informational itemnov 12, 2019 · informational item november 12, 2019 m e m o r a n d u m to:...
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Informational Item
November 12, 2019 M E M O R A N D U M TO: William V. Husfelt III, Superintendent FROM: Jim Loyed, Executive Director of Business Support Services AGENDA ITEM: Charter Schools Financials CONSENT OR ACTION (Please circle one) BUDGET AMOUNT: IN CURRENT BUDGET OR UNAPPROPRIATED FUND BALANCE (Please circle one) IF BUDGETED, GIVE BUDGET ACCOUNT NUMBERS: Fund Function Object Cost Center Project Program SUPERINTENDENT'S RECOMMENDATION: Approval: _______ Disapproval: _______ Discussion: _______ _______________________________ Superintendent
WILLIAM V. HUSFELT III
SUPERINTENDENT
1311 Balboa Avenue
Panama City, Florida
32401
(850) 767-4100
Hearing Impaired Access
(800) 955-8770 Voice
(800) 955-8771 TDD
www.bay.k12.fl.us
Board Members:
Jerry Register
District 1
Ginger Littleton
District 2
Pamm Chapman
District 3
Ryan Neves
District 4
Steve Moss
District 5
Board Action
314
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395
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397
398
399
400
401
402
403
404
405
406
Acc
ou
nts
Gen
eral
Fu
nd
Sp
ecia
l R
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ue
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nd
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t S
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-
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lass s
ize r
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3355
-
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chool re
cognitio
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-
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ther
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te r
evenue
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23
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RC
ES
-
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tere
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8
8.4
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0
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pro
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ent ta
x3413
-
%
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venue
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43,7
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tal R
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ues
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5
306,5
20.4
2
1,1
63,2
29.0
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4.9
7
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8
25,7
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-
Exp
en
dit
ure
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Curr
ent E
xpenditure
s
Instr
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5000
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197,4
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770,2
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0
26%
-
%
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serv
ices
6000
9,8
98.2
4
27,5
96.8
9
149,9
45.0
0
18%
-
%
Board
7100
9,5
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9
17,7
89.6
2
46,1
62.0
0
39%
-
%
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tration
7300
1,7
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0
4,3
75.4
8
29,8
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0
15%
-
%
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s a
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cquis
itio
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-
15,5
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8
-
%
-
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cal serv
ices
7500
3,1
87.5
1
6,8
63.7
4
27,7
34.0
0
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od
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rvic
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-
-
%
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al serv
ices
7700
-
-
%
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Pupil tra
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ation s
erv
ices
7800
1,3
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5
1,3
05.7
5
4,1
76.0
0
31%
-
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tion o
f pla
nt
7900
11,4
28.3
9
17,6
83.8
3
85,9
25.0
0
21%
-
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tenance o
f pla
nt
8100
-
984.1
2
-
%
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gy s
erv
ices
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%
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munity s
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ices
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-
1,0
30.0
0
0%
-
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bt
serv
ice
9200
968.1
1
2,9
04.3
3
11,6
17.0
0
25%
-
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tal E
xp
en
dit
ure
s124,6
21.7
1
292,4
39.3
9
1,1
26,6
77.0
0
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-
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-
Excess (
Defi
cie
ncy)
of
Reven
ues O
ver
Exp
en
dit
ure
s(6
2,8
09
.46
)
14,0
81.0
3
36,5
52.0
0
39%
25,7
59.3
8
25,7
59.3
8
-
Oth
er
Fin
an
cin
g S
ou
rces (
Uses)
Tra
nsfe
rs in
3600
Pro
cceds fro
m long term
debt
3700
-
-
Tra
nsfe
rs o
ut
9700
To
tal O
ther
Fin
an
cin
g S
ou
rces (
Uses)
-
-
-
-
-
-
Ne
t C
ha
ng
e in
Fu
nd
Ba
lan
ce
s(6
2,8
09
.46
)
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81.0
3
36,5
52.0
0
39%
25,7
59.3
8
25,7
59.3
8
-
Fund b
ala
nces, begin
nin
g676,2
19.2
6
599,3
28.7
7
624,6
07.0
5
96%
-
-
Adju
stm
ents
to b
egin
nin
g fund
bala
nce
Fu
nd
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lan
ce
s,
Be
gin
nin
g a
s R
es
tate
d676,2
19.2
6
599,3
28.7
7
624,6
07.0
5
96%
-
-
-
Fu
nd
Ba
lan
ce
s,
En
din
g613,4
09.8
0$
613,4
09.8
0$
661,1
59.0
5$
93%
25,7
59.3
8$
25,7
59.3
8$
-
$
%
Ch
au
tau
qu
a L
ea
rn &
Se
rve
Ch
art
er
Sc
ho
ol
wit
h M
SID
Nu
mb
er
07
81
Bay C
ou
nty
, F
lori
da
Sta
tem
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t o
f R
even
ue, E
xp
en
dit
ure
s, an
d C
han
ges in
Fu
nd
Bala
nce (
Un
au
dit
ed
)
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r M
on
th E
nd
ed
Se
pte
mb
er
30
, 20
19
Gen
era
l F
un
dS
pecia
l R
even
ue
409
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nth
/ Q
uart
er
Actu
al
YT
D A
ctu
al
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nu
al B
ud
get
% o
f Y
TD
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al to
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nu
al B
ud
get
Mo
nth
/ Q
uart
er
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al
YT
D A
ctu
al
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nu
al B
ud
get
% o
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al to
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nu
al B
ud
get
Mo
nth
/ Q
uart
er
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al
YT
D A
ctu
al
An
nu
al
Bu
dg
et
% o
f Y
TD
Actu
al
to
An
nu
al
Bu
dg
et
-$
-$
-$
%-
$
-$
-$
%-
$
-
$
-$
%
25,7
59.3
8
25,7
59.3
8
64,8
41.0
0
40%
-
63,0
32.5
7
189,0
97.7
2
758,8
88.0
0
25%
-
-
31,2
30.0
0
0%
-
-
31,2
30.0
0
0%
-
-
-
-
-
-
(11
,223
.00
)
3,7
77.0
0
295,7
12.0
0
1%
-
2.6
8
8.4
6
4.0
0
212%
-
-
-
10,0
00.0
0
113,6
37.2
4
43,7
83.0
0
260%
-
-
-
-
-
31,2
30.0
0
0%
87,5
71.6
3
332,2
79.8
0
1,1
94,4
58.0
0
28%
86,5
67.7
2
197,4
32.2
5
770,2
43.0
0
26%
9,8
98.2
4
27,5
96.8
9
149,9
45.0
0
18%
9,5
60.8
9
17,7
89.6
2
46,1
62.0
0
39%
1,7
05.1
0
4,3
75.4
8
29,8
46.0
0
15%
-
-
-
15,5
03.3
8
-
3,1
87.5
1
6,8
63.7
4
27,7
34.0
0
25%
-
-
-
-
-
-
1,3
05.7
5
1,3
05.7
5
4,1
76.0
0
31%
-
-
4,0
17.0
0
0%
11,4
28.3
9
17,6
83.8
3
89,9
42.0
0
20%
-
-
15,5
95.0
0
0%
-
984.1
2
15,5
95.0
0
6%
-
-
-
-
-
1,0
30.0
0
0%
968.1
1
2,9
04.3
3
11,6
17.0
0
25%
-
-
-
-
-
19,6
12.0
0
0%
124,6
21.7
1
292,4
39.3
9
1,1
46,2
90.0
0
26%
-
-
-
-
-
11,6
18.0
0
0%
(37
,050
.08
)
39,8
40.4
1
48,1
68.0
0
83%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,6
18.0
0
0%
(37
,050
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)
39,8
40.4
1
48,1
68.0
0
83%
-
-
676,2
19.2
6
599,3
28.7
7
624,6
07.0
5
96%
-
-
-
-
-
-
-
-
676,2
19.2
6
599,3
28.7
7
624,6
07.0
5
96%
-$
-$
-$
%-
$
-$
11,6
18.0
0$
0%
639,1
69.1
8$
639,1
69.1
8$
672,7
75.0
5$
95%
De
bt
Se
rvic
eC
ap
ita
l O
utl
ay
To
tal G
overn
men
tal
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nd
s
410
Acc
ou
nts
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eral
Fu
nd
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ecia
l R
even
ue
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nd
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t S
ervi
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al O
utl
ay
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tal
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vern
men
tal
Fu
nd
sA
SS
ET
S
Cas
h an
d ca
sh e
quiv
alen
ts11
1021
7,45
7.60
$
21
7,45
7.60
$
In
vest
men
ts11
60-
G
rant
rec
eiva
bles
1130
32,5
81.7
3
14,3
96.0
0
46,9
77.7
3
O
ther
cur
rent
ass
ets
12X
X17
0,69
8.11
17
0,69
8.11
D
epos
its12
101,
489.
88
1,
489.
88
D
ue fr
om o
ther
fund
s11
4046
,977
.73
46,9
77.7
3
O
ther
long
-ter
m a
sset
s14
00-
Tot
al A
sset
s43
6,62
3.32
$
32
,581
.73
$
-
$
14
,396
.00
$
48
3,60
1.05
$
LIA
BIL
ITIE
S A
ND
FU
ND
BA
LA
NC
E
Liab
ilitie
sA
ccou
nts
paya
ble
2120
4,11
6.94
$
-$
-$
4,11
6.94
$
Sal
arie
s, b
enef
its, a
nd p
ayro
ll ta
xes
paya
ble
2110
, 217
0, 2
330
58,6
09.8
4
58
,609
.84
Def
erre
d re
venu
e24
10-
N
otes
/bon
ds p
ayab
le21
80, 2
250,
231
0, 2
320
-
Leas
e pa
yabl
e23
15-
O
ther
liab
ilitie
s21
XX
, 22X
X, 2
3XX
-
Due
to o
ther
fund
s32
,581
.73
14
,396
.00
46
,977
.73
Tot
al L
iabi
litie
s62
,726
.78
32,5
81.7
3
-
14,3
96.0
0
109,
704.
51
Fun
d B
alan
ceN
onsp
enda
ble
2710
1,48
9.88
1,48
9.88
Res
tric
ted
2720
-
Com
mitt
ed27
30-
A
ssig
ned
2740
-
Una
ssig
ned
2750
372,
406.
66
-
-
372,
406.
66
To
tal F
un
d B
alan
ce37
3,89
6.54
-
-
-
37
3,89
6.54
TO
TA
L L
IAB
ILIT
IES
AN
D F
UN
D B
AL
AN
CE
436,
623.
32$
32,5
81.7
3$
-$
14,3
96.0
0$
483,
601.
05$
Bay
Co
un
ty, F
lori
da
Bal
ance
Sh
eet
(Un
aud
ited
)S
epte
mb
er 3
0, 2
019
Pal
m B
ay E
lem
enta
ry S
cho
ol w
ith
MS
ID N
um
ber
080
1
411
Acc
ou
nts
Gen
eral
Fu
nd
Sp
ecia
l R
even
ue
Fu
nd
Deb
t S
ervi
ceC
apit
al O
utl
ay
To
tal
Go
vern
men
tal
Fu
nd
sA
SS
ET
S
Cas
h an
d ca
sh e
quiv
alen
ts11
1022
6,22
0.96
$
50
.00
$
22
6,27
0.96
$
In
vest
men
ts11
60-
G
rant
rec
eiva
bles
1130
350,
000.
00
73,2
03.8
3
14,0
23.0
0
437,
226.
83
Oth
er c
urre
nt a
sset
s12
XX
-
Dep
osits
1210
43,4
59.1
5
43
,459
.15
Due
from
oth
er fu
nds
1140
48,1
12.1
7
19
,048
.37
67
,160
.54
Oth
er lo
ng-t
erm
ass
ets
1400
-
Tot
al A
sset
s66
7,79
2.28
$
92
,302
.20
$
-
$
14
,023
.00
$
77
4,11
7.48
$
LIA
BIL
ITIE
S A
ND
FU
ND
BA
LA
NC
E
Liab
ilitie
sA
ccou
nts
paya
ble
2120
51,9
46.3
7$
1,
179.
81$
-
$
-
$
53
,126
.18
$
Sal
arie
s, b
enef
its, a
nd p
ayro
ll ta
xes
paya
ble
2110
, 217
0, 2
330
77,9
45.1
8
2,
120.
49
80
,065
.67
Def
erre
d re
venu
e24
101,
981.
00
1,
981.
00
N
otes
/bon
ds p
ayab
le21
80, 2
250,
231
0, 2
320
-
Leas
e pa
yabl
e23
15-
O
ther
liab
ilitie
s21
XX
, 22X
X, 2
3XX
438,
440.
13
438,
440.
13
Due
to o
ther
fund
s19
,048
.37
34,0
89.1
7
14,0
23.0
0
67,1
60.5
4
Tot
al L
iabi
litie
s58
9,36
1.05
37
,389
.47
-
14
,023
.00
64
0,77
3.52
Fun
d B
alan
ceN
onsp
enda
ble
2710
43,4
59.1
5
43
,459
.15
Res
tric
ted
2720
-
Com
mitt
ed27
30-
A
ssig
ned
2740
-
Una
ssig
ned
2750
34,9
72.0
8
54
,912
.73
-
89
,884
.81
To
tal F
un
d B
alan
ce78
,431
.23
54,9
12.7
3
-
-
133,
343.
96
TO
TA
L L
IAB
ILIT
IES
AN
D F
UN
D B
AL
AN
CE
667,
792.
28$
92,3
02.2
0$
-$
14,0
23.0
0$
774,
117.
48$
Bay
Co
un
ty, F
lori
da
Bal
ance
Sh
eet
(Un
aud
ited
)S
epte
mb
er 3
0, 2
019
Pal
m B
ay P
rep
arat
ory
Aca
dem
y w
ith
MS
ID N
um
ber
077
1
412
Acc
ou
nts
Gen
eral
Fu
nd
Sp
ecia
l R
even
ue
Fu
nd
Deb
t S
ervi
ceC
apit
al O
utl
ay
To
tal
Go
vern
men
tal
Fu
nd
sA
SS
ET
S
Cas
h an
d ca
sh e
quiv
alen
ts11
1071
5,03
2.71
$
-
$
-
$
-
$
71
5,03
2.71
$
In
vest
men
ts11
60-
Gra
nt r
ecei
vabl
e-F
EF
P11
308,
335.
00
8,
335.
00
Oth
er c
urre
nt a
sset
s12
XX
-
D
epos
its12
1021
,600
.00
21,6
00.0
0
D
ue fr
om o
ther
fund
s11
4010
,073
.58
10,0
73.5
8
O
ther
long
-ter
m a
sset
s14
00-
Tot
al A
sset
s74
6,70
6.29
$
-
$
-
$
8,
335.
00$
75
5,04
1.29
$
LIA
BIL
ITIE
S A
ND
FU
ND
BA
LA
NC
E
Liab
ilitie
sA
ccou
nts
paya
ble
2120
9,31
4.87
$
149.
55$
-$
-$
9,46
4.42
$
S
alar
ies,
ben
efits
, and
pay
roll
taxe
s pa
yabl
e21
10, 2
170,
233
056
,778
.20
56,7
78.2
0
D
efer
red
reve
nue
2410
1,42
5.34
1,42
5.34
N
otes
/bon
ds p
ayab
le21
80, 2
250,
231
0, 2
320
-
Le
ase
paya
ble
2315
-
D
ue to
oth
er fu
nds
2210
1,73
8.58
8,33
5.00
10,0
73.5
8
O
ther
liab
ilitie
s21
XX
, 22X
X, 2
3XX
-
Tot
al L
iabi
litie
s67
,518
.41
1,88
8.13
-
8,33
5.00
77,7
41.5
4
Fun
d B
alan
ceN
onsp
enda
ble
2710
21,6
00.0
0
21
,600
.00
Res
tric
ted
2720
(1,8
88.1
3)$
(1
,888
.13)
Com
mitt
ed27
30-
Ass
igne
d27
40-
Una
ssig
ned
2750
657,
587.
88
-
-
657,
587.
88
To
tal F
un
d B
alan
ce67
9,18
7.88
(1
,888
.13)
-
-
677,
299.
75
TO
TA
L L
IAB
ILIT
IES
AN
D F
UN
D B
AL
AN
CE
746,
706.
29$
-$
-$
8,33
5.00
$
755,
041.
29$
Bay
Co
un
ty, F
lori
da
Bal
ance
Sh
eet
(Un
aud
ited
)S
epte
mb
er 3
0, 2
019
Ris
ing
Lea
der
s A
cad
emy,
Inc.
(07
12)
413
Ac
co
un
tsG
en
era
l F
un
d
Sp
ec
ial
Reve
nu
e F
un
dD
eb
t S
erv
ice
Ca
pit
al
Ou
tla
y
To
tal
Go
ve
rnm
en
tal
Fu
nd
s
AS
SE
TS
Cash
an
d c
ash
eq
uiv
ale
nts
11
10
77
7,7
67
.76
$
77
7,7
67
.76
$
Inve
stm
en
ts1
16
0-
Gra
nt
rece
iva
ble
-FE
FP
,CS
CO
11
30
85
1.0
0
2
,27
9.0
4
27
,23
0.0
0
3
0,3
60
.04
Oth
er
cu
rre
nt
asse
ts1
2X
X-
Dep
osits
12
10
44
,81
0.0
0
44
,81
0.0
0
Due
fro
m o
the
r fu
nd
s1
14
04
7,8
50
.88
4
7,8
50
.88
Oth
er
lon
g-t
erm
asse
ts1
40
0-
To
tal A
sse
ts8
71
,27
9.6
4$
2
,27
9.0
4$
-$
2
7,2
30
.00
$
90
0,7
88
.68
$
LIA
BIL
ITIE
S A
ND
FU
ND
BA
LA
NC
E
Lia
bili
tie
s
Acco
un
ts p
aya
ble
21
20
56
,26
1.5
0$
3,2
58
.57
$
5
9,5
20
.07
$
Sa
lari
es,
be
ne
fits
, a
nd
pa
yro
ll ta
xe
s p
aya
ble
21
10
, 2
17
0,
23
30
22
3,7
23
.46
1,5
55
.71
2
25
,27
9.1
7
Defe
rre
d r
eve
nu
e2
41
09
,96
4.2
1
9
,96
4.2
1
Note
s/b
on
ds p
aya
ble
21
80
, 2
25
0,
23
10
, 2
32
03
00
,00
0.0
0
3
00
,00
0.0
0
Due
to
oth
er
fun
ds
22
10
20
,62
0.8
8
2
7,2
30
.00
47
,85
0.8
8
Le
ase
pa
ya
ble
23
15
-
Oth
er
liab
ilitie
s2
1X
X,
22
XX
, 2
3X
X-
To
tal L
iab
ilitie
s5
89
,94
9.1
7
2
5,4
35
.16
-
2
7,2
30
.00
64
2,6
14
.33
Fu
nd
Ba
lan
ce
Non
sp
en
da
ble
27
10
44
,81
0.0
0
44
,81
0.0
0
Restr
icte
d2
72
0-
-
Com
mitte
d2
73
0-
Assig
ne
d2
74
0(2
3,1
56
.12
)
(2
3,1
56
.12
)
Una
ssig
ne
d2
75
02
36
,52
0.4
7
2
36
,52
0.4
7
To
tal
Fu
nd
Ba
lan
ce
28
1,3
30
.47
(23
,15
6.1
2)
-
-
25
8,1
74
.35
TO
TA
L L
IAB
ILIT
IES
AN
D F
UN
D B
AL
AN
CE
87
1,2
79
.64
$
2,2
79
.04
$
-
$
27
,23
0.0
0$
9
00
,78
8.6
8$
Bay C
ou
nty
, F
lori
da
Bala
nc
e S
he
et
(Un
au
dit
ed
)
Se
pte
mb
er
30
, 2
01
9
Un
ive
rsit
y A
ca
de
my C
ha
rter
Sc
ho
ol
(07
13
)
414
FT
E P
roje
cte
d675
FT
E A
ctu
al
663
98%
Perc
en
t o
f P
roje
cte
d
Acco
un
t
Nu
mb
er
2271086.4
4Y
TD
Actu
al
An
nu
al
Bu
dg
et
% o
f Y
TD
Actu
al
to
An
nu
al
Bu
dg
et
Mo
nth
/ Q
uart
er
Actu
al
YT
D A
ctu
al
An
nu
al
Bu
dg
et
% o
f Y
TD
Actu
al
to
An
nu
al
Bu
dg
et
Reven
ues
FE
DE
RA
L S
OU
RC
ES
Federa
l direct
3100
19,8
77.8
0$
19,8
77.8
0$
%
%
Federa
l th
roug
h s
tate
and local
3200
2,2
79.0
4
2,2
79.0
4
90,1
12.0
0
3%
ST
AT
E S
OU
RC
ES
FE
FP
3310
376,9
74.3
6
1,1
10,9
94.9
2
4,5
02,2
13.0
0
25%
Capital outlay
3397
Cla
ss s
ize r
eduction
3355
School re
cog
nitio
n3361
Oth
er
sta
te r
evenue
33X
X12,2
80.0
0
12,2
80.0
0
12,3
43.0
0
99%
LO
CA
L S
OU
RC
ES
Inte
rest
3430
660.0
1
3,1
00.6
2
19,5
69.0
0
16%
Local capital im
pro
vem
ent
tax
3413
Oth
er
local re
venue
34X
X1,8
10,3
97.8
1
1,9
18,4
16.8
1
585,5
12.0
0
328%
2,2
70.7
1
7,0
19.7
3
23,0
75.0
0
30%
To
tal
Reven
ues
2,2
20,1
89.9
8
3,0
64,6
70.1
5
5,1
19,6
37.0
0
60%
4,5
49.7
5
9,2
98.7
7
113,1
87.0
0
8%
Exp
en
dit
ure
s
Curr
ent
Expenditure
s
Instr
uction
5000
349,3
71.6
7
894,1
28.5
1
3,2
61,2
55.0
0
27%
2,2
79.0
4
2,2
79.0
4
Instr
uctional support
serv
ices
6000
14,4
12.1
8
30,6
70.9
2
93,7
46.0
0
33%
Board
7100
2,9
36.1
2
8,6
12.0
3
52,7
51.0
0
16%
School adm
inis
tration
7300
44,4
14.2
2
118,0
11.6
5
383,4
81.0
0
31%
Facili
ties a
nd a
cq
uis
itio
n7400
2,1
17,0
17.1
2
3,1
39,7
48.8
7
20,0
00.0
0
15699%
Fis
cal serv
ices
7500
15,3
28.9
1
33,1
31.4
2
133,4
01.0
0
25%
Food s
erv
ices
7600
12,7
63.8
4
30,1
75.8
5
31,9
89.0
0
94%
Centr
al serv
ices
7700
Pupil
transport
ation s
erv
ices
7800
582.0
0
582.0
0
Opera
tion o
f pla
nt
7900
51,5
09.6
7
500,3
74.5
0
582,1
51.0
0
86%
Main
tenance o
f pla
nt
8100
2,1
46.9
1
14,2
17.1
7
22,5
36.0
0
63%
Adm
inis
trative t
echnolo
gy s
erv
ices
8200
Com
munity s
erv
ices
9100
4,3
90.3
8
7,3
76.6
7
47,0
12.0
0
16%
Debt
serv
ice
9200
24,1
15.4
5
75,5
08.4
2
379,3
60.0
0
20%
To
tal
Exp
en
dit
ure
s2,6
26,2
24.6
3
4,8
22,3
62.1
6
4,9
75,6
93.0
0
97%
15,0
42.8
8
32,4
54.8
9
31,9
89.0
0
101%
Excess (
Defi
cie
ncy)
of
Reven
ues O
ver
Exp
en
dit
ure
s(4
06,0
34.6
5)
(1,7
57,6
92.0
1)
143,9
44.0
0
-1221%
(10,4
93.1
3)
(23,1
56.1
2)
81,1
98.0
0
-29%
Oth
er
Fin
an
cin
g S
ou
rces (
Uses)
Tra
nsfe
rs in
3600
-
-
Loan P
roceeds
3700
-
-
-
-
Tra
nsfe
rs o
ut
9700
To
tal
Oth
er
Fin
an
cin
g S
ou
rces (
Uses)
-
-
-
-
-
-
Net
Ch
an
ge i
n F
un
d B
ala
nces
(406,0
34.6
5)
(1,7
57,6
92.0
1)
143,9
44.0
0
-1221%
(10,4
93.1
3)
(23,1
56.1
2)
81,1
98.0
0
-29%
Fund b
ala
nces,
beg
innin
g$687,3
65.1
22,0
39,0
22.4
8
2,0
39,0
22.4
8
100%
(12,6
62.9
9)
-
-
Adju
stm
ents
to b
eg
innin
g f
und b
ala
nce
Fu
nd
Bala
nces,
Beg
inn
ing
as R
esta
ted
687,3
65.1
2
2,0
39,0
22.4
8
2,0
39,0
22.4
8
100%
(12,6
62.9
9)
-
-
Fu
nd
Bala
nces,
En
din
g281,3
30.4
7$
281,3
30.4
7$
2,1
82,9
66.4
8$
13%
(23,1
56.1
2)
$
(23,1
56.1
2)
$
81,1
98.0
0$
-2
9%
Un
ivers
ity A
cad
em
y C
hart
er
Sch
oo
l (0
713)
Bay C
ou
nty
, F
lori
da
Sta
tem
en
t o
f R
even
ue,
Exp
en
dit
ure
s,
an
d C
han
ges i
n F
un
d B
ala
nce (
Un
au
dit
ed
)
Gen
era
l F
un
dS
pecia
l R
even
ue
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27,2
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416
Informational Item
November 12, 2019 M E M O R A N D U M TO: William V. Husfelt III, Superintendent FROM: Jim Loyed, Executive Director of Business Support Services AGENDA ITEM: Charter Schools Audit Information 2019 CONSENT OR ACTION (Please circle one) BUDGET AMOUNT: IN CURRENT BUDGET OR UNAPPROPRIATED FUND BALANCE (Please circle one) IF BUDGETED, GIVE BUDGET ACCOUNT NUMBERS: Fund Function Object Cost Center Project Program SUPERINTENDENT'S RECOMMENDATION: Approval: _______ Disapproval: _______ Discussion: _______ _______________________________ Superintendent
WILLIAM V. HUSFELT III
SUPERINTENDENT
1311 Balboa Avenue
Panama City, Florida
32401
(850) 767-4100
Hearing Impaired Access
(800) 955-8770 Voice
(800) 955-8771 TDD
www.bay.k12.fl.us
Board Members:
Jerry Register
District 1
Ginger Littleton
District 2
Pamm Chapman
District 3
Ryan Neves
District 4
Steve Moss
District 5 Board Action
417
CENTRAL HIGH SCHOOL (A CHARTER SCHOOL UNDER
PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the
District School Board of Bay County, Florida
INDEPENDENT AUDITOR’S REPORT
for the fiscal year ended JUNE 30, 2019
King & Walker, CPAs, PL ______________________________________________________________________________________________________________________
Certified Public Accountants
418
THIS PAGE IS INTENTIONALLY BLANK.
419
CENTRAL HIGH SCHOOL (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
TABLE OF CONTENTS
PAGE
NO.
FINANCIAL SECTION
Independent Auditor’s Report 1
Management’s Discussion and Analysis – (Unaudited) 3
Basic Financial Statements
Government-Wide Financial Statements:
Statement of Net Position 8
Statement of Activities 9
Fund Financial Statements:
Balance Sheet – Governmental Funds 10
Reconciliation of the Governmental Funds Balance Sheet to the Statement
of Net Position 11
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds 12
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances to the Statement of Activities 13
Notes to Financial Statements 14
Required Supplementary Information
Budgetary Comparison Schedule – General Fund – (Unaudited) 33
Schedule of Proportionate Share of Net Pension Liability - FRS 34
Schedule of Contributions - FRS 35
Schedule of Proportionate Share of Net Pension Liability - HIS 36
Schedule of Contributions - HIS 37
Note to Required Supplementary Information 38
COMPLIANCE AND INTERNAL CONTROL
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 Governmental Auditing Standards 39
Management Letter as required by Rules of the Florida Auditor General,
Chapter 10.850, Florida Statutes, Charter School Audits 41
420
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Independent Auditor's Report
To the Board of Directors Central High School
(A charter school under Palm Bay Education Group, Inc.)
a Charter School and Component Unit of the
District School Board of Bay County, Florida
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major
fund, and the aggregate remaining fund information of Central High School (“School”), a charter
school under Palm Bay Education Group, Inc. and component unit of the District School Board of
Bay County, Florida, as of and for the year ended June 30, 2019, and the related notes to the financial
statements, which collectively comprise the School’s basic financial statements as listed in the table
of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Governmental 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
School’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 School’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 opinion.
421
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund, and the aggregate
remaining fund information of the School, as of June 30, 2019, and the respective changes in
financial position thereof for the year ended in accordance with accounting principles generally
accepted in the United States of America.
Emphasis of Matter
As described in Note 1, the accompanying financial statements referred to above present only the
financial position of the School at June 30, 2019, and the respective changes in financial position for
the year then ended, and is not intended to be a complete presentation of Palm Bay Education Group,
Inc. These financial statements do not purport to and do not present fairly the financial position of
Palm Bay Education Group, Inc. as of June 30, 2019 and its changes in financial position for the year
then ended in conformity with accounting principles generally accepted in the United States of
America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis, the Budgetary Comparison Schedule, and Note to Required
Supplementary Information, as listed in the table of contents, be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is
required by the Governmental Accounting Standards Board who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational, economic,
or historic context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about methods of preparing the information
and comparing the information for consistency with management’s responses to our inquiries, the
basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September
25, 2019 on our consideration of the School’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements
and other matters. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide an
opinion on internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards in considering the
School’s internal control over financial reporting and compliance.
Respectfully submitted,
September 25, 2019
Tampa, Florida
422
CENTRAL HIGH SCHOOL (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ________________________________________________________________________________________________________
The Management’s Discussion and Analysis (MD&A) section of the annual financial report of
the Central High School (“School”), a charter school under Palm Bay Education Group, Inc.
provides an overview of the School’s activities for the fiscal year ended June 30, 2019.
Because the information contained in the MD&A is intended to highlight significant
transactions, events, and conditions, it should be considered in conjunction with the School’s
financial statements and notes to financial statements as listed in the table of contents.
FINANCIAL HIGHLIGHTS
➢ For the fiscal year ended June 30, 2019, the School’s expenses exceeded revenues as
shown on the School’s statement of activities by $106,824.
➢ As shown on the balance sheet – governmental funds, the School reported a total fund
balance of $303,598.
➢ A net pension liability of $320,781 is reported on the statement of net position for
pensions, as the School participates in the Florida retirement system.
OVERVIEW OF THE FINANCIAL STATEMENTS
The basic financial statements consist of three components:
➢ Government-wide financial statements
➢ Fund financial statements
➢ Notes to financial statements
Government-Wide Financial Statements
The government-wide financial statements provide both short-term and long-term information
about the School’s overall financial condition in a manner similar to those of a private-sector
business. The statements include a statement of net position and a statement of activities that are
designed to provide consolidated financial information about the governmental and business-type
activities of the School presented on the accrual basis of accounting. The statement of net
position provides information about the government’s financial position, its assets and liabilities,
using an economic resources measurement focus. The difference between the assets and
liabilities, the net position, is a measure of the financial health of the School. The statement of
activities presents information about the change in the School’s net position and the results of
operations, during the fiscal year. An increase or decrease in net position is an indication of
whether the School’s financial health is improving or deteriorating. To assess the overall
financial position of the School, one needs to consider additional non-financial factors such as
changes in the School student base funding level.
423
CENTRAL HIGH SCHOOL (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ________________________________________________________________________________________________________
Fund Financial Statements
Fund financial statements are one of the components of the basic financial statements. A fund is
a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. Fund financial statements provide more detailed
information about the School’s financial activities, focusing on its most significant funds rather
than fund types. This is in contrast to the entity-wide perspective contained in the government-
wide statements.
Governmental Funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, the
governmental funds utilize a spendable financial resources measurement focus rather than the
economic resources measurement focus found in the government-wide financial statements. The
financial resources measurement focus allows the governmental fund statements to provide
information on near-term inflows and outflows of spendable resources as well as balances of
spendable resources available at the end of the fiscal year.
The governmental fund statements provide a detailed short-term view that may be used to
evaluate the School’s near-term financing requirements. This short-term view is useful when
compared to the long-term view presented as governmental activities in the government-wide
financial statements. To facilitate this comparison, both the governmental funds balance sheet
and the governmental funds statement of revenues, expenditures, and changes in fund balances
provide a reconciliation of governmental fund to governmental activities.
The governmental funds balance sheet and statement of revenues, expenditures, and changes in
fund balances provide detailed information about the School’s most significant funds. The
School operates two funds; a General Fund to account for its general operations and internal
account activities, and a Capital Projects Fund to account for its charter school capital outlay
funds. For reporting purposes, the School considers both funds major funds.
The School adopts an annual budget for its governmental funds. A budgetary comparison
schedule, as required, has been provided for the General Fund to demonstrate compliance with
the budget.
Notes to Financial Statements
The notes provide additional information that is essential for a full understanding of the data
provided in the government-wide and fund financial statements.
424
CENTRAL HIGH SCHOOL (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ________________________________________________________________________________________________________
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The following is a summary of the School’s current year and prior year net position:
6-30-18 6-30-19
Increase
(Decrease)
ASSETS
Current and Other Assets 546,881$ 412,725$ (134,156)$
Capital Assets, net 183,632 90,992 (92,640)
Total Assets 730,513 503,717 (226,796)
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 190,796 302,370 111,574
Total Deferred Outflows of Resources 190,796 302,370 111,574
LIABILITIES
Current and Other Liabilities 195,242 34,127 (161,115)
Long Term Liabilities 3,892 322,726 318,834
Total Liabilities 199,134 356,853 318,834
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 10,758 29,599 18,841
Total Deferred Inflows of Resources 10,758 29,599 18,841
NET POSITION
Net Investment in Capital Assets 179,740 89,047 (90,693)
Unrestricted 346,719 330,588 (16,131)
Total Net Position 526,459$ 419,635$ (106,824)$
Net Position, End of Year
Governmental Activities
The largest portion of the School’s assets is cash & cash equivalents, accounts receivable, a note
receivable, and the School's investment in capital assets net of accumulated depreciation.
Current liabilities consist of salaries and benefits payable and a due to a related charter school
included within the accounts payable account. Long-term liabilities consist of a lease payable
and the net pension liability for the Florida Retirement System. Total net position amounted to
$419,635 which included an unrestricted net position balance of $330,588
.
425
CENTRAL HIGH SCHOOL (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ________________________________________________________________________________________________________
The following is a summary of the School’s change in net position for the current year and prior
year:
The largest revenue source for the School is the State of Florida (95%). Revenues from State
sources for current operations are primarily received through the Florida Education Finance
Program (FEFP) funding formula. The FEFP formula utilizes student enrollment data to
determine the funds available for the School.
The largest concentrations of expenses were for instruction related functions (35%) and school
administration (31%) during the year. The facilities acquisition and construction function was
expended on the facility lease for the educational building.
6-30-18 6-30-19
Increase
(Decrease)
Revenues:
Federal Through State and Local 202,027$ -$ (202,027)$
State Sources 1,081,763 1,097,127 15,364
Local and Other 77,595 54,329 (23,266)
Total Revenues 1,361,385 1,151,456 (209,929)
Expenses:
Instruction 398,491 389,793 (8,698)
Instructional Support Services 15,926 51,579 35,653
Instructional Staff Training 6,077 1,437 (4,640)
Instructional-Related Technology 30,769 24,290 (6,479)
Board 65,449 72,199 6,750
General Administration 1,909 - (1,909)
School Administration 378,268 390,981 12,713
Facilities Acq. & Construction 136,928 113,545 (23,383)
Fiscal Services 30,953 30,463 (490)
Food Services 1,353 - (1,353)
Central Services 39,650 - (39,650)
Student Transportation 1,163 525 (638)
Operation of Plant 49,766 70,650 20,884
Maintenance of Plant 4,057 18,406 14,349
Community Service 87 1,071 984
Debt Service - Interest - 701 701
Unallocated Depreciation 25,061 57,354 32,293
Extraoridary Loss Due to Hurricane 35,286 35,286
Total Expenses 1,185,907 1,258,280 72,373
Increase/(Decrease) in Net Position 175,478$ (106,824)$ (282,302)$
Governmental Activities
Operating Results for the Year
426
CENTRAL HIGH SCHOOL (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ________________________________________________________________________________________________________
FINANCIAL ANALYSIS OF THE SCHOOL’S FUNDS
Governmental Funds
As the School completed the year, its governmental funds reported a combined fund balance of
$303,598.
BUDGETARY HIGHLIGHTS
The general fund budget for the fiscal year ended June 30, 2019, was developed based on the
School’s anticipated revenues and expenditures and the expected student population for the
school year. Actual expenditures were equal to the final budgeted expenditures. Refer to the
Budgetary Comparison Schedule for additional information.
CAPITAL ASSETS
The School was impacted by Hurricane Michael when it made landfall in October 2018. The
School facilities and their contents were damaged by the hurricane and the School required
building renovations and the replacement of equipment and furnishings. All of the related
building, improvements other than building and furniture and fixtures of the School is included
in the loss of hurricane-related damage. During the year ended June 30, 2019, the School
recognized a net loss of $35,286 as a result of the hurricane-related damage.
The School’s investment in capital assets for its governmental activities as of June 30, 2019,
amounts to $90,992 (net of accumulated depreciation). This investment in capital assets includes
furniture, fixtures, and equipment and leasehold improvements. Additional information
regarding the School’s capital assets is located in the notes to the financial statements.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the School’s finances.
Questions concerning any of the information provided in this report or requests for additional
financial information should be addressed to Palm Bay Education Group, Inc., 1104 Balboa
Avenue, Panama City, FL 32401.
427
Current Assets:
Cash & Cash Equivalents $ 115,294
Accounts Receivable 201,845
Note Receivable 75,000
Prepaid Expenses 20,586
Capital Assets:
Furniture, Fixtures, and Equipment, Net 61,039
Leasehold Improvements, Net 29,953
Total Capital Assets, Net 90,992
TOTAL ASSETS 503,717
Deferred outflow related to pensions 302,370
TOTAL DEFERRED OUTFLOWS OF RESOURCES 302,370
Accounts Payable 5,180
Salaries and Benefits Payable 28,947
Long Term Liabilities:
Capital Lease, due within one year 1,945
Net Pension Liability 320,781
TOTAL LIABILITIES 356,853
Deferred inflow related to pensions 29,599
TOTAL DEFERRED INFLOWS OF RESOURCES 29,599
Net Investment in Capital Assets 89,047
Unrestricted 330,588
TOTAL NET POSITION $ 419,635
CENTRAL HIGH SCHOOL
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Governmental
NET POSITION
STATEMENT OF NET POSITION
June 30, 2019
ActivitiesASSETS
LIABILITIES
DEFERRED OUTFLOWS OF RESOURCES
DEFERRED INFLOWS OF RESOURCES
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
The accompanying notes to the financial statements are an integral part of this statement.
- 8 -
428
Go
ver
nm
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ctiv
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-
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)
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11
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,18
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Gen
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:
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429
Cash & Cash Equivalents $ 115,294 $ - $ 115,294
Accounts Receivable 201,845 201,845
Prepaid Expenses 20,586 20,586
Total Assets $ 337,725 $ - $ 337,725
Accounts Payable $ 5,180 $ $ 5,180
Salaries and Benefits Payable 28,947 28,947
Total Liabilities 34,127 - 34,127
Unassigned 283,012 283,012
Nonspendable 20,586 20,586
Total Fund Balances 303,598 - 303,598
Total Liabilities and Fund Balances $ 337,725 $ - $ 337,725
FUND BALANCES
LIABILITIES
CENTRAL HIGH SCHOOL
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
BALANCE SHEET - GOVERNMENTAL FUNDS
ASSETS
June 30, 2019
General
Fund
Capital
Projects
Fund
Total
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
Governmental
Activities
The accompanying notes to the financial statements are an integral part of this statement.
- 10 -
430
Total Fund Balances - Governmental Funds $ 303,598
Amounts reported for governmental activities in the statement of
net position are different because:
Capital assets, net of accumulated depreciation, used in
governmental activities are not financial resources and
therefore, are not reported as assets in governmental funds. 90,992
Deferred Outflows and Inflows of resources are not available in the
current period and not reported in the governmental funds. 272,771
Long-term liabilities are not due and payable in the current period
and, therefore, are not reported as liabilities in the governmental
funds. Long-term liabilities at year-end consist of a capital lease
payable and the Net Pension Liability
Capital Lease Payable (1,945)
Net Pension Liability (320,781) (322,726)
Governmental funds report long-term debt and long term receivable
transactions as revenues or expenditures whereas these are not
reported in the statement of activities. 75,000
Total Net Position - Governmental Activities $ 419,635
June 30, 2019
CENTRAL HIGH SCHOOL
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
The accompanying notes to financial statements are an integral part of this statement.
- 11 -
431
Intergovernmental:
State Sources $ 1,017,941 $ 79,186 $ 1,097,127
Local and Other 54,329 54,329
Total Revenues 1,072,270 79,186 1,151,456
Current - Education:
Instruction 389,793 389,793
Instructional Support Services 51,579 51,579
Instructional Staff Training 1,437 1,437
Instructional-Related Technology 24,290 24,290
Board 72,199 72,199
School Administration 347,891 347,891
Facilities Acquisition & Construction 34,359 79,186 113,545
Fiscal Services 30,463 30,463
Student Transportation 525 525
Operation of Plant 70,650 70,650
Maintenance of Plant 18,406 18,406
Community Service 1,071 1,071
Debt Service:
Principal 1,947 1,947
Interest 701 701
Total Expenditures 1,045,311 79,186 1,124,497
Net Change in Fund Balances 26,959 - 26,959
Fund Balances, July 1, 2018 276,639 - 276,639 Fund Balances, June 30, 2019 $ 303,598 $ - $ 303,598
CENTRAL HIGH SCHOOL
IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Fiscal Year Ended June 30, 2019
Revenues
Expenditures
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
GeneralFund
CapitalProjects
Fund
TotalGovernmental
Funds
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
The accompanying notes to financial statements are an integral part of this statement.
- 12 -
432
Net Change in Fund Balances - Governmental Funds $ 26,959
Amounts reported for governmental activities in the statement of activities
are different because:
Capital outlays are reported in governmental funds as expenditures.
However, in the statement of activities, the cost of those assets is
allocated over their estimated useful lives as depreciation expense.
This is the amount of loss on disposal of fixed assets ($35,286)
and depreciation expense ($57,354) in the current period. (92,640)
Repayment of debt principal is an expenditure in the governmental funds,
but the payment reduces long-term liabilities in the statement of
net position. 1,947
Net effect of various transactions in the statement of activities that
do not require the use of current financial resources are not
reported in the governmental funds:
Pension Expense (calculated for net pension liability) (75,199)
Pension contributions made subsequent to the
pension liability measurement date of 6/30/18 32,109 (43,090)
Change in Net Position - Governmental Activities $ (106,824)
For the Fiscal Year Ended June 30, 2019
REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
CENTRAL HIGH SCHOOL
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
TO THE STATEMENT OF ACTIVITIES
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
The accompanying notes to the financial statements are an integral part of this statement.
- 13 -
433
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
➢ Reporting Entity
Central High School (‘School”) a charter school under Palm Bay Education
Group, Inc. is a compenent unit of the District School Board of Bay County,
Florida. The School is sponsored by its charter-holder, Palm Bay Education
Group, Inc., a not-for-profit corporation organized pursuant to Chapter 617,
Florida Statutes, the Florida Not-For-Profit Corporation Act. The governing body
of the School is the not-for-profit corporation Board of Directors, which is
comprised of five members.
The basic financial statements of the School present only the balances, activity
and disclosures related to the School. They do not purport to, and do not, present
fairly the financial position of Palm Bay Education Group, Inc. as of June 30,
2019, and its changes in financial position or budgetary comparisons, where
applicable, for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
The general operating authority of the School is contained in Section 1002.33,
Florida Statutes. The School operates under a charter of the sponsoring school
district, the District School Board of Bay County, Florida, (“District”). On July
28, 2015, the Bay County School District amended a charter agreement for
Central High School which changed the non-profit name to Palm Bay Education
Group, Inc. The current charter is effective for the period July 1, 2015 to June 30,
2020. At the end of the term of the charter, the District may choose not to renew
the charter under grounds specified in the charter. In this case, the District is
required to notify the school in writing at least 90 days prior to the charter’s
expiration. During the term of the charter, the District may also terminate the
charter if good cause is shown. In the event of termination of the charter, the
District shall assume operation of the School. The School is considered a
component unit of the District; therefore, for financial reporting purposes, the
School is required to follow generally accepted accounting principles applicable
to state and local governmental units.
Criteria for determining if other entities are potential component units which
should be reported within the School's basic financial statements are identified
and described in the Governmental Accounting Standards Board's (GASB)
Codification of Governmental Accounting and Financial Reporting Standards,
Sections 2100 and 2600. The application of these criteria provides for
identification of any entities for which the School is financially accountable and
other organizations for which the nature and significance of their relationship with
the School are such that exclusion would cause the School's basic financial
statements to be misleading or incomplete. Based on these criteria, no component
units are included within the reporting entity of the School.
434
➢ Basis of Presentation
Government-wide Financial Statements - Government-wide financial statements,
including the statement of Net Position and the statement of activities, present
information about the School as a whole.
Government-wide financial statements are prepared using the economic resources
measurement focus. The statement of activities presents a comparison between
direct expenses and program revenues for each function or program of the
School’s governmental activities. Direct expenses are those that are specifically
associated with a service, program, or department and are thereby clearly
identifiable to a particular function.
Program revenues include charges paid by the recipient of the goods or services
offered by the program and grants and contributions that are restricted to meeting
the operational or capital requirements of a particular program. Revenues that are
not classified as program revenues are presented as general revenues. The
comparison of direct expenses with program revenues identifies the extent to
which each governmental function is self-financing or draws from the general
revenues of the School.
Fund Financial Statements - Fund financial statements report detailed information
about the School in the governmental funds. The focus of governmental fund
financial statements is on major funds rather than reporting funds by type. Each
major fund is reported in a separate column. Because the focus of governmental
fund financial statements differs from the focus of government-wide financial
statements, a reconciliation is presented with each of the governmental fund
financial statements.
The School’s major governmental funds is as follows:
• General Fund – to account for all financial resources not required to be
accounted for in another fund, and for certain revenues from the State that are
legally restricted to be expended for specific current operating purposes.
• Capital Projects Fund – to account for all resources for the acquisition of
capital and related items purchased by the School with capital outlay funds.
➢ Basis of Accounting
Basis of accounting refers to when revenues and expenditures, or expenses, are
recognized in the accounts and reported in the financial statements. Basis of
accounting relates to the timing of the measurements made, regardless of the
measurement focus applied.
The government-wide financial statements are prepared using the accrual basis of
accounting. Revenues are recognized when earned and expenses are recognized
when a liability is incurred, regardless of the timing of the related cash flows.
Revenues from grants, entitlements, and donations are recognized in the fiscal
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year in which all eligibility requirements imposed by the provider have been
satisfied.
Governmental fund financial statements are prepared using the modified accrual
basis of accounting. Revenues, except for certain grant revenues, are recognized
when they become measurable and available. Revenues are considered to be
available when they are collectible within the current period or soon enough
thereafter to pay liabilities of the current period. The School considers revenues
to be available if they are collected within 30 days of the end of the current fiscal
year. When grant terms provide that the expenditure of resources is the prime
factor for determining eligibility for Federal, State, and other grant resources,
revenue is recognized at the time the expenditure is made. Under the modified
accrual basis of accounting, expenditures are generally recognized when the
related fund liability is incurred, except for principal and interest on long-term
debt, claims and judgments, and compensated absences, which are recognized
when due. Allocations of cost, such as depreciation, are not recognized in
governmental funds.
➢ Cash and Cash Equivalents
Cash and cash equivalents are defined as demand deposits, money market
accounts, and short term investments with original maturities of eight months or
less from date of acquisition. The School considers all demand accounts and
money market funds which are not subjected to withdrawal restrictions to be cash
and cash equivalents.
The School’s deposits are placed with banks and savings and loans qualified as
public depositories under Florida law. All deposits are insured by Federal
depository insurance, up to specified limits, or collateralized with securities held
in Florida’s multiple financial institution collateral pool as required by Chapter
280, Florida Statutes.
➢ Capital Assets
Expenditures for capital assets acquired or constructed for general School
purposes are reported in the governmental fund that financed the acquisition or
construction. The capital assets so acquired are reported at cost in the
government-wide statement of net position but are not reported in the
governmental fund financial statements. Capital assets are defined by the School
as those costing more than $750. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed. Donated assets are recorded
at fair value at the date of donation.
Capital assets are depreciated using the straight-line method over the following
estimated useful lives:
Description Estimated LivesFurniture, Fixtures and Equipment 5 yearsLeasehold Iimprovements 10 years
436
Current-year information relative to changes in capital assets is described in a
subsequent note.
➢ Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a
separate section for deferred outflows of resources. This separate financial
statement element, deferred outflows of resources, represents a consumption of
net position that applies to a future period(s) and so will not be recognized as an
outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will sometimes report
a separate section for deferred inflows of resources. This separate financial
statement element, deferred inflows of resources, represents an acquisition of net
position that applies to a future period(s) and so will not be recognized as an
inflow of resources (revenue) until then.
Net Pension Liability.
As a participating employer in the Florida Retirement System, the School
recognizes its proportionate share of the collective net pension liabilities of the
FRS cost-sharing multiple-employer defined benefit plans. As of June 30, 2019,
the School’s proportionate share of the net pension liabilities totaled $320,781.
The School’s retirement plans and related amounts are described in a subsequent
note.
➢ Net Position and Fund Balance Classification
Government-wide Financial Statements
Net Position are classified and reported in three components:
• Net Investment in Capital Assets – consists of capital assets, net of
accumulated depreciation, and reduced by the outstanding balances of any
borrowings that are attributed to the acquisition or improvement of those
assets.
• Restricted Net Position – consists of net position with constraints placed
on their use either by external groups such as creditors, contributors, or
laws or regulations of other governments.
• Unrestricted Net Position – all other net position that does not meet the
definition of “restricted” or “net investment in capital assets.”
Fund Financial Statements
GASB Codification Section 1800.142, Fund Balance Reporting and
Governmental Fund Type Definitions, defines the different types of fund balances
that a governmental entity must use for financial reporting purposes. GASB
requires the fund balance amounts to be reported within one of the following fund
balance categories:
437
• Nonspendable – fund balance associated with inventories, prepaid
expenses, long-term loans and notes receivable, and property held for
resale (unless the proceeds are restricted, committed or assigned). All
nonspendable fund balances at year end relate to assets that are in
nonspendable form.
• Restricted – fund balance that can be spent only for the specific purposes
stipulated by the constitution, external resource providers, or through
enabling legislation.
• Committed – fund balance that can be used only for the specific purposes
determined by a formal action of the School’s Board of Governance.
• Assigned – fund balance that is intended to be used by the School’s
management for specific purposes but does not meet the criteria to be
classified as restricted or committed.
• Unassigned – fund balance that is the residual amount for the School’s
general fund and includes all spendable amounts not contained in the other
classifications.
➢ Order of Fund Balance Spending Policy
The School’s policy is to apply expenditures against nonspendable fund balance,
restricted fund balance, committed fund balance, assigned fund balance, and
unassigned fund balance at the end of the fiscal year. First, nonspendable fund
balances are determined. Then restricted fund balances for specific purposes are
determined (not including nonspendable amounts). Any remaining fund balance
amounts for the non-general funds are to be classified as restricted fund balance.
It is possible for the non-general funds to be classified as restricted fund balance.
It is possible for the non-general funds to have negative unassigned fund balance
when nonspendable amounts plus the amount of restricted fund balances for
specific purposes exceed the positive fund balance for non-general fund.
➢ Revenue Sources
Revenues for current operations are received primarily from the District pursuant
to the funding provisions included in the School’s charter. In accordance with the
funding provisions of the charter and Section 1002.33(17), Florida Statutes, the
School reports the number of full-time equivalent students and related data to the
District.
Under provisions of Section 1011.62, Florida Statutes, the District reports the
number of full-time equivalent students and related data to the Florida
Department of Education (FDOE) for funding through the Florida Education
Finance Program (FEFP). Funding for the School is adjusted during the year to
reflect the revised calculations by the FDOE under the FEFP and the actual
weighted full-time equivalent (FTE) students reported by the School during
designated full-time equivalent student survey periods. The Department may also
adjust subsequent fiscal period allocations based upon an audit of the School's
438
compliance in determining and reporting FTE and related data. Normally, such
adjustments are treated as reductions or additions of revenue in the year when the
adjustments are made.
The basic amount of funding through the FEFP under Section 1011.62 is the
product of the (1) unweighted FTE, multiplied by (2) the cost factor for each
program, multiplied by (3) the base student allocation established by the
legislature. Additional funds for exceptional students who do not have a matrix of
services are provided through the guaranteed allocation designated in Section
1011.62(1)(e)2., Florida Statutes. For the fiscal year ended June 30, 2019, the
School reported 162.59 unweighted FTE and 162.92 weighted FTE.
FEFP funding may also be adjusted as a result of subsequent FTE audits
conducted by the Florida Auditor General pursuant to Section 1010.305, Florida
Statutes, and Rule 6A-1.0453, Florida Administrative Code (FAC). Schools are
required to maintain the following documentation for three years or until the
completion of an FTE audit:
• Attendance and membership documentation (Rule 6A-1.044 FAC).
• Teacher certificates and other certification documentation (Rule 6A-1.0503
FAC).
• Documentation for instructors teaching out-of-field (Rule 6A-1.0503 FAC).
• Procedural safeguards for weighted programs (Rule 6A-6.03411 FAC).
• Evaluation and planning documents for weighted programs (Section
1010.305, Florida Statutes, and Rule 6A-6.03411, FAC).
The School receives federal or state awards for the enhancement of various
educational programs. This assistance is generally received based on applications
submitted to and approved by various granting agencies. For federal or state
awards in which a claim to these grant proceeds is based on incurring eligible
expenditures, revenue is recognized to the extent that eligible expenditures have
been incurred.
The School follows the policy of applying restricted resources prior to applying
unrestricted resources when an expense is incurred for purposes for which both
restricted and unrestricted assets are available.
➢ Recently Issued Accounting Principles
Governmental Accounting Standards Board Statement No. 75, Accounting and
Financial Reporting for Postemployment Benefits Other than Pensions was
effective for fiscal years beginning after June 15, 2017. The net pension liability
for the FRS Pension Plan at July 1, 2017 has been increased due to the
restatement of the fund’s beginning net position as a result of the implementation
of GASB 75. The School’s proportionate share of the net pension liability
increased $34 and is reported in the Statement of Net Position and Statement of
Activities.
439
➢ Income Taxes
The School is exempt from Federal tax under Section 501(c)(3) of the Internal
Revenue Code. Accordingly, no provision for income taxes has been included in
the accompanying financial statements. Additionally, no uncertain tax positions
have been made requiring disclosure in the related note to financial statements.
The School’s income tax returns for the past three years are subject to
examination by tax authorities and may change upon examination.
➢ Use of Estimates
In preparing the financial statements in conformity with generally accepted
accounting principles in the United States (GAAP) management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the statement of net position and affect revenues and
expenditures for the period presented. Actual results could differ from those
estimates.
➢ Subsequent Events
Management has evaluated all events subsequent to the balance sheet date and
through the report date, which is the date these financial statements were available
to be issued. Management determined there are no subsequent events which
require disclosure.
2. CASH DEPOSITS
Custodial Credit Risk – Deposits. In the case of deposits, this is the risk that in the event
of a bank failure, the School’s deposits may not be returned to the School. The School
does not have a custodial credit risk policy. All cash deposits are held in banks that
qualify as public depositories under Florida law. All such deposits are insured by federal
depository insurance and/or collateralized with securities held in Florida’s multiple
financial institution collateral pool as required by Chapter 280, Florida Statutes.
3. ACCOUNTS RECEIVABLE – (RELATED PARTY)
During the current fiscal year, the School made payments for expenditures on behalf of
the Palm Bay Preparatory Academy for expenses. As of June 30, 2019, $201,845 is due
from Palm Bay Preparatory Academy, as reported on the School’s statement of net
position and balance sheet – governmental funds in the accounts receivable account.
4. NOTE RECEIVABLE – (RELATED PARTY)
On June 14, 2018, the School signed a promissory note to lend Palm Bay Elementary
School, a charter school under the same charter holder, $75,000. The promissory note
carries a zero percent interest rate and is to be repaid upon demand within five (5) years.
As of June 30, 2019, $75,000 is due to Central High School, as reported on the School’s
statement of net position.
440
5. CHANGES IN CAPITAL ASSETS
Changes in capital assets are presented in the table below:
Beginning Ending
Balance Additions Deletions Balance
Governmental Activities:
Furniture, Fixtures and Equipment 146,129$ (51,110)$ 95,019$
Leasehold Improvements 71,577 (34,584) 36,993
Total Capital Assets Being Depreciated 217,706 - (85,694) 132,012
Less Accumulated Depreciation for:
Furniture, Fixtures and Equipment (22,066) (47,346) 35,432 (33,980)
Leasehold Improvements (12,008) (10,008) 14,976 (7,040)
Total Accumulated Depreciation (34,074) (57,354) 50,408 (41,020)
Governmental Activities Capital Assets, Net 183,632$ (57,354)$ (35,286)$ 90,992$
All depreciation expense was shown as unallocated on the statement of activities.
6. CAPITAL LEASE
The capital lease payable consisted of the following:
Lease Consultants Corporation - Capitalized Lease Agreement 6/30/2019
For leased equipment. 22 month lease through 4/10/20. Monthly payments are
$190 with a $379 security deposit surrender as a purchase option at the end of
the lease. Interest rate of 10.6.%. 1,945$
Total Capital Lease Payable 1,945$
Future payment amounts for the capital lease payable are as follows:
Fiscal Year
Ending June 30 Total Principal Interest
2020 2,085 1,945 140
Total 2,085$ 1,945$ 140$
7. CHANGES IN LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities:
Beginning Ending Due in
Balance Additions Deductions Balance One Year
GOVERNMENTAL ACTIVITIES:
Capital Lease Payable 3,892$ -$ (1,947)$ 1,945$ 1,945$
Net Pension Liability 184,958 135,823 - 320,781 -
Total Governmental Activities 188,850$ 135,823$ (1,947)$ 322,726$ 1,945$
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8. SCHEDULE OF STATE REVENUE SOURCES
The following is a schedule of the School’s State revenue:
Source Amount
Public Charter School Grant Program 209,787 Florida Education Finance Program 662,598$
Class Size Reduction 142,387
Charter School Capital Outlay 79,186
Discretionary Local Effort 70,187
Supplemental Academic Instruction 46,421
ESE Guaranteed Allocation 23,714
Instructional Materials 12,996
Best & Brightest Teacher Scholarship 12,000
Safe Schools 10,544
Declining Enrollment 10,254
Reading Instruction 6,826
Discretionary Millage 5,549
Digital Classrooms Allocation 5,198
Mental Health 4,231
Fund Compression Allocation 2,405
Teacher Lead Program 2,129
Discretionary Lottery 502
Total State Revenue 1,097,127$
As provided in the charter school contract, the District has charged the School an
administrative fee amounting to $50,191.
9. FACILITY LEASE
Palm Bay Education Group, Inc. entered into an operating lease for its new educational
facility with CACPC, LLC, beginning August 1, 2017, through July 31, 2020. Rental
costs under this lease agreement for the 2018-19 fiscal year totaled $90,859.
The following is a schedule by years of future minimum rental costs:
June 30: Amount
2020 110,367$
2021 9,216
Total 119,583$
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10. RISK MANAGEMENT PROGRAMS
The School is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; and natural disasters for which the School
carries commercial insurance. There have been no significant reductions in insurance
coverage and settlement amounts have not exceeded insurance coverage for the current
year or the three prior years.
11. FLORIDA RETIREMENT SYSTEM (FRS) – Defined Benefit Pension Plans
General Information about the FRS
The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit
pension plan for participating public employees. The FRS was amended in 1998 to add
the Deferred Retirement Option Program (DROP) under the defined benefit plan and
amended in 2000 to provide a defined contribution plan alternative to the defined benefit
plan for FRS members effective July 1, 2002. This integrated defined contribution
pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the
HIS Program, a cost-sharing multiple-employer defined benefit pension plan to assist
retired members of any State-administered retirement system in paying the costs of health
insurance.
Essentially all regular employees of the School are eligible to enroll as members of the
State-administered FRS. Provisions relating to the FRS are established by Chapters 121
and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida
Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility,
contributions, and benefits are defined and described in detail. Such provisions may be
amended at any time by further action from the Florida Legislature. The FRS is a single
retirement system administered by the Florida Department of Management Services,
Division of Retirement, and consists of two cost-sharing multiple-employer defined
benefit plans and other nonintegrated programs. A comprehensive annual financial report
of the FRS, which includes its financial statements, required supplementary information,
actuarial report, and other relevant information, is available from the Florida Department
of Management Services’ Web site (www.dms.myflorida.com).
The School’s FRS and HIS pension expense totaled $75,199 for the fiscal year ended
June 30, 2019.
FRS Pension Plan
Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer
defined benefit pension plan, with a DROP for eligible employees. The general classes
of membership are as follows:
Regular Class – Members of the FRS who do not qualify for membership in the
other classes.
Employees enrolled in the Plan prior to July 1, 2011, vest at 6 years of creditable service
and employees enrolled in the Plan on or after July 1, 2011, vest at 8 years of creditable
443
service. All vested members, enrolled prior to July 1, 2011, are eligible for normal
retirement benefits at age 62 or at any age after 30 years of service. All members
enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal
retirement benefits at age 65 or any time after 33 years of creditable service. Employees
enrolled in the Plan may include up to 4 years of credit for military service toward
creditable service. The Plan also includes an early retirement provision; however, there
is a benefit reduction for each year a member retires before his or her normal retirement
date. The Plan provides retirement, disability, death benefits, and annual cost-of-living
adjustments to eligible participants.
DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees
eligible for normal retirement under the Plan to defer receipt of monthly benefit payments
while continuing employment with an FRS-participating employer. An employee may
participate in DROP for a period not to exceed 60 months after electing to participate.
During the period of DROP participation, deferred monthly benefits are held in the FRS
Trust Fund and accrue interest. The net pension liability does not include amounts for
DROP participants, as these members are considered retired and are not accruing
additional pension benefits.
Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years
of service, average final compensation, and service credit. Credit for each year of service
is expressed as a percentage of the average final compensation. For members initially
enrolled before July 1, 2011, the average final compensation is the average of the 5
highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the
average final compensation is the average of the 8 highest fiscal years’ earnings. The
total percentage value of the benefit received is determined by calculating the total value
of all service, which is based on retirement plan and/or the class to which the member
belonged when the service credit was earned. Members are eligible for in-line-of-duty or
regular disability and survivors’ benefits. The following chart shows the percentage
value for each year of service credit earned:
Class, Initial Enrollment, and Retirement Age/Years of Service % Value
Regular Class members initially enrolled before July 1, 2011
Retirement up to age 62 or up to 30 years of service 1.60
Retirement at age 63 or with 31 years of service 1.63
Retirement at age 64 or with 32 years of service 1.65
Retirement at age 65 or with 33 or more years of service 1.68
Regular Class members initially enrolled on or after July 1, 2011
Retirement up to age 65 or up to 33 years of service 1.60
Retirement at age 66 or with 34 years of service 1.63
Retirement at age 67 or with 35 years of service 1.65
Retirement at age 68 or with 36 or more years of service 1.68
As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the
FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the
annual cost-of-living adjustment is 3 percent per year. If the member is initially enrolled
444
before July 1, 2011, and has service credit on or after July 1, 2011, there is an
individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is
a proportion of 3 percent determined by dividing the sum of the pre-July 2011 service
credit by the total service credit at retirement multiplied by 3 percent. Plan members
initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after
retirement.
Contributions. The Florida Legislature establishes contribution rates for participating
employers and employees. Contribution rates during the 2018-19 fiscal year were as
follows:
Percent of Gross Salary
Class Employee Employer (1)
FRS, Regular 3.00 8.26
FRS, Reemployed Retiree (2) (2)
Notes: (1) Employer rates include 1.66 percent for the postemployment
health insurance subsidy. Also, employer rates, other than
for DROP participants, include 0.06 percent for
administrative costs of the Investment Plan.
(2) Contribution rates are dependent upon retirement class in
which reemployed.
The School’s contributions to the Plan totaled $22,904 for the fiscal year ended June 30,
2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a
liability of $179,476 for its proportionate share of the net pension liability. The net
pension liability was measured as of June 30, 2018, and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of July 1,
2018. The School’s proportionate share of the net pension liability was based on the
School’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year
contributions of all participating members. At June 30, 2018, the School’s proportionate
share was .000595860 percent, which was an increase of .000269538 percent from its
proportionate share measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of
$46,227. In addition, the School reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
445
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 15,204$ 552$
Change of assumptions 58,644 -
Net difference between projected and actual
earnings on FRS Plan investments - 13,867
Changes in proportion and differences between
School FRS contributions and proportionate
share of contributions 75,320 -
School FRS contributions subsequent to
the measurement date 22,904 -
Total 172,072$ 14,419$
The deferred outflows of resources related to pensions totaling $22,904, resulting from
School contributions subsequent to the measurement date, will be recognized as a
reduction of the net pension liability in the fiscal year ending June 30, 2020. Other
amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 23,026$
2021 15,714
2022 2,191
2023 10,463
2024 6,997
Thereafter 1,039
Actuarial Assumptions. The total pension liability in the July 1, 2018, actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included
in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Investment rate of return 7.00 percent, net of pension plan investment
expense, including inflation
Mortality rates were based on the Generational RP-2000 with Projection Scale BB.
The actuarial assumptions used in the July 1, 2018, valuation were based on the results of
an actuarial experience study for the period July 1, 2008, through June 30, 2013.
The long-term expected rate of return on pension plan investments was not based on
historical returns, but instead is based on a forward-looking capital market economic
model. The allocation policy’s description of each asset class was used to map the target
allocation to the asset classes shown below. Each asset class assumption is based on a
consistent set of underlying assumptions, and includes an adjustment for the inflation
446
assumption. The target allocation and best estimates of arithmetic and geometric real
rates of return for each major asset class are summarized in the following table:
Asset Class Target
Allocation (1)
Annual Arithmetic Return
Compound Annual
(Geometric) Return
Standard Deviation
Cash 1% 2.9% 2.9% 1.8%
Fixed Income 18% 4.4% 4.3% 4.0%
Global Equity 54% 7.6% 6.3% 17.0%
Real Estate (Property) 11% 6.6% 6.0% 11.3%
Private Equity 10% 10.7% 7.8% 26.5%
Strategic Investments 6% 6.0% 5.7% 8.6%
Total 100%
Assumed inflation - Mean 2.6% 1.9%
Note: (1) As outlined in the Plan's investment policy.
Discount Rate. The discount rate used to measure the total pension liability was 7.00
percent. The Plan’s fiduciary net position was projected to be available to make all
projected future benefit payments of current active and inactive employees. Therefore,
the discount rate for calculating the total pension liability is equal to the long-term
expected rate of return. The discount rate used in the 2018 valuation was updated from
7.1 percent to 7.0 percent.
Sensitivity of the School’s Proportionate Share of the Net Pension Liability to Changes in
the Discount Rate. The following presents the School’s proportionate share of the net
pension liability calculated using the discount rate of 7.0 percent, as well as what the
School’s proportionate share of the net pension liability would be if it were calculated
using a discount rate that is 1 percentage point lower (6.0 percent) or 1 percentage point
higher (8.0 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(6.0%) (7.0%) (8.0%)
School's proportionate share of
the net pension liability 327,551$ 179,476$ 56,491$
Pension Plan Fiduciary Net Position. Detailed information about the Plan’s fiduciary net
position is available in the separately issued FRS Pension Plan and Other State
Administered Systems Comprehensive Annual Financial Report.
HIS Pension Plan
Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer
defined benefit pension plan established under Section 112.363, Florida Statutes, and
447
may be amended by the Florida Legislature at any time. The benefit is a monthly
payment to assist retirees of State-administered retirement systems in paying their health
insurance costs and is administered by the Florida Department of Management Services,
Division of Retirement.
Benefits Provided. For the fiscal year ended June 30, 2019, eligible retirees and
beneficiaries received a monthly HIS payment of $5 for each year of creditable service
completed at the time of retirement with a minimum HIS payment of $30 and a
maximum HIS payment of $150 per month, pursuant to Section 112.363, Florida
Statutes. To be eligible to receive a HIS benefit, a retiree under a State-administered
retirement system must provide proof of health insurance coverage, which can include
Medicare.
Contributions. The HIS Plan is funded by required contributions from FRS participating
employers as set by the Florida Legislature. Employer contributions are a percentage of
gross compensation for all active FRS members. For the fiscal year ended June 30, 2019,
the contribution rate was 1.66 percent of payroll pursuant to Section 112.363, Florida
Statutes. The School contributed 100 percent of its statutorily required contributions for
the current and preceding 3 years. HIS Plan contributions are deposited in a separate
trust fund from which HIS payments are authorized. HIS Plan benefits are not
guaranteed and are subject to annual legislative appropriation. In the event the legislative
appropriation or available funds fail to provide full subsidy benefits to all participants,
benefits may be reduced or canceled.
The School’s contributions to the HIS Plan totaled $9,205 for the fiscal year ended June
30, 2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a net
pension liability of $141,305 for its proportionate share of the net pension liability. The
current portion of the net pension liability is the School’s proportionate share of benefit
payments expected to be paid within one year, net of the School’s proportionate share of
the HIS Plan’s fiduciary net position available to pay that amount. The net pension
liability was measured as of June 30, 2018, and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of July 1,
2018. The School’s proportionate share of the net pension liability was based on the
School’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year
contributions of all participating members. At June 30, 2018, the School’s proportionate
share was .001335068 percent, which was an increase of .000507997 percent from its
proportionate share measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of
$28,972. In addition, the School reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
448
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 2,163$ 240$
Change of assumptions 15,715 14,940
Net difference between projected and actual
earnings on HIS Plan investments 85 -
Changes in proportion and differences between
School HIS contributions and proportionate
share of contributions 103,130 -
School HIS contributions subsequent to
the measurement date 9,205 -
Total 130,298$ 15,180$
The deferred outflows of resources totaling $9,205, resulting from School contributions
subsequent to the measurement date, will be recognized as a reduction of the net pension
liability in the fiscal year ending June 30, 2020. Other amounts reported as deferred
outflows of resources and deferred inflows of resources related to pensions will be
recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 1,944$
2021 1,937
2022 1,357
2023 305
2024 (1,892)
Thereafter (867)
Actuarial Assumptions. The total pension liability in the July 1, 2017, actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included
in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Municipal bond rate 3.87 percent
Mortality rates were based on the Generational RP-2000 with Projected Scale BB.
While an experience study had not been completed for the HIS Plan, the actuarial
assumptions that determined the total pension liability for the HIS Plan were based on
certain results of the most recent experience study for the FRS Plan.
Discount Rate. The discount rate used to measure the total pension liability was 3.87
percent. In general, the discount rate for calculating the total pension liability is equal to
the single rate equivalent to discounting at the long-term expected rate of return for
benefit payments prior to the projected depletion date. Because the HIS benefit is
essentially funded on a pay-as-you-go basis, the depletion date is considered to be
immediate, and the single equivalent discount rate is equal to the municipal bond rate
449
selected by the plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal
Bond Index was adopted as the applicable municipal bond index.
Sensitivity of the School’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 3.87 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 (2.87 percent) or 1 percentage point
higher (4.87 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(2.87%) (3.87%) (4.87%)
School's proportionate share of
the net pension liability 160,938$ 141,305$ 124,940$
Pension Plan Fiduciary Net Position. Detailed information about the HIS Plan’s
fiduciary net position is available in the separately issued FRS Pension Plan and Other
State Administered Systems Comprehensive Annual Financial Report.
11. FRS – Defined Contribution Pension Plans
The SBA administers the defined contribution plan officially titled the FRS Investment
Plan (Investment Plan). The Investment Plan is reported in the SBA’s annual financial
statements and in the State of Florida Comprehensive Annual Financial Report.
As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to
participate in the Investment Plan in lieu of the FRS defined benefit plan. School
employees already participating in the State School System Optional Retirement Program
or DROP are not eligible to participate in the Investment Plan. Employer and employee
contributions are defined by law, but the ultimate benefit depends in part on the
performance of investment funds. Service retirement benefits are based upon the value of
the member’s account upon retirement. Benefit terms, including contribution
requirements, are established and may be amended by the Florida Legislature. The
Investment Plan is funded with the same employer and employee contributions rates, that
are based on salary and membership class (Regular Class, Senior Management Service
Class, etc.), as the FRS defined benefit plan. Contributions are directed to individual
member accounts, and the individual members allocate contributions and account
balances among various approved investment choices. Costs of administering the
Investment Plan, including the FRS Financial Guidance Program, are funded through an
employer contribution of 0.06 percent of payroll and by forfeited benefits of Investment
Plan members. Allocations to the Investment Plan member accounts during the 2018-19
fiscal year were as follows:
450
Percent of
Gross
Class Compensation
FRS, Regular 6.30
For all membership classes, employees are immediately vested in their own contributions
and are vested after 1 year of service for employer contributions and investment earnings
regardless of membership class. If an accumulated benefit obligation for service credit
originally earned under the FRS Pension Plan is transferred to the Investment Plan, the
member must have the years of service required for FRS Pension Plan vesting (including
the service credit represented by the transferred funds) to be vested for these funds and
the earnings on the funds. Nonvested employer contributions are placed in a suspense
account for up to 5 years. If the employee returns to FRS-covered employment within
the 5 year period, the employee will regain control over their account. If the employee
does not return within the 5 year period, the employee will forfeit the accumulated
account balance. For the fiscal year ended June 30, 2019, the information for the amount
of forfeitures was unavailable from the SBA; however, management believes that these
amounts, if any, would be immaterial to the School.
After termination and applying to receive benefits, the member may rollover vested funds
to another qualified plan, structure a periodic payment under the Investment Plan, receive
a lump-sum distribution, leave the funds invested for future distribution, or any
combination of these options. Disability coverage is provided in which the member may
either transfer the account balance to the FRS Pension Plan when approved for disability
retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan,
or remain in the Investment Plan and rely upon that account balance for retirement
income.
12. COMMITMENTS AND CONTINGENT LIABILITIES
The School participates in state grant programs, which are governed by various rules and
regulations of the grantor agencies. Costs charged to the respective grant programs are
subject to audit and adjustment by the grantor agencies, therefore, to the extent that the
School has not complied with the rules and regulations governing the grants, refunds of
any money received may be required and the collectibility of any related receivables at
June 30, 2019, may be impaired.
In the opinion of the School, there are no significant liabilities relating to compliance
with the rules and regulations governing the respective grants; therefore, no provision has
been recorded in the accompanying financial statements for such contingencies.
451
13. EXTRAORDINARY LOSS
The School was impacted by a hurricane in October 2018. The School suffered a net loss
of $35,286 of capitalized assets as a result of hurricane related damage. The
Extraordinary Loss is shown as an expense on the Statement of Activities.
14. FUNDING AND CREDIT CONCENTRATIONS
The School receives substantially all of its support and revenue from federal, state and
local funding sources, passed through the District, in the form of performance and budget
based contracts. Continuing operation of the School is greatly dependent upon the
continued support of these governmental agencies.
15. LEGAL MATTERS
In the normal course of conducting its operations, the School occasionally becomes party
to various legal actions and proceedings. In the opinion of management, the ultimate
resolution of such legal matters will not have a significant adverse effect on the
accompanying financial statements.
452
Revenues:
Intergovernmental:
State Sources $ 1,227,172 $ 1,017,941 $ 1,017,941 $ -
Local and Other 33,908 54,329 54,329 -
Total Revenues 1,261,080 1,072,270 1,072,270 -
Expenditures:
Current - Education:
Instruction 454,538 389,793 389,793 -
Instructional Support Services 49,170 51,579 51,579 -
Instruction & Curriculum Development 25 - - -
Instructional Staff Training 1,710 1,437 1,437 -
Instructional-Related Technology 47,747 24,290 24,290 -
Board 76,503 72,199 72,199 -
School Administration 358,662 347,891 347,891 -
Facilities Acquisition & Construction 88,167 34,359 34,359 -
Fiscal Services 36,038 30,463 30,463 -
Central Services 6,479 - - -
Student Transportation 1,587 525 525 -
Operation of Plant 114,829 70,650 70,650 -
Maintenance of Plant 5,490 18,406 18,406 -
Community Service 132 1,071 1,071 -
Debt Service:
Principal 1,947 1,947 -
Interest 701 701
Total Expenditures 1,241,077 1,045,311 1,045,311 -
20,003 26,959 26,959 -
Fund Balance, July 1, 2018 481,309 276,639 276,639 - Fund Balance, June 30, 2019 $ 501,312 $ 303,598 $ 303,598 $ -
CENTRAL HIGH SCHOOL
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
Original FinalVariance withFinal Budget -
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (UNAUDITED)
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
Net Change in Fund Balance
General Fund
For the Fiscal Year Ended June 30, 2019
Budget Budget Actual Positive(Negative)
See Independent Auditor's Report.
- 33 -453
as of 6/30/18 as of 6/30/17
(Note 1) (Note 1)
Proportion of the net pension liability/(asset) 0.000595860% 0.000326322%
Proportionate share of the net pension liability/(asset) $ 179,476 $ 96,557
Covered-employee payroll $ 436,057 $ 263,625
Proportionate share of the net pension liability (asset) as a percentage of its
covered-employee payroll 41% 37%
Plan fiduciary net position as a percentage of the total pension liability (Note 2) 84.26% 83.59%
Note 1: GASB 68 requires information for 10 years. However, until a full 10-year trend is compiled, governments should
present information for only those years for which information is available.
Note 2: The Plan's fiduciary net position as a percentage of the total pension liability is published in Note 4 of the
Comprehensive Annual Financial Report.
CENTRAL HIGH SCHOOL
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Proportionate Share of Net Pension Liability
Florida Retirement System
See Independent Auditor's Report.
- 34 -454
as of 6/30/19 as of 6/30/18 as of 6/30/17
(Note 1) (Note 1) (Note 1)
Contractually required contribution $ 22,904 $ 16,982 $ 8,495
Contributions in relation to the contractually required contribution $ (22,904) $ (16,982) $ (8,495)
Contribution deficiency/(excess) 0 0 0
Covered-employee payroll $ 554,398 $ 436,057 $ 263,625
Contributions as a percentage of covered-employee payroll 4.13% 3.89% 3.22%
Note 1: GASB 68 requires information for 10 years. However, until a full 10-year trend is compiled, governments should present
information for only those years for which information is available.
CENTRAL HIGH SCHOOL
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Contributions
Florida Retirement System
See Independent Auditor's Report.
- 35 -455
as of 6/30/18 as of 6/30/17
(Note 1) (Note 1)
Proportion of the net pension liability/(asset) 0.001335068% 0.000827071%
Proportionate share of the net pension liability/(asset) $ 141,305 $ 88,434
Covered-employee payroll $ 436,057 $ 263,625
Proportionate share of the net pension liability/(asset) as a percentage of its
covered-employee payroll 32% 34%
Plan fiduciary net position as a percentage of the total pension liability (Note 2) 2.15% 1.64%
Note 1: GASB 68 requires information for 10 years. However, until a full 10-year trend is compiled, governments should present
information for only those years for which information is available.
Note 2: The Plan's fiduciary net position as a percentage of the total pension liability is published in Note 4 of the Comprehensive
Annual Financial Report.
CENTRAL HIGH SCHOOL
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Proportionate Share of Net Pension Liability
Health Insurance Subsidy Program
See Independent Auditor's Report.
- 36 -456
as of 6/30/19 as of 6/30/18 as of 6/30/17
(Note 1) (Note 1) (Note 1)
Contractually required contribution $ 9,205 $ 7,240 $ 4,377
Contributions in relation to the contractually required contribution $ (9,205) $ (7,240) $ (4,377)
Contribution deficiency/(excess) 0 0 0
Covered-employee payroll $ 554,398 $ 436,057 $ 263,625
Contributions as a percentage of covered-employee payroll 1.66% 1.66% 1.66%
Note 1: GASB 68 requires information for 10 years. However, until a full 10-year trend is compiled, governments should present information for
only those years for which information is available.
CENTRAL HIGH SCHOOL
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Contributions
Health Insurance Subsidy Program
See Independent Auditor's Report.
- 37 -457
1. BUDGETARY BASIS OF ACCOUNTING
Budgets are presented on the modified accrual basis of accounting. During the fiscal
year, expenditures were controlled at the object level (e.g., salaries and benefits,
purchased services, materials and supplies and capital outlay) within each activity (e.g.,
instruction, pupil personnel services and school administration). Budgets may be
amended by resolution at any Board meeting prior to the date for the annual report.
2. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF
CONTRIBUTIONS –FLORIDA RETIREMENT SYSTEM PENSION PLAN
Changes of Assumptions. The long-term expected rate of return was decreased from 7.1
percent to 7.0 percent, and the active member mortality assumption was updated.
3. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF
CONTRIBUTIONS –HEALTH INSURANCE SUBSIDY PENSION PLAN
Changes of Assumptions. The municipal bond rate used to determine total pension
liability was increased from 3.58 percent to 3.87 percent.
458
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
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 Directors Central High School
(A charter school under Palm Bay Education Group, Inc.)
a Charter School and Component Unit of the
District School Board of Bay County, Florida
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 the governmental activities, each major fund, and the aggregate remaining fund
information of Central High School (“School”), a charter school under Palm Bay Education
Group, Inc. and component unit of the District School Board of Bay County, Florida, as of and
for the year ended June 30, 2019, and the ended June 30, 2019, and the related notes to the
financial statements, which collectively comprise the School’s basic financial statements, and
have issued our report thereon dated September 25, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School’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 the
School’s internal control. Accordingly, we do not express an opinion on the effectiveness of the
School’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 combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the School’s financial statements will not be
prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency,
or combination of deficiencies, in internal control that is less severe than a material weakness,
yet important enough to merit attention by those 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.
459
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School’s financial statements are
free from material misstatement, we performed tests of compliance with certain provisions of
laws, regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances
of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the School’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 School’s
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
Respectfully submitted,
September 25, 2019
Tampa, Florida
460
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Management Letter as Required by Rules of the Florida Auditor General,
Chapter 10.850, Florida Statutes, Charter School Audits
needs to be updated when available
To the Board of Directors Central High School
(A charter school under Palm Bay Education Group, Inc.)
a Charter School and Component Unit of the
District School Board of Bay County, Florida
Report on the Financial Statements
We have audited the financial statements of the Central High School (“School”), a charter
school under Palm Bay Education Group, Inc. and a Charter School and Component Unit of the
District School Board of Bay County, Florida, as of and for the fiscal year ended June 30, 2019,
and have issued our report thereon dated September 25, 2019.
Auditor’s Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States and Chapter 10.850, Rules of
the Auditor General.
Other Reporting Requirements
We have issued our Independent Auditor's Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed
in Accordance with Government Auditing Standards. Disclosures in those reports and schedule,
which are dated September 25, 2019, should be considered in conjunction with this management
letter.
Prior Audit Findings
Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or not
corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report. There were no prior audit findings or recommendations.
Official Title
Section 10.854(1)(e)5., Rules of the Auditor General, requires that the name or official title of
the entity and the school code assigned by the Florida Department of Education be disclosed in
this management letter. The official title and the school code assigned by the Florida Department
of Education of the entity are Central High School, 030782.
461
Financial Condition and Management
Sections 10.854(1)(e)2. and 10.855(11), Rules of the Auditor General, require us to apply
appropriate procedures and communicate whether or not the School has met one or more of the
conditions described in Section 218.503(1), Florida Statutes, and to identify the specific
condition(s) met. In connection with our audit, we determined that the School did not meet any of
the conditions described in Section 218.503(1), Florida Statutes.
Pursuant to Sections 10.854(1)(e)6.a. and 10.855(12), Rules of the Auditor General, we applied
financial condition assessment procedures for the School. It is management’s responsibility to
monitor the School’s financial condition, and our financial condition assessment was based in
part on representations made by management and review of financial information provided by
same.
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we communicate any
recommendations to improve financial management. In connection with our audit, we did not
have any such recommendations.
Transparency
Sections 10.854(1)(e)7. and 10.855(13), Rules of the Auditor General, require us to apply
appropriate procedures and communicate the results of our determination as to whether the
School maintains on its Web site the information specified in Section 1002.33(9)(p), Florida
Statutes. In connection with our audit, we determined that the School maintained on its Web site
the information specified in Section 1002.33(9)(p), Florida Statutes.
Additional Matters
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we address in the
management letter any recommendations to improve financial management. In connection with
our audit, we did not have any such recommendations.
Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliance
with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to
have occurred, that have an effect on the financial statements that is less than material but which
warrants the attention of those charged with governance. In connection with our audit, we did
not have any such findings.
Purpose of this Letter
Our management letter is intended solely for the information and use of the Legislative Auditing
Committee, members of the Florida Senate and the Florida House of Representatives, the Florida
Auditor General, Federal and other granting agencies, the Board of Directors, applicable
management, and District School Board of Bay County, Florida and is not intended to be and
should not be used by anyone other than these specified parties.
Respectfully submitted,
September 25, 2019
Tampa, Florida
462
CHAUTAUQUA
CHARTER SCHOOL, INC.
A Charter School and Component Unit of the
District School Board of Bay County, Florida
INDEPENDENT AUDITOR’S REPORT
for the fiscal year ended JUNE 30, 2019
King & Walker, CPAs, PL ______________________________________________________________________________________________________________________
Certified Public Accountants
463
THIS PAGE IS INTENTIONALLY BLANK.
464
CHAUTAUQUA CHARTER SCHOOL, INC.
TABLE OF CONTENTS
PAGE
NO.
FINANCIAL SECTION
Independent Auditor’s Report 1
Management’s Discussion and Analysis – (Unaudited) 3
Basic Financial Statements
Government-Wide Financial Statements:
Statement of Net Position 8
Statement of Activities 9
Fund Financial Statements:
Balance Sheet – Governmental Funds 10
Reconciliation of the Governmental Funds Balance Sheet to the Statement
of Net Position 11
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds 12
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances to the Statement
of Activities 13
Notes to Financial Statements 14
Required Supplementary Information
Budgetary Comparison Schedule – General Fund & Major Special
Revenue Fund – (Unaudited) 33
Schedule of Proportionate Share of Net Pension Liability - FRS 34
Schedule of Contributions - FRS 35
Schedule of Proportionate Share of Net Pension Liability - HIS 36
Schedule of Contributions - HIS 37
Notes to Required Supplementary Information 38
COMPLIANCE AND INTERNAL CONTROL
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 Governmental Auditing Standards 39
Management Letter as required by Rules of the Florida Auditor General,
Chapter 10.850, Florida Statutes, Charter School Audits. 41
465
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Independent Auditor's Report
To the Board of Directors of the Chautauqua Charter School, Inc.,
a Charter School and Component Unit of the
District School Board of Bay County, Florida
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each
major fund, and the aggregate remaining fund information of Chautauqua Charter School, Inc.
(“School”), a charter school and component unit of the District School Board of Bay County,
Florida, as of and for the year ended June 30, 2019, and the related notes to the financial
statements, which collectively comprise the School’s basic financial statements as listed in the
table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Governmental
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 School’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 School’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 opinion.
466
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, each major fund, and the
aggregate remaining fund information of the School, as of June 30, 2019, and the respective
changes in financial position thereof for the year ended in accordance with accounting principles
generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis and the Required Supplementary Information, as listed
in the table of contents, be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or
historic context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about methods of preparing the
information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on the
information because the limited procedures do not provide us with sufficient evidence to express
an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
September 27, 2019 on our consideration of the School’s internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements and other matters. The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the School’s internal control over financial reporting and compliance.
Respectfully submitted,
September 27, 2019
Tampa, Florida
467
CHAUTAUQUA CHARTER SCHOOL, INC. A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ______________________________________________________________________________________________
The Management’s Discussion and Analysis (MD&A) section of the annual financial report of
the Chautauqua Charter School, Inc. (“School”) provides an overview of the School’s activities
for the fiscal year ended June 30, 2019.
Because the information contained in the MD&A is intended to highlight significant
transactions, events, and conditions, it should be considered in conjunction with the School’s
financial statements and notes to financial statements as listed in the table of contents.
FINANCIAL HIGHLIGHTS
▪ For the fiscal year ended June 30, 2019, the School’s expenses exceeded revenue as
shown on the School’s statement of activities by $46,546.
▪ As shown on the statement of net position, the School reported an unrestricted net
position balance of $398,714, which included accounting for reporting the unfunded
pension liabilities.
▪ The School reported an unassigned fund balance of $590,909 on the balance sheet –
governmental funds.
OVERVIEW OF THE FINANCIAL STATEMENTS
The basic financial statements consist of three components:
✓ Government-wide financial statements
✓ Fund financial statements
✓ Notes to financial statements
Government-Wide Financial Statements
The government-wide financial statements provide both short-term and long-term information
about the School’s overall financial condition in a manner similar to those of a private-sector
business. The statements include a statement of net position and a statement of activities that are
designed to provide consolidated financial information about the governmental activities of the
School presented on the accrual basis of accounting. The statement of net position provides
information about the government’s financial position, its assets and liabilities, using an
economic resources measurement focus. The difference between the assets and liabilities, the
net position, is a measure of the financial health of the School. The statement of activities
presents information about the change in the School’s net position and the results of operations,
during the fiscal year. An increase or decrease in net position is an indication of whether the
School’s financial health is improving or deteriorating. To assess the overall financial position
of the School, one needs to consider additional non-financial factors such as changes in the
School student base funding level.
468
CHAUTAUQUA CHARTER SCHOOL, INC. A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ______________________________________________________________________________________________
Fund Financial Statements
Fund financial statements are one of the components of the basic financial statements. A fund is
a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. Fund financial statements provide more detailed
information about the School’s financial activities, focusing on its most significant funds rather
than fund types. This is in contrast to the entity-wide perspective contained in the government-
wide financial statements.
Governmental Funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, the
governmental funds utilize a spendable financial resources measurement focus rather than the
economic resources measurement focus found in the government-wide financial statements. The
financial resources measurement focus allows the governmental fund financial statements to
provide information on near-term inflows and outflows of spendable resources as well as
balances of spendable resources available at the end of the fiscal year.
The governmental fund financial statements provide a detailed short-term view that may be used
to evaluate the School’s near-term financing requirements. This short-term view is useful when
compared to the long-term view presented as governmental activities in the government-wide
financial statements. To facilitate this comparison, both the governmental funds balance sheet
and the governmental funds statement of revenues, expenditures, and changes in fund balances
provide a reconciliation of governmental fund to governmental activities.
The governmental funds balance sheet and statement of revenues, expenditures, and changes in
fund balances provide detailed information about the School’s most significant funds. The
School operates the following funds; a General Fund to account for its general operations and
internal account activities, a Capital Projects Fund to account for charter school capital outlay
funding to be used for rent or construction of school facilities, and a Special Revenue Fund to
account for Federal grant programs. The School has elected to show each fund as a major fund.
The School adopts an annual budget for its governmental funds. A budgetary comparison
schedule, as required, has been provided for the General Fund and Major Special Revenue Fund
to demonstrate compliance with the budget.
Notes to Financial Statements
The notes provide additional information that is essential for a full understanding of the data
provided in the government-wide and fund financial statements.
469
CHAUTAUQUA CHARTER SCHOOL, INC. A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ______________________________________________________________________________________________
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The following is a summary of the School’s current year and prior year net position:
6-30-18 6-30-19
Increase
(Decrease)
ASSETS
Current and Other Assets 667,129$ 642,328$ (24,801)$
Capital Assets, Net 42,249 111,264 69,015
Total Assets 709,378 753,592 44,214
DEFERRED OUTLOWS OF RESOURCES
Deferred Outflow Related to Pensions 111,199 136,088 24,889
Total Deferred Outflows of Resources 111,199 136,088 24,889
LIABILITIES
Current Liabilities 39,477 42,999 3,522
Noncurrent Liabilities 254,267 363,012 108,745
Total Liabilities 293,744 406,011 112,267
DEFERRED INFLOWS OF RESOURCES
Deferred Inflow Related to Pensions 46,349 49,731 3,382
Total Deferred Inflows of Resources 46,349 49,731 3,382
NET ASSETS
Net Investment in Capital Assets 42,249 35,224 (7,025)
Unrestricted 438,235 398,714 (39,521)
Total Net Position 480,484$ 433,938$ (46,546)$
Governmental Activities
Net Position, End of Year
Current assets are primarily comprised of cash & cash equivalents and amounts due from other
agencies. Current liabilities consist of vendor accounts payable. Deferred outflows and inflows
and the associated net pension liability relate to the School’s participation in the Florida
Retirement System (FRS) to report the employer’s proportional share of the net pension liability
of the plans. The amount of the net pension liability, a long-term debt, related to the FRS
participation as of June 30, 2019 amounts to $286,972.
470
CHAUTAUQUA CHARTER SCHOOL, INC. A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ______________________________________________________________________________________________
The following is a summary of the School’s change in net position for the current year and prior
year:
6-30-18 6-30-19
Increase
(Decrease)
Revenues:
Federal Through State and Local 60,358$ 65,066$ 4,708$
State Sources 735,595 855,327 119,732
Local and Other 179,523 115,771 (63,752)
Total Revenues 975,476 1,036,164 60,688
Expenses:
Instruction 648,577 754,104 105,527
Pupil Personnel Services 69,083 69,358 275
Instruction & Curriculum Development 810 810
Instructional Staff Training 500 500
Instruction Related Technology 149 850 701
Board 60,114 46,326 (13,788)
School Administration 47,563 39,694 (7,869)
Facilities Acq. & Construction 21,000 7,000 (14,000)
Fiscal Services 26,338 26,419 81
Pupil Transportation 22,725 3,618 (19,107)
Operation of Plant 26,342 59,256 32,914
Maintenance of Plant 2,803 65,762 62,959
Community Service 1,680 1,020 (660)
Debt Service - Interest 351 351
Unallocated Depreciation 5,206 7,642 2,436
Total Expenses 931,580 1,082,710 151,130
Increase/(Decrease) in Net Position 43,896$ (46,546)$ (90,442)$
Governmental Activities
Operating Results for the Year
The School received funding primarily from the State of Florida (83%) and Federal grants (6%).
Revenues from State sources for current operations are primarily received through the Florida
Education Finance Program (FEFP) funding formula and Charter School Capital Outlay funds.
Both sources utilize student enrollment data to determine the funds available for the School.
Federal funding was received through a grant from Department of Transportation and grants
through the Department of Education.
During the fiscal year ended June 30, 2019, the largest concentration of expenses were for
instruction related functions (76%).
471
CHAUTAUQUA CHARTER SCHOOL, INC. A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ______________________________________________________________________________________________
FINANCIAL ANALYSIS OF THE SCHOOL’S FUNDS
Governmental Funds
As the School completed the year, its governmental funds reported a combined fund balance of
$599,329.
GENERAL FUND BUDGETARY HIGHLIGHTS
The general fund budget for the fiscal year ended June 30, 2019, was developed based on the
School’s anticipated revenues and expenditures and the expected student population for the
school year. For the year ended June 30, 2019, actual expenditures were equal to the final
budgeted amounts. Refer to the Budgetary Comparison Schedule for additional reference.
CAPITAL ASSETS
The School’s investment in capital assets as of June 30, 2019, amounts to $111,264, net of
accumulated depreciation. This investment in capital assets includes buildings, vehicles,
software, and furniture, fixtures, and equipment. Additional information about the School’s
capital assets is presented in the Notes to the financial statements.
LONG-TERM LIABILITIES
At June 30, 2019, the School had $76,040 outstanding as a result of a mortgage on the School’s
educational facilities. The School also reported a liability of $286,972 for its proportionate share
of the net pension liability. Additional information about the School’s long-term liabilities are
presented in the notes to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
Facts, decisions, or conditions that are expected to have a significant effect on the financial
position or results of operations for the School in fiscal year 2020 include:
• Enrollment continues to be consistent.
• The School continues to enjoy strong community support.
• The School expects fund balance to continue to grow.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the School’s, finances and to
demonstrate the School’s accountability for the money it receives. Questions concerning any of
the information provided in this report or requests for additional financial information should be
addressed to the School Financial Services, Inc., Post Office Box 250, Bonifay, Florida 34425.
472
Cash & Cash Equivalents $ 597,839
Due From Other Agencies 36,069
Prepaid Expenses 8,420
Capital Assets:
Buildings, Net 95,965
Furniture, Fixtures & Equipment, Net 719
Vehicles, Net 14,580
Total Capital Assets, Net 111,264
Total Assets 753,592
Deferred Outflow Related to Pensions 136,088
Total Deferred Outflows of Resources 136,088
Accounts Payable 42,999
Long Term Liabilities:
Note Payable, due within one year 7,625
Note Payable, due after one year 68,415
Net Pension Liability 286,972
Total Liabilities 406,011
Deferred Inflow Related to Pensions 49,731
Total Deferred Inflows of Resources 49,731
Net Investment in Capital Assets 35,224
Unrestricted 398,714
Total Net Position $ 433,938
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
CHAUTAUQUA CHARTER SCHOOL, INC.
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Governmental
NET POSITION
STATEMENT OF NET POSITION
June 30, 2019
ActivitiesASSETS
LIABILITIES
DEFERRED OUTFLOWS OF RESOURCES
DEFERRED INFLOWS OF RESOURCES
The accompanying notes to the financial statements are an integral part of this statement.
- 8 -473
Net
(E
xpen
ses)
Rev
enue
and C
han
ges
in
Ch
arges
Op
erat
ing
Cap
ital
Net
Posi
tion
Ex
pen
ses
for
Gra
nts
an
d
Gra
nts
and
Gover
nm
enta
lS
ervic
esC
on
trib
uti
on
sC
ontr
ibuti
ons
Act
ivit
ies
Go
ver
nm
enta
l A
ctiv
itie
s:
Inst
ruct
ion
$7
54
,10
4$
-
$6
5,0
66
$-
$
(68
9,0
38
)
Pupil
Per
sonnel
Ser
vic
es6
9,3
58
(69
,35
8)
Inst
ruct
ion &
Curr
iculu
m D
evel
op
men
t8
10
(81
0)
Inst
ruct
ional
Sta
ff T
rain
ing
50
0(5
00
)
Inst
ruct
ion R
elat
ed T
echnolo
gy
85
0(8
50
)
Boar
d
46
,32
6(4
6,3
26
)
Sch
ool
Adm
inis
trat
ion
39
,69
4(3
9,6
94
)
Fac
ilit
ies
Acq
uis
itio
n &
Const
ruct
ion
7,0
00
7,0
00
-
Fis
cal
Ser
vic
es2
6,4
19
(26
,41
9)
Pupil
Tra
nsp
ort
atio
n3
,61
8(3
,61
8)
Oper
atio
n o
f P
lant
59
,25
612,1
31
(47
,12
5)
Mai
nte
nan
ce o
f P
lant
65
,76
215,5
70
(50
,19
2)
Com
munit
y S
ervic
e1
,02
0(1
,02
0)
Deb
t S
ervic
e -
Inte
rest
35
1(3
51
)
Unal
loca
ted D
epre
ciat
ion
7,6
42
(7,6
42
)
Tota
l G
over
nm
enta
l A
ctiv
itie
s$
1,0
82
,71
0$
-
$6
5,0
66
$34,7
01
(98
2,9
43
)
Gen
eral
Rev
enu
es:
Sta
te S
ou
rces
820,6
26
Lo
cal
and
Oth
er115,7
71
T
ota
l G
ener
al R
even
ues
936,3
97
Ch
ange
in N
et P
osi
tio
n(4
6,5
46
)
Net
Po
siti
on
- J
uly
1, 2
01
8480,4
84
Net
Po
siti
on
- J
un
e 3
0, 2
01
9$
433,9
38
CH
AU
TA
UQ
UA
CH
AR
TE
R S
CH
OO
L, IN
C.
For
the
Fis
cal
Yea
r E
nded
Ju
ne
30,
2019
Pro
gra
m R
even
ues
A C
HA
RT
ER
SC
HO
OL
AN
D C
OM
PO
NE
NT
UN
IT O
F T
HE
DIS
TR
ICT
SC
HO
OL
BO
AR
D O
F B
AY
CO
UN
TY
, F
LO
RID
A
ST
AT
EM
EN
T O
F A
CT
IVIT
IES
Th
e ac
com
pan
yin
g n
ote
s to
th
e fi
nan
cial
sta
tem
ents
are
an
in
tegra
l p
art
of
this
sta
tem
ent.
- 9
-
474
Special Capital Total
General Revenue Projects Governmental
Fund Fund Fund Funds
Cash & Cash Equivalents $ 597,839 $ - $ - $ 597,839
Due From Other Agencies 36,069 36,069
Due From Other Fund 36,069 36,069
Prepaid Expenses 8,420 8,420
Total Assets $ 642,328 $ 36,069 $ - $ 678,397
Accounts Payable $ 42,999 $ - $ - $ 42,999
Due To Other Fund 36,069 36,069
Total Liabilities 42,999 36,069 - 79,068
Nonspendable 8,420 - 8,420
Unassigned 590,909 - - 590,909
Total Fund Balances 599,329 - - 599,329
Total Liabilities and Fund Balances $ 642,328 $ 36,069 $ $ 678,397
FUND BALANCES
CHAUTAUQUA CHARTER SCHOOL, INC.
ASSETS
LIABILITIES
June 30, 2019
BALANCE SHEET - GOVERNMENTAL FUNDS
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
The accompanying notes to the financial statements are an integral part of this statement.
- 10 -475
Total Fund Balances - Governmental Funds $ 599,329
Amounts reported for governmental activities in the statement of
net position are different because:
Capital assets, net of accumulated depreciation, used in
governmental activities are not financial resources and
therefore, are not reported as assets in governmental funds. 111,264
Deferred Outflows and Inflows of Resources are not available
in the current period and not reported in the governmental funds
and, therefore, are not reported as liabilities in the governmental
funds. 86,357
Long-term liabilities are not reported in the governmental funds. Long-term liabilities at year end consist of:
Note Payable (76,040)
Net Pension Liability (286,972)
Total Net Position - Governmental Activities $ 433,938
June 30, 2019
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
CHAUTAUQUA CHARTER SCHOOL, INC.
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
The accompanying notes to financial statements are an integral part of this statement.
- 11 -476
Special Capital Total
General Revenue Projects Governmental
Fund Fund Fund Funds
Intergovernmental:
Federal Through State and Local $ - $ 65,066 $ - $ 65,066
State Sources 820,626 34,701 855,327
Local and Other 115,771 - 115,771
Total Revenues 936,397 65,066 34,701 1,036,164
Current - Education:
Instruction 689,038 65,066 754,104
Pupil Personnel Services 69,358 69,358
Instruction & Curriculum Development 810 810
Instructional Staff Training 500 500
Instruction Related Technology 850 850
Board 46,326 46,326
School Administration 28,496 28,496
Facilities Acquisition & Construction 7,000 7,000
Fiscal Services 26,419 26,419
Pupil Transportation 3,618 3,618
Operation of Plant 47,125 12,131 59,256
Maintenance of Plant 50,192 15,570 65,762
Community Service 1,020 1,020
Fixed Capital Outlay:
Facilities Acquisition & Construction 76,657 76,657
Debt Service:
Principal 617 617
Interest 351 351
Total Expenditures 1,041,377 65,066 34,701 1,141,144
(104,980) - - (104,980)
Other Financing Sources (Uses):
Proceeds from Loan 76,657 76,657
Total Other Financing Sources (Uses) 76,657 - - 76,657
Net Change in Fund Balances (28,323) - (28,323)
Fund Balances, July 1, 2018 627,652 - - 627,652 Fund Balances, June 30, 2019 $ 599,329 $ - $ - $ 599,329
CHAUTAUQUA CHARTER SCHOOL, INC.A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
Excess (Deficiency) of Revenues Over
Revenues
Expenditures
IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Fiscal Year Ended June 30, 2019
The accompanying notes to financial statements are an integral part of this statement.
- 12 -477
Net Change in Fund Balances - Governmental Funds $ (28,323)
Amounts reported for governmental activities in the statement of activities
are different because:
Capital outlays are reported in governmental funds as expenditures.
However, in the statement of activities, the cost of those assets is
allocated over their estimated useful lives as depreciation expense.
This is the amount of capital outlay expense ($76,657) in excess of
depreciation expense ($7,642) in the current period. 69,015
Repayment of debt principal is an expenditure in the governmental funds,
but the payment reduces long-term liabilities in the statement of
net position. 617
The inception of a long-term note proceeds provides current financial
resources to governmental funds but issuing debt increases long-term
liabilities in the Statement of Net Position (76,657)
Net effect of various transactions in the statement of activities that
do not require the use of current financial resources are not
reported in the governmental funds:
Pension Expense (calculated for net pension liability) (34,678)
Pension contributions made subsequent to the
pension liability measurement date of 6/30/18 23,480 (11,198)
Change in Net Position - Governmental Activities $ (46,546)
CHAUTAUQUA CHARTER SCHOOL, INC.
For the Fiscal Year Ended June 30, 2019
REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
TO THE STATEMENT OF ACTIVITIES
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
The accompanying notes to the financial statements are an integral part of this statement.
- 13 -
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
➢ Reporting Entity
The Chautauqua Charter School, Inc. (“School”) is a not-for-profit corporation
organized pursuant to Chapter 617, Florida Statutes, and the Florida Not-For-
Profit Corporation Act. The governing body of the School is the not-for-profit
corporation Board of Directors, which is comprised of not less than three
members.
The general operating authority of the School is contained in Section 1002.33,
Florida Statutes. The School operates under a charter of the sponsoring school
district, the District School Board of Bay County, Florida, (“District”). The
current charter is effective until June 30, 2029, and may be renewed by mutual
agreement between the School and the District. At the end of the term of the
charter, the District may choose not to renew the charter under grounds specified
in the charter. In this case, the District is required to notify the school in writing
at least 90 days prior to the charter’s expiration. During the term of the charter,
the District may also terminate the charter if good cause is shown. The School is
considered a component unit of the District; and meets the definition of a
governmental entity under the Audit and Accounting Guide – State and Local
Governments issued by the American Institute of Certified Public Accountants;
therefore, for financial reporting purposes, the School is required to follow
generally accepted accounting principles applicable to state and local
governmental units.
Criteria for determining if other entities are potential component units which
should be reported within the School's basic financial statements are identified
and described in the Governmental Accounting Standards Board's (GASB)
Codification of Governmental Accounting and Financial Reporting Standards,
Sections 2100 and 2600. The application of these criteria provides for
identification of any entities for which the School is financially accountable and
other organizations for which the nature and significance of their relationship with
the School are such that exclusion would cause the School's basic financial
statements to be misleading or incomplete. Based on these criteria, no component
units are included within the reporting entity of the School.
➢ Basis of Presentation
The School’s financial statements have been prepared in accordance with
generally accepted accounting principles as prescribed by the Governmental
Accounting Standards Board. Accordingly, both government-wide and fund
financial statements are presented.
Government-wide Financial Statements - Government-wide financial statements,
including the statement of net position and the statement of activities, present
information about the School as a whole.
Government-wide financial statements are prepared using the economic resources
measurement focus. The statement of activities presents a comparison between
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direct expenses and program revenues for each function or program of the
School’s governmental activities. Direct expenses are those that are specifically
associated with a service, program, or department and are thereby clearly
identifiable to a particular function.
Program revenues include charges paid by the recipient of the goods or services
offered by the program and grants and contributions that are restricted to meeting
the operational or capital requirements of a particular program. Revenues that are
not classified as program revenues are presented as general revenues. The
comparison of direct expenses with program revenues identifies the extent to
which each governmental function is self-financing or draws from the general
revenues of the School.
Fund Financial Statements - Fund financial statements report detailed information
about the School in the governmental funds. The focus of governmental fund
financial statements is on major funds rather than reporting funds by type. Each
major fund is reported in a separate column. Because the focus of governmental
fund financial statements differs from the focus of government-wide financial
statements, a reconciliation is presented with each of the governmental fund
financial statements.
The School’s major governmental funds are as follows:
• General Fund – to account for all financial resources not required to be
accounted for in another fund, and for certain revenues from the State that are
legally restricted to be expended for specific current operating purposes.
• Special Revenue Fund – To account for certain Federal grant program
resources.
• Capital Projects Fund – to account for all resources for the acquisition of
capital and related items purchased by the School with capital outlay funds.
➢ Basis of Accounting
Basis of accounting refers to when revenues and expenditures, or expenses, are
recognized in the accounts and reported in the financial statements. Basis of
accounting relates to the timing of the measurements made, regardless of the
measurement focus applied.
The government-wide financial statements are prepared using the accrual basis of
accounting. Revenues are recognized when earned and expenses are recognized
when a liability is incurred, regardless of the timing of the related cash flows.
Revenues from grants, entitlements, and donations are recognized in the fiscal
year in which all eligibility requirements imposed by the provider have been
satisfied.
Governmental fund financial statements are prepared using the modified accrual
basis of accounting. Revenues, except for certain grant revenues, are recognized
when they become measurable and available. Revenues are considered to be
available when they are collectible within the current period or soon enough
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thereafter to pay liabilities of the current period. The School considers revenues
to be available if they are collected within 60 days of the end of the current fiscal
year. When grant terms provide that the expenditure of resources is the prime
factor for determining eligibility for Federal, State, and other grant resources,
revenue is recognized at the time the expenditure is made. Under the modified
accrual basis of accounting, expenditures are generally recognized when the
related fund liability is incurred, except for principal and interest on long-term
debt, claims and judgments, and compensated absences, which are recognized
when due. Allocations of cost, such as depreciation, are not recognized in
governmental funds.
➢ Cash and Cash Equivalents
Cash and cash equivalents are defined as demand deposits, money market
accounts, and short term investments with original maturities of eight months or
less from date of acquisition. The School considers all demand accounts and
money market funds which are not subjected to withdrawal restrictions to be cash
and cash equivalents.
The School’s deposits are placed with banks and savings and loans which are
qualified as public depositories, prior to receipt of public monies, under Chapter
280, Florida statutes and the School’s policy. The School maintains its cash
accounts with one qualified public depository. The accounts routinely exceed the
federally insured limit of $250,000. Monies deposited in amounts greater than the
insurance coverage are secured by the bank’s pledging securities with the state
treasurer in the collateral pool. The School has not experienced any losses in such
accounts and does not believe it is exposed to any significant credit or custodial
risk.
➢ Capital Assets and Depreciation
Expenditures for capital assets acquired or constructed for general School
purposes are reported in the governmental fund that financed the acquisition or
construction. The capital assets so acquired are reported at cost in the
government-wide statement of net position but are not reported in the
governmental fund financial statements. Donated capital assets are recorded at
fair value at the date of donation. Capital assets are defined by the School as
those costing more than $750. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed.
Capital assets are depreciated using the straight-line method over the following
estimated useful lives:
Description Estimated Lives
Buildings 15 years
Furniture, Fixtures and Equipment 5 - 10 years
Software 5 years
Vehicles 5 years
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➢ Noncurrent Liabilities
Long-term obligations that will be financed by resources to be received in the
future by the general fund are reported in the government-wide financial
statements, not in the general fund. Capital improvement debt is reported net of
unamortized discount. The School amortizes debt discounts over the life of the
debt using the straight-line method. Current-year information relative to changes
in long-term debt is described in subsequent notes.
➢ Net Pension Liability
As a participating employer in the Florida Retirement System, the School
recognizes its proportionate share of the collective net pension liabilities of the
FRS cost-sharing multiple-employer defined benefit plans. As of June 30, 2019,
the School’s proportionate share of the net pension liabilities totaled $286,972.
The School’s retirement plans and related amounts are described in a subsequent
note.
➢ Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a
separate section for deferred outflows of resources. This separate financial
statement element, deferred outflows of resources, represents a consumption of
net position that applies to a future period(s) and so will not be recognized as an
outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will sometimes report
a separate section for deferred inflows of resources. This separate financial
statement element, deferred inflows of resources, represents an acquisition of net
position that applies to a future period(s) and so will not be recognized as an
inflow of resources (revenue) until then.
➢ Net Position and Fund Balance Classification
Government-wide Financial Statements
Net Position are classified and reported in three components:
• Net Investment in Capital Assets – consists of capital assets, net of
accumulated depreciation, and reduced by the outstanding balances of any
borrowings that are attributed to the acquisition or improvement of those
assets.
• Restricted Net Position – consists of net position with constraints placed
on their use either by external groups such as creditors, contributors, or
laws or regulations of other governments.
• Unrestricted Net Position – all other net position that does not meet the
definition of “restricted” or “net investment in capital assets.”
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Fund Financial Statements
GASB Codification Section 1800.142, Fund Balance Reporting and
Governmental Fund Type Definitions, defines the different types of fund balances
that a governmental entity must use for financial reporting purposes. GASB
requires the fund balance amounts to be reported within one of the following fund
balance categories:
• Nonspendable – fund balance associated with inventories, prepaid
expenses, long-term loans and notes receivable, and property held for
resale (unless the proceeds are restricted, committed or assigned). All
nonspendable fund balances at year end relate to assets that are in
nonspendable form.
• Restricted – fund balance that can be spent only for the specific purposes
stipulated by the constitution, external resource providers, or through
enabling legislation.
• Committed – fund balance that can be used only for the specific purposes
determined by a formal action of the School’s Board of Governance.
• Assigned – fund balance that is intended to be used by the School’s
management for specific purposes but does not meet the criteria to be
classified as restricted or committed.
• Unassigned – fund balance that is the residual amount for the School’s
general fund and includes all spendable amounts not contained in the other
classifications.
➢ Order of Fund Balance Spending Policy
The School’s policy is to apply expenditures against nonspendable fund balance,
restricted fund balance, committed fund balance, assigned fund balance, and
unassigned fund balance at the end of the fiscal year. First, nonspendable fund
balances are determined. Then restricted fund balances for specific purposes are
determined (not including nonspendable amounts). Any remaining fund balance
amounts for the non-general funds are to be classified as restricted fund balance.
It is possible for the non-general funds to be classified as restricted fund balance.
It is possible for the non-general funds to have negative unassigned fund balance
when nonspendable amounts plus the amount of restricted fund balances for
specific purposes exceed the positive fund balance for non-general fund.
➢ Revenue Sources
Revenues for current operations are received primarily from the District pursuant
to the funding provisions included in the School’s charter. As such, the School’s
revenue stream is largely dependent upon the general state of the economy and
the amounts allotted to the Florida Department of Education (FDOE) by the state
legislature. In accordance with the funding provisions of the charter and Section
1002.33(18), Florida Statutes, the School reports the number of full-time
equivalent students and related data to the District.
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Under provisions of Section 1011.62, Florida Statutes, the District reports the
number of full-time equivalent students and related data to the FDOE for funding
through the Florida Education Finance Program (FEFP). Funding for the School
is adjusted during the year to reflect the revised calculations by the FDOE under
the FEFP and the actual weighted full-time equivalent (FTE) students reported by
the School during designated full-time equivalent student survey periods. The
Department may also adjust subsequent fiscal period allocations based upon an
audit of the School's compliance in determining and reporting FTE and related
data. Normally, such adjustments are treated as reductions or additions of
revenue in the year when the adjustments are made. The District receives a 5%
administrative fee from the School, which is reflected in the accompanying
statement of activities and statement of revenues, expenditures and change in fund
balances – governmental funds.
The basic amount of funding through the FEFP under Section 1011.62 is the
product of the (1) unweighted FTE, multiplied by (2) the cost factor for each
program, multiplied by (3) the base student allocation established by the
legislature. Additional funds for exceptional students who do not have a matrix of
services are provided through the guaranteed allocation designated in Section
1011.62(1)(e)2., Florida Statutes. For the fiscal year ended June 30, 2019, the
School reported 47.5 unweighted and 107.6846 weighted FTE.
FEFP funding may also be adjusted as a result of subsequent FTE audits
conducted by the Florida Auditor General pursuant to Section 1010.305, Florida
Statutes, and Rule 6A-1.0453, Florida Administrative Code (FAC). Schools are
required to maintain the following documentation for three years or until the
completion of an FTE audit:
▪ Attendance and membership documentation (Rule 6A-1.044, FAC).
▪ Teacher certificates and other certification documentation (Rule 6A-
1.0503, FAC).
▪ Documentation for instructors teaching out-of-field (Rule 6A-1.0503,
FAC).
▪ Procedural safeguards for weighted programs (Rule 6A-6.03411, FAC).
▪ Evaluation and planning documents for weighted programs (Section
1010.305, Florida Statutes, and Rule 6A-6.03411, FAC).
The School receives federal or state awards for the enhancement of various
educational programs. This assistance is generally received based on applications
submitted to and approved by various granting agencies. For federal or state
awards in which a claim to these grant proceeds is based on incurring eligible
expenditures, revenue is recognized to the extent that eligible expenditures have
been incurred.
The School also receives state funds through the District under charter school
capital outlay funding pursuant to Section 1013.62, Florida Statutes. The amounts
received under this program are based on the School’s actual and projected
student enrollment during the fiscal year. Funds received under this program may
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only be used for lawful capital outlay expenditures and, as such are reflected as
restricted/reserved fund balance in the accompanying statement of net position
and balance sheet – governmental funds to the extent that they remain
unexpended.
The School also receives funding through donations and fundraising efforts,
school lunch sales and local property tax collections.
The School follows the policy of applying restricted resources prior to applying
unrestricted resources when an expense is incurred for purposes for which both
restricted and unrestricted assets are available.
A schedule of revenue sources for the current year is presented in a subsequent
note.
➢ Recently Issued Accounting Principles
Governmental Accounting Standards Board Statement No. 88, Certain
Disclosures Related to Debt, including Direct Borrowings and Direct Placements
was effective for fiscal years beginning after June 15, 2018. The School’s notes
related to debt reflect all required disclosures.
Governmental Accounting Standards Board Statement No. 75, Accounting and
Financial Reporting for Postemployment Benefits Other than Pensions was
effective for fiscal years beginning after June 15, 2017. The net pension liability
for the FRS Pension Plan at July 1, 2017 has been increased due to the
restatement of the fund’s beginning net position as a result of the implementation
of GASB 75. The School’s proportionate share of the net pension liability
increased $52 and is reported in the Statement of Net Position and Statement of
Activities.
➢ Income Taxes
The School is exempt from Federal tax under Section 501(c)(3) of the Internal
Revenue Code. Accordingly, no provision for income taxes has been included in
the accompanying financial statements. Additionally, no uncertain tax positions
have been made requiring disclosure in the related note to financial statements.
The School’s income tax returns for the past three years are subject to
examination by tax authorities and may change upon examination.
➢ Use of Estimates
In preparing the financial statements in conformity with generally accepted
accounting principles in the United States (GAAP) management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the statement of net position and affect revenues and
expenditures for the period presented. Actual results could differ from those
estimates.
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➢ Subsequent Events
Management has evaluated all events subsequent to the balance sheet date and
through the report date, which is the date these financial statements were available
to be issued. Management determined there are no subsequent events which
require disclosure.
2. CASH DEPOSITS
Custodial Credit Risk – Deposits. In the case of deposits, this is the risk that in the event
of a bank failure, the School’s deposits may not be returned to the School. The School
does not have a custodial credit risk policy. All cash deposits are held in banks that
qualify as public depositories under Florida law. All such deposits are insured by federal
depository insurance and/or collateralized with securities held in Florida’s multiple
financial institution collateral pool as required by Chapter 280, Florida Statutes.
3. DUE FROM OTHER AGENCIES
Amounts due from other agencies included in the accompanying statement of net
position and balance sheet – governmental funds represent grant expenditures awaiting
reimbursement by the Bay County School District and other State grant agencies. This
receivable is considered to be fully collectible and therefore, no allowance for
uncollectible accounts has been established.
4. CHANGES IN CAPITAL ASSETS
Changes in capital assets are presented in the table below:
Beginning Ending
Balance Additions Deletions Balance
GOVERNMENTAL ACTIVITIES
Capital Assets Being Depreciated:
Buildings 116,788$ 76,657$ -$ 193,445$
Furniture, Fixtures, and Equipment 109,162 109,162
Software 17,748 17,748
Vehicles 36,106 - 36,106
Total Capital Assets Being Depreciated 279,804 76,657 - 356,461
Less Accumulated Depreciation for:
Buildings (94,207) (3,273) (97,480)
Furniture, Fixtures, and Equipment (108,143) (300) (108,443)
Software (17,748) (17,748)
Vehicles (17,457) (4,069) (21,526)
Total Accumulated Depreciation (237,555) (7,642) - (245,197)
Governmental Activities Capital Assets, Net 42,249$ 69,015$ -$ 111,264$
All depreciation expense is shown as unallocated on the Statement of Activities.
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5. INTERFUND RECEIVABLES AND PAYABLES
At June 30, 2019, the General Fund was due $36,069 from the Special Revenue Fund for
expenditures awaiting reimbursement from other agencies. The amounts of interfund
receivables and payables are netted together and not reported on the statement of net
position.
6. NOTE PAYABLE
The School in June 2019 signed a promissory note with Hancock Whitney Bank for the
purchase through the assumption of the mortgage of its educational facility. Payments
will be made on a monthly basis of $968 for 38 months with a balloon payment due
August 18, 2022 of $51,353. The mortgage carries an annual interest rate of 5.5 percent.
In case of default for non-payment, the lender has the option to cause all payments to be
due and payable or foreclose on the property
The annual requirements amortize the note payable outstanding at June 30, 2019
follows:
Fiscal Year
Ending June 30: Total Principal Interest
2020 $ 11,617 $ 7,625 $ 3,992
2021 11,618 8,056 3,562
2022 11,617 8,510 3,107
2023 52,321 51,849 472
Total $ 87,173 $ 76,040 $ 11,133
7. CHANGES IN LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities:
Beginning Ending Due in
Balance Additions Deductions Balance One Year
GOVERNMENTAL ACTIVITIES:
Note Payable -$ 76,657$ 617$ 76,040$ 7,625$
Net Pension Liability 262,276 24,696 286,972 -
Total Governmental Activities 262,276$ 101,353$ 617$ 363,012$ 7,625$
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8. SCHEDULE OF STATE REVENUE SOURCES
The following is a schedule of the School’s State revenue:
Source Amount
Florida Education Finance Program 447,048$
ESE Guaranteed Allocation 133,927
Class Size Reduction 94,112
Vocational Rehab Summer Grant 68,000
Discretionary Local Effort 46,393
Charter School Capital Outlay 34,701
Supplementary Academic Instruction 13,563
Reading Allocation 4,512
Instructional Materials 3,797
Safe Schools Allocation 3,081
Miscellaneous 2,194
Digital Classroom Allocation 1,519
Mental Health Assistance 1,236
Fl Classroom Teacher Supply Assistance 912
Lottery Allocation 332
Total State Revenue 855,327$
As provided in the charter school contract, the District has charged the School an
administrative fee in the amount of $20,987.
9. FLORIDA RETIREMENT SYSTEM (FRS) – Defined Benefit Pension Plans
General Information about the Florida Retirement System (FRS)
The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit
pension plan for participating public employees. The FRS was amended in 1998 to add
the Deferred Retirement Option Program (DROP) under the defined benefit plan and
amended in 2000 to provide a defined contribution plan alternative to the defined benefit
plan for FRS members effective July 1, 2002. This integrated defined contribution
pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the
HIS Program, a cost-sharing multiple-employer defined benefit pension plan to assist
retired members of any State-administered retirement system in paying the costs of health
insurance.
Essentially all regular employees of the School are eligible to enroll as members of the
State-administered FRS. Provisions relating to the FRS are established by Chapters 121
and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida
Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility,
contributions, and benefits are defined and described in detail. Such provisions may be
amended at any time by further action from the Florida Legislature. The FRS is a single
retirement system administered by the Florida Department of Management Services,
Division of Retirement, and consists of two cost-sharing multiple-employer defined
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benefit plans and other nonintegrated programs. A comprehensive annual financial report
of the FRS, which includes its financial statements, required supplementary information,
actuarial report, and other relevant information, is available from the Florida Department
of Management Services’ Web site (www.dms.myflorida.com).
The School’s FRS and HIS pension expense totaled $34,678 for the fiscal year ended
June 30, 2019.
FRS Pension Plan
Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer
defined benefit pension plan, with a DROP for eligible employees. The general classes
of membership are as follows:
Regular Class – Members of the FRS who do not qualify for membership in the
other classes.
Employees enrolled in the Plan prior to July 1, 2011, vest at 6 years of creditable service
and employees enrolled in the Plan on or after July 1, 2011, vest at 8 years of creditable
service. All vested members, enrolled prior to July 1, 2011, are eligible for normal
retirement benefits at age 62 or at any age after 30 years of service. All members
enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal
retirement benefits at age 65 or any time after 33 years of creditable service. Employees
enrolled in the Plan may include up to 4 years of credit for military service toward
creditable service. The Plan also includes an early retirement provision; however, there
is a benefit reduction for each year a member retires before his or her normal retirement
date. The Plan provides retirement, disability, death benefits, and annual cost-of-living
adjustments to eligible participants.
DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees
eligible for normal retirement under the Plan to defer receipt of monthly benefit payments
while continuing employment with an FRS-participating employer. An employee may
participate in DROP for a period not to exceed 60 months after electing to participate.
During the period of DROP participation, deferred monthly benefits are held in the FRS
Trust Fund and accrue interest. The net pension liability does not include amounts for
DROP participants, as these members are considered retired and are not accruing
additional pension benefits.
Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years
of service, average final compensation, and service credit. Credit for each year of service
is expressed as a percentage of the average final compensation. For members initially
enrolled before July 1, 2011, the average final compensation is the average of the 5
highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the
average final compensation is the average of the 8 highest fiscal years’ earnings. The
total percentage value of the benefit received is determined by calculating the total value
of all service, which is based on retirement plan and/or the class to which the member
belonged when the service credit was earned. Members are eligible for in-line-of-duty or
regular disability and survivors’ benefits. The following chart shows the percentage
value for each year of service credit earned:
489
Class, Initial Enrollment, and Retirement Age/Years of Service % Value
Regular Class members initially enrolled before July 1, 2011
Retirement up to age 62 or up to 30 years of service 1.60
Retirement at age 63 or with 31 years of service 1.63
Retirement at age 64 or with 32 years of service 1.65
Retirement at age 65 or with 33 or more years of service 1.68
Regular Class members initially enrolled on or after July 1, 2011
Retirement up to age 65 or up to 33 years of service 1.60
Retirement at age 66 or with 34 years of service 1.63
Retirement at age 67 or with 35 years of service 1.65
Retirement at age 68 or with 36 or more years of service 1.68
As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the
FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the
annual cost-of-living adjustment is 3 percent per year. If the member is initially enrolled
before July 1, 2011, and has service credit on or after July 1, 2011, there is an
individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is
a proportion of 3 percent determined by dividing the sum of the pre-July 2011 service
credit by the total service credit at retirement multiplied by 3 percent. Plan members
initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after
retirement.
Contributions. The Florida Legislature establishes contribution rates for participating
employers and employees. Contribution rates during the 2018-19 fiscal year were as
follows:
Percent of Gross Salary
Class Employee Employer (1)
FRS, Regular 3.00 8.26
FRS, Reemployed Retiree (2) (2)
Notes: (1) Employer rates include 1.66 percent for the postemployment
health insurance subsidy. Also, employer rates, other than
for DROP participants, include 0.06 percent for
administrative costs of the Investment Plan.
(2) Contribution rates are dependent upon retirement class in
which reemployed.
The School’s contributions to the Plan totaled $17,894 for the fiscal year ended June 30,
2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a
liability of $176,436 for its proportionate share of the net pension liability. The net
pension liability was measured as of June 30, 2018, and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of July 1,
2018. The School’s proportionate share of the net pension liability was based on the
490
School’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year
contributions of all participating members. At June 30, 2018, the School’s proportionate
share was .0005857680 percent, which was an increase of .0000741520 percent from its
proportionate share measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of
$27,589. In addition, the School reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 14,947$ 542$
Change of assumptions 57,651 -
Net difference between projected and actual
earnings on FRS Plan investments - 13,632
Changes in proportion and differences between
School FRS contributions and proportionate
share of contributions 12,303 10,467
School FRS contributions subsequent to
the measurement date 17,894 -
Total 102,795$ 24,641$
The deferred outflows of resources related to pensions totaling $17,894, resulting from
School contributions subsequent to the measurement date, will be recognized as a
reduction of the net pension liability in the fiscal year ending June 30, 2020. Other
amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 22,636$
2021 15,448
2022 2,154
2023 10,286
2024 6,878
Thereafter 1,022
Actuarial Assumptions. The total pension liability in the July 1, 2018, actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included
in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Investment rate of return 7.00 percent, net of pension plan investment
expense, including inflation
Mortality rates were based on the Generational RP-2000 with Projection Scale BB.
The actuarial assumptions used in the July 1, 2018, valuation were based on the results of
an actuarial experience study for the period July 1, 2008, through June 30, 2013.
491
The long-term expected rate of return on pension plan investments was not based on
historical returns, but instead is based on a forward-looking capital market economic
model. The allocation policy’s description of each asset class was used to map the target
allocation to the asset classes shown below. Each asset class assumption is based on a
consistent set of underlying assumptions, and includes an adjustment for the inflation
assumption. The target allocation and best estimates of arithmetic and geometric real
rates of return for each major asset class are summarized in the following table:
Asset Class Target
Allocation (1)
Annual Arithmetic Return
Compound Annual
(Geometric) Return
Standard Deviation
Cash 1% 2.9% 2.9% 1.8%
Fixed Income 18% 4.4% 4.3% 4.0%
Global Equity 54% 7.6% 6.3% 17.0%
Real Estate (Property) 11% 6.6% 6.0% 11.3%
Private Equity 10% 10.7% 7.8% 26.5%
Strategic Investments 6% 6.0% 5.7% 8.6%
Total 100%
Assumed inflation - Mean 2.6% 1.9%
Note: (1) As outlined in the Plan's investment policy.
Discount Rate. The discount rate used to measure the total pension liability was 7.00
percent. The Plan’s fiduciary net position was projected to be available to make all
projected future benefit payments of current active and inactive employees. Therefore,
the discount rate for calculating the total pension liability is equal to the long-term
expected rate of return. The discount rate used in the 2018 valuation was updated from
7.1 percent to 7.0 percent.
Sensitivity of the School’s Proportionate Share of the Net Pension Liability to Changes in
the Discount Rate. The following presents the School’s proportionate share of the net
pension liability calculated using the discount rate of 7.0 percent, as well as what the
School’s proportionate share of the net pension liability would be if it were calculated
using a discount rate that is 1 percentage point lower (6.0 percent) or 1 percentage point
higher (8.0 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(6.0%) (7.0%) (8.0%)
School's proportionate share of
the net pension liability 322,004$ 176,436$ 55,534$
Pension Plan Fiduciary Net Position. Detailed information about the Plan’s fiduciary net
position is available in the separately issued FRS Pension Plan and Other State
Administered Systems Comprehensive Annual Financial Report.
492
HIS Pension Plan
Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer
defined benefit pension plan established under Section 112.363, Florida Statutes, and
may be amended by the Florida Legislature at any time. The benefit is a monthly
payment to assist retirees of State-administered retirement systems in paying their health
insurance costs and is administered by the Florida Department of Management Services,
Division of Retirement.
Benefits Provided. For the fiscal year ended June 30, 2019, eligible retirees and
beneficiaries received a monthly HIS payment of $5 for each year of creditable service
completed at the time of retirement with a minimum HIS payment of $30 and a
maximum HIS payment of $150 per month, pursuant to Section 112.363, Florida
Statutes. To be eligible to receive a HIS benefit, a retiree under a State-administered
retirement system must provide proof of health insurance coverage, which can include
Medicare.
Contributions. The HIS Plan is funded by required contributions from FRS participating
employers as set by the Florida Legislature. Employer contributions are a percentage of
gross compensation for all active FRS members. For the fiscal year ended June 30, 2019,
the contribution rate was 1.66 percent of payroll pursuant to Section 112.363, Florida
Statutes. The School contributed 100 percent of its statutorily required contributions for
the current and preceding 3 years. HIS Plan contributions are deposited in a separate
trust fund from which HIS payments are authorized. HIS Plan benefits are not
guaranteed and are subject to annual legislative appropriation. In the event the legislative
appropriation or available funds fail to provide full subsidy benefits to all participants,
benefits may be reduced or canceled.
The School’s contributions to the HIS Plan totaled $5,586 for the fiscal year ended June
30, 2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a net
pension liability of $110,536 for its proportionate share of the net pension liability. The
current portion of the net pension liability is the School’s proportionate share of benefit
payments expected to be paid within one year, net of the School’s proportionate share of
the HIS Plan’s fiduciary net position available to pay that amount. The net pension
liability was measured as of June 30, 2018, and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of July 1,
2018. The School’s proportionate share of the net pension liability was based on the
School’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year
contributions of all participating members. At June 30, 2018, the School’s proportionate
share was .0010443570 percent, which was an increase of .00008168 percent from its
proportionate share measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of
$7,089. In addition, the School reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
493
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 1,692$ 188$
Change of assumptions 12,293 11,687
Net difference between projected and actual
earnings on HIS Plan investments 67 -
Changes in proportion and differences between
School HIS contributions and proportionate
share of contributions 13,655 13,215
School HIS contributions subsequent to
the measurement date 5,586 -
Total 33,293$ 25,090$
The deferred outflows of resources totaling $5,586, resulting from School contributions
subsequent to the measurement date, will be recognized as a reduction of the net pension
liability in the fiscal year ending June 30, 2020. Other amounts reported as deferred
outflows of resources and deferred inflows of resources related to pensions will be
recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 1,521$
2021 1,515
2022 1,061
2023 238
2024 (1,480)
Thereafter (678)
Actuarial Assumptions. The total pension liability in the July 1, 2017, actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included
in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Municipal bond rate 3.87 percent
Mortality rates were based on the Generational RP-2000 with Projected Scale BB.
While an experience study had not been completed for the HIS Plan, the actuarial
assumptions that determined the total pension liability for the HIS Plan were based on
certain results of the most recent experience study for the FRS Plan.
Discount Rate. The discount rate used to measure the total pension liability was 3.87
percent. In general, the discount rate for calculating the total pension liability is equal to
the single rate equivalent to discounting at the long-term expected rate of return for
benefit payments prior to the projected depletion date. Because the HIS benefit is
essentially funded on a pay-as-you-go basis, the depletion date is considered to be
immediate, and the single equivalent discount rate is equal to the municipal bond rate
494
selected by the plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal
Bond Index was adopted as the applicable municipal bond index.
Sensitivity of the School’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 3.87 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 (2.87 percent) or 1 percentage point
higher (4.87 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(2.87%) (3.87%) (4.87%)
School's proportionate share of
the net pension liability 125,894$ 110,536$ 97,734$
Pension Plan Fiduciary Net Position. Detailed information about the HIS Plan’s
fiduciary net position is available in the separately issued FRS Pension Plan and Other
State Administered Systems Comprehensive Annual Financial Report.
10. FRS – Defined Contribution Pension Plans
The SBA administers the defined contribution plan officially titled the FRS Investment
Plan (Investment Plan). The Investment Plan is reported in the SBA’s annual financial
statements and in the State of Florida Comprehensive Annual Financial Report.
As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to
participate in the Investment Plan in lieu of the FRS defined benefit plan. School
employees already participating in the State School System Optional Retirement Program
or DROP are not eligible to participate in the Investment Plan. Employer and employee
contributions are defined by law, but the ultimate benefit depends in part on the
performance of investment funds. Service retirement benefits are based upon the value of
the member’s account upon retirement. Benefit terms, including contribution
requirements, are established and may be amended by the Florida Legislature. The
Investment Plan is funded with the same employer and employee contributions rates, that
are based on salary and membership class (Regular Class, Senior Management Service
Class, etc.), as the FRS defined benefit plan. Contributions are directed to individual
member accounts, and the individual members allocate contributions and account
balances among various approved investment choices. Costs of administering the
Investment Plan, including the FRS Financial Guidance Program, are funded through an
employer contribution of 0.06 percent of payroll and by forfeited benefits of Investment
Plan members. Allocations to the Investment Plan member accounts during the 2018-19
fiscal year were as follows:
Percent of
Gross
Class Compensation
FRS, Regular 6.30
495
For all membership classes, employees are immediately vested in their own contributions
and are vested after 1 year of service for employer contributions and investment earnings
regardless of membership class. If an accumulated benefit obligation for service credit
originally earned under the FRS Pension Plan is transferred to the Investment Plan, the
member must have the years of service required for FRS Pension Plan vesting (including
the service credit represented by the transferred funds) to be vested for these funds and
the earnings on the funds. Nonvested employer contributions are placed in a suspense
account for up to 5 years. If the employee returns to FRS-covered employment within
the 5 year period, the employee will regain control over their account. If the employee
does not return within the 5 year period, the employee will forfeit the accumulated
account balance. For the fiscal year ended June 30, 2019, the information for the amount
of forfeitures was unavailable from the SBA; however, management believes that these
amounts, if any, would be immaterial to the School.
After termination and applying to receive benefits, the member may rollover vested funds
to another qualified plan, structure a periodic payment under the Investment Plan, receive
a lump-sum distribution, leave the funds invested for future distribution, or any
combination of these options. Disability coverage is provided in which the member may
either transfer the account balance to the FRS Pension Plan when approved for disability
retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan,
or remain in the Investment Plan and rely upon that account balance for retirement
income.
11. SCHOOL FOOD SERVICE AGREEMENT
The School’s students’ lunches are provided at Bay County High School, at no cost. In
exchange for lunch, the students assist with the cleanup of the cafeteria. No revenues or
expenditures are reflected in these financial statements for transactions related to the
provision of meals.
12. FACILITY LEASE
The School leases facility space under a month to month operating lease. The School
purchased the facility in June 2019. (See Note 6 to the financial statements) Lease
expense for the year ended June 30, 2019, totaled $7,000.
13. RISK MANAGEMENT PROGRAM
The School is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; and natural disasters for which the School
carries commercial insurance. There have been no significant reductions in insurance
coverage and settlement amounts have not exceeded insurance coverage for the current
year or the three prior years.
496
14. COMMITMENTS AND CONTINGENT LIABILITIES
The School participates in state and federal grant programs, which are governed by
various rules and regulations of the grantor agencies. Costs charged to the respective
grant programs are subject to audit and adjustment by the grantor agencies, therefore, to
the extent that the School has not complied with the rules and regulations governing the
grants, refunds of any money received may be required and the collectability of any
related receivables at June 30, 2019, may be impaired.
In the opinion of the School, there are no significant liabilities relating to compliance
with the rules and regulations governing the respective grants; therefore, no provision
has been recorded in the accompanying financial statements for such contingencies.
15. FUNDING AND CREDIT RISK CONCENTRATIONS
The School receives substantially all of its support and revenue from federal, state and
local funding sources, passed through the District, in the form of performance and
budget based contracts. Continuing operation of the School is greatly dependent upon
the continued support of these governmental agencies.
16. LEGAL MATTERS
In the normal course of conducting its operations, the School occasionally becomes party
to various legal actions and proceedings. In the opinion of management, the ultimate
resolution of such legal matters will not have a significant adverse effect on the
accompanying financial statements
497
Var
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CH
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For
the F
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En
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0, 2019
See
In
dep
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Au
dit
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s R
eport
.
- 33 -
498
as of 6/30/18 as of 6/30/17 as of 6/30/16 as of 6/30/15 as of 6/30/14
Proportion of the net pension liability/(asset) 0.0005857680% 0.0005116160% 0.0005499660% 0.0005346400% 0.0005720610%
Proportionate share of the net pension liability/(asset) 176,436$ 151,333$ 138,867$ 69,056$ 34,904$
Covered-employee payroll 341,104$ 271,331$ 307,184$ 261,978$ 222,001$
Proportionate share of the net pension liability (asset)
as a percentage of its covered-employee payroll 52% 56% 45% 26.36% 15.72%
Plan fiduciary net position as a percentage of the total
pension liability 84.26% 83.89% 84.88% 92.00% 96.09%
Schedule of Proportionate Share of Net Pension Liability
Florida Retirement System
CHAUTAUQUA CHARTER SCHOOL, INC.A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
See Independent Auditor's Report.
- 34 -499
as of 6/30/19 as of 6/30/18 as of 6/30/17 as of 6/30/16 as of 6/30/15 as of 6/30/14
Contractually required contribution 17,894$ 16,694$ 13,319$ 13,412$ 13,035$ 12,531$
Contributions in relation to the contractually
required contribution (17,894)$ (16,694)$ (13,319)$ (13,412)$ (13,035)$ (12,531)$
Contribution deficiency/(excess) -$ -$ -$ -$ -$ -$
Covered-employee payroll 336,413$ 341,104$ 271,331$ 307,184$ 261,978$ 222,001$
Contributions as a percentage of covered-
employee payroll 5.32% 4.89% 4.91% 4.37% 4.98% 5.64%
Florida Retirement System
CHAUTAUQUA CHARTER SCHOOL, INC.A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Contributions
See Independent Auditor's Report.
- 35 -500
as of 6/30/18 as of 6/30/17 as of 6/30/16 as of 6/30/15 as of 6/30/14
Proportion of the net pension liability/(asset) 0.0010443570% 0.0009626770% 0.0010588860% 0.0009396850% 0.0010051270%
Proportionate share of the net pension liability/(asset) 110,536$ 102,934$ 123,409$ 95,833$ 93,982$
Covered-employee payroll 341,104$ 318,054$ 343,045$ 296,730$ 291,509$
Proportionate share of the net pension liability/(asset)
as a percentage of its covered-employee payroll 32.41% 32.36% 35.97% 32.30% 32.24%
Plan fiduciary net position as a percentage of the total
pension liability 2.15% 1.64% 0.97% 0.50% 0.99%
Schedule of Proportionate Share of Net Pension Liability
Health Insurance Subsidy Program
CHAUTAUQUA CHARTER SCHOOL, INC.A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
See Independent Auditor's Report.
- 36 -501
as of 6/30/19 as of 6/30/18 as of 6/30/17 as of 6/30/16 as of 6/30/15 as of 6/30/14
Contractually required contribution 5,586$ 5,664$ 5,095$ 5,427$ 3,443$ 3,443$
Contributions in relation to the contractually
required contribution (5,586)$ (5,664)$ (5,095)$ (5,427)$ (3,443)$ (3,443)$
Contribution deficiency/(excess) -$ -$ -$ -$ -$ -$
Covered-employee payroll 336,413$ 341,104$ 318,054$ 343,045$ 296,730$ 291,509$
Contributions as a percentage of covered-
employee payroll 1.66% 1.66% 1.60% 1.58% 1.16% 1.18%
Health Insurance Subsidy Program
CHAUTAUQUA CHARTER SCHOOL, INC.A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Contributions
See Independent Auditor's Report.
- 37 -502
1. BUDGETARY BASIS OF ACCOUNTING
Budgets are presented on the modified accrual basis of accounting. During the fiscal
year, expenditures were controlled at the object level (e.g., salaries and benefits,
purchased services, materials and supplies and capital outlay) within each activity (e.g.,
instruction, pupil personnel services and school administration). Budgets may be
amended by resolution at any Board meeting prior to the date for the annual report.
2. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF
CONTRIBUTIONS –FLORIDA RETIREMENT SYSTEM PENSION PLAN
Changes of Assumptions. The long-term expected rate of return was decreased from 7.1
percent to 7.0 percent, and the active member mortality assumption was updated.
3. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF
CONTRIBUTIONS –HEALTH INSURANCE SUBSIDY PENSION PLAN
Changes of Assumptions. The municipal bond rate used to determine total pension
liability was increased from 3.58 percent to 3.87 percent.
503
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
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 Directors of the Chautauqua Charter School, Inc.,
a Charter School and Component Unit of the
District School Board of Bay County, Florida
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 the governmental activities, each major fund, and the aggregate remaining fund
information of Chautauqua Charter School, Inc. (“School”), a charter school and component unit
of the District School Board of Bay County, Florida, as of and for the year ended June 30, 2019,
and the related notes to the financial statements, which collectively comprise the School’s basic
financial statements, and have issued our report thereon dated September 27, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School’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 the
School’s internal control. Accordingly, we do not express an opinion on the effectiveness of the
School’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 combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the School’s financial statements will not be
prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency,
or combination of deficiencies, in internal control that is less severe than a material weakness,
yet important enough to merit attention by those 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.
504
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School’s financial statements are
free from material misstatement, we performed tests of compliance with certain provisions of
laws, regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances
of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the School’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 School’s
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
Respectfully submitted,
September 27, 2019
Tampa, Florida
505
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Management Letter as Required by Rules of the Florida Auditor General,
Chapter 10.850, Florida Statutes, Charter School Audits
To the Board of Directors of the Chautauqua Charter School, Inc.,
a Charter School and Component Unit of the
District School Board of Bay County, Florida
Report on the Financial Statements
We have audited the financial statements of the Chautauqua Charter School, Inc. (“School”), a
Charter School and Component Unit of the District School Board of Bay County, Florida, as of
and for the fiscal year ended June 30, 2019, and have issued our report thereon dated September
27, 2019.
Auditor’s Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States and Chapter 10.850, Rules of
the Auditor General.
Other Reporting Requirements
We have issued our Independent Auditor's Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed
in Accordance with Government Auditing Standards. Disclosures in those reports and schedule,
which are dated September 27, 2019, should be considered in conjunction with this management
letter.
Prior Audit Findings
Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or not
corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report. There were no prior audit findings or recommendations.
Official Title
Section 10.854(1)(e)5., Rules of the Auditor General, requires that the name or official title of
the entity and the school code assigned by the Florida Department of Education be disclosed in
this management letter. The official title and the school code assigned by the Florida Department
of Education of the entity are Chautauqua Charter School, 030781.
506
Financial Condition and Management
Sections 10.854(1)(e)2. and 10.855(11), Rules of the Auditor General, require us to apply
appropriate procedures and communicate whether or not the School has met one or more of the
conditions described in Section 218.503(1), Florida Statutes, and to identify the specific
condition(s) met. In connection with our audit, we determined that the School did not meet any of
the conditions described in Section 218.503(1), Florida Statutes.
Pursuant to Sections 10.854(1)(e)6.a. and 10.855(12), Rules of the Auditor General, we applied
financial condition assessment procedures for the School. It is management’s responsibility to
monitor the School’s financial condition, and our financial condition assessment was based in
part on representations made by management and review of financial information provided by
same.
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we communicate any
recommendations to improve financial management. In connection with our audit, we did not
have any such recommendations.
Transparency
Sections 10.854(1)(e)7. and 10.855(13), Rules of the Auditor General, require us to apply
appropriate procedures and communicate the results of our determination as to whether the
School maintains on its Web site the information specified in Section 1002.33(9)(p), Florida
Statutes. In connection with our audit, we determined that the School maintained on its Web site
the information specified in Section 1002.33(9)(p), Florida Statutes.
Additional Matters
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we address in the
management letter any recommendations to improve financial management. In connection with
our audit, we did not have any such recommendations.
Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliance
with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to
have occurred, that have an effect on the financial statements that is less than material but which
warrants the attention of those charged with governance. In connection with our audit, we did
not have any such findings.
Purpose of this Letter
Our management letter is intended solely for the information and use of the Legislative Auditing
Committee, members of the Florida Senate and the Florida House of Representatives, the Florida
Auditor General, Federal and other granting agencies, the Board of Directors, applicable
management, and District School Board of Bay County, Florida and is not intended to be and
should not be used by anyone other than these specified parties.
Respectfully submitted,
September 27, 2019
Tampa, Florida
507
PALM BAY PREPARATORY
ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER
PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
INDEPENDENT AUDITOR’S REPORT
for the fiscal year ended JUNE 30, 2019
King & Walker, CPAs, PL______________________________________________________________________________________________________________________
Certified Public Accountants
508
THIS PAGE IS INTENTIONALLY BLANK.
509
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
TABLE OF CONTENTS
PAGE NO.
FINANCIAL SECTION
Independent Auditor’s Report 1
Management’s Discussion and Analysis – (Unaudited) 3
Basic Financial Statements
Government-Wide Financial Statements: Statement of Net Position 8 Statement of Activities 9
Fund Financial Statements: Balance Sheet – Governmental Funds 10 Reconciliation of the Governmental Funds Balance Sheet to the Statement
of Net Position 11 Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds 12 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 13 Notes to Financial Statements 14
Required Supplementary Information Budgetary Comparison Schedule – General Fund and Major Special Revenue Fund – (Unaudited) 34 Schedule of Proportionate Share of Net Pension Liability - FRS 35 Schedule of Contributions - FRS 36 Schedule of Proportionate Share of Net Pension Liability - HIS 37 Schedule of Contributions - HIS 38 Note to Required Supplementary Information 39
COMPLIANCE AND INTERNAL CONTROL
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 Governmental Auditing Standards 40
Management Letter as required by Rules of the Florida Auditor General, Chapter 10.850, Florida Statutes, Charter School Audits. 42
510
- 1 -
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Independent Auditor's Report
To the Board of Directors Palm Bay Preparatory Elementary Academy (A charter school under Palm Bay Education Group, Inc.) a Charter School and Component Unit of the District School Board of Bay County, Florida
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Palm Bay Preparatory Elementary Academy (“School”), a charter school under Palm Bay Education Group, Inc. and component unit of the District School Board of Bay County, Florida, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Governmental 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 School’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 School’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 opinion.
511
- 2 -
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the School, as of June 30, 2019, and the respective changes in financial position thereof for the year ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 1, the accompanying financial statements referred to above present only the financial position of the School at June 30, 2019, and the respective changes in financial position for the year then ended, and is not intended to be a complete presentation Palm Bay Education Group, Inc. These financial statements do not purport to and do not present fairly the financial position of Palm Bay Education Group, Inc. as of June 30, 2019 and its changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Budgetary Comparison Schedule, and Note to Required Supplementary Information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historic context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2019 on our consideration of the School’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School’s internal control over financial reporting and compliance.
Respectfully submitted,
September 30, 2019 Tampa, Florida
512
- 3 -
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________
The Management’s Discussion and Analysis (MD&A) section of the annual financial report of the Palm Bay Preparatory Elementary Academy (“School”), a charter school under Palm Bay Education Group, Inc. provides an overview of the School’s activities for the fiscal year ended June 30, 2019.
Because the information contained in the MD&A is intended to highlight significant transactions, events, and conditions, it should be considered in conjunction with the School’s financial statements and notes to financial statements as listed in the table of contents.
FINANCIAL HIGHLIGHTS
For the fiscal year ended June 30, 2019, the School’s revenue exceeded expenses as shown on the School’s statement of activities by $168,043.
As shown on the balance sheet – governmental funds, the School reported a combined fund balance of $315,188.
A net pension liability of $1,210,494 is reported on the statement of net position for pensions, as the School participates in the Florida retirement system.
OVERVIEW OF THE FINANCIAL STATEMENTS
The basic financial statements consist of three components:
Government-wide financial statements
Fund financial statements
Notes to financial statements
Government-Wide Financial Statements
The government-wide financial statements provide both short-term and long-term information about the School’s overall financial condition in a manner similar to those of a private-sector business. The statements include a statement of net position and a statement of activities that are designed to provide consolidated financial information about the governmental and business-type activities of the School presented on the accrual basis of accounting. The statement of net position provides information about the government’s financial position, its assets and liabilities, using an economic resources measurement focus. The difference between the assets and liabilities, the net position, is a measure of the financial health of the School. The statement of activities presents information about the change in the School’s net position and the results of operations, during the fiscal year. An increase or decrease in net position is an indication of whether the School’s financial health is improving or deteriorating. To assess the overall financial position of the School, one needs to consider additional non-financial factors such as changes in the School student base funding level.
513
- 4 -
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________
Fund Financial Statements
Fund financial statements are one of the components of the basic financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund financial statements provide more detailed information about the School’s financial activities, focusing on its most significant funds rather than fund types. This is in contrast to the entity-wide perspective contained in the government-wide statements.
Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, the governmental funds utilize a spendable financial resources measurement focus rather than the economic resources measurement focus found in the government-wide financial statements. The financial resources measurement focus allows the governmental fund statements to provide information on near-term inflows and outflows of spendable resources as well as balances of spendable resources available at the end of the fiscal year.
The governmental fund statements provide a detailed short-term view that may be used to evaluate the School’s near-term financing requirements. This short-term view is useful when compared to the long-term view presented as governmental activities in the government-wide financial statements. To facilitate this comparison, both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation of governmental fund to governmental activities.
The governmental funds balance sheet and statement of revenues, expenditures, and changes in fund balances provide detailed information about the School’s most significant funds. The School operates the following funds; a General Fund to account for its general operations and internal account activities, and a Special Revenue Fund to account for Federal grant programs and the School’s food service operations. For reporting purposes, both funds are considered major funds.
The School adopts an annual budget for its governmental funds. A budgetary comparison schedule, as required, has been provided for both the General Fund and Special Revenue Fund to demonstrate compliance with the budget.
Notes to Financial Statements
The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements.
514
- 5 -
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The following is a summary of the School’s current year and prior year net position:
6-30-18 6-30-19
Increase
(Decrease)
ASSETS
Current and Other Assets 412,477$ 536,228$ 123,751$
Capital Assets, net 2,553,197 161,975 (2,391,222)
Total Assets 2,965,674 698,203 (2,267,471)
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 97,811 1,231,641 1,133,830
Total Deferred Outflows of Resources 97,811 1,231,641 1,133,830
LIABILITIES
Current and Other Liabilities 404,446 221,040 (183,406)
Noncurrent Liabilities 2,621,941 1,395,972 (1,225,969)
Total Liabilities 3,026,387 1,617,012 (1,225,969)
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 107,691 107,691
Total Deferred Inflows of Resources - 107,691 107,691
NET POSITION
Net Investment in Capital Assets (68,744) 151,497 220,241
Unrestricted 105,842 53,644 (52,198)
Total Net Position 37,098$ 205,141$ 168,043$
Net Position, End of Year
Governmental Activities
The largest portions of the School’s assets is cash & cash equivalents (72%). Liabilities consist primarily of accounts payable, notes payable and the School’s proportionate share of the net pension liability. The School reported a total net position balance of $205,141.
515
- 6 -
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________
The following is a summary of the School’s change in net position for the current year and prior year:
Governmantal Activities
6-30-18 6-30-19
Increase
(Decrease)
Revenues: Federal Sources 331,392$ 562,264$ 230,872$ State Sources 2,028,509 2,373,926 345,417 Local and Other 216,183 253,683 37,500Total Revenues 2,576,084 3,189,873 613,789
Expenses: Instruction 1,604,120 1,753,353 149,233 Instructional Support Services 92,898 60,163 (32,735) Instructional Staff Training 2,134 1,907 (227) Instructional-Related Technology Services 8,243 20,695 12,452 Board 93,455 114,246 20,791 School Administration 154,665 476,400 321,735 Facilities Acq. & Construction 1,781 8,663 6,882 Fiscal Services 67,602 71,898 4,296 Student Transportation Services 1,021 (1,021) Operation of Plant 175,631 139,746 (35,885) Maintenance of Plant 30,720 32,230 1,510 Community Service 51,866 53,084 1,218 Debt Service - Interest 151,459 99,886 (51,573) Extraordinary Loss of Capital Assets 86,851 86,851 Transfer to Related School 64,113 64,113 Unallocated Depreciation 103,391 38,595 (64,796) Total Expenses 2,538,986 3,021,830 482,844
Increase/(Decrease) in Net Position 37,098$ 168,043$ 130,945$
Operating Results
The largest revenue source for the School is the State of Florida (74%). Revenues from State sources for current operations are primarily received through the Florida Education Finance Program (FEFP) funding formula. The FEFP formula utilizes student enrollment data to determine the funds available for the School.
The largest concentrations of expenses were for instruction (58%), and School administration (16%) during the year. The School had an extraordinary loss of capital assets due to the impact of a hurricane. The School also reported an expense from the net affect of the transfer of its land, building and debt to a Related School.
516
- 7 -
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________
FINANCIAL ANALYSIS OF THE SCHOOL’S FUNDS
Governmental Funds
As the School completed the year, its governmental funds reported a combined fund balance of $315,188.
BUDGETARY HIGHLIGHTS
The general fund budget for the fiscal year ended June 30, 2019, was developed based on the School’s anticipated revenues and expenditures and the expected student population for the school year. Actual expenditures were equal to the final budgeted expenditures. Refer to the Budgetary Comparison Schedule – General Fund for additional information.
CAPITAL ASSETS
The School was impacted by Hurricane Michael when it made landfall in October 2018. The School facilities and their contents were destroyed by the hurricane and the School required building renovations and the replacement of equipment and furnishings. During the year ended June 30, 2019, the School recognized a net loss of $86,851 as a result of the hurricane-related damage.
The building, land and the related debt were transferred to Palm Bay Preparatory Academy, a charter school under the same charter holder in October 2018. The loss of $64,113 is shown as a Transfer to Related School Statement of Activities.
The School’s investment in capital assets for its governmental activities as of June 30, 2019, amounts to $161,975 (net of accumulated depreciation). This investment in capital assets includes furniture, fixtures, and equipment. Additional information regarding the School’s capital assets is located in the notes to the financial statements.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the School’s finances. Questions concerning any of the information provided in this report or requests for additional financial
information should be addressed to Palm Bay Education Group, Inc., 1104 Balboa Avenue, Panama City, FL 32401.
517
Cash & Cash Equivalents $ 503,854
Due From Other Agencies 28,884
Prepaid Expenses and Deposits 3,490
Capital Assets:
Furniture, Fixtures, and Equipment, Net 161,975
Total Capital Assets, Net 161,975
TOTAL ASSETS 698,203
Deferred outflow related to pensions 1,231,641
TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,231,641
Accounts Payable 158,346
Salaries Payable 62,544
Deferred Revenue 150
Noncurrent Liabilities:
Due Within One Year:
Notes Payable 10,478
Due After One Year:
Notes Payable 175,000
Net Pension Liability 1,210,494
TOTAL LIABILITIES 1,617,012
Deferred inflow related to pensions 107,691
TOTAL DEFERRED INFLOWS OF RESOURCES 107,691
Net Investment in Capital Assets 151,497
Unrestricted 53,644
TOTAL NET POSITION $ 205,141
PALM BAY PREPARATORY ELEMENTARY ACADEMY
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Governmental
Activities
ASSETS
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
LIABILITIES
NET POSITION
STATEMENT OF NET POSITION
June 30, 2019
DEFERRED OUTFLOWS OF RESOURCES
DEFERRED INFLOWS OF RESOURCES
The accompanying notes to the financial statements are an integral part of this statement.
- 8 -518
Net
(E
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Rev
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86
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- 9
-
519
Special Total
General Revenue Governmental
Fund Fund Activities
Cash & Cash Equivalents $ 503,854 $ - $ 503,854
Due From Other Agencies 28,884 28,884
Prepaid Expenses and Deposits 3,490 3,490
Due From Other Funds 28,884 28,884
Total Assets $ 536,228 $ 28,884 $ 565,112
Accounts Payable $ 158,346 $ - $ 158,346
Salaries Payable 62,544 62,544
Deferred Revenue 150 150
Due to Other Funds 28,884 28,884
Total Liabilities 221,040 28,884 249,924
Nonspendable 3,490 3,490
Unassigned 311,698 311,698
Total Fund Balances 315,188 - 315,188
Total Liabilities and Fund Balances $ 536,228 $ 28,884 $ 565,112
FUND BALANCES
ASSETS
PALM BAY PREPARATORY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30, 2019
LIABILITIES
The accompanying notes to the financial statements are an integral part of this statement.
- 10 -520
Total Fund Balances - Governmental Funds $ 315,188
Amounts reported for governmental activities in the statement of
net position are different because:
Noncurrent liabilities are not due and payable in the current period
and, therefore, are not reported as liabilities in the governmental
funds. Noncurrent liabilities at year-end consist of loans
and notes payable. (1,395,972)
Deferred Outflows and Inflows of resources are not available in the
current period and not reported in the governmental funds. 1,123,950
Capital assets, net of accumulated depreciation, used in
governmental activities are not financial resources and
therefore, are not reported as assets in governmental funds. 161,975
Total Net Position - Governmental Activities $ 205,141
June 30, 2019
PALM BAY PREPARATORY ELEMENTARY ACADEMY
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
The accompanying notes to financial statements are an integral part of this statement.
- 11 -521
Special Total
General Revenue Governmental
Fund Fund Funds
Intergovernmental:
Federal Through Local $ - $ 562,264 $ 562,264
State Sources 2,373,926 2,373,926
Local and Other 253,683 253,683
Total Revenues 2,627,609 562,264 3,189,873
Current - Education:
Instruction 1,370,703 382,650 1,753,353
Instructional Support Services 52,932 7,231 60,163
Instructional Staff Training 1,907 1,907
Instructional-Related Technology Services 20,695 20,695
Board 106,746 7,500 114,246
School Administration 291,068 977 292,045
Facilities Acquisition & Construction 8,663 8,663
Fiscal Services 71,898 71,898
Operation of Plant 139,746 139,746
Maintenance of Plant 32,230 32,230
Community Service 53,084 53,084
Fixed Capital Outlay:
Other Capital Outlay 814 163,906 164,720
Debt Service:
Principal 70,080 70,080
Interest 99,886 99,886
Total Expenditures 2,320,452 562,264 2,882,716
Net Change in Fund Balances 307,157 307,157
Fund Balances, July 1, 2018 8,031 8,031 Fund Balances, June 30, 2019 $ 315,188 $ - $ 315,188
FUND BALANCES - GOVERNMENTAL FUNDS
PALM BAY PREPARATORY ELEMENTARY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
For the Fiscal Year Ended June 30, 2019
Revenues
Expenditures
The accompanying notes to financial statements are an integral part of this statement.
- 12 -522
Net Change in Fund Balances - Governmental Funds $ 307,157
Amounts reported for governmental activities in the statement of activities
are different because:
Capital outlays are reported in governmental funds as expenditures.
However, in the statement of activities, the cost of those assets is
allocated over their estimated useful lives as depreciation expense.
This is the amount of depreciation expense ($38,595), the transfer
of fixed assets to a Related School (64,113) and the extaordinary
loss ($86,851) in excess of capital outlay ($164,720). (24,839)
Repayment of debt principal is an expenditure in the governmental funds,
but the payment reduces long-term liabilities in the statement of
net position. 70,080
Net effect of various transactions in the statement of activities that
do not require the use of current financial resources are not
reported in the governmental funds:
Pension Expense (calculated for net pension liability) (297,729)
Pension contributions made subsequent to the
pension liability measurement date of 6/30/18 113,374
Change in Net Position - Governmental Activities $ 168,043
For the Fiscal Year Ended June 30, 2019
PALM BAY PREPARATORY ELEMENTARY ACADEMY
REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
The accompanying notes to the financial statements are an integral part of this statement.
- 13 -
523
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 14 -
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
Palm Bay Preparatory Elementary Academy (‘School”), a charter school under Palm Bay Education Group, Inc. is a component unit of the District School Board of Bay County, Florida. The School is sponsored by its charter-holder, Palm Bay Education Group, Inc., a not-for-profit corporation organized pursuant to Chapter 617, Florida Statutes, the Florida Not-For-Profit Corporation Act. The governing body of the School is the not-for-profit corporation Board of Directors, which is comprised of five members.
The basic financial statements of the School present only the balances, activity and disclosures related to the School. They do not purport to, and do not, present fairly the financial position of Palm Bay Education Group, Inc. as of June 30, 2016, and its changes in financial position or budgetary comparisons, where applicable, for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The general operating authority of the School is contained in Section 1002.33, Florida Statutes. The School operates under a charter of the sponsoring school district, the District School Board of Bay County, Florida, (“District”). The current charter had been made effective for the 2017-18 school year, and is effective until June 30, 2022. At the end of the term of the charter, the District may choose not to renew the charter under grounds specified in the charter. In this case, the District is required to notify the school in writing at least 90 days prior to the charter’s expiration. During the term of the charter, the District may also terminate the charter if good cause is shown. In the event of termination of the charter, the District shall assume operation of the School. The School is considered a component unit of the District; therefore, for financial reporting purposes, the School is required to follow generally accepted accounting principles applicable to state and local governmental units.
Criteria for determining if other entities are potential component units which should be reported within the School's basic financial statements are identified and described in the Governmental Accounting Standards Board's (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Sections 2100 and 2600. The application of these criteria provides for identification of any entities for which the School is financially accountable and other organizations for which the nature and significance of their relationship with the School are such that exclusion would cause the School's basic financial statements to be misleading or incomplete. Based on these criteria, no component units are included within the reporting entity of the School.
524
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 15 -
Basis of Presentation
Government-wide Financial Statements - Government-wide financial statements, including the statement of Net Position and the statement of activities, present information about the School as a whole.
Government-wide financial statements are prepared using the economic resources measurement focus. The statement of activities presents a comparison between direct expenses and program revenues for each function or program of the School’s governmental activities. Direct expenses are those that are specifically associated with a service, program, or department and are thereby clearly identifiable to a particular function.
Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self-financing or draws from the general revenues of the School.
Fund Financial Statements - Fund financial statements report detailed information about the School in the governmental funds. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is reported in a separate column. Because the focus of governmental fund financial statements differs from the focus of government-wide financial statements, a reconciliation is presented with each of the governmental fund financial statements.
The School’s major governmental funds are as follows:
General Fund – to account for all financial resources not required to be accounted for in another fund, and for certain revenues from the State that are legally restricted to be expended for specific current operating purposes.
Special Revenue Fund – to account for federal grant programs and the School’s food service operations.
Basis of Accounting
Basis of accounting refers to when revenues and expenditures, or expenses, are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied.
The government-wide financial statements are prepared using the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when a liability is incurred, regardless of the timing of the related cash flows. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements imposed by the provider have been satisfied.
525
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 16 -
Governmental fund financial statements are prepared using the modified accrual basis of accounting. Revenues, except for certain grant revenues, are recognized when they become measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The School considers revenues to be available if they are collected within 30 days of the end of the current fiscal year. When grant terms provide that the expenditure of resources is the prime factor for determining eligibility for Federal, State, and other grant resources, revenue is recognized at the time the expenditure is made. Under the modified accrual basis of accounting, expenditures are generally recognized when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, and compensated absences, which are recognized when due. Allocations of cost, such as depreciation, are not recognized in governmental funds.
Cash and Cash Equivalents
Cash and cash equivalents are defined as demand deposits, money market accounts, and short term investments with original maturities of eight months or less from date of acquisition. The School considers all demand accounts and money market funds which are not subjected to withdrawal restrictions to be cash and cash equivalents.
The School’s deposits are placed with banks and savings and loans which are qualified as public depositories, prior to receipt of public monies, under Chapter 280, Florida statutes and the School’s policy. The School maintains its cash accounts with one qualified public depository. The accounts routinely exceed the federally insured limit of $250,000. Monies deposited in amounts greater than the insurance coverage are secured by the bank’s pledging securities with the state treasurer in the collateral pool. The School has not experienced any losses in such accounts and does not believe it is exposed to any significant credit or custodial risk.
Capital Assets
Expenditures for capital assets acquired or constructed for general School purposes are reported in the governmental fund that financed the acquisition or construction. The capital assets so acquired are reported at cost in the government-wide statement of net position but are not reported in the governmental fund financial statements. Capital assets are defined by the School as those costing more than $750. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated assets are recorded at fair value at the date of donation.
Capital assets are depreciated using the straight-line method over the following estimated useful lives:
Description Estimated Lives
Furniture, Fixtures and Equipment 5 years
526
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 17 -
Current-year information relative to changes in capital assets is described in a subsequent note.
Noncurrent Liabilities
Long-term obligations that will be financed by resources to be received in the future by the general fund are reported in the government-wide financial statements, not in the general fund. Capital improvement debt is reported net of unamortized discount. The School amortizes debt discounts over the life of the debt using the straight-line method. Current-year information relative to changes in long-term debt is described in subsequent notes.
Net Pension Liability
As a participating employer in the Florida Retirement System, the School recognizes its proportionate share of the collective net pension liabilities of the FRS cost-sharing multiple-employer defined benefit plans. As of June 30, 2019, the School’s proportionate share of the net pension liabilities totaled $1,210,494.
The School’s retirement plans and related amounts are described in a subsequent note.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The School does not have any items that qualify for reporting in this category.
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until then. The School does not have any items that qualify for reporting in this category.
Net Position and Fund Balance Classification
Government-wide Financial Statements
Net Position are classified and reported in three components:
Net Investment in Capital Assets – consists of capital assets, net of accumulated depreciation, and reduced by the outstanding balances of any borrowings that are attributed to the acquisition or improvement of those assets.
527
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 18 -
Restricted Net Position – consists of net position with constraints placed on their use either by external groups such as creditors, contributors, or laws or regulations of other governments.
Unrestricted Net Position – all other net position that does not meet the definition of “restricted” or “net investment in capital assets.”
Fund Financial Statements
GASB Codification Section 1800.142, Fund Balance Reporting and Governmental Fund Type Definitions, defines the different types of fund balances that a governmental entity must use for financial reporting purposes. GASB requires the fund balance amounts to be reported within one of the following fund balance categories:
Nonspendable – fund balance associated with inventories, prepaid expenses, long-term loans and notes receivable, and property held for resale (unless the proceeds are restricted, committed or assigned). All nonspendable fund balances at year end relate to assets that are in nonspendable form.
Restricted – fund balance that can be spent only for the specific purposes stipulated by the constitution, external resource providers, or through enabling legislation.
Committed – fund balance that can be used only for the specific purposes determined by a formal action of the School’s Board of Governance.
Assigned – fund balance that is intended to be used by the School’s management for specific purposes but does not meet the criteria to be classified as restricted or committed.
Unassigned – fund balance that is the residual amount for the School’s general fund and includes all spendable amounts not contained in the other classifications.
Order of Fund Balance Spending Policy
The School’s policy is to apply expenditures against nonspendable fund balance, restricted fund balance, committed fund balance, assigned fund balance, and unassigned fund balance at the end of the fiscal year. First, nonspendable fund balances are determined. Then restricted fund balances for specific purposes are determined (not including nonspendable amounts). Any remaining fund balance amounts for the non-general funds are to be classified as restricted fund balance. It is possible for the non-general funds to be classified as restricted fund balance. It is possible for the non-general funds to have negative unassigned fund balance when nonspendable amounts plus the amount of restricted fund balances for specific purposes exceed the positive fund balance for non-general fund.
528
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 19 -
Revenue Sources
Revenues for current operations are received primarily from the District pursuant to the funding provisions included in the School’s charter. In accordance with the funding provisions of the charter and Section 1002.33(17), Florida Statutes, the School reports the number of full-time equivalent students and related data to the District.
Under provisions of Section 1011.62, Florida Statutes, the District reports the number of full-time equivalent students and related data to the Florida Department of Education (FDOE) for funding through the Florida Education Finance Program (FEFP). Funding for the School is adjusted during the year to reflect the revised calculations by the FDOE under the FEFP and the actual weighted full-time equivalent (FTE) students reported by the School during designated full-time equivalent student survey periods. The Department may also adjust subsequent fiscal period allocations based upon an audit of the School's compliance in determining and reporting FTE and related data. Normally, such adjustments are treated as reductions or additions of revenue in the year when the adjustments are made.
The basic amount of funding through the FEFP under Section 1011.62 is the product of the (1) unweighted FTE, multiplied by (2) the cost factor for each program, multiplied by (3) the base student allocation established by the legislature. Additional funds for exceptional students who do not have a matrix of services are provided through the guaranteed allocation designated in Section 1011.62(1)(e)2., Florida Statutes. For the fiscal year ended June 30, 2019, the School reported 333.97 unweighted FTE and 360.4081 weighted FTE.
FEFP funding may also be adjusted as a result of subsequent FTE audits conducted by the Florida Auditor General pursuant to Section 1010.305, Florida Statutes, and Rule 6A-1.0453, Florida Administrative Code (FAC). Schools are required to maintain the following documentation for three years or until the completion of an FTE audit:
Attendance and membership documentation (Rule 6A-1.044 FAC). Teacher certificates and other certification documentation (Rule 6A-1.0503
FAC). Documentation for instructors teaching out-of-field (Rule 6A-1.0503 FAC). Procedural safeguards for weighted programs (Rule 6A-6.03411 FAC). Evaluation and planning documents for weighted programs (Section
1010.305, Florida Statutes, and Rule 6A-6.03411, FAC).
The School receives federal or state awards for the enhancement of various educational programs. This assistance is generally received based on applications submitted to and approved by various granting agencies. For federal or state awards in which a claim to these grant proceeds is based on incurring eligible expenditures, revenue is recognized to the extent that eligible expenditures have been incurred.
529
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 20 -
The School follows the policy of applying restricted resources prior to applying unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted assets are available.
Recently Issued Accounting Principles
Governmental Accounting Standards Board Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements was effective for fiscal years beginning after June 15, 2018. The School’s notes related to debt reflect all required disclosures.
Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions was effective for fiscal years beginning after June 15, 2017. The net pension liability for the FRS Pension Plan at July 1, 2017 has been increased due to the restatement of the fund’s beginning net position as a result of the implementation of GASB 75.
Income Taxes
The School is exempt from Federal tax under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income taxes has been included in the accompanying financial statements. Additionally, no uncertain tax positions have been made requiring disclosure in the related note to financial statements. The School’s income tax returns for the past three years are subject to examination by tax authorities and may change upon examination.
Use of Estimates
In preparing the financial statements in conformity with generally accepted accounting principles in the United States (GAAP) management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statement of net position and affect revenues and expenditures for the period presented. Actual results could differ from those estimates.
Subsequent Events
Management has evaluated all events subsequent to the balance sheet date and through the report date, which is the date these financial statements were available to be issued. Management determined there are no subsequent events which require disclosure.
530
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 21 -
2. CASH DEPOSITS
Custodial Credit Risk – Deposits. In the case of deposits, this is the risk that in the event of a bank failure, the School’s deposits may not be returned to the School. The School does not have a custodial credit risk policy. All cash deposits are held in banks that qualify as public depositories under Florida law. All such deposits are insured by federal depository insurance and/or collateralized with securities held in Florida’s multiple financial institution collateral pool as required by Chapter 280, Florida Statutes.
3. DUE FROM OTHER AGENCIES
The amount due from other agencies included in the accompanying statement of net position and balance sheet – governmental funds consists of an amount for expenditures made for a grant awaiting reimbursement from the District. This receivable is considered to be fully collectible and as such, no allowance for uncollectible accounts has been established.
4. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
At June 30, 2019, the School’s General Fund was due $28,884 from the Special Revenue Fund for grant expenditures not yet reimbursed. The amounts of interfund receivables, payables and transfers are netted together and not reported in the statement of net position and the statement of activities.
5. CHANGES IN CAPITAL ASSETS
Changes in capital assets are presented in the table below:
Beginning EndingBalance Additions Deletions Balance
Governmental Activities:Capital Assets Not Being Depreciated:
Land 752,600$ -$ (752,600)$ -$ Total Capital Assets Not Being Depreciated 752,600 - (752,600) -
Capital Assets Being Depreciated:
Furniture, Fixtures and Equipment 106,242 164,720 (106,242) 164,720Buildings 1,797,746 (1,797,746) -
Total Capital Assets Being Depreciated 1,903,988 164,720 (1,903,988) 164,720
Less Accumulated Depreciation for:Furniture, Fixtures and Equipment (13,503) (8,633) 19,391 (2,745)Buildings (89,888) (29,962) 119,850 -Total Accumulated Depreciation (103,391) (38,595) 139,241 (2,745)Total Capital Assets Being Depreciated,Net 2,553,197$ 126,125$ (2,517,347)$ 161,975$
All depreciation expense was shown as unallocated on the statement of activities.
The deletion of furniture, fixtures and equipment resulted from an extraordinary loss due to Hurricane Michael. See Note 13 of the financial statements for more details.
531
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 22 -
6. ACCOUNTS PAYABLE, NOTES PAYABLE AND TRANSFER – (RELATED PARTY)
During the current fiscal year, Palm Bay Preparatory Academy, a charter school under the same charter holder, made payments for expenditures on behalf of the School for expenses. As of June 30, 2019, $158,044 is due to Palm Bay Preparatory Academy, as reported on the School’s statement of net position and balance sheet – governmental funds in the accounts payable account.
The School reported two notes payable, one from Palm Bay Preparatory Academy ($100,000) and the other from Central High School ($75,000), charter schools under the same charter holder. The note payable to Palm Bay Preparatory Academy is an on demand promissory note bearing 0% interest, dated June 30, 2017 due in five years. The note payable to Central High School is an on demand promissory note bearing 0% interest, dated June 30, 2018 due in five years. The notes payable are being reported as long term liabilities on the statement of net assets.
In October 2018, the School transferred the land, building and its related debt to Palm Bay Preparatory Academy, a charter school under the same charter holder. The related net transfer of $64,113 is reported on the School’s statement of activities.
7. NOTES PAYABLE
Notes payable consisted of the following: Balance at
Notes Payable: 6-30-19
Palm Bay Preparatory Academy, a charter school under the same charter holder,
$100,000; 0% interest; demand loan; due 6-30-2022. 100,000$
Central High School, a charter school under the same charter holder, $75,000; 0%
interest; demand loan; due 6-30-2023. 75,000
Novitas Credit Corp - Phone Equipment Lease entered into 7-24-17. 36 monthly
payments of $1,900 at 15.8%. This loan is split with Palm Bay Preparatory
Academy. 10,478
Total Notes Payable 185,478$
Amounts due for notes payable are as follows:
Fiscal YearEnding June 30: Total Principal Interest
2020 11,399$ 10,478$ 921$ 2021 - - -2022 100,000 100,000 -2023 75,000 75,000 -Total 186,399$ 185,478$ 921$
532
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 23 -
8. CHANGES IN LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities:
Beginning Ending Due in Balance Additions Deductions Balance One Year
GOVERNMENTAL ACTIVITIES:Notes Payable 194,430$ (8,952)$ 185,478$ 10,478$ Loan Payable 2,427,511 (2,427,511) -Net Pension Liability - 1,210,494 1,210,494
Total Governmental Activities 2,621,941$ 1,210,494$ (2,436,463)$ 1,395,972$ 10,478$
9. SCHEDULE OF STATE REVENUE SOURCES
The following is a schedule of the School’s State revenue:
Source AmountFlorida Education Finance Program 1,465,757$ Class Size Reduction 422,472Discretionary Local Effort 155,272Supplementary Academic Instruction 95,358ESE Guaranteed Allocation 49,463
VPK Program 42,913
Instructional Materials 26,696Declining Enrollment 22,685Safe School 21,661Best & Brightest Teacher Scholarships 18,875Reading Allocation 15,101Discretionary Millage 11,398Digital Classrooms Allocation 10,679Teacher Lead Program 6,688Funds Compression Allocation 4,941Other Miscellaneous State Revenue 2,857Discretionary Lottery 1,110
Total State Revenue 2,373,926$
As provided in the charter school contract, the District has charged the School an administrative fee amounting to $86,183.
10. FUNDING AND CREDIT CONCENTRATIONS
The School receives substantially all of its support and revenue from federal, state and local funding sources, passed through the District, in the form of performance and budget based contracts. Continuing operation of the School is greatly dependent upon the continued support of these governmental agencies.
533
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 24 -
11. FLORIDA RETIREMENT SYSTEM (FRS) – Defined Benefit Pension Plans
General Information about the FRS
The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program (DROP) under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined contribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the HIS Program, a cost-sharing multiple-employer defined benefit pension plan to assist retired members of any State-administered retirement system in paying the costs of health insurance.
Essentially all regular employees of the School are eligible to enroll as members of the State-administered FRS. Provisions relating to the FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, and benefits are defined and described in detail. Such provisions may be amended at any time by further action from the Florida Legislature. The FRS is a single retirement system administered by the Florida Department of Management Services, Division of Retirement, and consists of two cost-sharing multiple-employer defined benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services’ Web site (www.dms.myflorida.com).
The School’s FRS and HIS pension expense totaled $297,729 for the fiscal year ended June 30, 2019.
FRS Pension Plan
Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan, with a DROP for eligible employees. The general classes of membership are as follows:
Regular Class – Members of the FRS who do not qualify for membership in the other classes.
Employees enrolled in the Plan prior to July 1, 2011, vest at 6 years of creditable service and employees enrolled in the Plan on or after July 1, 2011, vest at 8 years of creditable service. All vested members, enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62 or at any age after 30 years of service. All members enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service. Employees enrolled in the Plan may include up to 4 years of credit for military service toward creditable service. The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.
534
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 25 -
DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirement under the Plan to defer receipt of monthly benefit payments while continuing employment with an FRS-participating employer. An employee may participate in DROP for a period not to exceed 60 months after electing to participate. During the period of DROP participation, deferred monthly benefits are held in the FRS Trust Fund and accrue interest. The net pension liability does not include amounts for DROP participants, as these members are considered retired and are not accruing additional pension benefits.
Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the 5 highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the 8 highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on retirement plan and/or the class to which the member belonged when the service credit was earned. Members are eligible for in-line-of-duty or regular disability and survivors’ benefits. The following chart shows the percentage value for each year of service credit earned:
Class, Initial Enrollment, and Retirement Age/Years of Service % Value
Regular Class members initially enrolled before July 1, 2011
Retirement up to age 62 or up to 30 years of service 1.60
Retirement at age 63 or with 31 years of service 1.63
Retirement at age 64 or with 32 years of service 1.65
Retirement at age 65 or with 33 or more years of service 1.68
Regular Class members initially enrolled on or after July 1, 2011
Retirement up to age 65 or up to 33 years of service 1.60
Retirement at age 66 or with 34 years of service 1.63
Retirement at age 67 or with 35 years of service 1.65
Retirement at age 68 or with 36 or more years of service 1.68
As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3 percent per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of 3 percent determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by 3 percent. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.
Contributions. The Florida Legislature establishes contribution rates for participating employers and employees. Contribution rates during the 2018-19 fiscal year were as follows:
535
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 26 -
Percent of Gross Salary
Class Employee Employer (1)
FRS, Regular 3.00 8.26
FRS, Reemployed Retiree (2) (2)
Notes: (1) Employer rates include 1.66 percent for the postemployment health insurance subsidy. Also, employer rates, other than for DROP participants, include 0.06 percent for administrative costs of the Investment Plan.
(2) Contribution rates are dependent upon retirement class in which reemployed.
The School’s contributions to the Plan totaled $90,399 for the fiscal year ended June 30, 2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a liability of $825,003 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2018. The School’s proportionate share of the net pension liability was based on the School’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year contributions of all participating members. At June 30, 2018, the School’s proportionate share was .002739005 percent, which was an increase of .002739005percent from its proportionate share measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of $217,800. In addition, the School reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 69,890$ 2,537$
Change of assumptions 269,571 -
Net difference between projected and actual
earnings on FRS Plan investments - 63,742
Changes in proportion and differences between
School FRS contributions and proportionate
share of contributions 412,080 -
School FRS contributions subsequent to
the measurement date 90,399 -
Total 841,940$ 66,279$
The deferred outflows of resources related to pensions totaling $90,399, resulting from School contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2020. Other amounts reported
536
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 27 -
as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 105,842$
2021 72,233
2022 10,071
2023 48,098
2024 32,161
Thereafter 4,777
Actuarial Assumptions. The total pension liability in the July 1, 2018, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Investment rate of return 7.00 percent, net of pension plan investment
expense, including inflation
Mortality rates were based on the Generational RP-2000 with Projection Scale BB.
The actuarial assumptions used in the July 1, 2018, valuation were based on the results of an actuarial experience study for the period July 1, 2008, through June 30, 2013.
The long-term expected rate of return on pension plan investments was not based on historical returns, but instead is based on a forward-looking capital market economic model. The allocation policy’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions, and includes an adjustment for the inflation assumption. The target allocation and best estimates of arithmetic and geometric real rates of return for each major asset class are summarized in the following table:
537
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 28 -
Asset Class Target
Allocation (1)
Annual Arithmetic Return
Compound Annual
(Geometric) Return
Standard Deviation
Cash 1% 2.9% 2.9% 1.8%
Fixed Income 18% 4.4% 4.3% 4.0%
Global Equity 54% 7.6% 6.3% 17.0%
Real Estate (Property) 11% 6.6% 6.0% 11.3%
Private Equity 10% 10.7% 7.8% 26.5%
Strategic Investments 6% 6.0% 5.7% 8.6%
Total 100%
Assumed inflation - Mean 2.6% 1.9%
Note: (1) As outlined in the Plan's investment policy.
Discount Rate. The discount rate used to measure the total pension liability was 7.00 percent. The Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return. The discount rate used in the 2018 valuation was updated from 7.1 percent to 7.0 percent.
Sensitivity of the School’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate. The following presents the School’s proportionate share of the net pension liability calculated using the discount rate of 7.0 percent, as well as what the School’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.0 percent) or 1 percentage point higher (8.0 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(6.0%) (7.0%) (8.0%)
School's proportionate share of
the net pension liability 1,505,664$ 825,003$ 259,673$
Pension Plan Fiduciary Net Position. Detailed information about the Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.
HIS Pension Plan
Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes, and may be amended by the Florida Legislature at any time. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying their health insurance
538
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 29 -
costs and is administered by the Florida Department of Management Services, Division of Retirement.
Benefits Provided. For the fiscal year ended June 30, 2019, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS benefit, a retiree under a State-administered retirement system must provide proof of health insurance coverage, which can include Medicare.
Contributions. The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal year ended June 30, 2019, the contribution rate was 1.66 percent of payroll pursuant to Section 112.363, Florida Statutes. The School contributed 100 percent of its statutorily required contributions for the current and preceding 3 years. HIS Plan contributions are deposited in a separate trust fund from which HIS payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled.
The School’s contributions to the HIS Plan totaled $22,975 for the fiscal year ended June 30, 2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a net pension liability of $385,491 for its proportionate share of the net pension liability. The current portion of the net pension liability is the School’s proportionate share of benefit payments expected to be paid within one year, net of the School’s proportionate share of the HIS Plan’s fiduciary net position available to pay that amount. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2018. The School’s proportionate share of the net pension liability was based on the School’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year contributions of all participating members. At June 30, 2018, the School’s proportionate share was .003642163 percent, which was an increase of .003642163 percent from its proportionate share measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of $79,929. In addition, the School reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
539
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 30 -
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 5,902$ 655$
Change of assumptions 42,871 40,757
Net difference between projected and actual
earnings on HIS Plan investments 233 -
Changes in proportion and differences between
School HIS contributions and proportionate
share of contributions 317,720 -
School HIS contributions subsequent to
the measurement date 22,975 -
Total 389,701$ 41,412$
The deferred outflows of resources totaling $22,975, resulting from School contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 5,303$
2021 5,284
2022 3,702
2023 831
2024 (5,161)
Thereafter (2,366)
Actuarial Assumptions. The total pension liability in the July 1, 2017, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Municipal bond rate 3.87 percent
Mortality rates were based on the Generational RP-2000 with Projected Scale BB.
While an experience study had not been completed for the HIS Plan, the actuarial assumptions that determined the total pension liability for the HIS Plan were based on certain results of the most recent experience study for the FRS Plan.
Discount Rate. The discount rate used to measure the total pension liability was 3.87 percent. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by the plan
540
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 31 -
sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index.
Sensitivity of the School’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 3.87 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 (2.87 percent) or 1 percentage point higher (4.87 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(2.87%) (3.87%) (4.87%)
School's proportionate share of
the net pension liability 439,051$ 385,491$ 340,845$
Pension Plan Fiduciary Net Position. Detailed information about the HIS Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.
12. FRS – Defined Contribution Pension Plans
The SBA administers the defined contribution plan officially titled the FRS Investment Plan (Investment Plan). The Investment Plan is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report.
As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined benefit plan. School employees already participating in the State School System Optional Retirement Program or DROP are not eligible to participate in the Investment Plan. Employer and employee contributions are defined by law, but the ultimate benefit depends in part on the performance of investment funds. Service retirement benefits are based upon the value of the member’s account upon retirement. Benefit terms, including contribution requirements, are established and may be amended by the Florida Legislature. The Investment Plan is funded with the same employer and employee contributions rates, that are based on salary and membership class (Regular Class, Senior Management Service Class, etc.), as the FRS defined benefit plan. Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Costs of administering the Investment Plan, including the FRS Financial Guidance Program, are funded through an employer contribution of 0.06 percent of payroll and by forfeited benefits of Investment Plan members. Allocations to the Investment Plan member accounts during the 2018-19 fiscal year were as follows:
541
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 32 -
Percent of
Gross
Class Compensation
FRS, Regular 6.30
For all membership classes, employees are immediately vested in their own contributions and are vested after 1 year of service for employer contributions and investment earnings regardless of membership class. If an accumulated benefit obligation for service credit originally earned under the FRS Pension Plan is transferred to the Investment Plan, the member must have the years of service required for FRS Pension Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Nonvested employer contributions are placed in a suspense account for up to 5 years. If the employee returns to FRS-covered employment within the 5 year period, the employee will regain control over their account. If the employee does not return within the 5 year period, the employee will forfeit the accumulated account balance. For the fiscal year ended June 30, 2019, the information for the amount of forfeitures was unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial to the School.
After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lump-sum distribution, leave the funds invested for future distribution, or any combination of these options. Disability coverage is provided in which the member may either transfer the account balance to the FRS Pension Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan, or remain in the Investment Plan and rely upon that account balance for retirement income.
13. EXTRAORDINARY LOSS
The School was impacted by Hurricane Michael when it made landfall in October 2018. The School suffered a loss of $86,851 as a result of the hurricane related damage to its furniture, fixtures and equipment. The Extraordinary Loss is shown as an expense on the Statement of Activities.
14. RISK MANAGEMENT PROGRAMS
The School is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the School carries commercial insurance. There have been no significant reductions in insurance coverage and settlement amounts have not exceeded insurance coverage for the current year or the three prior years.
542
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 33 -
15. COMMITMENTS AND CONTINGENT LIABILITIES
The School participates in state grant programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies, therefore, to the extent that the School has not complied with the rules and regulations governing the grants, refunds of any money received may be required and the collectability of any related receivables at June 30, 2019, may be impaired.
In the opinion of the School, there are no significant liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.
16. LEGAL MATTERS
In the normal course of conducting its operations, the School occasionally becomes party to various legal actions and proceedings. In the opinion of management, the ultimate resolution of such legal matters will not have a significant adverse effect on the accompanying financial statements.
543
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In
dep
end
ent
Au
dit
or'
s R
eport
.
- 3
4 -
544
as of 6/30/18
Proportion of the net pension liability/(asset) 0.002739005%
Proportionate share of the net pension liability/(asset) 825,003$
Covered-employee payroll 1,189,579$
Proportionate share of the net pension liability (asset) as a
percentage of its covered-employee payroll 69%
Plan fiduciary net position as a percentage of the total
pension liability 84.26%
Florida Retirement System
PALM BAY PREPARATORY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Proportionate Share of Net Pension Liability
See Independent Auditor's Report
- 35 -545
as of 6/30/19 as of 6/30/18
Contractually required contribution 90,399$ 78,059$
Contributions in relation to the contractually required contribution (90,399)$ (78,059)$
Contribution deficiency/(excess) -$ -$
Covered-employee payroll 1,383,762$ 1,189,579$
Contributions as a percentage of covered-employee payroll 6.53% 6.56%
Florida Retirement System
PALM BAY PREPARATORY ELEMENTARY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Contributions
See Independent Auditor's Report
- 36 -546
as of 6/30/18
Proportion of the net pension liability/(asset) 0.003642163%
Proportionate share of the net pension liability/(asset) 385,491$
Covered-employee payroll 1,189,579$
Proportionate share of the net pension liability/(asset) as a
percentage of its covered-employee payroll 32%
Plan fiduciary net position as a percentage of the total pension
liability 2.15%
Health Insurance Subsidy Program
PALM BAY PREPARATORY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Proportionate Share of Net Pension Liability
See Independent Auditor's Report
- 37 -547
as of 6/30/19 as of 6/30/18
Contractually required contribution 22,975$ 19,752$
Contributions in relation to the contractually required contribution (22,975)$ (19,752)$
Contribution deficiency/(excess) -$ -$
Covered-employee payroll 1,383,762$ 1,189,579$
Contributions as a percentage of covered-employee payroll 1.66% 1.66%
Health Insurance Subsidy Program
PALM BAY PREPARATORY ELEMENTARY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Contributions
See Independent Auditor's Report
- 38 -548
PALM BAY PREPARATORY ELEMENTARY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION June 30, 2019
- 39 -
1. BUDGETARY BASIS OF ACCOUNTING
Budgets are presented on the modified accrual basis of accounting. During the fiscal year, expenditures were controlled at the object level (e.g., salaries and benefits, purchased services, materials and supplies and capital outlay) within each activity (e.g., instruction, pupil personnel services and school administration). Budgets may be amended by resolution at any Board meeting prior to the date for the annual report.
2. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF CONTRIBUTIONS –FLORIDA RETIREMENT SYSTEM PENSION PLAN
Changes of Assumptions. The long-term expected rate of return was decreased from 7.1 percent to 7.0 percent, and the active member mortality assumption was updated.
3. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF CONTRIBUTIONS –HEALTH INSURANCE SUBSIDY PENSION PLAN
Changes of Assumptions. The municipal bond rate used to determine total pension liability was increased from 3.58 percent to 3.87 percent.
549
- 40 -
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
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 Directors Palm Bay Preparatory Elementary Academy (A charter school under Palm Bay Education Group, Inc.) a Charter School and Component Unit of the District School Board of Bay County, Florida
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 the governmental activities, each major fund, and the aggregate remaining fund information of Palm Bay Preparatory Elementary Academy (“School”), a charter school under Palm Bay Education Group, Inc. and component unit of the District School Board of Bay County, Florida, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School’s basic financial statements, and have issued our report thereon dated September 30, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School’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 the School’s internal control. Accordingly, we do not express an opinion on the effectiveness of the School’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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the School’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those 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.
550
- 41 -
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School’s financial statements are free from material misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School’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 School’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
September 30, 2019 Tampa, Florida
551
- 42 -
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Management Letter as Required by Rules of the Florida Auditor General, Chapter 10.850, Florida Statutes, Charter School Audits
To the Board of Directors Palm Bay Preparatory Elementary Academy (A charter school under Palm Bay Education Group, Inc.) a Charter School and Component Unit of the District School Board of Bay County, Florida
Report on the Financial Statements
We have audited the financial statements of the Palm Bay Preparatory Elementary Academy (“School”), (A charter school under Palm Bay Education Group, Inc.) a Charter School and Component Unit of the District School Board of Bay County, Florida, as of and for the fiscal year ended June 30, 2019, and have issued our report thereon dated September 30, 2019.
Auditor’s Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Chapter 10.850, Rules of the Auditor General.
Other Reporting Requirements
We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in those reports and schedule, which are dated September 30, 2019, should be considered in conjunction with this management letter.
Prior Audit Findings
Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no prior audit findings or recommendations.
Official Title
Section 10.854(1)(e)5., Rules of the Auditor General, requires that the name or official title of the entity and the school code assigned by the Florida Department of Education be disclosed in this management letter. The official title and the school code assigned by the Florida Department of Education of the entity are Palm Bay Elementary Charter School, 030801.
552
- 43 -
Financial Condition and Management
Sections 10.854(1)(e)2. and 10.855(11), Rules of the Auditor General, require us to apply appropriate procedures and communicate whether or not the School has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and to identify the specific condition(s) met. In connection with our audit, we determined that the School did not meet any of the conditions described in Section 218.503(1), Florida Statutes.
Pursuant to Sections 10.854(1)(e)6.a. and 10.855(12), Rules of the Auditor General, we applied financial condition assessment procedures for the School. It is management’s responsibility to monitor the School’s financial condition, and our financial condition assessment was based in part on representations made by management and review of financial information provided by same.
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.
Transparency
Sections 10.854(1)(e)7. and 10.855(13), Rules of the Auditor General, require us to apply appropriate procedures and communicate the results of our determination as to whether the Schoolmaintains on its Web site the information specified in Section 1002.33(9)(p), Florida Statutes. In connection with our audit, we determined that the School maintained on its Web site the information specified in Section 1002.33(9)(p), Florida Statutes.
Additional Matters
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.
Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.
Purpose of this Letter
Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the Board of Directors, applicable management, and District School Board of Bay County, Florida and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
September 30, 2019 Tampa, Florida
553
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER
PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
INDEPENDENT AUDITOR’S REPORT
for the fiscal year ended JUNE 30, 2019
King & Walker, CPAs, PL______________________________________________________________________________________________________________________
Certified Public Accountants
554
THIS PAGE IS INTENTIONALLY BLANK.
555
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
TABLE OF CONTENTS
PAGE NO.
FINANCIAL SECTION
Independent Auditor’s Report 1
Management’s Discussion and Analysis – (Unaudited) 3
Basic Financial Statements
Government-Wide Financial Statements: Statement of Net Position 8 Statement of Activities 9
Fund Financial Statements: Balance Sheet – Governmental Funds 10 Reconciliation of the Governmental Funds Balance Sheet to the Statement
of Net Position 11 Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds 12 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 13 Notes to Financial Statements 14
Required Supplementary Information Budgetary Comparison Schedule – General Fund and Major Special Revenue Fund – (Unaudited) 35 Schedule of Proportionate Share of Net Pension Liability - FRS 36 Schedule of Contributions - FRS 37 Schedule of Proportionate Share of Net Pension Liability - HIS 38 Schedule of Contributions - HIS 39 Note to Required Supplementary Information 40
COMPLIANCE AND INTERNAL CONTROL
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 Governmental Auditing Standards 41
Management Letter as required by Rules of the Florida Auditor General, Chapter 10.850, Florida Statutes, Charter School Audits. 43
556
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Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Independent Auditor's Report
To the Board of Directors Palm Bay Preparatory Academy (A charter school under Palm Bay Education Group, Inc.) a Charter School and Component Unit of the District School Board of Bay County, Florida
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Palm Bay Preparatory Academy (“School”), a charter school under Palm Bay EducationGroup, Inc. and component unit of the District School Board of Bay County, Florida, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Governmental 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 School’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 School’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 opinion.
557
- 2 -
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the School, as of June 30, 2019, and the respective changes in financial position thereof for the year ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 1, the accompanying financial statements referred to above present only the financial position of the School at June 30, 2019, and the respective changes in financial position for the year then ended, and is not intended to be a complete presentation Palm Bay Education Group, Inc. These financial statements do not purport to and do not present fairly the financial position of Palm Bay Education Group, Inc. as of June 30, 2019 and its changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Budgetary Comparison Schedule, and Note to Required Supplementary Information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historic context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2019 on our consideration of the School’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School’s internal control over financial reporting and compliance.
Respectfully submitted,
September 30, 2019 Tampa, Florida
558
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PALM BAY PREPARATORY ACADEMY (A CHARTER UNDER PALM BAY EDUCATION
GROUP, INC.) A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________
The Management’s Discussion and Analysis (MD&A) section of the annual financial report of the Palm Bay Preparatory Academy (“School”), a charter school under Palm Bay Education Group, Inc. provides an overview of the School’s activities for the fiscal year ended June 30, 2019.
Because the information contained in the MD&A is intended to highlight significant transactions, events, and conditions, it should be considered in conjunction with the School’s financial statements and notes to financial statements as listed in the table of contents.
FINANCIAL HIGHLIGHTS
For the fiscal year ended June 30, 2019, the School’s revenues exceeded expenses as shown on the School’s statement of activities by $8,092,078.
As shown on the statement of net position, the School reported a total net position balance of $8,821,471.
A net pension liability of $977,851 is reported on the statement of net position for pensions, as the School participates in the Florida retirement system.
OVERVIEW OF THE FINANCIAL STATEMENTS
The basic financial statements consist of three components:
Government-wide financial statements
Fund financial statements
Notes to financial statements
Government-Wide Financial Statements
The government-wide financial statements provide both short-term and long-term information about the School’s overall financial condition in a manner similar to those of a private-sector business. The statements include a statement of net position and a statement of activities that are designed to provide consolidated financial information about the governmental and business-type activities of the School presented on the accrual basis of accounting. The statement of net position provides information about the government’s financial position, its assets and liabilities, using an economic resources measurement focus. The difference between the assets and liabilities, the net position, is a measure of the financial health of the School. The statement of activities presents information about the change in the School’s net position and the results of operations, during the fiscal year. An increase or decrease in net position is an indication of whether the School’s financial health is improving or deteriorating. To assess the overall financial position of the School, one needs to consider additional non-financial factors such as changes in the School student base funding level.
559
- 4 -
PALM BAY PREPARATORY ACADEMY (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________
Fund Financial Statements
Fund financial statements are one of the components of the basic financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund financial statements provide more detailed information about the School’s financial activities, focusing on its most significant funds rather than fund types. This is in contrast to the entity-wide perspective contained in the government-wide statements.
Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, the governmental funds utilize a spendable financial resources measurement focus rather than the economic resources measurement focus found in the government-wide financial statements. The financial resources measurement focus allows the governmental fund statements to provide information on near-term inflows and outflows of spendable resources as well as balances of spendable resources available at the end of the fiscal year.
The governmental fund statements provide a detailed short-term view that may be used to evaluate the School’s near-term financing requirements. This short-term view is useful when compared to the long-term view presented as governmental activities in the government-wide financial statements. To facilitate this comparison, both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation of governmental fund to governmental activities.
The governmental funds balance sheet and statement of revenues, expenditures, and changes in fund balances provide detailed information about the School’s most significant funds. The School operates the following funds; a General Fund to account for its general operations and internal account activities, a Capital Projects Fund to account for financial resources that are restricted, committed or assigned to expenditures for capital outlays, and a Special Revenue Fund to account for Federal grant programs and the School’s food service operations. For reporting purposes, all funds are considered major funds.
The School adopts an annual budget for its governmental funds. A budgetary comparison schedule, as required, has been provided for the General Fund and Special Revenue Fund to demonstrate compliance with the budget.
Notes to Financial Statements
The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements.
560
- 5 -
PALM BAY PREPARATORY ACADEMY (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The following is a summary of the School’s current year and prior year net position:
6-30-18 6-30-19
Increase
(Decrease)
ASSETS
Current and Other Assets 753,852$ 3,112,556$ 2,358,704$
Capital Assets, net 2,543,296 15,940,755 13,397,459
Total Assets 3,297,148 19,053,311 15,756,163
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 769,722 889,141 119,419
Total Deferred Outflows of Resources 769,722 889,141 119,419
LIABILITIES
Current and Other Liabilities 75,598 5,311,944 5,236,346
Noncurrent Liabilities 3,222,206 5,721,095 2,498,889
Total Liabilities 3,297,804 11,033,039 2,498,889
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 39,673 87,942 48,269
Total Deferred Inflows of Resources 39,673 87,942 48,269
NET POSITION
Net Investment in Capital Assets 96,355 11,197,511 11,101,156
Unrestricted 633,038 (2,376,040) (3,009,078)
Total Net Position 729,393$ 8,821,471$ 8,092,078$
Net Position, End of Year
Governmental Activities
The largest portions of the School’s assets are capital assets (84%) as the School is rebuilding its educational facility. Liabilities consist of accounts and salaries payables, construction contracts and retainage payable, and noncurrent liabilities consists of a note payable, loans payable for the previous educational facility, and the net pension liability for the Florida Retirement System. Total net position amounted to $8,821,471 which included a defict unrestricted net position balance of $2,376,040.
561
- 6 -
PALM BAY PREPARATORY ACADEMY (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________
The following is a summary of the school’s change in net position for the current year and prior year:
6-30-18 6-30-19
Increase
(Decrease)
Revenues: Federal Sources 196,725$ 662,655$ 465,930$ State Sources 1,975,795 2,211,011 235,216 Local and Other 286,741 158,394 (128,347) Special Items 15,909,653 15,909,653Total Revenues 2,459,261 18,941,713 16,482,452
Expenses: Instruction 940,975 1,115,700 174,725 Instructional Support Services 29,679 66,368 36,689 Instructional Staff Training 740 5,018 4,278 Instructional-Related Technology Services 2,048 34,333 32,285 Board 119,575 134,067 14,492 School Administration 404,782 441,912 37,130 Facilities Acq. & Construction 9,228 82,036 72,808 Fiscal Services 62,169 64,245 2,076 Food Services 234,131 267,055 32,924 Student Transportation Services 1,197 (1,197) Operation of Plant 192,089 4,999,640 4,807,551 Maintenance of Plant 49,079 32,970 (16,109) Community Service 29,116 26,707 (2,409) Debt Service - Interest 133,776 106,485 (27,291) Unallocated Depreciation 103,220 36,213 (67,007) Extraordinary Loss Due to Hurricane - 3,436,886 3,436,886 Total Expenses 2,311,804 10,849,635 8,537,831
Increase/(Decrease) in Net Position 147,457$ 8,092,078$ 7,944,621$
Operating Results for the Year
Governmental Activities
The largest revenue source for the School is an insurance recovery of $15,845,540 (84%) which reported as a Special Item. The State of Florida Revenue (12%) is the largest recurring revenue. Revenues from State sources for current operations are primarily received through the Florida Education Finance Program (FEFP) funding formula. The FEFP formula utilizes student enrollment data to determine the funds available for the School.
The largest concentrations of expenses were for operation of plant (46%) expenses incurred for clean up and demolation of the previous facility and the extraordinary loss of capital assets due to the hurricane (32%).
562
- 7 -
PALM BAY PREPARATORY ACADEMY (A CHARTER UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________
FINANCIAL ANALYSIS OF THE SCHOOL’S FUNDS
Governmental Funds
As the School completed the year, its governmental funds reported a combined fund balance deficit of $2,299,388.
BUDGETARY HIGHLIGHTS
The general fund budget for the fiscal year ended June 30, 2019, was developed based on the School’s anticipated revenues and expenditures and the expected student population for the school year. Actual expenditures were equal to the final budgeted expenditures. Refer to the Budgetary Comparison Schedule – General Fund for additional information.
CAPITAL ASSETS
The School was impacted by Hurricane Michael when it made landfall in October 2018. The School facilities and their contents were damaged by the hurricane and the School required building renovations and the replacement of equipment and furnishings. All of the related building and furniture and fixtures of the School are included in the loss of hurricane-related damage. During the fiscal year ended June 30, 2019, the School recognized a net loss of $3,436,886 as a result of the hurricane-related damage.
The School’s investment in capital assets for its governmental activities as of June 30, 2019, amounts to $15,940,755 (net of accumulated depreciation). This investment in capital assets includes land, construction work in progress, and furniture, fixtures, and equipment. Additional information regarding the School’s capital assets is located in the notes to the financial statements.
LONG-TERM LIABILITIES
In June 2017, the School borrowed a total of $5,000,000 for the purpose of purchasing an educational facility. The first mortgage of $4,000,000 bears an interest rate of 5.27% per year with a balloon payment due in June 2020. The second mortgage of $1,000,000 bears an interest rate of 6.25% per year with a balloon payment due in June 2020. Additional information regarding the School’s long-term liabilities can be found in the Notes to the financial statements.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the School’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Palm Bay Education Group, Inc., 1104 Balboa Avenue, Panama City, FL 32401.
563
Cash & Cash Equivalents $ 50,278
Accounts Receivable 2,560,220
Due From Other Agencies 353,599
Note Receivable 100,000
Prepaid Expenses and Deposits 48,459
Capital Assets:
Land 1,505,200
Furniture, Fixtures, and Equipment, Net 104,203
Construction Work In Progress 14,331,352
Total Capital Assets, Net 15,940,755
TOTAL ASSETS 19,053,311
Deferred outflow related to pensions 889,141
TOTAL DEFERRED OUTFLOWS OF RESOURCES 889,141
Accounts Payable 231,213
Salaries Payable 76,992
Construction Contracts Payable 3,792,957
Retainage Payable 1,210,782
Noncurrent Liabilities:
Due Within One Year:
Note Payable 10,478
Loans Payable 4,732,766
Due After One Year:
Net Pension Liability 977,851
TOTAL LIABILITIES 11,033,039
Deferred inflow related to pensions 87,942
TOTAL DEFERRED INFLOWS OF RESOURCES 87,942
Net Investment in Capital Assets 11,197,511
Unrestricted (2,376,040)
Total Net Position $ 8,821,471
ASSETS
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
LIABILITIES
NET POSITION
STATEMENT OF NET POSITION
June 30, 2019
DEFERRED OUTFLOWS OF RESOURCES
DEFERRED INFLOWS OF RESOURCES
PALM BAY PREPARATORY ACADEMY
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Governmental
Activities
The accompanying notes to the financial statements are an integral part of this statement.
- 8 -564
Net
(E
xpen
ses)
Rev
enue
and C
han
ges
Ch
arges
Op
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ing
Cap
ital
Net
Posi
tion
Exp
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Inst
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$1
,11
5,7
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$-
$1
6,4
49
$-
$
(1,0
99,2
51)
Inst
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al S
up
po
rt S
ervic
es6
6,3
68
(66,3
68)
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al S
taff
Tra
inin
g5
,01
8
(5,0
18)
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ech
no
logy S
ervic
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4,3
33
(34,3
33)
Boar
d1
34
,06
7
(134,0
67)
Sch
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l A
dm
inis
trat
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44
1,9
12
(4
41,9
12)
Fac
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Acq
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itio
n &
Co
nst
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82
,03
6
81,0
20
(1,0
16)
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vic
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4,2
45
(64,2
45)
Foo
d S
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67
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5
42
,86
5
2
96
,20
6
72,0
16
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f P
lan
t4
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9,6
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3
50
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(4,6
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Mai
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2,9
70
(32,9
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3,3
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(2
3,3
87)
D
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Inte
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10
6,4
85
77,4
25
(29,0
60)
Extr
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Hu
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3,4
36
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6
(3,4
36,8
86)
Unal
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reci
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6,2
13
(36,2
13)
T
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10
,84
9,6
35
$4
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$6
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5
$158,4
45
(9
,982,3
50)
Gen
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Sta
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52,5
66
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and
Oth
er112,2
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Sp
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sura
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over
y15,8
45,5
40
Sp
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Tra
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Rel
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T
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18,0
74,4
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Ch
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92,0
78
Net
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- J
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729,3
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et P
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Ju
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30
, 2
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8,8
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The
acco
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finan
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an i
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this
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- 9
-
565
Special Capital Total
General Revenue Projects Governmental
Fund Fund Fund Activities
Cash & Cash Equivalents $ 50,228 $ 50 $ - $ 50,278
Accounts Receivable 2,560,220 2,560,220
Due From Other Agencies 2,782 350,817 353,599
Prepaid Expenses and Deposits 48,459 48,459
Due From Other Funds 348,746 348,746
Total Assets $ 3,010,435 $ 350,867 $ - $ 3,361,302
Accounts Payable $ 231,213 $ - $ - $ 231,213
Salaries Payable 74,871 2,121 76,992
Construction Contracts Payable 3,792,957 3,792,957
Retainage Payable 1,210,782 1,210,782
Due to Other Funds 348,746 348,746
Total Liabilities 5,309,823 350,867 - 5,660,690
Nonspendable 48,459 48,459
Unassigned (2,347,847) (2,347,847)
Total Fund Balances (2,299,388) - - (2,299,388)
Total Liabilities and Fund Balances $ 3,010,435 $ 350,867 $ - $ 3,361,302
FUND BALANCES
ASSETS
LIABILITIES
PALM BAY PREPARATORY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30, 2019
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
The accompanying notes to the financial statements are an integral part of this statement.
- 10 -566
Total Fund Balances - Governmental Funds $ (2,299,388)
Amounts reported for governmental activities in the statement of
net position are different because:
Capital assets, net of accumulated depreciation, used in
governmental activities are not financial resources and
therefore, are not reported as assets in governmental funds. 15,940,755
Long-term receivables are not due in the current period and
therefore, are not reported as a receivable in the
governmental funds. 100,000
Noncurrent liabilities are not due and payable in the current period
and, therefore, are not reported as liabilities in the governmental
funds.
Note Payable (10,478)
Loans Payable (4,732,766)
Net Pension Liability (977,851) (5,721,095)
Deferred Outflows and Inflows of resources are not available in the
current period and not reported in the governmental funds. 801,199
Total Net Position - Governmental Activities $ 8,821,471
June 30, 2019
PALM BAY PREPARATORY ACADEMY
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
The accompanying notes to financial statements are an integral part of this statement.
- 11 -567
Special Capital Total
General Revenue Projects Governmental
Fund Fund Fund Funds
Intergovernmental:
Federal Through Local $ - $ 662,655 $ - $ 662,655
State Sources 2,052,566 158,445 2,211,011
Local and Other 115,529 42,865 158,394
Total Revenues 2,168,095 705,520 158,445 3,032,060
Current - Education:
Instruction 1,099,251 16,449 1,115,700
Instructional Support Services 66,368 66,368
Instructional Staff Training 5,018 5,018
Instructional-Related Technology Services 34,333 34,333
Board 134,067 134,067
School Administration 310,476 310,476
Facilities Acquisition & Construction 1,016 81,020 82,036
Fiscal Services 64,245 64,245
Food Services 267,055 267,055
Operation of Plant 4,649,640 350,000 4,999,640
Maintenance of Plant 32,970 32,970
Community Service 26,707 26,707
Fixed Capital Outlay:
Facilities Acquisition & Construction 14,331,352 14,331,352
Other Capital Outlay 108,710 108,710
Debt Service:
Principal 70,080 70,080
Interest 29,060 77,425 106,485
Total Expenditures 20,963,293 633,504 158,445 21,755,242
(18,795,198) 72,016 - (18,723,182)
Other Financing Sources (Uses):
Insurance Recovery 15,845,540 15,845,540
Transfers In/(Out) 72,016 (72,016)
Total Other Financing Sources (Uses) 15,917,556 (72,016) - 15,845,540
Net Change in Fund Balances (2,877,642) - - (2,877,642)
Fund Balances, July 1, 2018 578,254 578,254Fund Balances, June 30, 2019 $ (2,299,388) $ - $ - $ (2,299,388)
PALM BAY PREPARATORY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES - GOVERNMENTAL FUNDS
Excess (Deficiency) of Revenues Over
Expenditures
Revenues
Expenditures
For the Fiscal Year Ended June 30, 2019
The accompanying notes to financial statements are an integral part of this statement.
- 12 -568
Net Change in Fund Balances - Governmental Funds $ (2,877,642)
Amounts reported for governmental activities in the statement of activities
are different because:
Capital outlays are reported in governmental funds as expenditures.
However, in the statement of activities, the cost of those assets is
allocated over their estimated useful lives as depreciation expense.
This is the amount of captial outlay ($14,440,062) and the transfer
in of land, building and debt from a related charter school ($64,113)
in excess of depreciation expense ($36,213) and the extraordinary
loss due to the hurricane ($3,436,886). 11,031,076
Repayment of debt principal is an expenditure in the governmental funds,
but the payment reduces long-term liabilities in the statement of
net position. 70,080
Net effect of various transactions in the statement of activities that
do not require the use of current financial resources are not
reported in the governmental funds:
Pension Expense (calculated for net pension liability) (231,537)
Pension contributions made subsequent to the
pension liability measurement date of 6/30/18 100,101
Change in Net Position - Governmental Activities $ 8,092,078
For the Fiscal Year Ended June 30, 2019
PALM BAY PREPARATORY ACADEMY
REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
The accompanying notes to the financial statements are an integral part of this statement.
- 13 -
569
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 14 -
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
Palm Bay Preparatory Academy (‘School”), a charter school under Palm Bay Education Group, Inc. is a component unit of the District School Board of Bay County, Florida. The School is sponsored by its charter-holder, Palm Bay Education Group, Inc., a not-for-profit corporation organized pursuant to Chapter 617, Florida Statutes, the Florida Not-For-Profit Corporation Act. The governing body of the School is the not-for-profit corporation Board of Directors, which is comprised of five members.
The basic financial statements of the School present only the balances, activity and disclosures related to the School. They do not purport to, and do not, present fairly the financial position of Palm Bay Education Group, Inc. as of June 30, 2019, and its changes in financial position or budgetary comparisons, where applicable, for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The general operating authority of the School is contained in Section 1002.33, Florida Statutes. The School operates under a charter of the sponsoring school district, the District School Board of Bay County, Florida, (“District”). On July 28, 2015, the Bay County School District approved a charter agreement for Palm Bay Preparatory Academy, which consolidated the charters of Newpoint Bay High and Newpoint Bay Academy into a single charter 6-12 school. The charter was reassigned from Newpoint Bay, Inc. to Palm Bay Education Group, Inc. The term of this charter is July 1, 2015 to June 30, 2018. On February 27, 2018, the Bay County School District approved a first amendment to the charter school contract for Palm Bay Preparatory Academy. The term of this charter is July 1, 2018 to June 30, 2023. At the end of the term of the charter, the District may choose not to renew the charter under grounds specified in the charter. In this case, the District is required to notify the school in writing at least 90 days prior to the charter’s expiration. During the term of the charter, the District may also terminate the charter if good cause is shown. In the event of termination of the charter, the District shall assume operation of the School. The School is considered a component unit of the District; therefore, for financial reporting purposes, the School is required to follow generally accepted accounting principles applicable to state and local governmental units.
Criteria for determining if other entities are potential component units which should be reported within the School's basic financial statements are identified and described in the Governmental Accounting Standards Board's (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Sections 2100 and 2600. The application of these criteria provides for identification of any entities for which the School is financially accountable and other organizations for which the nature and significance of their relationship with the School are such that exclusion would cause the School's basic financial statements
570
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 15 -
to be misleading or incomplete. Based on these criteria, no component units are included within the reporting entity of the School.
Basis of Presentation
Government-wide Financial Statements - Government-wide financial statements, including the statement of Net Position and the statement of activities, present information about the School as a whole.
Government-wide financial statements are prepared using the economic resources measurement focus. The statement of activities presents a comparison between direct expenses and program revenues for each function or program of the School’s governmental activities. Direct expenses are those that are specifically associated with a service, program, or department and are thereby clearly identifiable to a particular function.
Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self-financing or draws from the general revenues of the School.
Fund Financial Statements - Fund financial statements report detailed information about the School in the governmental funds. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is reported in a separate column. Because the focus of governmental fund financial statements differs from the focus of government-wide financial statements, a reconciliation is presented with each of the governmental fund financial statements.
The School’s major governmental funds are as follows:
General Fund – to account for all financial resources not required to be accounted for in another fund, and for certain revenues from the State that are legally restricted to be expended for specific current operating purposes.
Special Revenue Fund – to account for federal grant programs and the School’s food service operations.
Capital Projects Fund – to account for all resources for the acquisition of capital assets and related items purchased by the School with restricted capital outlay funds.
All other governmental funds are non-major and are presented in the aggregate.
571
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 16 -
Basis of Accounting
Basis of accounting refers to when revenues and expenditures, or expenses, are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied.
The government-wide financial statements are prepared using the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when a liability is incurred, regardless of the timing of the related cash flows. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements imposed by the provider have been satisfied.
Governmental fund financial statements are prepared using the modified accrual basis of accounting. Revenues, except for certain grant revenues, are recognized when they become measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The School considers revenues to be available if they are collected within 30 days of the end of the current fiscal year. When grant terms provide that the expenditure of resources is the prime factor for determining eligibility for Federal, State, and other grant resources, revenue is recognized at the time the expenditure is made. Under the modified accrual basis of accounting, expenditures are generally recognized when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, and compensated absences, which are recognized when due. Allocations of cost, such as depreciation, are not recognized in governmental funds.
Cash and Cash Equivalents
Cash and cash equivalents are defined as demand deposits, money market accounts, and short term investments with original maturities of eight months or less from date of acquisition. The School considers all demand accounts and money market funds which are not subjected to withdrawal restrictions to be cash and cash equivalents.
The School’s deposits are placed with banks and savings and loans which are qualified as public depositories, prior to receipt of public monies, under Chapter 280, Florida statutes and the School’s policy. The School maintains its cash accounts with one qualified public depository. The accounts routinely exceed the federally insured limit of $250,000. Monies deposited in amounts greater than the insurance coverage are secured by the bank’s pledging securities with the state treasurer in the collateral pool. The School has not experienced any losses in such accounts and does not believe it is exposed to any significant credit or custodial risk.
572
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 17 -
Capital Assets
Expenditures for capital assets acquired or constructed for general School purposes are reported in the governmental fund that financed the acquisition or construction. The capital assets so acquired are reported at cost in the government-wide statement of net position but are not reported in the governmental fund financial statements. Capital assets are defined by the School as those costing more than $750. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated assets are recorded at fair value at the date of donation.
Capital assets are depreciated using the straight-line method over the following estimated useful lives:
Description Estimated Lives
Furniture, Fixtures and Equipment 5 years
Buildings 20 years
Current-year information relative to changes in capital assets is described in a subsequent note.
Noncurrent Liabilities
Long-term obligations that will be financed by resources to be received in the future by the general fund are reported in the government-wide financial statements, not in the general fund. Capital improvement debt is reported net of unamortized discount. The School amortizes debt discounts over the life of the debt using the straight-line method. Current-year information relative to changes in long-term debt is described in subsequent notes.
Net Pension Liability
As a participating employer in the Florida Retirement System, the School recognizes its proportionate share of the collective net pension liabilities of the FRS cost-sharing multiple-employer defined benefit plans. As of June 30, 2019, the School’s proportionate share of the net pension liabilities totaled $977,851.
The School’s retirement plans and related amounts are described in a subsequent note.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that
573
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 18 -
applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until then.
Net Position and Fund Balance Classification
Government-wide Financial Statements
Net Position are classified and reported in three components:
Net Investment in Capital Assets – consists of capital assets, net of accumulated depreciation, and reduced by the outstanding balances of any borrowings that are attributed to the acquisition or improvement of those assets.
Restricted Net Position – consists of net position with constraints placed on their use either by external groups such as creditors, contributors, or laws or regulations of other governments.
Unrestricted Net Position – all other net position that does not meet the definition of “restricted” or “net investment in capital assets.”
Fund Financial Statements
GASB Codification Section 1800.142, Fund Balance Reporting and Governmental Fund Type Definitions, defines the different types of fund balances that a governmental entity must use for financial reporting purposes. GASB requires the fund balance amounts to be reported within one of the following fund balance categories:
Nonspendable – fund balance associated with inventories, prepaid expenses, long-term loans and notes receivable, and property held for resale (unless the proceeds are restricted, committed or assigned). All nonspendable fund balances at year end relate to assets that are in nonspendable form.
Restricted – fund balance that can be spent only for the specific purposes stipulated by the constitution, external resource providers, or through enabling legislation.
Committed – fund balance that can be used only for the specific purposes determined by a formal action of the School’s Board of Governance.
Assigned – fund balance that is intended to be used by the School’s management for specific purposes but does not meet the criteria to be classified as restricted or committed.
Unassigned – fund balance that is the residual amount for the School’s general fund and includes all spendable amounts not contained in the other classifications.
Order of Fund Balance Spending Policy
The School’s policy is to apply expenditures against nonspendable fund balance, restricted fund balance, committed fund balance, assigned fund balance, and
574
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 19 -
unassigned fund balance at the end of the fiscal year. First, nonspendable fund balances are determined. Then restricted fund balances for specific purposes are determined (not including nonspendable amounts). Any remaining fund balance amounts for the non-general funds are to be classified as restricted fund balance. It is possible for the non-general funds to be classified as restricted fund balance. It is possible for the non-general funds to have negative unassigned fund balance when nonspendable amounts plus the amount of restricted fund balances for specific purposes exceed the positive fund balance for non-general fund.
Revenue Sources
Revenues for current operations are received primarily from the District pursuant to the funding provisions included in the School’s charter. In accordance with the funding provisions of the charter and Section 1002.33(17), Florida Statutes, the School reports the number of full-time equivalent students and related data to the District.
Under provisions of Section 1011.62, Florida Statutes, the District reports the number of full-time equivalent students and related data to the Florida Department of Education (FDOE) for funding through the Florida Education Finance Program (FEFP). Funding for the School is adjusted during the year to reflect the revised calculations by the FDOE under the FEFP and the actual weighted full-time equivalent (FTE) students reported by the School during designated full-time equivalent student survey periods. The Department may also adjust subsequent fiscal period allocations based upon an audit of the School's compliance in determining and reporting FTE and related data. Normally, such adjustments are treated as reductions or additions of revenue in the year when the adjustments are made.
The basic amount of funding through the FEFP under Section 1011.62 is the product of the (1) unweighted FTE, multiplied by (2) the cost factor for each program, multiplied by (3) the base student allocation established by the legislature. Additional funds for exceptional students who do not have a matrix of services are provided through the guaranteed allocation designated in Section 1011.62(1)(e)2., Florida Statutes. For the fiscal year ended June 30, 2019, the School reported 325.33 unweighted FTE and 327.2257 weighted FTE.
FEFP funding may also be adjusted as a result of subsequent FTE audits conducted by the Florida Auditor General pursuant to Section 1010.305, Florida Statutes, and Rule 6A-1.0453, Florida Administrative Code (FAC). Schools are required to maintain the following documentation for three years or until the completion of an FTE audit:
Attendance and membership documentation (Rule 6A-1.044 FAC). Teacher certificates and other certification documentation (Rule 6A-1.0503
FAC). Documentation for instructors teaching out-of-field (Rule 6A-1.0503 FAC).
575
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 20 -
Procedural safeguards for weighted programs (Rule 6A-6.03411 FAC). Evaluation and planning documents for weighted programs (Section
1010.305, Florida Statutes, and Rule 6A-6.03411, FAC).
The School receives federal or state awards for the enhancement of various educational programs. This assistance is generally received based on applications submitted to and approved by various granting agencies. For federal or state awards in which a claim to these grant proceeds is based on incurring eligible expenditures, revenue is recognized to the extent that eligible expenditures have been incurred.
The School follows the policy of applying restricted resources prior to applying unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted assets are available.
Recently Issued Accounting Principles
Governmental Accounting Standards Board Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements was effective for fiscal years beginning after June 15, 2018. The School’s notes related to debt reflect all required disclosures.
Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions was effective for fiscal years beginning after June 15, 2017. The net pension liability for the FRS Pension Plan at July 1, 2017 has been increased due to the restatement of the fund’s beginning net position as a result of the implementation of GASB 75. The School’s proportionate share of the net pension liability increased $172 and is reported in the Statement of Net Position and Statement of Activities.
Income Taxes
The School is exempt from Federal tax under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income taxes has been included in the accompanying financial statements. Additionally, no uncertain tax positions have been made requiring disclosure in the related note to financial statements. The School’s income tax returns for the past three years are subject to examination by tax authorities and may change upon examination.
Use of Estimates
In preparing the financial statements in conformity with generally accepted accounting principles in the United States (GAAP) management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statement of net position and affect revenues and expenditures for the period presented. Actual results could differ from those estimates.
576
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 21 -
Subsequent Events
Management has evaluated all events subsequent to the balance sheet date and through the report date, which is the date these financial statements were available to be issued. Management determined there are no subsequent events which require disclosure.
2. CASH DEPOSITS
Custodial Credit Risk – Deposits. In the case of deposits, this is the risk that in the event of a bank failure, the School’s deposits may not be returned to the School. The School does not have a custodial credit risk policy. All cash deposits are held in banks that qualify as public depositories under Florida law. All such deposits are insured by federal depository insurance and/or collateralized with securities held in Florida’s multiple financial institution collateral pool as required by Chapter 280, Florida Statutes.
3. ACCOUNTS RECEIVABLE, NOTE RECEIVABLE AND TRANSFER – (RELATED PARTY)
The School reported a receivable from Palm Bay Elementary School, a charter school under the same entity, as a result of money advanced ($158,044) for expenses on behalf Palm Bay Elementary, in its statement of net position and balance sheet – governmental funds. The School expects to receive full payment within one year from the financial statement date and no allowance for bad debt has been established.
The School reported a note receivable ($100,000) from Palm Bay Elementary School, a charter school under the same entity. The note receivable is an on demand promissory note bearing 0% interest, dated July 1, 2017. This receivable is not expected to be collected within one year.
In October 2018, the School received a transfer of land, building and its related debt from Palm Bay Elementary Academy, a charter school under the same charter holder. The related net transfer of $64,113 is reported on the School’s statement of activities as a Special Item.
4. DUE FROM OTHER AGENCIES
The amount due from other agencies on the School’s statement of net position and balance sheet – governmental funds consists of an amount for expenditures made for grants awaiting reimbursement from the District. This receivable amount is considered to be fully collectible and therefore, no allowance for uncollectible accounts has been established.
5. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
At June 30, 2019, the General Fund was due $348,746 from the Special Revenue Fund for FEMA revenue not received. The amounts of interfund receivables, payables and transfers are netted together and not reported in the statement of net position and the statement of activities.
577
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 22 -
The Special Revenue Fund transferred $72,016 to the General Fund to provide support for the School’s general operations. The amounts of interfund transfers are netted together and not reported in the statement of activities.
6. CHANGES IN CAPITAL ASSETS
Changes in capital assets are presented in the table below.
Beginning EndingBalance Additions Deletions Balance
Governmental Activities:Capital Assets Not Being Depreciated:
Land 752,600$ 752,600$ -$ 1,505,200$ Construction Work in Progress 14,331,352 14,331,352
Total Capital Assets Not Being Depreciated 752,600 15,083,952 - 15,836,552
Capital Assets Being Depreciated:Furniture, Fixtures and Equipment 201,293 108,710 (201,293) 108,710Buildings 1,797,746 1,797,746 (3,595,492) -
Total Capital Assets Being Depreciated 1,999,039 1,906,456 (3,796,785) 108,710
Less Accumulated Depreciation for:Furniture, Fixtures and Equipment (110,965) (6,250) 112,708 (4,507)Buildings (97,378) (149,813) 247,191 -Total Accumulated Depreciation (208,343) (156,063) 359,899 (4,507)Total Capital Assets Being Depreciated, Net 1,790,696 1,750,393 (3,436,886) 104,203
Governmental Activities Capital Assets, Net 2,543,296$ 16,834,345$ (3,436,886)$ 15,940,755$
All depreciation expense was shown as unallocated on the statement of activities.
7. CONSTRUCTION CONTRACT COMMITMENTS
The following is a schedule of major construction contract commitments at June 30, 2019:
Contract Completed Balance Project Amount to Date Committed
Palm Bay Prep Hurricance Repairs to School Facility -
GAC Contractors, Inc. 18,674,882$ 12,107,822$ 6,567,060$ Palm Bay Charter K-8 School - DAG Architects 439,374 296,187 143,187Total 19,114,256$ 12,404,009$ 6,710,247$
578
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 23 -
8. NOTE PAYABLE
Note payable consisted of the following:
Balance at
Note Payable: 6-30-19
Novitas Credit Corp - Phone Equipment Lease entered into 7-24-17.
36 monthly payments of $1,900 at 15.8%. This loan is split with
Palm Bay Preparatory Elementay. 10,478$
Total Note Payable 10,478$
Amounts due for notes payable are as follows:
Fiscal Year
Ending June 30: Total Principal Interest
2020 11,399$ 10,478$ 921$
Total 11,399$ 10,478$ 921$
9. LOANS PAYABLE
Loans payable outstanding for the School consisted of the following: Balance at
Centennial Bank - First Mortgage Loan 6-30-19
$4,000,000 Balloon Note bearing an interest rate of 5.27% per annum
maturing June 29, 2020. The borrower shall pay $27,171 monthly until May
29, 2020. The outsanding principal balance of $3,679,787, plus accrued
unpaid interest and unpaid fees and expenses, if any are due and payable on
June 29, 2020. 3,794,042$
Central Baptist Church, Inc. - Second Mortgage Loan
$1,000,000 Balloon Note bearing an interest rate of 6.25% per annum
maturing June 29, 2019. The borrower shall pay $7,250 monthly until May
29, 2020. The outsanding principal balance of $909,573, accrued unpaid
interest and unpaid fees and expenses, if any are due and payable on June
29, 2020. 938,724
Total Loans Payable 4,732,766$
Amounts due for loans payable are as follows:
Fiscal Year
Ending June 30: Total Principal Interest
2020 4,951,215$ 4,732,766$ 218,449$
Total 4,951,215$ 4,732,766$ 218,449$
579
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 24 -
10. CHANGES IN LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities:
Beginning Ending Due in Balance Additions Deductions Balance One Year
GOVERNMENTAL ACTIVITIES:Note Payable 19,430$ -$ (8,952)$ 10,478$ 10,478$ Loans Payable 2,427,511 2,366,383 (61,128) 4,732,766 4,732,766Net Pension Liability 775,265 202,586 - 977,851 -Total Governmental Activities 3,222,206$ 2,568,969$ (70,080)$ 5,721,095$ 4,743,244$
11. SCHEDULE OF STATE REVENUE SOURCES
The following is a schedule of the School’s State revenue:
Source AmountFlorida Education Finance Program 1,330,805$ Class Size Reduction 285,551Charter School Capital Outlay 158,445Discretionary Local Effort 140,980Supplementary Academic Instruction 92,893ESE Guaranteed Allocation 54,302Instructional Materials 26,006Best & Brightest Teacher Scholarships 23,404Safe School 21,101Declining Enrollment 20,597Reading Allocation 13,711Discretionary Millage 11,104
Digital Classrooms Allocation 10,402
Mental Health Allocation 8,466
Florida Teachers' Lead Program 5,472
Funds Compression Allocation 4,813Other Miscellaneous State Revenue 1,951Discretionary Lottery 1,008
Total State Revenue 2,211,011$
As provided in the charter school contract, the District has charged the School an administrative fee amounting to $77,682.
12. FUNDING AND CREDIT CONCENTRATIONS
The School receives substantially all of its support and revenue from federal, state and local funding sources, passed through the District, in the form of performance and budget based contracts. Continuing operation of the School is greatly dependent upon the continued support of these governmental agencies.
580
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 25 -
13. FINANCIAL SERVICES CONTRACT
The School has contracted with a professional accounting services company to provide accounting and financial services, and other assistance to the School. The amount paid for these professional services during the fiscal year totaled $64,245. The contract may be cancelled by either party with 30 days advance notice.
14. FLORIDA RETIREMENT SYSTEM (FRS) – Defined Benefit Pension Plans
General Information about the FRS
The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program (DROP) under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined contribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the HIS Program, a cost-sharing multiple-employer defined benefit pension plan to assist retired members of any State-administered retirement system in paying the costs of health insurance.
Essentially all regular employees of the School are eligible to enroll as members of the State-administered FRS. Provisions relating to the FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, and benefits are defined and described in detail. Such provisions may be amended at any time by further action from the Florida Legislature. The FRS is a single retirement system administered by the Florida Department of Management Services, Division of Retirement, and consists of two cost-sharing multiple-employer defined benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services’ Web site (www.dms.myflorida.com).
The School’s FRS and HIS pension expense totaled $231,537 for the fiscal year ended June 30, 2019.
FRS Pension Plan
Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan, with a DROP for eligible employees. The general classes of membership are as follows:
Regular Class – Members of the FRS who do not qualify for membership in the other classes.
Employees enrolled in the Plan prior to July 1, 2011, vest at 6 years of creditable service and employees enrolled in the Plan on or after July 1, 2011, vest at 8 years of creditable service. All vested members, enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62 or at any age after 30 years of service. All members enrolled
581
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 26 -
in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service. Employees enrolled in the Plan may include up to 4 years of credit for military service toward creditable service. The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.
DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirement under the Plan to defer receipt of monthly benefit payments while continuing employment with an FRS-participating employer. An employee may participate in DROP for a period not to exceed 60 months after electing to participate. During the period of DROP participation, deferred monthly benefits are held in the FRS Trust Fund and accrue interest. The net pension liability does not include amounts for DROP participants, as these members are considered retired and are not accruing additional pension benefits.
Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the 5 highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the 8 highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on retirement plan and/or the class to which the member belonged when the service credit was earned. Members are eligible for in-line-of-duty or regular disability and survivors’ benefits. The following chart shows the percentage value for each year of service credit earned:
Class, Initial Enrollment, and Retirement Age/Years of Service % Value
Regular Class members initially enrolled before July 1, 2011
Retirement up to age 62 or up to 30 years of service 1.60
Retirement at age 63 or with 31 years of service 1.63
Retirement at age 64 or with 32 years of service 1.65
Retirement at age 65 or with 33 or more years of service 1.68
Regular Class members initially enrolled on or after July 1, 2011
Retirement up to age 65 or up to 33 years of service 1.60
Retirement at age 66 or with 34 years of service 1.63
Retirement at age 67 or with 35 years of service 1.65
Retirement at age 68 or with 36 or more years of service 1.68
As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3 percent per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion
582
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 27 -
of 3 percent determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by 3 percent. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.
Contributions. The Florida Legislature establishes contribution rates for participating employers and employees. Contribution rates during the 2018-19 fiscal year were as follows:
Percent of Gross Salary
Class Employee Employer (1)
FRS, Regular 3.00 8.26
FRS, Reemployed Retiree (2) (2)
Notes: (1) Employer rates include 1.66 percent for the postemployment health insurance subsidy. Also, employer rates, other than for DROP participants, include 0.06 percent for administrative costs of the Investment Plan.
(2) Contribution rates are dependent upon retirement class in which reemployed.
The School’s contributions to the Plan totaled $78,295 for the fiscal year ended June 30, 2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a liability of $631,452 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2018. The School’s proportionate share of the net pension liability was based on the School’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year contributions of all participating members. At June 30, 2018, the School’s proportionate share was .002096418 percent, which was an increase of .000413977 percent from its proportionate share measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of $160,739. In addition, the School reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
583
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 28 -
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 53,493$ 1,942$
Change of assumptions 206,328 -
Net difference between projected and actual
earnings on FRS Plan investments - 48,787
Changes in proportion and differences between
School FRS contributions and proportionate
share of contributions 241,538 -
School FRS contributions subsequent to
the measurement date 78,295 -
Total 579,654$ 50,729$
The deferred outflows of resources related to pensions totaling $78,295, resulting from School contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 81,011$
2021 55,287
2022 7,709
2023 36,814
2024 24,616
Thereafter 3,656
Actuarial Assumptions. The total pension liability in the July 1, 2018, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Investment rate of return 7.00 percent, net of pension plan investment
expense, including inflation
Mortality rates were based on the Generational RP-2000 with Projection Scale BB.
The actuarial assumptions used in the July 1, 2018, valuation were based on the results of an actuarial experience study for the period July 1, 2008, through June 30, 2013.
The long-term expected rate of return on pension plan investments was not based on historical returns, but instead is based on a forward-looking capital market economic model. The allocation policy’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions, and includes an adjustment for the inflation
584
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 29 -
assumption. The target allocation and best estimates of arithmetic and geometric real rates of return for each major asset class are summarized in the following table:
Asset Class Target
Allocation (1)
Annual Arithmetic Return
Compound Annual
(Geometric) Return
Standard Deviation
Cash 1% 2.9% 2.9% 1.8%
Fixed Income 18% 4.4% 4.3% 4.0%
Global Equity 54% 7.6% 6.3% 17.0%
Real Estate (Property) 11% 6.6% 6.0% 11.3%
Private Equity 10% 10.7% 7.8% 26.5%
Strategic Investments 6% 6.0% 5.7% 8.6%
Total 100%
Assumed inflation - Mean 2.6% 1.9%
Note: (1) As outlined in the Plan's investment policy.
Discount Rate. The discount rate used to measure the total pension liability was 7.00 percent. The Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return. The discount rate used in the 2018 valuation was updated from 7.1 percent to 7.0 percent.
Sensitivity of the School’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate. The following presents the School’s proportionate share of the net pension liability calculated using the discount rate of 7.0 percent, as well as what the School’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.0 percent) or 1 percentage point higher (8.0 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(6.0%) (7.0%) (8.0%)
School's proportionate share of
the net pension liability 1,152,426$ 631,452$ 198,752$
Pension Plan Fiduciary Net Position. Detailed information about the Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.
HIS Pension Plan
Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes, and may
585
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 30 -
be amended by the Florida Legislature at any time. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying their health insurance costs and is administered by the Florida Department of Management Services, Division of Retirement.
Benefits Provided. For the fiscal year ended June 30, 2019, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS benefit, a retiree under a State-administered retirement system must provide proof of health insurance coverage, which can include Medicare.
Contributions. The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal year ended June 30, 2019, the contribution rate was 1.66 percent of payroll pursuant to Section 112.363, Florida Statutes. The School contributed 100 percent of its statutorily required contributions for the current and preceding 3 years. HIS Plan contributions are deposited in a separate trust fund from which HIS payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled.
The School’s contributions to the HIS Plan totaled $21,806 for the fiscal year ended June 30, 2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a net pension liability of $346,399 for its proportionate share of the net pension liability. The current portion of the net pension liability is the School’s proportionate share of benefit payments expected to be paid within one year, net of the School’s proportionate share of the HIS Plan’s fiduciary net position available to pay that amount. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2018. The School’s proportionate share of the net pension liability was based on the School’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year contributions of all participating members. At June 30, 2018, the School’s proportionate share was .003272825 percent, which was an increase of .000676508 percent from its proportionate share measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of $70,798. In addition, the School reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
586
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 31 -
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 5,303$ 589$
Change of assumptions 38,524 36,624
Net difference between projected and actual
earnings on HIS Plan investments 209 -
Changes in proportion and differences between
School HIS contributions and proportionate
share of contributions 243,645 -
School HIS contributions subsequent to
the measurement date 21,806 -
Total 309,487$ 37,213$
The deferred outflows of resources totaling $21,806, resulting from School contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 4,766$
2021 4,748
2022 3,326
2023 747
2024 (4,637)
Thereafter (2,126)
Actuarial Assumptions. The total pension liability in the July 1, 2017, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Municipal bond rate 3.87 percent
Mortality rates were based on the Generational RP-2000 with Projected Scale BB.
While an experience study had not been completed for the HIS Plan, the actuarial assumptions that determined the total pension liability for the HIS Plan were based on certain results of the most recent experience study for the FRS Plan.
Discount Rate. The discount rate used to measure the total pension liability was 3.87 percent. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by the plan
587
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 32 -
sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index.
Sensitivity of the School’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 3.87 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 (2.87 percent) or 1 percentage point higher (4.87 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(2.87%) (3.87%) (4.87%)
School's proportionate share of
the net pension liability 394,529$ 346,399$ 306,281$
Pension Plan Fiduciary Net Position. Detailed information about the HIS Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.
15. FRS – Defined Contribution Pension Plans
The SBA administers the defined contribution plan officially titled the FRS Investment Plan (Investment Plan). The Investment Plan is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report.
As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined benefit plan. School employees already participating in the State School System Optional Retirement Program or DROP are not eligible to participate in the Investment Plan. Employer and employee contributions are defined by law, but the ultimate benefit depends in part on the performance of investment funds. Service retirement benefits are based upon the value of the member’s account upon retirement. Benefit terms, including contribution requirements, are established and may be amended by the Florida Legislature. The Investment Plan is funded with the same employer and employee contributions rates, that are based on salary and membership class (Regular Class, Senior Management Service Class, etc.), as the FRS defined benefit plan. Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Costs of administering the Investment Plan, including the FRS Financial Guidance Program, are funded through an employer contribution of 0.06 percent of payroll and by forfeited benefits of Investment Plan members. Allocations to the Investment Plan member accounts during the 2018-19 fiscal year were as follows:
588
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 33 -
Percent of
Gross
Class Compensation
FRS, Regular 6.30
For all membership classes, employees are immediately vested in their own contributions and are vested after 1 year of service for employer contributions and investment earnings regardless of membership class. If an accumulated benefit obligation for service credit originally earned under the FRS Pension Plan is transferred to the Investment Plan, the member must have the years of service required for FRS Pension Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Nonvested employer contributions are placed in a suspense account for up to 5 years. If the employee returns to FRS-covered employment within the 5 year period, the employee will regain control over their account. If the employee does not return within the 5 year period, the employee will forfeit the accumulated account balance. For the fiscal year ended June 30, 2019, the information for the amount of forfeitures was unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial to the School.
After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lump-sum distribution, leave the funds invested for future distribution, or any combination of these options. Disability coverage is provided in which the member may either transfer the account balance to the FRS Pension Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan, or remain in the Investment Plan and rely upon that account balance for retirement income.
16. EXTRAORDINARY LOSS
The School was impacted by Hurricane Michael when it made landfall in October 2018. The School suffered a loss of $3,436,886 as a result of the hurricane related damage. The Extraordinary Loss is shown as an expense on the Statement of Activities. The insurance recovery to date ($15,845,540) is recorded as Special Item on the Statement of Activities. The School will receive additional insurance recoveries of $2,400,000, which is reported in its account receivable balance as of June 30, 2019.
17. EQUIPMENT LEASE AGREEMENT
The School entered into a non-cancellable operating lease agreement in the 2018-19 fiscal year for portables and a mobile kitchen. Future minimum lease payments under non-cancellable operating leases as of June 30 are as follows:
Fiscal Year
Ending June 30 Total
2020 90,185$ Total 90,185$
589
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATION GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO FINANCIAL STATEMENTS June 30, 2019
- 34 -
18. RISK MANAGEMENT PROGRAMS
The School is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the School carries commercial insurance. There have been no significant reductions in insurance coverage and settlement amounts have not exceeded insurance coverage for the current year or the three prior years.
19. COMMITMENTS AND CONTINGENT LIABILITIES
The School participates in state grant programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies, therefore, to the extent that the School has not complied with the rules and regulations governing the grants, refunds of any money received may be required and the collectability of any related receivables at June 30, 2019, may be impaired.
In the opinion of the School, there are no significant liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.
20. LEGAL MATTERS
In the normal course of conducting its operations, the School occasionally becomes party to various legal actions and proceedings. In the opinion of management, the ultimate resolution of such legal matters will not have a significant adverse effect on the accompanying financial statements.
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- 3
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591
as of 6/30/18 as of 6/30/17
Proportion of the net pension liability/(asset) 0.002096418% 0.001682441%
Proportionate share of the net pension liability/(asset) 631,452$ 497,655$
Covered-employee payroll 1,068,969$ 827,577$
Proportionate share of the net pension liability (asset) as a
percentage of its covered-employee payroll 59% 60%
Plan fiduciary net position as a percentage of the total
pension liability 84.26% 83.89%
Florida Retirement System
PALM BAY PREPARATORY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Proportionate Share of Net Pension Liability
See Independent Auditor's Report
- 36 -592
as of 6/30/19 as of 6/30/18 as of 6/30/17
Contractually required contribution 78,295$ 59,746$ 43,798$
Contributions in relation to the contractually required
contribution (78,295)$ (59,746)$ (43,798)$
Contribution deficiency/(excess) -$ -$ -$
Covered-employee payroll 1,313,525$ 1,068,969$ 827,577$
Contributions as a percentage of covered-employee
payroll 5.96% 5.59% 5.29%
Florida Retirement System
PALM BAY PREPARATORY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Contributions
See Independent Auditor's Report
- 37 -593
as of 6/30/18 as of 6/30/17
Proportion of the net pension liability/(asset) 0.003272825% 0.002596317%
Proportionate share of the net pension liability/(asset) 346,399$ 277,610$
Covered-employee payroll 1,068,969$ 827,577$
Proportionate share of the net pension liability/(asset) as a
percentage of its covered-employee payroll 32% 34%
Plan fiduciary net position as a percentage of the total
pension liability 2.15% 1.64%
Health Insurance Subsidy Program
PALM BAY PREPARATORY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Proportionate Share of Net Pension Liability
See Independent Auditor's Report
- 38 -594
as of 6/30/19 as of 6/30/18 as of 6/30/17
Contractually required contribution 21,806$ 17,749$ 13,740$
Contributions in relation to the contractually required
contribution (21,806)$ (17,749)$ (13,740)$
Contribution deficiency/(excess) -$ -$ -$
Covered-employee payroll 1,313,525$ 1,068,969$ 827,577$
Contributions as a percentage of covered-employee
payroll 1.66% 1.66% 1.66%
Health Insurance Subsidy Program
PALM BAY PREPARATORY ACADEMY
(A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Contributions
See Independent Auditor's Report
- 39 -595
PALM BAY PREPARATORY ACADEMY (A CHARTER SCHOOL UNDER PALM BAY EDUCATIONAL GROUP, INC.)
A Charter School And Component Unit of the District School Board of Bay County, Florida
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION June 30, 2019
- 40 -
1. BUDGETARY BASIS OF ACCOUNTING
Budgets are presented on the modified accrual basis of accounting. During the fiscal year, expenditures were controlled at the object level (e.g., salaries and benefits, purchased services, materials and supplies and capital outlay) within each activity (e.g., instruction, pupil personnel services and school administration). Budgets may be amended by resolution at any Board meeting prior to the date for the annual report.
2. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF CONTRIBUTIONS –FLORIDA RETIREMENT SYSTEM PENSION PLAN
Changes of Assumptions. The long-term expected rate of return was decreased from 7.1 percent to 7.0 percent, and the active member mortality assumption was updated.
3. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF CONTRIBUTIONS –HEALTH INSURANCE SUBSIDY PENSION PLAN
Changes of Assumptions. The municipal bond rate used to determine total pension liability was increased from 3.58 percent to 3.87 percent.
596
- 41 -
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
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 Directors Palm Bay Preparatory Academy (A charter school under Palm Bay Education Group, Inc.) a Charter School and Component Unit of the District School Board of Bay County, Florida
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 the governmental activities, each major fund, and the aggregate remaining fund information of Palm Bay Preparatory Academy (“School”), a charter school under Palm Bay Education Group, Inc. and component unit of the District School Board of Bay County, Florida, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School’s basic financial statements, and have issued our report thereon dated September 30, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School’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 the School’s internal control. Accordingly, we do not express an opinion on the effectiveness of the School’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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the School’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those 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.
597
- 42 -
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School’s financial statements are free from material misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School’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 School’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
September 30, 2019 Tampa, Florida
598
- 43 -
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Management Letter as Required by Rules of the Florida Auditor General, Chapter 10.850, Florida Statutes, Charter School Audits
To the Board of Directors Palm Bay Preparatory Academy (A charter school under Palm Bay Education Group, Inc.) a Charter School and Component Unit of the District School Board of Bay County, Florida
Report on the Financial Statements
We have audited the financial statements of the Palm Bay Preparatory Academy (“School”), (A charter school under Palm Bay Education Group, Inc.) a Charter School and Component Unit of the District School Board of Bay County, Florida, as of and for the fiscal year ended June 30, 2019, and have issued our report thereon dated September 30, 2019.
Auditor’s Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Chapter 10.850, Rules of the Auditor General.
Other Reporting Requirements
We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in those reports and schedule, which are dated September 30, 2019, should be considered in conjunction with this management letter.
Prior Audit Findings
Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no prior audit findings or recommendations.
Official Title
Section 10.854(1)(e)5., Rules of the Auditor General, requires that the name or official title of the entity and the school code assigned by the Florida Department of Education be disclosed in this management letter. The official title and the school code assigned by the Florida Department of Education of the entity are Palm Bay Preparatory Academy 6-12, 030771.
599
RISING LEADERS ACADEMY, INC.
A Charter School and Component Unit of the
District School Board of Bay County, Florida
INDEPENDENT AUDITOR’S REPORT
for the fiscal year ended JUNE 30, 2019
King & Walker, CPAs, PL ______________________________________________________________________________________________________________________
Certified Public Accountants
600
THIS PAGE IS INTENTIONALLY BLANK.
601
RISING LEADERS ACADEMY, INC.
A Charter School and Component Unit of the District School Board of Bay County, Florida
TABLE OF CONTENTS
PAGE
NO.
FINANCIAL SECTION
Independent Auditor’s Report 1
Management’s Discussion and Analysis – (Unaudited) 3
Basic Financial Statements
Government-Wide Financial Statements:
Statement of Net Position 8
Statement of Activities 9
Fund Financial Statements:
Balance Sheet – Governmental Funds 10
Reconciliation of the Governmental Funds Balance Sheet to the Statement
of Net Position 11
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds 12
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances to the Statement
of Activities 13
Notes to Financial Statements 14
Required Supplementary Information
Budgetary Comparison Schedule – General Fund – (Unaudited) 33
Schedule of Proportionate Share of Net Pension Liability - FRS 34
Schedule of Contributions - FRS 35
Schedule of Proportionate Share of Net Pension Liability - HIS 36
Schedule of Contributions - HIS 37
Note to Required Supplementary Information 38
COMPLIANCE AND INTERNAL CONTROL
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 Governmental Auditing Standards 39
Management Letter as required by Rules of the Florida Auditor General,
Chapter 10.850, Florida Statutes, Charter School Audits. 41
602
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Independent Auditor's Report
To the Board of Directors Rising Leaders Academy, Inc.
a Charter School and Component Unit of the
District School Board of Bay County, Florida
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each
major fund, and the aggregate remaining fund information of Rising Leaders Academy, Inc.
(“School”), a component unit of the District School Board of Bay County, Florida, as of and for
the year ended June 30, 2019, and the related notes to the financial statements, which collectively
comprise the School’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Governmental
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 School’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 School’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 opinion.
603
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, each major fund, and the
aggregate remaining fund information of the School, as of June 30, 2019, and the respective
changes in financial position thereof for the year ended in accordance with accounting principles
generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis, the Budgetary Comparison Schedule, and Note to
Required Supplementary Information, as listed in the table of contents, be presented to
supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who
considers it to be an essential part of financial reporting for placing the basic financial statements
in an appropriate operational, economic, or historic context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about methods of preparing the information and comparing the information for consistency with
management’s responses to our inquiries, the basic financial statements, and other knowledge we
obtained during our audit of the basic financial statements. We do not express an opinion or
provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
September 25, 2019 on our consideration of the School’s internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements and other matters. The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the School’s internal control over financial reporting and compliance.
Respectfully submitted,
September 25, 2019
Tampa, Florida
604
RISING LEADERS ACADEMY, INC. A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ________________________________________________________________________________________________________
The Management’s Discussion and Analysis (MD&A) section of the annual financial report of
the Rising Leaders Academy, Inc. (“School”) provides an overview of the School’s activities for
the fiscal year ended June 30, 2019.
Because the information contained in the MD&A is intended to highlight significant
transactions, events, and conditions, it should be considered in conjunction with the School’s
financial statements and notes to financial statements as listed in the table of contents.
FINANCIAL HIGHLIGHTS
➢ For the fiscal year ended June 30, 2019, the School’s revenues exceeded expenses as
shown on the School’s statement of activities by $647,969.
➢ As shown on the balance sheet – governmental funds, the School reported a total fund
balance of $870,384.
➢ A net pension liability of $508,703 is reported on the statement of net position for
pensions, as the School participates in the Florida retirement system.
OVERVIEW OF THE FINANCIAL STATEMENTS
The basic financial statements consist of three components:
➢ Government-wide financial statements
➢ Fund financial statements
➢ Notes to financial statements
Government-Wide Financial Statements
The government-wide financial statements provide both short-term and long-term information
about the School’s overall financial condition in a manner similar to those of a private-sector
business. The statements include a statement of net position and a statement of activities that are
designed to provide consolidated financial information about the governmental and business-type
activities of the School presented on the accrual basis of accounting. The statement of net
position provides information about the government’s financial position, its assets and liabilities,
using an economic resources measurement focus. The difference between the assets and
liabilities, the net position, is a measure of the financial health of the School. The statement of
activities presents information about the change in the School’s net position and the results of
operations, during the fiscal year. An increase or decrease in net position is an indication of
whether the School’s financial health is improving or deteriorating. To assess the overall
financial position of the School, one needs to consider additional non-financial factors such as
changes in the School student base funding level.
605
RISING LEADERS ACADEMY, INC. A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ________________________________________________________________________________________________________
Fund Financial Statements
Fund financial statements are one of the components of the basic financial statements. A fund is
a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. Fund financial statements provide more detailed
information about the School’s financial activities, focusing on its most significant funds rather
than fund types. This is in contrast to the entity-wide perspective contained in the government-
wide statements.
Governmental Funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, the
governmental funds utilize a spendable financial resources measurement focus rather than the
economic resources measurement focus found in the government-wide financial statements. The
financial resources measurement focus allows the governmental fund statements to provide
information on near-term inflows and outflows of spendable resources as well as balances of
spendable resources available at the end of the fiscal year.
The governmental fund statements provide a detailed short-term view that may be used to
evaluate the School’s near-term financing requirements. This short-term view is useful when
compared to the long-term view presented as governmental activities in the government-wide
financial statements. To facilitate this comparison, both the governmental funds balance sheet
and the governmental funds statement of revenues, expenditures, and changes in fund balances
provide a reconciliation of governmental fund to governmental activities.
The governmental funds balance sheet and statement of revenues, expenditures, and changes in
fund balances provide detailed information about the School’s most significant funds. The
School operates three funds; a General Fund, Capital Projects Fund and a Special Revenue Fund.
For reporting purposes, the General Fund and Capital Projects funds are major funds. All other
governmental funds are non-major and are presented in the aggregate.
The School adopts an annual budget for its governmental funds. A budgetary comparison
schedule, as required, has been provided for the General Fund to demonstrate compliance with
the budget.
Notes to Financial Statements
The notes provide additional information that is essential for a full understanding of the data
provided in the government-wide and fund financial statements.
606
RISING LEADERS ACADEMY, INC. A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)
________________________________________________________________________________________________________
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The following is a summary of the School’s current year and prior year net position:
6-30-18 6-30-19
Increase
(Decrease)
ASSETS
Current and Other Assets 440,394$ 941,772$ 501,378$
Capital Assets, net 499,226 712,117 212,891
Total Assets 939,620 1,653,889 714,269
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 287,919 365,471 77,552
Total Deferred Outflows of Resources 287,919 365,471 77,552
LIABILITIES
Current and Other Liabilities 55,992 71,388 15,396
Long Term Liabilities 386,023 870,221 484,198
Total Liabilities 442,015 941,609 484,198
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 20,569 46,160 25,591
Total Deferred Inflows of Resources 20,569 46,160 25,591
NET POSITION
Net Investment in Capital Assets 113,203 350,599 237,396
Unrestricted 270,419 680,992 410,573
Total Net Position 383,622$ 1,031,591$ 647,969$
Net Position, End of Year
Governmental Activities
The largest portions of the School’s assets are cash & cash equivalents (55%) and capital assets
(43%) net of accumulated depreciation. Liabilities consist primarily of salaries and benefits
payable, accounts payables, notes payable for the purchase of the new educational facility and
the net pension liability for the Florida Retirement System. Total net position amounted to
$1,031,591 which included an unrestricted net position balance of $680,992.
607
RISING LEADERS ACADEMY, INC. A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) ________________________________________________________________________________________________________
The following is a summary of the School’s change in net position for the current year and prior
year:
6-30-18 6-30-19
Increase
(Decrease)
Revenues:
Federal Sources -$ 49,801$ 49,801$
State Sources 1,280,310 1,458,072 177,762
Local and Other 189,160 1,010,365 821,205
Total Revenues 1,469,470 2,518,238 1,048,768
Expenses:
Instruction 704,965 812,133 107,168
Instructional Support Services 1,388 6,035 4,647
Instructional Staff Training 9,696 7,000 (2,696)
Instructional-Related Technology 4,654 6,059 1,405
Board 42,101 54,299 12,198
School Administration 230,713 262,587 31,874
Facilities Acq. & Construction 55,097 134,624 79,527
Fiscal Services 57,502 64,822 7,320
Food Services 8,430 48,525 40,095
Student Transportation 3,191 224 (2,967)
Operation of Plant 95,688 171,425 75,737
Maintenance of Plant 66,987 25,844 (41,143)
Community Service 7,832 6,883 (949)
Debt Service - Interest 13,257 15,206 1,949
Impairment Loss Due to Hurricane 229,290 229,290
Unallocated Depreciation 26,046 25,313 (733)
Total Expenses 1,327,547 1,870,269 542,722
Increase/(Decrease) in Net Position 141,923$ 647,969$ 506,046$
Operating Results
Governmental Activities
The largest revenue source for the School is the State of Florida (58%). Revenues from State
sources for current operations are primarily received through the Florida Education Finance
Program (FEFP) funding formula. The FEFP formula utilizes student enrollment data to
determine the funds available for the School.
The largest concentrations of expenses were for instruction related functions (44%) and school
administration (14%) during the year.
608
RISING LEADERS ACADEMY, INC. A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)
________________________________________________________________________________________________________
FINANCIAL ANALYSIS OF THE SCHOOL’S FUNDS
Governmental Funds
As the School completed the year, its governmental funds reported a total fund balance of
$870,384.
BUDGETARY HIGHLIGHTS
The general fund budget for the fiscal year ended June 30, 2019, was developed based on the
School’s anticipated revenues and expenditures and the expected student population for the
school year. Over the course of the year, the school revised its general fund budget. Actual
expenditures were equal to the final budgeted expenditures. Refer to the Budgetary Comparison
Schedule – General Fund for additional information.
CAPITAL ASSETS
The School was impacted by Hurricane Michael when it made landfall in October 2018. The
School facilities and their contents were damaged by the hurricane and the School required
building renovations and the replacement of equipment and furnishings. All of the related
building, improvements other than building and furniture and fixtures of the School is included
in the loss of hurricane-related damage. During the year ended June 30, 2019, the School
recognized a net loss of $229,290 as a result of the hurricane-related damage. The School’s investment in capital assets for its governmental activities as of June 30, 2019,
amounts to $712,117 (net of accumulated depreciation). This investment in capital assets
includes land, building, improvements other than buildings, and furniture, fixtures, and
equipment. Additional information regarding the School’s capital assets is located in the notes to
the financial statements.
LONG-TERM LIABILITIES
In June 2017, the School borrowed a total of $400,000 for the purpose of purchasing an
educational facility. The first mortgage of $400,000 bears an interest rate of 3.5% per year and
matures in June 2032. Additional information regarding the School’s long-term liabilities can be
found in the Notes to the financial statements.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the School’s finances.
Questions concerning any of the information provided in this report or requests for additional
financial information should be addressed to Rising Leaders Academy, Inc., 1527 Lincoln
Avenue, Panama City, FL 32405.
609
Current Assets:
Cash & Cash Equivalents $ 913,368
Due from Other Agencies 6,804
Prepaid Expenses 21,600
Capital Assets:
Land 107,031
Building , Net 541,197
Furniture, Fixtures, and Equipment, Net 12,779
Improvements Other Than Buildings 51,110
Total Capital Assets, Net 712,117
TOTAL ASSETS 1,653,889
Deferred outflow related to pensions 365,471
TOTAL DEFERRED OUTFLOWS OF RESOURCES 365,471
Accounts Payable 14,110
Salaries and Benefits Payable 56,778
Deferred Revenue 500
Note Payable, due after one year 338,940
Note Payable, due within one year 22,578
Net Pension Liability 508,703
TOTAL LIABILITIES 941,609
Deferred inflow related to pensions 46,160
TOTAL DEFERRED INFLOWS OF RESOURCES 46,160
Net Investment in Capital Assets 350,599
Unrestricted 680,992
TOTAL NET POSITION $ 1,031,591
RISING LEADERS ACADEMY
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Governmental
NET POSITION
STATEMENT OF NET POSITION
June 30, 2019
ActivitiesASSETS
LIABILITIES
DEFERRED OUTFLOWS OF RESOURCES
DEFERRED INFLOWS OF RESOURCES
The accompanying notes to the financial statements are an integral part of this statement.
- 8 -
610
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- 9 -
611
Other
Governmental
Funds
Cash & Cash Equivalents $ 913,368 $ - $ - $ 913,368
Due from Other Agencies 6,804 6,804
Due from Other Funds 6,804 6,804
Prepaid Expenses 21,600 21,600
Total Assets $ 941,772 $ 6,804 $ - $ 948,576
Accounts Payable $ 14,110 $ - $ - $ 14,110
Salaries and Benefits Payable 56,778 56,778
Deferred Revenue 500 500
Due to Other Funds 6,804 6,804
Total Liabilities 71,388 6,804 - 78,192
Unassigned 848,784 848,784
Nonspendable 21,600 21,600
Total Fund Balances 870,384 - - 870,384
Total Liabilities and Fund Balances $ 941,772 $ 6,804 $ - $ 948,576
Activities
FUND BALANCES
LIABILITIES
RISING LEADERS ACADEMY
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
BALANCE SHEET - GOVERNMENTAL FUNDS
ASSETS
June 30, 2019
General
Fund
Capital
Projects
Fund
Total
Governmental
The accompanying notes to the financial statements are an integral part of this statement.
- 10 -
612
Total Fund Balances - Governmental Funds $ 870,384
Amounts reported for governmental activities in the statement of
net position are different because:
Long-term liabilities are not due and payable in the current period
and, therefore, are not reported as liabilities in the governmental
funds. Long-term liabilities at year-end consist of a notes payable.
Loans Payable (361,518)
Net Pension Liability (508,703) (870,221)
Deferred Outflows and Inflows of resources are not available in the
current period and not reported in the governmental funds.
Deferred Outflows 365,471
Deferred Inflows (46,160) 319,311
Capital assets, net of accumulated depreciation, used in
governmental activities are not financial resources and
therefore, are not reported as assets in governmental funds. 712,117
Total Net Position - Governmental Activities $ 1,031,591
June 30, 2019
RISING LEADERS ACADEMY
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
The accompanying notes to financial statements are an integral part of this statement.
- 11 -
613
OtherGovernmental
Funds
Intergovernmental:
Federal Through State and Local $ - $ - $ 49,801 $ 49,801
State Sources 1,363,895 94,177 1,458,072
Local and Other 1,007,976 2,389 1,010,365
Total Revenues 2,371,871 94,177 52,190 2,518,238
Current - Education:
Instruction 812,133 812,133
Instructional Support Services 6,035 6,035
Instructional Staff Training 7,000 7,000
Instructional-Related Technology 6,059 6,059
Board 54,299 54,299
School Administration 187,178 187,178
Facilities Acquisition & Construction 40,447 94,177 134,624
Fiscal Services 64,822 64,822
Food Services 48,525 48,525
Student Transportation 224 224
Operation of Plant 171,425 171,425
Maintenance of Plant 25,844 25,844
Community Service 6,883 6,883
Fixed Capital Outlay:
Facilities Acquisition & Construction 422,998 422,998
Other Capital Outlay 44,496 44,496
Debt Service:
Principal 24,505 24,505
Interest 15,206 15,206
Total Expenditures 1,889,554 94,177 48,525 2,032,256
482,317 - 3,665 485,982
Other Financing Sources (Uses):
Transfers In 3,665 3,665
Transfers (Out) (3,665) (3,665)
Total Other Financing Sources (Uses) 3,665 - (3,665) -
Net Change in Fund Balances 485,982 - - 485,982
Fund Balances, July 1, 2018 384,402 - - 384,402 Fund Balances, June 30, 2019 $ 870,384 $ - $ - $ 870,384
GovernmentalFunds
RISING LEADERS ACADEMY
IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Fiscal Year Ended June 30, 2019
Excess (Deficiency) of Revenues Over
Expenditures
Revenues
Expenditures
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
GeneralFund
CapitalOutlayFund
Total
The accompanying notes to financial statements are an integral part of this statement.
- 12 -
614
Net Change in Fund Balances - Governmental Funds $ 485,982
Amounts reported for governmental activities in the statement of activities
are different because:
Capital outlays are reported in governmental funds as expenditures.
However, in the statement of activities, the cost of those assets is
allocated over their estimated useful lives as depreciation expense.
This is the amount of capital outlays ($467,494) in excess of
depreciation expense ($25,313) and an extraordinary loss due to
Hurricane Michael ($229,290) in the current period. 212,891
Repayment of debt principal is an expenditure in the governmental funds,
but the payment reduces long-term liabilities in the statement of
net position. 24,505
Net effect of various transactions in the statement of activities that
do not require the use of current financial resources are not
reported in the governmental funds:
Pension Expense (calculated for net pension liability)
Pension contributions made subsequent to the (119,349)
pension liability measurement date of 6/30/18 43,940 (75,409)
Change in Net Position - Governmental Activities $ 647,969
For the Fiscal Year Ended June 30, 2019
REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
RISING LEADERS ACADEMY
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
TO THE STATEMENT OF ACTIVITIES
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
The accompanying notes to the financial statements are an integral part of this statement.
- 13 -
615
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
➢ Reporting Entity
Rising Leaders Academy, Inc. (‘School”) is a not-for-profit corporation organized
pursuant to Chapter 617, Florida Statutes, the Florida Not-For-Profit Corporation
Act. The governing body of the School is the not-for-profit corporation Board of
Directors, which is comprised of six members.
The general operating authority of the School is contained in Section 1002.33,
Florida Statutes. The School operates under a charter of the sponsoring school
district, the District School Board of Bay County, Florida, (“District”). On
February 14, 2017, the Bay County School District renewed thee charter
agreement for 15 years to June 30, 2032. At the end of the term of the charter, the
District may choose not to renew the charter under grounds specified in the
charter. In this case, the District is required to notify the school in writing at least
90 days prior to the charter’s expiration. During the term of the charter, the
District may also terminate the charter if good cause is shown. In the event of
termination of the charter, any property purchased by the School with public
funds and any unencumbered public funds, except capital outlay funds, revert
back to the District. Any unencumbered capital outlay funds revert back to the
Florida Department of Education to be redistributed among eligible charter
schools. The School is considered a component unit of the District; therefore, for
financial reporting purposes, the School is required to follow generally accepted
accounting principles applicable to state and local governmental units.
Criteria for determining if other entities are potential component units which
should be reported within the School's basic financial statements are identified
and described in the Governmental Accounting Standards Board's (GASB)
Codification of Governmental Accounting and Financial Reporting Standards,
Sections 2100 and 2600. The application of these criteria provides for
identification of any entities for which the School is financially accountable and
other organizations for which the nature and significance of their relationship with
the School are such that exclusion would cause the School's basic financial
statements to be misleading or incomplete. Based on these criteria, no component
units are included within the reporting entity of the School.
➢ Basis of Presentation
Government-wide Financial Statements - Government-wide financial statements,
including the statement of Net Position and the statement of activities, present
information about the School as a whole.
Government-wide financial statements are prepared using the economic resources
measurement focus. The statement of activities presents a comparison between
direct expenses and program revenues for each function or program of the
School’s governmental activities. Direct expenses are those that are specifically
associated with a service, program, or department and are thereby clearly
identifiable to a particular function.
616
Program revenues include charges paid by the recipient of the goods or services
offered by the program and grants and contributions that are restricted to meeting
the operational or capital requirements of a particular program. Revenues that are
not classified as program revenues are presented as general revenues. The
comparison of direct expenses with program revenues identifies the extent to
which each governmental function is self-financing or draws from the general
revenues of the School.
Fund Financial Statements - Fund financial statements report detailed information
about the School in the governmental funds. The focus of governmental fund
financial statements is on major funds rather than reporting funds by type. Each
major fund is reported in a separate column. Because the focus of governmental
fund financial statements differs from the focus of government-wide financial
statements, a reconciliation is presented with each of the governmental fund
financial statements.
The School’s major governmental funds are as follows:
• General Fund – to account for all financial resources not required to be
accounted for in another fund, and for certain revenues from the State that are
legally restricted to be expended for specific current operating purposes.
• Capital Projects Fund – to account for all resources for the acquisition of
capital and related items purchased by the School with capital outlay funds.
All other governmental funds are non-major and are presented in the aggregate.
➢ Basis of Accounting
Basis of accounting refers to when revenues and expenditures, or expenses, are
recognized in the accounts and reported in the financial statements. Basis of
accounting relates to the timing of the measurements made, regardless of the
measurement focus applied.
The government-wide financial statements are prepared using the accrual basis of
accounting. Revenues are recognized when earned and expenses are recognized
when a liability is incurred, regardless of the timing of the related cash flows.
Revenues from grants, entitlements, and donations are recognized in the fiscal
year in which all eligibility requirements imposed by the provider have been
satisfied.
Governmental fund financial statements are prepared using the modified accrual
basis of accounting. Revenues, except for certain grant revenues, are recognized
when they become measurable and available. Revenues are considered to be
available when they are collectible within the current period or soon enough
thereafter to pay liabilities of the current period. The School considers revenues
to be available if they are collected within 30 days of the end of the current fiscal
year. When grant terms provide that the expenditure of resources is the prime
factor for determining eligibility for Federal, State, and other grant resources,
revenue is recognized at the time the expenditure is made. Under the modified
617
accrual basis of accounting, expenditures are generally recognized when the
related fund liability is incurred, except for principal and interest on long-term
debt, claims and judgments, and compensated absences, which are recognized
when due. Allocations of cost, such as depreciation, are not recognized in
governmental funds.
➢ Cash and Cash Equivalents
Cash deposits consist of demand deposits and a money market account with local
financial institutions. Deposits on hand at this financial institution are insured by
the Federal Deposit Insurance Company up to $250,000.
➢ Capital Assets
Expenditures for capital assets acquired or constructed for general School
purposes are reported in the governmental fund that financed the acquisition or
construction. The capital assets so acquired are reported at cost in the
government-wide statement of net position but are not reported in the
governmental fund financial statements. Capital assets are defined by the School
as those costing more than $750. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed. Donated assets are recorded
at fair value at the date of donation.
Capital assets are depreciated using the straight-line method over the following
estimated useful lives:
Description Estimated Lives
Furniture, Fixtures and Equipment 5 years
Improvements, Other than Buildings 5 years
Buildings 20 years
Current-year information relative to changes in capital assets is described in a
subsequent note.
➢ Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a
separate section for deferred outflows of resources. This separate financial
statement element, deferred outflows of resources, represents a consumption of
net position that applies to a future period(s) and so will not be recognized as an
outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will sometimes report
a separate section for deferred inflows of resources. This separate financial
statement element, deferred inflows of resources, represents an acquisition of net
position that applies to a future period(s) and so will not be recognized as an
inflow of resources (revenue) until then.
618
➢ Net Pension Liability.
As a participating employer in the Florida Retirement System, the School
recognizes its proportionate share of the collective net pension liabilities of the
FRS cost-sharing multiple-employer defined benefit plans. As of June 30, 2019,
the School’s proportionate share of the net pension liabilities totaled $508,703.
The School’s retirement plans and related amounts are described in a subsequent
note.
➢ Long-Term Liabilities
Long-term obligations that will be financed from resources to be received in the
future by governmental funds are reported as liabilities in the government-wide
statement of net position.
In the governmental fund financial statements, bonds and other long-term
obligations are not recognized as liabilities until due.
Changes in long-term liabilities for the current year are reported in a subsequent
note.
➢ Net Position and Fund Balance Classification
Government-wide Financial Statements
Net Position are classified and reported in three components:
• Net Investment in Capital Assets – consists of capital assets, net of
accumulated depreciation, and reduced by the outstanding balances of any
borrowings that are attributed to the acquisition or improvement of those
assets.
• Restricted Net Position – consists of net position with constraints placed
on their use either by external groups such as creditors, contributors, or
laws or regulations of other governments.
• Unrestricted Net Position – all other net position that does not meet the
definition of “restricted” or “net investment in capital assets.”
Fund Financial Statements
GASB Codification Section 1800.142, Fund Balance Reporting and
Governmental Fund Type Definitions, defines the different types of fund balances
that a governmental entity must use for financial reporting purposes. GASB
requires the fund balance amounts to be reported within one of the following fund
balance categories:
• Nonspendable – fund balance associated with inventories, prepaid
expenses, long-term loans and notes receivable, and property held for
resale (unless the proceeds are restricted, committed or assigned). All
nonspendable fund balances at year end relate to assets that are in
nonspendable form.
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• Restricted – fund balance that can be spent only for the specific purposes
stipulated by the constitution, external resource providers, or through
enabling legislation.
• Committed – fund balance that can be used only for the specific purposes
determined by a formal action of the School’s Board of Governance.
• Assigned – fund balance that is intended to be used by the School’s
management for specific purposes but does not meet the criteria to be
classified as restricted or committed.
• Unassigned – fund balance that is the residual amount for the School’s
general fund and includes all spendable amounts not contained in the other
classifications.
➢ Order of Fund Balance Spending Policy
The School’s policy is to apply expenditures against nonspendable fund balance,
restricted fund balance, committed fund balance, assigned fund balance, and
unassigned fund balance at the end of the fiscal year. First, nonspendable fund
balances are determined. Then restricted fund balances for specific purposes are
determined (not including nonspendable amounts). Any remaining fund balance
amounts for the non-general funds are to be classified as restricted fund balance.
It is possible for the non-general funds to be classified as restricted fund balance.
It is possible for the non-general funds to have negative unassigned fund balance
when nonspendable amounts plus the amount of restricted fund balances for
specific purposes exceed the positive fund balance for non-general fund.
➢ Revenue Sources
Revenues for current operations are received primarily from the District pursuant
to the funding provisions included in the School’s charter. In accordance with the
funding provisions of the charter and Section 1002.33(17), Florida Statutes, the
School reports the number of full-time equivalent students and related data to the
District.
Under provisions of Section 1011.62, Florida Statutes, the District reports the
number of full-time equivalent students and related data to the Florida
Department of Education (FDOE) for funding through the Florida Education
Finance Program (FEFP). Funding for the School is adjusted during the year to
reflect the revised calculations by the FDOE under the FEFP and the actual
weighted full-time equivalent (FTE) students reported by the School during
designated full-time equivalent student survey periods. The Department may also
adjust subsequent fiscal period allocations based upon an audit of the School's
compliance in determining and reporting FTE and related data. Normally, such
adjustments are treated as reductions or additions of revenue in the year when the
adjustments are made.
The basic amount of funding through the FEFP under Section 1011.62 is the
product of the (1) unweighted FTE, multiplied by (2) the cost factor for each
program, multiplied by (3) the base student allocation established by the
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legislature. Additional funds for exceptional students who do not have a matrix of
services are provided through the guaranteed allocation designated in Section
1011.62(1)(e)2., Florida Statutes. For the fiscal year ended June 30, 2019, the
School reported 193.37 unweighted FTE and 208.7089 weighted FTE.
FEFP funding may also be adjusted as a result of subsequent FTE audits
conducted by the Florida Auditor General pursuant to Section 1010.305, Florida
Statutes, and Rule 6A-1.0453, Florida Administrative Code (FAC). Schools are
required to maintain the following documentation for three years or until the
completion of an FTE audit:
• Attendance and membership documentation (Rule 6A-1.044 FAC).
• Teacher certificates and other certification documentation (Rule 6A-1.0503
FAC).
• Documentation for instructors teaching out-of-field (Rule 6A-1.0503 FAC).
• Procedural safeguards for weighted programs (Rule 6A-6.03411 FAC).
• Evaluation and planning documents for weighted programs (Section
1010.305, Florida Statutes, and Rule 6A-6.03411, FAC).
The School receives federal or state awards for the enhancement of various
educational programs. This assistance is generally received based on applications
submitted to and approved by various granting agencies. For federal or state
awards in which a claim to these grant proceeds is based on incurring eligible
expenditures, revenue is recognized to the extent that eligible expenditures have
been incurred.
The School follows the policy of applying restricted resources prior to applying
unrestricted resources when an expense is incurred for purposes for which both
restricted and unrestricted assets are available.
➢ Recently Issued Accounting Principles
Governmental Accounting Standards Board Statement No. 75, Accounting and
Financial Reporting for Postemployment Benefits Other than Pensions was
effective for fiscal years beginning after June 15, 2017. The net pension liability
for the FRS Pension Plan at July 1, 2017 has been increased due to the
restatement of the fund’s beginning net position as a result of the implementation
of GASB 75. The School’s proportionate share of the net pension liability
increased $77 and is reported in the Statement of Net Position and Statement of
Activities.
Governmental Accounting Standards Board Statement No. 88, Certain
Disclosures Related to Debt, including Direct Borrowings and Direct Placements
was effective for fiscal years beginning after June 15, 2018. The School’s notes
related to debt reflect all required disclosures.
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➢ Income Taxes
The School is exempt from Federal tax under Section 501(c)(3) of the Internal
Revenue Code. Accordingly, no provision for income taxes has been included in
the accompanying financial statements. Additionally, no uncertain tax positions
have been made requiring disclosure in the related note to financial statements.
The School’s income tax returns for the past three years are subject to
examination by tax authorities and may change upon examination.
➢ Use of Estimates
In preparing the financial statements in conformity with generally accepted
accounting principles in the United States (GAAP) management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the statement of net position and affect revenues and
expenditures for the period presented. Actual results could differ from those
estimates.
➢ Subsequent Events
Management has evaluated all events subsequent to the balance sheet date and
through the report date, which is the date these financial statements were available
to be issued.
2. CASH DEPOSITS
Custodial Credit Risk – Deposits. In the case of deposits, this is the risk that in the event
of a bank failure, the School’s deposits may not be returned to the School. The School
does not have a custodial credit risk policy. Deposits on hand at financial institutions are
insured by the Federal Deposit Insurance Company (FDIC) up to $250,000. As of June
30, 2019, the School was exposed to custodial credit risk. One of the School’s accounts
at one bank exceeded the FDIC insurance limit by $253,632 at June 30, 2019.
3. DUE FROM OTHER AGENCIES
The amount due from other agencies on the School’s statement of net position and
balance sheet – governmental funds consists of an amount due from District School
Board of Bay County for Charter School Capital Outlay funds. This receivable amount
is considered to be fully collectible and therefore, no allowance for uncollectible
accounts has been established.
4. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
At June 30, 2019, the School’s General Fund was due $6,804 from the Capital Projects
Fund for expenditures not yet reimbursed. The Special Revenue Fund transferred $3,665
to the General Fund to provide financial support for food service costs of operation and
maintenance including utility costs among other costs incurred by the General Fund for
the food service program. The amounts of interfund receivables, payables and transfers
are netted together and not reported in the statement of net position and the statement of
activities.
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5. CHANGES IN CAPITAL ASSETS
Changes in capital assets are presented in the table below:
Beginning Ending
Governmental Activities: Balance Additions Deletions Balance
Capital Assets Not Being Depreciated:
Land 107,031$ -$ -$ 107,031$
Total Capital Assets Not Being Depreciated 107,031 - - 107,031
Capital Assets Being Depreciated:
Furniture, Fixtures and Equipment 68,724 (34,379) 34,345
Buildings 285,675 422,998 (153,368) 555,305
Improvements Other Than Buildings 92,076 44,496 (82,019) 54,553
Total Capital Assets Being Depreciated 446,475 467,494 (269,766) 644,203
Less Accumulated Depreciation for:
Furniture, Fixtures and Equipment (37,152) (5,756) 21,342 (21,566)
Buildings (7,142) (12,078) 5,112 (14,108)
Improvements Other Than Buildings (9,986) (7,479) 14,022 (3,443)
Total Accumulated Depreciation (54,280) (25,313) 40,476 (39,117)
Total Capital Assets Being Depreciated,Net 392,195 442,181 (229,290) 605,086
Governmental Activities Capital Assets, Net 499,226$ 442,181$ (229,290)$ 712,117$
All depreciation expense was shown as unallocated on the statement of activities.
6. COMMITMENTS AND CONTINGENT LIABILITIES
The School participates in state grant programs, which are governed by various rules and
regulations of the grantor agencies. Costs charged to the respective grant programs are
subject to audit and adjustment by the grantor agencies, therefore, to the extent that the
School has not complied with the rules and regulations governing the grants, refunds of
any money received may be required and the collectability of any related receivables at
June 30, 2019, may be impaired.
In the opinion of the School, there are no significant liabilities relating to compliance
with the rules and regulations governing the respective grants; therefore, no provision has
been recorded in the accompanying financial statements for such contingencies.
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7. NOTE PAYABLE
Note payable outstanding for the School consisted of the following:
Balance at
Hancock Whitney Bank 6-30-19
$400,000 note payable issued for the purchase of School facility and
improvements. Note bears interest rate of 3.5% per annum maturing June
29, 2032. This note payable is secured by the School's facilities. The
borrower shall pay $2,906 monthly until June 30, 2032. In the event of
default, all unpaid principal and interest shall be due and payable. 361,518$
Total Note Payable 361,518$
Future amounts payable for the note payable are as follows:
Fiscal Year
Ending June 30: Total Principal Interest
2020 34,871 22,578 12,293
2021 34,871 23,381 11,490
2022 34,871 24,213 10,658
2023 34,871 25,074 9,797
2024 34,871 25,966 8,905
2025-2029 174,355 144,357 29,998
2030-2032 105,543 95,949 9,594
Total 454,253$ 361,518$ 92,735$
8. CHANGES IN LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities:
Beginning Ending Due in
Balance Additions Deductions Balance One Year
GOVERNMENTAL ACTIVITIES:
Note Payable 386,023$ -$ (24,505)$ 361,518$ 22,578$
Net Pension Liability 381,333 127,370 - 508,703 -
Total Governmental Activities 767,356$ 127,370$ (24,505)$ 870,221$ 22,578$
9. FUNDING AND CREDIT CONCENTRATIONS
The School receives substantially all of its support and revenue from federal, state and
local funding sources, passed through the District, in the form of performance and budget
based contracts. Continuing operation of the School is greatly dependent upon the
continued support of these governmental agencies.
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10. SCHEDULE OF STATE REVENUE SOURCES
The following is a schedule of the School’s State revenue:
Source Amount
Florida Education Finance Program 848,807$
Class Size Reduction 234,297
Charter School Capital Outlay 94,177
Discretionary Local Effort 89,924
Supplementary Academic Instruction 55,215
Best & Brightest Teacher Scholarship 27,728
School Recognition Funds 18,453
Instructional Materials 15,458
Declining Enrollment 13,138
Safe School 12,542
ESE Guaranteed Allocation 12,167
Reading Allocation 8,746
Discretionary Millage 6,600
Digital Classrooms Allocation 6,183
Mental Health 5,032
Florida Teachers' Lead Program 4,256
Funds Compression Allocation 2,861
Miscellaneous State Revenue 1,845
Discretionary Lottery 643
Total State Revenue 1,458,072$
As provided in the charter school contract, the District has charged the School an
administrative fee amounting to $26,232.
11. FLORIDA RETIREMENT SYSTEM (FRS) – Defined Benefit Pension Plans
General Information about the Florida Retirement System (FRS)
The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit
pension plan for participating public employees. The FRS was amended in 1998 to add
the Deferred Retirement Option Program (DROP) under the defined benefit plan and
amended in 2000 to provide a defined contribution plan alternative to the defined benefit
plan for FRS members effective July 1, 2002. This integrated defined contribution
pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the
HIS Program, a cost-sharing multiple-employer defined benefit pension plan to assist
retired members of any State-administered retirement system in paying the costs of health
insurance.
Essentially all regular employees of the School are eligible to enroll as members of the
State-administered FRS. Provisions relating to the FRS are established by Chapters 121
and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida
Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility,
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contributions, and benefits are defined and described in detail. Such provisions may be
amended at any time by further action from the Florida Legislature. The FRS is a single
retirement system administered by the Florida Department of Management Services,
Division of Retirement, and consists of two cost-sharing multiple-employer defined
benefit plans and other nonintegrated programs. A comprehensive annual financial report
of the FRS, which includes its financial statements, required supplementary information,
actuarial report, and other relevant information, is available from the Florida Department
of Management Services’ Web site (www.dms.myflorida.com).
The School’s FRS and HIS pension expense totaled $119,349 for the fiscal year ended
June 30, 2019.
FRS Pension Plan
Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer
defined benefit pension plan, with a DROP for eligible employees. The general classes
of membership are as follows:
Regular Class – Members of the FRS who do not qualify for membership in the
other classes.
Employees enrolled in the Plan prior to July 1, 2011, vest at 6 years of creditable service
and employees enrolled in the Plan on or after July 1, 2011, vest at 8 years of creditable
service. All vested members, enrolled prior to July 1, 2011, are eligible for normal
retirement benefits at age 62 or at any age after 30 years of service. All members
enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal
retirement benefits at age 65 or any time after 33 years of creditable service. Employees
enrolled in the Plan may include up to 4 years of credit for military service toward
creditable service. The Plan also includes an early retirement provision; however, there
is a benefit reduction for each year a member retires before his or her normal retirement
date. The Plan provides retirement, disability, death benefits, and annual cost-of-living
adjustments to eligible participants.
DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees
eligible for normal retirement under the Plan to defer receipt of monthly benefit payments
while continuing employment with an FRS-participating employer. An employee may
participate in DROP for a period not to exceed 60 months after electing to participate.
During the period of DROP participation, deferred monthly benefits are held in the FRS
Trust Fund and accrue interest. The net pension liability does not include amounts for
DROP participants, as these members are considered retired and are not accruing
additional pension benefits.
Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years
of service, average final compensation, and service credit. Credit for each year of service
is expressed as a percentage of the average final compensation. For members initially
enrolled before July 1, 2011, the average final compensation is the average of the 5
highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the
average final compensation is the average of the 8 highest fiscal years’ earnings. The
total percentage value of the benefit received is determined by calculating the total value
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of all service, which is based on retirement plan and/or the class to which the member
belonged when the service credit was earned. Members are eligible for in-line-of-duty or
regular disability and survivors’ benefits. The following chart shows the percentage
value for each year of service credit earned:
Class, Initial Enrollment, and Retirement Age/Years of Service % Value
Regular Class members initially enrolled before July 1, 2011
Retirement up to age 62 or up to 30 years of service 1.60
Retirement at age 63 or with 31 years of service 1.63
Retirement at age 64 or with 32 years of service 1.65
Retirement at age 65 or with 33 or more years of service 1.68
Regular Class members initially enrolled on or after July 1, 2011
Retirement up to age 65 or up to 33 years of service 1.60
Retirement at age 66 or with 34 years of service 1.63
Retirement at age 67 or with 35 years of service 1.65
Retirement at age 68 or with 36 or more years of service 1.68
As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the
FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the
annual cost-of-living adjustment is 3 percent per year. If the member is initially enrolled
before July 1, 2011, and has service credit on or after July 1, 2011, there is an
individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is
a proportion of 3 percent determined by dividing the sum of the pre-July 2011 service
credit by the total service credit at retirement multiplied by 3 percent. Plan members
initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after
retirement.
Contributions. The Florida Legislature establishes contribution rates for participating
employers and employees. Contribution rates during the 2018-19 fiscal year were as
follows:
Percent of Gross Salary
Class Employee Employer (1)
FRS, Regular 3.00 8.26
FRS, Reemployed Retiree (2) (2)
Notes: (1) Employer rates include 1.66 percent for the postemployment
health insurance subsidy. Also, employer rates, other than
for DROP participants, include 0.06 percent for
administrative costs of the Investment Plan.
(2) Contribution rates are dependent upon retirement class in
which reemployed.
The School’s contributions to the Plan totaled $33,750 for the fiscal year ended June 30,
2019.
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Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a
liability of $314,855 for its proportionate share of the net pension liability. The net
pension liability was measured as of June 30, 2018, and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of July 1,
2018. The School’s proportionate share of the net pension liability was based on the
School’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year
contributions of all participating members. At June 30, 2018, the School’s proportionate
share was .001045318 percent, which was an increase of .000276217 percent from its
proportionate share measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of
$81,542. In addition, the School reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 26,673$ 968$
Change of assumptions 102,879 -
Net difference between projected and actual
earnings on FRS Plan investments - 24,326
Changes in proportion and differences between 80,490
School FRS contributions and proportionate
share of contributions - -
School FRS contributions subsequent to
the measurement date 33,750 -
Total 243,792$ 25,294$
The deferred outflows of resources related to pensions totaling $33,750, resulting from
School contributions subsequent to the measurement date, will be recognized as a
reduction of the net pension liability in the fiscal year ending June 30, 2020. Other
amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 40,394$
2021 27,567
2022 3,844
2023 18,356
2024 12,274
Thereafter 1,823
Actuarial Assumptions. The total pension liability in the July 1, 2018, actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included
in the measurement:
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Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Investment rate of return 7.00 percent, net of pension plan investment
expense, including inflation
Mortality rates were based on the Generational RP-2000 with Projection Scale BB.
The actuarial assumptions used in the July 1, 2018, valuation were based on the results of
an actuarial experience study for the period July 1, 2008, through June 30, 2013.
The long-term expected rate of return on pension plan investments was not based on
historical returns, but instead is based on a forward-looking capital market economic
model. The allocation policy’s description of each asset class was used to map the target
allocation to the asset classes shown below. Each asset class assumption is based on a
consistent set of underlying assumptions, and includes an adjustment for the inflation
assumption. The target allocation and best estimates of arithmetic and geometric real
rates of return for each major asset class are summarized in the following table:
Asset Class Target
Allocation (1)
Annual Arithmetic Return
Compound Annual
(Geometric) Return
Standard Deviation
Cash 1% 2.9% 2.9% 1.8%
Fixed Income 18% 4.4% 4.3% 4.0%
Global Equity 54% 7.6% 6.3% 17.0%
Real Estate (Property) 11% 6.6% 6.0% 11.3%
Private Equity 10% 10.7% 7.8% 26.5%
Strategic Investments 6% 6.0% 5.7% 8.6%
Total 100%
Assumed inflation - Mean 2.6% 1.9%
Note: (1) As outlined in the Plan's investment policy.
Discount Rate. The discount rate used to measure the total pension liability was 7.00
percent. The Plan’s fiduciary net position was projected to be available to make all
projected future benefit payments of current active and inactive employees. Therefore,
the discount rate for calculating the total pension liability is equal to the long-term
expected rate of return. The discount rate used in the 2018 valuation was updated from
7.1 percent to 7.0 percent.
Sensitivity of the School’s Proportionate Share of the Net Pension Liability to Changes in
the Discount Rate. The following presents the School’s proportionate share of the net
pension liability calculated using the discount rate of 7.0 percent, as well as what the
School’s proportionate share of the net pension liability would be if it were calculated
using a discount rate that is 1 percentage point lower (6.0 percent) or 1 percentage point
higher (8.0 percent) than the current rate:
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1% Current 1%
Decrease Discount Rate Increase
(6.0%) (7.0%) (8.0%)
School's proportionate share of
the net pension liability 574,624$ 314,855$ 99,102$
Pension Plan Fiduciary Net Position. Detailed information about the Plan’s fiduciary net
position is available in the separately issued FRS Pension Plan and Other State
Administered Systems Comprehensive Annual Financial Report.
HIS Pension Plan
Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer
defined benefit pension plan established under Section 112.363, Florida Statutes, and
may be amended by the Florida Legislature at any time. The benefit is a monthly
payment to assist retirees of State-administered retirement systems in paying their health
insurance costs and is administered by the Florida Department of Management Services,
Division of Retirement.
Benefits Provided. For the fiscal year ended June 30, 2019, eligible retirees and
beneficiaries received a monthly HIS payment of $5 for each year of creditable service
completed at the time of retirement with a minimum HIS payment of $30 and a
maximum HIS payment of $150 per month, pursuant to Section 112.363, Florida
Statutes. To be eligible to receive a HIS benefit, a retiree under a State-administered
retirement system must provide proof of health insurance coverage, which can include
Medicare.
Contributions. The HIS Plan is funded by required contributions from FRS participating
employers as set by the Florida Legislature. Employer contributions are a percentage of
gross compensation for all active FRS members. For the fiscal year ended June 30, 2019,
the contribution rate was 1.66 percent of payroll pursuant to Section 112.363, Florida
Statutes. The School contributed 100 percent of its statutorily required contributions for
the current and preceding 3 years. HIS Plan contributions are deposited in a separate
trust fund from which HIS payments are authorized. HIS Plan benefits are not
guaranteed and are subject to annual legislative appropriation. In the event the legislative
appropriation or available funds fail to provide full subsidy benefits to all participants,
benefits may be reduced or canceled.
The School’s contributions to the HIS Plan totaled $10,190 for the fiscal year ended June
30, 2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a net
pension liability of $193,848 for its proportionate share of the net pension liability. The
current portion of the net pension liability is the School’s proportionate share of benefit
payments expected to be paid within one year, net of the School’s proportionate share of
the HIS Plan’s fiduciary net position available to pay that amount. The net pension
liability was measured as of June 30, 2018, and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of July 1,
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2018. The School’s proportionate share of the net pension liability was based on the
School’s 2017-18 fiscal year contributions relative to the total 2017-18 fiscal year
contributions of all participating members. At June 30, 2018, the School’s proportionate
share was .001831503 percent, which was an increase of .000392756 percent from its
proportionate share measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of
$37,807. In addition, the School reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 2,968$ 329$
Change of assumptions 21,558 20,495
Net difference between projected and actual
earnings on HIS Plan investments 117 -
Changes in proportion and differences between
School HIS contributions and proportionate
share of contributions 86,846 42
School HIS contributions subsequent to
the measurement date 10,190 -
Total 121,679$ 20,866$
The deferred outflows of resources totaling $10,190, resulting from School contributions
subsequent to the measurement date, will be recognized as a reduction of the net pension
liability in the fiscal year ending June 30, 2020. Other amounts reported as deferred
outflows of resources and deferred inflows of resources related to pensions will be
recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 2,667$
2021 2,657
2022 1,861
2023 418
2024 (2,595)
Thereafter (1,190)
Actuarial Assumptions. The total pension liability in the July 1, 2017, actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included
in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Municipal bond rate 3.87 percent
Mortality rates were based on the Generational RP-2000 with Projected Scale BB.
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While an experience study had not been completed for the HIS Plan, the actuarial
assumptions that determined the total pension liability for the HIS Plan were based on
certain results of the most recent experience study for the FRS Plan.
Discount Rate. The discount rate used to measure the total pension liability was 3.87
percent. In general, the discount rate for calculating the total pension liability is equal to
the single rate equivalent to discounting at the long-term expected rate of return for
benefit payments prior to the projected depletion date. Because the HIS benefit is
essentially funded on a pay-as-you-go basis, the depletion date is considered to be
immediate, and the single equivalent discount rate is equal to the municipal bond rate
selected by the plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal
Bond Index was adopted as the applicable municipal bond index.
Sensitivity of the School’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 3.87 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 (2.87 percent) or 1 percentage point
higher (4.87 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(2.87%) (3.87%) (4.87%)
School's proportionate share of
the net pension liability 220,782$ 193,848$ 171,398$
Pension Plan Fiduciary Net Position. Detailed information about the HIS Plan’s
fiduciary net position is available in the separately issued FRS Pension Plan and Other
State Administered Systems Comprehensive Annual Financial Report.
12. FRS – Defined Contribution Pension Plans
The SBA administers the defined contribution plan officially titled the FRS Investment
Plan (Investment Plan). The Investment Plan is reported in the SBA’s annual financial
statements and in the State of Florida Comprehensive Annual Financial Report.
As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to
participate in the Investment Plan in lieu of the FRS defined benefit plan. School
employees already participating in the State School System Optional Retirement Program
or DROP are not eligible to participate in the Investment Plan. Employer and employee
contributions are defined by law, but the ultimate benefit depends in part on the
performance of investment funds. Service retirement benefits are based upon the value of
the member’s account upon retirement. Benefit terms, including contribution
requirements, are established and may be amended by the Florida Legislature. The
Investment Plan is funded with the same employer and employee contributions rates, that
are based on salary and membership class (Regular Class, Senior Management Service
Class, etc.), as the FRS defined benefit plan. Contributions are directed to individual
member accounts, and the individual members allocate contributions and account
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balances among various approved investment choices. Costs of administering the
Investment Plan, including the FRS Financial Guidance Program, are funded through an
employer contribution of 0.06 percent of payroll and by forfeited benefits of Investment
Plan members. Allocations to the Investment Plan member accounts during the 2018-19
fiscal year were as follows:
Percent of
Gross
Class Compensation
FRS, Regular 6.30
For all membership classes, employees are immediately vested in their own contributions
and are vested after 1 year of service for employer contributions and investment earnings
regardless of membership class. If an accumulated benefit obligation for service credit
originally earned under the FRS Pension Plan is transferred to the Investment Plan, the
member must have the years of service required for FRS Pension Plan vesting (including
the service credit represented by the transferred funds) to be vested for these funds and
the earnings on the funds. Nonvested employer contributions are placed in a suspense
account for up to 5 years. If the employee returns to FRS-covered employment within
the 5 year period, the employee will regain control over their account. If the employee
does not return within the 5 year period, the employee will forfeit the accumulated
account balance. For the fiscal year ended June 30, 2019, the information for the amount
of forfeitures was unavailable from the SBA; however, management believes that these
amounts, if any, would be immaterial to the School.
After termination and applying to receive benefits, the member may rollover vested funds
to another qualified plan, structure a periodic payment under the Investment Plan, receive
a lump-sum distribution, leave the funds invested for future distribution, or any
combination of these options. Disability coverage is provided in which the member may
either transfer the account balance to the FRS Pension Plan when approved for disability
retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan,
or remain in the Investment Plan and rely upon that account balance for retirement
income.
13. IMPAIRMENT LOSS & INSURANCE CLAIM
The School was impacted by a hurricane in October 2018. The School suffered a loss of
$229,290 as a result of the hurricane-related damage. The Impairment Loss is shown as
an expense on the Statement of Activities. The insurance claim of $986,708 was
reduced by the deductible of $70,100 to obtain the amount of $916,608, which is shown
as a General Revenue Special Item on the Statement of Activates and included in the
Local and Other Revenue on the Statement of Revenues, expenditures, and changes in
Fund Balances – Governmental Funds.
633
14. RISK MANAGEMENT PROGRAMS
The School is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; and natural disasters for which the School
carries commercial insurance. There have been no significant reductions in insurance
coverage and settlement amounts have not exceeded insurance coverage for the current
year or the three prior years.
15. LEGAL MATTERS
In the normal course of conducting its operations, the School occasionally becomes party
to various legal actions and proceedings. In the opinion of management, the ultimate
resolution of such legal matters will not have a significant adverse effect on the
accompanying financial statements.
634
Revenues:
Intergovernmental:
Federal Through State and Local $ $ - $ - $ -
State Sources 1,378,186 1,363,895 1,363,895 -
Local and Other 213,441 1,007,976 1,007,976 -
Total Revenues 1,591,627 2,371,871 2,371,871 -
Expenditures:
Current - Education:
Instruction 861,067 812,133 812,133 -
Instructional Support Services 925 6,035 6,035 -
Instructional Staff Training 3,392 7,000 7,000 -
Instructional-Related Technology 5,108 6,059 6,059 -
Board 45,478 54,299 54,299 -
School Administration 206,747 187,178 187,178 -
Facilities Acquisition & Construction 260,853 40,447 40,447 -
Fiscal Services 62,546 64,822 64,822 -
Food Services 9,546 - - -
Student Transportation 5,550 224 224 -
Operation of Plant 97,895 171,425 171,425 -
Maintenance of Plant 7,248 25,844 25,844 -
Community Service 1,235 6,883 6,883 -
Fixed Capital Outlay:
Facilities Acquisition & Construction 422,998 422,998 -
Other Capital Outlay 44,496 44,496 -
Debt Service:
Principal 43,037 24,505 24,505 -
Interest 21,500 15,206 15,206
Total Expenditures 1,632,127 1,889,554 1,889,554 -
(40,500) 482,317 482,317 -
Other Financing Sources (Uses):
Proceeds from Loan 250,000 - - -
Transfers In 3,665 3,665 -
Total Other Financing Sources (Uses) 250,000 3,665 3,665 -
209,500 485,982 485,982 -
Fund Balance, July 1, 2018 367,382 384,402 384,402 - Fund Balance, June 30, 2019 $ 576,882 $ 870,384 $ 870,384 $ -
Net Change in Fund Balance
General Fund
For the Fiscal Year Ended June 30, 2019
Excess (Deficiency) of Revenues Over
Expenditures
Budget Budget Actual Positive(Negative)
RISING LEADERS ACADEMY, INC.
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
Original FinalVariance withFinal Budget -
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND (UNAUDITED)
See Independent Auditor's Report.
- 33 -635
as of 6/30/18 as of 6/30/17 as of 6/30/16 as of 6/30/15 as of 6/30/14
Proportion of the net pension liability/(asset) 0.001045318% 0.000769101% 0.000741598% 0.000735559% 0.000295923%
Proportionate share of the net pension
liability/(asset) 314,855$ 227,495$ 187,254$ 95,007$ 18,056$
Covered-employee payroll 598,205$ 458,598$ 444,332$ 395,800$ 155,931$
Proportionate share of the net pension
liability (asset) as a percentage of its covered-
employee payroll 53% 50% 42% 24% 12%
Plan fiduciary net position as a percentage of
the total pension liability\ 84.26% 83.89% 84.88% 92.00% 96.09%
RISING LEADERS ACADEMY, INC.
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Proportionate Share of Net Pension Liability
Florida Retirement System
See Independent Auditor's Report.
- 34 -636
as of 6/30/19 as of 6/30/18 as of 6/30/17 as of 6/30/16 as of 6/30/15 as of 6/30/14
Contractually required contribution 33,750$ 29,791$ 20,022$ 18,085$ 17,934$ 6,482$
Contributions in relation to the contractually
required contribution (33,750)$ (29,791)$ (20,022)$ (18,085)$ (17,934)$ (6,482)$
Contribution deficiency/(excess) -$ -$ -$ -$ -$ -$
Covered-employee payroll 613,716$ 598,205$ 458,598$ 444,332$ 395,800$ 155,931$
Contributions as a percentage of covered-
employee payroll 5.50% 4.98% 4.37% 4.07% 4.53% 4.16%
RISING LEADERS ACADEMY, INC.
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Contributions
Florida Retirement System
See Independent Auditor's Report.
- 35 -637
as of 6/30/18 as of 6/30/17 as of 6/30/16 as of 6/30/15 as of 6/30/14
Proportion of the net pension
liability/(asset) 0.001831503% 0.001438747% 0.001439328% 0.001304581% 0.005243680%
Proportionate share of the net pension
liability/(asset) 193,848$ 153,838$ 167,748$ 133,047$ 49,030
Covered-employee payroll 598,205$ 458,598$ 444,332$ 395,800$ 155,931
Proportionate share of the net pension
liability/(asset) as a percentage of its
covered-employee payroll 32% 34% 38% 34% 31%
Plan fiduciary net position as a
percentage of the total pension liability 2.15% 1.64% 0.97% 0.50% 0.99%
RISING LEADERS ACADEMY, INC.
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Proportionate Share of Net Pension Liability
Health Insurance Subsidy Program
See Independent Auditor's Report.
- 36 -638
as of 6/30/19 as of 6/30/18 as of 6/30/17 as of 6/30/16 as of 6/30/15 as of 6/30/14
Contractually required contribution 10,190$ 9,932$ 7,614$ 7,377$ 4,987$ 1,796$
Contributions in relation to the contractually
required contribution (10,190)$ (9,932)$ (7,614)$ (7,377)$ (4,987)$ (1,796)$
Contribution deficiency/(excess) -$ -$ -$ -$ -$ -$
Covered-employee payroll 613,716$ 598,205$ 458,598$ 444,332$ 395,800$ 155,931$
Contributions as a percentage of covered-
employee payroll 1.66% 1.66% 1.66% 1.66% 1.26% 1.15%
RISING LEADERS ACADEMY, INC.
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
Schedule of Contributions
Health Insurance Subsidy Program
See Independent Auditor's Report.
- 37 -639
1. BUDGETARY BASIS OF ACCOUNTING
Budgets are presented on the modified accrual basis of accounting. During the fiscal
year, expenditures were controlled at the object level (e.g., salaries and benefits,
purchased services, materials and supplies and capital outlay) within each activity (e.g.,
instruction, pupil personnel services and school administration). Budgets may be
amended by resolution at any Board meeting prior to the date for the annual report.
2. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF
CONTRIBUTIONS –FLORIDA RETIREMENT SYSTEM PENSION PLAN
Changes of Assumptions. The long-term expected rate of return was decreased from 7.1
percent to 7.0 percent, and the active member mortality assumption was updated.
3. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF
CONTRIBUTIONS –HEALTH INSURANCE SUBSIDY PENSION PLAN
Changes of Assumptions. The municipal bond rate used to determine total pension
liability was increased from 3.58 percent to 3.87 percent.
640
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
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 Directors Rising Leaders Academy, Inc.
a Charter School and Component Unit of the
District School Board of Bay County, Florida
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 the governmental activities, each major fund, and the aggregate remaining fund
information of Rising Leaders Academy, Inc. (“School”), a component unit of the District
School Board of Bay County, Florida, as of and for the year ended June 30, 2019, and the related
notes to the financial statements, which collectively comprise the School’s basic financial
statements, and have issued our report thereon dated September 25, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School’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 the
School’s internal control. Accordingly, we do not express an opinion on the effectiveness of the
School’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 combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the School’s financial statements will not be
prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency,
or combination of deficiencies, in internal control that is less severe than a material weakness,
yet important enough to merit attention by those 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.
641
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School’s financial statements are
free from material misstatement, we performed tests of compliance with certain provisions of
laws, regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances
of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the School’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 School’s
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
Respectfully submitted,
September 25, 2019
Tampa, Florida
642
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Management Letter as Required by Rules of the Florida Auditor General,
Chapter 10.850, Florida Statutes, Charter School Audits
To the Board of Directors Rising Leaders Academy, Inc.
a Charter School and Component Unit of the
District School Board of Bay County, Florida
We have audited the financial statements of the Rising Leaders Academy, Inc. (“School”), a
Charter School and Component Unit of the District School Board of Bay County, Florida, as of
and for the fiscal year ended June 30, 2019, and have issued our report thereon dated September
25, 2019.
Auditor’s Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States and Chapter 10.850, Rules of
the Auditor General.
Other Reporting Requirements
We have issued our Independent Auditor's Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed
in Accordance with Government Auditing Standards. Disclosures in those reports and schedule,
which are dated September 25, 2019, should be considered in conjunction with this management
letter.
Prior Audit Findings
Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or not
corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report. There were no prior audit findings or recommendations.
Official Title
Section 10.854(1)(e)5., Rules of the Auditor General, requires that the name or official title of
the entity and the school code assigned by the Florida Department of Education be disclosed in
this management letter. The official title and the school code assigned by the Florida Department
of Education of the entity are Rising Leaders Academy, 032701.
643
Financial Condition and Management
Sections 10.854(1)(e)2. and 10.855(11), Rules of the Auditor General, require us to apply
appropriate procedures and communicate whether or not the School has met one or more of the
conditions described in Section 218.503(1), Florida Statutes, and to identify the specific
condition(s) met. In connection with our audit, we determined that the School did not meet any of
the conditions described in Section 218.503(1), Florida Statutes.
Pursuant to Sections 10.854(1)(e)6.a. and 10.855(12), Rules of the Auditor General, we applied
financial condition assessment procedures for the School. It is management’s responsibility to
monitor the School’s financial condition, and our financial condition assessment was based in
part on representations made by management and review of financial information provided by
same.
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we communicate any
recommendations to improve financial management. In connection with our audit, we did not
have any such recommendations.
Transparency
Sections 10.854(1)(e)7. and 10.855(13), Rules of the Auditor General, require us to apply
appropriate procedures and communicate the results of our determination as to whether the
School maintains on its Web site the information specified in Section 1002.33(9)(p), Florida
Statutes. In connection with our audit, we determined that the School maintained on its Web site
the information specified in Section 1002.33(9)(p), Florida Statutes.
Additional Matters
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we address in the
management letter any recommendations to improve financial management. In connection with
our audit, we did not have any such recommendations.
Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliance
with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to
have occurred, that have an effect on the financial statements that is less than material but which
warrants the attention of those charged with governance. In connection with our audit, we did
not have any such findings.
Purpose of this Letter
Our management letter is intended solely for the information and use of the Legislative Auditing
Committee, members of the Florida Senate and the Florida House of Representatives, the Florida
Auditor General, Federal and other granting agencies, the Board of Directors, applicable
management, and District School Board of Bay County, Florida and is not intended to be and
should not be used by anyone other than these specified parties.
Respectfully submitted,
September 25, 2019
Tampa, Florida
644
- 44 -
Financial Condition and Management
Sections 10.854(1)(e)2. and 10.855(11), Rules of the Auditor General, require us to apply appropriate procedures and communicate whether or not the School has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and to identify the specific condition(s) met. In connection with our audit, we determined that the School did not meet any of the conditions described in Section 218.503(1), Florida Statutes.
Pursuant to Sections 10.854(1)(e)6.a. and 10.855(12), Rules of the Auditor General, we applied financial condition assessment procedures for the School. It is management’s responsibility to monitor the School’s financial condition, and our financial condition assessment was based in part on representations made by management and review of financial information provided by same.
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.
Transparency
Sections 10.854(1)(e)7. and 10.855(13), Rules of the Auditor General, require us to apply appropriate procedures and communicate the results of our determination as to whether the Schoolmaintains on its Web site the information specified in Section 1002.33(9)(p), Florida Statutes. In connection with our audit, we determined that the School maintained on its Web site the information specified in Section 1002.33(9)(p), Florida Statutes.
Additional Matters
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.
Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.
Purpose of this Letter
Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the Board of Directors, applicable management, and District School Board of Bay County, Florida and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
September 30, 2019 Tampa, Florida
645
COMMUNITY CHARTER ACADEMY, INC.
D/B/A UNIVERSITY ACADEMY A Charter School and Component Unit of the
District School Board of Bay County, Florida
INDEPENDENT AUDITOR’S REPORT
for the fiscal year ended JUNE 30, 2019
King & Walker, CPAs, PL ______________________________________________________________________________________________________________________
Certified Public Accountants
646
THIS PAGE IS INTENTIONALLY BLANK.
647
COMMUNITY CHARTER ACADEMY, INC.
D/B/A UNIVERSITY ACADEMY
TABLE OF CONTENTS
PAGE
NO.
FINANCIAL SECTION
Independent Auditor’s Report 1
Management’s Discussion and Analysis – (Unaudited) 3
Basic Financial Statements
Government-Wide Financial Statements:
Statement of Net Position 8
Statement of Activities 9
Fund Financial Statements:
Balance Sheet – Governmental Funds 10
Reconciliation of the Governmental Funds Balance Sheet to the Statement
of Net Position 11
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds 12
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances to the Statement
of Activities 13
Notes to Financial Statements 14
Other Required Supplementary Information
Budgetary Comparison Schedule – General Fund – (Unaudited) 34
Schedule of Proportionate Share of Net Pension Liability - FRS 35
Schedule of Contributions - FRS 36
Schedule of Proportionate Share of Net Pension Liability - HIS 37
Schedule of Contributions - HIS 38
Note to Required Supplementary Information 39
COMPLIANCE AND INTERNAL CONTROL
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 Governmental Auditing Standards 40
Management Letter as required by Rules of the Florida Auditor General,
Chapter 10.850, Florida Statutes, Charter School Audits. 42
648
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Independent Auditor's Report
To the Board of Directors of Community Charter Academy, Inc.
d/b/a University Academy,
a Charter School and Component Unit of the District
School Board of Bay County, Florida
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major
fund, and the aggregate remaining fund information of Community Charter Academy, Inc, d/b/a
University Academy (“School”), a charter school and component unit of the District School Board of
Bay County, Florida, as of and for the year ended June 30, 2019, and the related notes to the financial
statements, which collectively comprise the School’s basic financial statements as listed in the table of
contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Governmental 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 School’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 School’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 opinion.
649
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund, and the aggregate
remaining fund information of the School, as of June 30, 2019, and the respective changes in financial
position thereof for the year ended in accordance with accounting principles generally accepted in the
United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis, the Budgetary Comparison Schedule and the Note to
Required Supplementary Information, as shown in the table of contents be presented to supplement the
basic financial statements. Such information, although not a part of the basic financial statements, is
required by the Governmental Accounting Standards Board who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational, economic,
or historic context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America,
which consisted of inquiries of management about methods of preparing the information and
comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September
30, 2019 on our consideration of the School’s internal control over financial reporting and on our tests
of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the School’s internal
control over financial reporting and compliance.
Respectfully submitted,
September 30, 2019
Tampa, Florida
650
COMMUNITY CHARTER ACADEMY, INC.
D/B/A UNIVERSITY ACADEMY A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) _______________________________________________________________________________________________________________
The Management’s Discussion and Analysis (MD&A) section of the annual financial report of
Community Charter Academy, Inc, d/b/a University Academy (“School”) provides an overview
of the School’s activities for the fiscal year ended June 30, 2019.
Because the information contained in the MD&A is intended to highlight significant transactions,
events, and conditions, it should be considered in conjunction with the School’s financial
statements and notes to financial statements found in the table of contents.
FINANCIAL HIGHLIGHTS
▪ For the fiscal year ended June 30, 2019, the School’s revenue exceeded expenses as shown
on the School’s statement of activities by $1,619,613.
▪ As shown on the statement of net position, the School reported an unrestricted net position
balance of $1,264,981.
OVERVIEW OF THE FINANCIAL STATEMENTS
The basic financial statements consist of three components:
✓ Government-wide financial statements
✓ Fund financial statements
✓ Notes to financial statements
Government-Wide Financial Statements
The government-wide financial statements provide both short-term and long-term information
about the School’s overall financial condition in a manner similar to those of a private-sector
business. The statements include a statement of net position and a statement of activities that are
designed to provide consolidated financial information about the governmental activities of the
School presented on the accrual basis of accounting. The statement of net position provides
information about the government’s financial position, its assets and liabilities, using an economic
resources measurement focus. The difference between the assets and liabilities, the net position,
is a measure of the financial health of the School. The statement of activities presents information
about the change in the School’s net position and the results of operations, during the fiscal year.
An increase or decrease in net position is an indication of whether the School’s financial health is
improving or deteriorating. To assess the overall financial position of the School, one needs to
consider additional non-financial factors such as changes in the School student base funding level.
651
COMMUNITY CHARTER ACADEMY, INC.
D/B/A UNIVERSITY ACADEMY A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) _______________________________________________________________________________________________________________
Fund Financial Statements
Fund financial statements are one of the components of the basic financial statements. A fund is
a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. Fund financial statements provide more detailed
information about the School’s financial activities, focusing on its most significant funds rather
than fund types. This is in contrast to the entity-wide perspective contained in the government-
wide statements.
Governmental Funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, the
governmental funds utilize a spendable financial resources measurement focus rather than the
economic resources measurement focus found in the government-wide financial statements. The
financial resources measurement focus allows the governmental fund statements to provide
information on near-term inflows and outflows of spendable resources as well as balances of
spendable resources available at the end of the fiscal year.
The governmental fund statements provide a detailed short-term view that may be used to evaluate
the School’s near-term financing requirements. This short-term view is useful when compared to
the long-term view presented as governmental activities in the government-wide financial
statements. To facilitate this comparison, both the governmental funds balance sheet and the
governmental funds statement of revenues, expenditures, and changes in fund balances provide a
reconciliation of governmental fund to governmental activities.
The governmental funds balance sheet and statement of revenues, expenditures, and changes in
fund balances provide detailed information about the School’s most significant funds. The School
operates four funds; a General Fund, a Debt Service Fund, a Capital Projects Fund and a Special
Revenue Fund. For reporting purposes, the General Fund is considered a major fund for financial
reporting purposes. Data from the other governmental funds are combined into a single aggregate
presentation.
The School adopts an annual budget for its governmental funds. A budgetary comparison
schedule, as required, has been provided for the General Fund to demonstrate compliance with the
budget.
Notes to Financial Statements
The notes provide additional information that is essential for a full understanding of the data
provided in the government-wide and fund financial statements.
652
COMMUNITY CHARTER ACADEMY, INC.
D/B/A UNIVERSITY ACADEMY A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)
_______________________________________________________________________________________________________________
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net position may serve over time as a useful indicator of a government’s financial position. The
following is a summary of the School’s current year and prior year net position:
6-30-18 6-30-19
Increase
(Decrease)
ASSETS
Current and Other Assets 1,252,632$ 2,306,896$ 1,054,264$
Capital Assets, net 11,795,033 12,345,606 550,573
Total Assets 13,047,665 14,652,502 1,604,837
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflow Related to Pensions 1,279,482 1,316,933 37,451
LIABILITIES
Current Liabilities 227,470 267,874 40,404
Long-term Liabilities 13,714,991 13,613,931 (101,060)
Total Liabilities 13,942,461 13,881,805 (60,656)
DEFERRED INFLOWS OF RESOURCES
Deferred Inflow Related to Pensions 89,517 172,848 83,331
NET POSITION
Net Investment in Capital Assets - 649,801 649,801
Unrestricted 295,169 1,264,981 969,812
Total Net Position 295,169$ 1,914,782$ 1,619,613$
Net Position, End of Year
Governmental Activities
The Current Assets of the School primarily consist of cash and cash equivalents (97%). Liabilities
consist mainly of long-term liabilities (98%). Net Position is comprised of the School’s investment
in capital assets, net of related debt and accumulated depreciation, and the results of the prior and
current year’s operations.
653
COMMUNITY CHARTER ACADEMY, INC.
D/B/A UNIVERSITY ACADEMY A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) _______________________________________________________________________________________________________________
The following is a summary of the School’s change in net position for the current year and prior
year:
6-30-18 6-30-19
Increase
(Decrease)
Revenues:
Federal Sources 23,406$ 87,497$ 64,091$
State Sources 4,305,695 4,624,570 318,875
Local and Other 487,455 9,608,467 9,121,012
Total Revenues 4,816,556 14,320,534 9,503,978
Expenses:
Instruction 3,022,155 3,144,047 121,892
Instructional Support Services - 68,465 68,465
Instructional & Curriculum Development 28,786 1,548 (27,238)
Instructional Staff Training - 1,674 1,674
Instructional-Related Technology - 49,972 49,972
Board 79,171 53,069 (26,102)
School Administration 295,912 526,716 230,804
Facilities Acq. & Construction - 686,515 686,515
Fiscal Services 115,855 128,374 12,519
Food Services - 109,773 109,773
Operation of Plant 442,020 901,210 459,190
Maintenance of Plant 31,143 75,059 43,916
Community Service 30,971 40,971 10,000
Debt Service - Interest & Fiscal Charges 314,371 371,539 57,168
Unallocated Depreciation 352,008 75,803 (276,205)
Extraordinary Loss Due to Hurricane - 6,466,186 6,466,186
Total Expenses 4,712,392 12,700,921 7,988,529
Increase/(Decrease) in Net Position 147,457$ 1,619,613$ 1,515,449$
Operating Results for the Year
Governmental Activities
The largest recurring revenue source for the School are from the State of Florida. Revenues from
State sources for current operations are primarily received through the Florida Education Finance
Program (FEFP) funding formula. The FEFP formula utilizes student enrollment data to determine
the funds available for the School. The increase in Local and Other Revenue was due to proceeds
received from insurance claims ($8,796,506) due to hurricane damage in 2018-19.
The largest concentration of expenses is Instruction, which accounted for 50 percent of total
expenditures, (disregarding the extraordinary loss on capital assets) and consists primarily of
teachers’ salaries. The School suffered an extraordinary loss on its capital assets of $6,466,186
from hurricane damage in 2018-19.
654
COMMUNITY CHARTER ACADEMY, INC.
D/B/A UNIVERSITY ACADEMY A Charter School and Component Unit of the District School Board of Bay County, Florida
MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited) _______________________________________________________________________________________________________________
FINANCIAL ANALYSIS OF THE SCHOOL’S FUNDS
Governmental Funds
As the School completed the year, its governmental funds reported a total combined fund balance
of $2,039,022.
BUDGETARY HIGHLIGHTS
The general and special revenue fund budgets for the fiscal year ended June 30, 2019 were
developed based on the School’s anticipated revenues and expenditures, the expected student
population for the school year, and federal grants. Over the course of the year, the school revised
its general fund budget. Refer to the Budgetary Comparison Schedule for additional reference.
CAPITAL ASSETS
The School was impacted by Hurricane Michael when it made landfall in October 2018. The
School facilities and their contents were damaged by the hurricane and the School required
building renovations and the replacement of equipment and furnishings. During the year ended
June 30, 2019, the School recognized a net loss of $6,466,186 as a result of the hurricane-related
damage.
The School’s investment in capital assets for its governmental activities as of June 30, 2019,
amounts to $12,345,606 (net of accumulated depreciation). This investment in capital assets
includes land, buildings and improvements, and furniture, fixtures, and equipment. Additional
information regarding the School’s capital assets can be found in the notes to the financial
statements.
LONG-TERM DEBT
At June 30, 2019, the School had $13,613,931 in long-term debt outstanding, consisting of a long-
term loans for facility construction, a capital lease, net pension liability for the Florida Retirement
System, and a deferred contribution for land and buildings. Additional information regarding the
School’s long-term debt can be found in the subsequent notes to the financial statements.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the School’s finances. Questions
concerning any of the information provided in this report or requests for additional financial
information should be addressed to the Principal, Community Charter Academy, Inc. d/b/a
University Academy, 1980 Discovery Loop, Panama City, FL 32405.
655
Cash and Cash Equivalents $ 2,246,727
Deposits and Prepaid Expenses 60,169
Capital Assets:
Land 2,000,000
Buildings & Improvements, Net 10,313,551
Furniture, Fixtures, and Equipment, Net 32,055
Total Capital Assets, Net 12,345,606
TOTAL ASSETS 14,652,502
Deferred outlaw related to pensions 1,316,933
TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,316,933
Accounts Payable 39,526
Salaries and Benefits Payable 222,310
Unearned Revenue 6,038
Long-Term Liabilities
Deferred Contribution 4,700,521
Capital Lease Payable, due within one year 1,686
Loans Payable, due within one year 287,668
Loans Payable, after one year 6,705,930
Net Pension Liability 1,918,126
TOTAL LIABILITIES 13,881,805
Deferred inflow related to pensions 172,848
TOTAL DEFERRED INFLOWS OF RESOURCES 172,848
Net Investment in Capital Assets 649,801
Unrestricted 1,264,981
TOTAL NET POSITION $ 1,914,782
DEFERRED OUTFLOWS OF RESOURCES
NET POSITION
Governmental
Activities
STATEMENT OF NET POSITION
June 30, 2019
LIABILITIES
DEFERRED INFLOWS OF RESOURCES
D/B/A UNIVERSITY ACADEMY
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
ASSETS
COMMUNITY CHARTER ACADEMY, INC.
The accompanying notes to the financial statements are an integral part of this statement.
- 8 -
656
Net
(E
xp
ense
s)
Rev
enu
e
Ex
pen
ses
and
Ch
anges
Ch
arges
Op
erat
ing
Cap
ital
Net
Posi
tion
for
Gra
nts
an
d
Gra
nts
an
d
Gover
nm
enta
l
Ser
vic
esC
on
trib
uti
on
sC
on
trib
uti
on
sA
ctiv
itie
s
Gover
nm
enta
l A
ctiv
itie
s:
Inst
ruct
ion
$3
,14
4,0
47
$-
$4
3,2
27
$8
0,0
00
$(3
,02
0,8
20
)
Inst
ruct
ion
al S
up
port
Ser
vic
es6
8,4
65
(68
,46
5)
Inst
ruct
ion
& C
urr
icu
lum
Dev
elop
men
t1
,54
8
(1,5
48
)
Inst
ruct
ion
al S
taff
Tra
inin
g1
,67
4
(1,6
74
)
Inst
ruct
ion
al R
elat
ed T
ech
no
logy
49
,97
2
(49
,97
2)
Boar
d
53
,06
9
(53
,06
9)
Sch
ool
Ad
min
istr
atio
n5
26
,71
6
(52
6,7
16
)
Fac
ilit
ies
Acq
uis
itio
n &
Con
stru
ctio
n6
86
,51
5
30
7,6
65
(37
8,8
50
)
Fis
cal
Ser
vic
es1
28
,37
4
(12
8,3
74
)
Food
Ser
vic
es1
09
,77
3
18
,77
8
44
,27
0
(46
,72
5)
Op
erat
ion
of
Pla
nt
90
1,2
10
(90
1,2
10
)
Mai
nte
nan
ce o
f P
lan
t7
5,0
59
(75
,05
9)
Com
mu
nit
y S
ervic
e4
0,9
71
31
0,3
47
26
9,3
76
Inte
rest
& F
isca
l C
har
ges
37
1,5
39
(37
1,5
39
)
Ex
trao
rdin
ary L
oss
du
e to
Hu
rric
ane
6,4
66
,18
6
(6,4
66
,18
6)
Un
allo
cate
d D
epre
ciat
ion
75
,80
3
(75
,80
3)
Tota
l G
over
nm
enta
l A
ctiv
itie
s$
12
,70
0,9
21
$3
29
,12
5
$8
7,4
97
$3
87
,66
5
(11
,89
6,6
34
)
Gen
eral
Rev
enu
es:
Sta
te S
ou
rces
4,3
16
,90
5
Sp
ecia
l It
em -
In
sura
nce
Rec
over
y8
,79
6,5
06
Loca
l an
d O
ther
40
2,8
36
Tota
l G
ener
al R
even
ues
13
,51
6,2
47
Ch
ange
in N
et P
osi
tion
1,6
19
,61
3
Net
Posi
tion
- J
uly
1, 2
01
82
95
,16
9
Net
Posi
tion
- J
un
e 3
0, 2
01
9$
1,9
14
,78
2
ST
AT
EM
EN
T O
F A
CT
IVIT
IES
For
the
Fis
cal
Yea
r E
nded
Ju
ne
30,
2019
D/B
/A U
NIV
ER
SIT
Y A
CA
DE
MY
Pro
gra
m R
even
ues
CO
MM
UN
ITY
CH
AR
TE
R A
CA
DE
MY
, IN
C.
A C
HA
RT
ER
SC
HO
OL
AN
D C
OM
PO
NE
NT
UN
IT O
F T
HE
DIS
TR
ICT
SC
HO
OL
BO
AR
D O
F B
AY
CO
UN
TY
, F
LO
RID
A
Th
e a
cco
mp
an
yin
g n
ote
s to
th
e f
ina
ncia
l sta
tem
en
ts a
re a
n inte
gra
l p
art
of
this
sta
tem
en
t.
- 9 -
657
Other Total
General Governmental Governmental
Fund Funds Funds
Cash and Cash Equivalents $ 2,246,727 $ - $ 2,246,727
Deposits & Prepaids Expenses 60,169 60,169
Due From Other Funds 1,311 1,311
TOTAL ASSETS $ 2,306,896 $ 1,311 $ 2,308,207
Accounts Payable $ 38,215 $ 1,311 $ 39,526
Salaries and Benefits Payable 222,310 222,310
Unearned Revenue 6,038 6,038
Due to Other Funds 1,311 1,311
Total Liabilities 267,874 1,311 269,185
Nonspendable 60,169 60,169
Unassigned 1,978,853 1,978,853
Total Fund Balances 2,039,022 - 2,039,022
TOTAL LIABILITIES AND FUND BALANCES $ 2,306,896 $ 1,311 $ 2,308,207
FUND BALANCES
COMMUNITY CHARTER ACADEMY, INC.
ASSETS
LIABILITIES
June 30, 2019
BALANCE SHEET - GOVERNMENTAL FUNDS
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
D/B/A UNIVERSITY ACADEMY
The accompanying notes to the financial statements are an integral part of this statement.
- 10 -
658
Total Fund Balances - Governmental Funds $ 2,039,022
Amounts reported for governmental activities in the statement of
net position are different because:
Capital assets, net of accumulated depreciation, used in
governmental activities are not financial resources and
therefore, are not reported as assets in governmental funds. 12,345,606
Deferred Outflows and Inflows of resources are not available in the
current period and not reported in the governmental funds.
Deferred Outflows 1,316,933
Deferred Inflows (172,848) 1,144,085
Long-term liabilities are not due and payable in the current
period and therefore are not reported as liabilities in the
governmental funds.
Deferred Contributions (4,700,521)
Loans Payable (6,993,598)
Capital Lease Payable (1,686)
Net Pension Liability (1,918,126) (13,613,931)
Total Net Position - Governmental Activities $ 1,914,782
COMMUNITY CHARTER ACADEMY, INC.
D/B/A UNIVERSITY ACADEMY
June 30, 2019
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
The accompanying notes to financial statements are an integral part of this statement.
- 11 -
659
Other TotalGeneral Governmental Governmental
Fund Funds Funds
Intergovernmental:
Federal Direct $ 19,678 $ - $ 19,678
Federal Through State and Local - 67,819 67,819
State Sources 4,316,905 307,665 4,624,570
Local and Other 9,509,689 98,778 9,608,467
Total Revenues 13,846,272 474,262 14,320,534
Current - Education:
Instruction 3,040,497 103,550 3,144,047
Instructional Support Services 68,465 68,465
Instruction & Curriculum Development 1,548 1,548
Instructional Staff Training 1,674 1,674
Instructional Related Technology 49,972 49,972
Board 53,069 53,069
School Administration 294,927 294,927
Facilities Acquisition & Construction 629,999 56,516 686,515
Fiscal Services 128,374 128,374
Food Services 109,773 109,773
Operation of Plant 901,210 901,210
Maintenance of Plant 75,059 75,059
Community Service 40,971 40,971
Fixed Capital Outlay:
Facilities Acquisition & Construction 7,056,465 7,056,465
Other Capital Outlay 36,097 36,097
Debt Service:
Principal 286,970 286,970
Interest & Fiscal Charges 371,539 371,539
Total Expenditures 12,378,327 928,348 13,306,675
Excess (Deficiency) of Revenues
Over/(Under) Expenditures 1,467,945 (454,086) 1,013,859
Other Financing Sources (Uses):
Transfers In 705,235 705,235
Transfers (Out) (454,086) (251,149) (705,235)
Total Other Financing Sources (Uses) (454,086) 454,086 -
Net Change in Fund Balances 1,013,859 - 1,013,859
Fund Balances, July 1, 2018 1,025,163 - 1,025,163
Fund Balances, June 30, 2019 $ 2,039,022 $ - $ 2,039,022
COMMUNITY CHARTER ACADEMY, INC.
Expenditures
IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Fiscal Year Ended June 30, 2019
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
Revenues
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
D/B/A UNIVERSITY ACADEMY
The accompanying notes to financial statements are an integral part of this statement.
- 12 -
660
Net Change in Fund Balances - Governmental Funds $ 1,013,859
Amounts reported for governmental activities in the statement of activities
are different because:
Capital outlays are reported in governmental funds as expenditures.
However, in the statement of activities, the cost of those assets is
allocated over their estimated useful lives as depreciation expense.
This is the amount of capital outlay ($7,092,562) in excess of
depreciation expense ($75,803), and the extraordinary loss due 550,573
due to the hurricane ($6,466,186).
Principal payments on long-term debt are reported as an expenditure
in the Governmental Funds and a reduction to long-term debt
in the Statement of Activities. 286,970
Net effect of various transactions in the statement of activities that
do not require the use of current financial resources are not
reported in the governmental funds:
Pension Expense (calculated for net pension liability) (410,298)
Pension contributions made subsequent to the
pension liability measurement date of 6/30/18 178,509 (231,789)
Change in Net Position - Governmental Activities $ 1,619,613
COMMUNITY CHARTER ACADEMY, INC.
For the Fiscal Year Ended June 30, 2019
REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
TO THE STATEMENT OF ACTIVITIES
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF BAY COUNTY, FLORIDA
D/B/A UNIVERSITY ACADEMY
The accompanying notes to the financial statements are an integral part of this statement.
- 13 -
661
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
➢ Reporting Entity
The Community Charter Academy, Inc. d/b/a University Academy, is a component
of the District School Board of Bay County, Florida (“District”), a not-for-profit
corporation organized pursuant to Chapter 617, Florida Statutes, the Florida Not-
For-Profit Corporation Act. The governing body of the School is the not-for-profit
corporation Board of Directors, which is comprised five members.
The general operating authority of the School is contained in Section 1002.33,
Florida Statutes. The School operates under a charter of the sponsoring school
district, the District School Board of Bay County, Florida, (“District”). The current
charter is effective through June 30, 2032 and is subject to annual review and may
be renewed by mutual agreement between the School and the District. At the end
of the term of the charter, the District may choose not to renew the charter under
grounds specified in the charter. In this case, the District is required to notify the
school in writing at least 90 days prior to the charter’s expiration. During the term
of the charter, the District may also terminate the charter if good cause is shown. In
the event of termination of the charter, the District shall assume operation of the
School. The School is considered a component unit of the District; therefore, for
financial reporting purposes, the School is required to follow generally accepted
accounting principles applicable to state and local governmental units.
Criteria for determining if other entities are potential component units which should
be reported within the School's basic financial statements are identified and
described in the Governmental Accounting Standards Board's (GASB)
Codification of Governmental Accounting and Financial Reporting Standards,
Sections 2100 and 2600. The application of these criteria provides for identification
of any entities for which the School is financially accountable and other
organizations for which the nature and significance of their relationship with the
School are such that exclusion would cause the School's basic financial statements
to be misleading or incomplete. Based on these criteria, no component units are
included within the reporting entity of the School.
➢ Basis of Presentation
Government-wide Financial Statements - Government-wide financial statements,
including the statement of net position and the statement of activities, present
information about the School as a whole.
Government-wide financial statements are prepared using the economic resources
measurement focus. The statement of activities presents a comparison between
direct expenses and program revenues for each function or program of the School’s
governmental activities. Direct expenses are those that are specifically associated
with a service, program, or department and are thereby clearly identifiable to a
particular function.
662
Program revenues include charges paid by the recipient of the goods or services
offered by the program and grants and contributions that are restricted to meeting
the operational or capital requirements of a particular program. Revenues that are
not classified as program revenues are presented as general revenues. The
comparison of direct expenses with program revenues identifies the extent to which
each governmental function is self-financing or draws from the general revenues of
the School.
Fund Financial Statements - Fund financial statements report detailed information
about the School in the governmental funds. The focus of governmental fund
financial statements is on major funds rather than reporting funds by type. Each
major fund is reported in a separate column. Because the focus of governmental
fund financial statements differs from the focus of government-wide financial
statements, a reconciliation is presented with each of the governmental fund
financial statements.
The School’s major governmental fund is as follows:
• General Fund: to account for all financial resources not required to be
accounted for in another fund, and for certain revenues from the State that are
legally restricted to be expended for specific current operating purposes.
Data from the other governmental funds are combined into a single aggregate
presentation.
➢ Basis of Accounting
Basis of accounting refers to when revenues and expenditures, or expenses, are
recognized in the accounts and reported in the financial statements. Basis of
accounting relates to the timing of the measurements made, regardless of the
measurement focus applied.
The government-wide financial statements are prepared using the accrual basis of
accounting. Revenues are recognized when earned and expenses are recognized
when a liability is incurred, regardless of the timing of the related cash flows.
Revenues from grants, entitlements, and donations are recognized in the fiscal year
in which all eligibility requirements imposed by the provider have been satisfied.
Governmental fund financial statements are prepared using the modified accrual
basis of accounting. Revenues, except for certain grant revenues, are recognized
when they become measurable and available. Revenues are considered to be
available when they are collectible within the current period or soon enough
thereafter to pay liabilities of the current period. The School considers revenues to
be available if they are collected within 30 days of the end of the current fiscal year.
When grant terms provide that the expenditure of resources is the prime factor for
determining eligibility for Federal, State, and other grant resources, revenue is
recognized at the time the expenditure is made. Under the modified accrual basis
663
of accounting, expenditures are generally recognized when the related fund liability
is incurred, except for principal and interest on long-term debt, claims and
judgments, and compensated absences, which are recognized when due.
Allocations of cost, such as depreciation, are not recognized in governmental funds.
➢ Deposits and Investments
Cash and cash equivalents are defined as demand deposits, money market accounts,
and short term investments with original maturities of eight months or less from
date of acquisition. The School considers all demand accounts and money market
funds which are not subjected to withdrawal restrictions to be cash and cash
equivalents. Cash deposits consist of demand deposits with financial institutions.
Deposits on hand at financial institutions are insured by the Federal Deposit
Insurance Company up to $250,000.
➢ Capital Assets
Expenditures for capital assets acquired or constructed for general School purposes
are reported in the governmental fund that financed the acquisition or construction.
The capital assets so acquired are reported at cost in the government-wide statement
of net position but are not reported in the governmental fund financial statements.
Capital assets are defined by the School as those costing more than $750. Such
assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated assets are recorded at fair value at the date of donation.
Capital assets are depreciated using the straight-line method over the following
estimated useful lives:
Description Estimated Lives
Furniture, Fixtures and Equipment 5 years
Buildings and Improvements 15-40 years
➢ Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a
separate section for deferred outflows of resources. This separate financial
statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow
of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will sometimes report a
separate section for deferred inflows of resources. This separate financial statement
element, deferred inflows of resources, represents an acquisition of net position that
applies to a future period(s) and so will not be recognized as an inflow of resources
(revenue) until then.
664
➢ Long-term Debt
Long-term obligations that will be financed by resources to be received in the future
by the general fund are reported in the government-wide financial statements, not
in the general fund. Current-year information relative to changes in long-term debt
is described in subsequent notes.
➢ Net Pension Liability
As a participating employer in the Florida Retirement System, the School
recognizes its proportionate share of the collective net pension liabilities of the FRS
cost-sharing multiple-employer defined benefit plans. As of June 30, 2019, the
School’s proportionate share of the net pension liabilities totaled $1,918,126.
A subsequent note includes a complete discussion of defined benefit pension plans.
➢ Net Position and Fund Balance Classification
Government-wide Financial Statements
Net Position are classified and reported in three components:
• Net Investment in Capital Assets – consists of capital assets, net of
accumulated depreciation, and reduced by the outstanding balances of any
borrowings that are attributed to the acquisition or improvement of those
assets.
• Restricted Net Position – consists of net position with constraints placed on
their use either by external groups such as creditors, contributors, or laws or
regulations of other governments.
• Unrestricted Net Position – all other net position that does not meet the
definition of “restricted” or “net investment in capital assets.”
Fund Financial Statements
GASB Codification Section 1800.142, Fund Balance Reporting and Governmental
Fund Type Definitions, defines the different types of fund balances that a
governmental entity must use for financial reporting purposes. GASB requires the
fund balance amounts to be reported within one of the following fund balance
categories:
• Nonspendable – fund balance associated with inventories, prepaid
expenses, long-term loans and notes receivable, and property held for resale
(unless the proceeds are restricted, committed or assigned). All
nonspendable fund balances at year end relate to assets that are in
nonspendable form.
665
• Restricted – fund balance that can be spent only for the specific purposes
stipulated by the constitution, external resource providers, or through
enabling legislation.
• Committed – fund balance that can be used only for the specific purposes
determined by a formal action of the School’s Board of Governance.
• Assigned – fund balance that is intended to be used by the School’s
management for specific purposes but does not meet the criteria to be
classified as restricted or committed.
• Unassigned – fund balance that is the residual amount for the School’s
general fund and includes all spendable amounts not contained in the other
classifications.
➢ Order of Fund Balance Spending Policy
The School’s policy is to apply expenditures against nonspendable fund balance,
restricted fund balance, committed fund balance, assigned fund balance, and
unassigned fund balance at the end of the fiscal year. First, nonspendable fund
balances are determined. Then restricted fund balances for specific purposes are
determined (not including nonspendable amounts). Any remaining fund balance
amounts for the non-general funds are to be classified as restricted fund balance. It
is possible for the non-general funds to be classified as restricted fund balance. It
is possible for the non-general funds to have negative unassigned fund balance
when nonspendable amounts plus the amount of restricted fund balances for
specific purposes exceed the positive fund balance for non-general fund.
➢ Revenue Sources
Revenues for current operations are received primarily from the District pursuant
to the funding provisions included in the School’s charter. In accordance with the
funding provisions of the charter and Section 1002.33(17), Florida Statutes, the
School reports the number of full-time equivalent students and related data to the
District.
Under provisions of Section 1011.62, Florida Statutes, the District reports the
number of full-time equivalent students and related data to the Florida Department
of Education (FDOE) for funding through the Florida Education Finance Program
(FEFP). Funding for the School is adjusted during the year to reflect the revised
calculations by the FDOE under the FEFP and the actual weighted full-time
equivalent students (FTE) reported by the School during designated full-time
equivalent student survey periods. The Department may also adjust subsequent
fiscal period allocations based upon an audit of the School's compliance in
determining and reporting FTE and related data. Normally, such adjustments are
treated as reductions or additions of revenue in the year when the adjustments are
made.
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The basic amount of funding through the FEFP under Section 1011.62 is the
product of the (1) unweighted FTE, multiplied by (2) the cost factor for each
program, multiplied by (3) the base student allocation established by the legislature.
Additional funds for exceptional students who do not have a matrix of services are
provided through the guaranteed allocation designated in Section 1011.62(1)(e)2.,
Florida Statutes. For the fiscal year ended June 30, 2019, the School reported
631.72 unweighted FTE and 662.22 Weighted FTE.
FEFP funding may also be adjusted as a result of subsequent FTE audits conducted
by the Florida Auditor General pursuant to Section 1010.305, Florida Statutes, and
Rule 6A-1.0453, Florida Administrative Code (FAC). Schools are required to
maintain the following documentation for three years or until the completion of an
FTE audit:
▪ Attendance and membership documentation (Rule 6A-1.044, FAC).
▪ Teacher certificates and other certification documentation (Rule 6A-1.0503,
FAC).
▪ Documentation for instructors teaching out-of-field (Rule 6A-1.0503, FAC).
▪ Procedural safeguards for weighted programs (Rule 6A-6.03411, FAC).
▪ Evaluation and planning documents for weighted programs (Section 1010.305,
Florida Statutes, and Rule 6A-6.03411, FAC).
The School receives federal or state awards for the enhancement of various
educational programs. This assistance is generally received based on applications
submitted to and approved by various granting agencies. For federal or state awards
in which a claim to these grant proceeds is based on incurring eligible expenditures,
revenue is recognized to the extent that eligible expenditures have been incurred.
The School also receives funding through donations and fundraising efforts, school
lunch sales and local property tax collections.
The School follows the policy of applying restricted resources prior to applying
unrestricted resources when an expense is incurred for purposes for which both
restricted and unrestricted assets are available.
➢ Recently Issued Accounting Principles
Governmental Accounting Standards Board Statement No. 88, Certain Disclosures
Related to Debt, including Direct Borrowings and Direct Placements was effective
for fiscal years beginning after June 15, 2018. The School’s notes related to debt
reflect all required disclosures.
Governmental Accounting Standards Board Statement No. 75, Accounting and
Financial Reporting for Postemployment Benefits Other than Pensions was
effective for fiscal years beginning after June 15, 2017. The net pension liability
for the FRS Pension Plan at July 1, 2017 has been increased due to the restatement
of the fund’s beginning net position as a result of the implementation of GASB 75.
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The School’s proportionate share of the net pension liability increased $377 and is
reported in the Statement of Net Position and Statement of Activities.
➢ Income Taxes
The School is exempt from Federal tax under Section 501(c)(3) of the Internal
Revenue Code. Accordingly, no provision for income taxes has been included in
the accompanying financial statements. Additionally, no uncertain tax positions
have been made requiring disclosure in the related notes to financial statements.
The School’s income tax returns for the past three years are subject to examination
by tax authorities and may change upon examination.
➢ Use of Estimates
In preparing the financial statements in conformity with generally accepted
accounting principles in the United States management is required to make
estimates and assumptions that affect the reported amounts of assets and liabilities
as of the date of the statement of net position and affect revenues and expenditures
for the period presented. Actual results could differ from those estimates.
➢ Subsequent Events
Management has evaluated all events subsequent to the balance sheet date and
through the report date, which is the date these financial statements were available
to be issued. Management determined there are no subsequent events which require
disclosure.
2. CASH DEPOSITS
Custodial Credit Risk – Deposits. In the case of deposits, this is the risk that in the event
of a bank failure, the School’s deposits may not be returned to the School. The School
does not have a custodial credit risk policy. Deposits on hand at financial institutions are
insured by the Federal Deposit Insurance Company (FDIC) up to $250,000. As of June
30, 2019, the School was exposed to custodial credit risk. Two of the School’s bank
accounts exceeded the FDIC insurance limit by $893,078 and $810,243.
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3. CHANGES IN CAPITAL ASSETS
Changes in capital assets are presented in the table below:
Beginning Ending
Balance Additions Deletions Balance
Governmental Activities:
Capital Assets Not Being Depreciated:
Land 2,000,000$ -$ -$ 2,000,000$
Total Capital Assets Not Being Depreciated 2,000,000 - - 2,000,000
Capital Assets Being Depreciated:
Buildings and Fixed Equipment 10,385,312 7,056,465 (7,056,465) 10,385,312
Furniture, Fixtures and Equipment 435,001 36,097 (435,001) 36,097
Total Capital Assets Being Depreciated 10,820,313 7,092,562 (7,491,466) 10,421,409
Less Accumulated Depreciation for:
Buildings and Fixed Equipment (746,215) (71,761) 746,215 (71,761)
Furniture, Fixtures and Equipment (279,065) (4,042) 279,065 (4,042)
Total Accumulated Depreciation (1,025,280) (75,803) 1,025,280 (75,803)
Total Capital Assets, Depreciable Net 9,795,033 7,016,759 (6,466,186) 10,345,606
Governmental Activities Capital Assets, Net 11,795,033$ 7,016,759$ (6,466,186)$ 12,345,606$
All depreciation expense was shown as unallocated on the Statement of Activities.
4. LOANS PAYABLE
On October 17, 2016, the School entered into a loan agreement with Summit Bank for
$7,697,501 secured by the School’s buildings and equipment. This loan is a renewal of a
promissory note dated October 3, 2013 of 5,000,000 and an increased promissory note
dated July 31, 2014 of $5,320,000. The loans were obtained for the construction and
renovation of the School’s educational facility.
The interest rate is based on the 30-day LIBOR (currently 0.436%), plus a margin of 3.250
percentage points, resulting in an initial rate of 3.686%. Payments are to be made on a
monthly basis for 101 months with a final payment due on April 17, 2025 of $5,152,955.
In the event of default for non-payment, the interest rate shall increase to 18%. Upon
default the lender has the option to foreclose on the secured property
On January 7, 2016, the School and Summit Bank entered into an Interest Rate Hedging
Agreement. The agreement’s effective date is January 16, 2016 to February 17, 2025. The
fixed payment rate to the School is 4.65%. The floating payment rate for Summit Bank is
based on the 30-day LIBOR (currently 0.436%), plus a margin of 3.250 percentage points,
resulting in an initial rate of 3.686%. Payments are due on the 17th of each month.
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Annual requirements to amortize all loans outstanding as of June 30, 2019, are as follows:
Fiscal Year Ending
June 30: Total Principal Interest
2020 620,519$ 287,668$ 332,851$
2021 620,519 301,935 318,584
2022 620,519 316,908 303,611
2023 620,519 332,625 287,894
2024 620,520 349,121 271,399
2025 5,618,316 5,405,341 212,975
Total 8,720,912$ 6,993,598$ 1,727,314$
5. CHANGES IN LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities:
Beginning Ending Due in
Balance Additions Deductions Balance One Year
Governmental Activities:
Loan 7,261,178$ -$ (267,580)$ 6,993,598$ 287,668$
Capital Lease Payable 21,076 - (19,390) 1,686 1,686
Net Pension Liability 1,732,216 185,910 - 1,918,126 -
Total Governmental Activities 9,014,470$ 185,910$ (286,970)$ 8,913,410$ 289,354$
6. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
At June 30, 2019, the School’s General Fund owed the Special Revenue Fund $1,311
expenditures paid awaiting reimbursement. These amounts are netted together and not
reported in the statement of net position.
The General Fund transferred $46,726 to the Special Revenue Fund to cover the costs of
the food service program and $407,360 to the Debt Service Fund for the payment of long-
term debt. The Capital Projects Fund transferred $251,149 to the Debt Service Fund for the
payment of long-term debt. The amounts of inter-fund transfers are netted together and not
reported in the statement of activities.
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7. SCHEDULE OF STATE REVENUE SOURCES
The following is a schedule of the School’s State revenue for the 2019 fiscal year:
Source Amount
Florida Education Finance Program 2,702,567$
Class Size Reduction 696,436
Charter School Capital Outlay 307,665
Discretionary Millage 306,873
Supplementary Academic Instruction 180,376
Best & Brightest Teachers 86,400
ESE Guaranteed Allocation 75,687
School Recognition 57,435
Instructional Materials 50,497
Declining Enrollment 41,684
Safe Schools 40,972
Reading Allocation 27,748
Digital Classrooms Allocation 20,199
Mental Health Allocation 16,439
Florida Teachers Classroom Supply 11,552
Discretionary Lottery 2,040
Total State Revenue 4,624,570$
As provided in the charter school contract, the District has charged the School an
administrative fee of $32,938.
8. FUNDING AND CREDIT RISK CONCENTRATIONS
The School receives substantially all of its support and revenue from federal, state and local
funding sources, passed through the District, in the form of performance and budget based
contracts. Continuing operation of the School is greatly dependent upon the continued
support of these governmental agencies.
9. FLORIDA RETIREMENT SYSTEM (FRS) – Defined Benefit Pension Plans
General Information about the Florida Retirement System (FRS)
The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension
plan for participating public employees. The FRS was amended in 1998 to add the
Deferred Retirement Option Program (DROP) under the defined benefit plan and amended
in 2000 to provide a defined contribution plan alternative to the defined benefit plan for
FRS members effective July 1, 2002. This integrated defined contribution pension plan is
the FRS Investment Plan. Chapter 112, Florida Statutes, established the HIS Program, a
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cost-sharing multiple-employer defined benefit pension plan to assist retired members of
any State-administered retirement system in paying the costs of health insurance.
Essentially all regular employees of the School are eligible to enroll as members of the
State-administered FRS. Provisions relating to the FRS are established by Chapters 121
and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida
Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility,
contributions, and benefits are defined and described in detail. Such provisions may be
amended at any time by further action from the Florida Legislature. The FRS is a single
retirement system administered by the Florida Department of Management Services,
Division of Retirement, and consists of two cost-sharing multiple-employer defined benefit
plans and other nonintegrated programs. A comprehensive annual financial report of the
FRS, which includes its financial statements, required supplementary information,
actuarial report, and other relevant information, is available from the Florida Department
of Management Services’ Web site (www.dms.myflorida.com).
The School’s FRS and HIS pension expense totaled $410,298 for the fiscal year ended June
30, 2019.
FRS Pension Plan
Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer
defined benefit pension plan, with a DROP for eligible employees. The general classes of
membership are as follows:
Regular Class – Members of the FRS who do not qualify for membership in the
other classes.
Employees enrolled in the Plan prior to July 1, 2011, vest at 6 years of creditable service
and employees enrolled in the Plan on or after July 1, 2011, vest at 8 years of creditable
service. All vested members, enrolled prior to July 1, 2011, are eligible for normal
retirement benefits at age 62 or at any age after 30 years of service. All members enrolled
in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits
at age 65 or any time after 33 years of creditable service. Employees enrolled in the Plan
may include up to 4 years of credit for military service toward creditable service. The Plan
also includes an early retirement provision; however, there is a benefit reduction for each
year a member retires before his or her normal retirement date. The Plan provides
retirement, disability, death benefits, and annual cost-of-living adjustments to eligible
participants.
DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees
eligible for normal retirement under the Plan to defer receipt of monthly benefit payments
while continuing employment with an FRS-participating employer. An employee may
participate in DROP for a period not to exceed 60 months after electing to participate.
During the period of DROP participation, deferred monthly benefits are held in the FRS
Trust Fund and accrue interest. The net pension liability does not include amounts for
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DROP participants, as these members are considered retired and are not accruing additional
pension benefits.
Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years
of service, average final compensation, and service credit. Credit for each year of service
is expressed as a percentage of the average final compensation. For members initially
enrolled before July 1, 2011, the average final compensation is the average of the 5 highest
fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average
final compensation is the average of the 8 highest fiscal years’ earnings. The total
percentage value of the benefit received is determined by calculating the total value of all
service, which is based on retirement plan and/or the class to which the member belonged
when the service credit was earned. Members are eligible for in-line-of-duty or regular
disability and survivors’ benefits. The following chart shows the percentage value for each
year of service credit earned:
Class, Initial Enrollment, and Retirement Age/Years of Service % Value
Regular Class members initially enrolled before July 1, 2011
Retirement up to age 62 or up to 30 years of service 1.60
Retirement at age 63 or with 31 years of service 1.63
Retirement at age 64 or with 32 years of service 1.65
Retirement at age 65 or with 33 or more years of service 1.68
Regular Class members initially enrolled on or after July 1, 2011
Retirement up to age 65 or up to 33 years of service 1.60
Retirement at age 66 or with 34 years of service 1.63
Retirement at age 67 or with 35 years of service 1.65
Retirement at age 68 or with 36 or more years of service 1.68
As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the
FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual
cost-of-living adjustment is 3 percent per year. If the member is initially enrolled before
July 1, 2011, and has service credit on or after July 1, 2011, there is an individually
calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion
of 3 percent determined by dividing the sum of the pre-July 2011 service credit by the total
service credit at retirement multiplied by 3 percent. Plan members initially enrolled on or
after July 1, 2011, will not have a cost-of-living adjustment after retirement.
Contributions. The Florida Legislature establishes contribution rates for participating
employers and employees. Contribution rates during the 2018-19 fiscal year were as
follows:
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Percent of Gross Salary
Class Employee Employer (1)
FRS, Regular 3.00 8.26
FRS, Reemployed Retiree (2) (2)
Notes: (1) Employer rates include 1.66 percent for the postemployment
health insurance subsidy. Also, employer rates, other than for
DROP participants, include 0.06 percent for administrative
costs of the Investment Plan.
(2) Contribution rates are dependent upon retirement class in
which reemployed.
The School’s contributions to the Plan totaled $138,292 for the fiscal year ended June 30,
2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a liability
of $1,225,964 for its proportionate share of the net pension liability. The net pension
liability was measured as of June 30, 2018, and the total pension liability used to calculate
the net pension liability was determined by an actuarial valuation as of July 1, 2018. The
School’s proportionate share of the net pension liability was based on the School’s 2017-
18 fiscal year contributions relative to the total 2017-18 fiscal year contributions of all
participating members. At June 30, 2018, the School’s proportionate share was
0.004070196 percent, which was an increase of 0.00361643 from its proportionate share
measured as of June 30, 2017.
For the fiscal year ended June 30, 2019, the School recognized pension expense of
$290,438. In addition, the School reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 103,858$ 3,770$
Change of assumptions 400,585 -
Net difference between projected and actual
earnings on FRS Plan investments - 94,721
Changes in proportion and differences between
School FRS contributions and proportionate
share of contributions 260,723 -
School FRS contributions subsequent to
the measurement date 138,292 -
Total 903,458$ 98,491$
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The deferred outflows of resources related to pensions totaling $138,292, resulting from
School contributions subsequent to the measurement date, will be recognized as a reduction
of the net pension liability in the fiscal year ending June 30, 2020. Other amounts reported
as deferred outflows of resources and deferred inflows of resources related to pensions will
be recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 79,813$
2021 71,066
2022 48,856
2023 37,099
2024 19,860
Thereafter 4,030
Actuarial Assumptions. The total pension liability in the July 1, 2018, actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included
in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Investment rate of return 7.00 percent, net of pension plan investment
expense, including inflation
Mortality rates were based on the Generational RP-2000 with Projection Scale BB.
The actuarial assumptions used in the July 1, 2018, valuation were based on the results of
an actuarial experience study for the period July 1, 2008, through June 30, 2013.
The long-term expected rate of return on pension plan investments was not based on
historical returns, but instead is based on a forward-looking capital market economic
model. The allocation policy’s description of each asset class was used to map the target
allocation to the asset classes shown below. Each asset class assumption is based on a
consistent set of underlying assumptions, and includes an adjustment for the inflation
assumption.
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The target allocation and best estimates of arithmetic and geometric real rates of return for
each major asset class are summarized in the following table:
Asset Class Target
Allocation (1)
Annual Arithmetic Return
Compound Annual
(Geometric) Return
Standard Deviation
Cash 1% 2.9% 2.9% 1.8%
Fixed Income 18% 4.4% 4.3% 4.0%
Global Equity 54% 7.6% 6.3% 17.0%
Real Estate (Property) 11% 6.6% 6.0% 11.3%
Private Equity 10% 10.7% 7.8% 26.5%
Strategic Investments 6% 6.0% 5.7% 8.6%
Total 100%
Assumed inflation - Mean 2.6% 1.9%
Note: (1) As outlined in the Plan's investment policy.
Discount Rate. The discount rate used to measure the total pension liability was 7.00
percent. The Plan’s fiduciary net position was projected to be available to make all
projected future benefit payments of current active and inactive employees. Therefore, the
discount rate for calculating the total pension liability is equal to the long-term expected
rate of return. The discount rate used in the 2018 valuation was updated from 7.1 percent
to 7.0 percent.
Sensitivity of the School’s Proportionate Share of the Net Pension Liability to Changes in
the Discount Rate. The following presents the School’s proportionate share of the net
pension liability calculated using the discount rate of 7.0 percent, as well as what the
School’s proportionate share of the net pension liability would be if it were calculated using
a discount rate that is 1 percentage point lower (6.0 percent) or 1 percentage point higher
(8.0 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(6.0%) (7.0%) (8.0%)
School's proportionate share of
the net pension liability 2,237,436$ 1,225,964$ 385,877$
Pension Plan Fiduciary Net Position. Detailed information about the Plan’s fiduciary net
position is available in the separately issued FRS Pension Plan and Other State
Administered Systems Comprehensive Annual Financial Report.
Payables to the Pension Plan. At June 30, 2019, the School reported a payable of $17,304
for the outstanding amount of contributions to the pension plan required for the fiscal year
ended June 30, 2019.
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HIS Pension Plan
Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer
defined benefit pension plan established under Section 112.363, Florida Statutes, and may
be amended by the Florida Legislature at any time. The benefit is a monthly payment to
assist retirees of State-administered retirement systems in paying their health insurance
costs and is administered by the Florida Department of Management Services, Division of
Retirement.
Benefits Provided. For the fiscal year ended June 30, 2019, eligible retirees and
beneficiaries received a monthly HIS payment of $5 for each year of creditable service
completed at the time of retirement with a minimum HIS payment of $30 and a maximum
HIS payment of $150 per month, pursuant to Section 112.363, Florida Statutes. To be
eligible to receive a HIS benefit, a retiree under a State-administered retirement system
must provide proof of health insurance coverage, which can include Medicare.
Contributions. The HIS Plan is funded by required contributions from FRS participating
employers as set by the Florida Legislature. Employer contributions are a percentage of
gross compensation for all active FRS members. For the fiscal year ended June 30, 2019,
the contribution rate was 1.66 percent of payroll pursuant to Section 112.363, Florida
Statutes. The School contributed 100 percent of its statutorily required contributions for
the current and preceding 3 years. HIS Plan contributions are deposited in a separate trust
fund from which HIS payments are authorized. HIS Plan benefits are not guaranteed and
are subject to annual legislative appropriation. In the event the legislative appropriation or
available funds fail to provide full subsidy benefits to all participants, benefits may be
reduced or canceled.
The School’s contributions to the HIS Plan totaled $40,217 for the fiscal year ended June
30, 2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to Pensions. At June 30, 2019, the School reported a net
pension liability of $692,162 for its proportionate share of the net pension liability. The
current portion of the net pension liability is the School’s proportionate share of benefit
payments expected to be paid within one year, net of the School’s proportionate share of
the HIS Plan’s fiduciary net position available to pay that amount. The net pension liability
was measured as of June 30, 2018, and the total pension liability used to calculate the net
pension liability was determined by an actuarial valuation as of July 1, 2018. The School’s
proportionate share of the net pension liability was based on the School’s 2017-18 fiscal
year contributions relative to the total 2017-18 fiscal year contributions of all participating
members. At June 30, 2018, the School’s proportionate share was 0.006539636 percent,
which was an increase of 0.000598527 from its proportionate share measured as of June
30, 2017.
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For the fiscal year ended June 30, 2019, the School recognized pension expense of
$119,860. In addition, the School reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
Description of Resources of Resources
Differences between expected and
actual experience 10,597$ 1,176$
Change of assumptions 76,977 73,181
Net difference between projected and actual
earnings on HIS Plan investments 418 -
Changes in proportion and differences between
School HIS contributions and proportionate
share of contributions 285,266 -
School HIS contributions subsequent to
the measurement date 40,217 -
Total 413,475$ 74,357$
The deferred outflows of resources totaling $40,217, resulting from School contributions
subsequent to the measurement date, will be recognized as a reduction of the net pension
liability in the fiscal year ending June 30, 2020. Other amounts reported as deferred
outflows of resources and deferred inflows of resources related to pensions will be
recognized in pension expense as follows:
Fiscal Year Ending June 30 Amount
2020 68,357$
2021 68,357
2022 61,162
2023 42,653
2024 30,589
Thereafter 14,145
Actuarial Assumptions. The total pension liability in the July 1, 2017, actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included
in the measurement:
Inflation 2.60 percent
Salary increases 3.25 percent, average, including inflation
Municipal bond rate 3.87 percent
Mortality rates were based on the Generational RP-2000 with Projected Scale BB.
While an experience study had not been completed for the HIS Plan, the actuarial
assumptions that determined the total pension liability for the HIS Plan were based on
certain results of the most recent experience study for the FRS Plan.
Discount Rate. The discount rate used to measure the total pension liability was 3.87
percent. In general, the discount rate for calculating the total pension liability is equal to
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the single rate equivalent to discounting at the long-term expected rate of return for benefit
payments prior to the projected depletion date. Because the HIS benefit is essentially
funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the
single equivalent discount rate is equal to the municipal bond rate selected by the plan
sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted
as the applicable municipal bond index.
Sensitivity of the School’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 3.87 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 (2.87 percent) or 1 percentage point
higher (4.87 percent) than the current rate:
1% Current 1%
Decrease Discount Rate Increase
(2.87%) (3.87%) (4.87%)
School's proportionate share of
the net pension liability 788,332$ 692,162$ 611,999$
Pension Plan Fiduciary Net Position. Detailed information about the HIS Plan’s fiduciary
net position is available in the separately issued FRS Pension Plan and Other State
Administered Systems Comprehensive Annual Financial Report.
Payables to the Pension Plan. At June 30, 2019, the School reported a payable of $4,883
for the outstanding amount of contributions to the HIS Plan required for the fiscal year
ended June 30, 2019.
10. FRS – Defined Contribution Pension Plans
The SBA administers the defined contribution plan officially titled the FRS Investment
Plan (Investment Plan). The Investment Plan is reported in the SBA’s annual financial
statements and in the State of Florida Comprehensive Annual Financial Report.
As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to
participate in the Investment Plan in lieu of the FRS defined benefit plan. School
employees already participating in the State School System Optional Retirement Program
or DROP are not eligible to participate in the Investment Plan. Employer and employee
contributions are defined by law, but the ultimate benefit depends in part on the
performance of investment funds. Service retirement benefits are based upon the value of
the member’s account upon retirement. Benefit terms, including contribution
requirements, are established and may be amended by the Florida Legislature. The
Investment Plan is funded with the same employer and employee contributions rates, that
are based on salary and membership class (Regular Class, Senior Management Service
Class, etc.), as the FRS defined benefit plan. Contributions are directed to individual
member accounts, and the individual members allocate contributions and account balances
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among various approved investment choices. Costs of administering the Investment Plan,
including the FRS Financial Guidance Program, are funded through an employer
contribution of 0.06 percent of payroll and by forfeited benefits of Investment Plan
members. Allocations to the Investment Plan member accounts during the 2018-19 fiscal
year were as follows:
Percent of
Gross
Class Compensation
FRS, Regular 6.30
For all membership classes, employees are immediately vested in their own contributions
and are vested after 1 year of service for employer contributions and investment earnings
regardless of membership class. If an accumulated benefit obligation for service credit
originally earned under the FRS Pension Plan is transferred to the Investment Plan, the
member must have the years of service required for FRS Pension Plan vesting (including
the service credit represented by the transferred funds) to be vested for these funds and the
earnings on the funds. Nonvested employer contributions are placed in a suspense account
for up to 5 years. If the employee returns to FRS-covered employment within the 5 year
period, the employee will regain control over their account. If the employee does not return
within the 5 year period, the employee will forfeit the accumulated account balance. For
the fiscal year ended June 30, 2019, the information for the amount of forfeitures was
unavailable from the SBA; however, management believes that these amounts, if any,
would be immaterial to the School.
After termination and applying to receive benefits, the member may rollover vested funds
to another qualified plan, structure a periodic payment under the Investment Plan, receive
a lump-sum distribution, leave the funds invested for future distribution, or any
combination of these options. Disability coverage is provided in which the member may
either transfer the account balance to the FRS Pension Plan when approved for disability
retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan, or
remain in the Investment Plan and rely upon that account balance for retirement income.
The School’s Investment Plan pension expense $41,364 for the fiscal year ended June 30,
2019.
11. EXTRAORDINARY LOSS
The School was impacted by a hurricane in October 2018. The School suffered a loss of
$6,466,186 to its capital assets as a result of the hurricane related damage. The
Extraordinary Loss is shown as an expense on the Statement of Activities. The insurance
recovery to date ($8,796,506) is recorded as Special Item on the Statement of Activities.
The School may receive additional insurance recoveries; however, the amount was not
determinable at June 30, 2019.
680
12. COMMITMENTS AND CONTINGENT LIABILITIES
On April 21, 2016, the St. Andrew Bay Land Company, LLC deeded the 12.215 acre
School site together with all improvements to Community Charter Academy, Inc. d/b/a
University Academy as evidenced by a Special Warranty Deed. A Declaration of
Covenants, Condition and Restrictions for Charter School Site with Re-Purchase Option
and Revisionary Interest has been filed with the Bay County Clerk’s Office that governs
future use and sale of this property. As such, a deferred contribution of $4,700,521 has
been recorded with $2,000,000 allocated to Land and $2,700,521 allocated to Buildings
and Fixed Equipment in the Statement of Net Position.
The School participates in state grant programs, which are governed by various rules and
regulations of the grantor agencies. Costs charged to the respective grant programs are
subject to audit and adjustment by the grantor agencies, therefore, to the extent that the
School has not complied with the rules and regulations governing the grants, refunds of
any money received may be required and the collectability of any related receivables at
June 30, 2019, may be impaired.
In the opinion of the School, there are no significant liabilities relating to compliance with
the rules and regulations governing the respective grants; therefore, no provision has been
recorded in the accompanying financial statements for such contingencies.
13. RISK MANAGEMENT PROGRAMS
The School is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; and natural disasters for which the School
carries commercial insurance. There have been no significant reductions in insurance
coverage and settlement amounts have not exceeded insurance coverage for the current
year or the three prior years.
14. LEGAL MATTERS
In the normal course of conducting its operations, the School occasionally becomes party
to various legal actions and proceedings. In the opinion of management, the ultimate
resolution of such legal matters will not have a significant adverse effect on the
accompanying financial statements.
681
Variance withOriginal Final Actual Final Budget -Budget Budget Positive
(Negative)Revenues:
Intergovernmental:
Federal Direct $ - $ 19,678 $ 19,678 $ -
State Sources 3,647,740 4,316,905 4,316,905 -
Local and Other 686,004 9,509,689 9,509,689 -
Total Revenues 4,333,744 13,846,272 13,846,272 -
Expenditures:
Current - Education:
Instruction 2,613,648 3,040,497 3,040,497 -
Instructional Support Services 32,479 68,465 68,465 -
Instruction & Curriculum Development 1,184 1,548 1,548
Instructional Staff Training 5,294 1,674 1,674 -
Instructional Related Technology 24,078 49,972 49,972 -
Board 59,890 53,069 53,069 -
School Administration 336,308 294,927 294,927 -
Facilities Acquisition & Construction 244 629,999 629,999 -
Fiscal Services 111,534 128,374 128,374 -
Operation of Plant 414,370 901,210 901,210 -
Maintenance of Plant 2,906 75,059 75,059 -
Community Service 42,661 40,971 40,971 -
Fixed Capital Outlay:
Facilities Acquisition & Construction 7,056,465 7,056,465
Other Capital Outlay 36,097 36,097 - Debt Service:
Principal 162,174 - - - Interest & Fiscal Charges 343,544 - - -
Total Expenditures 4,150,314 12,378,327 12,378,327 - Excess (Deficiency) of Revenues
Over/(Under) Expenditures 183,430 1,467,945 1,467,945
Other Financing Sources (Uses):
Transfers (Out) (454,086) (454,086) -
Total Other Financing Sources (Uses) - (454,086) (454,086) -
Net Change in Fund Balance 183,430 1,013,859 1,013,859 -
Fund Balance, July 1, 2018 1,012,752 1,025,163 1,025,163 -
Fund Balance, June 30, 2019 $ 1,196,182 $ 2,039,022 $ 2,039,022 $ -
COMMUNITY CHARTER ACADEMY, INC.
D/B/A UNIVERSITY ACADEMY
General Fund
A CHARTER SCHOOL AND COMPONENT UNIT OF THE
DISTRICT SCHOOL BOARD OF SEMINOLE COUNTY, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND - (UNAUDITED)
For the Fiscal Year Ended June 30, 2019
See Independent Auditor's Report.
- 34 -682
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686
1. BUDGETARY BASIS OF ACCOUNTING
Budgets are presented on the modified accrual basis of accounting. During the fiscal year,
expenditures were controlled at the object level (e.g., salaries and benefits, purchased
services, materials and supplies and capital outlay) within each activity (e.g., instruction,
pupil personnel services and school administration). Budgets may be amended by
resolution at any Board meeting prior to the date for the annual report.
2. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF
CONTRIBUTIONS –FLORIDA RETIREMENT SYSTEM PENSION PLAN
Changes of Assumptions. The long-term expected rate of return was decreased from 7.1
percent to 7.0 percent, and the active member mortality assumption was updated.
3. SCHEDULE OF NET PENSION LIABILITY AND SCHEDULE OF
CONTRIBUTIONS –HEALTH INSURANCE SUBSIDY PENSION PLAN
Changes of Assumptions. The municipal bond rate used to determine total pension liability
was increased from 3.58 percent to 3.87 percent.
687
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-42749 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
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 Directors of Community Charter Academy, Inc.
d/b/a University Academy,
a Charter School and Component Unit of the District
School Board of Bay County, Florida
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 the
governmental activities, each major fund, and the aggregate remaining fund information of Bay
Science Charter School, a charter school under Discovery Educational Services, Inc. and
component unit of the District School Board of Bay County, Florida, as of and for the year ended
June 30, 2019, and the related notes to the financial statements, which collectively comprise the
School’s basic financial statements, and have issued our report thereon dated September 30, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School’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 the School’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the School’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
combination of deficiencies, in internal control, such that there is a reasonable possibility that a
material misstatement of the School’s financial statements will not be prevented or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies,
in internal control that is less severe than a material weakness, yet important enough to merit
attention by those 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.
688
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School’s financial statements are free
from material misstatement, we performed tests of compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
School’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 School’s internal control
and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
September 30, 2019
Tampa, Florida
689
Members: 2803 W. Busch Blvd Ste 106 Florida Institute of CPAs Tampa, FL 33618 American Institute of CPAs office (813) 892-4274 fax (813) 932-1913 Government Audit Quality Center www.KingandWalker.com
Management Letter as Required by Rules of the Florida Auditor General,
Chapter 10.850, Florida Statutes, Charter School Audits
To the Board of Directors of Community Charter Academy, Inc.
d/b/a University Academy,
a Charter School and Component Unit of the District
School Board of Bay County, Florida
Report on the Financial Statements
We have audited the financial statements of the Community Charter Academy, Inc. d/b/a University
Academy (“School”), a Charter School and Component Unit of the District School Board of Bay
County, Florida, as of and for the fiscal year ended June 30, 2019, and have issued our report
thereon dated September 30, 2019.
Auditor’s Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States and Chapter 10.850, Rules of
the Auditor General.
Other Reporting Requirements
We have issued our Independent Auditor's Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed
in Accordance with Government Auditing Standards. Disclosures in those reports and schedule,
which are dated September 30, 2019, should be considered in conjunction with this management
letter.
Prior Audit Findings
Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or not
corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report. There were no prior audit findings or recommendations.
Official Title
Section 10.854(1)(e)5., Rules of the Auditor General, requires that the name or official title of the
entity and the school code assigned by the Florida Department of Education be disclosed in this
management letter. The official title and the school code assigned by the Florida Department of
Education of the entity are University Academy Sabl Inc., 032711.
690
Financial Condition and Management
Sections 10.854(1)(e)2. and 10.855(11), Rules of the Auditor General, require us to apply
appropriate procedures and communicate whether or not the School has met one or more of the
conditions described in Section 218.503(1), Florida Statutes, and to identify the specific condition(s)
met. In connection with our audit, we determined that the School did not meet any of the conditions
described in Section 218.503(1), Florida Statutes.
Pursuant to Sections 10.854(1)(e)6.a. and 10.855(12), Rules of the Auditor General, we applied
financial condition assessment procedures for the School. It is management’s responsibility to
monitor the School’s financial condition, and our financial condition assessment was based in part
on representations made by management and review of financial information provided by same.
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we communicate any
recommendations to improve financial management. In connection with our audit, we did not have
any such recommendations.
Transparency
Sections 10.854(1)(e)7. and 10.855(13), Rules of the Auditor General, require us to apply
appropriate procedures and communicate the results of our determination as to whether the School
maintains on its Web site the information specified in Section 1002.33(9)(p), Florida Statutes. In
connection with our audit, we determined that the School maintained on its Web site the
information specified in Section 1002.33(9)(p), Florida Statutes.
Additional Matters
Section 10.854(1)(e)3., Rules of the Auditor General, requires that we address in the management
letter any recommendations to improve financial management. In connection with our audit, we
did not have any such recommendations.
Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliance
with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have
occurred, that have an effect on the financial statements that is less than material but which
warrants the attention of those charged with governance. In connection with our audit, we did not
have any such findings.
Purpose of this Letter
Our management letter is intended solely for the information and use of the Legislative Auditing
Committee, members of the Florida Senate and the Florida House of Representatives, the Florida
Auditor General, Federal and other granting agencies, the Board of Directors, applicable
management, and District School Board of Bay County, Florida and is not intended to be and
should not be used by anyone other than these specified parties.
Respectfully submitted,
September 30, 2019
Tampa, Florida
691