AUDITHIGHLIGHTS

YEAR ENDED JUNE 30, 2010

MINNEWASKA SCHOOL DISTRICT #2149

Year EndedJune 30, 2010

Year EndedJune 30, 2009

Amount ofIncrease

(Decrease)

%Increase

(Decrease)

Local Sources

Property Taxes $ 1,562,002 $ 1,419,238 $ 142,764 10.1%Interest

earnings 30,961 33,671 (2,710) (8.0)%Other 1,267,277 1,182,962 84,315 7.1%

State sources 9,315,186 9,827,512 (512,326) (5.2)%Federal sources 1,275,420 400,451 874,969 218.5%Other Financing Sources 34,041 1,715,538 (1,681,497) (98.0)%

Total GeneralFund Revenue $ 13,484,887 $ 14,579,372 $ (1,094,485) (7.5)%

General Fund Revenues

Budgeted Amounts

Actual General Fund

Over (Under) BudgetOriginal Final

Revenues

Local property tax levies $ 1,549,324 $ 1,549,323 $ 1,562,002 $ 12,679

Other local and county revenues 1,073,673 1,097,467 1,270,820 173,353

Revenues from state sources 9,188,097 9,025,463 9,315,186 289,723

Revenue from federal sources 402,131 1,269,648 1,275,420 5,772

Sales and other conversions of assets 31,850 17,919 20,173 2,254

Insurance recovery and settlement -0- 7,349 7,245 (104)

Total Revenues $ 12,245,075 $ 12,967,169 $ 13,450,846 $ 483,677

General Fund Revenues- Budget to Actual

Administration & District Support6.3%

Direct Instruction36.3%

Exceptional Instruction27.0%

Community Ed2.0%

Pupil & Instructional support 8.2%

Site, Buildings, Equipment11.3%

Fiscal & fixed 0.3%

Food services4.5%

Interest Expense4.0%

Figure A-4 Minnewaska Area School's ExpensesFiscal Year 2010

Year EndedJune 30, 2010

Year EndedJune 30, 2009

Amount ofIncrease

(Decrease)

%Increase

(Decrease)

Salaries $ 7,785,347 $ 7,435,752 $ 349,595 4.7%Employees benefits 1,826,819 3,308,414 ( 1,481,595) (44.8)%Purchased services 2,233,402 2,049,415 183,987 9.0%Supplies & material 847,613 761,413 86,200 11.3%Non-Capital equipment 169,070 48,260 120,810 250.3%Capital Expenditures 83,100 1,064,953 (981,853) (92.2)%Debt Service 235,894 269,602 (33,708) (12.5)%Other expenditures 44,688 50,567 (5,879) (11.6)%

Total Expenditures $ 13,225,933 $ 14,988,376 $ (1,762,443) (11.8)%

General Fund Expenditures

Expenditures Budgeted Amounts

Actual General Fund

Over (Under) Final

BudgetCurrent: Original Final

District and school administration $ 480,219 $ 563,118 $ 559,966 $(3,152)

District support services 298,086 409,691 410,309 618

Regular instruction 5,250,194 5,365,869 5,347,132 (18,737)

Vocational instruction 65,768 115,548 113,111 (2,437)

Exceptional instruction 3,866,375 4,286,864 4,224,797 (62,067)

Community education and services -0- -0- -0- -0-

Instructional support services 197,472 143,8246 157,672 13,848

Pupil support services 1,116,999 1,092,519 1,094,851 2,332

Site, buildings and equipment 967,790 1,046,453 954,413 (92,040)

Fiscal and other fixed cost programs 68,311 44,686 44,688 2

Total Current 12,311,214 13,068,572 12,906,939 (161,633)

Capital Outlay 51,894 51,894 83,100 31,206

Debt Service:

Principal 79,305 83,320 83,319 (1)

Interest 198,113 145,571 145,577 6

Debt issuance costs -0- 6,998 6,998 -0-

Total Debt Service 277,418 235,889 235,894 5

Total Expenditures $ 12,640,526 $ 13,356,355 $ 13,225,933 $ (130,422)

Budgeted Amounts

Actual General Fund

Variances with Final Budget

Favorable (unfavorable)Original Final

Excess (deficiency) of revenue over expenditures (395,451) (389,186) 224,913 614,099

Other Financing Sources (Uses)

Sale of real property and equipment -0- 2,709 2,709 -0-

Capital Equipment Lease -0- -0- 31,332 31,332

Total Other Financing Sources (Uses) $ -0- $ 2,709 $ 34,041 $ 31,332

Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing (Uses) $ (395,451) $ (386,477) $ 258,954 $ 645,431

Fund Balances - Beginning of Year 1,037,227 1,037,227 $ 1,037,227 -0-

Fund Balances - End of Year $ 641,776 $ 650,750 $ 1,296,181 $ 645,431

Fund Balances (Deficits) General

Community Service

Building Construction

Total Designated for:

Student Activities 78,517 -0- -0- 78,517 Separation/Retirement

Benefits 579,719 -0-

579,719

Total Designated 658,236 -0- -0- 658,236

Reserved for:

Staff Development 65,336 -0- -0- 65,336

Health and Safety (66,385) -0- -0- (66,385)

Operating Capital 556,082 -0- -0- 556,082 Unfunded Severance &

Retirement Levy 40,685 -0- -0- 40,685 Community Education -0- 18,764 -0- 18,764

ECFE -0- 7,163

7,163

Alternative Facilities -0- -0- 520,222 520,222

Gifted and Talented 7,009 -0- -0- 7,009

Safe Schools 5,708 -0- -0- 5,708

School Readiness -0- 3,287 -0- 3,287

Total Reserved $ 608,435 $ 29,214 $ 520,222 $1,157,871

Unreserved 29,510 2,382 -0- 31,892

FUND BALANCES

Table A-1Minnewaska Area SchoolsCombined Statement of Net AssetsGovernmental Activities

TotalPercentage

Change

2010 2009 2009-2010

Current and Other Assets $ 11,211,3453 $ 8,599,734 30.4%

Capital Assets 27,231,204 27,120,093 .4%

Total Assets 38,442,548 35,719,827 7.6%

Long-term Liabilities 16,304,176 17,095,446 (8.6)%

Other Liabilities 8,704,189 5,209,968 67.1%

Total Liabilities 25,008,365 22,305,414 8.6%

Net AssetsInvested in capital assets, net of

related debt 12,946,194 12,705,648 1.9%

Restricted 630,947 629,658 .2%

Unrestricted (142,958) 79,107 (280.7)%

Total Net Assets $13,434,183 $ 13,414,413 .1%

Actuarial Studies

Two Actuarial Studies-Did in Fiscal Year ending 6/30/2010 with

6/30/2009 starting numbersDone to determine the liability associated

with future severance payouts and with other post employee benefits (subsidized health care costs)

Board has bonded for OPEB liability and designated fund balance along with an annual levy for severance payouts

Actuarial study shows approximately $300,000 in unfunded OPEB at the date of the study

Additional retirement incentives paid out of the OPEB assets will increase the unfunded amount

Prior Year Follow upCorrectedDeficiency 2009-3 – Fixed Asset ControlsDeficiency 2009-4 – Senior Class Activity Account

Work in Progress Deficiency 2009-1 - Financial Oversight &

Monitoring Deficiency 2009-2 - Financial Reporting ProcessDeficiency 2009-5 - Time Distribution Records

Related to Federal Programs

CURRENT YEAR SUMMARY Audit Opinion- “Unqualified Opinion” audit report (Page 2-3)

Internal Controls Reporting Pages 62-63

MATERIAL WEAKNESSDeficiency 2010-2- Financial Oversight & Monitoring Page 68Deficiency 2010-3- Internal Controls Over Day Treatment Revenues Page 69

SIGNIFICANT DEFICIENCYDeficiency 2010-4 – Period End Financial Reporting Page 70Deficiency 2010-5 – Fiscal Agent Page 71

STATE COMPLIANCE

Deficiency 2010-6 - State Certification of Withholding Requirements on Contracts Page 72

Require separate reporting on our consideration of Internal Controls and Compliance.

Control deficiency is 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 financial misstatements on a timely basis.

Significant DeficiencyMore than a remote likelihood that a more than inconsequential misstatement will not be detected by the District’s internal controls.

Material Weakness More than a remote likelihood that a material

misstatement will not be prevented or detected by the District’s internal controls.

Summary (Continued)Federal Awards Program Audit Internal Control Deficiency

Deficiency 2010-1 Time Distribution Records (Page 67)

2010 Conclusions

The District needs to continue to closely monitor its revenues & expenditures. The District needs to restore the unreserved/undesignated fund balance to a reasonable amount.

As Day Treatment is a substantial component of revenues & expenses, the District needs to continue to develop ways to monitor financial results.

The District is concluding its facilities upgrade and now should monitor its energy savings and work on paying down debt.

SAS 114 Letter

Thanks to the District Staff for cooperation during the audit.

Dinham, Folkert & Associates Chtd. Certified Public Accountants