fox lake grade school district no. 114 spring grove ... · management is responsible for the...

FOX LAKE GRADE SCHOOL

DISTRICT NO. 114 SPRING GROVE, ILLINOIS

ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED

JUNE 30, 2017

FOX LAKE GRADE SCHOOL DISTRICT NO. 114 TABLE OF CONTENTS

JUNE 30, 2017

EXHIBIT PAGE

Independent Auditor’s Report 1 Independent Auditor’s report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 4 Statement of Assets and Liabilities Arising from Cash Transactions – Regulatory Basis A 6 Statement of Revenues Received, Expenditures Disbursed and Changes in Fund Balances B 8 Statement of Revenues Received C 10 Statement of Expenditures Disbursed, Budget to Actual – Educational Fund D 12 Statement of Expenditures Disbursed, Budget to Actual – Operations and Maintenance Fund E 16 Statement of Expenditures Disbursed, Budget to Actual – Debt Service Fund F 18 Statement of Expenditures Disbursed, Budget to Actual – Transportation Fund G 20 Statement of Expenditures Disbursed, Budget to Actual – Municipal Retirement/Social Security Fund H 22 Notes to Financial Statements 26 Other Information:

Schedule of the Employer’s Proportionate Share of the Net Pension Liability – TRS 48 Schedule of Employer Contributions – TRS 49 Schedule of Changes in Net Pension Liability and Related Ratios – IMRF 50 Schedule of Employer Contributions – IMRF 51

SCHEDULE PAGE Detailed Schedules of Revenues Received and Expenditures Disbursed: Educational Fund 1 52 Operations and Maintenance Fund 2 58 Debt Service Fund 3 59 Transportation Fund 4 60 Municipal Retirement/Social Security Fund 5 61 Working Cash Fund 6 62 Activity Funds 7 63

FOX LAKE GRADE SCHOOL DISTRICT NO. 114 TABLE OF CONTENTS

JUNE 30, 2017

SCHEDULE PAGE Schedule of Bonded Debt Maturities and Interest 8 65 Per Capita Costs 9 67 Notes to Other Information 68

INDEPENDENT AUDITOR’S REPORT

To the Board of Education Fox Lake Grade School District No. 114 Spring Grove, Illinois We have audited the accompanying financial statements of Fox Lake Grade School District No. 114, Spring Grove, Illinois, as of and for the fiscal year ended June 30, 2017, and the related notes, 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 the financial reporting provisions of the Illinois State Board of Education, which practices differ from accounting principles generally accepted in the United States of America. Also, as described in Note 1, management is responsible for the preparation and fair presentation of the financial statements in accordance with the cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Management is also responsible for 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 error or fraud. Auditor’s Responsibility Our responsibility is to express an opinion 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 entity’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 entity’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 that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 1, the financial statements of Fox Lake Grade School District No. 114 are prepared on the basis of the financial reporting provisions of the Illinois State Board of Education, which is a basis of accounting

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other than accounting principles generally accepted in the United States of America, to comply with the requirements of the Illinois State Board of Education. The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the “Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles” paragraph, the financial statements referred to in the first paragraph do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of Fox Lake Grade School District No. 114 as of June 30, 2017, and the changes in its financial position for the year then ended. Unmodified Opinion on Regulatory Basis of Accounting In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the assets and liabilities arising from cash transactions of Fox Lake Grade School District No. 114, as of June 30, 2017, and its revenue received and expenditures disbursed during the year then ended, on the basis of the financial reporting provisions of Illinois State Board of Education as described in Note 1. Basis of Accounting We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to that matter. Other Matters Prior-Year Comparative Information We have previously audited the District’s 2016 financial statements, and we expressed an adverse opinion on the financial statements in our report dated September 27, 2016. In our opinion, the summarized and comparative information presented herein as of and for the year ended June 30, 2016, is consistent, in all material respects, with the audited financial statements from which it has been derived. Disclaimer of Opinion on Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Fox Lake Grade School District No. 114’s financial statements. The other information, as listed in the table of contents, is the responsibility of management, and presented for purposes of additional analysis and are not a required part of the financial statements. We have applied certain limited procedures to the Other 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 financial statements, and other knowledge we obtained during our audit of the 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.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 9, 2017, on our consideration of Fox Lake Grade School District No. 114’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

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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 Fox Lake Grade School District No. 114’s internal control over financial reporting and compliance.

Evans, Marshall & Pease, P.C.

Evans, Marshall and Pease, P.C. Certified Public Accountants Rolling Meadows, Illinois November 9, 2017 (10)

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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED

IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Education Fox Lake Grade School District No. 114 Spring Grove, Illinois 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 Fox Lake Grade School District No. 114, Spring Grove, Illinois, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise Fox Lake Grade School District No. 114’s financial statements, and have issued our report thereon dated November 9, 2017. Our opinion was adverse because the financial statements were not prepared in accordance with generally accepted accounting principles. However, the financial statements were found to be fairly stated, in accordance with regulatory reporting requirements established by the Illinois State Board of Education, on the cash basis of accounting, which is a comprehensive basis of accounting other than general accepted accounting principles. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Fox Lake Grade School District No. 114’s internal 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 Fox Lake Grade School District No. 114’s internal control. Accordingly, we do not express an opinion on the effectiveness of Fox Lake Grade School District No. 114’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 entity’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. 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 Fox Lake Grade School District No. 114’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

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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 entity’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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Evans, Marshall & Pease, P.C.

Evans, Marshall and Pease, P.C. Certified Public Accountants

Rolling Meadows, Illinois November 9, 2017

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Operations and Debt

Educational Maintenance Service Transportation

Assets

Cash 64,603$ 204,034$ 717,822$ 93,816$

Interfund receivables - - - -

Intergovernmental receivables - - 74,425 -

Capital assets:

Land - - - -

Buildings - - - -

Improvements other than buildings - - - -

Equipment - - - -

Transportation equipment - - - -

Other debits:

Amount to be provided for payment of:

Bond principal - - - -

Amount available in debt service fund - - - -

Total Assets 64,603$ 204,034$ 792,247$ 93,816$

Liabilities

Current liabilities

Interfund payables 5,100,000$ 100,000$ -$ -$

Loans payable 600,000 - - -

Payroll deductions and withholdings (396) 6 - 234

Due to organizations - - - -

Due to the flexible benefit plan - - - -

Total current liabilities 5,699,604 100,006 - 234

Long-term liabilities

Bonds payable - - - -

Total long-term liabilities - - - -

Total Liabilities 5,699,604 100,006 - 234

Fund Balance

Investment in general fixed assets - - - -

Fund balance - unreserved - designated 2,450,117 503,890 854,151 124,365

Fund balance - unreserved - undesignated (8,085,118) (399,862) (61,904) (30,783)

Total Fund Balance (5,635,001) 104,028 792,247 93,582

Total Liabilities and Fund Balance 64,603$ 204,034$ 792,247$ 93,816$

The accompanying notes are an integral part of these financial statements.

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FOX LAKE GRADE SCHOOL DISTRICT NO. 114

STATEMENT OF ASSETS AND LIABILITIES

ARISING FROM CASH TRANSACTIONS - REGULATORY BASIS

(WITH SUMMARIZED INFORMATION AS OF JUNE 30, 2016)

JUNE 30, 2017

EXHIBIT A

Municipal General General

Retirement/ Working Fixed Long-Term

Social Security Cash Agency Assets Debt 2017 2016

15,841 2,971,714$ 36,467$ -$ -$ 4,104,297$ 4,393,916$

- 5,200,000 - - - 5,200,000 4,900,000

- - - - - 74,425 -

- - - 57,292 - 57,292 57,292

- - - 17,376,946 - 17,376,946 17,437,139

- - - 398,913 - 398,913 383,923

- - - 1,943,389 - 1,943,389 1,951,062

- - - 995,670 - 995,670 855,723

- - - - 5,075,119 5,075,119 6,446,604

- - - - 792,247 792,247 739,226

15,841$ 8,171,714$ 36,467$ 20,772,210$ 5,867,366$ 36,018,298$ 37,164,885$

-$ -$ -$ -$ -$ 5,200,000$ 4,900,000$

- - - - - 600,000 -

(161) - - - - (317) -

- - 21,692 - - 21,692 23,429

- - 14,775 - - 14,775 16,369

(161) - 36,467 - - 5,836,150 4,939,798

- - - - 5,867,366 5,867,366 7,185,830

- - - - 5,867,366 5,867,366 7,185,830

(161) - 36,467 - 5,867,366 11,703,516 12,125,628

- - - 20,772,210 - 20,772,210 20,685,139

185,195 45,660 - - - 4,163,378 3,998,309

(169,193) 8,126,054 - - - (620,806) 355,809

16,002 8,171,714 - 20,772,210 - 24,314,782 25,039,257

15,841$ 8,171,714$ 36,467$ 20,772,210$ 5,867,366$ 36,018,298$ 37,164,885$

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Operations and Debt


Revenues Received:

Local sources 5,143,163$ 1,049,836$ 1,665,199$ 128,582$

State sources 1,240,812 - - 313,749

Federal sources 697,154 - - -

Total Direct Revenues Received 7,081,129 1,049,836 1,665,199 442,331

Revenues for On-Behalf Payments 3,420,404 - - -

Expenditures Disbursed:

Instruction 4,699,630 - - -

Support services 2,580,522 882,129 - 625,216

Community services 8,665 - - -

Payments to other districts and

governmental units 736,886 - 1,628 -

Debt services - - 1,610,550 -

Total Direct Expenditures Disbursed 8,025,703 882,129 1,612,178 625,216

Expenditures for On-Behalf Payments 3,420,404 - - -

Excess (Deficiency) of Revenues Received

Over Expenditures Disbursed

Before Other Financing Sources (Uses) (944,574) 167,707 53,021 (182,885)

Other Financing Sources (Uses)

Payment to refunded bonds escrow agent - - - -

Refunding bonds issued - - - -

Premium on refunding bonds issued - - - -

Total Other Financing Sources (Uses) - - - -

Net Changes in Fund Balances (944,574) 167,707 53,021 (182,885)

Fund Balance, July 1, (4,690,427) (63,679) 739,226 276,467

Fund Balance, June 30, (5,635,001)$ 104,028$ 792,247$ 93,582$


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STATEMENT OF REVENUES RECEIVED, EXPENDITURES DISBURSED

AND CHANGES IN FUND BALANCES

(WITH SUMMARIZED INFORMATION FOR THE YEAR ENDED JUNE 30, 2016)

FOR THE YEAR ENDED JUNE 30, 2017

EXHIBIT B

Municipal

Retirement/ Working

Social Security Cash 2017 2016

384,667$ 99,436$ 8,470,883$ 8,228,006$

- - 1,554,561 1,664,950

- - 697,154 500,475

384,667 99,436 10,722,598 10,393,431

- - 3,420,404 1,873,900

137,040 - 4,836,670 4,738,713

251,566 - 4,339,433 4,314,393

312 - 8,977 4,714

- - 738,514 701,399

- - 1,610,550 1,618,316

388,918 - 11,534,144 11,377,535

- - 3,420,404 1,873,900

(4,251) 99,436 (811,546) (984,104)

- - - (4,300,469)

- - - 4,310,000

- - - 95,363

- - - 104,894

(4,251) 99,436 (811,546) (879,210)

20,253 8,072,278 4,354,118 5,233,328

16,002$ 8,171,714$ 3,542,572$ 4,354,118$

Total

(Memorandum Only)

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Operations and Debt


Revenues Received:

Local Sources:

General tax levy 4,808,525$ 1,006,143$ 1,662,776$ 128,503$

Special education levy 82,326 - - -

FICA/Medicare levy - - - -

Corporate replacement taxes 92,748 - - -

Earnings on investments 594 157 2,423 79

Impact fees - 1,800 - -

Food service 53,157 - - -

Tuition - - - -

Pupil activities 57,756 - - -

Rental 44,862 - - -

Donations from private sources 100 - - -

Other 3,095 41,736 - -

Total Local Sources 5,143,163 1,049,836 1,665,199 128,582

States Sources:

General state aid 808,038 - - -

Special education 286,717 - - -

State free lunch 1,217 - - -

Early childhood 144,840 - - -

Other - - - -

Transportation - - - 313,749

Total State Sources 1,240,812 - - 313,749

Federal Sources:

Title I - Low income 176,377 - - -

Title II - Teacher quality 34,786 - - -

National school lunch 180,291 - - -

Special Milk 724 - - -

School breakfast program 48,220 - - -

IDEA flow -through 251,532 - - -

Preschool flow-through 5,224 - - -

Medicaid matching - fee-for-service - - - -

Medicaid matching - administrative outreach - - - -

Total Federal Sources 697,154 - - -

Total Revenues Received 7,081,129$ 1,049,836$ 1,665,199$ 442,331$


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STATEMENT OF REVENUES RECEIVED


EXHIBIT C

Municipal

Retirement/ Working

Social Security Cash Total

128,325$ 89,637$ 7,823,909$

7,824 - 90,150

232,357 - 232,357

16,052 - 108,800

109 9,799 13,161

- - 1,800

- - 53,157

- - -

- - 57,756

- - 44,862

- - 100

- - 44,831

384,667 99,436 8,470,883

- - 808,038

- - 286,717

- - 1,217

- - 144,840

- - -

- - 313,749

- - 1,554,561

- - 176,377

- - 34,786

- - 180,291

- - 724

- - 48,220

- - 251,532

- - 5,224

- - -

- - -

- - 697,154

384,667$ 99,436$ 10,722,598$

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Employee Purchased Supplies and

Salaries Benefits Services Materials

Instruction:

Regular programs 2,288,535$ 341,940$ 198,374$ 141,854$

Special education programs 1,170,872 190,565 2,052 29,781

Interscholastic programs 157,380 2,416 4,337 3,507

Bilingual programs 97,311 18,254 - -

Total Instruction 3,714,098 553,175 204,763 175,142

Support Services:

Pupil:

Attendance and social work services 177,457 3,344 207 541

Health services 38,529 516 16,465 1,580

Psychological services 45,669 1,254 113,172 190

Speech and pathology services 183,507 15,144 4,420 773

Other services - - 4,190 5,929

Total Pupil 445,162 20,258 138,454 9,013

Instructional Staff:

Improvement of instruction services 4,009 19 37,309 6,707

Educational media services 106,787 8,336 11,890 13,673

Assessment and testing services - - - -

Total Instructional Staff 110,796 8,355 49,199 20,380

General Administration:

Board of education services 4,625 - 201,372 4,467

Executive administration services 218,132 43,026 4,281 741

Special area administration services - 5,824 - -

Total General Administration 222,757 48,850 205,653 5,208

School Administration:

Office of the principal services 491,293 98,560 1,178 2,117

Total School Administration 491,293 98,560 1,178 2,117

Business:

Fiscal services 92,920 8,451 15,424 7,628

Food services 155,878 10,628 2,874 233,449

Total Business 248,798 19,079 18,298 241,077


STATEMENT OF EXPENDITURES DISBURSED, BUDGET TO ACTUAL


EDUCATIONAL FUND

12

EXHIBIT D

Capital Other Non-Capitalized Termination

Outlay Objects Equipment Benefits Total Budget

38,304$ 11,983$ -$ -$ 3,020,990$ 3,034,454$

- 132 - - 1,393,402 1,389,285

- 2,033 - - 169,673 163,436

- - - - 115,565 89,350

38,304 14,148 - - 4,699,630 4,676,525

- - - - 181,549 200,949

- - - - 57,090 130,310

- - - - 160,285 48,234

- - - - 203,844 208,787

- - - - 10,119 20,792

- - - - 612,887 609,072

- 191 - - 48,235 55,255

- - - - 140,686 122,447

3,339 - - - 3,339 24,000

3,339 191 - - 192,260 201,702

- 11,628 - - 222,092 199,230

- 1,977 - - 268,157 180,720

- - - - 5,824 -

- 13,605 - - 496,073 379,950

- 1,404 - - 594,552 631,018

- 1,404 - - 594,552 631,018

8,247 - - - 132,670 156,118

1,915 - - - 404,744 410,338

10,162 - - - 537,414 566,456

(CONTINUED)

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Central:

Data processing services 119,314$ 22,267$ -$ -$

Total Central 119,314 22,267 - -

Other Support Services: - - 5,730 25

Total Other Support Services - - 5,730 25

Total Support Services 1,638,120 217,369 418,512 277,820

Community Services 7,650 15 1,000 -

Payments to Other Districts and

Governmental Units - - 108,275 -

Total Expenditures Disbursed 5,359,868$ 770,559$ 732,550$ 452,962$

EDUCATIONAL FUND




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EXHIBIT D

(CONCLUDED)



-$ -$ -$ -$ 141,581$ 140,229$

- - - - 141,581 140,229

- - - - 5,755 500

- - - - 5,755 500

13,501 15,200 - - 2,580,522 2,528,927

- - - - 8,665 8,050

- 628,611 - - 736,886 604,857

51,805$ 657,959$ -$ -$ 8,025,703$ 7,818,359$

15



Support Services:

Business:

Operations and maintenance of plant services 318,575$ 77,356$ 209,554$ 254,455$

Total Business 318,575 77,356 209,554 254,455

Total Support Services 318,575 77,356 209,554 254,455

Total Expenditures Disbursed 318,575$ 77,356$ 209,554$ 254,455$

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OPERATIONS AND MAINTENANCE FUND


EXHIBIT E



22,189$ -$ -$ -$ 882,129$ 962,254$

22,189 - - - 882,129 962,254

22,189 - - - 882,129 962,254

22,189$ -$ -$ -$ 882,129$ 962,254$

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Debt Services:

Principal retirements -$ -$ -$ -$

Interest on bonds - - - -

Other - - - -

Total Debt Services - - - -

Total Expenditures Disbursed -$ -$ -$ -$

18




DEBT SERVICE FUND


EXHIBIT F



-$ 1,318,464$ -$ -$ 1,318,464$ 1,224,722$

- 292,086 - - 292,086 389,366

- 1,628 - - 1,628 3,500

- 1,612,178 - - 1,612,178 1,617,588

-$ 1,612,178$ -$ -$ 1,612,178$ 1,617,588$

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Support Services:

Business:

Pupil transportation services 287,957$ 50,948$ 41,977$ 61,450$

Total Business 287,957 50,948 41,977 61,450

Total Support Services 287,957 50,948 41,977 61,450

Total Expenditures Disbursed 287,957$ 50,948$ 41,977$ 61,450$

20




TRANSPORTATION FUND


EXHIBIT G



181,657$ 1,227$ -$ -$ 625,216$ 721,385$

181,657 1,227 - - 625,216 721,385

181,657 1,227 - - 625,216 721,385

181,657$ 1,227$ -$ -$ 625,216$ 721,385$

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Instruction:

Regular programs -$ 32,172$ -$ -$

Special programs - 96,546 - -

Interscholastic programs - 6,244 - -

Bilingual programs - 2,078 - -

Total Instruction - 137,040 - -

Support Services:

Pupil:

Attendance and social work services - 2,556 - -

Health services - 7,198 - -

Psychological services - 629 - -

Speech pathology and audiology services - 2,591 - -

Total Pupil - 12,974 - -

Instructional Staff:

Improvement of instruction services - 19 - -

Educational media services - 17,063 - -

Total Instructional Staff - 17,082 - -

General Administration:

Board of education services - 310 - -

Executive administration services - 1,963 - -

Total General Administration - 2,273 - -

School Administration:

Office of the principal services - 33,293 - -

Total School Administration - 33,293 - -

Business:

Fiscal services - 17,621 - -

Operations and maintenance - 57,418 - -

of plant services

Pupil transportation services - 59,675 - -

Food services - 29,267 - -

Total Business - 163,981 - -

22

FOX LAKE GRADE SCHOOL DISTRICT NO.114



MUNICIPAL RETIREMENT/SOCIAL SECURITY FUND

EXHIBIT H



-$ -$ -$ -$ 32,172$ 36,341$

- - - - 96,546 91,623

- - - - 6,244 4,692

- - - - 2,078 1,247

- - - - 137,040 133,903

- - - - 2,556 2,642

- - - - 7,198 -

- - - - 629 504

- - - - 2,591 2,789

- - - - 12,974 5,935

- - - - 19 -

- - - - 17,063 18,857

- - - - 17,082 18,857

- - - - 310 2,336

- - - - 1,963 -

- - - - 2,273 2,336

- - - - 33,293 36,646

- - - - 33,293 36,646

- - - - 17,621 30,509

- - - - 57,418 68,202

- - - - 59,675 63,042

- - - - 29,267 29,022

- - - - 163,981 190,775

(CONTINUED)

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Central:

Data processing services -$ 21,963$ -$ -$

Total Central - 21,963 - -

Total Support Services - 251,566 - -

Community services - 312 - -

Payments for special education programs - - - -

Total Expenditures Disbursed -$ 388,918$ -$ -$




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EXHIBIT H

(CONCLUDED)



-$ -$ -$ -$ 21,963$ 22,614$

- - - - 21,963 22,614

- - - - 251,566 277,163

- - - - 312 180

- - - - - 16,425

-$ -$ -$ -$ 388,918$ 427,671$

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FOX LAKE GRADE SCHOOL DISTRICT NO. 114 NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2017

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fox Lake Grade School District No. 114’s (the “District”) accounting policies conform to the cash basis of accounting as defined by the Illinois State Board of Education Audit Guide. A. Principles Used to Determine Scope of Entity The reporting entity includes the governing board and all related organizations for which the District exercises oversight responsibility. The District has developed criteria to determine whether outside agencies with activities which benefit its citizens, including joint agreements which serve pupils from numerous districts, should be included within its financial reporting entity. The criteria includes, but is not limited to, whether the District exercises oversight responsibility (which includes financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations, and accountability for fiscal matters), scope of public service, and special financing relationships. The joint agreement has been determined not to be part of the reporting entity after applying the manifesting of oversight, scope of public service, and special financing relationships criteria and is therefore excluded from the accompanying financial statements because the District does not control the assets, operations, or management of the joint agreement. In addition, the District is not aware of any entity which would exercise such oversight as to result in the District being considered a component unit of the entity. B. Basis of Presentation – Fund Accounting The accounts of the District are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets and liabilities arising from cash transactions, fund balance, revenue received, and expenditures disbursed. The District maintains individual funds required by the State of Illinois. These funds are grouped as required for reports filed with the Illinois State Board of Education. District resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The following funds and account groups are used by the District.

Educational Fund – The Educational Fund is the general operating fund of the District. It is used to account for all transactions that are not specifically covered in another fund. Certain expenditures that must be charged to this fund include the direct costs of instructional programs, health and attendance services, lunch programs, all costs of administration, and related insurance costs. Certain revenues that must be credited to this fund include educational tax levies, tuition, and textbook rentals. Tort and Special Education are included in this fund.

Operations and Maintenance Fund – The Operations and Maintenance Fund is used to account for all costs of maintaining, improving, or repairing school buildings and property, renting buildings and property for school purposes, or paying of premiums for insurance on school buildings. Operations of this fund are generally financed by a special tax levied for these purposes and contributions and donations from private sources. Debt Service Fund – The Debt Service Fund is used to account for all principal, interest, and administrative costs for tax-financed bond payments. Operations of this fund are generally financed by a special tax levied for these purposes. Transportation Fund – The Transportation Fund is used to account for the costs associated with transporting pupils for any purpose. Revenue received for transportation purposes from any source must be deposited into this fund, including property taxes levied and state grants received for these purposes.

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JUNE 30, 2017 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Municipal Retirement/Social Security Fund – The Municipal Retirement/Social Security Fund is used to account for costs of providing retirement benefits under Municipal Retirement Fund and Social Security if there are separate taxes levied for these purposes. If separate taxes are not levied for these purposes, then the payments shall be charged to the fund where the salaries are charged. Working Cash Fund – The Working Cash Fund is used to account for a separate tax levied for working cash purposes and for any bonds sold for this purpose. Cash available in this fund may be loaned to any fund of the District.

Agency Funds – The Agency Funds are used to account for Student Activity Funds and the Flexible Benefit Account, which are assets held by the District as an agent for the students and employees. These funds are custodial in nature and do not involve the measurement of the results of operations. The amounts due to the Student Activity Fund organizations and the Flexible Benefit Account are equal to the assets.

General Fixed Assets Account Group – The General Fixed Assets Account Group is used to record physical assets of the District that have a long-term (i.e. more than one year) period of usefulness.

General Long-Term Debt Account Group – The General Long-Term Debt Account Group is used

to record total bonded debt and other long-term debt of the District. Measurement Focus The financial statements of all funds, except the agency fund and two account groups, focus on the measurement of spending or “financial flow” and the determination of changes in financial position rather than upon net income determination. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of “available spendable resources”. Fund operating statements present increases (cash receipts and other financing sources) and decreases (cash disbursements and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period. General Fixed Assets and General Long-Term Debt Account Groups The accounting and reporting treatment applied to the capital assets and long-term liabilities associated with a fund are determined by its measurement focus. Capital assets used in operations are accounted for in the General Fixed Assets Account Group rather than in the funds. Long-term liabilities expected to be financed from funds are accounted for in the General Long-Term Debt Account Group, not in the funds. The two account groups are not “funds”. They are concerned only with the measurement of financial position. They are not involved with measurement of results of operations. C. Basis of Accounting Basis of accounting refers to when revenues received and expenditures disbursed are recognized in the accounts and how they are reported on the financial statements. The District maintains its accounting records for all funds and account groups on the cash basis of accounting under guidelines prescribed by the Illinois State Board of Education. Accordingly, revenues are recognized and recorded in the accounts when cash is received. In the same manner, expenditures are recognized and recorded upon the disbursement of cash. Assets of a fund are only recorded when a right to receive cash exists which arises from a previous cash transaction. Liabilities of a fund, similarly, result from previous cash transactions.

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JUNE 30, 2017

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Cash basis financial statements omit recognition of receivables and payables and other accrued and deferred items that do not arise from previous cash transactions. Proceeds from sales of bonds are included as other financing sources in the appropriate fund on the date received. Related bond principal payable in the future is recorded at the same time in the General Long-Term Debt Account Group. If the District utilized accounting principles generally accepted in the United States of America, the basic financial statements would be replaced with government-wide financial statements and fund financial statements. The fund financial statements would use the modified accrual basis of accounting. The government-wide financial statements would be presented on the accrual basis of accounting. D. Cash and Deposits

Cash and deposits are considered to be cash on hand, demand deposits, money market accounts and non-negotiable certificates of deposit. E. Capital Assets Capital assets have been acquired for general governmental purposes. At the time of purchase, capital assets are recorded as disbursements in the fund for which the asset was purchased and capitalized at cost in the General Fixed Assets Account Group. Donated capital assets are stated at estimated fair market value as of the date of acquisition. Capital assets are defined by the District as assets with an initial individual cost of more than $500 and an estimated useful life in excess of one year or more. Such assets are recorded at historical cost or estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Depreciation of capital assets is provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows:

Assets Years Improvements, other than buildings 20 Buildings 40 Equipment 5-10

F. Total Memorandum Only The “Total Memorandum Only” column represents the aggregation (by addition) of the line item amounts reported for each fund type and account group. No consolidations or other eliminations were made in arriving at the totals; thus they do not present consolidated information. These totals are presented only to facilitate financial analysis and are not intended to reflect the financial position or results of operations of the District as a whole. G. Corporate Replacement Taxes Corporate replacement taxes are first allocated to the Municipal Retirement/Social Security Fund to the extent required by Illinois law, then the balance is allocated to the Educational Fund at the discretion of the District.

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JUNE 30, 2017

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) H. Fund Balance Reporting Governmental fund balances are to be classified into five major classifications: Nonspendable, Restricted, Committed, Assigned, and Unassigned. Nonspendable – the nonspendable fund balance classification includes amounts that cannot be

spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example inventories and prepaid amounts.

Restricted – the restricted fund balance classification refers to amounts that are subject to outside

restrictions, not controlled by the District. Items such as restrictions imposed by creditors (such as debt covenants), grantors, contributors, or laws or regulations of other governments, or imposed by law through constitutional provisions or enabling legislation. Special Revenue Funds are by definition restricted for those specified purposes. The District has several revenue sources received within different funds that also fall into these categories –

Special Education – revenues and the related expenditures of this restricted tax levy are accounted for in the Educational Fund.

State Grants – proceeds from state grants and the related expenditures have been included in the Educational Fund and Transportation Fund.

Federal Grants – proceeds from federal grants and the related expenditures have been included in the Educational Fund.

Social Security – expenditures and the related expenditures of this restricted tax levy are accounted for in the Municipal Retirement/Social Security Fund.

Committed – the committed fund balance refers to amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the school board. Those committed amounts cannot be used for any other purpose unless the government removes or changes the specified use by taking the same type of formal action it employed to previously commit those amounts. Assigned – the assigned fund balance classification refers to amounts that are constrained by the District’s intent to be used for specific purposes, but are neither restricted nor committed. Assignments may take place after the end of the reporting period. Unassigned – the unassigned fund balance classification is the residual classification for amounts in the General Fund for amounts that have not been restricted, committed, or assigned to specific purposes within the General Fund.

Expenditures of fund balances – unless specifically identified, expenditures reduce restricted balances first, then to committed balances, next assigned balances, and finally act to reduce unassigned balances. Expenditures for a specifically identified purpose will act to reduce the specific classification of fund balance that is identified.

NOTE 2 – RESERVED FUND BALANCES Reserved fund balances are those balances that are reserved for a specific purpose, other than the regular purpose of any given fund. Unreserved Fund Balances are all balances that are not reserved for a specific purpose other than the specified purpose of a fund.

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JUNE 30, 2017

NOTE 2 – RESERVED FUND BALANCES (CONT’D) Social Security Tax Levy Cash receipts and the related cash disbursements of this reserved tax levy are accounted for in the Illinois Municipal Retirement/Social Security Fund. The Social Security portion of the fund balance at June 30, 2017, is $90,146. NOTE 3 – DESIGNATED FUND BALANCE The District has designated receipts from the 2016 tax levy for expenditures to be incurred during fiscal year ending June 30, 2018. At June 30, 2017, the following balances were designated:

Fund Amount

Educational 2,450,117$

Operations and Maintenance 503,890

Debt Service 854,151

Transportation 124,365

Municipal Retirement/Social Security 185,195

Working Cash 45,660

Total 4,163,378$

NOTE 4 – BUDGETS AND BUDGETARY ACCOUNTING Budgets and Budgetary Accounting The budget for all funds is prepared on the cash basis of accounting which is the same basis that is used in financial reporting. This allows for comparability between budget and actual amounts. This is an acceptable method in accordance with Chapter 105, Section 5/17-1 of the Illinois Compiled Statutes. The budget was passed on September 20, 2016. For each fund, total fund disbursements may not legally exceed the budgeted disbursements. The budget lapses at the end of each fiscal year. The District follows these procedures in establishing the budgetary data reflected in the financial statements:

1. Prior to July 1, the Superintendent submits to the Board of Education a proposed operating budget for the fiscal year commencing on that date. The operating budget includes proposed expenditures and the means of financing them.

2. A public hearing is conducted to obtain taxpayer comments. 3. Prior to October 1, the budget is legally adopted through passage of a resolution. 4. Formal budgetary integration is employed as a management control device during the

year. 5. The Board of Education may make transfers between the various items in any fund not

exceeding in the aggregate 10% of the total of such fund as set forth in the budget. 6. The Board of Education may amend the budget (in other ways) by the same procedures

required of its original adoption.

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JUNE 30, 2017 NOTE 4 – BUDGETS AND BUDGETARY ACCOUNTING (CONT’D) Expenditures in Excess of Budget The District over-expended its budget in the Educational Fund by $207,344 (excluding unbudgeted on-behalf payments). NOTE 5 – PROPERTY TAXES The District’s property tax is levied each year on all taxable real property located in the District on or before the last Tuesday in December. The 2016 levy was passed by the Board on December 14, 2016. Property taxes attach as an enforceable lien on property as of January 1 and are payable in two installments on approximately June 1 and September 1. The District receives significant distributions of tax receipts approximately one month after these dates. Taxes recorded in these financial statements are from the 2016 and 2015 tax levies. The following are the tax rate limits permitted by the School Code and by local referendum and the actual rates levied per $100 of assessed valuation:

Tax Rate Limits 2016 Levy 2015 Levy

Educational 3.5000 2.3373 2.5285

Tort As needed 0.0000 0.0000

Special Education 0.4000 0.0409 0.0426

Operations and Maintenance 0.5500 0.4903 0.5290

Transportation As needed 0.1210 0.0044

Municipal Retirement As needed 0.0639 0.0660

Social Security As needed 0.1163 0.1189

Debt Service As needed 0.8312 0.8517

SEDOL Municipal Retirement As needed 0.0000 0.0082

Working Cash 0.05 0.0444 0.0460

4.0454 4.1953

A summary of the past two years’ assessed valuation, tax rates, and extensions follows:

Tax Year

Equalized

Assessed Valuation

Rates Extensions Rates Extensions

Purpose

Educational 2.3373 4,668,810$ 2.5285 4,828,782$

Tort 0.0000 - 0.0000 -

Special Education 0.0409 81,673 0.0426 81,085

Operations and Maintenance 0.4903 979,451 0.5290 1,010,353

Transportation 0.1210 241,734 0.0044 8,329

Municipal Retirement 0.0639 127,678 0.0660 126,008

Social Security 0.1163 232,304 0.1189 227,005

Debt Service 0.8312 1,660,290 0.8517 1,626,656

SEDOL Municipal Retirement 0.0000 - 0.0082 15,739

Working Cash 0.0444 88,759 0.0460 88,465

4.0454 8,080,699$ 4.1953 8,012,422$

$190,981,898

2016 2015

$199,749,026

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JUNE 30, 2017 NOTE 6 – CASH AND DEPOSITS The District has adopted a formal cash and investment management policy. The financial institutions in which accounts are made must be approved by the Board of Education. Separate deposit and investment accounts are not maintained for all District funds; instead, the individual funds maintain their balances in the common accounts, with accounting records being maintained to show the portion of the common account balance attributable to each participating fund. At June 30, 2017, the carrying amount of the District’s cash and deposits totaled $4,104,297 ($4,067,830 governmental and $36,467 fiduciary), which includes $150 in the governmental petty cash fund. Bank balances totaling $4,272,928 as follows:

Governmental Fiduciary Total

Cash and Deposits 4,227,123$ 45,805$ 4,272,928$

For disclosure purposes, the amounts are classified as follows:

Less Than Six Months to One Year to

Cash and Deposits Amount Six Months One Year Three Years

Cash with Financial Institutions 455,778$ 455,778$ -$ -$

Non-negotiable Certificates of Deposit 600,000 300,000 300,000 -

ISDLAF+ 2,217,150 2,217,150 - - Term Series 1,000,000 1,000,000 - -

Total 4,272,928$ 3,972,928$ 300,000$ -$

Maturities

Interest Rate Risk. The District limits its exposure to losses arising from increasing interest rates by limiting the amount of cash held for a period longer than one year. The weighted average of the portfolio maturity was 37.93 days and the weighted portfolio yield was 0.982%.

Credit Risk. The District is allowed to invest in securities as authorized by Chapter 30, Sections 23 5/2, and 23 5/6, and Chapter 105, Section 5/8-7 of the Illinois Compiled Statutes. These Statutes authorize the District to invest in obligations of the U.S. Treasury and U.S. Agencies’ accounts and any other investments constituting direct obligations of any bank as defined by the Illinois Bank Act, certain short-term commercial paper, accounts of federally insured savings and loans, and the state treasurers’ investment pool. The District has no cash and investment policy that would further limit its cash and investment choices.

The Illinois School District Liquid Asset Fund Plus (ISDLAF+) is a not-for-profit investment trust fund formed pursuant to the Illinois Municipal Code and managed by a Board of Trustees elected from participating members. This fund is not registered with the SEC as an investment company, but does operate in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940. Investments are valued at net asset value (NAV) per share price, which is the price at which the investment could be sold, as determined by the pool.

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JUNE 30, 2017 NOTE 6 – CASH AND DEPOSITS (CONT’D) Custodial Risk. Custodial credit risk is the risk that, in the event of the failure of the bank or the counterparty, the District will not be able to recover the value of its deposits that are in the possession of an outside party. The bank balances of $4,272,928 are as follows:

Depository Account Bank Balance

FDIC Insured 906,228$

Uncollateralized 3,366,700

Total Deposits 4,272,928$

NOTE 7 – CHANGES IN CAPITAL ASSETS

A summary of changes in capital assets follows:

Balance Balance

July 1, 2016 Additions Deletions June 30, 2017

Capital assets not being depreciated:

Land 57,292$ -$ -$ 57,292$

Total capital assets not being depreciated 57,292 - - 57,292

Capital assets being depreciated:

Buildings 17,376,946 - - 17,376,946

Improvements other than buildings 398,913 - - 398,913

Equipment other than transportation 1,869,395 73,994 - 1,943,389

Transportation equipment 814,013 181,657 - 995,670

Total capital assets being depreciated 20,459,267 255,651 - 20,714,918

Less accumulated depreciation for:

Buildings 7,375,039 409,635 - 7,784,674

Improvements other than buildings 336,315 11,588 - 347,903

Equipment other than transportation 1,368,507 104,634 - 1,473,141

Transportation equipment 495,998 72,888 - 568,886

Total accumulated depreciation 9,575,859 598,745 - 10,174,604

Net capital assets being depreciated 10,883,408 (343,094) - 10,540,314

Net governmental activities capital assets 10,940,700$ (343,094)$ -$ 10,597,606$

The District adjusted the carrying values of its capital assets being depreciated and accumulated depreciation at July 1, 2016, by ($125,673) based on the report of a capital asset appraiser.

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JUNE 30, 2017 NOTE 8 – RETIREMENT FUND COMMITMENTS A. Teachers’ Retirement System of the State of Illinois (TRS) General Information about the Pension Plan Plan Description The District participates in the Teachers’ Retirement System of the State of Illinois (TRS). TRS is a cost-sharing multiple-employer defined benefit pension plan that was created by the Illinois legislature for the benefit of Illinois public school teachers employed outside the city of Chicago. TRS members include all active nonannuitants who are employed by a TRS-covered employer to provide services for which teacher licensure is required. The Illinois Pension Code outlines the benefit provisions of TRS, and amendments to the plan can be made only by legislative action with the Governor’s approval. The TRS Board of Trustees is responsible for the system’s administration. TRS issues a publicly available financial report that can be obtained at www.trsil.org; by writing to TRS at 2815 West Washington Street, P. O. Box 19253, Springfield, IL 62794; or by calling (888) 678-3675. Benefits Provided TRS provides retirement, disability, and death benefits. Tier I members have TRS or reciprocal system service prior to January 1, 2011. Tier I members qualify for retirement benefits at age 62 with five years of service, at age 60 with 10 years, or age 55 with 20 years. The benefit is determined by the average of the four highest years of creditable earnings within the last 10 years of creditable service and the percentage of average salary to which the member is entitled. Most members retire under a formula that provides 2.2 percent of final average salary up to a maximum of 75 percent with 34 years of service. Disability and death benefits are also provided. Tier II members qualify for retirement benefits at age 67 with 10 years of service, or a discounted annuity can be paid at age 62 with 10 years of service. Creditable earnings for retirement purposes are capped and the final average salary is based on the highest consecutive eight years of creditable service rather than the last four. Disability provisions for Tier II are identical to those of Tier I. Death benefits are payable under a formula that is different from Tier I. Essentially all Tier I retirees receive an annual 3 percent increase in the current retirement benefit beginning January 1 following the attainment of age 61 or on January 1 following the member’s first anniversary in retirement, whichever is later. Tier II annual increases will be the lesser of three percent of the original benefit or one-half percent of the rate of inflation beginning January 1 following attainment of age 67 or on January 1 following the member’s first anniversary in retirement, whichever is later. Contributions The State of Illinois maintains the primary responsibility for funding TRS. The Illinois Pension Code, as amended by Public Act 88-0593 and subsequent acts, provides that for years 2010 through 2045, the minimum contribution to the System for each fiscal year shall be an amount determined to be sufficient to bring the total assets of the system up to 90 percent of the total actuarial liabilities of the system by the end of fiscal year 2045.

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JUNE 30, 2017

NOTE 8 – RETIREMENT FUND COMMITMENTS (CONT’D) Contributions from active members and TRS contributing employers are also required by the Illinois Pension Code. The contribution rates are specified in the pension code. The active member contribution rate for the year ended June 30, 2016, was 9.4 percent of creditable earnings. On July 1, 2016, the rate dropped to 9.0 percent of pay due to the expiration of the Early Retirement Option (ERO). The member contribution, which may be paid on behalf of employees by the employer, is submitted to TRS by the employer.

On-behalf contributions to TRS. The State of Illinois makes employer pension contributions on behalf of the District. For the year ended June 30, 2017, State of Illinois contributions recognized by the District were based on the State’s proportionate share of the collective net pension liability associated with the District, and the District recognized revenue and expenditures of $3,420,404 in pension contributions from the State of Illinois. 2.2 formula contributions. Employers contribute 0.58 percent of total creditable earnings for the 2.2 formula change. The contribution rate is specified by statute. Contributions for the year ended June 30, 2017, were $23,813, and are deferred because they were paid after the June 30, 2016, measurement date. Federal and special trust fund contributions. When TRS members are paid from federal and special trust funds administered by the employer, there is a statutory requirement for the employer to pay an employer pension contribution from those funds. Under a policy adopted by the TRS Board of Trustees that has been in effect since the fiscal year ended June 30, 2006, employer contributions for employees paid from federal and special trust funds will be the same as the state contribution rate to TRS. Public Act 98-0674 now requires the two rates to be the same. For the year ended June 30, 2017, the employer pension contribution was 38.54 percent of salaries paid from federal and special trust funds. For the year ended June 30, 2017, salaries totaling $104,420 were paid from federal and special trust funds that required employer contributions of $21,506. These contributions are deferred because they were paid after the June 30, 2016, measurement date. Employer retirement contributions. Under GASB Statement No. 68, contributions that an employer is required to pay because of a TRS member retiring are categorized as specific liability payments. The District is required to make a one-time contribution to TRS for members retiring under the Early Retirement Option (ERO). The payments vary depending on the member’s age and salary. The maximum employer ERO contribution under the program that ended June 30, 2016, is 146.5 percent and applies when the member is age 55 at retirement. For the year ended June 30, 2017, the employer paid $-0- to TRS for employer ERO contributions for retirements that occurred before July 1, 2016. The District is also required to make a one-time contribution to TRS for members granted salary increases over 6 percent if those salaries are used to calculate a retiree’s final average salary. A one-time contribution is also required for members granted sick leave days in excess of the normal annual allotment if those days are used as TRS service credit. For the year ended June 30, 2017, the employer paid $8,063 to TRS for employer contributions due on salary increases in excess of 6 percent and $-0- for sick leave days granted in excess of the normal annual allotment.

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JUNE 30, 2017

NOTE 8 – RETIREMENT FUND COMMITMENTS (CONT’D) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017, the District reported a liability for its proportionate share of the net pension liability (first amount shown below) that reflected a reduction for state pension support provided to the District. The state’s support and total are for disclosure purposes only. The amount recognized by the District as its proportionate share of the net pension liability, the related state support, and the total portion of the net pension liability that was associated with the District were as follows:

District's proportionate share of the net pension liability 1,241,499$

State's proportionate share of the net pension liability associated with the District 34,361,204

Total 35,602,703$

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, and rolled forward to June 30, 2016. The District’s proportion of the net pension liability was based on the District’s share of contributions to TRS for the measurement year ended June 30, 2016, relative to the contributions of all participating TRS employers and the state during that period. At June 30, 2016, the employer’s proportion was 0.00157 percent, which was a decrease of 0.00014 from its proportion measured as of June 30, 2015. For the year ended June 30, 2017, the District recognized pension expense of $3,465,723 and revenue of $3,420,404 for support provided by the state. At June 30, 2016, the employer reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows

of Resources of Resources

Differences between expected and actual experience 9,180$ 842$ Net difference between projected and actual earnings

on pension plan investments 35,075 -

Changes of assumptions 106,626 -

Changes in proportion and differences between employer

contributions and proportionate share of contributions - 138,173

Employer contributions subsequent to the measurement

date 45,319 -

Total 196,200$ 139,015$

$45,319 reported as deferred outflows of resources related to pensions resulting from employer contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the reporting 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 (10,416)$

2019 (10,416)

2020 13,163

2021 18,046

2022 1,489

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JUNE 30, 2017 NOTE 8 – RETIREMENT FUND COMMITMENTS (CONT’D) Actuarial Assumptions The total pension liability in the June 30, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.50 percent Salary increases varies by amount of service credit Investment rate of return 7.00 percent, net of pension plan investment expense, including inflation Mortality rates were based on the RP-2014 White Collar Table with adjustments as appropriate for TRS experience. The rates are used on a fully-generational basis using projection table MP-2014. For the June 30, 2016, valuation, the investment return assumption was lowered from 7.50 percent to 7.0 percent. Salary increase assumptions were lowered from their 2015 levels. Other assumptions were based on the 2015 experience analysis which increased retirement rates, improved mortality assumptions and made other changes. The long-term expected rate of return on pension plan investments 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. The target allocation and best estimates of arithmetic real rates of return for each major asset class that were used by the actuary are summarized in the following table:

Target Long-Term Expected

Asset Class Allocation Real Rate of Return

U.S. equities large cap 14.4% 6.94%

U.S. equities small/mid cap 3.6% 8.09%

International equities developed 14.4% 7.46%

Emerging market equities 3.6% 10.15%

U.S. bonds core 10.7% 2.44%

International debt developed 5.3% 1.70%

Real estate 15.0% 5.44%

Commodities (real return) 11.0% 4.28%

Hedge funds (absolute return) 8.0% 4.16%

Private equity 14.0% 10.63%

Total 100.0%

Discount Rate

At June 30, 2016, the discount rate used to measure the total pension liability was a blended rate of 6.83 percent, which was a change from the June 30, 2015, rate of 7.47 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions, employer contributions, and state contributions will be made at the current statutorily-required rates.

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JUNE 30, 2017

NOTE 8 – RETIREMENT FUND COMMITMENTS (CONT’D) Based on those assumptions, TRS’s fiduciary net position at June 30, 2016, was not projected to be available to make all projected future benefit payments of current active and inactive members and all benefit recipients. Tier I’s liability is partially-funded by Tier II members, as the Tier II member contribution is higher than the cost of Tier II benefits. Due to this subsidy, contributions from future members in excess of the service cost are also included in the determination of the discount rate. Despite the subsidy, all projected future payments were not covered, so a slightly lower long-term expected rate of return on TRS investments was applied to all periods of projected benefit payments to determine the total pension liability. At June 30, 2015, the discount rate used to measure the total pension liability was 7.47 percent. The discount rate was lower than the actuarially-assumed rate of return on investments that year as well because TRS’s fiduciary net position and the subsidiary provided by Tier II were sufficient to cover all projected benefit payments. Sensitivity of the Employer’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the District’s proportionate share of the net pension liability calculated using the discount rate of 6.83 percent, as well as what the District’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.83 percent) or 1-percentage-point higher (7.83 percent) than the current rate.

1% Decrease Current Discount Rate 1% Increase

(5.83%) (6.83%) (7.83%)

District's proportionate share

of the net pension liability1,518,404$ 1,241,499$ 1,015,341$

TRS fiduciary net position Detailed information about the TRS’s fiduciary net position as of June 30, 2016, is available in the separately issued TRS Comprehensive Annual Financial Report.

B. Illinois Municipal Retirement Fund (IMRF) IMRF Plan Description. The District’s defined benefit pension plan for regular employees provides retirement and disability benefits, post retirement increases, and death benefits to plan members and beneficiaries. The District’s plan is managed by the Illinois Municipal Retirement Fund (IMRF), the administrator of a multi-employer public pension fund. A summary of IMRF’s pension benefits is provided in the “Benefits Provided” section of this document. Details of all benefits are available from IMRF. Benefit provisions are established by statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly available Comprehensive Annual Financial Report that includes financial statements, detailed information about the pension plan’s fiduciary net position, and required supplementary information. The report is available for download at www.imrf.org. Benefits Provided IMRF has three benefit plans. The vast majority of IMRF members participate in the Regular Plan (RP). The Sheriff’s Law Enforcement Personnel (SLEP) plain is for sheriffs, deputy sheriffs, and selected police chiefs. Counties could adopt the Elected County Official (ECO) plan for officials elected prior to August 8, 2011, (the ECO plan was closed to new participants after that date).

38

http://www.imrf.org/


JUNE 30, 2017 NOTE 8 – RETIREMENT FUND COMMITMENTS (CONT’D) All three IMRF benefit plans have two tiers. Employees hired before January 1, 2011, are eligible for Tier 1 benefits. Tier 1 employees are vested for pension benefits when they have at least eight years of qualifying service credit. Tier 1 employees who retire at age 55 (at reduced benefits) or after age 60 (at full benefits) with eight years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any consecutive 48 months within the last 10 years of service, divided by 48. Under Tier 1, the pension is increased by 3% of the original amount on January 1 every year after retirement. Employees hired on or after January 1, 2011, are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participating employees who retire at age 62 (at reduced benefits) or after age 67 (at full benefits) with ten years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any 96 consecutive months within the last 10 years of service, divided by 96. Under Tier 2, the pension is increased on January 1 every year after retirement, upon reaching age 67, by the lessor of:

3% of the original pension amount, or

½ of the increase in the Consumer Price Index of the original pension amount. Employees Covered by Benefit Terms As of December 31, 2016, the following employees were covered by the benefit terms:

Retirees and Beneficiaries currently receiving benefits 35

Inactive Plan Members entitled to, but not yet receiving, benefits 111

Active Plan Members 61

207

Contributions As set by statute, the District’s Regular Plan Members are required to contribute 4.50 percent of their annual covered salary. The statute requires employers to contribute the amount necessary, in addition to member contributions, to finance the retirement coverage of its own employees. The District’s annual contribution rate for calendar year 2016 was 11.40 percent. For the fiscal year ended June 30, 2017, the District contributed $194,725 to the plan. The District also contributes for disability benefits, death benefits, and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by IMRF’s Board of Trustees, while the supplemental retirement benefits rate is set by statute. Net Pension Liability The District’s net pension liability was measured as of December 31, 2016. The total pension liability used to calculate the net pension liability was determined by an actuarial evaluation as of that date.

39


JUNE 30, 2017

NOTE 8 – RETIREMENT FUND COMMITMENTS (CONT’D) Actuarial Assumptions The following are the methods and assumptions used to determine total pension liability at December 31, 2016:

The Actuarial Cost Method used was Entry Age Normal.

The Asset Valuation Method used was Market Value of Assets.

The Inflation Rate was assumed to be 2.75%.

Salary Increases were expected to be 3.75% to 14.50%, including inflation.

The Investment Rate of Return was assumed to be 7.50%.

Projected Retirement Age was from an Experience-based Table of Rates, specific to the type of eligibility condition, last updated for the 2014 valuation according to an experience study from years 2011 to 2013.

The IMRF-specific rates for Mortality (for non-disabled retirees) were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience.

For Disabled Retirees, an IMRF-specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). The IMRF-specific rates were developed from the RP-2014 Disabled Retirees Mortality Table, applying the same adjustments that were applied for non-disabled lives.

For Active Members, an IMRF- specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). The IMRF-specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience.

The long-term expected rate of return on pension plan investments 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 to the target asset allocation percentage and adding expected inflation. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table as of December 31, 2016:

Long-Term

Portfolio Expected

Target Real Rate

Asset Class Percentage of Return

Domestic Equity 38% 6.85%

International Equity 17% 6.75%

Fixed Income 27% 3.00%

Real Estate 8% 5.75%

Alternative Investments 9% 2.65% - 7.35%

Cash Equivalents 1% 2.25%

Total 100%

40


JUNE 30, 2017 NOTE 8 – RETIREMENT FUND COMMITMENTS (CONT’D) Single Discount Rate A Single Discount Rate of 7.50% was used to measure the total pension liability. The projection of cash flow used to determine this Single Discount Rate assumed that the plan members’ contributions will be made at the current contribution rate, and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. The Single Discount Rate reflects:

1. The long-term expected rate of return on pension plan investments (during the period in which the fiduciary net position is projected to be sufficient to pay benefits), and

2. The tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rating (which is published by the Federal Reserve) as of the measurement date (to the extent that the contributions for use with the long-term expected rate of return are not met).

For the purpose of the most recent valuation, the expected rate of return on plan investments is 7.50%, the municipal bond rate is 3.78%, and the resulting single discount rate is 7.50%. Changes in Net Pension Liability

Total Plan Net

Pension Fiduciary Pension

Liability Net Position Liability

(A) (B) (A) - (B)

Balances at December 31, 2015 5,981,132$ 4,951,789$ 1,029,343$

Changes for the year:

Service Cost 184,418 - 184,418

Interest on the Total Pension Liability 442,196 - 442,196

Change of Benefit Terms - - -

Differences Between Expected and Actual

Experience of the Total Pension Liability 82,633 - 82,633

Changes of Assumptions (14,344) - (14,344)

Contributions - Employer - 189,833 (189,833)

Contributions - Employees - 76,125 (76,125)

Net Investment Income - 334,409 (334,409)

Benefits Payments, including Refunds of Employee Contributioins (323,257) (323,257) -

Other (Net Transfer) - 47,336 (47,336)

Net Changes 371,646 324,446 47,200

Balances at December 31, 2016 6,352,778$ 5,276,235$ 1,076,543$

41


JUNE 30, 2017

NOTE 8 – RETIREMENT FUND COMMITMENTS (CONT’D) Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the plan’s net pension liability, calculated using a Single Discount Rate of 7.50%, as well as what the plan’s net pension liability would be if it were calculated using a Single Discount Rate that is 1% lower or 1% higher:

1% Decrease Current Discount Rate 1% Increase

(6.50%) (7.50%) (8.50%)

Total pension liability 7,124,141$ 6,352,778$ 5,713,568$

Plan fiduciary net position 5,276,235 5,276,235 5,276,235

Net pension liability 1,847,906$ 1,076,543$ 437,333$

Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2017, the District recognized pension expense of $194,725. At June 30, 2017, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred Net Deferred

Outflows of Inflows of Outflows of

Deferred Amounts Related to Pensions Resources Resources Resources

Deferred amounts to be recognized in pensionexpense in future periods

Differences between expected and actual experience 55,634$ 25,753$ 29,881$

Changes of assumptions 14,837 9,657 5,180

Net difference between projected and actual

earnings on pension plan investments 259,578 - 259,578

Total deferred amounts to be recognized in pension

expense in future periods 330,049 35,410 294,639

Pension contributions made subsequent to the

measurement date 90,569 - 90,569

Total Deferred Amounts Related to Pensions 420,618$ 35,410$ 385,208$

$90,569 reported as deferred outflows of resources related to pensions resulting from employer contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the reporting year ending June 30, 2018.

42


JUNE 30, 2017 NOTE 8 – RETIREMENT FUND COMMITMENTS (CONT’D) Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future periods as follows:

Year Ended

December 31: Amount

2017 101,759$

2018 108,197

2019 77,361

2020 7,322

2021 -

Thereafter -

Total 294,639$

C. Aggregate Pension Amounts For the year ended June 30, 2017, aggregate pension amounts are as follows:

TRS IMRF Total

Deferred Outflows of Resources 196,200$ 420,618$ 616,818$

Net Pension Liability 1,241,499 1,076,543 2,318,042

Deferred Inflows of Resources 139,015 35,410 174,425

Pension Expense, Net of State Support 45,319 194,725 240,044

NOTE 9 – OTHER POST-EMPLOYMENT BENEFITS

A. Teacher Health Insurance Security (THIS) Fund

Contributions

The District participates in the Teacher Health Insurance Security (THIS) Fund, a cost-sharing, multiple-employer defined benefit post-employment healthcare plan that was established by the Illinois legislature for the benefit of retired Illinois public school teachers employed outside the city of Chicago. The THIS Fund provides medical, prescription, and behavioral health benefits, but it does not provide vision, dental, or life insurance benefits to annuitants of the Teachers’ Retirement System (TRS). Annuitants not enrolled in Medicare may participate in the state-administered participating provider option plan or choose from several managed care options. Annuitants who are enrolled in Medicare Parts A and B may be eligible to enroll in a Medicare Advantage plan. The State Employees Group Insurance Act of 1971 (5 ILCS 375) outlines the benefit provisions of THIS Fund and amendments to the plan can be made only by legislative action with the Governor’s approval. The plan is administered by the Illinois Department of Central Management Services (CMS) with the cooperation of TRS. Section 6.6 of the State Employees Group Insurance Act of 1971 requires all active contributors to TRS who are not employees of the state to make a contribution to the THIS Fund.

43


JUNE 30, 2017 NOTE 9 – OTHER POST-EMPLOYMENT BENEFITS (CONT’D) The percentage of employer required contributions in the future will not exceed 105 percent of the percentage of salary actually required to be paid in the previous fiscal year.

On-Behalf Contributions to the THIS Fund The State of Illinois makes employer retiree health insurance contributions on behalf of the employer. State contributions are intended to match contributions to the THIS Fund from active members which were 1.12 percent of pay during the year ended June 30, 2017. State of Illinois contributions were $45,924, and the District recognized revenue and expenditures of this amount during the year.

Employer Contributions to the THIS Fund The District also makes contributions to the THIS Fund. The employer THIS Fund contribution was 0.84 percent during the year ended June 30, 2017. For the year ended June 30, 2017, the employer paid $34,443 to the THIS Fund, which was 100 percent of the required contribution.

Further information on the THIS Fund The publicly available financial report of the THIS Fund may be found on the website of the Illinois Auditor General (http://www.auditor.illinois.gov/Audit-Reports/ABC-List.asp). The current reports are listed under “Central Management Services” (http://www.auditor.illinois.gov/Audit-Reports/CMS-THISF.asp). Prior reports are available under “Healthcare and Family Services” (http://www.auditor.illinois.gov/Audit-Reports/HEALTHCARE-FAMILY-SERVICES-Teacher-Health-Ins-Sec-Fund.asp). NOTE 10 – GENERAL LONG-TERM DEBT Changes in general long-term debt are summarized as follows:

Balance Balance

July 1, 2016 Issued Retired June 30, 2017

General Obligation Limited Tax

Capital Appreciation School Bonds

Dated 4/29/04 570,830$ -$ 98,464$ 472,366$

General Obligation School Bonds

Dated 10/25/12 2,370,000 - 460,000 1,910,000

General Obligation Refunding 10/6/15 4,245,000 - 760,000 3,485,000

7,185,830$ -$ 1,318,464$ 5,867,366$

On April 29, 2004, the District issued $1,459,463 in General Obligation Limited Tax Capital Appreciation School Bonds. The bond’s interest rate ranges from 4.7% to 6.7%. Interest is due on the bonds every July 1 and January 1 beginning January 1, 2010, and continuing until January 1, 2023. Principal payments are due every January 1 beginning January 1, 2010, and ending January 1, 2023. On August 13, 2007, the District issued $7,695,000 (including $173,992 Working Cash Bonds) in General Obligation School Bonds to advance refund $7,165,000 of outstanding 2001 Series Building Bonds. Securities were purchased and deposited into an irrevocable trust with an escrow agent to provide for all future debt service payments of the debt refunded. The bonds’ interest rate ranges from 4.00% to 4.125%. Interest is due on the bonds every July 1 and January 1 beginning January 1, 2008, and continuing until January 1, 2021. Principal payments are due every January 1 beginning January 1, 2008, and ending January 1, 2021. This issue was refunded by the Refunding Bonds issued October 6, 2015.

44


JUNE 30, 2017 NOTE 10 – GENERAL LONG-TERM DEBT (CONT’D) On October 25, 2012, the District issued $3,740,000 in General Obligation School Bonds. The bonds’ interest rate ranges from 2.00% to 3.5%. Interest is due on the bonds every July 1 and January 1 beginning July 1, 2013, and continuing until January 1, 2021. Principal payments are due every January 1 beginning January 1, 2014, and ending January 1, 2021. On October 6, 2015, the District issued $4,310,000 in General Obligation Refunding Bonds. The bonds’ interest rate ranges from 2.00% to 3.00%. Interest is due on the bonds every July 1 and January 1 continuing until January 1, 2021. Principal payments are due every January 1 beginning January 1, 2016, and ending January 1, 2021. The District defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the District’s financial statements. At June 30, 2017, $3,490,000 of bonds outstanding are considered defeased. Legal Debt Margin The District is subject to the Illinois School Code, which limits the amount of certain indebtedness to 6.9% of the most recent available equalized assessed valuation of the District. For the tax year 2016, the equalized assessed valuation was $199,749,026. The District’s legal debt limit is $13,782,683 and as of June 30, 2017, the District has a legal debt margin of $7,915,317. NOTE 11 – DEBT SERVICE REQUIREMENTS At June 30, 2017, the annual debt service requirements to service all long-term debt are as follows:

Year Ending June 30, Principal Interest Total

2018 1,372,579$ 271,271$ 1,643,850$

2019 1,432,045 247,605 1,679,650

2020 1,491,842 220,908 1,712,750

2021 1,436,951 180,899 1,617,850

2022 70,668 139,332 210,000

2023 63,281 136,719 200,000

5,867,366$ 1,196,734$ 7,064,100$

NOTE 12 – OPERATING LEASES The District is engaged in three agreements to lease copiers. The stated monthly payments pursuant to the agreements are $1,989, $1,484 and $2,092 per month. During the year ended June 30, 2017, the District expended $66,780 in lease payments from the Educational Fund. The minimum annual lease payments are as follows:

Year Ending June 30, Amount

2018 64,956$

2019 64,956

2020 44,966

2021 29,216

2022 11,640

Total 215,734$

45


JUNE 30, 2017 NOTE 13 – COMMON BANK ACCOUNT Separate bank accounts are not maintained for all District funds. Instead, the funds maintain their uninvested cash balances in a common checking account, with accounting records being maintained to show the portion of the common bank account balance attributable to each participating fund. Occasionally certain of the funds participating in the common bank account will incur overdrafts (deficits) in the account. Such overdrafts in effect constitute cash borrowed from other District funds and are, therefore, interfund loans which have not been authorized by School Board action. No District fund had a cash overdraft at June 30, 2017.

NOTE 14 – DEFICIT FUND BALANCE Deficit fund balances existed in the following funds:

Fund Balance

Fund at June 30, 2017

Educational Fund (5,635,001)$

NOTE 15 – 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. The District purchases commercial insurance to handle these risks of loss. During fiscal year 2017 there was no significant reduction in insurance coverage for any category. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years.

NOTE 16 – INTERFUND LOANS

Balance

From To June 30, 2017

Working Cash Fund Educational Fund 5,100,000$

Working Cash Fund Operations and Maintenance Fund 100,000

The purpose of the interfund loans was to help with cash flow needs prior to receiving property tax revenue.

NOTE 17 – JOINT VENTURE – SPECIAL EDUCATION DISTRICT OF LAKE COUNTY (SEDOL) The District and thirty-five other districts within Lake County have entered into a joint agreement to provide special education programs and services to the students enrolled. Each member district has a financial responsibility for annual and special assessments as established by the management council. Complete financial statements for SEDOL can be obtained from the Administrative Offices at 18160 Gages Lake Road, Gages Lake, Illinois 60030-1819.

46


JUNE 30, 2017 NOTE 18 – CONTINGENCIES/COMMITMENTS The District is not aware of any litigation which might have a material adverse effect on the District’s financial position. The District had no material outstanding construction contracts at June 30, 2017. NOTE 19 – TORT EXPENDITURES The District’s tort expenditures, which were paid by the Educational Fund, consisted of payments for:

Workers' compensation 64,591$

Liability insurance 47,857

Unemployment insurance 545

Total Tort Expenditures 112,993$

NOTE 20 – TAX ANTICIPATION WARRANTS During the year ended June 30, 2017, the District procured one issue of Tax Anticipation Warrants (TAWs) to manage its cash flows between cycles of property tax receipts. At June 30, 2017, $600,000 of TAWs remained outstanding. The procurement of Tax Anticipation Warrants is summarized as follows:

Balance Balance

July 1, 2016 Issued Retired June 30, 2017

Tax Anticipation Warrants: -$ 600,000$ -$ 600,000$

NOTE 21 – SUBSEQUENT EVENTS Subsequent events are events or transactions that occur after the balance sheet date but before the financial statements are issued or available to be issued. There are two types of subsequent events: recognized (events that relate to conditions present at the balance sheet date) and non-recognized (events or conditions that did not exist at the balance sheet date but arose after that date).

There have been no recognized or non-recognized subsequent events that have occurred between June 30, 2017, and the date of this audit report requiring disclosure in the financial statements.

47

OTHER INFORMATION

FY 2016* FY 2015* FY 2014*

Employer's proportion of the net pension liability 0.0016% 0.0017% 0.0018%

Employer's proportionate share of the net pension liability 1,241,499$ 1,123,047$ 1,101,881$

State's proportionate share of the net pension liability

associated with the employer 34,361,204 22,304,021 20,758,697

Total 35,602,703$ 23,427,068$ 21,860,578$

Employer's covered-employee payroll 4,351,994$ 4,027,035$ 3,977,756$

Employer's proportionate share of the net pension liability as a

percentage of its covered-employee payroll 28.53% 27.89% 27.36%

Plan fiduciary net position as a percentage of the total pension

liability 36.40% 41.50% 43.00%

*The amounts presented were determined as of the prior fiscal-year end.

This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year

trend is compiled, information is presented for those years for which information is available.


TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS

MOST RECENT FISCAL YEARS

48

OTHER INFORMATION

SCHEDULE OF THE EMPLOYER'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

FY 2016* FY 2015* FY 2014*

Contractually-required contribution 68,104$ 63,571$ 66,151$

Contributions in relation to the contractually-required contribution 57,408 59,756 67,213

Contribution deficiency (excess) 10,696$ 3,815$ (1,062)$

Employer's covered-employee payroll 4,351,994$ 4,027,035$ 3,977,756$

Contributions as a percentage of covered-employee payroll 1.56% 1.58% 1.66%

*The amounts presented were determined as of the prior fiscal-year end.



49


OTHER INFORMATION

SCHEDULE OF EMPLOYER CONTRIBUTIONS

TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS

MOST RECENT FISCAL YEARS

Calendar year ending December 31, 2016 2015 2014

Total pension liability

Service cost 184,418$ 181,678$ 185,045$

Interest on the total pension liability 442,196 424,129 391,735

Benefit changes - - -

Difference between expected and actual experience

of the total pension liability 82,633 (56,157) (90,856)

Changes of assumptions (14,344) - 243,239

Benefit payments, including refunds of employee contributions (323,257) (295,699) (279,142)

Net change in pension liability 371,646 253,951 450,021

Total pension liability - beginning 5,981,132 5,727,181 5,277,160

Total pension liability - ending (A) 6,352,778$ 5,981,132$ 5,727,181$

Plan fiduciary net position

Contributions - employer 189,833$ 180,600$ 179,069$

Contributions - employees 76,125 71,103 70,343

Net investment income 334,409 24,282 290,733

Benefit payments, including refunds of employee contributions (323,257) (295,699) (279,142)

Other (net transfer) 47,336 93,187 (163,670)

Net change in plan fiduciary net position 324,446 73,473 97,333

Plan fiduciary net position - beginning 4,951,789 4,878,316 4,780,983

Plan fiduciary net position - ending (B) 5,276,235$ 4,951,789$ 4,878,316$

Net pension liability/(asset) - ending (A) - (B) 1,076,543$ 1,029,343$ 848,865$

Plan fiduciary net position as a percentage

of total pension liability 83.05% 82.79% 85.18%

Covered valuation payroll 1,665,215$ 1,580,057$ 1,599,629$

Net pension liability as a percentage

of covered valuation payroll 64.65% 65.15% 53.07%



50


OTHER INFORMATION

SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS

ILLINOIS MUNICIPAL RETIREMENT FUND

MOST RECENT CALENDAR YEARS

Calendar Year Actuarially Contribution Covered Actual Contribution

Ending Determined Actual Deficiency Valuation as a % of

December 31 Contribution Contribution (Excess) Payroll Covered Valuation Payroll

2016 189,835$ * 189,833$ 2$ 1,665,215$ 11.40%

2015 180,601 180,600 1 1,580,057 11.43%

2014 168,326 179,069 (10,743) 1,599,629 11.19%

*Estimate based on contribution rate of 11.40% and covered valuation payroll of $1,665,215.

Valuation Date:

Notes Actuarially determined contribution rates are calculated as of December 31 each year, which are

12 months prior to the beginning of the fiscal year in which contributions are reported.

Methods and Assumptions Used to Determine 2016 Contribution Rates:

Actuarial Cost Method: Aggregate entry age normal

Amortization Method: Level percentage of payroll, closed

Remaining Amortization Period: 27-year closed period until remaining period reaches 15 years (then 15-year

rolling period)

Asset Valuation Method: 5-year smoothed market; 20% corridor

Wage Growth: 3.50%

Price Inflation: 2.75%. Approximate; No explicit price inflation assumption is used in this valuation

Salary Increases: 3.75% to 14.50%, including inflation

Investment Rate of Return: 7.50%

Retirement Age: Experience-based table of rates that are specific to the type of eligibility condition;

last updated for the 2014 valuation pursuant to an experience study of the period

2011 to 2013.

Mortality: For non-disabled retirees, an IMRF specific mortality table was used with fully

generational projection scale MP-2017 (base year 2012). The IMRF specific

rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality

Table with adjustments to match current IMRF experience. For disabled retirees,

an IMRF specific mortality table was used with fully generational projection

scale MP-2014 (base year 2012). The IMRF specific rates were developed from

the RP-2014 Disabled Retirees Mortality Table applying the same adjustments

that were applied for non-disabled lives. For active members, an IMRF specific

mortality table was used with fully generational projection scale MP-2014 (base

year 2012). The IMRF specific rates were developed from the RP-2014 Employee

Mortality Table with adjustments to match current IMRF experience.

Other Information:

Notes There were no benefit changes during the year.

* Based on Valuation Assumptions used in the December 31, 2014, actuarial valuation



51


OTHER INFORMATION

SCHEDULE OF EMPLOYER CONTRIBUTIONS

MOST RECENT CALENDAR YEARS

ILLINOIS MUNICIPAL RETIREMENT FUND

SCHEDULE 1

2016

Budget Actual Actual

Revenues Received:

Local Sources:

General tax levy 4,877,070$ 4,808,525$ 4,757,199$

Special education levy 81,896 82,326 79,883

Corporate replacement taxes 93,049 92,748 78,606

Earnings on investments 190 594 190

Food services 91,417 53,157 98,271

Tuition 22,500 - 9,706

Pupil activities 13,511 57,756 11,061

Rentals 42,000 44,862 41,885

Donations from private sources 9,500 100 10,298

Other 3,115 3,095 2,363

Total From Local Sources 5,234,248 5,143,163 5,089,462

State Sources:

General state aid 807,767 808,038 738,767

Special education 422,242 286,717 359,202

State free lunch 2,036 1,217 1,711

Early childhood 195,840 144,840 144,237

Other 118,882 - 750

Total From State Sources 1,546,767 1,240,812 1,244,667

Federal Sources:

Title I - Low Income 141,039 176,377 144,721

Title II - Teacher Quality 36,379 34,786 34,193

National school lunch 158,911 180,291 172,958

Special Milk 370 724 444

School breakfast program 35,633 48,220 44,446

IDEA flow-through 184,716 251,532 67,597

Preschool flow-through 7,769 5,224 4,398

Medicaid matching - administrative outreach 17,406 - 24,880

Medicaid matching - fee for service 23,667 - 6,838

Other 114,898 - -

Total From Federal Sources 720,788 697,154 500,475

Total Revenues Received 7,501,803 7,081,129 6,834,604

(CONTINUED)


EDUCATIONAL FUND

SCHEDULE OF REVENUES RECEIVED AND EXPENDITURES DISBURSED

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016

2017

52

SCHEDULE 1

(CONTINUED)

2016



Instruction:

Regular Programs:

Salaries 2,341,116$ 2,288,535$ 2,408,719$

Employee benefits 283,382 341,940 352,235

Purchased services 212,301 198,374 147,896

Supplies and materials 145,287 141,854 118,924

Capital outlay 40,000 38,304 57,419

Other 12,368 11,983 12,368

Total 3,034,454 3,020,990 3,097,561

Special Education Programs:

Salaries 1,168,272 1,170,872 1,098,082




Capital outlay 585 - -

Other 65 132 127

Total 1,389,285 1,393,402 1,281,030

Interscholastic Programs:

Salaries 151,400 157,380 136,120




Other 2,000 2,033 1,886

Total 163,436 169,673 148,118

Bilingual Programs:

Salaries 81,475 97,311 86,459


Total 89,350 115,565 96,355

Total Instruction 4,676,525 4,699,630 4,623,064

(CONTINUED)


EDUCATIONAL FUND



2017

53

SCHEDULE 1

(CONTINUED)

2016



Support Services:

Pupils:

Attendance and Social Work Services:

Salaries 184,228$ 177,457$ 138,219$


Purchased services 130 207 3,176

Supplies and materials 1,000 541 993.00

Total 200,949 181,549 145,728

Health Services:

Salaries 33,000 38,529 -

Employee benefits 5,018 516 -



Total 130,310 57,090 5,895

Psychological Services:

Salaries 45,118 45,669 102,565


Purchased services - 113,172 97,962

Supplies and materials 1,000 190 -

Total 48,234 160,285 207,856

Speech Pathology and Audiology Services:

Salaries 184,603 183,507 179,225


Purchased services 8,000 4,420 381

Supplies and materials 300 773 -

Total 208,787 203,844 192,781

Other Support Services - Pupils

Salaries 5,824 - -



Total 20,792 10,119 14,968

Improvement of Instruction Services:

Salaries 1,200 4,009 1,264

Employee benefits - 19 -



Other - 191 -

Total 55,255 48,235 51,482

(CONTINUED)

FOX LAKE GRADE SCHOOL DISTRICT NO.114

EDUCATIONAL FUND



2017

54

SCHEDULE 1(CONTINUED)

2016Budget Actual Actual

Expenditures Disbursed:Support Services:

Instructional Staff:Educational Media Services:

Salaries 98,486$ 106,787$ 96,608$


Purchased services - 11,890 -


Total 122,447 140,686 113,165

Assessment and Testing Services:Purchased services 20,000 - 14,541 Supplies and materials 4,000 - - Capital outlay - 3,339 -

Total 24,000 3,339 14,541

General Administration: Board of Education Services:

Salaries 2,000 4,625 2,000

Employee benefits 191,030 - -


Supplies and materials - 4,467 5,142

Other 1,000 11,628 810

Total 199,230 222,092 235,335

Executive Administration Services:

Salaries 129,910 218,132 123,471



Supplies and materials 250 741 198

Other 2,000 1,977 1,590

Total 180,720 268,157 172,115

Special Area Administration Services:Salaries - 5,824 3,744

Total - 5,824 3,744

School Administration: Office of the Principal Services:

Salaries 503,856 491,293 481,108




Other 2,450 1,404 2,453

Total 631,018 594,552 593,783

(CONTINUED)

FOX LAKE GRADE SCHOOL DISTRICT NO. 114EDUCATIONAL FUND

SCHEDULE OF REVENUES RECEIVED AND EXPENDITURES DISBURSEDFOR THE YEARS ENDED JUNE 30, 2017 AND 2016

2017

55

SCHEDULE 1(CONTINUED)


Expenditures Disbursed:Support Services:

Business:Fiscal Services:

Salaries 130,745$ 92,920$ 120,674$




Capital outlay - 8,247 -

Total 156,118 132,670 143,216

Food Services:Salaries 143,694 155,878 136,525 Employee benefits 8,309 10,628 2,051 Purchased services 2,335 2,874 2,338 Supplies and materials 256,000 233,449 259,179 Capital outlay - 1,915 -

Total 410,338 404,744 400,093

Central:Data Processing Services:

Salaries 119,314 119,314 106,569 Employee benefits 20,915 22,267 19,098

Total 140,229 141,581 125,667

Other Support Services:Purchased services - 5,730 - Supplies and materials 500 25 497

Total 500 5,755 497

Total Support Services 2,528,927 2,580,522 2,420,866

Community Services:Salaries 7,650 7,650 4,074 Employee benefits - 15 53 Purchased services - 1,000 - Supplies and materials 400 - 413

Total 8,050 8,665 4,540

Payments to Other Districts and Governmental Units: Payments for Special Education Programs:

Purchased services 30,000 108,275 66,135 Supplies and materials - - 310 Other 574,857 231,791 193,598 Tuition - 396,820 325,126

Total 604,857 736,886 585,169

(CONTINUED)

FOX LAKE GRADE SCHOOL DISTRICT NO. 114EDUCATIONAL FUND

SCHEDULE OF REVENUES RECEIVED AND EXPENDITURES DISBURSEDFOR THE YEARS ENDED JUNE 30, 2017 AND 2016

2017

56

SCHEDULE 1(CONCLUDED)



Total Expenditures Disbursed 7,818,359$ 8,025,703$ 7,633,639$

(Deficiency) of Revenues Received OverExpenditures Disbursed (316,556)$ (944,574)$ (799,035)$


2017

57

FOX LAKE SCHOOL DISTRICT NO. 114EDUCATIONAL FUND


SCHEDULE 2

2016


Revenues Received:

Local Sources:

General tax levy 1,020,457$ 1,006,143$ 951,062$


Impact fees 22,125 1,800 22,125

Other 68,000 41,736 18,675

Total Local Sources 1,110,932 1,049,836 992,212

Total Revenues Received 1,110,932 1,049,836 992,212


Support Services:

Operations and Maintenance of Plant Services:

Salaries 415,821 318,575 410,070




Capital outlay 30,290 22,189 34,789

Other 100 - 22,687

Total Support Services 962,254 882,129 986,856

Total Expenditures Disbursed 962,254 882,129 986,856

Excess of Revenues Received Over

Expenditures Disbursed 148,678$ 167,707$ 5,356$


OPERATIONS AND MAINTENANCE FUND



2017

58

SCHEDULE 3

2016


Revenues Received:

Local Sources:

General tax levy 1,632,373$ 1,662,776$ 1,612,180$

Earnings on investments 800 2,423 800

Total Local Sources 1,633,173 1,665,199 1,612,980

Total Revenues Received 1,633,173 1,665,199 1,612,980


Debt Service:

Principal retirement 1,224,722 1,318,464 1,289,722

Interest on bonds 389,366 292,086 328,594

Other 3,500 1,628 101,560

Total Debt Service: 1,617,588 1,612,178 1,719,876

Total Expenditures Disbursed 1,617,588 1,612,178 1,719,876

Excess (Deficiency) of Revenues Received Over Expenditures

Disbursed Before Other Financing Sources (Uses) 15,585$ 53,021$ (106,896)$

Other Financing Sources (Uses):

Payment to refunded bonds escrow agent - - (4,300,469)

Refunding bonds issued - - 4,310,000

Premium on refunding bonds issued - - 95,363

Total Other Financing Sources (Uses) - - 104,894

Excess (Defiiency) of Revenues Received Over Expenditures

Disbursed and Other Financing Sources (Uses) 15,585$ 53,021$ (2,002)$


DEBT SERVICE FUND



2017

59

SCHEDULE 4

2016


Revenues Received:

Local Sources:

General tax levy 8,412$ 128,503$ 54,968$

Earnings on investments 1,158 79 1,150

Total Local Sources 9,570 128,582 56,118

State Sources:

Transportation aid 435,608 313,749 420,283

Total State Sources 435,608 313,749 420,283

Total Revenues Received 445,178 442,331 476,401


Support Services:

Pupil Transportation Services:

Salaries 313,546 287,957 295,519




Capital outlay 181,657 181,657 115,500

Other 3,000 1,227 2,726

Total Support Services 721,385 625,216 663,820


(Deficiency) of Revenues Received Over

Expenditures Disbursed (276,207)$ (182,885)$ (187,419)$


TRANSPORTATION FUND



2017

60

SCHEDULE 5

2016


Revenues Received:

Local Sources:

General tax levy 127,268$ 128,325$ 121,801$

Special education levy 15,896 7,824 15,058

FICA/Medicare levy 229,275 232,357 221,301

Corporate replacement taxes 19,954 16,052 19,339





Instruction:


Support services:


Community services:

Employee benefits 180 312 174

Payments to other districts and governmental units:

Employee benefits 16,425 - 14,670


Excess (Deficiency) of Revenues Received

Over Expenditures Disbursed (35,253)$ (4,251)$ 4,180$





2017

61

SCHEDULE 6

2016


Revenues Received:

Local Sources:

General tax levy 89,349$ 89,637$ 91,985$

Earnings on investments 7,725 9,799 7,725

Other 4,962 - -



Excess of Revenues Received Over

Expenditures Disbursed 102,036$ 99,436$ 99,710$


WORKING CASH FUND



2017

62

SCHEDULE 7

Cash Cash

Balance Revenues Expenditures Balance

July 1, 2016 Received Disbursed June 30, 2017

Lotus School

Adopt-A-Class 689$ -$ 670$ 19$

All-stars (14) - 508 (522)

Art Clubs 230 - - 230

Assemblies 288 1,707 1,995 -

Choir (78) 917 263 576

Extra curricular activities 68 540 444 164

Field Day 85 1,729 1,540 274

Field Trips (50) 2,610 2,560 -

Fine Arts 275 - - 275

Gymnastics 500 - 506 (6)

Lotus activity 2,718 2,080 2,715 2,083

Mad minutes (40) - - (40)

Principal program 303 608 546 365

Principal awards (84) 84 - -

Music (455) 1,612 - 1,157

PBIS 28 1,761 3,190 (1,401)

Pottery 129 - 180 (51)

Skating 170 1,949 1,866 253

Yearbook 881 2,717 4,065 (467)

Total Lotus School 5,643$ 18,314$ 21,048$ 2,909$

Stanton

Adopt-A-Class 600$ 300$ 420$ 480$

Assemblies 2,147 2,000 1,882 2,265

Athletics 1,121 4,812 4,865 1,068

Basketball 5 572 607 (30)

Cheerleading 354 740 809 285

Cross Country 117 810 678 249

Drama Club 830 654 1,061 423

Drugs 3 - - 3

Field Day 303 - 300 3

Field Trips 2,143 725 2,205 663

Fitness Club 85 40 - 125

General Activity 385 1,934 1,315 1,004

Girls Basketball 51 672 664 59

Guardian fund 1,000 500 - 1,500

Library 47 203 124 126

Memorial 146 - - 146

Middle School 4 100 100 4

NJHS 100 878 880 98

Orchesis 4 307 265 46

(CONTINUED)


ACTIVITY FUNDS

STATEMENT OF REVENUES RECEIVED AND EXPENDITURES DISBURSED


63

SCHEDULE 7

(CONCLUDED)

Cash Cash

Balance Revenues Expenditures Balance

July 1, 2016 Received Disbursed June 30, 2017

Peer leader 384$ 100$ 332$ 152$

Physical education grants 14 1,565 1,112 467

PBIS 3,072 5,069 6,198 1,943

Scholarship 692 300 95 897

Scholastic Bowl 30 227 187 70

Searle 541 - - 541

Snowflake 15 - - 15

Soccer 43 291 238 96

Student Council 415 557 1,156 (184)

Student Needs 404 100 15 489

Technology 211 1,675 1,183 703

Track 422 3,510 2,143 1,789

Trip - Springfield 952 11,565 11,057 1,460

Volleyball 104 895 812 187

Wrestling 553 1,483 1,019 1,017

Yearbook 489 2,029 1,894 624

Total Stanton School 17,786$ 44,613$ 43,616$ 18,783$

Total Student Activity 23,429$ 62,927$ 64,664$ 21,692$

64

ACTIVITY FUNDS

STATEMENT OF REVENUES RECEIVED AND EXPENDITURES DISBURSED



Year

Ended

June 30, Principal Interest Principal Interest Principal Interest

2018 92,579$ 122,421$ 480,000$ 60,750$ 800,000$ 88,100$

2019 87,045 127,955 500,000 47,550 845,000 72,100

2020 81,842 133,158 520,000 32,550 890,000 55,200

2021 76,951 138,049 410,000 14,350 950,000 28,500

2022 70,668 139,332 - - - -

2023 63,281 136,719 - - - -

TOTAL 472,366$ 797,634$ 1,910,000$ 155,200$ 3,485,000$ 243,900$

From 3.75 To 4.65% From 2.00 To 3.50% From 2.00 to 3.00%

65

$1,459,463 $3,740,000 $4,310,000

Interest Varying Interest Varying Interest Varying

April 29, 2004 October 25, 2012 October 6, 2015


SCHEDULE OF BONDED DEBT MATURITIES AND INTEREST

JUNE 30, 2017

SCHEDULE 8

Principal Interest

1,372,579$ 271,271$

1,432,045 247,605

1,491,842 220,908

1,436,951 180,899

70,668 139,332

63,281 136,719

5,867,366$ 1,196,734$

Totals

66

SCHEDULE 9

2017 2016

Total Expenditures Disbursed

Educational Fund 8,025,703$ 7,633,639$

Operation and Maintenance Fund 882,129 986,856

Debt Service Fund 1,612,178 1,719,876

Transportation Fund 625,216 663,820

Municipal Retirement/Social Security Fund 388,918 373,344

Total 11,534,144 11,377,535

Less Revenues Received or Expenditures Disbursed

Not Applicable to Operating Expenses of Regular Programs

Capital outlay 255,651 207,708

Payments to other Districts and Governmental units 736,886 599,529

Community service 8,977 4,714

Bond principal 1,318,464 1,289,722

Total 2,319,978 2,101,673

Operating Expense 9,214,166 9,275,862

Less Offsetting Revenues Received

Governmental aid claims 1,042,081 1,278,023

Food service 53,157 98,271

Pupil activities 57,756 11,061

Rentals 44,862 41,885

Total 1,197,856 1,429,240

Total Deductions for Tuition Computation 3,517,834 3,530,913

Net Operating Expense for Tuition Computation 8,016,310 7,846,622

Add Total Depreciation Allowance 598,745 575,917

Total Allowance for Tuition Computation 8,615,055$ 8,422,539$

Average Daily Attendance 709.22 714.60

Per Pupil

Estimated Operating Expense Per Pupil 12,992$ 12,980$

Estimated Per Capita Tuition Charge 12,147$ 11,786$


PER CAPITA COSTS


67

FOX LAKE GRADE SCHOOL DISTRICT NO. 114 NOTES TO OTHER INFORMATION

JUNE 30, 2017

NOTE 1 – TEACHERS’ RETIREMENT SYSTEM OF THE STATE OF ILLINOIS (TRS) Changes of Assumptions For the 2016 measurement year, the assumed investment rate of return was 7.0 percent, including an inflation rate of 2.5 percent and a real return of 4.5 percent. Salary increases were assumed to vary by service credit. For the 2015 measurement year, the assumed investment rate of return was 7.5 percent, including an inflation rate of 3.0 percent and a real return of 4.5 percent. Salary increases were assumed to vary by service credit. Various other changes in assumptions were adopted based on the experience analysis for the three-year period ending June 30, 2014. For the 2014 measurement year, the assumed investment rate of return was also 7.5 percent, including an inflation rate of 3.0 percent and a real return of 4.5 percent. However, salary increases were assumed to vary by age.

68

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