comprehensive annual financial reportof the district over the last 5 years. fiscal year 2012-2013...

Comprehensive Annual Financial Report

of the

Borough of Manville Board of Education

County of Somerset

Manville, New Jersey

For the Fiscal Year Ended June 30, 2017

Prepared by

Borough of Manville, Board of Education Finance Department

INTRODUCTORY SECTION

Letter of Transmittal Roster of Officials Consultants and Advisors Organizational Chart

FINANCIAL SECTION

Independent Auditor Report

TABLE OF CONTENTS

REQUIRED SUPPLEMENTARY INFORMATION - PART I

Management's Discussion and Analysis (Unaudited)

BASIC FINANCIAL STATEMENTS

A District-Wide Financial Statements:

A-1 Statement of Net Position A-2 Statement of Activities

B. Major Fund Financial Statements:

Governmental Funds:

PAGE

1-4 5 6 7

8-10

11

12-24

25

26

27 28

29

B-1 Balance Sheet 30-31 B-2 Statement of Revenues, Expenditures, and Changes in Fund Balance 32 8-3 Reconciliation of the Statement of Revenues, Expenditures, and Changes

in Fund Balances of Governmental Funds to the Statement of Activities 33

Other Funds

Proprietary Funds:

8-4 Statement of Net Position B-5 Statement of Revenues, Expenses, and Changes in Fund Net Position 8-6 Statement of Cash Flows

Fiduciary Funds:

8-7 Statement of Fiduciary Net Position 8-8 Statement of Changes in Fiduciary Net Position

Notes to the Financial Statements

34

35 36 37

38 39

40-76

TABLE OF CONTENTS (CONTINUED)

REQUIRED SUPPLEMENTARY INFORMATION - PART II

C. Budgetary Comparison Schedules:

C-1 General Fund C-2 Special Revenue Fund C-3 Budget to GAAP Reconciliation

REQUIRED SUPPLEMENTARY INFORMATION - Part Ill

L. Schedules Related to Accounting and Reporting for Pension (GASB 68)

L-1

L-2

L-3

L-4

Schedule of the District's Proportionate Share of the Net Pension Liability - Public Employees Retirement System - Last Ten Years Schedule of the District's Contributions - Public Employees Retirement System - Last Ten Years Schedule of the District's Proportionate Share of the Net Pension Liability Teachers Pension and Annuity Fund - Last Ten Years Schedules Related to Accounting and Reporting for Pension (GASB 68) Note to RSI Ill for the Fiscal Year Ended June 30, 2017

OTHER SUPPLEMENTARY INFORMATION

D. School Level Schedules

E. Special Revenue Fund:

PAGE

77

78

79-85 86 87

88

89

90

91

92

93

94

NIA

95

E-1 Combining Schedule of Revenues and Expenditures - Budgetary Basis 96-97 E-2 Schedule of Preschool Education Aid - Budgetary Basis N/A

F. Capital Projects Fund

F-1 Summary Statement of Project Expenditures - Budgetary Basis F-2 Summary Schedule of Revenues, Expenditures, and Changes in

Fund Balance - Budgetary Basis F-2A Schedule of Project Revenues, Expenditures, Project Balance, and

Project Status - Budgetary Basis - Roof Replacement in West Wing of High School

F-28 Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - Asbestos Abatement at Manville Schools

F-2C Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - High School Sidewalk Repair

F-20 Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - High School/ABIS Roof Repair

F-2E Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - Asbestos Abatement at ABIS And Roosevelt School

F-2F Schedule of Project Revenues, Expenditures, Project Balance, and Project Status - Budgetary Basis - High School Student Parking Lot

98

99

100

101

102

103

104

105

106

TABLE OF CONTENTS {CONTINUED) PAGE

G. Proprietary Funds NIA

Enterprise Fund:

G-1 Combining Statement of Net Position NIA G-2 Combining Statement of Revenues, Expenses and Changes in Fund Net

Position N/A G-3 Combining Statement of Cash Flows NIA

H. Fiduciary Fund 107

H-1 Combining Statement of Fiduciary Net Position 108 H-2 Combining Statement of Changes in Fiduciary Net Position 109 H-3 Student Activity Agency Fund Schedule of Receipts and Disbursements 11 O H-4 Payroll Agency Fund Schedule of Receipts and Disbursements 111

I. Long Term Debt

1-1 1-2 1-3

Schedule of Serial Bonds Schedule of Obligations Under Capital Leases Debt Service Fund Budgetary Comparison Schedule

STATISTICAL SECTION (UNAUDITED)

J-1 Net Position by Component J-2 Changes in Net Position J-3 Fund Balances - Governmental Funds J-4 Changes in Fund Balances - Governmental Funds J-5 General Fund Other Local Revenue by Source J-6 Assessed Value and Actual Value of Taxable Property J-7 Direct and Overlapping Property Tax Rates J-8 Principal Property Tax Payers - Current and Nine Years Ago J-9 Property Tax Levies and Collections J-10 Ratios of Outstanding Debt by Type J-11 Ratios of Net Bonded Debt Outstanding J-12 Direct and Overlapping Governmental Activities Debt J-13 Legal Debt Margin Information J-14 Demographic and Economic Statistics J-15 Principal Employers - Current Year and Nine Years Ago J-16 Full-Time Equivalent District Employees by Function/Program J-17 Operating Statistics J-18 School Building Information J-19 Schedule of Required Maintenance J-20 Insurance Schedule

112

113 N/A 114

115 116-117

118 119 120 121 122 123 124 125 126 127 128 129 N/A 130 131 132 133 134

TABLE OF CONTENTS (CONTINUED)

SINGLE AUDIT SECTION

K-1 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Basic Financial

PAGE

Statements Performed in Accordance with Government Auditing Standards 135-136

K-2 Independent Auditor's Report on Compliance with Requirements Applicable to Major Federal and State Financial Assistance Programs and Internal Control Over Compliance Required by the Uniform Guidance and New Jersey OMS Circular 15-08 137-138

K-3 Schedule of Expenditures of Federal Awards, Schedule A 139

K-4 Schedule of Expenditures of State Financial Assistance, Schedule B 140

K-5 Notes to the Schedules of Expenditures of Federal Awards and State Financial Assistance 141-142

K-6 Schedule of Findings and Questioned Costs 143-145

K-7 Schedule of Prior Year Audit Findings 146

INTRODUCTORY SECTION

MANVILLE PUBLIC SCHOOLS

Mr. Robert Beers Superintendent of Schools

Phone (908) 231-8500x8545 Fax (908) 707-3963

November 13, 2017

Honorable President and Members of the Board of Education Manville School District Somerset County, New Jersey

410 Brooks Boulevard Manville, New Jersey 08835

Dear Board Members and Constituents:

Kimberly A. Clelland Business Administrator /Board Secretary

Phone (908) 231-8500X8504 Fax (908) 704-0510

The comprehensive annual financial report of the Manville School District for the fiscal year ended June 30, 2017, 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 governmental activities, the business-type activities, each major fund and the aggregate remaining fund information at June 30, 2017 and the government-wide financial statements 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 (designed to complement Management's Discussion and Analysis and should be read in conjunction with it), the Districts 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 and is unaudited. The District is required to undergo an annual single audit in conformity with the provisions of the Single Audit Amendment of 1996 and the provisions of the Uniform Guidance and New Jersey OMB Circular 15-08, "Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid Payments". 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 are included in the single audit section of this report.

1

1. REPORTING ENTITY AND ITS SERVICES: Manville School District is an independent reporting entity within the criteria adopted by the GASS. All funds and the government-wide statements of the District are included in this report. The Manville Board of Education and all its schools constitute the District's reporting entity.

The District provides 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 completed the 2016-2017 fiscal year with an enrollment of approximately 1,448 students. The following details the changes in the student enrollment of the District over the last 5 years.

Fiscal Year 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Student Enrollment 1,307 1,412 1,415 1,423 1,448

Percent Change .011% .008% .009% .009% .009%

2. ECONOMIC CONDITIONS AND OUTLOOK: Manville is a community of moderately priced single-family homes. The Manville School District is currently examining options related to continuing with a "Shared Services" agreement with the Borough of Manville, examining additional options beyond shared services due to recent cutbacks in funds and staffing by the Borough of Manville. A separate agreement with local law enforcement continues to provide security at all major events. The district has realized enrollment increases in grades kindergarten to grade three with an increase of students eligible for extended services and the free and reduced lunch program. Facilities security, student safety, and providing effective instructional programs conducive to the individual growth of the student continue to be the main goals of the district.

3. MAJOR INITIATIVES: The Manville School District has planned the following projects for the future school years:

1) To continue to assess and maintain a safe environment for all students and employees;

2) To continue to review and upgrade technological infrastructure related to instruction, building security and communications.

3) Continue to review and revise instructional programs and related professional development to maintain standards of accountability within the guidelines and mandates outlined by the New Jersey State Learning Standards.

4) To allow for continuous school improvement as evidenced by assessment data.

5) To continue to maintain and complete repairs/replacements of all facilities.

6) To seek options for expansion of facilities due to burgeoning student enrollment within the district.

2

4. INTERNAL ACCOUNTING CONTROLS: Management of the District is responsible for establishing and maintaining internal control 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 generally accepted accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). The internal control structure is designed to provide reasonable, but not absolute, 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's, the District also is responsible for ensuring that adequate internal control 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 Management.

As part of the District's single audit described earlier, tests are made 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.

5. 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 county office of the New Jersey Department of Education. 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 at June 30, 2017.

6. ACCOUNTING SYSTEM AND REPORTS: The District's accounting records reflect generally accepted accounting principles, as promulgated by the Governmental Accounting Standards Board (GASS). The accounting system of the District is organized on the basis of funds and the government-wide statements. These funds and the government-wide statements are explained in "Notes to the Financial Statement", Note 1.

7. 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. You should review in detail the management's discussion and analysis for the fiscal year ended June 30, 2017, for Financial Summaries.

3

8. DEBT ADMINISTRATION: At June 30, 2017, the District's outstanding debt included $236,000 of general obligation bonds.

9. CASH MANAGEMENT: The investment policy of the District is guided in large part by State statute as detailed in "Notes to the Financial Statement" Note 2. The District has adopted a cash management plan, which requires it to deposit public funds in public depositories protected from los 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. The law requires governmental units to deposit public funds only in public depositories located in New Jersey, where the funds are secured in accordance with the Act.

10. RISK MANAGEMENT: The Board carries various forms of insurance, including but not limited to general liability, automobile liability and comprehensive collision, hazard and the insurance on property and contents, and fidelity bonds.

11. OTHER INFORMATION:

A) Independent Audit - State statutes require an annual audit by independent certified public accountants or certified municipal accountants. The accounting firm of Suplee, Clooney and Company, CPAs was selected by the Board of Education at the annual Reorganization Meeting. 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 Amendments of 1996 and the Uniform Guidance and State Treasury Circular Letter 15-08 OMB. The auditor's report on the basic financial statements and combining and individual fund statements and schedules is included in the financial section of this report. The auditor's report related specifically to the single audit is included in the single audit section of this report.

12. ACKNOWLEDGEMENTS: We would like to express our appreciation to the Members of the Manville School Board 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. The preparation of this report could not have been accomplished without the efficient and dedicated services of our financial and accounting staff.

Res12ectfully submitted:

T~ Robert Beers

Superintendent Business Administrator/Board Secretary

4

BOROUGH OF MANVILLE SCHOOL DISTRICT

ROSTER OF OFFICIALS

JUNE 30, 2017

Members of the Board of Education

Heidi Alles - President

Jeanne Lombardino - Vice President

Branden Agans

Jennifer Esposito

Kelly Harabin

Sharon Liszczak

Sharon Lukac

Ned Panfile

Louis Petzinger

Other Officials

Anne R. Facenda, Superintendent of Schools

Kimberly A. Clelland, Business Administrator

Lori Majeski , Treasurer of School Moneys

5

Term Expires

2017

2017

2017

2019

2019

2018

2019

2018

2017

BOROUGH OF MANVILLE SCHOOL DISTRICT CONSULTANTS AND ADVISORS

JUNE 30, 2017

Audit Firm

Suplee, Clooney & Company

Attorney

David Rubin

Official Depository

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FINANCIAL SECTION

SuPLEE, CLoONEY & COMPANY CERTIFIED PUBLIC ACCOUNTANTS

308 East Broad Street, Westfield, New Jersey 07090-2122

Telephone 908-789-9300 Fax 908-789-8535

E·mail [email protected]

INDEPENDENT AUDITOR REPORT

Honorable President and Members of the Board of Education Borough of Manville School District County of Somerset Manville, New Jersey 08835

Report on the Financial Statements

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 Borough of Manville School District, County of Somerset, New Jersey (the "District") as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor Responsibility

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 and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, audit requirements prescribed by the Division of Finance, Department of Education, State of New Jersey, and the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and State of New Jersey OMB Circular 15-08 "Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid." Those standards and provisions require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

8

SuPLEE, CLooNEY & COMPANY

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

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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Borough of Manville School District, County of Somerset, New Jersey as of June 30, 2017, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, budgetary comparison information in Exhibit C-1 through C-3 and the pension schedules in Exhibit L-1 through L-4 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.

9

SUPLEE, CLOONEY & COMPANY

Supplementary and Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Borough of Manville School District's basic financial statements. The accompanying supplementary schedules such as the combining and individual fund financial statements, long-term debt schedules and the Schedules of Expenditures of Federal Awards and State Financial Assistance, as listed in the table of contents, as required by the Uniform Guidance, New Jersey's OMB Circular 15-08, "Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid," and the State of New Jersey, Department of Education, Division of Finance, are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The accompanying supplementary information schedules such as the combining and individual fund financial statements, long-term debt schedules and the Schedules of Expenditures of Federal Awards and State Financial Assistance, as listed in the table of contents, as required by the Uniform Guidance, New Jersey's OMB Circular 15-08, "Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid," and the State of New Jersey, Department of Education, Division of Finance is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The other information, such as the introductory and statistical sections, has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express on opinion or provide any assurance on it.

Other Reporting Required bv Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 13, 2017 on our consideration of the Borough of Manville School District's internal control over financial reporting and on 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 and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Borough of Manville School District's internal control over financial reporting and compliance.

PUBLIC SCHOOL ACCOUNTANT NO. 948 November 13, 2017

10

REQUIRED SUPPLEMENTARY INFORMATION - PART I

11

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)

12

BOROUGH OF MANVILLE SCHOOL DISTRICT MANVILLE, NEW JERSEY

MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2017

UNAUDITED

This section of The Borough of Manville School District's ("The District") annual financial report presents its discussion and analysis of the District's financial performance during the fiscal year ended June 30, 2017. Please read it in conjunction with the transmittal letter at the front of this report and the District's financial statements, which immediately follow this section.

Management's Discussion and Analysis (MD&A) is Required Supplementary Information specified in the Governmental Accounting Standard Board's (GASB) Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis - for State and Local Governments. Certain comparative information between the current fiscal year and the prior year is presented in the MD&A.

Financial Highlights

• At the government-wide financial statements, revenue from governmental activities accounted for $27,999,945 or 98 percent of total school district revenue. The other 2 percent of revenue was generated by the business type activities.

Fund Level Schedules

• The fund balance in the General Fund increased by $375,354 after a decrease of $914,674 in 2015-2016.

• The Board of Education had no capital projects in 2016-2017 due to not being able to increase the capital reserve fund at the end of 2015-2016.

• The Board of Education reduced its bonds payable by 38% to a balance of $236,000.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the District's basic financial statements. The District's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This document also contains required and supplementary information and other information in addition to the basic financial statements themselves.

Government-Wide Financial Statements

The government-wide financial statements are designed to provide readers with a broad overview of the District's finances, in a manner similar to a private-sector business.

13



UNAUDITED

The statement of net position presents information on all of the assets, deferred inflows and outflows and liabilities of the District, with the difference between the four reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating.

The statement of activities presents information showing how the net position of the District changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation leave).

The Government-wide financial statements can be found on pages 27-28 of this report.

Fund Financial Statements

A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

The District maintains three funds types:

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

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

The District maintains four individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balance for the general fund, special revenue fund, capital projects fund and debt service fund, all of which are considered to be major funds.

14



UNAUDITED

The District adopts an annual appropriated budget for its general fund, special revenue fund and debt service fund. Budgetary comparison statements have been provided as required supplementary information for the general fund, special revenue fund and debt service fund to demonstrate compliance with this budget.

The basic governmental fund financial statements can be found on pages 30-33 of this report.

Proprietary funds. The District maintains one proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The District uses an enterprise fund to account for the operations of its food service program. The basic proprietary fund financial statements can be found on pages 35-37 of this report.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the governmental entity. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the District's own programs.

The District utilizes trust funds to account for its unemployment compensation insurance fund and private purpose scholarship fund. The District uses agency funds to account for resources held for student activities and groups, and payroll related liabilities. The fiduciary fund financial statements can be found on pages 38-39 of this report.

Notes to the basic financial statements. The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 40-76 of this report.

Other information. The combining statements referred to earlier in connection with governmental funds and enterprise funds are presented immediately following the notes to the basic financial statements. Combining and individual fund statements and schedules can be found on pages 95-114 of this report.

Financial Highlights Government-wide Financial Analysis

As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the District, assets exceeded liabilities by $2,260,075 at the close of fiscal year 2016. The following table provides a summary of net position at June 30, 2017 and 2016 relating to the District's governmental and business-type activities:

Key financial Highlights for the 2016-2017 fiscal year include the following:

• The State withheld both of the June fiscal year state aid payments until July 2017. • The State aid awarded in 2016-2017 increased by 1% from 2015-2016. • The District did not use capital reserve in 2016-2017 and was able to increase capital reserve

by $271,287 in 2016-2017.

15



UNAUDITED

Financial Analysis of the District as a Whole

The District's statement of net position shown in Table 1 below reflects the District's net position as a whole. Table 2 reflects the changes in net position from operating results.

Table 1 Condensed Statement of Net Position

Total Governmental Activities Business-T~~e Activities Total School District Percentage

FY 2017 FY 2016 FY 2017 FY 2016 FY 2017 FY 2016 Change Current and Other Assets $1,960,623 $1,683,362 $159,135 $58,080 $2,119,758 $1,741,442 22%

Capital Assets 8,618,399 8,917,973 1,474 3,296 8,619,873 8,921,269 -3%

Total Assets 10,579,022 10,601,335 160,609 61,376 10,739,631 10,662,711 1%

Deferred Outflows Related to pensions 2,396,593 1,061,365 2,396,593 1,061,365 126%

Long-Term Liabilities 8,715,332 6,856,920 8,715,332 6,856,920 27% Short-Term Liabilities 1,078,043 1,104,340 68,101 16,679 1,146,144 1,121,019 2%

Total Liabilities 9,793,375 7,961,260 68, 101 16,679 9,861,476 7,977,939 24%

Deferred Inflows Related to pensions 146,877 211,479 146,877 211,479 -31%

Net Position: Net Investment In Capital Assets 8,382,399 8,571,973 1,474 3,296 8,383,873 8,575,269 -2% Restricted 1,253,138 944,226 1,253,138 944,226 33% Unrestricted (Deficit) (6,600, 174) (6,026,238) 91,034 41,401 (6,509,140) (5,984,837) 9%

Total Net Position $3,035,363 $3,489,961 $92,508 $44,697 $3,127,871 $3,534,658 -12%

16



UNAUDITED

The largest portion of the District's net position is its net investment in capital assets. Restricted net position includes those items that are subject to external restrictions (e.g. for capital projects, capital reserve and excess fund balance in the general fund).

Current and other assets increased in fiscal year 2017 as less cash and cash equivalents were spent for operations and capital projects than in the prior fiscal year 2016. Net investment in capital assets decreased mainly due to no capital asset purchases in 2016~2017 to offset the depreciation expense.

Restricted net position increased due to the replenishing of the capital reserve funds. The unrestricted net position deficit continues to grow due to the increased pension liability resulting from the implementation of GASB 68 in fiscal year 2015.

Table 2 Changes in Net Position

Governmental Business-Type Total School Activities Activities District

FY 2017 FY 2016 FY 2017 FY 2016 FY 2017 FY 2016

Revenue: Program Revenue:

Charges for Services $237,581 $231,921 $237,581 $231,921 Operating Grants and

Contributions $7,183,722 $5,558,275 412,262 384,288 7,595,984 5,942,563

General Revenue: Property Taxes 15,141,795 14,263,625 15,141,795 14,263,625 Federal and State Aid

not restricted 5,532,493 5,401,152 5,532,493 5,401,152 Other 141,935 147,114 81 104 142,016 147,218

Total Revenue 27,999,945 25,370,166 649,924 616,313 28,649,869 25,986,479

Expenses: Instruction 16,922,833 16,006,821 16,922,833 16,006,821 Student & Instructional

Support Services 4,677,502 4,116,044 4,677,502 4,116,044 Administrative and

Business 2,947,414 2,594,869 2,947,414 2,594,869 Maintenance &

Operations 3,030,518 2,904,432 3,030,518 2,904,432 Transportation 544,254 503,227 544,254 503,227 Other 270,228 275,756 602,113 588,884 872,341 864,640

Total Expenses 28,392,749 26,401,149 602,113 588,884 28,994,862 26,990,033

Canceled Receivable {61,794} {61,794}

Change in net position {$454,598} {$1,030,983} $47,811 $27,429 {$406,787} {$1,003,554)

17

Sources of Revenue



UNAUDITED

The District's total government-wide revenue for the 2016-2017 school year was $28,649,869 as reflected in Table 3. Property taxes and state formula aid accounted for 71 percent of the total revenue with the other 29 percent consisting of other state and federal aid including pension liabilities, federal and state grants, charges for services, and miscellaneous sources.

Table 3 Sources of Revenue

Sources of Revenue Amount Percentage Amount Percentage

Property Taxes $15, 141,795 53% $14,263,625 55% State Formula Aid 5,312,769 19% 5,257,866 20% Other State and Federal Aid 7,087,751 24% 5,304,417 20% Federal and State Grants 722,932 2% 775,253 3% Charges for Services 237,581 1% 231,921 1% Other 147,041 1% 153,397 1%

$28,649,869 100% $25,986,479 100%

The increase in property taxes of $878, 170 is mainly attributable to the use of bank cap allowed under current state regulations.

The increase of $1,783,334 in other state and federal aid is mainly due to an increase in the State on behalf pension and post-retirement benefits paid by the State on behalf of the District and an increase in the actuarial pension as per the implementation of GASB 68 in 2014-2015.

All other sources of revenue remained at a constant level from 2016-2016 to 2016-2017.

18



UNAUDITED

Expenses for the Fiscal Year 2017 and 2016

The total expenses for the 2016-2017 fiscal year for all programs and services were $28,994,861. Table 4 below summarizes these costs. The District's expenses are predominantly related to instructing, providing services and transporting students, grades kindergarten through twelve, which accounts for 76 percent of the total District costs. Administrative and business expenses account for the costs of the Office of the Superintendent of Schools, the Business Office, and the Principal's Offices in all four school buildings. Maintenance and operations account for the costs of keeping the school buildings and grounds safe, clean and in good operating condition, and includes all the utility costs related to the school facilities. Other costs include interest on long-term debt, depreciation expense and the costs of the business-type activities of the proprietary fund. It is important to note that depreciation expense on capital assets is included in expenses for the year; expenses therefore include $301,396 for depreciation.

Table 4 Expenses for Fiscal Year 2017 and 2016

FY 2017 FY 2016 Expense Category Amount Percentage Amount Percentage

Instruction 16,922,833 59% 16,006,821 59% Student & Instruction Services 4,677,502 16% 4,116,044 15% Administrative and Business 2,947,414 10% 2,594,869 10% Maintenance & Operations 3,030,518 10% 2,904,432 11% Transportation 544,254 2% 503,227 2% Food service operations 602,113 2% 588,884 2% Other 270,227 1% 275,756 1%

$28,994,861 100% $26,990,033 100%

19

Governmental Activities



UNAUDITED

Table 5 presents the net cost (total cost less fees generated by the activities and intergovernmental aid provided for specific programs) of seven major District activities: instruction, tuition, student and instructional services, administration and business, maintenance and operations, transportation, and other. The net cost shows the financial burden placed on the District's taxpayers and the state by each of these functions.

Table 5 Net Cost of Governmental Activities

Expenditure Category

Instruction Student & Instruction Services Administrative and Business Maintenance & Operations Transportation Other

FY 2017 Amount Percentage

$11,797,830 56% 3,129,570 15% 2,451,561 12% 3,030,518 14%

529,320 2% 222,498 1%

$21, 161,297 100%

Financial Analysis of the District's Funds

FY 2016 Amount Percentage

$12,048,416 58% 2,873,248 14% 2,250,199 11% 2,904,432 14%

490,823 2% 248,431 1%

$20,815,549 100%

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

Governmental funds. The focus of the District's governmental funds is to provide information on nearterm inflows, outflows and balances of spendable resources. Such information is useful in assessing the District's financing requirements.

General Fund. The general fund is the main operating fund of the District. At the end of the current fiscal year, restricted fund balance was $637 ,273 and assigned fund balance was $330,249. The net change in total fund balance for the General Fund was an increase of $375,354 after a decrease in the prior year.

20



UNAUDITED

Special Revenue Fund. The special revenue fund is used to tract the proceeds of specific revenue sources that are restricted or committed to expenditures for specific purposes, other than debt service or capital projects. Revenue and expenditures for the current fiscal year were comparable to the prior fiscal year, with a decrease in federal grants of $51,909. There were no non-public state grants in the current fiscal year with the closing of the non-public school in the Borough. IDEA Basic and Title I continue to be the largest grants in the special revenue fund with expenditures in the current fiscal year of $331, 185 and $311,000 respectively.

Capital Projects Fund. The capital projects fund is used to account for and report financial resources that are restricted, committed or assigned to an expenditure for capital outlays, including the acquisition or construction of major capital facilities and other assets (other than those financed by the proprietary funds). There were no expenditures in the current fiscal year. There were no new capital state grants awarded in the 2016-2017 year.

Debt Service Fund. The debt service fund accounts for resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds. The fund balance in the debt service fund is $1, 795, which is attributable to interest earned in the capital projects fund during the current fiscal year and prior fiscal years as well as unused funds in prior years.

General Fund Budgeting Highlights

The District's budget is prepared according to New Jersey Statutes and is based on accounting for certain transactions on a basis of modified accrual and encumbrance accounting. The most significant budgeted fund is the general fund. During the fiscal year there were differences between the original budget and the final amended budget as a result of transfers being applied to certain line items. These transfers were made between line items as part of the normal process as permitted by State guidelines. Readers should refer to Section C of the financial report for comparisons between actual and budgeted amounts.

Described below are explanations for variations in revenues and expenditures for certain lines where the modified budgeted amounts differ from the original budget by significant amounts. All other fluctuations were considered immaterial and no explanations were deemed required.

Expenditures

The modified budget for general administration increased from the original budget by $75,050 as a result of an increase in architectural and engineering costs as well as other purchased professional services.

The modified budget for other operations and maintenance of plant decreased from the original budget by $75, 100 as a result of a decrease in salaries and insurance costs.

21



UNAUDITED

There was a decrease in unemployment costs and while health benefit costs increased, the increase wasn't was large as in the prior year due to employee offsets.

While undistributed expenditures remained relatively the same from the prior, there was a small increase in the on-behalf pension and post retirement contributions made by the state offset by a small decrease in reimbursed social security contributions.

Revenues

Extraordinary aid was at $107, 170 as a result of the fact that the final award amount is calculated by the State of New Jersey. This was nearly double of the amount in the prior year.

Unrestricted miscellaneous revenue was in excess of the modified budget by $41, 145 mainly due to an increase in incoming tuition and cancellation of various reserves.

Capital Assets

During the fiscal year 2016-2017, there were no capital acquisitions by the District to offset the depreciation expense. Table 6 reflects the comparative balances of capital assets net of depreciation as of June 30, 2017 and 2016, respectively. The detail of the changes in capital assets is reflected in Note 3 to the financial statements.

Table 6 Capital Assets (Net of Depreciation)

Total Governmental Activities Business-Type Activities Total School District Percentage

FY 2017 FY 2016 FY 2017 FY2016 FY2017 FY 2016 Change

Land and Site Improvements $5,360,200 $5,360,200 $5,360,200 $5,360,200 0% Building and Building Improvements 3,186,978 3,478,490 3,186,978 3,478,490 -8% Machinery and Equipment 71,221 79,283 $1,474 $3,296 72,695 82,579 -12%

Total Assets $8,618,399 $8,917,974 $1,474 $3,296 $8,619,873 $8,921,270 3%

22

Debt Administration



UNAUDITED

At June 30, 2017 the District had $8,830,332 of outstanding long-term liabilities, consisting of bonds payable, compensated absences and net pension liability. The District will continue to pay down its debt and liabilities, as the obligations are due. Table 7 reflects the comparison of outstanding long-term liabilities for the past two fiscal years. More information of the District's long-term liabilities is presented in Note 4 to the financial statements.

Table 7 Outstanding Long-term Liabilities

Compensated Absences Payable Net Pension Liability Payable Bonds Payable

The District's Future

Total School Debt FY 2017 FY 2016

$480,494 8, 113,838

236,000

$8,830,332

$393,587 6,232,333

346,000

$6,971,920

Total Percentage Change

22% 30%

-32%

26%

The District is presently in stable financial position. Prior to the new state senate bill requiring New Jersey School Districts to reduce fund balance to 2% of their operating expenditures the District had planned to maintain a fund balance of at least 3% of budgeted expenditures. This state requirement has forced the District to reconsider future planning, as more stringent state approvals have been forced on the District.

A major concern for the community is that state aid is being held at the same level or minimally increased; therefore, the burden of the rising cost of education is focused on taxpayers to support their local schools. The District has settled with the teachers union and has made all retro payments due as per the settled contract. The District will begin new negotiations with the teachers union.

Despite these concerns, the Manville Borough Board of Education is committed to maintaining fiscal responsibility as well as achieving educational excellence for all of the students of the District.

23



UNAUDITED

Contacting the District's Financial Management

This financial report is designed to provide the District's citizens, taxpayers, customers and investors and creditors with a general overview of the District's finances and to demonstrate the District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mrs. Kimberly A. Clelland, School Business Administrator/Board Secretary at the Manville Board of Education, 410 Brooks Blvd., Manville, New Jersey 08835. Please visit our website at www.manvilleschools.org.

24

BASIC FINANCIAL STATEMENTS

The basic financial statements provide a financial overview of the District's operations. These financial statements present the financial position and

operating results of all funds as of June 30, 2017.

25

DISTRICT-WIDE FINANCIAL STATEMENTS

The statement of net position 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.

26

BOROUGH OF MANVILLE SCHOOL DISTRICT STATEMENT OF NET POSITION

ASSETS:

Cash and cash equivalents Internal balances Receivables, net Inventory Restricted assets:

Restricted cash and cash equivalents Capital assets:

Non-depreciable Depreciable

Total assets

DEFERRED OUTFLOWS: Related to pensions Total Deferred Outflows

LIABILITIES:

Accounts payable Payable to state government Unearned revenue Accrued interest payable Noncurrent liabilities:

Due within one year Due beyond one year:

Net Pension Liability Compensated absences payable Bonds and capital leases payable Total liabilities

DEFERRED INFLOWS: Related to pensions Total Deferred Outflows

NET POSITION:

Net investment in capital assets Restricted for:

Capital projects fund Debt service fund (Deficit) Other purposes

Unrestricted (Deficit)

JUNE 30. 2017

GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES

$714,392 (94,009) 702,967

637,273

5,360,200 3,258,199

10,579,022

2,396,593 2,396,593

875,761 11,731 70,844 4,707

115,000

8,113,838 480,494 121,000

9,793,375

146,877 146,877

8,382,399

288,528 (2,912)

967,522 (6,600,174)

$3,035,363

$19,379 94,009 30,765 14,982

1,474 160,609

68,101

68,101

1,474

91,034

$92,508

EXHJBIT "A-1"

$733,771

733,732 14,982

637,273

5,360,200 3,259,673

10,739,631

2,396,593 2,396,593

943,862 11,731 70,844 4,707

115,000

8,113,838 480,494 121,000

9,861,476

146,877 146,877

8,383,873

288,528 (2,912)

967,522 (6,509, 140)

$3,127,871

The accompanying notes to the financial statements are an integral part of this statement.

27

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MAJOR FUND FINANCIAL STATEMENTS

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

29

EXHIBIT "B-1" SHEET#1

BQBOUGH OF MANVILLE SCHOQL Dl§TRICT BALA!:::!CE SHEET

GOVERNMENTAL FUNDS JUNE 30. 2017

SPECIAL CAPITAL DEBT TOTAL GENERAL REVENUE PROJECTS SERVICE GOVERNMENTAL

ASSETS AND OTHER DEBITS: FUND FUND FUND FUND FUNDS

Assets: Cash and cash equivalents $627,704 $84,893 $1,795 $714,392

Capital reserve account 637,273 637,273

Accounts receivable: Federal $299,139 299,139

State 138,399 265,429 403,828

lnterfund 174,113 174,113

Total assets $1,577,489 $299,139 $350,322 $1,795 $2,228,745

LIABILITIES AND FUND BALANCES:

Liabilities: Accounts payable $515,958 $104,245 $620,203

Intergovernmental payable: State 11,731 11,731

lnterfunds payable 94,009 174,113 268, 122

Unearned revenue 9,050 61,794 70,844

Total liabilities 609,967 299,139 61,794 970,900

Fund balances: Restricted for: Capital reserve account 637,273 637,273 Capital projects fund 288,528 288,528 Debt service fund 1,795 1,795

Assigned for: Year end encumbrances 56,648 56,648 Designated for subsequent years expenditures 273,601 273,601

Total fund balances 967,522 288,528 1,795 1,257,845

Total liabilities and fund balances $1,577,489 $299,139 $350,322 $1,795


30

Total Fund Balances (Brought Forward)


BALANCE SHEET

GOVERNMENTAL FUNDS

JUNE 30, 2017

Amounts Reported for Governmental Activities in the Statement

of Net Position (A-1) are different because:

Capital assets used in governmental activities are not financial

resources and therefore are not reported in the funds,

Cost of Assets

Accumulated Depreciation

Long term liabilities, including bonds payable, and other related

amounts that are not due and payable in the current period

and therefore are not reported as liabilities in the funds.

Net pension liability

Serial bonds payable

Compensated absences payable

Deferred Outflows and Inflows of resources are applicable to future periods and therefore are not reported in the funds.

Pensions: Deferred Outflows

Pension related

Deferred Inflows: Pension related

Certain liabilities are not due and payable in the current period

and therefore, are not reported in the governmental funds.

Accounts Payable - Pension Related

Accrued Interest Payable

Net Position of Governmental Activities

$38,032,574

(29,414, 175)

(8, 113,838)

(236,000)

(480,494)

(255,558)

(4,707)

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

31

EXHIBIT "B-1"

SHEET#2

$1,257,845

8,618,399

(8,830,332)

2,396,593

(146,877)

(260,265)

$3,035,363

EXHIBIT "B-2"

BORO\,!QH OF MANVILLE SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2017

SPECIAL CAPITAL DEBT TOTAL GENERAL REVENUE PROJECTS SERVICE GOVERNMENTAL

FUND FUND FUND FUND FUNDS REVENUES: Local sources:

Local tax levy $15,019,215 $122,580 $15,141,795 Interest earned on capital reserve funds 732 732 Miscellaneous 141,145 $5,025 $58 146,228

Total revenues-local sources 15,161,092 5,025 58 122,580 15,288,755

State sources 7,698,893 7,698,893 Federal sources 134,493 722,932 857,425

Total revenues 22,994,478 727,957 58 122,580 23,845,073

EXPENDITURES: Current expense:

Instruction: Regular 5,126,654 307,232 5,433,886 Special education 2,391,828 104,650 2,496,478 Other instruction 785,813 785,813

Support services: Tuition 1,167,177 1,167,177 Student and instruction related services 2,517,791 316,075 2,833,866 General administrative services 499,786 499,786 School administrative services 864,340 864,340 Central services 371,716 371,716 Administrative technology 129,727 129,727 Plant operations and maintenance 2,345,080 2,345,080 Student transportation services 544,254 544,254 Employee benefits 5,863,387 5,863,387

Capital outlay - debt assessment 11,571 11,571 Debt service:

Principal 110,000 110,000 Interest 12,579 12,579

Total expenditures 22,619,124 727,957 122,579 23,469,660

Excess (deficiency) of revenues over (under) expenditures 375,354 58 375,413

Other financing sources (uses): Canceled receivable (61,794) (61,794) Transfers in 58 58 Transfers out (58) (581

Total financing sources (uses): (61,852) 58 (61,794)

Net change in fund balances 375,354 (61,794) 59 313,619

Fund balances, July 1, 2016 592,168 350,322 1,736 944,226

Fund balances, June 30, 2017 $967,522 $288,528 $1,795 $1,257,845


32

BOROUGH OF MANVILLE SCHOOL DISTRICT RECONCILIATION OF THE STATEMENT OF REVENUES. EXPENDITURES

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES

FOR THE FISCAL YEAR ENDED JUNE 30. 2017

Total net change in fund balances - governmental funds (from B-2)

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

Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the period.

Depreciation expense Capital outlays Capital outlays not capitalized

($299,574) 11,571

(11,571)

Repayment of bond principal is an expenditure in the governmental funds, but repayment reduces long-term liabilities in the statement of net position and is not reported in the statements of activities.

Payment of bonds

In the statement of activities, interest on long-term debt is accrued, regardless of when due. In governmental funds, interest is reported when due. The accrued interest is an addition in the reconciliation.

District pension contributions are reported as expenditures in the governmental funds when made.

However, they are reported as deferred outflows of resources in the Statement of Net Position because

the reported net pension liability is measured a year before the District's report date. Pension expense,

which is the change in the net pension liability adjusted for changes in deferred outflows and inflows of

resources related to pensions, is reported in the Statement of Activities.

District pension contributions

Less: Pension expense

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

Change in net position of governmental activities

243,380

(737,233)


33

EXHIBIT "B-3"

$313,619

(299,574)

110,000

2,117

(493,853)

(86,907)

($454,598)

OTHER FUNDS

34

ASSETS:

Current assets:

Cash and cash equivalents

Accounts receivable:

State

Federal

lnterfund

Inventory

Total current assets

Noncurrent assets:


STATEMENT OF NET POSITION

PROPRIETARY FUNDS

JUNE 30. 2017

Furniture, machinery & equipment

Less accumulated depreciation

Total noncurrent assets

Total assets

LIABILITIES:

Current liabilities:

Accounts payable

Total current liabilities

NET POSITION:

Net investment in capital assets

Unrestricted

Total net position

EXHIBIT "B-4"

BUSINESS-TYPE ACTIVITIES

ENTERPRISE FUND

FOOD SERVICE FUND

(MAJOR)

$19,379

598

30,167

94,009

14,982

159, 135

107,727

(106,253)

1,474

160,609

68, 101

68,101

1,474

91,034

$92,508


35

EXHIBIT "B-5"


STATEMENT OF REVENUES. EXPENSES AND CHANGES IN FUND NET POSITION

PROPRIETARY FUNDS

OPERATING REVENUES:

Local sources:

Daily sales-reimbursable programs:

School lunch program

Daily sales non-reimbursable programs

Total operating revenue

OPERATING EXPENSES:

Salaries

Employee benefits

Management fee

Repairs and other

Depreciation

Cost of sales- reimbursable programs

Cost of sales- non-reimbursable programs

Total operating expenses

Operating (loss)

Nonoperating revenues:

State sources:

State school lunch program

Federal sources:

National school lunch program

National school breakfast program

Food distribution program

Interest revenue

Total nonoperating revenues

Change in net position

Total net position - beginning

Total net position - ending

FOR THE YEAR ENDED JUNE 30. 2017


ENTERPRISE FUND

FOOD SERVICE FUND (MAJOR)

$149,602

87,979

237,581

187,320

48,623

35,314

107,046

1,822

200,785

21,203

602,113

(364,532)

7,231

317,083

50,560

37,388

81

412,343

47,811

44,697

$92 508


36


STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS


CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers

Payments to employees

Payments to employee benefits

Payment to suppliers

Net cash (used for) operating activities

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

State sources

Federal sources

Net cash provided by noncapital financing activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest on investments

Net cash provided by investing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents- July 1

Cash and cash equivalents- June 30

Operating (loss)

Adjustments to reconcile operating (loss)

to cash provided (used for) by operating activities:

Depreciation

Change in assets and liabilities:

Increase in inventory

Increase in receivable

Increase in accounts payable

Net cash (used for) operating activities

EXHIBIT "B-6"


ENTERPRISE FUND

FOOD SERVICE FUND

(MAJOR)

$237,581

(187,320)

(48,623)

(394,357)

(392,719)

7,092

398,125

405,217

81

81

12,579

6,800

19379

(364,532)

1,822

(9,289)

(72,142)

51,422

($392,719)


37

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ADDITIONS:

Contributions:

Donations

Payroll deductions

Interest earned

Total additions

DEDUCTIONS:

Unemployment claims

Scholarships awarded

Total deductions


Net position - July 1

Net position - June 30


STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS


STATE

UNEMPLOYMENT

INSURANCE

FUND

$37,509

44

37,553

25,582

25,582

11,971

28,677

$40,648

PRIVATE

PURPOSE

SCHOLARSHIP

FUND

$19,606

75

19,681

24,424

24,424

(4,743)

57,048

$52,305


39

EXHIBIT "8-8"

$19,606

37,509

119

57,234

25,582

24,424

50,006

7,228

85,725

$92,953

NOTE 1:

Borough of Manville School District Notes to the Financial Statements

June 30, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Borough of Manville School District have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASS) 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.

Reporting Entity

The Manville School District is a Type II District located in Somerset County, New Jersey. The School District is an instrumentality of the State of New Jersey, established to function as an educational institution. The District is governed by a 9 member board elected to three-year terms 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 primary criterion for including activities within the District's reporting entity, are set forth in Statement No. 39 of the Governmental Accounting Standards Board entitled "Determining Whether Certain Organizations are Component Units" (GASB 39) as codified in Section 2100 of the GASS Codification of Governmental Accounting and Financial Reporting Standards.

Organizations that are legally separate, tax-exempt entities and that meet all of the following criteria should be discretely presented as component units. These criteria are:

1. The economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government.

2. The primary government, or its component units, is entitled to, or has the ability to otherwise access, a majority of the economic resources of the organization.

3. The economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary government.

The combined financial statements include all funds of the District over which the Board exercises operating control. The operations of the District include elementary, middle and high schools located in the Borough of Manville. There were no additional entities required to be included in the reporting entity under the criteria as described above, in the current fiscal year. Furthermore, the District is not includable in any other reporting entity on the basis of such criteria.

40

NOTE 1:


June 30. 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basis of Presentation

The District's basic financial statements consist of District-wide statements, including a statement of net position and a statement of activities, and fund financial statements which provide a more detailed level of financial information.

District-Wide Statements: The statement of net position and the statement of activities display information about the District as a whole. 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 generally between the governmental and business-type activity of the District. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

The statement of net position presents the financial condition of the governmental and business-type activity of the 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) fees and charges 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 requirement of a particular program. Revenues that are not classified as program revenues, including all 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 District.

Fund Financial Statements: The District segregates transactions related to certain 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 (NJDOE) 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 NJDOE believes that the presentation of all funds as major is important for public interest and to promote consistency among district financial reporting models.

41

NOTE 1:


June 30, 2017


Governmental Fund Tvpes

General Fund - The general fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund. Included are certain expenditures for vehicles and movable instructional or noninstructional equipment which are classified in the capital outlay subfund.

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 District accounts for the proceeds of specific revenue sources from State and Federal Governments (other than major capital projects or the enterprise funds) and local appropriations that are restricted or committed to expenditures for specified purposes, other than debt service or capital projects.

Capital Projects Fund - The capital projects fund is used to account for and report all financial resources that are restricted, committed, or assigned to an expenditure for capital outlay, including 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 and state grants 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 accounts 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.

42

NOTE 1:


June 30, 2017


Proprietary Fund

Enterprise Fund - The enterprise fund accounts for all revenues and expenses pertaining to cafeteria operations. The food service fund is utilized to account for operations that are financed and operated in a manner similar to private business enterprises. The stated intent is that the cost (i.e. expenses including depreciation and indirect costs) of providing goods or services to the students on a continuing basis are financed or recovered primarily through user charges.

Fiduciary Fund Types

Agency Funds - The agency funds are used to account for assets held by the district on behalf of others and are custodial in nature. The agency funds included in this category are as follows:

Unemployment Compensation Insurance Trust Fund - A trust fund used to account for assets to finance the costs of unemployment benefits. Since the Board has adopted the direct reimbursement method, the District is under obligation to appropriate sufficient funds out of its general fund and hold them in trust for this purpose.

Payroll and Student Activities Funds (Agency) - These are agency funds 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.

Private Purpose Scholarship Funds - A trust fund used to account for assets donated by individuals that will provide for the payment of awards to district students.

43

NOTE 1:


June 30, 2017


Basis of Accounting - Measurement Focus

Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements.

District-Wide, Proprietary, and Fiduciary Fund Financial Statements: The District-wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Differences in the accrual and modified accrual basis of accounting arise in the recognition of revenue, the recording of unearned revenue, and in the presentation of expenses versus expenditures. Ad Valorem (Property) Taxes are susceptible to accrual as under New Jersey State Statute a municipality is required to remit to its school district the entire balance of taxes in the amount voted upon or certified, prior to the end of the school year. The District records the entire approved tax levy as revenue (accrued) at the start of the fiscal year, since the revenue is both measurable and available. The District is entitled to receive monies under the established payment schedule and the unpaid amount is considered to be an "accounts receivable". Revenue from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.

Governmental Fund Financial Statements: Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. "Measurable" means the amount of the transactions can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

As a general rule the effect of interfund activity has been eliminated from the district-wide financial statements.

The County Board of Taxation is responsible for the assessment of properties, and the Township Tax Collector is responsible for collection of taxes. Assessments are certified and taxes are levied on January 1; taxes are due February 1, May 1, August 1 and November 1. Unpaid taxes are considered delinquent the following January 1 and are then subject to lien.

44

NOTE 1:


June 30, 2017


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. In accordance with P.L. 2011, c. 202, which became effective January 17, 2012, the District elected to move the April 2013 school Board election to the date of the November general election thereby eliminating the vote on the annual base budget. Budgets are prepared using the modified accrual basis of accounting. 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. All budget amendments and transfers must be approved by School Board resolution. The over-expenditures related to on-behalf payments in the general fund are due to the inclusion of the non-budgeted on-behalf payments made by the State of New Jersey as District expenditures. These amounts are offset by related revenues and as such do not represent budgetary over-expenditures.

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. 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 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 records.

45

NOTE 1:


June 30, 2017


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 assigned 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 unearned 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.

lnterfunds

lnterfund receivables and payables arise from transactions between particular funds and are considered short term in duration. The lnterfund transactions are recorded by all funds affected in the period in which the transactions are executed and are part of the district's available spendable resources.

Inventories

Inventories of materials and supplies held for consumption in the governmental funds are recorded as expenditures at the time of purchase and year end balances are not reported in the financial statements.

Inventories of food and/or supplies in the food service fund are recorded at cost on a first-in, first-out basis or, in the case of Food Donation Commodities, at stated value which approximates market.

46

NOTE 1:


June 30, 2017


Capital Assets

The District has an established formal system of accounting for its capital assets. Purchased or constructed capital assets are reported at cost. Donated capital assets are valued at their estimated fair market value on the date received. 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. Capital assets are defined by the District as assets with an initial, individual cost of more than $2,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or through estimation procedures performed by an independent appraisal company. Donated capital assets are valued at their acquisition value on the date of donation.

Capital assets are depreciated in the government-wide statements using the straight-line method over the following estimated useful lives:

Asset Class

School Buildings Building Improvements Electrical/Plumbing Vehicles Office & Computer Equipment Instructional Equipment Grounds Equipment

Compensated Absences

Estimated Useful Lives

50 20 30 8

5-10 10 15

The District accounts for compensated absences (e.g., unused vacation, sick leave) as directed by Governmental Accounting Standards Board Statement No. 16 (GASB 16), "Accounting for Compensated Absences." A liability for compensated absences attributable to services already rendered and not contingent on a specific event that is outside the control of the employer and employee is accrued as employees earn the rights to the benefits.

47

NOTE 1:


June 30, 2017


Compensated Absences (continued)

District employees are granted varying amounts of vacation and sick leave in accordance with the District's personnel policy. 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 and contracts.

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 GMP, 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.

Fund Balance and Net Position

Fund balance restrictions are used to indicate that portion of the fund balance that is not available for expenditures or is legally segregated for a specific future use. Designation of portions of the fund balances are established to indicate tentative plans for financial utilization in a future period. The unassigned fund balances represent the amount available for future budgetary operations.

Unassigned net position represents the remains of the District's equity in the cumulative earnings of the proprietary fund.

Unearned Revenue

Unearned revenue in the special revenue and capital projects funds represents funds which have been received but not yet earned. A corresponding accounts receivable has also been established for any open encumbrances at year end which is allowable under generally accepted accounting principles.

48

NOTE 1:


June 30, 2017


Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities, and long-term obligations are reported on the Government-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.

Net Position

GASB 63 provides guidance for reporting net position in the statement of financial position and related disclosures. Net Position represents the difference between assets and liabilities. Net investment in capital assets 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 position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the District or through external restrictions imposed by creditors, granters, or laws or regulations of other governments. The District's policy is to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net positions are available.

Fund Balances

Under GASB 54, in the fund financial statements, governmental funds report the following classifications of fund balance:

Nonspendable - includes amounts that cannot be spent because they are either not spendable in form or are legally or contractually required to be maintained intact.

Restricted - includes amounts restricted by external sources (creditors, laws of other governments, etc.) or by constitutional provision or enabling legislation. The District reports the Capital Reserve, Emergency Reserve, Maintenance Reserve and Excess Surplus as Restricted Fund Balance.

49

NOTE 1:


June 30, 2017


Fund Balances (Continued)

Committed - includes amounts that can only be used for specific purposes. Committed fund balance is reported pursuant to resolutions passed by the Board of Education, the District's highest level of decision making authority. Commitments may be modified or rescinded only through resolutions approved by the Board of Education.

Assigned - includes amounts that the District intends to use for a specific purpose, but do not meet the definition of restricted or committed fund balance. Under the District's policy, amounts may be assigned by the Business Administrator. The District reports Year End Encumbrances as Assigned Fund Balance. The District also reports amounts Designated for Subsequent Year's Expenditures as Assigned Fund Balance.

Unassigned -is the residual classification for the general fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, if expenditures incurred for specific purposes exceeded the amounts restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance.

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balance are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed.

Revenues - Exchange and Non-Exchange Transactions

Revenue 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.

50

NOTE 1:


June 30, 2017


Revenues - Exchange and Non-Exchange Transactions (Continued)

Non-exchange transactions, in which the 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 property taxes is recognized in the period in which the revenue is earned. Revenue from grants, entitlements, and donations is recognized in the fiscal year 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 District must provide local resources to be used for a specific purpose; and expenditure requirements, in which the resources are provided to the 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 both measurable and available at fiscal year end: property taxes available 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 District, these revenues are sales in the Enterprise Funds. 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 the program. Depreciation expense, where practicable, is specifically identified by function and is included in the indirect 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.

51

NOTE 1:


June 30, 2017


Extraordinary and Special Items

Extraordinary items are transactions or events that are unusual in nature and infrequent of 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 accounting principles generally accepted in the United States 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.

Accounting and Financial Reporting for Pensions

In the district-wide financial statements for purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the District's proportionate share of the New Jersey Public Employees Retirement System ("PERS") and the Teachers' Pension and Annuity Fund ("TPAF") and the additions to/deductions from these retirement systems' fiduciary net position have been determined on the same basis as they were reported by PERS and TPAF. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

In the governmental fund financial statements the year end pension liability is not required to be reflected. Pension related revenues and expenditures are reflected based on amounts that are normally expected to be liquidated with available financial resources for required pension contributions. Expenditures for PERS are recognized based upon billings made by the State of New Jersey due April pt of each fiscal year. TPAF contributions are paid on the District's behalf by the State of New Jersey. The governmental fund financial statements reflect both a revenue and expense for this pension contribution.

52

NOTE 1:

NOTE 2:


June 30, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {CONTINUED)

Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. Currently, the District has only on item that qualifies for reporting in this category, deferred amounts related to pensions.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue} until that time. Currently, the District has one item that qualifies in this category, deferred amounts related to pension.

CASH AND CASH EQUIVALENTS AND INVESTMENTS

The Board considers petty cash, change funds, cash in banks, deposits in the government money market account, and short-term investments with original maturities of three months or less as cash and cash equivalents. Investments are stated at cost, which approximates market.

Deposits

New Jersey statutes permit the deposit of public funds in public depositories which are located in New Jersey and which meet the requirements of the Governmental Unit Deposit Protection Act (GUDPA). GUDPA requires a bank that accepts public funds to be a public depository. A public depository is defined as a state bank, a national bank, or a savings bank, which is located in the State of New Jersey, the deposits of which are insured by the Federal Deposit Insurance Corporation. The statutes also require public depositories to maintain collateral for deposits of public funds that exceed certain insurance limits. All collateral must be deposited with the Federal Reserve Bank or a Banking Institution that is a member of the Federal Reserve System, and has capital funds of not less than $25,000,000. Under (GUDPA), 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 the deposits to the governmental unit.

53

NOTE 2:


June 30, 2017

CASH AND CASH EQUIVALENTS AND INVESTMENTS (CONTINUED)

Deposits (Continued)

The Borough of Manville School District had the following cash and cash equivalents at June 30, 2017.

Cashin Reconciled Bank Deletions Balance

Governmental Funds $1,555,656 $203,991 $1,351,665 Proprietary Fund 19,434 55 19,379 Fiduciary Fund 624,645 31,385 593,259

$2, 199,734 $235,431 $1,964,303

Custodial Credit Risk - Deposits - Custodial credit risk is the risk that in the event of a bank failure, the deposits may not be returned. The District does not have a specific deposit policy for custodial credit risk other than those policies that adhere to the requirements of statute. As of June 30, 2017, based upon the coverage provided by FDIC and NJGUDPA, no amount of the bank balance was exposed to custodial credit risk. Of the cash on balance in the bank, $250,000 was covered by Federal Depository Insurance and $1,937,269 was covered by NJGUDPA. The New Jersey Asset and Rebate Management (NJARM) Fund is an investment pool and is not insured by either FDIC or GUDPA. The amount in NJARM is $12,465.

Investments

The purchase of investments by the Board is strictly limited by the express authority of the N.J.S.A. 18A:20-37 Education, Administration of School Districts. Permitted investments include any of the following type of securities:

1. Bonds or other obligations of the United States of America or obligations guaranteed by the United States of America;

2. Government money market mutual funds which are purchased from an investment company or investment trust which is registered with the Securities and Exchange Commission under the "Investment Company Act of 1940," 15 U.S.C. 80a-1 et seq., and operated in accordance with 17 C.F.R. § 270.2a-7 and which portfolio is limited to U.S. Government securities that meet the definition of an eligible security pursuant to 17 C.F.R. § 270.2a-7 and repurchase agreements that are collateralized by such U.S. Government securities in which direct investment may be made pursuant to paragraphs (1) and (3) of N.J.S.A. 18A:20-37. These funds are also required to be rated by a nationally recognized statistical rating organization.

54

NOTE 2:


June 30, 2017

CASH AND CASH EQUIVALENTS AND INVESTMENTS (CONTINUED)

Investments (Continued)

3. Any obligation that a federal agency or a federal instrumentality has issued in accordance with an act of Congress, which security has a maturity date not greater than 397 days from the date of purchase, provided that such obligation bears a fixed rate of interest not dependent on any index or other external factor.

4. Bonds or other obligations of the Local Unit or bonds or other obligations of school districts of which the Local Unit is a part or within which the school district is located.

5. Bonds or other obligations, having a maturity date not more than 397 days from date of purchase, approved by the Division of Investment of the Department of Treasury for investment by School Districts.

6. Local government investment pools that are fully invested in U.S. Government securities that meet the definition of eligible security pursuant to 17 C.F.R. § 270a-7 and repurchase agreements that are collateralized by such U.S. Government securities in which direct investment may be made pursuant to paragraphs (1) and (3) of N.J.S.A. 18A:20-37. This type of investment is also required to be rated in the highest category by a nationally recognized statistical rating organization.

7. Deposits with the State of New Jersey Cash Management Fund established pursuant to section 1 of P.L. 1977, c.281 (C. 52:18A-90.4); or

8. Agreements for the repurchase of fully collateralized securities if:

a. the underlying securities are permitted investments pursuant to paragraphs (1) and {3) of this subsection;

b. the custody of collateral is transferred to a third party; c. the maturity of the agreement is not more than 30 days; d. the underlying securities are purchased through a public depository as

defined in section 1 of P.L. 1970, c.236 (C. 17:19-41); and; e. a master repurchase agreement providing for the custody and security

of collateral is executed.

As of June 30, 2017, the Board had $12,465 on deposit with the NJARM. Based upon the limitations set forth by New Jersey Statutes 40A:5-15.1 and existing investment practices, the District is generally not exposed to credit risks and interest rate risks for its investments, nor is it exposed to foreign currency risk for its deposits and investments.

55

NOTE 3:


June 30, 2017

CHANGE IN CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2017 was as follows;

Beginning Balance Additions Deletions

Governmental activities: Capital assets that are not depreciated:

Land and Improvements $5,360,200 Total capital assets that are not

depreciated 5,360,200

Capital assets being depreciated: Building and building improvements 30,890,392 (912) Machinery and equipment 1,782,893 Total capital assets being depreciated 32,673,285 (912)

Total capital assets 38,033,485 (912)

Less: accumulated depreciation for: Building and building improvements (27,411,902) (291,513) 912 Machinery and equipment p,703,610} {8,062)

(29, 115,512) (299,574) 912

Governmental activities capital assets, net 8,917,974 (299,574)

Business type activities: Machinery and equipment 107,727 Less: accumulated depreciation (104,431) (1,822)

Business type activities capital assets, net $3,296 {$1,822}

Depreciation Expense was charged to governmental expenses as follows:

Instruction: Regular Special Other

Support Services: Student and instruction related services General administration School administration Central services Administration Info Technology Plant operations and maintainance

Direct Expense of Various Functions

56

($12,738) (5,971) (1,990)

{9, 156) (1,194) (1,990)

(796) (398)

(5,573) {259,767)

($299,574)

Ending Balance

$5,360,200

5,360,200

30,889,480 1,782,893

32,672,373

38,032,573

(27,702,502) (1,711,672)

{29,414, 174)

8,618,399

107,727 (106,253)

$1,474

NOTE 4:


June 30. 2017

LONG-TERM LIABILITIES

Bonds are issued by the District pursuant to the prov1s1ons of Title 18A, Education, of the New Jersey Statutes and are required to be approved by the voters of the municipality through referendum. The proceeds of bonds are recorded in the Capital Projects Fund and are restricted to the use for which they were approved in the bond referendum. All bonds are retired in annual installments within the statutory period of usefulness.

School Bonds issued by the District are entitled to and benefit from the provision of the New Jersey School Board Reserve Act P.L. 1980 c.72. Basically, funds are held by the State of New Jersey within its State Fund for the Support of Free Public Schools as a school bond reserve pledged by law to secure payment of principal and interest due on such bonds in the event of the inability of the issuer to make payments.

At June 30, 2017, the District had no bonds or notes authorized but not issued.

The following is a summary of changes in governmental activities long-term liabilities that effect other long-term obligations for the year ended June 30, 2017.

Net Pension Bonds Compensated Liability Payable Absences Payable Total

Balance, July 1, 2016 $6,232,333 $346,000 $393,587 $6,971,920

Additions/Issued 1,881,505.00 91,931 1,973,436

Reductions 110,000 5,024 115,024

Balance, June 30, 2017 $8, 113,838 $236,000 $480,494 $8,830,332

Amounts Due Within One Year $115,000 $115,000

Compensated absences are liquidated by expenditures charged to the general fund. Bonds payable are liquidated by expenditures charged to the debt service fund.

57

NOTE 4:


June 30, 2017

LONG-TERM LIABILITIES (CONTINUED)

Bonds Payable

The annual requirements to amortize all debt outstanding as of June 30, 2017, with interest payments on issued debt, are as follows:

Year Ending June 30 Principal Interest Total

2018 $115,000 $7,797 $122,797 2019 121,000 2,662 123,662

$236,000 $10,459 $246,459

Under New Jersey Statutes, the District may incur debt in an amount not to exceed 4% of the averaged equalized valuation basis of real property. For the calendar year ended December 31, 2016, the District's borrowing capacity under N.J.S. 18A:24-19 would be as follows:

2016 2015 2014

Average equalized valuation of property

School borrowing margin (4% of average equalized valuation of property)

Net bonded school debt as of December 31, 2016

School borrowing power available

58

Equalized Valuation of Real Property

$891,269, 141 890,447,497 871,267,467

2,652,984,105

884,328,035

35,373,121

236,000

$35,137,121

NOTE 5:


June 30, 2017

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 noncontributing 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 provision 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 under the provision of Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007 to provide coverage to elected and certain appointed officials, effective July 1, 2007. Membership is mandatory for such individuals with vesting occurring after one year of membership.

59

NOTE 5:


June 30, 2017

PENSION PLANS (CONTINUED)

Significant Legislation

Effective June 28, 2011, P.L. 2011, c. 78 enacted certain changes in the operations and benefit provisions of the TPAF and the PERS systems.

Pension Plan Design Changes

Effective June 28, 2011, P.L. 2011, c. 78, new members of TPAF and PERS, hired on or after June 28, 2011, will need 30 years of creditable service and have attained the age of 65 for receipt of the early retirement benefit without a reduction of 1/4 of 1% for each month that the member is under age 65. New members will be eligible for a service retirement benefit at age 65.

Funding Changes

Under the new legislation, the methodology for calculating the unfunded accrued liability payment portion of the employer's annual pension contribution to the PERS, and TPAF. The unfunded actuarial accrued liability (UAAL) will be amortized for each plan over an open-ended 30 year period and paid in level dollars. Beginning with the July 1, 2019 actuarial valuation (July 1, 2018 for PFRS), the UAAL will be amortized over a closed 30 year period until the remaining period reaches 20, when the amortization period will revert to an openended 20 year period.

COLA Suspension

The payment of automatic cost-of-living adjustment to current and future retirees and beneficiaries are suspended until reactivated as permitted by this law.

Vesting and Benefit Provisions - The vesting and benefit provisions of PERS are set by N.J.S.A. 43:15A and 43.38, and N.J.S.A. 18A:6C for TPAF. All benefits vest after ten years of service, except for post-retirement healthcare benefits that vest after 25 years of service.

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.

60

NOTE 5:


June 30, 2017

PENSION PLANS (CONTINUED)

Contribution Requirements - The contribution policy is set by N.J.S.A. 43:15A 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.

Effective June 28, 2011, P. L. 2011, c. 78 provides for increases in the employee contribution rates: from 5.5% to 6.5% plus an additional 1 % phased-in over 7 years beginning in the first year, meaning after 12 months, after the law's effective date for TPAF and PERS.

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 TPAF (i.e. the State of New Jersey makes the employer contribution on behalf of public school districts.

PERS Contribution Requirements

Funding

6/30/2017 6/30/2016 6/30/2015

Cost (APC)

$243,380 238,691 231,773

APC Contributed

100% 100% 100%

Obligation

$243,380 238,691 231,773

Three-Year Trend Information for TPAF (Paid On-Behalf of the District)

During the fiscal years ended June 30, 2017, 2016 and 2015, the State of New Jersey contributed $897,903, $684,430 and $458,483 respectively to the TPAF pension system on behalf of the District.

Also, in accordance with N.J.S.A. 18A:66-66, during the years ended June 30, 2017, 2016 and 2015, the State of New Jersey reimbursed the District $637,393, $677, 125 and $596,978, respectively for the employer's share of social security contributions for TPAF members, as calculated on their base salaries.

61

NOTE 6:


June 30, 2017

ACCOUNTING AND FINANCIAL REPORTING FOR PENSION - GASB 68

Public Employees Retirement System (PERS)

At June 30, 2017, the District reported a liability of $8, 113,838 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2015 which was rolled forward to June 30, 2016. The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating members, actuarially determined. At June 30, 2016, the District's proportion was 0.0273957579 percent, which was a decrease of 0.0003676677 percent from its proportion measured as of June 30, 2015.

For the year ended June 30, 2017, the District recognized pension expense of $493,853 in the government-wide financial statements. This pension expense was based on the pension plans June 30, 2016 measurement date.

At June 30, 2017, the District reported deferred outflows of resources and deferred inflows of resources related to PERS from the following sources:

Deferred Deferred Inflow of Outflow of

Resources Resources Differences between expected and actual experience

Changes of assumptions

$153,893

$1,680,754

Net difference between projected and actual earnings on pension plan investments

Changes in proportion and differences between District contributions and proportionate share of contributions

District contributions subsequent to the measurement date

62

$309,388

$146,877

$255,558

$146,877 $2,396,593

NOTE 6:


June 30, 2017

ACCOUNTING AND FINANCIAL REPORTING FOR PENSION - GASB 68 (Continued)

Public Employees Retirement System (PERS) (Continued)

The $244,597 reported as deferred outflows of resources related to pensions resulting from school district contributions subsequent to the measurement date (i.e. for the school year ending June 30, 2017, the plan measurement date is June 30, 2016) will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30 Amount

2018 $444,380 2019 $444,380 2020 $522,804 2021 $441,796 2022 $140,798

Actuarial Assumptions

The total pension liability for the June 30, 2016 measurement date was determined by an actuarial valuation as of July 1, 2015, which rolled forward to June 30, 2016. This actuarial valuation used the following assumptions, applied to all periods in the measurement.

Inflation Salary Increases

Through 2026 Thereafter

Investment Rate of Return

3.08 Percent

1.65-4.15 Percent (based on age) 2.65-5.15 Percent (based on age)

7.65 Percent

The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2011 to June 30, 2014. To the extent that actual experience deviates from these assumptions, the emerging liabilities may be higher or lower than anticipated. The more the experience deviates, the larger the impact on future financial statements.

63

NOTE 6:


June 30, 2017

ACCOUNTING AND FINANCIAL REPORTING FOR PENSION - GASB 68 (CONTINUED)


Mortality Rates

Pre-retirement mortality rates were based on the RP-2000 Employee Preretirement Mortality Table for male and female active participants. For State employees, mortality tables are set back 4 years for males and females. For local employees, mortality tables are set back 2 years for males and 7 years for females. In addition, the tables provide for future improvements in mortality from the base year of 2013 using a generational approach based on the plan actuary's modified MP-2014 projection scale. Post-retirement mortality rates were based on the RP-2000 Combined Healthy Male and Female Mortality Tables (set back 1 year for males and females) for service retirements and beneficiaries of former members and a one-year static projection based on mortality improvement Scale AA. In addition, the tables for service retirements and beneficiaries of former members provide for future improvements in mortality from the base year of 2013 using a generational approach based on the plan actuary's modified MP-2014 projection scale. Disability retirement rates used to value disabled retirees were based on the RP-2000 Disabled Mortality Table (set back 3 years for males and set forward 1 year for females).

Long-Term Rate of Return

In accordance with State statute, the long-term expected rate of return on plan investments (7.65% at June 30, 2016 and 7.90% at June 30, 2015) is determined by the State Treasurer, after consultation with the Directors of the Division of Investment and Division of Pensions and Benefits, the board of trustees and the actuaries. The long-term expected rate of return was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

64

NOTE 6:


June 30, 2017



Long-Term Rate of Return (Continued)

Best estimates of arithmetic rates of return for each major asset class included in PERS's target asset allocation as of June 30, 2016 are summarized in the following table:

June 30, 2016 Long-Term

Target Expected Real Asset Class Allocation Rate of Return

Cash 5.00% 0.87% U.S. Treasuries 1.50% 1.74% Investment Grade Credit 8.00% 1.79% Mortgages 2.00% 1.67% High Yield Bonds 2.00% 4.56% Inflation Indexed Bonds 1.50% 3.44% Broad U.S. Equities 26.00% 8.53% Developed Foreign Markets 13.25% 6.83% Emerging Market Equities 6.50% 9.95% Private Equity 9.00% 12.40% Hedge Funds/Absolute Returns 12.50% 4.68% Real Estate (Property) 2.00% 6.91% Commodities 0.50% 5.45% Global Debt ex US 5.00% (0.25%) REIT 5.25% 5.63%

100.00%

Discount Rate

The discount rate used to measure the total pension liability was 3.98% and 4.90% as of June 30, 2016 and 2015, respectively. This single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.65% and 7.90%, and a municipal bond rate of 2.85% and 3.80% as of June 30, 2016 and 2015, respectively, based on the Bond Buyer Go 20-Bond Municipal Bond Index which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher.

65

NOTE 6:


June 30, 2017

ACCOUNTING ANO FINANCIAL REPORTING FOR PENSION - GASB 68 (CONTINUED)


Discount Rate (Continued)

The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made based on the contribution rate in the most recent fiscal year. The State employer contributed 30% of the actuarially determined contributions and the local employer contributed 100% of their actuarially determined contributions. Based on those assumptions, the plan's fiduciary net position was projected to be available to make projected future benefit payments of current plan members through 2034. Therefore, the long-term expected rate of return on plan investments was applied to projected benefit payments through 2034, and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability.

Sensitivity of the Collective Net Pension Liability to Changes in the Discount Rate

The following presents the collective net pension liability of the participating employers as of June 30, 2016 respectively, calculated using the discount rate as disclosed above as well as what the collective net pension liability would be if it was calculated using a discount rate that is 1 -percentage point lower or 1-percentage-point higher than the current rate:

1% At Current 1% Decrease Discount Rate Increase

2.98% 3.98% 4.98% District's proportionate share

of the pension liability $9,942,561 $8, 113,838 $6,604,068

Pension Plan Fiduciary Net Position

Detailed information about the pension plan's fiduciary net position is available in the separately issued Financial Report for the State of New Jersey Public Employees Retirement System (PERS). The report may be obtained at State of New Jersey Division of Pensions and Benefits P.O. Box 295 Trenton, New Jersey 08625-0295 http://www.state. nj. us/treasury/pensions.

66

NOTE 6:


June 30, 2017


Teachers Pensions and Annuity Fund (TPAF)

The employer contributions for local participating employers are legally required to be funded by the State in accordance with N.J.S.A 18:66-33. Therefore, these local participating employers are considered to be in a special funding situation as defined by GASS Statement No. 68 and the State is treated as a nonemployer contributing entity. Since the local participating employers do not contribute directly to the plan (except for employer specific financed amounts), there is no net pension liability or deferred outflows or inflows to report in the financial statements of the local participating employers. However, the notes to the financial statements of the local participating employers must disclose the portion of the nonemployer contributing entities' total proportionate share of the net pension liability that is associated with the local participating employer.

The portion of the TPAF Net Pension Liability that was associated with the District recognized at June 30, 2017 was as follows:

Net Pension Liability: Districts proportionate share State's proportionate share

associated with the District

-0-

$67,248,314

$67,248,314

The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2015. The net pension liability associated with the District was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts and the State, actuarially determined. At June 30, 2016, the proportion of the TPAF net pension liability associated with the District was .0854854702% which was an increase of .0006811859 percent from its proportion measured as of June 30, 2015.

For the year ended June 30, 2017, the District recognized on-behalf pension expense and revenue of $5,052,775 for contributions provided by the State. This pension expense and revenue was based on the pension plan's June 30, 2016 measurement date.

67

NOTE 6:


June 30, 2017

ACCOUNTING AND FINANCIAL REPORTING FOR PENSION - GASS 68 (CONTINUED)

Teachers Pensions and Annuity Fund (TPAF) (continued)

Actuarial Assumptions

The total pension liability for the June 30, 2016 measurement date was determined by an actuarial valuation as of July 1, 2015, which was rolled forward to June 30, 2016. This actuarial valuation used the following actuarial assumptions, applied to all periods in the measurement:

Inflation rate Salary increases:

2012-2021 Thereafter

Investment rate of return

Mortality rates

2.50%

Varies based on experience Varies based on experience 7.65%

Pre-retirement, post-retirement and disabled mortality rates were based on the experience of TPAF members reflecting mortality improvement on a generational basis based on a 60-year average of Social Security data from 1953 to 2013.

The actuarial assumptions used in the July 1, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2012 to June 30, 2015.

Long-Term Expected Rate of Return

In accordance with State statute, the long-term expected rate of return on plan investments (7.65% at June 30, 2016) is determined by the State Treasurer, after consultation with the Directors of the Division of Investments and Division of Pensions and Benefits, the board of trustees and the actuaries. The long-term expected rate of return was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

68

NOTE 6:


June 30, 2017

ACCOUNTING AND FINANCIAL REPORTING FOR PENSION - GASS 68 (CONTINUED)

Teachers Pensions and Annuity Fund (TPAF) (continued)

Long-Term Expected Rate of Return

Best estimates of arithmetic real rates of return for each major asset class included in TPAF's target asset allocation as of June 30, 2016 are summarized in the following table:

Long-Term Target Expected Real

Asset Class Allocation Rate of Return

US Cash 5.00% 0.39%

US Government Bonds 1.50% 1.28%

US Credit Bonds 13.00% 2.76%

US Mortgages 2.00% 2.38%

US Inflation-Indexed Bonds 1.50% 1.41%

High Yield Bonds 2.00% 4.70%

US Equities Markets 26.00% 5.14%

Foreign-Developed Equity 13.25% 5.91%

Emerging Market Equities 6.50% 8.16% Private Real Estate Property 5.25% 3.64% Timber 1.00% 3.86% Farmlands 1.00% 4.39% Private Equity 9.00% 8.97% Commodities 0.50% 2.87% Hedge Funds - Multi Strategy 5.00% 3.70% Hedge Funds - Equity Hedge 3.75% 4.72% Hedge Funds - Distressed 3.75% 3.49% ----

100.00%

69

NOTE 6:


June 30, 2017


Teachers Pensions and Annuity Fund (TPAF) (Continued)

Discount Rate

The discount rate used to measure the total pension liability was 3.22% and 4.13% as of June 30, 2016 and 2015, respectively. This single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.65% and 7.90, and a municipal bond rate of 2.85% and 3.80% as of June 30, 2016 and 2015, respectively, based on the Bond Buyer Go 20-Bond Municipal Bond Index which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made based on the contribution rate in the most recent fiscal year. The State contributed 30% of the actuarially determined contributions. Based on those assumptions, the plan's fiduciary net position was projected to be available to make projected future benefit payments of current plan members through 2029. Therefore, the long-term expected rate of return on plan investments was applied to projected benefit payments through 2029, and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability.

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

Because the District's proportionate share of the net pension liability is zero, consideration of potential changes in the discount rate is not applicable to the District.

Pension Plan Fiduciary Net Position

Detailed information about the pension plan's fiduciary net position is available in the separately issued Financial Report for the State of New Jersey Teachers Public and Annuity Fund (TPAF). The report may be obtained at State of New Jersey Division of Pensions and Benefits P.O. Box 295 Trenton, New Jersey 08625-0295 http://www.state.nj.us/treasury/pensions.

70

NOTE 7:


June 30, 2017

OTHER POST-RETIREMENT BENEFITS

For eligible retired employees, the School District participates in the State Health Benefits Program (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 was established in 1961 under N.J.S.A. 52:14-17.25 et seq., to provide health benefits to State employees, retirees, and their dependents. Rules governing the operation and administration of the program are found in Title 17, Chapter 9 of the New Jersey Administrative Code. SHBP provides medical, prescription drugs, mental health/substance abuse, and Medicare Part B reimbursement to retirees and their covered dependents.

The State Health Benefits Commission is the executive body established by statute to be responsible for the operation of the SHBP. The State of New Jersey Division of Pensions and Benefits issues a publicly available financial report that includes financial statements and required supplementary information for the SHBP. That report may be obtained by writing to: State of New Jersey Division of Pensions and Benefits, P.O. Box 295, Trenton, NJ 08625-0295.

Chapter 384 of Public Laws 1987 and Chapter 6 of Public Laws 1990 required Teachers' Pensions and Annuity Fund (TPAF) and the Public Employees' Retirement System (PERS), respectively, to fund post-retirement medical benefits for those State employees who retire after accumulating 25 years of credited service or on state disability retirement. P.L. 2007, Chapter 103 amended the law to eliminate the funding of post-retirement medical benefits through the 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, 2016, there were 110,512 retirees eligible for post-retirement medical benefits, and the State contributed $1.37 billion on their behalf. 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 benefits changed from a pre-funding basis to a pay-asyou-go basis beginning in Fiscal Year 1994.

The State is also responsible for the cost attributable to P.L. 1992, c.126, which provides employer paid 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 $231.2 million toward Chapter 126 benefits for 20,045 eligible retired members in Fiscal Year 2016.

71

NOTE 7:

NOTE 8:

NOTE 9:


June 30, 2017

OTHER POST-RETIREMENT BENEFITS (CONTINUED)

The State will set the contribution rate based on the annual required contribution of the employers (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) of the plan over a period not to exceed thirty years. The State's contributions to the State Health Benefits Program Fund for TPAF retirees' post-retirement benefits on behalf of the School District for the years ended June 30, 2017, 2016, and 2015 were $748, 157, $814,968 and $727,842, respectively, which equaled the required contributions for each year. The State's contributions to the State Health Benefits Program Fund for PERS retirees' post-retirement benefits on behalf of the School District was not determined or made available by the State of New Jersey.

LITIGATION

The Board attorney's letter advises that there is no litigation, pending litigation, claims, contingent liabilities, unasserted claims or assessments or statutory violations which involve the Board of Education and which might materially affect the Board's financial position.

CONTINGENCIES

The District receives financial assistance from the State of New Jersey and the U.S. Government in the form of grants. Entitlement to the funds is generally conditional upon compliance with terms and conditions of the grant agreements and applicable regulations, including the expenditure of the funds for eligible purposes. The State and Federal grants received and expended in the 2016-2017 fiscal year were subject to the Uniform Guidance and New Jersey OMB Circular 15-08 which mandates that grant revenues and expenditures be audited in conjunction with the District's annual audit if expenditures for federal or state programs exceed $750,000. Findings and questioned costs, if any, relative to federal and state financial assistance programs are discussed in the Single Audit Section, Schedule of Findings and Questioned Costs. In addition, all grants and cost reimbursements are subject to financial and compliance audits by the granters. The District's management does not believe any such audit would result in material amounts of disallowed costs.

72

NOTE 10:

NOTE 11:


June 30, 2017

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. There have been no significant reductions in insurance coverage from the prior year and no settlements have exceeded insurance coverage over the past three years.

Property and Liability Insurance - The District maintains commercial insurance coverage for property, liability, and student accident 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 table below 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 previous two years:

Interest and Amount Ending Fiscal Year Contributions Reimbursed Balance

2016-2017 $37,553 $25,582 $40,648 2015-2016 39, 136 29,754 28,677 2014-2015 36,688 53,380 19,295

INTERFUND RECEIVABLES AND PAYABLES

The following interfund balances remained on the balance sheet at June 30, 2017:

lnterfund lnterfund Fund Receivable Pa)lable

General Fund $174,113 $94,009 Special Revenue Fund 174,113 Enterprise Fund 94,009

$268, 122 $268, 122

All balances resulted from the time lag between the dates that short-term loans were disbursed and payments between funds were made.

All interfunds are expected to be repaid within one year.

73

NOTE 12:

NOTE 13:


June 30, 2017

FUND BALANCE APPROPRIATED

General Fund - Of the $967,522 General Fund fund balance at June 30, 2017, $68, 782 is assigned for year-end encumbrances however only $56,648 is reflected on the balance sheet as assigned since the unassigned balance would be negative; $637,273 has been restricted in the Capital Reserve Account; and $273,601 is unassigned fund balance designated for subsequent year's expenditures.

CALCULATION OF EXCESS SURPLUS

In accordance with N.J.S.A.18A:7F-7, as amended by P.L. 2004,c.73 (S1701), the Restricted Fund Balance - Excess Surplus is a required calculation pursuant to the New Jersey Comprehensive Educational Improvement and Financing Act of 1996 (CEIFA). New Jersey school districts are required to reserve General Fund fund balance at the fiscal year end of June 30 if they did not appropriate a required minimum amount as budgeted fund balance in their subsequent years' budget. Based on this calculation, the Manville School District has $-0- excess fund balance resulting from the year ended June 30, 2017.

General Fund Expenditures Fiscal Year Ended June 30, 2017

Less: On-Behalf TPAF Pension and Social Security Reimbursement

Adjusted General Fund Expenditures

Excess Surplus Percentage 2% of Adjusted 2016-17 General Fund Expenditures

Greater of Line Above of $250,000.00

Add: Allowable Adjustments

Maximum Unreserved/Undesignated Fund Balance

Actual Unreserved/Undesignated Fund Balance

Excess Surplus

74

$22,619, 123

2,285,959

20,333,164

2% 406,663

406,663

107,170

513,833

513,833

NOTE 14:

NOTE 15:


June 30, 2017

CAPITAL RESERVE ACCOUNT

A capital reserve account was established by the Borough of Manville Board of Education by the inclusion of $540,510 in the 2000-2001 school year for the accumulation of funds for use as capital outlay expenditures in subsequent fiscal years. The capital reserve account is maintained in the general fund and its activity is included in the general fund annual budget.

Funds placed in the capital reserve account are restricted to capital projects in the district's approved Long Range Facilities Plan (LRFP). Upon submission of the LRFP to the department, a district may increase the balance in the capital reserve by appropriating funds in the annual general fund budget certified for taxes or by transfer by board resolution at year end (June 1 to June 30) of any unanticipated revenue or unexpended line-item appropriation amounts, or both. A district may also appropriate additional amounts when the express approval of the voters has been obtained either by a separate proposal at budget time or by a special question at one of the four special elections authorized pursuant to N.J.S.A. 19:60-2. Pursuant to N.J.A.C. 6:23A-14.1(g), the balance in the account cannot at any time exceed the local costs of uncompleted capital projects in its approved LRFP.

The activity of the capital reserve for the year ending June 30, 2017 year is as follows:

The activity of the capital reserve for the year ending June 30, 2017 year is as follows:

Beginning balance, July 1, 2016 Add: Interest earnings Add: Transfer per Board Resolution Ending balance, June 30, 2017

There were no withdrawals from the capital reserve in 2016-2017.

DEFERRED COMPENSATION

$365,254 732

271,287 $637,273

The District offers its employees a choice of the deferred compensation plans created in accordance with Internal Revenue Code Section 403(b) and 457. The plans 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. Since the District does not have any property or rights to the plan assets and no fiduciary relationship exists between the District and the deferred compensation plan, the plan assets are not included in the District's financial statements as of June 30, 2017.

75

NOTE 16:

NOTE 17:

NOTE 18:


June 30, 2017

INVENTORY

Inventory in the Food Service Fund at June 30, 2017 consisted of the following:

Food and Supplies $14.982

The value of Federal donated commodities as reflected on Schedule A (required by the Single Audit Act Amendments of 1996) is the difference between market value and cost of the commodities at the date of purchase and has been included as an item of non-operating revenue in the financial statements.

RESTRICTED ASSETS

The funds set aside for the capital reserve are classified as restricted assets (cash and cash equivalents) as they are restricted for use for future capital requirements.

SUBSEQUENT EVENTS

The Board of Education has evaluated subsequent events occurring after the financial statement date through November 13, 2017 which is the date the financial statements were available to be issued. No items were noted for disclosure or adjustment.

76

REQUIRED SUPPLEMENTARY INFORMATION - PART II

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99

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,107

BOROUGH OF MANVILLE SCHOOL DISTRICT BUDGETARY COMPARISON SCHEDULE

BUDGET TO GAAP RECONCILIATION NOTE TO REQUIRED SUPPLEMENTARY INFORMATION


Sources/inflows of resources

Actual amounts (budgetary) "revenues" from the budgetary comparison schedules

Difference - budget to GAAP Grant accounting budgetary basis differs from GAAP in that encumbrances are recognized as expenditures, and related revenue is recognized.

State aid payment recognized for GAAP statements in the current year, previously recognized for budgetary purposes.

State aid payment recognized for budgetary purposes, not recognized for GAAP statements until the subsequent year.

Total revenues as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds.

Uses/outflows of resources

Actual amounts (budgetary basis) "total outflows" from the budgetary comparison schedules

Difference - budget to GAAP Encumbrances for supplies and equipment ordered but not received are reported in the year the order is placed for budgetary purposes, but in the year the supplies are received for financial purposes

Total expenditures as reported on the statement of revenues. expenditures and changes in fund balances - governmental funds.

87

GENERAL FUND

$23,001,483

518,963

(525,968)

22,994,478

22,619,124

$22,619,124

EXHIBIT "C-3"

SPECIAL REVENUE

FUND

$734,899

(6,942)

727,957

734,899

(6,942)

$727,957

REQUIRED SUPPLEMENTARY INFORMATION - PART Ill

88

SCHEDULES RELATED TO ACCOUNTING AND REPORTING FOR PENSION (GASB 68)

89

<D

0

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asu

rem

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t D

ate

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30.

20

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Not

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IT "

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will

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IT "

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33.7

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28.7

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EXHIBIT "L-4"


SCHEDULES RELATED TO ACCOUNTING AND REPORTING FOR PENSION {GASS 68)

NOTE TO RSI Ill


PUBLIC EMPLOYEES RETIREMENT SYSTEM (PERS}

Change in benefit terms

None

Change in assumptions

The discount rate changed from 4.90% to 3.98% as of June 30, 2016.

TEACHERS PENSION AND ANNUITY FUND <TPAF)

Change in benefit terms

None

Change in assumptions

The discount rate changed from 4. 13% to 3.22% as of June 30, 2016.

93

OTHER SUPPLEMENTARY INFORMATION

94

SPECIAL REVENUE FUND DETAIL STATEMENTS

Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specific purposes other than debt

service or capital projects.

95

RE

VE

NU

ES

Fed

eral

sou

rces

Oth

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sour

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S

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$343

,604

$1

2,57

3

343,

604

12,5

73

90,0

00

17,0

00

1,07

3

107,

000

1,07

3

215,

000

11,5

00

2,00

0

18,1

04

1,50

0

236,

604

11,5

00

$343

,604

$1

2,57

3

LOC

AL

PR

OG

RA

MS

$5,0

25

5,02

5

5,02

5

5,02

5

$5,0

25

EX

HIB

IT "

E-1

"

SH

EE

T#

2

TO

TA

L

2017

$729

,874

5,02

5

734,

899

254,

151

90,0

00

59,9

34

404,

085

13,0

00

57,6

54

228,

700

3,00

0

26,8

43

1,61

7

330,

814

$734

,899

CAPITAL PROJECTS FUND DETAIL STATEMENTS

98

ISS

UE

I P

RO

JEC

T T

ITL

E

Ro

of R

ep

lace

me

nt i

n W

est

Win

g o

f Hig

h S

cho

ol

Asb

est

os

Ab

ate

me

nt-

Man

ville

Sch

oo

ls

Sid

ewal

k R

ep

air

-A

ll S

cho

ols

Hig

h S

cho

ol a

nd

AB

IS R

oo

f Re

pa

ir

Asb

est

os

Ab

ate

me

nt-

AB

IS &

Ro

ose

velt

Sch

oo

l

Hig

h S

cho,

ol P

arki

ng L

ot

co

co

BO

RO

UG

H O

F M

AN

VIL

LE S

CH

OO

L D

IST

RIC

T

CA

PIT

AL

PR

OJE

CT

S F

UN

D

SU

MM

AR

Y S

TA

TE

ME

NT

OF

PR

OJE

CT

EX

PE

ND

ITU

RE

S -

BU

DG

ET

AR

Y B

AS

IS

FO

R T

HE

FIS

CA

L Y

EA

R E

ND

ED

JU

NE

30.

20

17

OR

IGIN

AL

C

AN

CE

LE

D/

EX

PE

ND

ITU

RE

S T

O D

AT

E

DA

TE

A

PP

RO

PR

IAT

ION

A

DJU

ST

ME

NT

S

PR

IOR

Y'_

EAR

S C

UR

RE

NT

YE

AR

03

/28

/14

$1

,071

,686

($

30

6,2

57

) $

58

7,2

32

On

Go

ing

1

83

,72

9

17

,67

5

14

0,2

15

On

Goi

ng

10

0,0

00

2

7,8

05

04

/01

/15

4

81

,60

0

457,

12

5

On

Goi

ng

20

,00

0

(17,

675)

2

,32

5

On

Goi

ng

45

,00

0

30

,73

4

$1,9

02,0

15

($3

06

,25

7)

$1

,24

5,4

36

EX

HIB

IT "

F-1

"

UN

EX

PE

ND

ED

B

AL

AN

CE

JU

NE

30.

20

17

$1

78

,19

7

61

,18

9

72

,19

5

24

,47

5

14

,26

6

$3

50

,32

2

if

BOROUGH OF MANVILLE SCHOOL DISTRICT CAPITAL PROJECTS FUND

SUMMARY SCHEDULE OF REVENUES. EXPENDITURES. AND CHANGES IN FUND BALANCE-BUDGETARY BASIS


REVENUES AND OTHER FINANCING SOURCES: Tra11sre1 fmffl::eapital-r:eserve Interest earned

Total revenues and other financing sources

EXPENDITURES AND OTHER FINANCING USES: Canceled Receivable Transfer out - debt service fund

Total expenditures and other financing uses

Excess of revenues and other financing sources over expenditures and other financing uses

Fund balance - July 1

Fund balance - June 30

Reconciliation to GAAP Basis:

Fund Balance June 30 - Budgetary Basis (Exhibit F-2)

AdG;~wmar~s-" c• 11:cent ~r Less: Unrealized revenue SDA grant

Fund Balance June 30 - GAAP Basis (Exhibit B-2)

100

EXHIBIT "F-2"

$58

58

$306,257 58

306,315

(306,257)

656,579

$350,322

350,322

(61,794)

$288,528


SCHEDULE OF PROJECT REVENUES, EXPENDITURES, PROJECT BALANCE, AND PROJECT STATUS BUDGETARY BASIS - ROOF REPLACEMENT IN WEST WING OF HIGH SCHOOL

FROM INCEPTION AND FOR THE FISCAL YEAR ENDED JUNE 30, 2017

REVENUES AND OTHER FINANCING SOURCES: State sources - SDA grant Transfer from capital reserve


EXPENDITURES AND OTHER FINANCING USES: Purchased professional and technical services Construction services


Excess (deficiency) ofrevenues over (under) expenditures

ADDITIONAL PROJECT INFORMATION: Project number Grant date Bond authorization date Bonds authorized Bonds issued Original authorized cost Additional authorized cost Revised authorized cost Percentage increase over original authorized cost

Percentage completion Original target completion date Completion date

PRIOR PERIODS

$571,686 500,000

1,071,686

49,632 537,600

587,232

$484,454

3000-050-14-1003 3128/14

NIA NIA NIA

$1,264,453 ($499,024) $765,429

NIA 75%

6130116 NIA

101

CURRENT YEAR TOTALS

($306,257) $265,429 500,000

(306,257) 765,429

49,632 537,600

587,232

($306,257) $178,197

EXHIBIT "F-2A"

REVISED AUTHORIZED

COST

$265,429 500,000

765,429

153,000 612,429

765,429


SCHEDULE OF PROJECT REVENUES. EXPENDITURES. PROJECT BALANCE. AND PROJECT STATUS BUDGETARY BASIS -ASBESTOS ABATEMENT AT MANVILLE SCHOOLS


REVENUES AND OTHER FINANCING SOURCES: Transfer from capital reserve Transfer to other capital project




Excess (deficiency) of revenues over (under) expenditures

ADDITIONAL PROJECT INFORMATION: Project number Grant date Bond authorization date Bonds authorized Bonds issued Original authorized cost Additional authorized cost Revised authorized cost Percentage increase over original

authorized cost Percentage completion Original target completion date Revised target completion date

PRIOR PERIODS

$192,998 (9,270)

183,728

41,566 98,648

140,214

$43,514

3000-090-10-1001 N/A N/A N/A NIA

$119,400 82,003

$201,403

69% 70%

7/1/14 on going

102

CURRENT YEAR TOTALS

$192,998 17,675 8,405

17,675 201,403

41,566 98,648

140,214

$17,675 $61,189

EXHIBIT "F-2B"

REVISED AUTHORIZED

COST

$192,998 8,405

201,403

85,000 116,403

201,403


SCHEDULE OF PROJECT REVENUES, EXPENDITURES, PROJECT BALANCE, AND PROJECT STATUS BUDGETARY BASIS- HIGH SCHOOL SIDEWALK REPAIR


REVENUES AND OTHER FINANCING SOURCES: Transfer from capital reserve


EXPENDITURES AND OTHER FINANCING USES: Construction services



ADDITIONAL PROJECT INFORMATION: Project number Grant date Bond authorization date Bonds authorized Bonds issued Original authorized cost Additional authorized cost Revised authorized cost Percentage increase over original authorized cost

Percentage completion Original target completion date Revised target completion date

PRIOR PERIODS

$100,000

100,000

27,805

27,805

$72,195

NIA NIA NIA NIA NIA

$100,000

$100,000

NIA

6130113 6130117

103

CURRENT YEAR TOTALS

$100,000

100,000

27,805

27,805

$72,195

EXHIBIT "F-2C"

REVISED AUTHORIZED

COST

$100,000

100,000

100,000

100,000


SCHEDULE OF PROJECT REVENUES, EXPENDITURES, PROJECT BALANCE, AND PROJECT STATUS BUDGETARY BASIS - HIGH SCHOOU ABIS ROOF REPAIR









PRIOR PERIODS

$450,000 31,600

481,600

31,600 425,525

457,125

$24,475

3000-65-15-1000 N/A N/A N/A N/A

$450,000 31,600

$481,600

7% 95%

9/1/16 N/A

104

CURRENT YEAR TOTALS

$450,000 31,600

481,600

31,600 425,525

457,125

$24,475

EXHIBIT "F-D"

REVISED AUTHORIZED

COST

$450,000 31,600

481,600

31,600 450,000

481,600


SCHEDULE OF PROJECT REVENUES. EXPENDITURES. PROJECT BALANCE. AND PROJECT STATUS BUDGETARY BASIS ·ASBESTOS ABATEMENT AT ABIS AND ROOSEVELT SCHOOL

FROM INCEPTION AND FOR THE FISCAL YEAR ENDED JUNE 30. 2017



EXPENDITURES AND OTHER FINANCING USES: Purchased professional and technical services





PRIOR PERIODS

$20,000

20,000

2,325

2,325

$17,675

N/A NIA N/A N/A NIA

$20,000

$20,000

12% on going

N/A

105

CURRENT YEAR TOTALS

$20,000 (17,675) (17,675)

(17,675) 2,325

2,325

2,325

($17,675)

EXHIBIT "F-2E"

REVISED AUTHORIZED

COST

$20,000 (17,675)

2,325

2,325

2,325


SCHEDULE OF PROJECT REVENUES. EXPENDITURES. PROJECT BALANCE, AND PROJECT STATUS BUDGETARY BASIS· HIGH SCHOOL PARKING LOT

FROM INCEPTION AND FOR THE FISCAL YEAR ENDED JUNE 30. 2017

REVENUES AND OTHER FINANCING SOURCES: Transfer from capital reserve


EXPENDITURES AND OTHER FINANCING USES: Construction services





PRIOR PERIODS

$45,000

45,000

30,734

30,734

$14,266

N/A N/A N/A NIA N/A

$45,000

$45,000

100% 7/1/17

N/A

106

CURRENT YEAR TOTALS

$45,000

45,000

30,734

30,734

$14,266

EXHIBIT "F·2F"

REVISED AUTHORIZED

COST

$45,000

45,000

45,000

45,000

FIDUCIARY FUND DETAIL STATEMENTS

Fiduciary funds are used to account for assets when a school district is functioning either as a trustee or as an agent for another party.

Unemployment Compensation Insurance Trust Fund:

Scholarship Trust Fund:

Student Activity Fund:

Payroll Agency Fund:

This trust fund is used to account for board contributions which are utilized to pay unemployment compensation claims as they arise.

This trust fund is used to account for assets held by the district for grants to students where there are no restrictions regarding the use of principal and interest.

This agency fund is used to account for student funds held at the schools.

This agency fund is used to account for the payroll transactions of the school district.

107

AS

SE

TS

:

Cas

h an

d ca

sh e

quiv

alen

ts

Tot

al a

sset

s

__,,

LIA

BIL

ITIE

S:

0 ())

Pay

roll

de

du

ctio

ns

and

with

hold

ings

Due

to

stu

de

nt g

roup

s

Tot

al li

abili

ties

NE

T P

OS

ITIO

N:

He

ld in

tru

st f

or

stat

e un

empl

oym

ent

Hel

d in

tru

st fo

r sc

hola

rshi

ps

To

tal n

et p

ositi

on

BO

RO

UG

H O

F M

AN

VIL

LE S

CH

OO

L D

IST

RIC

T

FID

UC

IAR

Y F

UN

D

CO

MB

ININ

G S

TA

TE

ME

NT

OF

FID

UC

IAR

Y N

ET

PO

SIT

ION

JUN

E 3

0. 2

017

TR

US

T F

UN

DS

ST

AT

E

PR

IVA

TE

UN

EM

PL

OY

ME

NT

P

UR

PO

SE

T

OT

AL

INS

UR

AN

CE

S

CH

OL

AR

SH

IP

TR

US

T F

UN

D

$40,

648

$52,

305

$92,

953

40,6

48

52,3

05

92,9

53

40,6

48

40,6

48

52,3

05

52,3

05

$40,

648

$52,

305

$92,

953

EX

HIB

IT"H

-1"

AG

EN

CY

FU

ND

T

OT

AL

ST

UD

EN

T A

CT

IVIT

IES

P

AY

RO

LL

AG

EN

CY

FU

ND

$78,

753

$421

,553

$5

00,3

06

78,7

53

421,

553

500,

306

42

1,5

53

42

1,55

3

78,7

53

78,7

53

$78,

753

$421

,553

$5

00,3

06

ADDITIONS:

Donations

Payroll deductions

Interest earned

Total additions

DEDUCTIONS:

Unemployment Claims

Scholarships awarded

Total deductions


Net position - July 1

Net position - June 30


FIDUCIARY FUND

COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION


STATE

UNEMPLOYMENT

INSURANCE

TRUST FUND

109

$37,509

44

37,553

25,582

25,582

11,971

28,677

$40,648

PRIVATE

PURPOSE

SCHOLARSHIP

TRUST FUND

$19,606

75

19,681

24,424

24,424

(4,743)

57,048

$52,305

EXHIBIT "H-2"

TOTAL

$19,606

37,509

119

57,234

25,582

24,424

50,006

7,228

85,725

$92,953

AS

SE

TS

:

Cas

h an

d ca

sh e

quiv

alen

ts

__,.

_,.

0 T

otal

ass

ets

LIA

BIL

ITIE

S:

Due

Stu

dent

Gro

ups

Stu

dent

act

iviti

es

Ath

letic

act

iviti

es

Tot

al a

sset

s

BO

RO

UG

H O

F M

AN

VIL

LE S

CH

OO

L D

IST

RIC

T

FID

UC

IAR

Y F

UN

D

ST

UD

EN

T A

CT

IVIT

Y

FU

ND

SC

HE

DU

LE O

F R

EC

EIP

TS

AN

D D

ISB

UR

SE

ME

NT

S

FO

R T

HE

FIS

CA

L Y

EA

R E

ND

ED

JU

NE

30,

201

7

BA

LAN

CE

JUN

E 3

0, 2

016

AD

DIT

ION

S

DE

LET

ION

S

$93,

730

$221

,611

$2

36,5

88

93,7

30

221,

611

236,

588

93,6

59

175,

560

191,

002

71

46,0

51

45,5

86

$93,

730

$221

,611

$2

36,5

88

EX

HIB

IT "

H-3

"

BA

LAN

CE

JUN

E 3

0, 2

017

$78,

753

78,7

53

78,2

17

536

$78,

753

AS

SE

TS

:

Cas

h a

nd

ca

sh e

quiv

alen

ts

->.

->.

->.

Tot

al a

sset

s

LIA

BIL

ITIE

S:

Pay

roll

dedu

ctio

ns a

nd w

ithho

ldin

gs

Tot

al li

abili

ties

BO

RO

UG

H O

F M

AN

VIL

LE S

CH

OO

L D

IST

RIC

T

FID

UC

IAR

Y F

UN

D

PA

YR

OLL

AG

EN

CY

FU

ND

SC

HE

DU

LE

OF

RE

CE

IPT

S A

ND

DIS

BU

RS

EM

EN

TS

FO

R T

HE

FIS

CA

L Y

EA

R E

ND

ED

JU

NE

30.

201

7

BA

LAN

CE

JUN

E 3

0. 2

016

AD

DIT

ION

S

DE

LE

TIO

NS

$537

,969

$6

,589

,505

$6

,705

,921

537,

969

6,58

9,50

5 6,

705,

921

537,

969

6,58

9,50

5 6,

705,

921

$537

,969

$6

,589

,505

$6

,705

,921

EX

HIB

IT "

H-4

"

BA

LA

NC

E

JUN

E 3

0. 2

01

7

$421

,553

421,

553

42

1,5

53

$421

,553

LONG-TERM DEBT SCHEDULES

The Long-Term Debt schedules are used to reflect the outstanding principal balances of the long-term liabilities of the District. This includes obligations under Serial Bonds.

112

......

......

VJ

ISS

UE

Ca

pita

l im

pro

vem

en

ts

DA

TE

OF

IS

SU

E

07/0

1/02

AM

OU

NT

OF

IS

SU

E

$1,3

71,0

00

BO

RO

UG

H O

F M

AN

VIL

LE S

CH

OO

L D

IST

RIC

T

LO

NG

-TE

RM

DE

BT

S

CH

ED

ULE

OF

SE

RIA

L B

ON

DS

JU

NE

30.

201

7

AN

NU

AL

MA

TU

RIT

IES

D

AT

E

AM

OU

NT

07/1

5/17

07

/151

18

115,

000

121,

000

INT

ER

ES

T

RA

TE

4.30

%

4.40

%

BA

LAN

CE

JU

NE

30,

201

6

$346

,000

$346

,000

RE

TIR

ED

$110

,000

$110

,000

EX

HIB

IT "

l-1

"

BA

LAN

CE

JU

NE

30,

201

7

$236

,000

$236

,000

REVENUES: Local sources:

Local tax levy

Total regular debt service-revenues

EXPENDITURES: Regular debt service:

Interest Redemption of principal

Total regular debt service-expenditures

Excess of revenues over expenditures

Other financing sources: Transfers in

Excess of revenues & other financing sources over expenditures

Fund balance, July 1

Fund balance, June 30

BOROUGH OF MANVILLE SCHOOL DISTRICT DEBT SERVICE FUND

BUDGETARY COMPARISON SCHEDULE FOR THE FISCAL YEAR ENDED JUNE 30. 2017

ORIGINAL BUDGET ACTUAL

$122,580 $122,580

122,580 122,580

12,580 12,579 110,000 110,000

122,580 122,579

58

59

1,736

$1 795

114

EXHIBIT "1-3"

VARIANCE

$1

1

1

58

59

1,736

$1 795

STATISTICAL SECTION (UNAUDITED)

Contents

Financial Trends:

BOROUGH OF MANVILLE SCHOOL DISTRICT STATISTICAL SECTION

These schedules contain trend information to help the reader understand how the district's financial performance and well being have changed over time.

Revenue Capacity:

These schedules contain information to help the reader assess the district's most significant local revenue source, the property tax.

Debt Capacity:

These schedules present information to help the reader assess the affordability of the district's current levels of outstanding debt and the district's ability to issue additional debt in the future.

Demographic and Economic Information:

These schedules offer demographic and economic indicators to help the reader understand the environment within which the district's financial activities take place.

Operating Information:

These schedules contain service and infrastructure data to help the reader understand

provides and the activities it performs.

Sources

J-1 to J-4

J-5 to J-9

J-10toJ-13

J-14 to J-15

J-16 to J-20

Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports (CAFR) for the relevant year.

EX

HIB

IT"J

-1"

BO

RO

UG

H O

F M

AN

VIL

LE S

CH

OO

L D

ISTR

ICT

NE

T E

O§I

TIQ

N B

Y !,

;;OM

PO

NE

NT

UN

AU

DIT

ED

2017

20

16

ZQ.1.

§ ~

W1

20

12

2011

20

10

2009

~

Gov

ernm

enta

l act

iviti

es

Net

inve

stm

ent i

n ca

pita

l ass

ets

$8,3

82,3

99

$8,5

71,9

73

$8,3

08,5

88

$7,9

09,8

24

$7,1

51,6

34

$7,1

72,1

78

$7,0

05,7

97

$6,5

64,7

04

$8,8

06,0

53

$6,8

93,1

05

Res

trict

ed

1,25

3,13

8 94

4,22

6 1,

526,

474

1,82

4,51

2 2,

517,

933

2,37

2,11

4 1,

899,

909

2,03

8,16

0 1,

600,

674

685,

126

Unr

estri

cted

(Def

icit)

(6

,600

,174

) (6

,026

,238

) (5

,314

, 118

) (1

14,8

10)

(119

,593

) 21

,463

42

2,18

2 (3

51,0

80)

(120

,555

) 15

,266

To

tal g

over

nmen

tal a

ctiv

ities

net

pos

ition

3,

035,

363

3,48

9,96

1 4,

520,

945

9,61

9,52

5 9,

549,

974

9,56

5,75

5 9,

327,

888

8,25

1,78

4 8,

286,

172

7,59

3,49

6

Bus

ines

s-ty

pe a

ctiv

ities

N

et in

vest

men

t in

capi

tal e

sset

s 1,

474

3,29

6 5,

909

8,73

5 20

,436

27

,619

35

,661

32

,519

28

,045

33

,151

U

nres

trict

ed

91,0

34

41,4

01

11,3

59

23,8

89

(4,4

10)

(4,4

31)

1905

1 9,

160

36,4

13

22,3

97

Tot

al b

usin

ess-

type

act

iviti

es n

et p

ositi

on

92,5

08

44,6

97

17,2

68

32,6

24

16,0

26

23,1

88

54,7

12

41,6

79

64,4

58

55,5

48

Gov

ernm

ent-w

ide

Net

inve

stm

ent i

n ca

pita

l ass

ets

8,38

3,87

3 8,

575,

269

8,31

4,49

7 7,

918,

558

7,17

2,07

0 7,

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05

BOROUGH OF MANVILLE SCHOOL DISTRICT DIRECT AND OVERLAPPING PROPERTY TAX RATES

UNAUDITED

Borough of Manville Board of Education Overlaeeing Rates Fiscal Year General

Ended Obligation December 31. Basic Rate (a) Debt Service (b)

2017 $1.76 $0.01 2016 1.67 0.01 2015 1.28 0.01 2014 1.24 0.00 2013 1.18 0.02 2012 1.15 0.02 2011 1.11 0.02 2010 1.09 0.02 2009 1.06 0.02 2008 1.03 0.02

Source: District Records and Municipal Tax Collector (Rates are per $100 of assessed value)

Total Direct School Borough of Somerset

Tax Rate Manville County

$1.77 $1.02 $0.42 1.68 1.02 0.40 1.29 0.81 0.32 1.24 0.80 0.32 1.20 0.76 0.33 1.17 0.75 0.34 1.13 0.73 0.31 1.11 0.71 0.30 1.08 0.69 0.30 1.05 0.71 0.31

(a) The district's basic tax rate is calculated from the A4F form which is submitted with the budget and the Net valuation taxable

(b) Rates for debt service are based on each year's requirements.

* revaluation

122

EXHIBIT "J-7"

Total Direct and Overlapping

Tax Rate

$3.21 3.10 2.42 2.37 2.29 2.27 2.17 2.12 2.07 2.07

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Sou

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Tax

Ass

ess

or

Fiscal Year Ended

June 30,

2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

BOROUGH OF MANVILLE SCHOOL DISTRICT PROPERTY TAX LEVIES AND COLLECTIONS

UNAUDITED

Taxes Levied Collected within the Fiscal Year of the Lev~ (a) for the Percentage

Fiscal Year Amount of Levy

$15,141,795 $15,141,795 100% 14,263,625 14,263,625 100% 13,985,754 13,985,754 100% 13,641,895 13,641,895 100% 13,514,356 13,514,356 100% 13,257,205 13,257,205 100% 13,003,302 13,003,302 100% 12,679,478 12,679,478 100% 12,349,547 12,349,547 100% 12,019,465 12,019,465 100%

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

EXHIBIT "J-9"

Collections in Subsequent Years

Note: School taxes are collected by the Municipal Tax Collector. Under New Jersey State Statute, a municipality is required to remit to the school district the entire property tax balance, in is the amount voted upon or certified prior to the end of the school year.

124

Fiscal Year

Ended June 30.

2017 2016

2015 2014 2013

2012 2011 2010

2009

2008

BOROUGH OF MANVILLE SCHOOL DISTRICT RATIOS OF OUTSTANDING DEBT BY TYPE

UNAUDITED

Governmental Activities General Percentage

Obligation Capital Total of Personal Bonds (b) Leases District Income {a)

$236,000 $236,000 37% 346,000 346,000 25% 456,000 456,000 19%

561,000 561,000 15% 661,000 661,000 12% 834,000 834,000 9%

1,004,000 1,004,000 7% 1,169,000 $19,268 1,188,268 6% 1,329,000 50,567 1,379,567 5%

1,484,000 91,665 1,575,665 5%

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

EXHIBIT "J-10"

Per Capita (a)

$23

33

44 54 63

80 96

115

133 153

Note: Details regarding the district's outstanding debt can be found in the notes to the financial statements. (a) See Exhibit NJ J-14 for personal income and population data. These ratios are calculated using personal in

125

Fiscal Year Ended

June 30.

2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

BOROUGH OF MANVILLE SCHOOL DISTRICT RATIOS OF NET BONDED DEBT OUTSTANDING

UNAUDITED

General Bonded Debt Outstanding Percentage of General Net General Actual Taxable

Obligation Bonded Debt Value (a) of Bonds Deductions Outstanding Property

$236,000 $236,000 0.03% 346,000 346,000 0.04% 456,000 456,000 0.04% 561,000 561,000 0.05% 661,000 661,000 0.06% 834,000 834,000 0.07%

1,004,000 1,004,000 0.09% 1,169,000 1, 169,000 0.10% 1,329,000 1,329,000 0.11% 1,484,000 1,484,000 0.13%

EXHIBIT"J-11"

Per Capita (b)

$23 33 44 54 63 80 96

113 128 144

Note: Details regarding the district's outstanding debt can be found in the notes to the financial statements. (a) See Exhibit NJ J-6 for property tax data. (b) Population data can be found in Exhibit NJ J-14.

126

BOROUGH OF MANVILLE SCHOOL DISTRICT DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT

AS OF DECEMBER 31. 2016 UNAUDITED

Debt Estimated

Percentage Governmental Unit Outstanding Applicable (al

Debt repaid with property taxes Manville Borough

Other debt Somerset County Somerset-Raritan Valley Sewage Authority

Subtotal, overlapping debt

Manville Borough School District Direct Debt

Total direct and overlapping debt

$7,000,079 100%

185,467,357 2% 17,944,076 7%

Source: Borough of Manville Chief Financial Officer, Somerset County Treasurer's Office and Somerset-Raritan Valley Sewage Authority

Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the District.

EXHIBIT "J-12"

Estimated Share of Overlapping

Debt

$7,000,079

2,866,681 1,239,936

11, 106,696

236,000

$11,342,696

This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Manville. This process recognizes that, when considering the District's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping payment.

(a) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of another governmental unit's taxable value that is within the district's boundaries and dividing it by each unit's total taxable value.

127

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Source:

BOROUGH OF MANVILLE SCHOOL DISTRICT DEMOGRAPHIC AND ECONOMIC STATISTICS

UNAUDITED

Per Capita Population <al Personal Income (bl Personal Income (c)

10,430 * * 10,429 $901,774,772 $86,468 10,458 875,658,798 83,731 10,482 840,310,494 80, 167 10,461 817,663, 143 78,163 10,436 774,747,768 74,238 10,359 7 40,388,807 71,473 10,381 729,898,491 70,311 10,273 769,036,780 74,860 10,261 739,951,493 72,113

(a) Population information provided by the NJ Dept. of Labor and Workforce Development.

EXHIBIT "J-14"

Unemployment Rate (d)

5% 6% 7% 11% 8% 8% 8% 8% 3% 4%

(b) Personal income has been estimated based upon the municipal population and per capita personal income presented. (c) Per capita personal income by municipality was computed using Census Bureau midyear population estimates.

Estimates for 2007-2016 reflect county population. (d) Unemployment data provided by the NJ Dept. of Labor and Workforce Development.

* not available

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EXHIBIT "J-20"

BOROUGH OF MANVILLE SCHOOL DISTRICT INSURANCE SCHEDULE

Multi Peril Policy - Diploma Joint Insurance Fund Property Coverage:

Blanket Real & Personal Property Blanket Valuable Papers & Records

Newly Acquired Property: Property

Flood (Zone A or V) Flood (All other zones)

JUNE 30. 2017 UNAUDITED

Comprehensive General liability and Automotive Coverage: Liability

Workers Compensation Policy

Excessive School Leaders Professional liability

Crime Coverage: Public Official Bond Limit - Board Secretary/Business Administrator Public Official Bond Limit - Treasurer of School Monies

Employee Dishonesty

Source: District Records

134

Coverage Amount Deductible

$500,000,000 within blanket limits

25,000,000 per occurrence 25,000,000 per occurrence 10,000,000 per occurrence

5,000,000 per occurrence 100,000,000 aggregate

5,000,000

5,000,000

100,000 275,000

500,000

$5,000

5,000

SINGLE AUDIT SECTION

EXHIBIT "K-1"

SuPLEE, CLoONEY & CoMPANY CERTIFIED PUBLIC ACCOUNTANTS

308 East Broad Street, Westfield, New Jersey 07090·2122

Telephone 908·789·9300 Fax 908·789·8535

E-mail [email protected]

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS


We have audited, in accordance with the auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Borough of Manville School District (the "District") as of and for the year ended June 30, 2017 and the related notes to the financial statements, which collectively comprise the District's financial statements, and have issued our report thereon dated November 13, 2017.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the District's control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the Borough of Manville School District's internal control.

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 a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

135

SUPLEE, CLOONEY & COMPANY

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statements are free from 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 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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of This Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


136

EXHIBIT "K-2"

SuPLEE, CLOONEY & CoMPANY CERTIFIED PUBLIC ACCOUNTANTS

308 East Broad Street, Westfield, New Jersey 07090·2122

Telephone 908·789·9300 Fax 908·789·8535

E-mail [email protected]

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL

AND STATE FINANCIAL ASSISTANCE PROGRAMS AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE

UNIFORM GUIDANCE AND NEW JERSEY OMB CIRCULAR 15-08


Report on Compliance for Each Major Federal and State Program

We have audited the Borough of Manville School District's compliance with the types of compliance requirements described in the federal OMB Compliance Supplement and the New Jersey OMB State Grant Compliance Supplement that could have a direct and material effect on each of the Borough of Manville School District's major federal and state programs for the year ended June 30, 2017. The District's major federal and state programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal and state programs.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for each of the Borough of Manville School District's major federal and state programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance 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 requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and New Jersey OMB 15-08. Those standards, the Uniform Guidance and New Jersey OMB 15-08 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 federal or state program occurred. An audit includes examining, on a test basis, evidence about the Borough of North Plainfield School District'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 on compliance for each major federal and state program. However, our audit does not provide a legal determination of the Borough of Manville School District's compliance

137

SuPLEE, CLOONEY & COMPANY

Opinion on Each Major Federal and State Program

In our opinion, the Borough of Manville School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal and state programs for the year ended June 30, 2016.

Report on Internal Control Over Compliance

Management of the Borough of Manville School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Borough of Manville School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal and state program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal and state program and to test and report on internal control over compliance in accordance with the Uniform Guidance and New Jersey OMB 15-08, 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 Manville School District's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal or 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 noncompliance with a type of compliance requirement of a federal and state program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal or state program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance 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 compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance and State of New Jersey OMB 15-08. Accordingly, this report is not suitable for any other purpose.


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NOTE 1:

NOTE 2:

NOTE 3:

Borough of Manville School District Notes to the Schedules of Expenditures of Federal Awards

and State Financial Assistance Year Ended June 30, 2017

GENERAL

EXHIBIT "K-5"

The accompanying schedules of expenditures of federal awards and state financial assistance include federal and state activity of the Board of Education, Borough of Manville School District. The Board of Education is defined in Note 1 to the Board's basic financial statements. All federal and state awards received directly from the 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 financials assistance.

BASIS OF ACCOUNTING

The accompanying schedules of expenditures of awards and federal awards and state financial assistance are presented on the budgetary basis of accounting with the exceptions of programs recorded in the food service fund, which are presented using the accrual basis of accounting. These bases of accounting are described in Note 1 of the Board's basic financial statements. The information in this schedule is presented in accordance with the requirements of the Uniform Guidance, 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. The District has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance.

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 schedule (RSI) are presented for the general fund and special revenue fund to demonstrate financeregulated 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 revenue, whereas 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:22-44.2.

141

NOTE 3:

NOTE 4:

NOTE 5:

Borough of Manville School District Notes to the Schedules of Expenditures of Federal Awards

and State Financial Assistance Year Ended June 30, 2017

RELATIONSHIP TO BASIC FINANCIAL STATEMENTS (CONTINUED)

The net adjustment to reconcile from the budgetary basis to the GAAP basis is ($7,005) for the general fund and ($6,942) 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. Federal awards and state financial assistance revenues are reported in the Board's basic financial statements on a GAAP basis as follows:

Federal State Total

General Fund $134,493 $7,705,898 $7,840,391 Special Revenue Fund 729,874 729,874 Food Service Fund 405,031 7,231 412,262

1,269,398 7,713,129 8,982,527 GAAP Adjustment - General (7,005) (7,005) GAAP Adjustment - Special Revenue (6,942) (6,942) Total Awards and

Financial Assistance $1,262,456 $7,706, 124 $8,982,527

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.

OTHER Revenues and expenditures reported in the Food Distribution Program represent current year value received and current year distributions respectively. 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, 2017. TPAF Social Security contributions represent the amount reimbursed by the state for the employer's share of Social Security contributions for TPAF members for the year ended June 30, 2017.

142

Borough of Manville School District Schedule of Findings and Questioned Costs


Section I - Summary of Auditor's Results

Financial Statements

(1) Type of Auditor's Report Issued:

(2) Internal Control Over Financial Reporting:

(3)

(a)

(b)

Material weakness identified?

Significant deficiencies identified that are not considered to be material weaknesses?

Noncompliance material to basic financial statements noted?

Federal Program(s)

(1) Internal Control Over Major Federal Programs:

(2)

(3)

(a)

(b)



Type of Auditor's Report issued on compliance for major federal program(s)?

Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a) of the Uniform Guidance and listed in Section Ill of this schedule?

{4) Identification of Major Federal Program(s):

N.C.L.B Title I

Program Grant Number

84.010

(5) Program Threshold Determination:

(6}

Type A Federal Program Threshold> $750,000 Type 8 Federal Program Threshold<= $750,000

Auditee qualified as a low-risk auditee under the Uniform Guidance?

143

EXHIBIT "K-6"

Unmodified

No

No

No

No

No

Unmodified

No

Yes



Section I - Summary of Auditor's Results (Continued)

State Program(s)

(1) Internal Control Over Major State Programs:

(2)

(3)

(a)

(b)



Type of Auditor's Report issued on compliance for major state program(s)?

Any audit findings disclosed that are required to be reported in accordance with N.J. OMS Circular 15-08 and listed in Section Ill of this schedule?

(4) Identification of Major State Program(s):

Program

State Aid Cluster: Special Education Aid Security Aid Under Adequacy Aid PARCC Readiness Per Pupil Growth Aid Equalization Aid Professional Learning Aid

Grant Number

495-034-5120-089 495-034-5120-084 495-034-5120-096 495-034-5120-098 495-034-5120-097 495-034-5120-078 495-034-5120-101

(5) Program Threshold Determination:

(6)

Type A State Program Threshold> $750,000 Type S State Program Threshold<= $750,000

Auditee qualified as a low-risk auditee under OMS Circular 15-08?

144

No

No

Unmodified

No

Yes



Section II - Financial Statement Audit - Reported Findings Under Government Auditing Standards

Internal Control Findings

None Reported

Compliance Findings

None Reported

Section Ill - Findings and Questioned Costs Relative to Major Federal and State Programs

Federal Programs - None Reported

State Programs - None Reported

145

Borough of Manville School District

Schedule of Prior Year Audit Findings

Not Applicable

146

EXHIBIT "K-7"

comprehensive annual financial reportof the district over the last 5 years. fiscal year 2012-2013...

Documents