning and performing our audit, we considered the Borough of Wildwood Crest School District Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the basic financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Borough of Wildwood Crest School District Board of Education’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Borough of Wildwood Crest School District Board of Education’s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as define previously. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies. These findings are identified as 12-2, 12-7, 12-8 and 12-12. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those in governance.

Page 92

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Borough of Wildwood Crest School District Board of Education’s basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of basic financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and audit requirements prescribed by the Division of Finance, Department of Education, State of New Jersey listed in the accompanying schedule of findings and questioned costs as items 12-1, 12-3 and 12-6. In addition, we noted certain other matters that we have reported to the Board of Education of the Borough of Wildwood Crest School District in the separate Auditors' Management Report on Administrative Findings - Financial, Compliance and Performance dated December 5, 2012. The District’s response to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the Borough of Wildwood Crest School District response and, accordingly, we express no opinion on it. This report is intended for the information of the management of the Borough of Wildwood Crest School District Board of Education, the New Jersey State Department of Education (the cognizant audit agency), other state and federal awarding agencies and pass-through entities, and is not intended and should not be used by anyone other than these parties. Ford, Scott & Associates, L.L.C. FORD, SCOTT & ASSOCIATES, L.L.C. CERTIFIED PUBLIC ACCOUNTANTS


Page 93

K-2 REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND

MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH NEW JERSEY OMB CIRCULAR 04-04

The Honorable President and Members of the Board of Education Borough of Wildwood Crest School District County of Cape May Wildwood Crest, New Jersey Compliance We have audited the compliance of the Board of Education of the Wildwood Crest School District, in the County of Cape May, State of New Jersey, with the types of compliance requirements described in the New Jersey State Grant Compliance Supplement that could have a direct and material effect on each of its major state programs for the fiscal year ended June 30, 2012. Wildwood Crest Board of Education's major state programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major state programs is the responsibility of the Wildwood Crest Board of Education's management. Our responsibility is to express an opinion on the Wildwood Crest Board of Education's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements as prescribed by the Division of Finance, Department of Education, State of New Jersey, and New Jersey OMB’s Circular 04-04, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid. Those standards, and New Jersey OMB’s Circular 04-04, require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major state program occurred. An audit includes examining, on a test basis, evidence about the Borough of Wildwood Crest Board of Education's compliance with those requirements and performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the Borough of Wildwood Crest Board of Education's compliance with those requirements. As described in findings 12-5, 12- 9, 12-10 and 12-11 in the accompanying schedule of findings and questioned costs, the Board of Education of the Wildwood Crest School District did not comply with requirements regarding special tests and provisions regarding State Aid Programs – State Aid Public and SDA ROD Grant. Compliance with such requirements is necessary, in our opinion, for the Wildwood Crest Board of Education to comply with the requirements applicable to that program. In our opinion, except for the noncompliance described in the preceding paragraph, the Board of Education of the Borough of Wildwood Crest School District, in the County of Cape May, State of New Jersey, complied, in all material respects, with the requirements referred to above that could have a direct and material effect on its major state programs for the year ended June 30, 2012.

Page 94

Internal Control Over Compliance The management of the Board of Education of the Borough of Wildwood Crest School District is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to state programs. In planning and performing our audit, we considered Borough of Wildwood Crest Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major state program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133 and NJ OMB Circular 04-04, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Borough of Wildwood Crest Board of Education’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, non compliance with a type of compliance requirement of a state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material non compliance with a type of compliance requirement of a state program will not be prevented, or detected and corrected on a timely basis. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. The Borough of Wildwood Crest Board of Education’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the responses and, accordingly, we express no opinion on them. This report is intended for the information of the management of the Borough of Wildwood Crest Board of Education, the New Jersey State Department of Education (cognizant audit agency), other state awarding agencies and pass-through entities and is not intended and should not be used by anyone other than these specified parties. Ford, Scott & Associates, L.L.C. FORD, SCOTT& ASSOCIATES, L.L.C. CERTIFIED PUBLIC ACCOUNTANTS


Page 95

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Page 97

BOROUGH OF WILDWOOD CREST SCHOOL DISTRICT K-5 Notes to the Schedules of Expenditures of Awards and Financial Assistance

June 30, 2012 Note 1: General The accompanying schedules of expenditures of federal awards and state financial assistance present the activity of all federal and state award activity of the Board of Education, Borough of Wildwood Crest School District. The Board of Education is defined in Note 1(A) to the Board's basic financial statements. All federal and state awards received directly from federal and state agencies, as well as federal awards and state financial assistance passed through other government agencies is included on the schedule of expenditures of federal awards and state financial assistance. Note 2: Basis of Accounting The accompanying schedules of expenditures of awards and financial assistance are presented on the budgetary basis of accounting with the exception of programs recorded in the food service fund, which are presented using the accrual basis of accounting. These bases of accounting are described in Notes 1(C) and 1(D) to the Board's basic financial statements. The information in this 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 basic financial statements. Note 3: Relationship to Basic Financial Statements The basic financial statements present the general fund and special revenue fund on a GAAP basis. Budgetary comparison statements or schedules (RSI) are presented for the general fund and special revenue fund to demonstrate finance-related legal compliance in which certain revenue is permitted by law or grant agreement to be recognized in the audit year, whereas for GAAP reporting, revenue is not recognized until the subsequent year or when expenditures have been made. The general fund is presented in the accompanying schedules on the modified accrual basis with the exception of the revenue recognition of the last state aid payment in the current budget year, which is mandated pursuant to N.J.S.A. 18A:22-44.2. For GAAP purposes that payment is not recognized until the subsequent budget year due to the state deferral and recording of the last state aid payment in the subsequent year. The special revenue fund is presented in the accompanying schedules on the grant accounting budgetary basis, which recognizes encumbrances as expenditures and also recognizes the related revenues, whereas the GAAP basis does not. The special revenue fund also recognizes the last state aid payment in the current budget year, consistent with N.J.S.A. 18A:22-4.2. The net adjustment to reconcile from the budgetary basis to the GAAP basis is -$16,640.60 for the general fund and $548.60 for the special revenue fund. See the Notes to the Required Supplementary Information for a reconciliation of the budgetary basis to the modified accrual basis of accounting for the general and special revenue funds. Awards and financial assistance revenues are reported in the Board's basic financial statements on a GAAP basis as presented below:

On-Behalf

Federal State TPAF Pension Total

General Fund $ 26,019.00 $ 1,016,109.13 $ (280,724.00) $ 761,404.13

Special Revenue Fund 178,736.00 55,408.60 - 234,144.60

Capital Projects Fund 353,067.00 353,067.00

Food Service Fund 29,774.38 786.12 - 30,560.50

Total Financial Assistance $ 234,529.38 $ 1,425,370.85 $ (280,724.00) $ 1,379,176.23

The On-Behalf Pension Contributions made for the District by the State of New Jersey are recognized as revenue in the basic financial statements, but are not considered in the major program determination.

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BOROUGH OF WILDWOOD CREST SCHOOL DISTRICT K-5 Notes to the Schedules of Expenditures of Awards and Financial Assistance

June 30, 2012 (Continued)

Note 4: Relationship to Federal and State Financial Reports Amounts reported in the accompanying schedules agree with the amounts reported in the related federal and state financial reports. Note 5: Other The amount reported as TPAF Pension Contributions represents the amount paid by the State on behalf of the District for the year ended June 30, 2012. TPAF Social Security Contributions represents the amount reimbursed by the State for the employer’s share of social security contributions for TPAF members for the year ended June 30, 2012.

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K-6 BOROUGH OF WILDWOOD CREST SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS

FOR THE YEAR ENDING JUNE 30, 2012

Section I – Summary of Auditor’s Results Financial Statements Type of auditor’s report issued: Unqualified Opinion Internal control over financial reporting: 1) Material weakness(es) identified? Yes X No 2) Significant deficiencies identified?

X Yes

None reported

Noncompliance material to basic financial

statements noted?

Yes X

No

Federal Awards Not applicable. State Awards Dollar threshold used to distinguish between type A and type B programs: $300,000 Auditee qualified as low-risk auditee? Yes X No

Type of auditor's report issued on compliance for major programs: Qualified Opinion Internal Control over major programs: 1) Material weakness(es) identified? Yes X No 2) Significant deficiencies identified?

Yes X None reported

Any audit findings disclosed that are required to be reported in accordance with NJOMB Circular Letter 04-04

X

Yes

No

Identification of major programs:

GMIS Number(s) Name of State Program

495-034-5120-085

State Aid – Public Cluster

Adjustment Aid

495-034-5120-089

Special Education Aid

495-034-5120-084 Security Aid 5800-030-10-G0VW SDA ROD Grant

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FOR THE YEAR ENDING JUNE 30, 2012 (CONTINUED)

Section II - Financial Statement Findings

In accordance with Government Auditing Standards, our audit disclosed the following finding relating to the financial statements that is required to be reported under this section. In addition, we noted other findings that are reported in the Auditor’s Management Report on Administrative Findings. Finding 12-1: The surety bond coverage for the previous treasurer was less than the minimum amount required under N.J.A.C. 6A:23A-16.4 and there was no coverage at all in place for the current treasurer. Criteria: The State Department of Education has established a schedule of minimum surety bond coverage to be utilized by all districts in the state. Condition: The District did not meet the minimum coverage requirements. Questioned Costs: There are no questioned costs related to this finding. Context: The required coverage was calculated to be approximately $160,000. The coverage in effect was $90,000 for the previous treasurer and $0.00 for the current treasurer. Effect: The District was not in compliance with the state requirement. Cause: Unknown. Recommendation: We recommend that the district obtain surety bond coverage of at least $175,000 for the Treasurer of School Monies, in accordance with the minimum requirements established by N.J.A.C. 6A:23A-16.4.

Planned Corrective Action: We have been informed that as of the date of this report surety bond coverage has been obtained in the amount of $200,000.00.

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Section II - Financial Statement Findings - Continued

Finding 12-2: Several vouchers selected for testing were missing a) some of the required approval signatures, b) vendor invoice or other supporting documentation, c) documentation of NJ Business Registration Certificate and in some cases were charged to the incorrect budget account number. Criteria: All required supporting documentation should be in place prior to payment. Condition: Several vouchers selected for testing were missing a) some of the required approval signatures, b) vendor invoice or other supporting documentation, c) documentation of NJ Business Registration Certificate and in some cases, were charged to the incorrect budget account number. Questioned Costs: There are no questioned costs related to this finding. Context: Several vouchers selected for testing were missing a) some of the required approval signatures, b) vendor invoice or other supporting documentation, c) documentation of NJ Business Registration Certificate and in some cases were charged to the incorrect budget account number. Effect: This indicates a control weakness that could allow an erroneous payment to be made. Cause: Not known. Recommendation: We recommend that no payments be made unless the voucher includes a) all of the required approval signatures, b) vendor invoice or other supporting documentation, c) documentation of NJ Business Registration Certificate and the purchase is charged to the correct budget account number.

Planned Corrective Action: A corrective action plan will be filed by the district to address this finding.

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Finding 12-3: The Board’s School Physician was compensated through the payroll account which resulted in withholdings for pension contributions even though this individual was awarded a professional service contract. Criteria: N.J.S.A. 43:15A-7.2 states that professional service appointees are ineligible to participate in the PERS Pension System. Condition: The School Physician, a professional appointee, is enrolled in the PERS Pension System. Questioned Costs: There are no questioned costs related to this finding. Context: The School Physician, a professional appointee, is enrolled in the PERS Pension System. Effect: The District is not in compliance with N.J.S.A. 43:15A-7.2. Cause: Not known. Recommendation: We recommend that the District must comply with N.J.S.A. 43:15A-7.2 and remove professional service providers from the Public Employees’ Retirement System.

Planned Corrective Action: We have been informed that condition was corrected in July of 2012.

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Finding 12-6: The required certification (E-CERT1) of compliance with requirements for income tax on compensation of administrators (superintendent, assistant superintendents, and business administrator) to the NJ Department of Treasury was not was not filed. Criteria: The Department of Education requires that the certification be filed annually by March 15th. Condition: The required certification was not completed or filed. Questioned Costs: There are no questioned costs related to this finding. Context: The required certification was not completed or filed. Effect: The District is not in compliance with Department of Education requirement. Cause: Not known. Recommendation: We recommend that the Board of Education designate someone to prepare and submit the certification as required by N.J.S.A. 18A:14.4 and submit the E-CERT1.

Planned Corrective Action: The District has informed us that this filing will be done retroactively.

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Finding 12-7: Several expenses related to the 2011 / 2012 school year were not encumbered or accrued at year-end. The resulting audit adjustments created over expenditures of several line items as indicated on audit exhibit C-1. Criteria: All expenditures should be accrued and charged to the budget year in which the expense is incurred. Condition: The Districts record’s, as originally presented for audit understated expenses in several categories. Questioned Costs: There are no questioned costs related to this finding. Context: Expenses totaling $66,087.86 were required to be accrued by audit adjustment. Effect: Expenditures were understated, and after audit adjustment, line items were overspent. Cause: Not known. Recommendation: We recommend that all expenditures be properly accrued or encumbered to the appropriate budget year and that budget transfers be submitted to the Board of Education for approval for all line items that may have insufficient funds available.

Planned Corrective Action: A corrective action plan will be filed by the district to address this finding.

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Finding 12-8: The District has shared service agreements with the Wildwood Board of Education. However, no formal, signed agreements could be presented for audit. Criteria: All shared service agreements should be in writing in order to verify that the agreed upon terms are being complied with. Condition: No written contract was provided for audit. Questioned Costs: There are no questioned costs related to this finding. Context: Approximately $30,000 worth of expenditures for shared services have no written support. Effect: Expenses for shared services could be inaccurately charged. Cause: Not known. Recommendation: We recommend that formal shared service agreements for administrative and business services be adopted and signed by all parties involved. Planned Corrective Action: We have been informed that the District is currently in the process of preparing a written shared services agreement.

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Finding 12-12: Criteria: Our audit of the capital asset ledger found that land sold during FY 2012 was not deleted from the ledger. Condition: The capital asset ledger as originally presented for audit was overstated. Questioned Costs: There are no questioned costs related to this finding. Context: The parcel of land was valued at $60,200.00. Effect: The capital asset ledger was overstated by $60,200.00. Cause: Not known. Recommendation: We recommend that formal shared service agreements for administrative and business services be adopted and signed by all parties involved. Planned Corrective Action: We recommend that capital asset deletions be made accurately and timely to the capital asset ledger.

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Section III – Federal Awards and State Financial Assistance Findings and Questioned Costs

FEDERAL AWARDS N/A. STATE AWARDS Our audit disclosed the following related to state programs. Finding 12-5: Two newly hired and one existing employee did contribute towards their health benefit cost but the contribution amounts were not calculated correctly. Program Information: State Aid - Public Adjustment Aid – 495-034-5120-085 Special Education Aid – 495-034-5120-089 Security Aid – 495-034-5120-084 Criteria: Employees are required to contribute to the cost of their health benefits, according to a sliding schedule promulgated by the State of New Jersey. Condition: Contribution calculated and deducted for three employees were less than the required amounts. Questioned Costs: The total calculated underpayment was $2,457. Context: The District has approximately 56 employees. The underpayment relates to three employees. Effect: The District is not in compliance with the state requirement. Cause: We realize that this error most likely occurred due to the complexity and variables associated with calculating this requirement. Recommendation: We recommend that all required health benefit contributions be properly calculated. Planned Corrective Action: A corrective action plan will be filed by the district to address this finding.

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Section III – Federal Awards and State Financial Assistance Findings and Questioned Costs –

(Continued) STATE AWARDS (CONTINUED) Finding 12-9: The Board did net set the annual maximum travel expenditure amounts by resolution as required by the District’s travel policy. Program Information: State Aid - Public Adjustment Aid – 495-034-5120-085 Special Education Aid – 495-034-5120-089 Security Aid – 495-034-5120-084 Criteria: The Accountability Regulations for School Districts established by the State of New Jersey, Department of Education requires that maximum travel expenditures amounts be established annually. Condition: No maximum amount was established. Questioned Costs: None. Context: The Accountability Regulations for School Districts established by the State of New Jersey, Department of Education requires that maximum travel expenditures amounts be established annually. Effect: The District is not in compliance with the state requirement. Cause: Unknown. Recommendation: We recommend that the annual maximum travel expenditure for a pre- budget year should be set by Board resolution as set forth in the District’s travel policy. Planned Corrective Action: A corrective action plan will be filed by the district to address this finding for future years and the District has informed us that this will be done retroactively for the current year.

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(Continued) Finding 12-10: Our audit of expenditures found payments made to two separate vendors in excess of the bid threshold that were not advertised for competitive bids. Program Information: State Aid - Public Adjustment Aid – 495-034-5120-085 Special Education Aid – 495-034-5120-089 Security Aid – 495-034-5120-084 Criteria: The Public Schools Contract Law requires competitive bidding for purchases in excess of the Bid Threshold, unless the purchase is specifically exempted by the law. Condition: Our audit of expenditures found payments made to two separate vendors in excess of the bid threshold that were not advertised for competitive bids. Questioned Costs: The purchases in excess of the Bid Threshold for the two vendors totaled $43,674. Context: Vendors were paid in excess of the bid threshold without competitive bids. Effect: The District is not in compliance with the state requirement. Cause: Unknown. Recommendation: We recommend that all payments to vendors for similar goods and services should be advertised for competitive bids in accordance with the Public Schools Contract Law. Planned Corrective Action: A corrective action plan will be filed by the district to address this finding.

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(Continued) Finding 12-11: Our audit of expenditures found that no formal signed contract was available for one vendor that was awarded professional appointment. Program Information: SDA ROD Grant 5800-030-10-G0VW Criteria: Written contracts should be executed for all Professional Service Appointments. Condition: No written contract was made available for audit. Questioned Costs: The expenditures in excess of the Bid Threshold for the Professional Service totaled $30,929. Context: No written contract was made available for audit. Effect: The District is not in compliance with the state requirement. Cause: Unknown. Recommendation: We recommend that formal signed contracts be available for all professional appointments. Planned Corrective Action: A corrective action plan will be filed by the district to address this finding.

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BOROUGH OF WILDOOD CREST SCHOOL DISTRICT K-7 SUMMARY SCHEDULE OF PRIOR-YEAR AUDIT FINDINGS AND QUESTIONED COSTS AS PREPARED BY MANAGEMENT

FOR THE YEAR ENDED JUNE 30, 2012 STATUS OF PRIOR YEAR FINDINGS FINANCIAL STATEMENT FINDINGS Finding 11-1 Substantial year-end adjustments were necessary to properly reflect revenues, expenditures and account balances in the Board’s financial statements at year-end. Status of Prior Year Finding This finding has been corrected. Finding 11-5: Our audit of Title I expenditures found the reimbursement to the state for TPAF Social Security and Pension charged to federally funded programs due September 30, 2009 was not made by the District. Status of Prior Year Finding This finding has been corrected. STATE AWARDS Finding 11-2 Approved budgetary line accounts should not be over-expended. The Board Secretary/Business Administrator should record all activity to the budgetary accounts throughout the year to properly reflect expenditures so that monthly certifications are consistent with account activity. Status of Prior Year Finding Other than Over Expenditures created by Audit Adjustments, this finding has been corrected. Finding 11-3 The reconciled cash balance of the district performed by the Treasurer did not agree to the monthly Board Reports and at year end. The District performed a separate reconciliations to bring the balances into agreement during the year. However, the revenues and expenses determined as a result of these reconciliations were not recorded in the budgetary systems. Status of Prior Year Finding This finding has been corrected. Finding 11-4: Our audit of Application for State School Aid (ASSA) as of October 15, 2010 found errors in the number of student reported compared to the school registers. Status of Prior Year Finding This finding has been corrected.

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comprehensive annual financial reportc-3 budget-to-gaap reconciliation 59 other supplementary...

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