SCHOOL DISTRICT OF CLEMENTONThe third goal is geared towards improving our students' math fact...

SCHOOL DISTRICTOF

CLEMENTON

Clementon Board of EducationClementon, New Jersey

Comprehensive Annual Financial ReportFor the Fiscal Year Ended June 30, 2012

of the

Comprehensive Annual

Financial Report

Clementon Board of EducationClementon, New Jersey

For the Fiscal Year Ended June 30, 2012

Prepared byClementon Board of Education

Finance Department

CLEMENTON SCHOOL DISTRICT

INTRODUCTORY SECTION

Letter of TransmittalOrganizational ChartRoster of OfficialsConsultants and Advisors

FINANCIAL SECTION

Independent Auditor's Report

K-I Report on Compliance and on Internal Control Over Financial Reporting Basedon an Audit of Financial Statements Performed in Accordance withGovernment Auditing Standards

Required Supplementary Information - Part IManagement's Discussion and Analysis

Basic Financial Statements

A. District-wide Financial Statements:

A-I Statement of Net AssetsStatement of ActivitiesA-2

B. Fund Financial Statements:

Governmental Funds:B-1 Balance SheetB-2 Statement of Revenues, Expenditures, and Changes in Fund BalancesB-3 Reconciliation of the Statement of Revenues, Expenditures, and Changes in

Fund Balances of Governmental Funds to the Statement of Activities

Proprietary Funds:B-4 Statement of Net AssetsB-5 Statement of Revenues, Expenses. and Changes in Fund Net AssetsB-6 Statement of Cash Flows

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

Notes to the Financial Statements

Page278

9

I I

13

16

2627

2930

31

323334

3536

37

Required Supplementary Information - Part II

C. Budgetary Comparison Schedules

C-I Budgetary Comparison Schedule - General FundC-I a Combining Schedule of Revenues, Expenditures and Changes

in Fund Balance - Budget and Actual (if applicable)C-I b Budgetary Comparison Schedule - Education Jobs Funds

General FundC-I ba Budgetary Comparison Schedule - American Recovery & Reinvestment Act

General Fund - government Service FundsBudgetary Comparison Schedule - Special Revenue Fund

N/A

N/A63C-2

Notes to the Required Supplementary InformationC-3 Budget-to-GAAP Reconciliation

Other Supplementary Information

D. School Level Schedules: N/A

E. Special Revenue Fund:

Combining Schedule of Revenues and ExpendituresSpecial Revenue Fund - Budgetary Basis

E-2 Demonstrably Effective Program Aid Schedule of Expenditures -

E-I

Budgetary Basis

Early Childhood Program Aid Schedule of Expenditures -Budgetary Basis

Distance Learning Network Aid Schedule of Expenditures -Budgetary Basis

E-S Instructional Supplement A id Schedule of Expenditures -

E-3N/A

E-4N/A

Budgetary BasisStatement ofTageted At-Risk (TARA) Aid - Budgetary Basis

N/AN/AE-6

F. Capital Projects Fund:F-I Summary Statement of Revenues. Expenditures, and Changes in Fund Balance-

Budgetary Basis

G. Proprietary Fund:

Enterprise Fund:

G-I Combining Statement of Net Assets

G-2 Combining Statement of Revenues, Expenses and Changes inFund Net Assets

G-3 Combining Statement of Cash Flows

Internal Service Fund: N/A

H. Fiduciary Funds:H-I Combining Statement of Fiduciary Net AssetsH-2 Combining Statement of Changes in Fiduciary Net AssetsH-3 Student Activity Agency Fund Schedule of Receipts and DisbursementsH-4 Payroll Agency Fund Schedule of Receipts and Disbursements

56

62

64

67

68

70

74

7576

78798081

Page

I. Long- Term Debt:

I-I Schedule of Serial Bonds 83

1-2 Schedule of Obligations under Capital Leases N/A

1-3 Budgetary Comparison Schedule - Debt Service Fund 84

STATISTICAL SECTION (Unaudited)

J-I Net Assets by Component 86J-2 Changes in Net Assets. Last Four Fiscal Years 87

J-3 Fund Balances. Governmental Funds, Last Four Fiscal Years 89

J-4 Changes in Fund Balances, Governmental Funds, Last Ten Fiscal Years 90J-5 General Fund - Other Local Revenue by Source, Last Ten Fiscal Years 91J-6 Assessed Value and Actual Value of Taxable Property, Last Ten Fiscal Years 92J-7 Direct and Overlapping Property Tax Rates, Last Ten Fiscal Years 93J-8 Principal Property Tax Payers, Current Year and Nine Years Ago 94J-9 Property Tax Levies and Collections, Last Ten Fiscal Years 95J-IO Ratios of Outstanding Debt by Type, Las Ten Fiscal Years 96J-II Ratios of Net General Bonded Debt Outstanding. Last Ten Fiscal Years 97J-12 Ratios of Overlapping Governmental Activities Debt, As of June 30,2006 98J-13 Legal Debt Margin Information, Last Ten Fiscal Years 99J-14 Demographic and Economic Statistics 100J-15 Principal Employers, Current Year & Nine Years Ago (information not available) N/AJ-16 Full-time Equivalent District Employees by Function/Program, Last Ten Fiscal Yean 101J-17 Operating Statistics, Last Ten Fiscal Years 102J-18 School Building Information, Last Ten Fiscal Years 103J-19 Schedule of Required Maintenance, Last Six Fiscal Years 104J-20 Insurance Schedule lOS

SINGLE AUDIT SECTION

K-2 Report on Compliance with Requirements Applicable to Each MajorProgram and on Internal Control Over Compliance in Accordance withOMB Circular A-133 and New Jersey OMB Circular Letter 04-04 107

K-3 Schedule of Expenditures of Federal Awards, Schedule A 109K-4 Schedule of Expenditures of State Financial Assistance, Schedule B I 10K-5 Notes to the Schedules of Awards and Financial Assistance I I IK-6 Schedule of Findings and Questioned Costs 113K-7 Summary Schedule of Prior Audit Findings 117

Introductory Section

-----Clemenion &hoal~d-----CLBMBNTON BOARD OF EDUCATION

4 Audubon AvenueClementon, New Jersey 08021·4499

CLBMENTON ELEMENTARY SCHOOL4 Audubon Avenue

Clementon, New Jersey 08021·4499

Telephone: (856) 783·2300Fax: (856) 783·8929

Telephone: (856) 183·2300Fax: (8S6) 783·8929

September 24,2012

Honorable President andMembers of the Board of EducationClementon School DistrictCounty of Camden, New Jersey

Dear Board Members:

The comprehensive annual financial report of the Clementon School District (District) forthe fiscal year ended June 30, 2012, is hereby submitted. Responsibility for both theaccuracy of the data and completeness and fairness of the presentation, including alldisclosures, rests with the management of the Board of Education (Board). To the bestof our knowledge and belief, the data presented in this report is accurate in all materialrespects and is reported in a manner designed to present fairly the financial position andresults of operation of the various funds and account groups of the District. Alldisclosures necessary to enable the reader to gain an understanding of the District'sfinancial activities have been included.

The comprehensive annual financial report is presented in four sections: introductory,financial, statistical, and single audit. The introductory section included this transmittalletter, the District's organizational chart and a list of principal officials. The financialsection includes the general-purpose financial statements and schedules, as well as theauditor's report thereon. The statistical section includes selected financial anddemographic information, generally presented on a multi-year basis. The District isrequired to undergo an annual single audit in conformity with the provisions of the SingleAudit Act of 1984 and the U.S. Office of Management and Budget Circular A-133, "Auditsof State and Local Governments and Non-profit Organizations", and the State TreasuryCircular Letter 04-04 OMB, "Single Audit Policy for Recipients of Federal Grants, StateGrants and State Aid Payments". Information related to this single audit, including theauditor's report on the internal control structure and compliance with applicable laws andregulations and findings and recommendations, are included in the single audit section ofthis report.

1, REPORTING ENTITY AND ITS SERVICES: Clementon School District is anindependent reporting entity within the criteria adopted by the GASS as established byNCGA statement NO.3. All funds and account groups of the District are included in this

2

BOARD OF EDUCATION

report. The Clementon Board of Education and its school constitute the District'sreporting entity.

The District provided educational services for grades Pre-Kindergarten through grade 8 inour building. Through a send/receive relationship with the Pine Hill School District. weprovide programs for our students in grades 9-12. including Special Education. Thedistrict completed the 20112012 fiscal year with an enrollment of 456 students. Thefollowing details the changes in the student enrollment of the District over the last fiveyears.

AVERAGE DISTRICT ENROLLMENT

FISCAL YEAR2011-20122010-20112009-20102008-20092007-20082006-20072005-20062004-20052003-20042002~20032001~20022000~20011999-20001998~1999

STUDENTENROLLMENT

456478496519513533578612604583582516491482

INCREASE!DECREASE

-22-18-236

-20-45-34

9211

662594

PERCENTCHANGE

.05

.04

.050.12.21.1

.0.60.23.7

<0.112.8

5.00.20.1

2. ECONOMIC CONDITION AND OUTLOOK: The Borough of Clementon is consideredto be small in size with an area of only two square miles. The Borough comprisedapproximately 1280 acres and is estimated to be 90% developed with 85% of thedeveloped area being residential. 10% commercial and 5% industrial.

The history of the Borough of Clementon centers around its six lakes. In the early 1900'sit was a favorite spot for summer vacationers with a bustling downtown area and itsfamed amusement park. Clementon Lake Park. Today. however, many of the stores andbusinesses have left the Borough in favor of shopping malls and large commercial officebuildings. This has resulted in the majority of the land becoming residential. Populationestimates of the Borough and the 2000 census reveal a decrease in the number ofresidents In recent years. Estimates of July 1. 1998 place the population at 5.399, whilethe 2000 census shows 4.850. a decrease of 10.1%. Borough officials cite the possibilityof an inaccurate accounting from apartment residents as a cause for the decrease. AnIndication of this can be seen in the increase of students enrolled at Clementon SchoolDistrict. The average District enrollment has Increased due to the dissolution of theLower Camden County Regional School District Number One. Clementon now educatesstudents through high school, entering Into a send/receive relationship with the Pine HillSchool District for our 9th though 12th graders. Our enrollment of Pre-K - 8th grade

3

BOARD OF EDUCATION

students has decreased to 456 for the 2011~2012 school year. Clementon studentsenrolled at Overbrook High School in Pine Hili number 160.

3. MAJOR INITIATIVES:The first goal focuses on using the second version of the Developmental ReadingAnalysis (DRA2) to decrease the number of students in grades kindergarten. 1st, and 2nd

who are reading below grade level. The Developmental Reading Assessment providesteachers with a method for assessing and documenting students' development asreaders over time. Its purpose is to identify students' reading level, defined as a text onwhich students meet specific criteria in terms of accuracy, fluency, and comprehension.Classroom teachers will administer the assessment three times a year. Results will allowfor an analysis of data, planning of guided reading lessons, and Response to Intervention(RTI) groups and focuses.

The second goal will focus on increasing our students' nonfiction reading comprehensionskills in grades 6-8. Teachers will determine students' reading levels using the DRA2.This information will be used for data collection and analysis. Instructional strategies,lesson planning, and participation in professional development will then be explored andimplemented throughout the year according to where the students' needs are specificallyfound to lie.

The third goal is geared towards improving our students' math fact fluency. By using theOtter Creek Math Facts Program, teachers will provide student benchmark assessmentsto see their adequacy of skills. Instructional time each day will be offered to students forthem to practice and understand their math facts while the teacher monitors theirproqrees through ongoing assessments. This will allow for the instruction, practice, andimplementation to be varied as needed.

4. INTERNAL ACCOUNTING CONTROLS: Management of the District is responsible forestablishing and maintaining an internal control structure designed to ensure that theassets of the District are protected from loss, theft or misuse and to ensure statements inconformity with generally accepted accounting principals (GAAP). The internal controlstructure is designed to provide reasonable, but not absolute, assurance that theseobjectives are met. The concept of reasonable assurance recognized that: (1) the costof a control should not exceed the benefits likely to be derived; and (2) the valuation ofcosts and benefits requires estimates and judgments by management.

As a recipient of federal and state financial assistance, the District also is responsible forensuring that an adequate Internal control structure is in place to ensure compliance withapplicable laws and regulations related to these programs. This internal control structureis also subject to periodic evaluation by the District management. As part of the District'ssingle audit described earlier, test are made to determine the adequacy of the internalcontrol structure, including that portion related to federal and state financial assistance

4

BOARD OF EDUCATION

programs; as well as to determine that the District has complied with applicable laws andregulations.

5. BUDGETARY CONTROLS: In addition to internal accounting controls, the Districtmaintains budgetary controls. The objective of these budgetary controls is to ensurecompliance with legal provisions embodied in the annual appropriated budget approvedby the voters of the municipality. Annual appropriated budgets are adopted for thegeneral fund, the special revenue fund, and the debt service fund. Prolect-lenqthbudgets are approved for capital improvements and accounted for in the capital projectsfund. The final budget amount as amended for the fiscal year is reflected in the financialsection.

An encumbrance account system is used to record outstanding purchase commitmentson a line item basis. Open encumbrances at year-end are either canceled or areincluded as re-appropriations of fund balance in the subsequent year. Those amounts tobe re-appropriated are reported as reservation of fund balance at June 30, 2012.

6. ACCOUNTING SYSTEM AND REPORTS: The District's accounting records reflectgenerally accepted accounting principles, as promulgated by the GovernmentalAccounting Standards Board (GASB). The accounting system of the District is organizedon the basis of funds and account groups. These funds and account groups areexplained in "Notes to the Financial Statements", Note 1.

8. CASH MANAGEMENT: The investment policy of the District is guided in large part bystate statute as detailed In "Notes to the Financial Statements", Note 2. The District hasadopted a cash management plan, which requires it to deposit public funds in publicdepositories protected from loss under the provisions of the Government Unit DepositProtection Act (GUDPA). GUDPAwas enacted in 1970 to protect Governmental unitsfrom a loss of funds on deposit with a failed banking institution in New Jersey. The lawrequires governmental units to deposit public funds only in public depositories located inNew Jersey, where the funds are secured in accordance with the Act.

9. RISK MANAGEMENT: The Board carries various forms of insurance, including but notlimited to general liability, automobile liability and comprehensive/collision, hazard andtheft insurance on property and contents, and fidelity bonds.

10. OTHER INFORMATION: State statutes require an annual audit by independentcertified public accountants or registered municipal accountants. The accounting firm ofInverso & Stewart, CPAs, was selected by the Board. In addition to meeting therequirements set forth in state statues, the audit also was designed to meet therequirements of the Single Audit Act of 1984 and the related OMB Circular Aw133 andState Treasury Circular Letter 04~04 OMB. The auditor's report on the general-purpose

5

BOARD OF EDUCATION

financial statements and individual fund statements and schedules is included in thefinancial section of this report. The auditor's reports related specifically to the single auditare included in the single audit section of the report.

11. ACKNOWLEDGEMENTS: We would like to express our appreciation to the membersof the Clementon Board of Education for their concern in providing fiscal accountability tothe citizens and taxpayer of the school district and thereby contributing full support to thedevelopment and maintenance of our financial operation.

Respectfully submitted,

Lynn MarcusSuperintendenVPrincipaJ

(J,d/d~ r:~~Aanne E. ClementSchool Business Administrator/Board Secretary

6

POLICY CLEMENTONSCHOOL DISTRICT

ADMINISTRATIONIIIO/page 2 of2

Organizational Chart

Citizens of Clementon

Clementon Board of Education

I Superintendent J

IIrl Principal I School Business AdministratorJ I Secretary I r--- l-

Il80artJ secretary

I IAssistant TechnologyPrincipal Coordinator Community Business

I Education Officer-- Child

Program StaffStudent

.___SttJdy ISupervision I TeachersTeam

Aides Camp CustodialI-Clementon Staff

Secretary I SecretaryStaff

I Secretary I Instructional CafeteriaAides Manager

CafeteriaStaff

Adopted:

7

CLEMENTON SCHOOL DISTRICT

Roster of OfficialsJune 30,2012

Members of the Board of Education: Term Expires

Irene 1. Buchalter, PresidentSara A. Paranzino, Vice PresidentRandall FreilingEllen SuckleJohn RomerWilliam DilworthWilliam WeylandVirginia deHaanKathleen Rappold

201420132014201220122014201320122013

Other Officials:

Lynn Marcus, SuperintendentJoanne E. Clement, Business Administrator/Board SecretaryMary Bakey, TreasurerFrank Cavallo, Jr., Esq. Solicitor

8

CLEMENTON SCHOOL DISTRICTConsultants and Advisors

Audit Firm

Inverso & Stewart, LLC12000 Lincoln Drive West, Suite 402

Marlton, NJ 08053

Attorney

Parker/McCayGreentree Center, Suite 401Route 73 & Greentree Road

Marlton, NJ 08053

Broker of Record

Arthur J. GallagherP.O. box 530

Marlton, NJ 08053-0530

Official Depository

Beneficial Bank1901 Route 70 East

Cherry Hill, NJ 08003

9

Financial Section

INVERSO & STEWART, LLC

Certified Public AccountantsRegistered Municipal Accountants

12000 lincoln Drive West. Suite 402Marlton. New Jersey 08053(856) 983-2244Fax (856) 983-6674[-Mail: IstoasrQ..conrentric.net

-~Iember of-Amerlcan Institute of CPAsNew Jersey Society of CPAs

INDEPENDENT AUDITOR'S REPORT

The Honorable President and Membersof the Board of Education

Clementon School DistrictCounty of CamdenClementon, New Jersey

We have audited the accompanying financial statements of the governmental activities, the business-type activities. eachmajor fund and the aggregate remaining fund information of the Clementon School District, in the County of Camden, Stateof New Jersey (School District), as of and for the fiscal year ended June 30, 2012, which collectively comprise the SchoolDistrict's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe School District's management. Our responsibility is to express opinions on these financial statements based on ouraudit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America; thestandards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and in compliance with audit requirements as prescribed by the Division of Finance, Department ofEducation, State of New Jersey. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit includes consideration ofintemal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control over financialreporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financialposition of the govemmental activities, business-type activities, each major fund and the aggregate remaining fundinformation of the Clementon School District, in the County of Camden, State of New Jersey, as of June 30,2012, and therespective changes in financial position and, where applicable, cash flows thereof for the fiscal year then ended inconformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated August 2, 2012 on ourconsideration of the Clementon School District, in the County of Camden, State of New Jersey's internal control overfinancial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grantagreements and other matters. The purpose of that report is to describe the scope of our testing of internal control overfinancial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control overfinancial reporting or on compliance. That report is an integral part of an audit performed in accordance with GovernmentAuditing Standards and should be considered in assessing the results of our audit.

11

The accompanying management's discussion and analysis and budgetary comparison information, as listed in the table ofcontents, are not a required part of the basic financial statements but are supplementary information required byaccounting principles generally accepted in the United States of America. We have applied certain limited procedures,which consisted principally of inquiries of management regarding the methods of measurement and presentation of therequired supplementary information. However. we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise theClementon School District's basic financial statements. The accompanying Schedule of Expenditures of Federal Awardsand State Financial Assistance are presented for purposes of additional analysis as required by U.S. Office ofManagement and Budget Circular A-133. Audits of States, Local Govemments, and Non-Profit Organizations and State ofNew Jersey Circular 04-04-0MB. Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid. and arenot a required part of the financial statements. In addition. the introductory section. combining statements and relatedmajor fund supporting statements and schedules. and statistical section listed in the table of contents are also presentedfor purposes of additional analysis and are not a required part of the basic financial statements. The Schedules ofExpenditures of Federal Awards and State Financial Assistance, combining statements and related major fund supportingstatements and schedules have been subjected to the auditing procedures applied in the audit of the basic financialstatements and, in our opinion. are fairly stated in all material respects in relation to the baste financial statements taken asa whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the auditof the basic financial statements, and accordingly. we express no opinion on them.


INVERSO & STEWART, LLCCertified Public Accountants

la c.. A't. \Robert A. StewartCertified Public AccountantRegistered Municipal Accountant

Marlton. New JerseyAugust 2. 2012

12

INVERSO & STEWART, LLC

Certified Public AccountantsRegistered Municipal Accountants

12000 Lincoln Drive West, Suite 402Marlton, New Jersey 08053(856) 983-2244Fax (856)983-6674[-Mall: I~cptu®(oncentric,net

-Member or-American Institute or CPAsNew Jersey Society or CPAs

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGAND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCEWITH GOVERNMENT AUDITING STANDARDS

The Honorable President and Membersof the Board of Education

Clementon School DistrictCounty of CamdenClementon, New Jersey

We have audited the financial statements of the govemmental activities, the business-type activities, each major fund andthe aggregate remaining fund information of the Clementon School District (School District), in the County of Camden,State of New Jersey, as of and for the fiscal year ended June 30, 2012, which collectively comprise the School District'sbasic financial statements and have issued our report thereon dated August 2, 2012. We conducted our audit inaccordance with auditing standards generally accepted in the United States of America; the standards applicable tofinancial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States; andin compliance with audit requirements as prescribed by the Division of Finance, Department of Education, State of NewJersey.

Internal Control Over FinanCial Reporting

Management of the Clementon School District is responsible for establishing and maintaining effective intemal control overfinancial reporting. In planning and performing our audit, we considered the Clementon School District's internal controlover financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on thefinancial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's intemalcontrol over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the School District'sinternal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees,in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timelybasis. A material weakness is a deficiency, or combination of deficienCies, in intemal control, such that there is areasonable possibility that a material misstatement of the School District's financial statements will not be prevented, ordetected and corrected on a timely basis.

Our consideration of intemal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and was not designed to identify all deficiencies in internal control over financial reporting that might bedefiCiencies,significant deficiencies or material weaknesses. We did not identify any deficiencies in intemal control overfinancial reporting that we consider to be material weaknesses, as defined above.

13

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Clementon School District's financial statements are free ofmaterial misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts andgrant agreements, noncompliance with which could have a direct and material effect on the determination of financialstatement amounts. However, providing an opinion on compliance with those provisions was not an objective of our auditand, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance orother matters that are required to be reported under Government Auditing Standards and audit requirements as prescribedby the Division of Finance, Department of Education, State of New Jersey.

We noted certain matters that we reported to management of the Clementon School District in a separate report entitled,Auditors Management Report on Administrative Findings - Financial, Compliance and Performance dated August 2, 2012.

This report is intended solely for the information and use of the management of the School District, the Division of Finance,Department of Education, State of New Jersey, and federal and state awarding agencies and pass-through entities and isnot intended to be and should not be used by anyone other than these specified parties.


INVERSO & STEWART, LLCCertified Public Accountants

Robert A. StewartCertified Public AccountantRegistered Municipal Accountant

Marlton, New JerseyAugust2,2012

14

Required Supplementary Information - Part I

Management's Discussion and Analysis

Clementon School DistrictManagement's Discussion and AnalysisFor the Fiscal Year Ended June 30, 2012

As management of the Board of Education of the Borough of Clementon, New Jersey(School District), we offer readers of the School District's financial statements thisnarrative overview and analysis of the School District for the fiscal year ended June 30,2012. We encourage readers to consider the information presented in conjunction withadditional information that we have furnished in our letter of transmittal, which can befound in the introductory section of this report.

Financial Highlights

• The assets of the School District exceeded its liabilities at the close of themost recent fiscal year by $4,108,611 (net assets).

• Governmental activities have an unrestricted net assets deficit of $722,002.The accounting treatments in the governmental funds for compensatedabsences payable, and the June state aid payments, and state statutes thatprohibit school districts from maintaining more than 2% of its adopted budgetas unrestricted fund balance are primarily responsible for this deficit balance.

• The total net assets of the School District increased by $434,815, or a11.85% increase from the prior fiscal year-end balance. This increase islargely due to repayment of long-term debt.

• Fund balance of the School District's governmental funds increased by$391,319 resulting in an ending fund balance of $1,475,308. The increase isa direct result of the School District only spending 92.66% of the total budgetwhen it expended 94.37% in the prior year.

• Business-type activities have unrestricted net assets of $86,682, which maybe used to meet the School District's ongoing obligations of the food serviceoperations and community education program.

• The School District's long-term obligations decreased by $423,782 which isthe net result of changes in bond obligations, compensated absences andunfunded pension liability.

Overview of the Basic Financial Statements

This discussion and analysis is intended to serve as an introduction to the SchoolDistrict's basic financial statements. Comparison to the prior year's activity is provided inthis document. The basic financial statements are comprised of three components: 1)District-wide financial statements, 2) Fund financial statements, and 3) Notes to thebasic financial statements. This report also contains other supplementary information inaddition to the basic financial statements themselves.

16

District-wide Financial Statements

The district-wide financial statements are designed to provide the reader with a broadoverview of the financial activities in a manner similar to a private-sector business. Thedistrict-wide financial statements include the statement of net assets and the statementof activities.

The statement of net assets presents information about all of the School District's assetsand liabilities. The difference between the assets and liabilities is reported as netassets. Over time, changes in net assets may serve as a useful indicator of whether thefinancial position of the School District is improving or deteriorating.

The statement of activities presents information showing how the net assets of theSchool District changed during the current fiscal year. Changes in net assets arerecorded in the statement of activities when the underlying event occurs, regardless ofthe timing of related cash flows. Thus, revenues and expenses are reported in thisstatement even though the resulting cash flows may be recorded in a future period.

Both of the district-wide financial statements distinguish functions of the School Districtthat are supported from taxes and intergovernmental revenues (governmental activities)and other functions that are intended to recover all or most of their costs from user feesand charges (business-type activities). Governmental activities consolidategovernmental funds including the General Fund, Special Revenue Fund, CapitalProjects Fund, and Debt Service Fund. Business-type activities consolidate the FoodService Fund and the Community Education Program.

Fund Financial Statements

Fund financial statements are designed to demonstrate compliance with finance-relatedrequirements. A fund is a grouping of related accounts that is used to maintain controlover resources that have been segregated for specific objectives. All of the funds of theSchool District are divided into three categories: governmental funds, proprietary fundsand fiduciary funds.

Governmental funds account for essentially the same information reported in thegovernmental activities of the district-wide financial statements. However, unlike thedistrict-wide financial statements, the governmental fund financial statements focus onnear-term financial resources and fund balances. Such information may be useful inevaluating the financing requirements in the near term.

Since the governmental funds and the governmental activities report information usingthe same functions, it is useful to compare the information presented. Because thefocus of each report differs, a reconciliation is provided on the fund financial statementsto assist the reader in comparing the near-term requirements with the long-term needs.

The School District maintains four individual governmental funds. The major funds arethe General Fund, the Special Revenue Fund, the Capital Projects Fund, and the DebtService Fund. They are presented separately in the fund financial statements.

17

The School District adopts an annual appropriated budget for the General Fund, SpecialRevenue Fund and the Debt Service Fund. A budgetary comparison statement hasbeen provided for each of these funds to demonstrate compliance with budgetaryrequirements.

Proprietary funds are used to present the same functions as the business-type activitiespresented in the district-wide financial statements. The School District maintains onetype of proprietary fund - the Enterprise Fund. The fund financial statements of theenterprise fund provides the same information as the district-wide financial statements,only in more detail.

The School District's two enterprise funds (Food Service Fund and CommunityEducation Program Fund) are listed individually and are considered to be major funds.

Fiduciary funds are used to account for resources held for the benefit of parties outsidethe government. Fiduciary funds are not reflected in the district-wide financialstatements because the resources of those funds are not available to support the SchoolDistrict's programs.

Notes to the Basic Financial Statements

The notes to the basic financial statements provide additional information that isessential to a full understanding of the data provided in the basic financial statements.

Other Information

In addition to the basic financial statements and accompanying notes, this report alsocontains other supplementary information and schedules required by the New JerseyAudit Program, issued by the New Jersey Department of Education.

District-wide Financial Analysis

The assets of the School District are classified as current assets and capital assets.Cash, investments, receivables, inventories and prepaid expenses are current assets.These assets are available to provide resources for the near-term operations of theSchool District. The majority of the current assets are the results of the tax levy andstate aid collection process.

Capital assets are used in the operations of the School District. These assets are land,buildings, improvements, equipment and vehicles. Capital assets are discussed ingreater detail in the section titled, Capital Assets and Debt Administration, elsewhere inthis analysis.

Current and long-term liabilities are classified based on anticipated liquidation either inthe near-term or in the future. Current liabilities include accounts payable, accruedsalaries and benefits, unearned revenues, and current debt obligations. The liquidationof current liabilities is anticipated to be either from currently available resources, current

18

assets or new resources that become available during fiscal year 2012. Long-termliabilities such as long-term debt obligations and compensated absences payable will beliquidated from resources that will become available after fiscal year 2012.

The assets of the primary government activities exceeded liabilities by $3,950,638 withan unrestricted deficit balance of $722,002. The net assets of the primary governmentdo not include internal balances. As mentioned earlier, deficit unrestricted net assetsare primarily due to the accounting treatment for compensated absences payable andthe June state aid payments, and state statutes that prohibit school districts frommaintaining more than 2% of its adopted budget as unrestricted fund balance.

A net investment of $2,952,163 in land, improvements, buildings and equipment whichprovide the services to the School District's 469 public school students, represents71.85% of the School District's net assets. Net assets of $1,79,768 have been restrictedas follows:

Restricted for Future Budget Appropriations $Restricted for Future Tuition CostsRestricted for Future Debt Service CostsRestricted for Future EmergenciesRestricted for Future Capital ProjectsRestricted for Subsequent Year's Budget

554,626439,000

9,107200,000216,955372,080

Total $ 1,791,768

Comparative Summary of Net AssetsAs of June 30, 2012 and 2011

Governmental Activities Business-Type Activities District-Wide2012 2011 2012 2011 2012 2011

ASSETSCurrent assets $ 1.631,900 $ 1,655.693 $ 88,212 $ 95,940 $ 1.720.112 $ 1.751,633Capital assets 5,238,872 5,596.481 71.291 791175 5,310,163 5.675,656

Total assets 61870,772 7,252,174 159.503 175,115 7.030,275 7,4271289

LIABILITIESCurrent liabilities 481.534 876.111 1.530 483,064 876.111Noncurrent liabilities 2,438.600 2,877.382 2,438.600 2.877.382

Totalliabilities 2.920.134 3,753.493 1.530 2.921.664 3.753.493

Net Assets $ 3,950.638 $ 3,498.681 $ 157,973 $ 175.115 $ 4.108,611 $ 3.673.796

Net Assets Consist of:Invested in Capital Assets $ 2,880,872 $ 2.908,481 $ 71.291 $ 79,175 $ 2,952,163 $ 2.987,656Restricted Assets 1.791.768 1.278.322 1,791,768 1.278,322Unrestricted Assets (722.002} (688.122} 86.682 95.940 (635,320} (592.182}

Net Assets $ 3.950.638 $ 3.498.681 s 157.973 s 175.115 $ 4.108.611 $ 3.673.796

19

Comparative Schedule of Changes in Net AssetsAs of and for the Fiscal Year Ended June 30, 2012 and 2011

Governmental Activities Business-Type Activities District-Wide2012 2011 2012 2011 2012 2011

Revenues:Charges for services $ 12,516 $ 119,880 $ 134,170 $ 132,396 $ 134,170Operating grants and

contributions 1,288,943 $1,300,677 178,613 183,026 1,467,556 1,483,703Property taxes 4,132,017 4,097,149 4,132,017 4,097,149State aid - unrestricted 6,522,811 6,222,122 6,522,811 6,222,122Other revenues 171.354 212.028 278 479 171.632 212.507

Total Revenues 12,127.641 11,831,976 298,771 317,675 12,426,412 12.149,651

Expenses:Governmental Activities:

Instruction 3,505,575 3,572,541 3,505,575 3,572,541Tuition 3,709,226 3,728,817 3,709,226 3,728,817Related services 830,822 842,179 830,822 842,179Administrative services 600,290 627,723 600,290 627,723Operations and

Maintenance 437,070 466,227 437,070 466,227Transportation 321,146 382,306 321,146 382,306Employee benefits 1,987,590 1,885,736 1,987,590 1,885,736Interest on debt 131,850 124,126 131,850 124,126Other 72,940 47,021 72,940 47,021

Loss on disposal ofcapital assets 79,175 79,175

Business-Type Activities:Food Service 246,040 235,821 246,040 235,821After School Program 69,873 79,399 69,873 79,399

Total Epenses 11,675,684 11,676,676 315,913 315,220 11,991,597 11,991,896Increase {Decrease} in NetAssets before transfers 451,957 155,300 (17,142) 2,455 434,815 157,755

TransfersChange in Net Assets 451,957 155,300 (17,142) 2,455 434.815 157,755Net Assets, July 1 3,498.681 3.343.381 175.115 172.660 3.673.796 3.516.041

Governmental Activities

Governmental activities increased the net assets of the School District by $451,957during the current fiscal year. Key elements of the increase in net assets forgovernmental activities are as follows:

• Repayment of long-term obligations in the amount of $423,782.

Business-type Activities

Business-type activities decreased the School District's net assets by $17,142. Keyelements of the decrease in net assets for governmental activities are as follows:

• The Food service program had a loss of $5,700 at year-end while theAfter School Care Program had a loss of $11,720.

20

Financial Analysis of the Governmental Funds

As noted earlier, the School District uses fund accounting to ensure and demonstratecompliance with finance-related legal requirements.

Governmental Funds - The focus of the School District's governmental funds is toprovide information on near-term inflows, outflows, and balances of spendableresources. Such information is useful in assessing the School District's financingrequirements. In particular, unreserved fund balance may serve as a useful measure ofa government's net resources available for spending at the end of the fiscal year.

As of the end of the current fiscal year, the School District's governmental funds reporteda combined ending fund balance of $1,475,308, an increase of $391,319 in comparisonwith the prior year. This increase is largely due to the freeze on spending.

The unreserved fund balance for the School District at the end of the fiscal year is$316,460. The remainder of the fund balance is reserved to indicate that it is notavailable for new spending because it has already been committed: 1) appropriated as arevenue source in the subsequent year's budget ($372,080), 2) reserved for futurecapital outlay expenditures ($216,955), 3) reserved for future tuition costs ($439,000), 4)reserved for emergencies ($200,000), and 5) reserved for excess surplus ($554,626).

The general fund is the chief operating fund of the School District. As discussed earlier,the balance in the unreserved fund balance is due, primarily, to the accounting treatmentof the June state aid payments as discussed in the notes to the basic financialstatements, and state statutes that prohibit New Jersey school districts from maintainingmore than 2% of its adopted budget as unrestricted fund balance.

Revenue is generally recognized at the time that the outlays are identified; therefore nofund balances are normally generated in the special revenue fund.

General Fund Budgetary Highlights

The difference between the original budget and the final amended budget was $21,314,or an increase of 0.19%. This increase to the budget represents prior yearencumbrances that rolled over to the current year for spending purposes.

At the end of the current fiscal year, unreserved fund balance (budgetary basis) of thegeneral fund was $255,553 while total fund balance (budgetary basis) was $2,038,214.As a measure of the general fund's liquidity, it may be useful to compare bothunreserved fund balance (budgetary basis) and total fund balance (budgetary basis) tototal general fund expenditures. Actual (budgetary basis) expenditures of the GeneralFund including other finanCing uses amounted to $10,691,887. Unreserved fundbalance (budgetary basis) represents 2.39% of expenditures while total fund balance(budgetary basis) represents 19.06% of that same amount.

Capital Asset and Debt Administration

The School District's investment in capital assets for its governmental and business-typeactivities as of June 30, 2012 totaled $5,310,163 (net of accumulated depreciation).This investment in capital assets includes land, improvements, buildings, and

21

equipment. The net decrease in the District's investment in capital assets for the currentfiscal year was $365,493 or a 6.43% decrease.

Major capital assets events during the current fiscal year included the following:

• Depreciation expense for the current fiscal year was $294,034.• $79,715 of food service equipment was recorded twice and accordingly was

removed from the records during the fiscal year ended June 30, 2012.

Capital Asset (net of accumulated depreciation)June 30, 2012 and 2011

Governmental Activities Business-Typel Activities District-Wide2012 2011 2012 2011 2012 2011

Land $ 178,131 $ 178,131 $ 178,131 $ 178,131Const. in ProgressSite Improvements 51,549 56,024 51,549 56,024Building and Building

Improvements 4,948,084 5,223,686 4,948,084 5,223,686Equipment 61,108 138,640 $ 71,291 $ 79,175 132,399 217,815

Net Assets $ 5,238,872 $ 5,596,481 $ 71,291 $ 79,175 $ 5,310,163 $ 5,675,656

Additional information on the School District's capital assets can be found in the notes tothe basic financial statements (Note 5) of this report.

Long-term debt - During the fiscal year ended June 30, 2012, the School District had$2.3588,000 in serial bonds payable, $249,404 in unfunded pension liability, and$176,196 in compensated absences.

All reductions in long-term debt were made according to the payment schedules.

The School District continues to maintain its AA rating from Standard & Poor'sCorporation for its general obligation bond issues.

Additional information on the School District's long-term obligations can be found in thenotes to the basic financial statements (Note 7) of this report.

Economic factors and Next Years Budget and Rates

The following factors were considered and incorporated into the preparation of theSchool District's budget for the 2012-2013 fiscal year.

• For the 2012-2013 fiscal year the School District received a slight increase instate aid. We will be utilizing the extra State Aid that we received in 2011-2012to maintain staff for the 2012-2013 school year. Contractual salaries werenegotiated at 2.5% increase with employee contributions for health insurance.

22

We entered into a Trust Fund for our health insurance which afforded us asmaller increase than in prior years. High school tuition continues to increase.More students are attending Camden County Technical School in the 2012-2013school year. Our solar panels continue to save the district approximately$12,000 per year in electric costs. Clementon is sharing purchasing with thePine Hill Board of Education as a shared service. We are currently exploring apurchased power agreement with the Pine Hill Board of Education and ourmunicipalities.

Requests for Information

This financial report is designed to provide a general overview of the School District'sfinances for all those with an interest in the School District. Questions concerning any ofthe information provided in this report or requests for additional financial informationshould be addressed to the Clementon School District Business Administrator, FourAudubon Avenue, Clementon, New Jersey, 08021.

23

Basic Financial Statements

District-Wide Financial Statements

A-1CLEMENTON SCHOOL DISTRICT

Statement of Net AssetsJune 3D, 2012

Governmental Business-TypeActivities Activities Total

ASSETS:Cash and Cash Equivalents $ 463,556 $ 79,437 $ 542,993Receivables, net 902,594 7,990 910,584Inventory 785 785Restricted Assets:

Restricted Cash and Cash Equivalents 216,955 216,955Deferred Bond Issuance Costs - net 48,795 48,795Capital Assets, net (Note 5) 5,238,872 71291 5,310,163

Total Assets 6,870,772 159,503 7,030,275

LIABILITIES:Accounts Payable 96,437 96,437Intergovernmental Payables - State: 9,868 9,868Accrued Interest Payable 28,737 28,737Deferred Revenue 1,492 1,530 3,022Noncurrent Liabilities (Note 7):

Due within one year 345,000 345,000Due beyond one year 2,438,600 2,438,600

Total Liabilities 2,9201134 1530 2,9211664

Invested in Capital Assets, Net of Related Debt 2,880,872 71,291 2,952,163Restricted for:

Capital Projects Fund 216,955 216,955Debt Service Fund 9,107 9,107Other Purposes 1,565,706 1,565,706

Unrestricted (Deficit) (7221002) 861682 (6351320)

Total Net Assets ~ 3,950,638 i 157,973 ~ 4,108,611

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

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Functions/Programs

I\).....

Govemmental Activities:Instruction:

RegularSpecial EducationOther instruction

Support Services:TuitionStudent & instruction related servicesGeneral administrative servicesSchool administrative servicesCentral servicesPlant operations and maintenancePupil transportationUnallocated employee benefits

Special schoolsInterest on long-term debtUnallocated depreciation and amortization

Total Govemmental Activities

Business-Type Activities:Food serviceAfter school programTotal Business-Type Activities

Total Primary Govemment

A-2

CLEMENTON SCHOOL DISTRICTStatement of Activities


Net (Expense) Revenue andProsram Revenues Chanses In Net Assets

Operating CapitalCharges for Grants and Grants and Governmental Business-Type

Expenses Services Contributions Contributions Activities Activities Total

S 2,300,491 S 12,516 s (2,287,975) s (2,287,975)1,172,550 s 503,919 (668,631) (668,631)

32,534 (32,534) (32,534)

3,709,226 (3,709,226) (3,709,226)830,822 107,765 (723,057) (723,057)238,635 (238,635) (238,635)134.652 (134,652) (134.652)227.003 (227.003) (227.003)437.070 (437.070) (437.070)321.146 (321.146) (321.146)

1,987.590 564.658 (1,422.932) (1.422,932)32.686 (32.686) (32,686)

131,850 112.601 (19.249) (19,249)40,254 {40,2541 {40,2541

11,596,509 12,516 1,288,943 (10,295,0501 (10,295,050)

246,040 S 61,727 178,613 S (5,700) (5,700)69873 58,153 {11,7201 {11.7201

315,913 119,880 178,613 {17,4201 {17.4201

s 11,912,422 ~ 132,396 ~ 1,467,556 $ {10,295.0501 {17,42OI {10,312.4701

General Revenues:Taxes:

Property taxes, levied for general purposes, net 3,842,137 3,842,137Taxes levied for debt service 289,880 289,880

Federal and State aid not restricted 6,522,811 6,522,811Investment eamings 1,396 278 1,674Miscellaneous income 169,958 169.958Special Items:

(loss) on disposal of capital assets 179,1751 {79.1751Total general revenues, special items, extraordinary items and transfers 10.747,007 278 10,747,285Change in Net Assets 451.957 (17,142) 434.815

Net Assets· July " 2011 3.498,681 175.115 3.673.796Net Assets - June 30, 2012 $ 3,950,638 ~ 157,973 ~ 4,108,611


Fund Financial Statements

B-1CLEMENTON SCHOOL DISTRICT

Balance SheetGovernmental Funds

June 30,2012

Special Capital Debt TotalGeneral Revenue Projects Service Governmental

ASSETS Fund Fund Fund Fund Funds

Assets:Cash and cash equivalents S 525,194 S (70,745) S 9,107 S 463,556

Receivables, net:State 80,553 80,553Federal 17,048 113,024 130,072Other 3,300 3,300District tax levy 688,669 688,669

Restricted cash and cash equivalents 216,955 216,955

Total Assets $ 1,531,719 S 42,279 $ $ 9107 S 1 583 105

LIABILITIES AND FUND BALANCESLiabilities:Accounts payable: $ 65,518 $ 30,919 $ 96,437Intergovernmental payable - State 9,868 9,868Deferred revenues 1492 1.492

Total Liabilities 65,518 42279 107,797

Fund Balances:Restricted for:

Capital reserve 216,955 216,955Tuilion reserve 439,000 439,000Emergency reserve 200,000 200,000Excess surplus 554,626 554,626

Assigned to:Subsequent year's budget 372,080 372,080

Unassigned 1316,460} 9107 1307,353}

Total Fund Balances 1,466,201 9107 1,475,308

Total Liabilities and Fund Balances S 1,531719 S 42,279 S $ 9,107

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

Capital assets used in governmental activities are not financial resourcesand therefore are not reported in the funds. The cost of the assets is$10,263,236,666 and the accumulated depreciation is $5,024,364. 5,238,872

Bond issuance costs are amortized over the life of the bonds on thestatement of net assets. 48,795

Long-term liabilities, including bonds payable, are not due and payablein the current period and therefore are not reported as liabilities in thefunds:

General Obligation Bonds S (2,358,000)Early Retirement Debt Obligation Payable (249,404)Accrued Interest Payable (28,737)Compensated Absences Payable 1176,196}

!2,812,337}

Net assets of governmental activities S 3950638


29


Statement of Revenues, Expenditures and Changes In Fund BalancesGovernmental Funds


Special Capital Debt TotalGeneral Revenue Projects Service Governmental

Fund Fund Fund Fund FundsREVENUES:local sources:

Local tax levy s 3,842,137 S 289,880 S 4,132,017Interest earned 1,396 1,396Tuition 12,516 12,516Miscellaneous 169,958 169,958

Total local sources 4,026,007 289,880 4,315,887

State sources 6,846,314 $ 96,699 112,601 7,055,614Federal sources 241,155 514,985 756,140

Total Revenues 11,113,476 611,684 402,481 12,127,641

EXPENDITURES:Current expense:

Regular instruction 2,160,009 2,160,009Special education instruction 681,172 491,378 1,172,550Other instruction 32,534 32,534Support services and undistributed costs:Tuition 3,709,226 3,709,226Student & instruction related services 723,057 107,765 830,822General administrative services 238,635 238,635School administrative services 134,652 134,652Central services 197,600 197,600Plant operations and maintenance 407,667 407,667Pupil transportation 321,146 321,146Unallocated employee benefits 2,016,030 2,016,030

Capital outlay 37,473 37,473Transfer to charter school 32,686 32,686Debt service:Principal 330,000 330,000Interest and other charges 115,292 115,292

Total Expenditures 10,691,887 599,143 445,292 11,736,322

Excess (Deficiency) of Revenues over(under) Expenditures 421,589 12541 {42,811} 391,319

Other Financing Sources (Uses):Transfers in 9,126 9,126Transfers out $ {9,126} {9,126}

Total Other Financing Sources (Uses) {9,126} 9,126

Net Change in Fund Balances 421,589 12,541 (9,126) (33,685) 391,319Fund Balances - July 1, 2011 1,044,612 {12,541} 9,126 42,792 1,083,989

Fund Balances - June 30, 2012 $ 1,466,201 ~ $ $ 9,107 ~ 1,475,308


30


Reconciliation of the Statement of Revenues, Expendituresand Changes in Fund Balances of Governmental Funds

to the Statement of ActivitiesFor the Fiscal Year Ended June 30, 2012

Total Net Change in Fund Balances - Governmental Funds (from B-2) $ 391,319

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

Governmental Funds report capital outlays as expenditures. However, in thestatement of activities, the cost of those assets is allocated over their estimateduseful lives as depreciation expense. This is the amount by which capitaloutlays exceeded depreciation in the current period.

Depreciation expenseFixed assets additions

$ (294,034)15,600 (278,434)

Repayment of long-term debt is an expenditure in the governmental funds,but the repayment reduces long-term liabilities in the statement of net assetsand is not reported in the statement of activities. 358,440

Governmental funds report the effect of issuance costs, premiums, discountsand similar items when debt is first issued, whereas these amounts are deferredand amortized in the statement of activities. This amount is the net effect ofthese differences. (10,850)

Interest on long-term debt in the statement of activities is accrued, regardlessof when due. In the governmental funds, interest is reported when due. Thisamount is the net effect of the difference in the treatment of interest onlong-term debt. 5,315

The net effect of various miscellaneous transactions involving capital assets(i.e. disposals) is to decrease net assets. (79,175)

In the statement of activities, certain operating expenses, (e.g. compensatedabsences) are measured by the amounts earned during the year. In thegovernmental funds, however, expenditures for these items are reported in theamount of financial resources used (paid). When the earned amount exceedsthe paid amount, the difference is a reduction in the reconciliation (-); whenthe paid amount exceeds the earned amount the difference is an addition tothe reconciliation (+) 65,342

Change in Net Assets of Governmental Activities $ 451,957


31


Statement of Net AssetsProprietary Funds

June 30, 2012

Business-Type ActivitiesEnterprise Funds

Food AfterService School

Fund Prosram TotalASSETS:

Current Assets:Cash and cash equivalents $ 60,447 $ 18,990 $ 79.437Intergovernmental receivables:

State 147 147Federal 7,843 7,843

Inventories 785 785

Total current assets 69,222 18,990 88,212

Noncurrent assets:Machinery and equipment (net of 138,030 138,030accumulated depreciation) (66,7391 (66,7391

Total noncurrent assets 71,291 71,291

Total Assets 140,513 18,990 159,503

LIABILITIES:

Current Liabilities:Deferred revenue 1,530 1,530

Total current liabilities 1,530 1,530

NET ASSETS:Invested in capital assets 71,291 71,291Unrestricted 69,222 17,460 86,682

Total Net Assets S 140,513 $ 17,460 S 157,973


32


Statement of Revenues, Expenses and Changes In Fund Net AssetsProprietary Funds


Business-Type ActivitiesEnter~rlse Funds

Food AfterService School

Fund Program TotalsOperating Revenues:

Charges for Services:Daily sales:

Reimbursable programs S 37,547 S 37,547Non-reimbursable programs 24,180 24,180

Program fees S 58,153 58,153

Total Operating Revenue 61,727 58,153 119,880

Operating Expenses:Salaries and fringe benefits 114,790 61,956 176,746Management fee 13,128 13,128Supplies and materials 6,982 5,827 12,809Other costs 9,479 2,090 11,569Depreciation 7,884 7,884Cost of sales 93,777 93,777

Total Operating Expenses 246,040 69,873 315,913

Operating Income (Loss) (184,313) (11,720) (196,033)

Non-Operating Revenues:State sources:

State school lunch program 3,026 3,026Federal sources:

National school lunch program 124,795 124,795National school breakfast program 31,569 31,569Food distribution program 19,223 19,223

Local sources:Interest earned 278 278

Total Non-Operating Revenues 178,613 278 178,891

Income (Loss) before Contributions and Transfers (5,700) (11,442) (17,142)

Operating Transfer In

Changes in Net Assets (5,700) (11,442) (17,142)

Net Assets - July 1, 2011 146,213 28,902 175,115

Net Assets - June 30,2012 S 140,513 S 17,460 $ 157,973


33

CLEMENTON SCHOOL DISTRICTStatement of Cash Flows

Proprietary FundsFor the Fiscal Year Ended June 30, 2012

Business-Type ActivitiesEnterprise Funds

B-6

$ 61,727 $ 59,683(114,790) (61,956)

(122,412) (13,399)

(175,475) (15,672)

3,131180,072

183,203

FoodService

FundCash Flows from Operating Activities:

Cash receipts from customersCash payments to employees for servicesCash payments to suppliers for goods

and services

Net Cash Provided by (used for)Operating Activities

Cash Flows from Noncapital Financing Activities:Cash received from state sourcesCash received from federal sources

Net Cash Provided by (used for) Noncapital Financing Activities

Cash Flows Used by Capital andRelated Financing Activities:

Purchase of Equipment

Cash Flow Provided by Investing Activities:Interest on Cash Equivalents

Net Increase (Decrease) in Cashand Cash Equivalents 7,728

Cash and Cash Equivalents - July 1, 2011 52.719

Cash and Cash Equivalents - June 30, 2012 S 60,447

Reconciliation of Operating Income (Loss)to Net Cash Provided by (used for)

Operating Activities:Operating Income (Loss)Adjustments to Reconcile Operating Income

(Loss) to Cash Provided by (used for)Operating Activities:

DepreciationChange in Assets and Liabilities:

(Increase) decrease in inventoriesIncrease (decrease) in deferred revenuesIncrease (decrease) in accounts payable

$ (184,313)

7,884

954

Net Cash Provided by (used for) Operating Activities $ (1754751

Noncash Noncapltal Financing Activities:During the year the School District received $19,223 of food commodities from theU.S. Department of Agriculture.

AfterSchool

Program

278

(15.394)

34.384

$ 18,990

S (11,720)

1,530(5,482)

S (156721


34

Total

$ 121,410(176,746)

(135,811)

(191,147)

3,131180,072

183,203

278

(7,666)

87,103

S 79.437

$ (196,033)

7.884

9541,530

(5,482)

S (191 1471

B-7CLEMENTON SCHOOL DISTRICTStatement of Fiduciary Net Assets

Fiduciary FundsJune 3D, 2012

Trust FundsUnemployment FlexibleCompensation Benefit Agency

Trust Trust Funds

ASSETS:Cash and cash equivalents $ 50,016 $ 889 $ 48,654

Total Assets 50,016 889 $ 481654

LIABILITIES:

Payroll deductions and withholdingsDue to student groups

$ 16,33032,324

Total Liabilities $ 48,654

NET ASSETS:Held in trust for unemployment

claims and other purposes $ 50,016

Held in trust for claims $ 889


35

8-8CLEMENTON SCHOOL DISTRICT

Statement of Changes in Fiduciary Net AssetsFiduciary Funds

For the Fiscal Year Ended June 30,2012

Unemployment FlexibleCompensation Benefit

Trust TrustADDITIONS:

Contributions:Employee $ 6,995 $ 10,083

Total Contributions 6,995 10,083

Interest earned on investments 576 6

Total Additions 7,571 10,089

DEDUCTIONS:Claims paid 25,831 9,200

Total Deductions 25,831 9,200

Change in Net Assets (18,260) 889

Net Assets - July 1, 2011 68,276

Net Assets - June 30,2012 $ 50,016 $ 889


36

Clementon School DistrictNotes to Basic Financial Statements


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity - The Borough of Clementon School District ("School District") is a Type II district located in the County ofCamden. State of New Jersey. As a Type II district, the School District functions independently through a Board ofEducation. The Board of Education is comprised of nine members elected to three-year terms. These terms are staggeredso that three member's terms expire each year. The purpose of the School District is to provide educational services forresident students in grades K through 8. Students in grades 9 through 12 aHend, on a tuition basis, the Pine Hill HighSchool District. The Clementon School District has an approximate enrollment at June 30, 2012 of 469 students.

The primary criteria for including activities within the School District's reporting entity, as set forth in Section 2100 of theGovernmental Accounting Standards Board (GASB) Codification of Govemmental Accounting and Financial ReportingStandards is the degree of oversight responsibility maintained by the School District. Oversight responsibility includesfinancial interdependency, selection of governing authority, designation of management, ability to significantly influenceoperations and accountability for fiscal matters. The combined financial statements include all funds of the School districtover which the Board exercises operating control. There were no additional entities required to be included in the reportingentity under the criteria as described above. Furthermore, the School District is not includable in any other reporting entityon the basis of such criteria.

Basis of Presentation

The basic financial statements of the School District have been prepared in conformity with accounting principles generallyaccepted in the United States of America (GAAP) as applied to governmental units. The Governmental AccountingStandards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financialreporting principles. The School District also applies Financial Accounting Standards Board (FASB) Statements andInterpretations issued on or before November 30, 1989 to its governmental and business-type activities and to its proprietaryfunds, provided they do not conflict with or contradict GASB pronouncements. The more significant of the School District'saccounting policies are described below.

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

Government-wide Statements - The statement of net assets and the statement of activities display informationabout the School District as a whole. These statements include the financial activities of the primary government,except for fiduciary funds. The statements distinguish between those activities of the School District that aregovernmental and those that are considered business-type activities. The statement of net assets presents thefinancial condition of the governmental and business-type activities of the School District at fiscal year-end. Thestatement of activities presents a comparison between direct expenses and program revenues for each program orfunction of the School District's governmental activities and for the business-type activities of the School District.Direct expenses are those that are specifically associated with a service, program or department and, therefore,clearly identifiable to a particular function. The policy of the School District is to not allocate indirect expenses tofunctions in the statement of activities. Program revenues include charges paid by the recipient of the goods orservices offered by the program, grants and contributions that are restricted to meeting the operational or capitalrequirements of a particular program and interest earned on grants that is required to be used to support a particularprogram. Revenues, which are not classified as program revenues, are presented as general revenues of the SchoolDistrict, with certain limited exceptions. The comparison of direct expenses with program revenues identifies theextent to which each business segment or governmental function is self-financing or draws from the general revenuesof the School District.

Fund Financial Statements - During the fiscal year, the School District segregates transactions related to certainSchool District functions or activities in separate funds in order to aid financial management and to demonstrate legalcompliance. Fund financial statements are designed to present financial information of the School District at thismore detailed level. The focus of governmental and enterprise fund financial statements is on major funds. Eachmajor fund is presented in a single column. The fiduciary fund is reported by type. The School District uses funds tomaintain its financial records during the fiscal year. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. There are three categories of funds: governmental, proprietary, and fiduciary.

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Governmental Funds - Governmental funds are those through which most governmental functions typically are financed.Governmental fund reporting focuses on the sources, uses and balances of current financial resources. Expendable assetsare assigned to the various governmental funds according to the purposes for which they mayor must be used. Currentliabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets andliabilities is reported as fund balance. The following are the School District's major governmental funds:

General Fund • The general fund is the general operating fund of the School District and is used to account for allfinancial resources except those required to be accounted for in another fund. Included are certain expenditures forvehicles and movable instructional or non-instructional equipment classified in the capital outlay sub-fund.

As required by the New Jersey State Department of Education, the School District includes budgeted capital outlay inthis fund. Accounting principles generally accepted in the United States of America as they pertain to governmentalentities state that general fund resources may be used to directly finance capital outlays for long-lived improvementsas long as the resources in such cases are derived exclusively from unrestricted revenues.

Resources for budgeted capital outlay purposes are normally derived from State of New Jersey aid, district taxes andappropriated fund balance. Expenditures are those which result in the acquisition of or additions to capital assets forland, existing buildings, improvements of grounds, construction of buildings, additions to or remodeling of buildingsand the purchase of built-in equipment.

In addition to the capital outlay sub-fund, the School District is accountable for an additional sub-fund, the EducationJobs Fund ("Ed Jobs"), resulting from federal legislation signed into law on August 10, 2010. The Ed Jobs programwas created to provide funding assistance to states in order to save or create education jobs for the period from theSeptember 30, 2010 through September 30, 2012. Jobs funded under this program include those that provideeducational and related services for early childhood, elementary, and secondary education. Ed Jobs revenues andexpenditures are recorded in the general fund (fund 18) on a reimbursement basis. As such, revenue is not includedin the fiscal year surplus, and no portion of general fund balance at June 30, 2012 is considered to be attributable toEd Jobs. Ed Jobs expenditures are included as a component of overall general fund expenditures, and are alsoincluded in general fund expenditures for purposes of the excess surplus calculation.

Special Revenue Fund - The special revenue fund is used to account for and report the proceeds of specificrevenues sources that are restricted or committed to expenditure for specified purposes other than debt service orcapital projects.

Capital Projects Fund· The capital projects fund is used to account and report financial resources that are restricted,committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilitiesand other capital assets, other than those financed by proprietary funds. The financial resources are derived fromNew Jersey Economic Development Authority grants, temporary notes or serial bonds which are specificallyauthorized by the voters as a separate question on the ballot either during the annual election or at a special election.

Debt Service Fund - The debt service fund is used to account for and report financial resources that are restricted,committed, or assigned to expenditure for principal and interest.

Proprietary Funds - Proprietary funds are used to account for the School District's ongoing activities, which are similar tothose in the private sector.

Enterprise Funds - The enterprise funds are used to account for operations that are financed and operated in amanner similar to private business enterprises, where the intent of the School District is that all costs (expenses,including depreciation) of providing goods or services to the students on a continuing basis be financed or recoveredprimarily through user charges; or, where the School District has decided that periodic determination of revenuesearned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, managementcontrol, accountability, or other purposes.

The School District's enterprise funds are:

Food Service Fund - This fund accounts for the financial transactions related to the food service operations of theSchool District.

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Proprietary Funds (Continued) -

Before and After School Care Fund - This fund accounts for the financial activity related to providing day careservices for School District students before and after school and during the summer.

All proprietary funds are accounted for on a cost of services or "capital maintenance" measurement focus. This means thatall assets and all liabilities, whether current or noncurrent, associated with their activity are included on their balance sheets.Their reported fund equity (net assets) is segregated into investment in capital assets. net of related debt. and unrestrictednet assets, if applicable. Proprietary fund type operating statements present increases (revenues) and decreases(expenses) in net total assets.

Depreciation of all exhaustive fixed assets used by proprietary funds is charged as an expense against their operations.Accumulated depreciation is reported on proprietary fund balance sheets. Depreciation has been provided over theestimated useful lives using the straight-line method. The estimated useful lives are as follows:

EquipmentLight Trucks and VehiclesHeavy Trucks and Vehicles

12 Years4 Years6 Years

Fiduciary Funds - Fiduciary fund reporting focuses on net assets and changes in net assets. The fiduciary fund category issplit into two classifications: trust funds and agency funds. Agency funds are used to account for assets held by the SchoolDistrict in a trustee capacity or as an agent for individuals. private organizations, other governments, and/or other funds (i.e.payroll and student activities). They are custodial in nature (assets equal liabilities) and do not involve measurement ofresults of operations. The School District has four fiduciary funds; an unemployment compensation trust fund, a flexiblespending trust fund, a student activity fund. and a payroll fund.

Measurement Focus

Government-wide Financial Statements - The government-wide financial statements are prepared using the economicresources measurement focus. All assets and all liabilities associated with the operation of the School District are includedon the statement of net assets.

Fund Financial Statements - All governmental funds are accounted for using a flow of current financial resourcesmeasurement focus. With this measurement focus. only current assets and current liabilities generally are included on thebalance sheet. The statement of revenues, expenditures and changes in fund balances reports on the sources (I.e.revenues and other financing sources) and uses (i.e. expenditures and other financing uses) of current financial resources.This approach differs from the manner in which the governmental activities of the government-wide financial statements areprepared. Governmental fund financial statements, therefore, include a reconciliation with brief explanations to betteridentify the relationship between the government-wide statements and the statements for governmental funds.

Like the government-wide statements, all proprietary fund types are accounted for on a flow of economic resourcesmeasurement focus. All assets and all liabilities associated with the operation of these funds are included on the statementof net assets. The statement of changes in fund net assets presents increases (i.e. revenues) and decreases (i.e.expenses) in net total assets. The statement of cash flows provides information about how the School District finances andmeets the cash flow needs of its proprietary activities. Fiduciary funds are reported using the economic resourcesmeasurement focus.

Basis of Accounting

Basis of accounting determines when transactions are recorded in the financial records and reported on the financialstatements. Government-wide financial statements are prepared using the accrual basis of accounting. Governmentalfunds use the modified accrual basis of accounting. Proprietary and fiduciary funds also use the accrual basis ofaccounting. Differences in the accrual and the modified accrual basis of accounting arise in the recognition of revenue. therecording of deferred revenue, and in the presentation of expenses versus expenditures.

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Basis of Accounting

Revenues - Exchange and Non-exchange Transactions - Revenue resulting from exchange transactions, in whicheach party gives and receives essentially equal value is recorded on the accrual basis when the exchange takes place.On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and becomeavailable. "Measurable" means the amount of the transaction can be determined and "available" means that theresources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be usedto pay liabilities of the current fiscal year. For the School District, available means expected to be received within sixtydays after fiscal year end.

Non-exchange transactions, in which the School District receives value without directly giving equal value in return,include Ad Valorem (property) taxes, grants, entitlements, and donations. Ad Valorem (Property) Taxes are susceptible toaccrual, as under New Jersey State Statute, a municipality is required to remit to its school district the entire balance oftaxes in the amount voted upon or certified, prior to the end of the school year. The School District records the entireapproved tax levy as revenue (accrued) at the start of the fiscal year since the revenue is both measurable and available.The School District is entitled to receive monies under the established payment schedule and the unpaid amount isconsidered to be an "accounts receivable". With the exception of restricted formula aids recorded in the special revenuefund, revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirementshave been satisfied. Eligibility requirements include timing requirements, which specify the fiscal year when the resourcesare required to be used or the fiscal year when use is first permiHed, matching requirements, in which the School Districtmust provide local resources to be used for a specified purpose, and expenditure requirements, in which the resourcesare provided to the School District on a reimbursement basis.

Under the modified accrual basis, the following revenue sources are considered to be both measurable and available atfiscal year-end; tuition, grants, fees, and rentals.

Expenses/Expenditures - On the accrual basis of accounting, expenses are recognized at the time they are incurred.The fair value of donated commodities used during the fiscal year is reported in the operating statement as an expense.Unused donated commodities are reported as deferred revenue. The measurement focus of governmental fundaccounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generallyrecognized in the accounting period in which the related fund liability is incurred, if measurable. Allocations of cost, suchas depreciation and amortization, are not recognized in governmental funds.

Budgets/Budgetary Control - Annual appropriated budgets are prepared in the spring of each fiscal year for the general,special revenue, and debt service funds. The budgets are submiHed to the county office and are voted upon at the annualschool election on the third Tuesday in April. Budgets are prepared using the modified accrual basis of accounting. Thelegal level of budgetary control is established at line item accounts within each fund. Line item accounts are defined as thelowest (most specific) level of detail as established pursuant to the minimum chart of accounts referenced in N.JAC. 6:23A-16.2(f)1. Transfers of appropriations may be made by School Board resolution at any time during the fiscal year inaccordance with N.J.A.C. 6A:23A-13.3.

Formal budgetary integration into the accounting system is employed as a management control device during the fiscalyear. For governmental funds there are no substantial differences between the budgetary basis of accounting andaccounting principles generally accepted in the United States of America with the exception of the legally mandated revenuerecognition of the one or more June state aid payments for budgetary purposes only and the special revenue fund.Encumbrance accounting is also employed as an extension of formal budgetary integration in the governmental fund types.Unencumbered appropriations lapse at fiscal year-end.

The accounting records of the special revenue fund are maintained on the budgetary basis. The budgetary basis differsfrom GAAP in that the budgetary basis recognizes encumbrances as expenditures and also recognizes the relatedrevenues, whereas the GAAP basis does not. Sufficient supplemental records are maintained to allow for the presentationof GAAP basis financial reports.

The budget, as detailed on Exhibit C-1, Exhibit C-2 and Exhibit 1-3,includes all amendments to the adopted budget. if any.

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Budgets/Budgetary Control (Continued) - Exhibit C-3 presents a reconciliation of the general fund revenues and specialrevenue fund revenues and expenditures from the budgetary basis of accounting as presented in the general fundbudgetary comparison schedule and the special revenue fund budgetary comparison schedule to the GAAP basis ofaccounting as presented in the statement of revenues, expenditures and changes in fund balances - govemmental funds.Note that the School District does not report encumbrances outstanding at year end as expenditures in the general fundsince the general fund budget follows modified accrual basis with the exception of the revenue recognition policy for the oneor more June state aid payments.

Encumbrances - Under encumbrance accounting purchase orders, contracts and other commitments for the expenditure ofresources are recorded to reserve a portion of the applicable appropriation. Encumbrances are a component of fundbalance at fiscal year-end as they do not constitute expenditures or liabilities but rather commitments related to unperformedcontracts for goods and services. Open encumbrances in governmental funds, other than the special revenue fund, whichhave not been previously restricted, committed, or assigned, should be included within committed or assigned fund balance,as appropriate.

Open encumbrances in the special revenue fund, however, for which the School District has received advances of grantawards, are reflected in the balance sheet as deferred revenues at fiscal year-end.

The encumbered appropriation authority carries over into the next fiscal year. An entry will be made at the beginning of thenext fiscal year to increase the appropriation reflected in the certified budget by the outstanding encumbrance amount as ofthe current fiscal year end.

Cash, Cash Equivalents and Investments - Cash and cash equivalents, for all funds, include petty cash, change funds,cash in banks and all highly liquid investments with a maturity of three months or less at the time of purchase and are statedat cost plus accrued interest. Such is the definition of cash and cash equivalents used in the statement of cash flows for theproprietary funds. U.S. Treasury and agency obligations and certificates of deposit with maturities of one year or less whenpurchased are stated at cost. All other investments are stated at fair value.

New Jersey school districts are limited as to the types of investments and types of financial institutions they may invest in.N.J.SA 18A:20-37 provides a list of permissible investments that may be purchased by New Jersey school districts.

N.J.S.A. 17:9-41 et seq. establishes the requirements for the security of deposits of governmental units. The statuterequires that no govemmental unit shall deposit public funds in a public depository unless such funds are secured inaccordance with the Governmental Unit Deposit Protection Act (GUDPA), a multiple financial institution collateral pool,which was enacted in 1970 to protect governmental units from a loss of funds on deposit with a failed banking institution inNew Jersey. Public depositories include State or federally chartered banks, savings banks or associations located in orhaving a branch office in the State of New Jersey, the deposits of which are federally insured. All public depositories mustpledge collateral, having a market value at least equal to five percent of the average daily balance of collected public funds,to secure the deposits of Governmental Units. If a public depository fails, the collateral it has pledged, plus the collateral ofall other public depositories, is available to pay the full amount of their deposits to the governmental units.

Tuition Receivable - Tuition charges were established by the School District based on estimated costs. The charges aresubject to adjustment when the final costs are determined.

Tuition Payable - Tuition charges for the fiscal years ended June 30, 2012 and 2011 were based on rates established bythe receiving school district. These rates are subject to change when the actual costs have been determined.

Inventories - Inventories are valued at cost, which approximates market. The costs are determined on a first-in, first-outbasis.

The cost of inventories in governmental fund types is recorded as expenditures when purchased rather than whenconsumed, and is not recorded since any amounts are considered immaterial to the basic financial statements.

Inventories recorded in the government-wide financial statements and in the proprietary fund types are recorded asexpenditures when consumed rather than when purchased.

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Prepaid Expenses - Prepaid expenses recorded on the government-wide financial statements and in the proprietary fundtypes represent payments made to vendors for services that will benefit periods beyond June 30, 2012.

In the governmental fund types, however, payments for prepaid items are fully recognized as an expenditure in the fiscalyear of payment. No asset for the prepayment is created, and no expenditure allocation to future accounting periods isrequired (non-allocation methoc/). This is consistent with the basic governmental concept that only expendable financialresources are reported by a specific fund.

Deferred Expenditures - Deferred expenditures are disbursements that are made in one period, but are more accuratelyreflected as an expenditure/expense in the next fiscal period. Unlike prepaid expenses, deferred expenditures are notregularly recurring cost of operations.

Short-Term Interfund Receivables I Payables - Short-term interfund receivables I payables represent amounts that areowed, other than charges for goods or services rendered to I from a particular fund in the School District and that are duewithin one year. These amounts are eliminated in the governmental and business-type columns of the statement of netassets, except for the net residual amounts due between governmental and business-type activities, which are presented asinternal balances.

Capital Assets - General capital assets are those assets not specifically related to activities reported in the proprietaryfunds. These assets generally result from expenditures in the governmental funds. These assets are reported in thegovemmental activities column of the government-wide statement of net assets but are not reported in the fund financialstatements. Capital assets utilized by the proprietary funds are reported both in the business-type activities column of thegovernment-wide statement of net assets and the proprietary fund statement of net assets.

All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during thefiscal year. Donated fixed assets are recorded at their fair market value as of the date received. The School Districtmaintains a capitalization threshold of $2,000.00. The School District does not possess any infrastructure. Improvementsare capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend anasset's life are not. All reported capital assets except land and construction in progress are depreciated. Improvements aredepreciated over the remaining useful lives of the related capital assets.

Depreciation is computed using the straight-line method over the following useful lives:

DeSCription

GovernmentalActivities

Estimated Lives

Business-TypeActivities

Estimated Lives

Land and ImprovementsBuildings and ImprovementsFumiture and EquipmentVehicles

10-20 years10-50 years5-20 years5-10 years

N/AN/A

12 years4-6 years

Accrued Salaries and Wages - Certain School District employees, who provide services to the School District over the ten-month academic year, have the option to have their salaries evenly disbursed during the twelve-month year. New Jerseystatutes require that these earned but undisbursed amounts be retained in a separate bank account. As of June 30, 2012,the amounts earned by these employees were disbursed to the employees' own individual credit union accounts.

Compensated Absences - Compensated absences are those absences for which employees will be paid, such asvacation, sick leave, and sabbatical leave. A liability for compensated absences that are attributable to services alreadyrendered, and that are not contingent on a specific event that is outside the control of the School District and its employees,is accrued as the employees earn the rights to the benefits. Compensated absences that relate to future services, or thatare contingent on a specific event that is outside the control of the School District and its employees, are accounted for inthe period in which such services are rendered or in which such events take place.

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Compensated Absences (Continued) - The entire compensated absence liability is reported on the government-widefinancial statements.

For governmental funds. the current portion of unpaid compensated absences is the amount that is normally expected to bepaid with expendable available financial resources. In proprietary funds. the entire amount of compensated absences isrecorded as a fund liability.

Deferred Revenue - Deferred revenue arises when assets are recognized before revenue recognition criteria have beensatisfied.

Accrued Liabilities and Long-Term Obligations - All payables. accrued liabilities. and long-term obligations are reportedon the government-wide financial statements, and all payables. accrued liabilities and long-term obligations payable fromproprietary funds are reported on the proprietary fund financial statements. In general. governmental fund payables andaccrued liabilities that. once incurred. are paid in a timely manner and in full from current financial resources are reported asobligations of the funds. However, claims and judgments. compensated absences, special termination benefits andcontractually required pension contributions that will be paid from governmental funds are reported as a liability in the fundfinancial statements only to the extent that they are normally expected to be paid with expendable available financialresources. Bonds are recognized as a liability on the fund financial statements when due.

Net Assets - Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net ofrelated debt consists of capital assets, net of accumulated depreciation. reduced by the outstanding balance of anyborrowings used for the acquisition. construction. or improvement of those assets. Net assets are reported as restrictedwhen there are limitations imposed on their use either through the enabling legislation adopted by the School District orthrough external restrictions imposed by creditors, grantors. or laws or regulations of other governments.

It is the School District's policy to apply restricted resources when an expense is incurred for purposes for which bothrestricted and unrestricted net assets are available.

Fund Balance - The School District reports fund balance in classifications that comprise a hierarchy based primarily on theextent to which the School District is bound to honor constraints on the specific purposes for which amounts in those fundscan be spent. The School District's classifications. and policies for determining such classifications, are as follows:

Nonspendable - The nonspendable fund balance classification includes amounts that cannot be spent because theyare either not in spendable form or are legally or contractually required to be maintained intact. The "not in spendableform" criteria includes items that are not expected to be converted to cash, such as inventories and prepaid amounts.The School District had no nonspendable fund balance at June 30.2012.

Restricted - This fund balance classification includes amounts that are restricted to specific purposes. Suchrestrictions, or constraints. are placed on the use of resources either by being (a) externally imposed by creditors,grantors, contributors. or laws or regulations of other governments; or (b) imposed by law through constitutionalprovisions or enabling legislation.

Committed - This fund balance classification includes amounts that can only be used for specific purposes pursuantto constraints imposed by formal action of the School District's highest level of decision making authority. which for theSchool District is the Board of Education. Once committed. amounts cannot be used for any other purpose unless theBoard of Education removes. or changes. the specified use by taking the same type of action imposing thecommitment.

Assigned - This fund balance classification includes amounts that are constrained by the School District's intent to beused for specific purposes. but are neither restricted nor committed. Intent is expressed by either the Board ofEducation or by the Business Administrator. to which the Board of Education has delegated the authority to assignamounts to be used for specific purposes.

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

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Fund Balance (Continued) - When an expenditure is incurred for purposes for which both restricted and unrestricted fundbalances are available. it is the School District's policy to spend restricted fund balances first. Likewise, when anexpenditure is incurred for purposes for which amounts in any of the unrestricted fund balance classifications can be used, itis the policy of the School District to spend fund balances, if appropriate, in the following order: committed, assigned. thenunassigned.

Operating and Non-Operating Revenues and Expenses - Operating revenues are those revenues that are generateddirectly from the primary activity of the proprietary funds. For the School District, these revenues are sales for the foodservice program and tuition fees for the before and after school program. Non-operating revenues principally consist ofinterest income earned on various interest bearing accounts and federal and state subsidy reimbursements for the foodservice program.

Operating expenses are necessary costs incurred to provide the goods or services that are the primary activity of the fund.There are no non-operating expenses.

Interfund Activity - Transfers between governmental and business-type activities on the government-wide statements arereported in the same manner as general revenues. Exchange transactions between funds are reported as revenues in theseller funds and as expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another withouta requirement for repayment are reported as interlund transfers. Interlund transfers are reported as other financingsources/uses in governmental funds and after non-operating revenues/expenses in proprietary funds. Reimbursementsfrom funds responsible for particular expenditures/expenses to the funds that initially paid for them are not presented on thefinancial statements.

Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in theUnited State of America requires management to make estimates and assumptions that affect the amounts reported in thefinancial statements and accompanying notes. Actual results may differ from those estimates.

2. CASH AND CASH EQUIVALENTS

Custodial Credit Risk Related to Deposits - Custodial credit risk refers to the risk that, in the event of a bank failure, theSchool District's deposits may not be recovered. Although the School District does not have a formal policy regardingcustodial credit risk, N.J.SA 17.9-41 et seq. requires that govemmental units shall deposit public funds in publicdepositories protected from loss under the provisions of the Govemmental Unit Deposit Protection Unit (GUDPA). Underthe Act, the first $250,000.00 of govemmental deposits in each insured depository is protected by the Federal DepositInsurance Corporation (FDIC). Public funds owned by the School District in excess of FDIC insured amounts are protectedby GUDPA. Banks that qualify as public depositories under New Jersey statutes hold cash deposits, with bank balancestotaling $1,159,216.96 at June 30, 2012.

3. CAPITAL RESERVE ACCOUNT

A capital reserve account was established by the School District for the accumulation of funds for use as capital outlayexpenditures in subsequent fiscal years. The capital reserve account is maintained in the general fund and its activity isincluded in the general fund annual budget.

Funds placed in the capital reserve account are restricted to capital projects in the School District's approved Long RangeFacilities Plan (LRFP). Upon submission of the LRFP to the New Jersey Department of Education, a school district mayincrease the balance in the capital reserve by appropriating funds in the annual general fund budget certified for taxes or bytransfer by board resolution at fiscal year-end (June 1 to June 30) of any unanticipated revenue or unexpended line-itemappropriation amounts, or both. A school district may also appropriate additional amounts when the express approval of thevoters has been obtained either by a separate proposal at budget time or by a special question at one of the four specialelections authorized pursuant to N.J.S.A. 19:60-2. Pursuant to N.J.A.C. 6:23A-14.1(g), the balance in the account cannot atany time exceed the local support costs of uncompleted capital projects in its approved LRFP.

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3. CAPITAL RESERVE ACCOUNT (Continued)

The activity of the capital reserve for the July 1, 2011 to June 30, 2012 fiscal year is as follows:

Balance July 1, 2011Increased by:

Interest EarnedBoard Resolution

$ 115,558

$ 1,397100,000

101,397216,955

Decreased by:Budget WithdrawalBoard Resolution

Balance June 30, 2012 $ 216,955

The June 30, 2012 capital reserve balance does not exceed the LRFP balance of local support costs of uncompletedprojects.

4. ACCOUNTS RECEIVABLES

Accounts receivables at June 30, 2012 consisted of accounts (fees) and intergovernmental grants. All intergovernmentalreceivables are considered collectible in full due to the stable condition of State programs and the current fiscal yearguarantee of federal funds.

Accounts receivable at June 30,2012 for the School District's individual major and fiduciary funds, in the aggregate, are asfollows:

SpecialGeneral Revenue Proprietary

Fund Fund Fund Total

Intergovernmental

State $ 80,553 $ 147 $ 80,700Federal 17,048 $ 113,024 7,843 137,915Other 691,969 691,969

Total $ 789,570 $ 113,024 $ 7,990 $ 910,584

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For the Fiscal Year Ended June 3D, 2012

5. CAPITAL ASSETS

Capital asset activity for the fiscal year ended June 30,2012, was as follows:

Balance BalanceJune 3D, 2011 Additions Deletions June 3D, 2012

Govemmental Activities:Land $ 178,131 s 178,131Construction in ProgressTotal Capital Assets not being

Depreciation 178,131 178,131Land Improvements 189,287 189,287Building and Improvements 9,069,596 9,069,596Equipment 948,652 s 15,600 $ {138,0302 826,222Total Historical Cost 10,385,666 15,600 {138,0302 10,263,236Less Accumulated Depreciation:

Land Improvements (133,263) (4,475) (137,738)Building and Improvements (3,845,910) (275,602) (4,121,512)Equipment {810,0122 ~13,9572 58,855 F65,114l

Total Accumulated Depreciation {4,789,1852 ~294,0342 58,855 {5,O24,364l

Governmental Activities CapitalAssets, Net $ 5,596,481 $ (278,434) $ (79,175) s 5,238,872

Business-Type Activities:

Equipment 138,030 138,030Less - Accumulated Depreciation {58,855) F,8841 {66,739)Business-Type Activities Capital

Assets, Net 79,175 {7,8842 71,291

Depreciation expense in the amount of $294,034 was charged to governmental functions as follows:

Function Amount

Regular InstructionCentral AdministrationPlant Operations and MaintenanceUnallocated

$ 205,82429,40329,40329,404

Total depreciation expense $ 294,034

6. INVENTORY

Inventory in the food service fund at June 30,2012 consisted of the following:

FoodSupplies

$ 582203

$ 785

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7. LONG-TERM OBLIGATIONS

During the fiscal year ended June 30, 2012, the following changes occurred in long-term obligations:

Principal PrincipalOutstanding Outstanding Due Within

June 30, 2011 Additions Reductions June 30, 2012 One YearGovernmental Activities:

Compensated Absences $ 241,538 65,342 $ 176,196Unfunded Pension Liability 277,844 28,440 249,404General Obligation Bonds 2,688,000 330.000 2,358,000 $ 345,000

$ 3,207,382 $ $ 423,782 $ 2,783,600 $ 345,000

Bonds Payable - Bonds and loans are authorized in accordance with State law by the voters of the School District throughreferendums. All bonds are retired in serial installments within the statutory period of usefulness. Bonds issued by theSchool District are as follows:

2000 General Obligation Bonds dated February 1, 2000 in the amount of $475,000 due in annual installmentsthrough February 1, 2014, bearing interest rate of 4.45%.

2005 General Obligation Bonds dated April 1, 2005 in the amount of $1,883,000 due in annual installmentsthrough April 1, 2018, bearing interest rate of 4.10 % to 4.25%.

As of June 30, 2012, principal and interest due on bonds outstanding is as follows:

Fiscal YearEnding June 3D, Principal

2013 $ 345,0002014 360,0002015 385,0002016 400,0002017 420,0002018 448,000

$ 2,358,000

Interest Total

$ 100,85885,78070,06053,89036,89019,040

$ 445,858445,780455,060453,890456,890467,040

$ 366,518 $ 2,724,518

As of June 30, 2012 the School District had no authorizations to issue additional bonded debt.

Compensated Absences - Compensated absences will be paid from the fund from which the employees' salaries arepaid.

Unfunded Pension liability

In accordance with the Lower Camden County Regional High School dissolution agreement, effective July 1, 2001, theClementon School District assumed liability for its proportionate share of the "Regional High School Early RetirementIncentive Program" permitted by State legislation during 1995 for certain members of the Teachers Pension and AnnuityFund and the Public Employees Retirement Fund. The members had to meet certain age and service requirementsand had to apply for retirement between certain dates in fiscal year 1996 to be eligible. The School District is liable forits proportionate share of additional costs under this program. As of June 30, 2012 the School District had an accruedliability of $249,404 payable in annual installments.

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8. OPERATING LEASES

At June 30, 2012, the School District had operating lease agreements in effect for copy machines and a postage meter.Total rental payments for such leases were $26,303 for the fiscal year ended June 30, 2012. The future minimum leasepayments for these leases are as follows:

Fiscal YearEnding June 30, Amount

2013201420152016

$ 15,1823,9183,918

585

$ 23,603

9. PENSION PLANS

Description of Plans - Substantially all of the School District's employees participate in one of the following pension planswhich have been established by State statute, and are administered by the New Jersey Division of Pensions and Benefits(Division): the Teachers' Pension and Annuity Fund (TPAF), the Public Employees' Retirement System (PERS) or theDefined Contribution Retirement Program (DCRP). Each plan has a Board of Trustees that is primarily responsible for itsadministration. The Division issues a publicly available financial report that includes financial statements and requiredsupplementary information. That report may be obtained by writing to the State of New Jersey, Division of Pensions andBenefits. P.O. Box 295, trenton, New Jersey, 08625-0295.

Teachers' Pens/on and Annuity Fund (TPAF)

The Teachers' Pension and Annuity Fund is a cost-sharing contributory defined benefit pension plan which was establishedon January 1, 1955, under the provisions of N.J.S.A. 18A:66. The TPAF provides retirement, death and disability, andmedical benefrtsto qualified members. Vesting and benefit provisions are established by N.J.S.A. 18A:66.

The contribution requirements of plan members are determined by State statute. In accordance with Chapter 92 andChapter 103, P.L. 2007, plan members were required to contribute 5.5% of their annual covered salary. Chapter 78 P.L.2011 changed the employee contribution rate as follows: Effective with the first payroll check to be paid on or after October1,2011 plan members rate will increase to 6.5% with an additional increase of .14% beginning in July 2012 and continuingeach year until the rate reaches 7.5% in July 2018. The State Treasurer has the right under the current law to maketemporary reductions in rates based on the existence of surplus pension assets in the retirement system; however, statutealso requires the return to the normal rate when such surplus pension assets no longer exists.

Under current statute, all employer contributions are made by the State of New Jersey on-behalf of the School District andall other related non-contributing employers. No normal or accrued liability contribution by the School District has beenrequired over the several preceding fiscal years.

Public Employees' Retirement System (PERS)

The Public Employees' Retirement System is a cost-sharing multiple-employer defined benefit pension plan which wasestablished on January 1, 1955. The PERS provides retirement, death and disability. and medical benefits to certainqualified members. Vesting and benefit provisions are established by N.J.S.A. 43:15A and 43:3B.

The contribution requirements of plan members are determined by State statute. In accordance with Chapter 92 andChapter 103, P.L. 2007, plan members were required to contribute 5.5% of their annual covered salary. Chapter 78 P.L.2011 changed the employee contribution rate as follows: Effective with the first payroll check to be paid on or after October1, 2011 plan members rate will increase to 6.5% with an additional increase of .14% beginning in July 2012 and continuingeach year until the rate reaches 7.5% in July 2018. The State Treasurer has the right under the current law to maketemporary reductions in rates based on the existence of surplus pension assets in the retirement system; however, statutealso requires the return to the normal rate when such surplus pension assets no longer exists.

48



9. PENSION PLANS (Continued)

The School District is billed annually for its normal contribution plus any accrued liability. The School District's contributions,equal to the required contribution for each fiscal year, were as follows:

NonFiscal Normal Accrued ContributoryYear Contributions L1ablll~ LIfe

2012 $ 21,091 $ 42,183 $ 4,031 $2011 22,434 35,746 4,4192010 22,339 28,704 7,078

TotalLiabilityPaid byDistrict

67,30562,59958,121

Denned Contribution Retirement Program (DCRP)

The Defined Contribution Retirement Program is a cost-sharing multiple-employer defined contribution pension plan whichwas established on July 1, 2007. under the provisions of Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007(N.J.S.A.43:15C-1 et. seq), and expanded under the provisions of Chapter 89, P.L. 2008 and Chapter 1, P.l. 2010. TheDefined Contribution Retirement Program Board oversees the DCRP, which is administered for the Divisions of Pensionsand Benefits by Prudential Financial. The DCRP provides eligible members, and their beneficiaries, with a tax-sheltered,defined contribution retirement benefit, along with life insurance and disability coverage. Vesting and benefit provisions areestablished by N.J.S.A. 43:15C-1 et. seq.

The contribution requirements of plan members are determined by State statute. In accordance with Chapter 92, P.l. 2007and Chapter 103, P.l. 2007, plan members are required to contribute 5.5% of their annual covered salary. Chapter 78 P.L.2011 changed the employee contribution rate as follows: Effective with the first payroll check to be paid on or after October1,2011 plan members rate will increase to 6.5% with an additional increase of .14% beginning in July 2012 and continuingeach year until the rate reaches 7.5% in July 2018. The State Treasurer has the right under the current law to maketemporary reductions in rates based on the existence of surplus pension assets in the retirement system; however, statestatute also requires the retum to the normal rate when such surplus pension assets no longer exist. The employeecontributions along with the School District's contribution for each pay period are transmitted to Prudential Financial not laterthan the fifth business day after the date on which the employee is paid for that pay period.

The School District's contributions, equal to the required contribution for each fiscal year, were as follows:

Paid byRscal Total Employee SchoolYear Liability Contribution District

2012 $ 934 $ 604 s 3302011 643 416 2272010

Related Party Investments - The Division of Pensions and Benefits does not invest in securities issued by the SchoolDistrict.

49



10. POST-RETIREMENT BENEFITS

The School District contributes to the New Jersey State Health Benefits Program (SHBP), a cost-sharing multiple-employerdefined benefit post-employment healthcare plan administered by the State of New Jersey Division of Pension and Benefits.SHBP was established to provide medical, prescription drug, mental health/substance abuse and Medicare Part Breimbursement to retirees and their covered dependents. The State Health Benefits Program Act is found in New JerseyStatutes Annotated, Title 52, Article 17.25 et seq. Rules governing the operation and administration of the program arefound in Title 17, Chapter 9 of the New Jersey Administrative Code. The State of New Jersey Division of Pension issues apublicly available financial report that includes financial statements and required supplementary information for SHBP. Thatreport may be obtained by writing to the Division of Pension and Benefits, PO Box 295, Trenton, NJ 08625-0295.

P.L. 1987, c.384 and P.L. 1990, c.6 required Teachers' Pensions and Annuity Fund (TPAF) and the Public Employees'Retirement System (PERS), respectively, to fund post-retirement medical benefits for those State employees who retire afteraccumulating 25 years of credited service or on a disability retirement. P.L. 2007, c. 103 amended the law to eliminate thefunding of post-retirement medical benefits through the TPAF and PERS. It created separate funds outside of the pensionplans for the funding and payment of post-retirement medical benefits for retired State employees and retired educationalemployees. As of June 30, 2011 there were 93,323 retirees eligible for post-retirement medical benefits. The cost of thesebenefits is funded through contributions by the State in accordance with P.L. 1994, c.62. Funding of post-retirement medicalpremiums changed from a pre-funding basis to a pay-as-you-go basis beginning in fiscal year 1994.

The State is also responsible for the cost attributable to P.L. 1992 c.126, which provides free health benefits to members ofPERS and Alternate Benefit Program who retired from a board of education or county college with 25 years of service. TheState paid $144 million toward Chapter 126 benefits for 15,709 eligible retired members in fiscal year 2011.

The State establishes the contribution rate based on the annual required contribution of the employers (ARC), an amountactuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents the level of fundingthat, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities(or funding excess) of the plan over a period not to exceed thirty years. The State's contribution to the SHBP Fund for TPAFretirees' post-retirement benefits on behalf of the School District for the year ended June 30, 2012 was $212,006, whichequaled the required contributions. The State's contribution to the SHBP Fund for PERS retirees' post-retirement benefitson behalf of the School District was not determined or made available by the State of New Jersey.

11. ON-BEHALF PAYMENTS

For the fiscal year ended June 30, 2012, the School District has recognized as revenues and expenditures $105,461 of on-behalf payments made by the State of New Jersey for normal retirement costs related to TPAF and $247,191 for employer'sshare of social security contributions for TPAF members, as calculated on their base salaries.

12. RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errorsand omissions; employee health and accident claims; and natural disasters.

Property and Liability Insurance - The School District maintains commercial insurance coverage for property, liability,student accident and surety bonds. A complete schedule of insurance coverage can be found in the Statistical Section ofthis Comprehensive Annual Financial Report.

Joint Insurance Pool - The School District is a member of the Burlington County Insurance Pool Joint Insurance Fund.Insurance coverage as provided by the Fund can be found in the Statistical Section of this Comprehensive Annual FinancialReport.

Annual contributions to the Fund are determined by the Fund's Board of Trustees. The School District is jointly andpersonally liable for claims insured by the Fund and its members during the period of its membership, including liability forsupplemental assessments, if necessary. The Fund's Board of Trustees may authorize refunds to its members in any fundyear for which contributions exceed the amount necessary to fund all obligations for that year.

The Fund publishes its own financial report which can be obtained at: Burlington County Insurance Pool Joint InsuranceFund, Five Greentree Centre, Suite 410, Marlton, New Jersey, 08053.

50



12. RISK MANAGEMENT (Continued)

New Jersey Unemployment Compensation Insurance - The School District has elected to fund its New JerseyUnemployment Compensation Insurance under the "Benefit Reimbursement Method". Under this plan, the School District isrequired to reimburse the New Jersey Unemployment Trust Fund for benefits paid to its former employees and charged toits account with the State. The School District is billed quarterly for amounts due to the State.

The following is a summary of School District contributions, employee contributions, reimbursements to the State forbenefits paid and the ending balance of the School District's expendable trust fund for the current and previous two fiscalyears:

Fiscal District Employee Amount EndingYear Contributions Contributions Reimbursed Balance

2012 $ 576 $ 6,995 $ 25,831 $ 50,0162011 889 7,345 23.501 68.2762010 917 7.267 20.206 83.543

13. DEFERRED COMPENSATION

The School District offers its employees a choice of various deferred compensation plans created in accordance withInternal Revenue Code Section 403(b) and 457. The plans, available to all permanent School District employees. permitparticipants to defer a portion of their current salary to future years. Participation in the plans is optional. The deferredcompensation is not available to the participants until termination, retirement, death, or an unforeseeable emergency occurs.The plan assets are held in trust for the benefit of the employee and are administered by a third party therefore they are notreflected on the financial statements of the School District.

14. COMPENSATED ABSENCES

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

School District employees are granted varying amounts of vacation and sick leave in accordance with the School District'spersonnel policy. Upon termination, employees are paid for accrued vacation. The School District's policy permitsemployees to accumulated unused sick leave and carry forward the full amount to subsequent years. Upon retirementemployees shall be paid by the School District for the unused sick leave in accordance with the School District's agreementswith the various employee unions.

The liability for vested compensated absences is recorded within those funds as the benefits accrued to the employees. Asof June 30, 2012. the liability for compensated absences in the governmental activities was $176,196.

15. CONTINGENCIES

The School District participates in a number of federal and state programs that are fully or partially funded by grantsreceived from other governmental units. Expenditures financed by grants are subject to audit by the appropriate grantorgovernment. If expenditures are disallowed due to noncompliance with grant program regulations. the School District maybe required to reimburse the grantor government.

At June 30. 2012, significant amounts of grant expenditures have not been audited by the granting agency, but the SchoolDistrict believes that disallowed expenditures discovered in subsequent audits. if any, will not have a material effect on anyof the individual funds or the overall financial position of the School District. Additionally, deferred revenues are recognizedin those funds that have received grant monies in advance of future. reimbursable expenditures.

51



16. FLEXIBLE BENEFITS PROGRAM

The School District offers its employees a Flexible Benefits Program. The purpose of the program is to provide a taxincentive for plan participants incurring health premium expenses, dependent care expenses and other medical expensesnot covered by other insurance. The School District. who is the plan administrator, acts as the agent to furnishreimbursement services. The plan participants redirect a prescribed amount of their gross pay (tax-free) into areimbursement account and then in-tum submit claims to the School District for repayment. Because of Internal RevenueService regulations, if at the end of any plan year unexpended funds remain, these funds will be forfeited by the participantsand returned to the School District.

The following is a summary of School District contributions, employee contributions, reimbursements to the plan participantsfor benefits paid and the ending balance of the School District's fiduciary fund for the current and prior two years.

FiscalYear

DistrictContributions

EmployeeContributions

AmountReimbursed

EndingBalance

201220112010

$ 6 $ 10,083 $ 9,200 $ 889

17. DEFICIT UNASSIGNED FUND BALANCE

The School District has a deficit unassigned fund balance of $316,460 in the General Fund as of June 30,2012 as reportedin the fund statements (modified accrual basis). N.J.SA 18A:22-44.2 provides that in the event a state school aid paymentis not made until the following school budget year, school districts must record the delayed one or more June state aidpayments as revenues, for budget purposes only, in the current school budget year. The statute provides legal authority forschool districts to recognize this revenue in the current budget year. For intergovernmental transactions, GASB StatementNo. 33 requires that recognition (revenue, expenditure, asset, liability) should be in symmetry, Le., if one governmentrecognizes an asset, the other government recognizes a liability. Since the State is recording the June state aid paymentsin the subsequent fiscal year, the School District cannot recognize the June state aid payment on the GAAP financialstatements until the year the State records the payable. Due to the timing difference of recording the June state aidpayments, the general and special revenue fund balance deficit does not alone indicate that the School District is facingfinancial difficulties.

Pursuant to N.J.SA 18A:22-44.2 any negative unassigned general fund balance that is reported as a direct result from adelay in the June payments of state aid until the following fiscal year, is not considered in violation of New Jersey statuteand regulation nor in need of corrective action. The School District deficit in the GAAP funds statements of $316,460 isequal to or less than the June state aid payment.

18. DEFICIT UNRESTRICTED NET ASSETS

As of June 30, 2012, a deficit of $722,002 existed in the Unrestricted Net Assets of the Governmental Activities. Areconciliation of Unreserved Fund Balance reported on Exhibit B-1 to Unrestricted Net Assets reported on Exhibited A-1 asfollows:

Balances, June 30. 2012:Fund Balance (Deficit)(Exclusive of Capital Projects and Debt Service Funds)UnassignedAdd - Accrued Interest on BondsLiabilies:

Accrued Interest PayableEarly Retirement ObiligationCompensated Absences

Unrestricted Net Assets (Deficit)

$ (316,460)48,795

(28,737)(249,404)(176,196)

s (722,002)

52



19. FUND BALANCES

RESTRICTED

As stated in Note 1, the restricted fund balance classification includes amounts that are restricted to specific purposes.Such restrictions, or constraints, are placed on the use of resources by either of the following: (a) externally imposed bycreditors, grantors, contributors, or laws or regulations of other govemments; or (b) imposed by law through constitutionalprovisions or enabling legislation. Specific restrictions of the School District's fund balance are summarized as follows:

General Fund:

Excess Surplus -In accordance with N.J.S.A. 1BA:7F-7,as amended, the designation of restricted fund balance -excess surplus is the result of a required calculation pursuant to the New Jersey Comprehensive EducationalImprovement and Financing Act of 1996 (CEIFA). New Jersey school districts are required to restrict general fund,fund balance at the fiscal year end of June 30 if they did not appropriate a required minimum amount as budgetedfund balance in their subsequent years' budget. The excess fund balance at June 30, 2012 is 554,626 presentedon the budgetary basis of accounting (Exhibit C-1). Additionally, $107,355 of excess fund balance generatedduring the 2010-2011 fiscal year has been restricted and designated for utilization in the 2012-2013 budget.

Capital Reserve - As of June 30,2012, the balance in the capital reserve account is $216,955. The entire amountis restricted for future capital outlay expenditures for capital projects in the School District's approved Long RangeFacilities Plan.

Tuition Reserve - In accordance with N.J.A.C. 6A:23-3.1(f)(8), the School District has restricted fund balance atJune 3D,2012 in the amount of $439,000 for tuition adjustments. This reserve represents foreseeable future tuitionadjustments up to a maximum of 10% of the estimated cost of the respective contract year. As of June 30, 2012,$200,000 has been reserved for the 2012-2013 year and $239,000 has been reserved for the 2013-2014 year.

Emergency Reserve - As of June 30, 2012, the balance in the emergency reserve is $200,000. These funds arerestricted for the purpose of financing unanticipated general fund expenditures required for a through and efficienteducation in accordance with N.J.S.A. 1BA:7F-41c(1).

Debt Service Fund - As of June 3D, 2012, the restricted fund balance amount was $9,107 all of which is restricted forfuture debt service expenditures.

ASSIGNED

As stated in Note 1, the assigned fund balance classification includes amounts that are constrained by the School District'sintent to be used for specific purposes, but are neither restricted nor commiHed. Specific assignments of the SchoolDistrict's fund balance are summarized as follows:

General Fund:

Designated for Subsequent Year's Expenditures - The School District has appropriated and included as ananticipated revenue for the fiscal year ending June 30,2013, $372,080 of general fund balance at June 3D,2012.

UNASSIGNED

As slated in Note 1, the unassigned fund balance classification represents fund balance that has not been restricted,commiHed,or assigned to specific purposes. The School District's unassigned fund balance is summarized as follows:

General Fund - As of June 30,2012, the fund balance of the general fund was a deficit of $316,460, thus resulting inthe fund balance classification of unassigned. The deficit is a result of the delay in the recording of the payment ofstate aid until the following fiscal year (See Note 17).

53

Required Supplementary Information - Part II

Budgetary Comparison Schedules

C-1CLEMENTON SCHOOL DISTRICT

Required Supplementary InformationBudgetary Comparison Schedule

General FundFor the Fiscal Year Ended June 3D, 2012

VarianceOriginal Budget Final Final toBUdget Transfers Budget Actual Actual

REVENUES:Local sources:

Local Tax Levy s 3.842.137 s 3.842.137 s 3.842.137Tuition 20.000 20.000 12,516 s (7.484)Interest on capital reserve 100 100 (100)Unrestricted misc. revenues 75.000 75.000 171.354 96.354

Total local sources 3.937,237 3,937,237 4.026.007 88.770

State sources:Special education aid 348,136 348,136 348,136Equalization aid 5.726,697 5.726,697 5,726,697Security aid 13,327 13.327 121.641 108.314Extraordinary aid 75.000 75.000 75,999 999Nonpublic transportation 4.554 4.554Anti-bullying aid 339 339SDA reimbursement 24,935 24,935On-behalf TPAF pension contrib .. (non-budgeted) 317.467 317.467Reimbursed TPAF social security

contribution (non-budgeted) 247.191 247.191

Total state sources 6.163.160 6,163,160 6.866,959 703.799

Federal sources:Education jobs fund 216,104 216,104 222.874 6.770Medicaid reimbursement 14.000 14.000 18.281 4.281

Total federal sources 230,104 230.104 241.155 11.051

TOTAL REVENUES 10.330,501 10.330.501 11.134.121 803.620

EXPENDITURES:CURRENT EXPENSE:Regular Programs - Instruction:

Salaries of teachersKindergarten 204.743 s 7,538 212.281 212.281Grades 1-5 1.140.814 18,568 1.159.382 1,118,049 41.333Grades 6-8 689.433 689.433 632.166 57.267

Regular Programs - Home Instruction:Salaries of teachers 3.000 2.216 5.216 5.093 123Other salaries for instruction 3.000 (2.216) 784 784

Regular Programs - Undistributed Instruction:Purchased professional - educational services 77.019 77.019 75.501 1.518Purchased technical services 13.775 17.400 31.175 18,482 12.693Other purchased services 25.249 25.249 25.249General supplies 76.422 (11.734) 64.688 63.469 1.219Textbooks 49.810 {35.916} 13.894 8.935 4.959

Total- Regular Programs -Instruction 2.283,265 {4.144} 2,279.121 2.160.009 119,112

See Management·s Discussion and Analysis section of this report for explanation of significant budget variances. original and final.

!CONnNUED TO NEXT PAGEl

56


Required Supplementary InformationBudgetary Comparison Schedule


VarianceIConUnued from prior page) Original Budget Final Final to

Budget Transfers Budget Actual ActualSpecial Education Instruction:

Leamlng and/or Language Disabilities:Salaries of teachers s 257,950 s 257,950 s 253,609 s 4,341Other salaries for instruction 52,949 52,949 35,177 17,772General supplies 375 375 320 55Textbooks 500 s {500)

Totalleaming and/or language disabilities 311,774 {500) 311,274 289,106 22.168

Multiple Disabilities:Salaries of teachers 74,855 750 75,605 75,605Other salaries for Instruction 13,949 13,949 13.167 782General supplies 1,000 (500) 500 264 236Textbooks 500 500 500

Total multiple disabilities 90,304 250 90.554 89.036 1.518

Resource room/resource center:Salaries of teachers 282,290 282.290 271.449 10.841Other salaries for instruction 34,797 34,797 31,372 3,425General supplies 300 300 209 91Textbook 500 {500)

Total resource room/resource center 317,887 {500) 317,387 303.030 14357

Total Special Education • Instruction 719.965 {750) 719.215 681.172 38.043

Bilingual Education - Instruction:General supplies 225 225 225

Total bilingual education 225 225 225

School-Sponsored Cocurricular Act - Instruction:Salaries 11,218 11,218 11.218Purchased Services SOO 500 280 220General supplies 2,000 2,000 625 1.375

Total school-sponsored cocurr. act. - instruct. 13.718 13.718 12.123 1.595

School-Sponsored Athletics - Instruction:Salaries 15.761 15,761 15,631 130Purchased services 8.065 8.065 3,806 4.259Supplies and materials 4.100 4.100 974 3.126Other objects 1.400 1.400 1.400

Total school-sponsored athletics - instruct. 29.326 29,326 20.411 8,915

Total Instruction 3.046.499 {4.894) 3.041.605 2.873.715 167.890

See Management's Discussion and Analysis section of this report for explanation of significant budget variances. original and final.

ICONTINUED TO NEXT PAGEl

57


Required Supplementary InfonnaUonBudgetary Comparison Schedule


Variance(Continued from prior pago) Original Budget Final Final to

Budget Transfers Budget Actual Actual

Undistributed Expenditures - InstructionTuition to other LEAs within the state - reg. S 2,392,116 S 55.068 S 2.447.184 S 2.428.043 S 19,141Tuition to other LEAs within the state - spec 369.656 (78.844) 290.812 281,492 9.320Tuition - County Voc School Districts - reg 114.000 114.000 114.000Tuition to CSSD & Reg. Day schools 342.597 (971) 341.626 336.817 4.809Tuition to priv. sen, for the disabled in state 474,569 (35,432) 439.137 422,999 16.138Tuition to priv. sch. for the disabled out of state 76.292 76.292 76.292Tuition - state facilities 76.292 (16,565} 59.727 49,583 10.144

Total undistributed expenditures - instruction 3.769,230 (452} 3.768,778 3,709.226 59.552

Attendance and Social Work Services:Salaries 6.458 6,458 6.280 178Purchased professional and technical services 12,000 12,000 11.776 224Supplies and materials 500 (500}

Total attendance and social work services 18,958 (500} 18.458 18.056 402

Health Services:Salaries 48.480 375 48.855 48.855Purchased professional and technical services 6.730 (325) 6.405 3.255 3.150Supplies and materials 2,000 200 2,200 1.797 403

Total health services 57.210 250 57.460 53.907 3.553

Speech. OT. PT and Related Services:Salaries 50.200 50.200 36.286 13.914Purchased professional - educational services 55.000 (500) 54.500 47.732 6.768Supplies and materials 150 150 89 61

Total speech. 01. pt. and related services 105.350 (500} 104.850 84.107 20.743

Special Education - Extraordinary Services:Salaries 31.620 31.620 23.804 7.816Purchased professional - educational services 170.650 (10.145} 160.505 111,927 48.578

Total special education - extraordinary services 202.270 (10,145) 192.125 135.731 56.394

Guidance:Salaries of other professional staff 82,679 82.679 81.830 849Supplies and materials 1.000 1.000 342 658

Total guidance 83,679 83,679 82.172 1.507

See Management·s Discussion and Analysis section of this report for explanation of Significant budget variances. original and final.

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58


Required Supplementary InfonnationBudgetary Comparison Schedule

General FundFor the Fiscal Year Ended June 30, 2012

Variance(Conllnued from prior pagel Original Budget Final Final to


Child Study Teams:Salaries of other professional staff s 154.254 s (21.000) s 133.254 $ 127.537 S 5.717Salaries of secretarial and clerical assistants 25.830 25.830 25,461 369Purchased professional - educational services 45.898 19.762 65.660 60.848 4.812Misc. Purchased services 800 800 327 473Supplies and materials 2.500 1,238 3.738 3.688 50

Total child study teams 229,282 229,282 217.861 11.421

Improvement of Instructional Services:Salaries of supervisor of instruction 30.320 30.320 28.539 1.781

Total improvement of instructional services 30.320 30.320 28.539 1.781

Educational Media Services/School Ubrary:Salaries 23.895 23.895 23.505 390Salaries of technology coordinators 66.300 66.300 66.300Purchased professional - technical services 2.195 2.195 1.570 625Other purchased services 8.774 230 9.004 9.004Supplies and materials 4.785 {2301 4.555 1.623 2.932

Total educational media services/school library 105.949 105,949 102.002 3.947

Instructional Staff Training Services:Olher purchased services 1.500 1500 682 818

Total instructional staff training services 1500 1.500 682 818

Support Services - General Administration:Salaries 159,122 159.122 157.219 1.903Legal services 20.000 (2,043) 17,957 11.345 6.612Audit fees 24.500 24,500 13.500 11.000Other purchased professional services 2.552 13,643 16,195 6.095 10.100Purchased technical services 6,790 6,790 4.370 2.420Communications / telephone 17.700 2,000 19.700 19,385 315BOE other purchased services 4,200 4.200 3.076 1.124Other purchased services 12.299 12.299 12.272 27General supplies 1.000 1,000 651 349BOE in-house training/meeting supplies 575 575 65 510Miscellaneous expenditures 7.445 (1.283) 6.162 5.374 788BOE membership dues and fees 4000 1.283 5.283 5,283

Total support services - general administration 260.183 13,600 273.783 238.635 35.148

Support Services - School Administration:Salaries of principals/assist. principals 70,000 2.500 72.500 72.500Salaries of secretarial and clerical assistants 58,562 693 59.255 59.255Supplies and materials 3.350 (193) 3,157 2.897 260Olher objects 500 !500~

Total support services - school administration 132,412 2.500 134.912 134.652 260

See Management's Discussion and Analysis section of this report for explanation of significant budget variances. original and final.

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59

C·1CLEMENTON SCHOOL DISTRICT

Required Supplementary In'onnalionBudgetary Comparison Schedule

General FundFor the Fiscal Year Ended June 30, 2012

VarianceIContlnuod from prior pago) Original Budget Final Final to


Support Services - Central Services:Salaries S 170,706 S 170,706 S 145,706 S 25,000Purchased technical services 33,470 33,470 32,613 857Supplies and materials 1,300 1,300 453 847Miscellaneous expenditures 1000 1000 853 147

Total support servicescentral services 206,476 206,476 179,625 26851

Support Servicea- Admin. Info. Tech.Salaries S 6,500 6,500 6.500Supplies and materials 17975 (6,500} 11475 11475

Total admin. information technology 17975 17975 17975

Required Maintenance School Facilities:Cleaning, repair and maintenance services 30,475 400 30,875 30,405 470General supplies 2050 (400} 1650 1,639 11

Total required maintenance school facilities 32,525 32,525 32,044 481

Custodial Services:Salaries 161,937 (4,384) 157,553 157,553Purchased professional and technical services 166 8,010 8,176 8,176Cleaning, repair and maintenance services 23,418 12,368 35,786 35,786Rental of land & building other than lease purch. 5,900 (4,322) 1,578 1,435 143Other purchased property services 14,300 (2,182) 12,118 12,117 1Insurance 23,558 (307) 23,251 23,251General supplies 35,750 (9,183) 26,567 20,121 6,446Energy (Electricity) 140000 140,000 104,706 35,294

Total custodial services 405,029 405,029 363145 41884

Security:Salaries 33541 33541 12478 21,063

Total security 33541 33541 12478 21063

Total operation & main!. of plant services 471095 471095 407667 63,428

Student Transportation Services:Management fee • ESC Transp. programs 16,000 16,000 12,713 3,287Contr. servo(not between home & sch) - vendor 10,350 10,350 3,465 6,885Contr. servo(between home & sch) - joint agree. 60,000 60,000 44,671 15,329Contr. Servo (Reg. Students) - ESC 72,800 72,800 14,378 58,422Contr. Servo (Spl. Ed. Students) - ESC 340,000 4,554 344,554 223,771 120,783Contr. Servo- Aid in Lieu of payments 21,216 4551 25767 22148 3619

Total student transportation services 520,366 9105 529471 321146 208,325

See Management's Discussion and Analysis section of this report for explanation of significant budget variances, original and final.

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