Achievement District & Public School Credit Enhancement ...File Link Achievement District Qualification L a s t Na me Hykes Co n t a c t Ema i l [email protected] Co n t a c t Ph

Submission information

Form: Combined Application Achievement District & Public School Credit Enhancement Program(http://education.azgovernor.gov/edu/form/combinedapplicationachievementdistrictpublicschoolcreditenhancementprogram)Submitted by Anonymous (not verified)March 23, 2017 5:53pm68.107.183.30

Combined Application Achievement District &Public School Credit Enhancement Program

Applicant Information

Contact Information

Submission #: 4

School Name Academy of Math and Science

School Address 3448 N. 1st Ave

School City Tucson/Phoenix

School Zip Code 85719

Phone Number 5208875392

First Name Steven

http://education.azgovernor.gov/edu/form/combined-application-achievement-district-public-school-credit-enhancement-program

File Link

Achievement District Qualification

Last Name Hykes

Contact Email [email protected]

Contact Phone 5208875392

Drop Box Link https://www.dropbox.com/sh/ygqpswlhbpyyu7n/AACZWpy1DL5dy3UCFTpucXU_a?

dl=0

Proving Receipt of Letter Grade of A or equivalent. Yes, the undersigned certifies that the

Applicant school has achieved a current grade of A. For charter schools, by checking yes, theundersigned further certifies that the applicant school is in material compliance with all requirementsand their charter is not subject to revocation.

Letter Grade of A File Academy of Math and Sciencelettergradesid4.pdf

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencelettergradesid4.pdf)

Instructional Strategies and Curricula See attached file.

Instructional Strategies and Curricula File Academy of Math and Sciencestrategycurriculasid

4.docx(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencestrategycurriculasid4.docx)

Enrollment Demand Yes, the undersigned certifies that the school has demonstrated a verifiable

enrollment demand.

Enrollment Demand Methodology See Academies Enrollment Demand Final Word and Excel

Documents in Dropbox.

Enrollment Demand File

Partnership with Underperforming School We have signed a partnership agreement with Phoenix

Collegiate Academy, a C rated school in South Phoenix.

http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-letter-grade-sid-4.pdfhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-strategy-curricula-sid-4.docx

Financial Information

Public Charter School Applicants

Partnership with Underperforming School File Academy of Math and Sciencepartnershipsid

4.docx(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencepartnershipsid4.docx)

Poverty Indicators See attached.

Poverty Indicators File Academy of Math and Sciencepovertyindicatorssid4.docx

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencepovertyindicatorssid4.docx)

Financial Statements See AMS Financial Statements and MASSA Financial Statements in Dropbox.

Financial Statements File

Current Year Budget See attached file.

Current Year Budget File Academy of Math and Sciencebudgetsid4.xlsx

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencebudgetsid4.xlsx)

Debt Ratio Statement See attached file.

Debt Ratio Statement File Academy of Math and Sciencedebtratiosid4.xlsx

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencedebtratiosid4.xlsx)

Charter Board Directors & Senior Staff See attached file.

Charter Board Directions & Senior Staff File Academy of Math and Scienceboardstaffsid4.docx

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Scienceboardstaffsid4.docx)

Charter Litigation There is no ongoing litigation and the only prior litigation has been resolved without

fault and was immaterial.

http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-partnership-sid-4.docxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-poverty-indicators-sid-4.docxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-budget-sid-4.xlsxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-debt-ratio-sid-4.xlsxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-board-staff-sid-4.docx

Charter Litigation File

Charter School Cash Flow Statement See attachment.

Charter School Cash Flow Statement File Academy of Math and Sciencecashflowstatementsid

4.xlsx(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencecashflowstatementsid4.xlsx)

Charter School Enrollment See attached.

Charter School Enrollment File Academy of Math and Scienceenrollmentsid4.xlsx

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Scienceenrollmentsid4.xlsx)

Charter School Liquidity Statement See attachment and Charter School Cash Flow question for

Days Cash on Hand criteria being met.

Charter School Liquidity Statement File Academy of Math and Scienceliquiditystatementsid

4.xlsx(http://education.azgovernor.gov/sites/default/files/webform/Academy%20of%20Math%20and%20Scienceliquiditystatementsid4.xlsx)

Charter School Debt Rating We are currently in the process of receiving a bond rating from Standard

and Poor’s and our underwriter RBC expects a BB rating.

Charter School Debt Rating File

Charter School Outstanding Debt See attached.

Charter School Outstanding Debt File Academy of Math and Sciencedebtoutstandingsid4.docx

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencedebtoutstandingsid4.docx)

Charter School Academic Outcomes and Operations See attached.

Charter School Academic Outcomes and Operations File Academy of Math and Science

academicoutcomessid4.docx(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Scienceacademicoutcomessid4.docx)

Charter School Personal Benefit Disclosure See attached.

Charter School Personal Benefit Disclosure File Academy of Math and Sciencepersonal

disclosuresid4.docx(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencepersonaldisclosuresid4.docx)

http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-cashflow-statement-sid-4.xlsxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-enrollment-sid-4.xlsxhttp://education.azgovernor.gov/sites/default/files/webform/Academy%20of%20Math%20and%20Science-liquidity-statement-sid-4.xlsxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-debt-outstanding-sid-4.docxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-academic-outcomes-sid-4.docxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-personal-disclosure-sid-4.docx

Guaranteed Financing

Confirm Accuracy and Completeness

Financial Timeline See attached.

Financial Timeline File Academy of Math and Sciencefinancialtimelinesid4.docx

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencefinancialtimelinesid4.docx)

Use of Guaranteed Financing See attached.

Use of Guaranteed Financing File Academy of Math and Scienceguaranteedfinancingsid4.xlsx

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Scienceguaranteedfinancingsid4.xlsx)

Collateral Property Identification See attached.

Collateral Property Identification File Academy of Math and Sciencecollateralpropertysid4.docx

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Sciencecollateralpropertysid4.docx)

Teacher Turnover Rates The Academies teacher turnover rates were 30% from spring 2015 to fall

2015, and 8% from spring 2016 to fall 2016.

Teacher Turnover Rates File

Parent/Teacher Survey Results See attached.

Parent/Teacher Survey Results File Academy of Math and Scienceteachersurveysid4.docx

(http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Scienceteachersurveysid4.docx)

By checking yes below, the applicant confirms that the accuracy and completeness of theinformation in this application has been certified by the Chief Executive Officer or ChiefFinancial Officer of the School.

Yes, the information in this application is accurate, complete, and has been verified by the ChiefExecutive Officer or Chief Financial Officer of the School.

http://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-financial-timeline-sid-4.docxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-guaranteed-financing-sid-4.xlsxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-collateral-property-sid-4.docxhttp://education.azgovernor.gov/sites/default/files/Academy%20of%20Math%20and%20Science-teacher-survey-sid-4.docx

**Pulled from AMS’s ASBCS Online Profile

Instructional Strategies and Curricula Academies of Math and Science (AMS) provides excellent standards-based instruction to exceed all Arizona standards, as well as STEM and a variety of non-core classes and extracurricular to create well-rounded students. Curriculum/Areas of Instruction All AMS curricula meetings the following criteria:

• Wealth of field-tested data and research supporting the efficacy of each program • Solid instructional design, with a focus on mastery and cumulative practice • High level of teacher supports for teachers of all experience levels • Accuracy in content • Prior experience implementing the curriculum at other school sites • Prevalence of curriculum use by other, high-performing charter networks

All curriculum choices are aligned to the Arizona College and Career Ready Standards in English Language Arts and Math and Arizona Standards in science, social studies, art, physical education, and music. Non-core enrichment classes include piano, guitar, art, foreign language, and computers. After-school extracurricular activities include Science Olympiad, robotics, martial arts, gymnastics, drama club, and Russian club. Core Programs All instructional systems and materials at the AMS are based on extensive research into their effectiveness. Some of these include: Saxon Math grades K-8, Open Court for language arts grades K-5, Write Source and Warriner’s Grammar grades 6-8, novel selections by Core Knowledge grades 6-8, CPO Science for grade 6-8, and Singapore Science for grades K-5. The rigorous application of these and other carefully researched instructional systems has been a major contributing factor to the AMS Schools’ high performance. Assessment Teacher generated assessments as frequently as daily, publisher generated cumulative, formative, and summative assessments, internal network benchmark assessments, required state tests, and NWEA Measures of Academic Progress (MAP). The data is used to determine the required level of intervention for each student. Educational Philosophy & Pedagogy AMS believe that efficient learning occurs when teachers clearly present material, organize their classrooms for success, use effective instructional techniques, develop high expectations of students, use rigorous assessment, give opportunities for students to actively respond, and use standardized discipline and classroom management procedures. AMS teachers are required to develop lesson plans that are engaging and include effective instructional methods. Instruction follows unique in-house teacher instructional methods manual influenced by some of the following: teaching taxonomy presented in Teach Like a Champion

• Direct Instruction: In addition to standard direct instruction methods (Gagne), our teachers will use the Direct Instruction method as developed by Sigfried Engelmann for use with at-risk populations.

• Structured cooperative learning (influenced heavily by Kaagan structures, the work of Johnson and Johnson, and Robert Slavin)

• Inquiry instruction for variety, to inspire curiosity, and for students to have opportunities to become self-teachers.

Special Education. Special Education programming is delivered at each of the AMS’ schools in compliance with applicable laws and the needs of the students.

Grade Level Prince MASSA AMSC TotalKinder 65 30 167 262

1st 14 53 109 1762nd 13 45 99 1573rd 9 44 104 1574th 5 54 131 1905th 4 45 93 1426th 6 38 134 1787th 8 33 72 1138th 5 33 39 77

Total 129 375 948 1452

Grade Level Prince MASSA AMSC TotalKinder 98 65 240 404

1st 21 115 159 2952nd 19 98 143 2603rd 13 95 151 2594th 8 117 188 3135th 7 98 136 2406th 9 82 190 2817th 12 72 107 1918th 7 72 63 141

Total 194 814 1376 2384

16-17 Waitlist Data – Current Waitlist Without Expansion

16-17 Waitlist Data – Projected Waitlist through July 1st Without Expansion

AMS currently has 1451 students enrolled and is looking to serve an additional 500 students as a result of the credit enhancement making debt more affordable. As of March 23, 2017, AMS has 1,452 students on our waiting list and anticipates having 2,384 by July. Last year, we had over 1,700 on our waiting list by July.

The Academies maintain spreadsheets at each school which track both enrolled students as well as students on a waitlist. Once our school is filled to capacity, each parent that contacts the school for enrollment is told that we conduct a lottery and by March begin to enroll students on a first come, first enrolled basis. Each year in November we contact parents from the prior year based on the number of seats available to check if they are interested and encourage them to apply again to avoid missing enrollment another year. Unfortunately, our waiting lists are not only larger than our enrollment, but cannot by physically accommodated by the facility space we have.

Email [email protected] | Phone 602.268.9900 | Web www.phxca.org | 5610 S. Central Ave., Phoenix, AZ 85040

5/23/2017

To Whom It May Concern:

The Academies of Mathematics and Science, Inc (“AMS”) and Phoenix Collegiate Academy (“PCA”) have agreed to partner for an unspecified period whereby AMS will assist PCA in the business areas of finance and governance as they look to continue their growth. During these discussions, other areas of school operations may be discussed and assisted on as needed basis and as it relates to overall governance. Either school in this agreement may leave the agreement at any time wherein either school feels that the areas above have been discussed and significant progress and improvement has been made. Both schools agree to act in good faith and attest to being unrelated and unaffiliated schools and entities for this purpose.

Sincerely,

Akshai J Patel Chief Executive Officer

AMSP, MASSA, and AMSC are Title I schools serving at-risk community and together serve, on average, 82% free-and-reduced lunch students, and all serve zip codes where at least one-third of individuals fall below the poverty line, per American Community Survey. Below are some income statistics indicative of the populations we serve. Results are for a 3-mile radius around each site, utilizing 2010 census data and American Community Survey (ACS) data. AMSP FRL %: 71.5% Average Household Income: $31,609.00 Persons Below Poverty Level: 33% MASSA FRL %: 78.2% Average Household Income: $31,076.00 Persons Below Poverty Level: 35% AMSC FRL %: 95.9% Average Household Income: $33,463.00 Persons Below Poverty Level: 36%

Academy of Mathematics and Science, Inc.

Financial StatementsSupplementary Information

andIndependent Auditors' Reports

Year Ended June 30, 2015

CONTENTS

Independent Auditors' Report................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................1-2

Financial Statements

Statement of Financial Position ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................3

Statement of Activities ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................4

Statement of Cash Flows .................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................5

Notes to Financial Statements .................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................6-13

Supplementary Information

Departmental Schedule of Financial Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................14

Departmental Schedule of Activities................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................15

Independent Auditors' Report on Internal Control Over Financial Reporting andon Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................16-17

Schedule of Findings and Responses................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................18

Certified

Public Accountants

4001 North 3rd Street Suite 275 Phoenix, AZ 85012-2086 Tel: (602) 264-3077 Fax: (602) 265-6241

Independent Auditors' Report

To the Board of DirectorsAcademy of Mathematics and Science, Inc.Tucson, Arizona

Report on the Financial Statements

We have audited the accompanying financial statements of Academy of Mathematics and Science, Inc.(the Academy), a nonprofit organization, which comprise the statement of financial position as of June 30,2015, and the related statements of activities and cash flows for the year then ended, and the related notesto the financial statements.

Management's Responsibility for the Financial Statements

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

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conductedour audit in accordance with auditing standards generally accepted in the United States of America and thestandards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free from material misstatement.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of the Academy as of June 30, 2015, and the changes in its net assets and its cash flowsfor the year then ended in accordance with accounting principles generally accepted in the United States ofAmerica.

Other Matters

Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole.The accompanying Departmental Schedules of Financial Position and Activities on pages 14-15 arepresented for purposes of additional analysis and are not a required part of the financial statements. Suchinformation is the responsibility of management and was derived from and relates directly to theunderlying accounting and other records used to prepare the financial statements. The information hasbeen subjected to the auditing procedures applied in the audit of the financial statements and certainadditional procedures, including comparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the financial statements or to the financial statementsthemselves, and other additional procedures in accordance with auditing standards generally accepted inthe United States of America. In our opinion, the information is fairly stated, in all material respects, inrelation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 13,2015 on our consideration of the Academy’s internal control over financial reporting and on our tests ofits compliance with certain provisions of laws, regulations, contracts, and grant agreements and othermatters. The purpose of that report is to describe the scope of our testing of internal control over financialreporting and compliance and the results of that testing, and not to provide an opinion on internal controlover financial reporting or on compliance. That report is an integral part of an audit performed inaccordance with Government Auditing Standards in considering the Academy’s internal control overfinancial reporting and compliance.

November 13, 2015

2

KCambergFester & Chapman P.C.


STATEMENT OF FINANCIAL POSITION

June 30, 2015

ASSETS

Current assets:Cash $ 726,096Restricted cash, current 499,591Due from government 19,026Due from related party 12,793Note receivable, from a related party 173,979Prepaid expenses 40,119

Total current assets 1,471,604

Property and equipment:Land 514,562Leasehold improvements 1,620,965Buildings and improvements 3,094,027Furniture, fixtures and equipment 405,892Construction in progress 3,746,625Less accumulated depreciation (1,653,586)

7,728,485

Restricted cash, noncurrent 2,268,422Loan issuance costs, net of accumulated amortization of $5,718 291,328Deposits 26,235

Total assets $ 11,786,074

LIABILITIES AND NET ASSETS

Current liabilities:Accounts payable and accrued expenses $ 149,646Accrued payroll and related 235,037Due to related party 2,727Capital leases 2,095Long-term debt, current portion 174,818Deferred revenue 2,847

Total current liabilities 567,170

Long-term debt, net of current portion 10,378,017Total liabilities 10,945,187

Net assets:Unrestricted 829,603Temporarily restricted 11,284

Total net assets 840,887

Total liabilities and net assets $ 11,786,074

The accompanying notes are an integral part of these statements.3


STATEMENT OF ACTIVITIES


UnrestrictedTemporarilyRestricted Total

Revenue and support:State Equalization $ 2,396,063 $ 2,396,063Classroom Site Funds 145,840 145,840Instructional Improvement Fund 14,971 14,971Grants 393,365 393,365Extracurricular activities 31,493 $ 58,653 90,146School fees 66,291 66,291Rental 392,825 392,825Management fees 558,138 558,138Interest income 2,698 2,698Miscellaneous 1,757 1,757Net assets released from restrictions 47,369 (47,369)

Total revenue and support 4,050,810 11,284 4,062,094

Expenses:Salaries 2,035,403 2,035,403Payroll taxes and benefits 408,119 408,119Rent 329,927 329,927Professional services 105,696 105,696Purchased property services 116,025 116,025Supplies 158,226 158,226Repairs and maintenance 33,862 33,862Advertising 47,109 47,109Food service 132,354 132,354Insurance 35,120 35,120Transportation 20,989 20,989Dues and fees 8,768 8,768Extracurricular activities 34,032 34,032Fundraising 8,796 8,796Depreciation and amortization 214,801 214,801Interest 216,785 216,785Miscellaneous 92,344 92,344

Total expenses 3,998,356 3,998,356

Change in net assets 52,454 11,284 63,738

Net assets, beginning of the year 777,149 777,149

Net assets, end of the year $ 829,603 $ 11,284 $ 840,887



STATEMENT OF CASH FLOWS


Cash flows from operating activities:Change in net assets $ 63,738Adjustments to reconcile change in net assets to net cash provided by operating activities:

Depreciation and amortization 214,801Changes in:

Due from government (4,883)Due from related party 33,483Prepaid expenses (36,701)Deposits (9,046)Accounts payable and accrued expenses 45,817Accrued payroll and related 73,994Due to related party 2,727Deferred revenue 2,847

Net cash provided by operating activities 386,777

Cash flows from investing activities:Net proceeds loaned to a related party school (73,979)Purchases of property and equipment (4,791,225)

Net cash used by investing activities (4,865,204)

Cash flows from financing activities:Proceeds from long-term debt 7,433,403Principal payments on long-term debt (50,165)Net deposits to restricted cash (2,768,013)Payments on capital leases (3,916)

Net cash provided by financing activities 4,611,309

Net increase in cash 132,882

Cash, beginning of the year 593,214

Cash, end of the year $ 726,096

Supplemental disclosure of cash flow informationCash paid during the year for interest $ 216,785

Supplemental disclosure of noncash financing activitiesLoan proceeds paid directly to refinance debt $ 2,913,771

Loan proceeds paid directly for issuance costs $ 297,046



NOTES TO FINANCIAL STATEMENTS

June 30, 2015

NOTE 1 - BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Academy of Mathematics and Science, Inc. (the Academy) is a 501(c)(3) non-profit corporationestablished in the State of Arizona in 2001 to operate a charter school. The Academy is dedicatedto providing students in kindergarten through eighth grade with a quality education, emphasizingmath and science while simultaneously providing a superior education in all other aspects of thecurriculum. The Academy operates under a charter contract with the Arizona State Board forCharter Schools, which mandates policy and operational guidelines.

The significant accounting policies of the Academy follow:

Basis of Presentation: Financial statement presentation follows the recommendations of theFinancial Accounting Standards Board Accounting Standards Codification (FASB ASC) topic ofNot-for-Profit Entities. The Academy is required to report information regarding its financialposition and activities according to three classes of net assets: unrestricted net assets, temporarilyrestricted net assets, and permanently restricted net assets. As of June 30, 2015, the Academy hadno permanently restricted net assets.

Use of Estimates: In preparing financial statements in conformity with accounting principlesgenerally accepted in the United States of America, management is required to make estimates andassumptions that affect the reported amounts of assets and liabilities, the disclosure of contingentassets and liabilities at the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. Actual results could differ from those estimates.

Contributions: The Academy follows the FASB ASC subtopic of Revenue Recognition for Not-for-Profit Entities. Contributions received are recorded as unrestricted, temporarily restricted orpermanently restricted support based on the existence and/or nature of any donor restrictions. Alldonor restricted support is reported as an increase in temporarily restricted or permanentlyrestricted net assets depending on the nature of the restriction. When a donor restriction expires,that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarilyrestricted net assets are reclassified to unrestricted net assets and reported in the statement ofactivities as net assets released from restrictions.

Due from Government: Due from government consists mainly of state approved payments to theAcademy to operate the charter school. The Academy has never experienced any losses due tonon-payment, expects none on the June 30, 2015 balances, and therefore has not established anallowance for uncollectibility.

Prepaid Expenses: Prepaid expenses consist mainly of prepaid rent related to the lease of theschool site, textbooks purchased for use in the subsequent fiscal year and prepaid insurance.

6



June 30, 2015

NOTE 1 - BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -Continued

Property and Equipment: All acquisitions of land and improvements, building and improvements,and furniture, fixtures and equipment with a cost of $3,000 or more and an estimated life of oneyear or more are capitalized. Assets are stated at cost. Depreciation is provided on the straight-linebasis over the following estimated useful lives of the respective assets:

Leasehold improvements Lesser of the estimated useful life or remaining term of applicable lease

Building and improvements 7-40 yearsFurniture, fixtures and equipment 3-10 years

Loan Issuance Costs: Loan issuance costs and origination fees are deferred and amortized over theterm of the loan using the straight-line method.

Donated Services: Donated services are recognized only if the services received either create orenhance nonfinancial assets or require specialized skills, are provided by individuals possessingthose skills, and would typically need to be purchased if not provided by donation. A number ofvolunteers have made contributions of their time to the Academy to help with programs, provideclerical support and general maintenance. The value of this contributed time is not reflected in thefinancial statements since it does not meet either of the recognition criteria.

Advertising: Advertising costs are expensed as incurred.

Expense Allocation: The costs of providing various programs and other activities have beensummarized on a functional basis in Note 8. Accordingly, certain costs have been allocated amongthe programs and supporting services benefited.

Income Taxes: The Academy is exempt from federal and state income taxes as an organizationother than a private foundation under Section 501(c)(3) of the Internal Revenue Code and similarstate provisions.

Concentration of Credit Risk: The Academy places its cash with multiple financial institutions. Attimes, such cash may be in excess of FDIC insurance limits. The Academy has not experiencedany losses in such accounts and believes it is not exposed to any significant risks on cash.

7



June 30, 2015

NOTE 2 - RESTRICTED CASH

Restricted cash consists of cash that is restricted as to withdrawal or use under the terms of theAcademy's long-term debt agreements (see Note 6). The accounts are held by Bank of Arizona astrustee.

Restricted cash consists of the following at June 30, 2015:

Project fund $ 2,268,422Bond fund 461,315Cost of issuance fund 38,276

Total $ 2,768,013

NOTE 3 - NOTE RECEIVABLE, FROM A RELATED PARTY

The Academy has a $175,000 note receivable with the Academy of Mathematics and ScienceSouth, Inc., a related party (see Note 12), to pay for start-up costs. The note receivable is due onthe earlier of June 30, 2016 or within 90 days of demand by the Academy, and accrues interest at2.5%. The outstanding balance at June 30, 2015 was $173,979.

NOTE 4 - OPERATING LEASES

The Academy leases facilities and equipment from both unrelated and related parties (see Note 12)under the provisions of long-term lease agreements classified as operating leases expiring throughDecember 2023. Rental expenses under the leases for the year ended June 30, 2015 totaled$329,927.

The future minimum payments under the lease agreements are as follows:

Year ending June 30:2016 $ 283,8942017 283,8942018 283,8942019 283,8942020 252,490Thereafter 873,723

Total $ 2,261,789

8



June 30, 2015

NOTE 5 - CAPITAL LEASES

The Academy acquired office equipment under the provisions of long-term lease agreementsclassified as capital leases. Accordingly, the cost of the assets of $11,658 has been capitalized.Accumulated depreciation on the assets was $9,608 at June 30 2015. The future minimum leasepayments under the capital leases, together with the present value of the net minimum leasepayments, are as follows:

Year ending June 30:2016 $ 2,171Less amount representing interest 76Present value of net minimum capital lease payments $ 2,095

NOTE 6 - LONG-TERM DEBT

Long-term debt consisted of the following at June 30, 2015:

$3,132,000 loan payable to RAZA Development Fund, Inc. datedJuly 25, 2014, to refinance its $2,727,000 loan payable and tofinance additional building improvements. Interest-only paymentswere due for the first six months under the agreement, thereaftermonthly principal and interest payments of $22,439 are due, withinterest at 6.00%. The loan is amortized over twenty years with aballoon payment of $2,526,804 due in July 2021. The loan issecured by a deed of trust on real property, a security interest inall personal property of the Academy, and guaranteed by Mathand Science Success Academy, Inc. (a related party, see Note 12)with a security interest in all the personal property of theguarantor. $ 3,111,562

$750,000 loan payable to RAZA Development Fund, Inc. datedJuly 24, 2015, to refinance its $306,000 loan payable and tofinance additional tenant improvements to the school site.Interest-only payments were due for the first six months under theagreement, thereafter monthly principal and interest payments of$11,636 are due, with interest at 6.00%. The loan matures in July2021. The loan is secured by a security interest in all the personalproperty of the Academy. 725,720

9



June 30, 2015

NOTE 6 - LONG-TERM DEBT - Continued

$6,700,000 Education Revenue Bonds (Series 2015B) issued bythe Industrial Development Authority of the Town of Florence,Inc. The proceeds of the bonds were loaned to the Academypursuant to a loan agreement dated May 1, 2015. The loanmatures over a 30-year period, with an interest rate of 7.25%.Monthly principal and interest payments vary, and range from aminimum of $40,479 to a maximum of $47,885. The loan issecured by AMS - Camelback's personal property and revenues,including revenues received from the State of Arizona underAMS - Camelback's charter contract, and a deed of trust on realproperty located at AMS - Camelback's site. 6,700,000

$21,000 loan payable dated July 15, 2014 to purchase a bus.Principal and interest payments of $638 are due monthly. Theinterest rate is 5.91% and the loan matures in August 2017. 15,553

Total 10,552,835

Less current portion 174,818

$10,378,017

The future minimum payments on long-term debt are as follows:

Year ending June 30:2016 $ 174,8182017 201,3182018 237,2252019 278,6402020 327,126Thereafter 9,333,708

Total $10,552,835

Under these loan agreements, the Academy is required to comply with certain financial covenants.As of and during the year ended June 30, 2015, the Academy was in compliance with thesecovenants.

10



June 30, 2015

NOTE 7 - TEMPORARILY RESTRICTED NET ASSETS

The Academy received temporarily restricted contributions totaling $58,653 and disbursed$47,369 of those contributions for extracurricular activities during the year ended June 30, 2015.

As of June 30, 2015, $11,284 remained in net assets temporarily restricted for extracurricularactivities.

NOTE 8 - FUNCTIONAL EXPENSE CLASSIFICATION

The following is a summary of the Academy's expenses by function for the year ended June 30,2015:

Primary and secondary education $ 3,021,024General and administrative 968,536Fundraising 8,796

Total $ 3,998,356

NOTE 9 - COMMITMENTS AND CONTINGENT LIABILITIES

Compliance: The Academy's compliance with certain laws and regulations is subject to review bythe State of Arizona, Office of the Auditor General and Department of Education. Such reviewscould result in adjustments or withholding of State Equalization assistance.

Commitments: During the fiscal year ended June 30, 2015, the Academy entered into aconstruction contract to build a second school site. As of June 30, 2015, the Academy had aremaining commitment of approximately $1,839,000 to complete this project.

NOTE 10 - ECONOMIC DEPENDENCY

For the year ended June 30, 2015, approximately 73% of the Academy's revenue was derived fromthe State of Arizona through payments of State Equalization, Classroom Site Funds (Proposition301), Instructional Improvement Fund, State of Arizona grants, and federal grants passed throughthe State of Arizona. Non-federal funds that are paid from the State of Arizona are subject tofunding approval from the state legislature. Changes in state funding levels for charter schoolscould have a significant impact on the Academy's future revenues.

11



June 30, 2015

NOTE 11 - RETIREMENT PLAN

The Academy maintains a deferred compensation plan under Section 457 of the Internal RevenueCode. Employees are eligible to participate in the plan upon employment at the Academy andbecome fully vested after two years. The Academy matches all contributions up to 2.5% of theemployee's gross pay. Contributions to the plan totaled $36,364 for the year ended June 30, 2015.

NOTE 12 - RELATED PARTY TRANSACTIONS

The Academy is related to Math and Science Success Academy, Inc. (MASSA); Academy ofMathematics and Science South, Inc. (AMSS); CAT Investment Properties, LLC (CAT); and SetaProperties, LLC. (Seta) through common members of its board of directors or by commonmanagement. During the year ended June 30, 2015, the Academy had the following transactionswith related parties:

The Academy provides management services to MASSA and AMSS under intercompanyagreements. Amounts received from MASSA and AMSS under the agreements totaled$370,104 and $188,034, respectively, for the year ended June 30, 2015. The Academy isowed $12,793 from MASSA at June 30, 2015.

In June 2012, MASSA entered into a ten year operating lease extension with the Academyfor MASSA's school site. The Academy received rental income from MASSA totaling$392,825 for the year ended June 30, 2015.

MASSA is the guarantor of the Academy's $3,132,000 loan payable to RAZADevelopment Fund, Inc.

The Academy made a loan to AMSS for start-up costs. The amount of the loan due fromAMSS was $173,979 at June 30, 2015. AMSS also owed the Academy $2,727 at June 30,2015.

The Academy is obligated to CAT (see Note 4) under the provisions of a long-term leaseagreement classified as an operating lease. Amounts paid under the lease for the year endedJune 30, 2015 totaled $34,259. Future minimum payments under the agreement are$139,891. As part of the lease agreement, the Academy has paid a deposit totaling $2,855to CAT.

The Academy is obligated to Seta under the provisions of a long-term lease agreementclassified as an operating lease. Amounts paid under the lease for the year ended June 30,2015 totaled $271,559 (see Note 4). Future minimum payments under the agreement are$2,121,898. As part of the lease agreement, the Academy has paid a deposit totaling$23,380 to Seta.

12



June 30, 2015

NOTE 13 - SUBSEQUENT EVENTS

The Academy has evaluated subsequent events through November 13, 2015, the date which thefinancial statements were available to be issued, and has concluded that no events have occurredsince the year ended June 30, 2015 that would require an adjustment to or disclosure in thefinancial statements.

13


DEPARTMENTAL SCHEDULE OF FINANCIAL POSITION

June 30, 2015

AMS - Prince AMS - Camelback Eliminations TotalASSETS

Current assets:Cash $ 726,096 $ 726,096Restricted cash, current $ 499,591 499,591Due from government 19,026 19,026Due from related party 111,291 $ (98,498) 12,793Note receivable, from a related party 173,979 173,979Prepaid expenses 40,119 40,119

Total current assets 1,070,511 499,591 (98,498) 1,471,604

Land 514,562 514,562Leasehold improvements 1,620,965 1,620,965Buildings and improvements 3,094,027 3,094,027Furniture, fixtures and equipment 377,604 28,288 405,892Construction in progress 8,811 3,737,814 3,746,625Less accumulated depreciation (1,653,586) (1,653,586)

3,962,383 3,766,102 7,728,485

Restricted cash, noncurrent 2,268,422 2,268,422Loan issuance costs, net of accumulated

amortization of $5,71825,399 265,929 291,328

Deposits 26,235 26,235

Total assets $ 5,084,528 $ 6,800,044 $ (98,498) $ 11,786,074

LIABILITIES AND NET ASSETS (DEFICIT)

Current liabilities:Accounts payable and accrued expenses $ 56,933 $ 92,713 $ 149,646Accrued payroll and related 219,430 15,607 235,037Due to related party 101,225 $ (98,498) 2,727Capital leases 2,095 2,095Long-term debt, current portion 174,818 174,818Deferred revenue 2,847 2,847

Total current liabilities 456,123 209,545 (98,498) 567,170

Long-term debt, net of current portion 3,678,017 6,700,000 10,378,017Total liabilities 4,134,140 6,909,545 (98,498) 10,945,187

Net assets (deficit):

Unrestricted 939,104 (109,501) 829,603Temporarily restricted 11,284 11,284

Total net assets (deficit) 950,388 (109,501) 840,887

Total liabilities and net assets (deficit) $ 5,084,528 $ 6,800,044 $ (98,498) $ 11,786,074

14


DEPARTMENTAL SCHEDULE OF ACTIVITIES


AMS - Prince AMS - Camelback Total

UnrestrictedTemporarilyRestricted Subtotal Unrestricted

TemporarilyRestricted Subtotal

Revenue and support:State Equalization $ 2,396,063 $ 2,396,063 $ 2,396,063Classroom Site Funds 145,840 145,840 145,840Instructional Improvement Fund 14,971 14,971 14,971Grants 393,365 393,365 393,365Extracurricular activities 31,493 $ 58,653 90,146 90,146School fees 66,291 66,291 66,291Rental 392,825 392,825 392,825Management fees 558,138 558,138 558,138Interest income 2,698 2,698 2,698Miscellaneous 1,757 1,757 1,757

Net assets released from restrictions 47,369 (47,369)Total revenue and support 4,050,810 11,284 4,062,094 4,062,094

Expenses:Salaries 2,000,860 2,000,860 $ 34,543 $ 34,543 2,035,403Payroll taxes and benefits 400,850 400,850 7,269 7,269 408,119Rent 329,852 329,852 75 75 329,927Professional services 102,360 102,360 3,336 3,336 105,696Purchased property services 107,538 107,538 8,487 8,487 116,025Supplies 137,024 137,024 21,202 21,202 158,226Repairs and maintenance 33,402 33,402 460 460 33,862Advertising 21,064 21,064 26,045 26,045 47,109Food service 132,354 132,354 132,354Insurance 34,712 34,712 408 408 35,120Transportation 18,421 18,421 2,568 2,568 20,989Dues and fees 8,768 8,768 8,768Extracurricular activities 34,032 34,032 34,032Fundraising 8,796 8,796 8,796Depreciation and amortization 213,316 213,316 1,485 1,485 214,801Interest 216,785 216,785 216,785Miscellaneous 88,721 88,721 3,623 3,623 92,344

Total expenses 3,888,855 3,888,855 109,501 109,501 3,998,356

Change in net assets 161,955 11,284 173,239 (109,501) (109,501) 63,738

Net assets, beginning of the year 777,149 777,149 777,149

Net assets (deficit), end of the year $ 939,104 $ 11,284 $ 950,388 $ (109,501) $ $ (109,501) $ 840,887

15

Certified

Public Accountants


Independent Auditors' Report on Internal Control Over Financial Reporting and

on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards


We have audited, in accordance with the auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General of the United States, the financial statements of Academy ofMathematics and Science, Inc. (the Academy), a nonprofit organization, which comprise the statement offinancial position as of June 30, 2015, and the related statements of activities and cash flows for the yearthen ended, and the related notes to the financial statements, and have issued our report thereon datedNovember 13, 2015.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Academy's internalcontrol over financial reporting (internal control) to determine the audit procedures that are appropriate inthe circumstances for the purpose of expressing our opinion on the financial statements, but not for thepurpose of expressing an opinion on the effectiveness of the Academy’s internal control. Accordingly, wedo not express an opinion on the effectiveness of the Academy’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, to prevent, ordetect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combinationof deficiencies, in internal control such that there is a reasonable possibility that a material misstatementof the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. Asignificant deficiency is a deficiency, or a combination of deficiencies, in internal control that is lesssevere than a material weakness, yet important enough to merit attention by those charged withgovernance.

Our consideration of the internal control was for the limited purpose described in the first paragraph ofthis section and was not designed to identify all deficiencies in internal control that might be materialweaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies mayexist that were not identified. Given these limitations, during our audit we did not identify anydeficiencies in internal control that we consider to be material weaknesses. We did identify a certaindeficiency in internal control, described in the accompanying schedule of findings and responses as 2015-001, that we consider to be a significant deficiency.

16

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Academy's financial statements are free frommaterial misstatement, we performed tests of its compliance with certain provisions of laws, regulations,contracts, and grant agreements, noncompliance with which could have a direct and material effect on thedetermination of financial statement amounts. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit, and accordingly, we do not express such an opinion. Theresults of our tests disclosed no instances of noncompliance or other matters that are required to bereported under Government Auditing Standards.

The Academy's Response to Findings

The Academy's response to the finding identified in our audit is described in the accompanying scheduleof findings and responses. The Academy's response was not subjected to the auditing procedures appliedin the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

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

November 13, 2015

17

KCambergFester & Chapman P.C.


SCHEDULE OF FINDINGS AND RESPONSES

June 30, 2015

2015-001 Financial Statements Under Generally Accepted Accounting Principles

Criteria:Financial statements are to be presented in accordance with accounting principles generally accepted inthe United States of America (GAAP). Further, Financial Accounting Standards Board AccountingStandards Codification topic of Not-for-Profit Entities, and American Institute of Certified PublicAccountants Accounting and Auditing Guide - Not-for-Profit Organizations contain requirements forproper accounting.

Condition:Audit adjustments and additional audit effort were necessary to correctly state the Academy's constructionin progress, retainage, equipment, loan issuance costs and related amortization.

Cause:The Academy did not record construction related costs for the month of June and did not write off the loanissuance costs and related amortization for the loan that was refinanced during the year ended June 30,2015.

Effect:Prior to the posting of audit adjustments, the Academy's construction in progress, retainage, equipment,loan issuance costs and related amortization were misstated.

Recommendation:Management should strengthen its system of internal controls to help ensure that all construction relatedcosts are properly accrued at year-end and that loan issuance costs are recorded in accordance with GAAP.

Management's Response:While we do agree that an adjusting journal entry was needed to properly state the balance ofConstruction-in-Progress as of the fiscal year-end, we do not agree that the system of internal controls forthe organization needs to be strengthened. The accounting entries giving rise to the finding relate to anisolated and, to date, unique presentation of construction funding and are not indicative of an internalcontrol deficiency. The Construction-in-Progress accounting adjustment relates to invoices paid for by abank trustee, on the school’s behalf, from bond issuance proceeds, and does not reflect on the school’syear-end cutoff procedures. Our business office personnel have the requisite skills, knowledge, andexperience to perform their respective duties, and our internal controls are well-designed andimplemented. The accounting entries in question fell outside of normal processes. Furthermore,Construction-in-Progress adjustment pertains solely to the Academy of Math and Science – Camelback,which was not yet operational during the audit year. It also worth noting that after modifying both the CIPaccount and the restricted cash account, which did not have an impact on net assets, the aggregate total ofthe remaining journal entries related to loan issuance costs and amortization expense is 1% of expenses.Nonetheless, the auditor’s recommendation has been noted.

18

Certified

Public Accountants


INDEPENDENT ACCOUNTANT’S REPORT

ON APPLYING AGREED-UPON PROCEDURES


We have performed the procedures enumerated below, which were agreed to by Arizona State Board ofCharter Schools (the specified party), solely to assist you with respect to the compliance of Academy ofMathematics and Science, Inc. (the Academy), a nonprofit organization, as of and for the year ended June30, 2015. The Academy’s management is responsible for compliance. This agreed-upon proceduresengagement was conducted in accordance with attestation standards established by the American Instituteof Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of thoseparties specified in the report. Consequently, we make no representation regarding the sufficiency of theprocedures described below either for the purpose for which this report has been requested or for any otherpurpose.

Our procedures and findings are included in the following 6/15 version of the Legal ComplianceQuestionnaire.

We were not engaged to, and did not, conduct an audit, the objective of which would be the expression ofan opinion on the Academy's compliance. Accordingly, we do not express such an opinion. Had weperformed additional procedures, other matters might have come to our attention that would have beenreported to you.

The Academy's responses to our findings are presented in the attached Legal Compliance Questionnaire.We did not apply any procedures to the Academy's responses and, accordingly, we are not reporting onthem.

This report is intended solely for the information and use of the Board of Directors, management of theAcademy, and the Arizona State Board for Charter Schools and is not intended to be and should not beused by anyone other than the specified parties.

November 13, 2015

Arizona State Board for Charter Schools

Legal Compliance Questionnaire

Charter/CTDS: Academy of Math and Science, Inc. (108713000)

Fiscal Year Ended: June 30, 2015

Table of Contents

Topic Page

INSTRUCTIONS................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................2

PERSONNEL................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................4

REQUIRED FILINGS................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................5

SPECIAL EDUCATION................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................6

CLASSROOM SITE FUND................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................6

STUDENT ATTENDANCE REPORTING................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................7

OPEN MEETING LAW................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................12

INSURANCE REQUIREMENTS................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................13

TUITION................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................13

RECORDS MANAGEMENT................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................13

SIGNATURE PAGE................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................13

6/15 1

INSTRUCTIONS

NOTE: This questionnaire should only be used for charters that are exempt from the Uniform System ofFinancial Records for Arizona Charter Schools (charters that HAVE an exception). If a charter is subject toprocurement requirements pursuant to A.R.S. §§15-189.02 and 41-2535(A), this questionnaire should beused in conjunction with the Procurement Compliance Questionnaire (see audit guidelines) which isavailable on the Arizona State Board for Charter Schools’ website https://asbcs.az.gov.

In order to determine whether a charter that is exempt from the requirements of the Uniform System ofFinancial Records for Arizona Charter Schools (USFRCS) is complying with applicable legal requirements, theauditors must complete the following Legal Compliance Questionnaire in accordance with both the agreedupon procedures (instructions contained herein) and the attestation standards established by the AmericanInstitute of Certified Public Accountants. (Note: This questionnaire is not comprehensive of all legalrequirements for charter schools. As such, this document should not be the sole reference to determine alllaws and regulations that are applicable to charter schools).

The following prescribed minimum agreed upon procedures, as well as those identified throughout thequestionnaire, must be used for completing the Legal Compliance Questionnaire in accordance with theattestation standards established by the American Institute of Certified Public Accountants. The State Boardfor Charter Schools may reject questionnaires not meeting these standards.

Sufficient, appropriate evidence must be obtained annually for each question to satisfactorily

determine whether the charter complies with the legal requirements, and the evidence must be

included in the documentation.

Evidence may be obtained through test work, observation, examination, and client assertion. However,

client assertion alone is not adequate evidence to support “Yes” answers to the questionnaire.

Population size should be considered in determining the number of items to test, and the items

selected should be representative of the population.

The number of items tested must be sufficient to determine whether a deficiency was the result of an

isolated incident or a recurring problem. Therefore, testing one transaction, record, or item is not

sufficient.

The sample size should be expanded if the audit firm cannot clearly determine whether the charter

complies with the legal requirements of the question.

6/15 2

If sufficient evidence has been obtained and documented during the current audit, that evidence may

be referenced to answer questions.

All “No” and “N/A” answers must be adequately explained in the comments column or in an

attachment. Findings must be described in sufficient detail to enable the State Board for Charter

Schools to describe the finding in a letter. The description should include the number of items tested

and the number of exceptions noted.

A “Yes” answer indicates that the audit firm has determined that the charter complies with the legal

requirements of the question and a “No” answer indicates the charter does not comply. However, the

final determination of compliance on each question, as well as overall compliance with legal

requirements, is made by the State Board for Charter Schools based on the evidence presented in the

questionnaire, audit reports, resulting documentation, and any other sources.

The resulting documentation supporting the audit firm’s answers to the Legal Compliance Questionnairemust be made available on request for review by the State Board for Charter Schools. To facilitate this review,the audit firm may wish to include in the documentation a copy of the questionnaire containing references toprocedures performed for each question.

6/15 3

Legal Compliance Questionnaire1

Questions/Subject Area Yes/No Comments

Personnel1. Did the school have valid fingerprint clearance cards (FCC) for

100% of the required personnel as of the testing date? A.R.S.

§15-183 (C)(5) and A.R.S. §15-512 (H)

No See questions 2a. through

2c. below

(QUESTIONS #2a THROUGH 2c ONLY APPLY TO NEW HIRES

REQUIRED PURSUANT TO A.R.S. §15-183(C)(5) TO HAVE VALID

FCCS AND DO NOT APPLY IF AN INDIVIDUAL’S FCC HAS

EXPIRED.)

2. For each individual referenced in #1 that did not have a valid

FCC, please provide the following information (provide

supplemental pages, if necessary) (See agency guidance

available on the Board’s website prior to completing these

questions) A.R.S. §15-183 (C)(5):

a. Was an application for a FCC on file with the Department of

Public Safety (DPS) as of the testing date?

Yes

b. Did DPS receive the application prior to the hire date? Yes

c. Prior to placement, did the school do all of the following?

i) Document the necessity for hiring/placing the

individual prior to receiving a FCC?

Yes

ii) Obtain statewide criminal history information on the

individual?

Yes

iii) Obtain references from the applicant’s current and

previous employers?

Yes

3. Did the charter school maintain up-to-date fingerprints of all

Governing Body members as of the testing date? Charter

Contract2

Yes

4. Were all other personnel fingerprint checked as of the testing

date? A.R.S. §15-183 (C)(5) and A.R.S. §15-512

Yes

5. Did the charter school inform the parents and guardians of

pupils enrolled in the school of the availability of resume

information for all employees who provide instruction to

pupils? A.R.S. §15-183 (F)

Yes

_____________________________

1 For the purposes of this questionnaire, please note that “Governing Body” means the group of persons requiredby A.R.S. §15-183(E)(8) that is responsible for policy decisions of the charter school. The term “GoverningBoard” means the group of persons that the charter holder has assigned the responsibility addressed by thequestion. The applicable group of persons may be the Governing Body or the officers, directors, members orpartners of the charter holder. The applicable group of persons may vary depending on the issue addressed by thequestion.2 Specific contract cites could not be provided as term references vary per contract year.

6/15 4


Required Filings1. Is the school in good standing with the following regulatory

bodies:

a. Internal Revenue Service U.S.C. Title 26

i. For payroll taxes, income taxes (if applicable) and

applicable tax forms required to be filed during the

audited fiscal year?

Yes

ii. The school did not have any payroll or income taxes

payable from a prior year(s) as of audited fiscal year end

(June 30th) is a true statement.

Yes

iii. If the response to 1.a.i, 1.a.ii, or both is "no", does the

school have a payment plan in place with the Internal

Revenue Service?

N/A See questions i. and ii.

above

iv. If the answer to Question 1.a.iii is "yes", has the school

made all of the required payments under the payment

plan as of audited fiscal year end (June 30th)?

N/A See question iii. above

b. Arizona Department of Revenue A.R.S. §43-401 and §43-

1111

i. For payroll taxes, state income taxes (if applicable) and

applicable tax forms required to be filed during the


Yes

ii. The school did not have any payroll or income taxes

payable from a prior year(s) as of audited fiscal year end

(June 30th) is a true statement.

Yes

iii. If the response to 1.b.i, 1.b.ii, or both is "no", does the

school have a payment plan in place with the Arizona

Department of Revenue?


above

iv. If the answer to Question 1.b.iii is "yes", has the school




c. Arizona Department of Economic Security A.R.S. § 23-721 et

seq.

i. State unemployment contributions requirements for the


Yes

ii. The school did not have any state unemployment

contributions payable from a prior year(s) as of audited

fiscal year end (June 30th) is a true statement.

Yes

iii. If the response to 1.c.i, 1.c.ii, or both is "no", does the

school have a payment plan in place with the Arizona

Department of Economic Security?


above

iv. If the answer to Question 1.c.iii is "yes", has the school




6/15 5


d. Corporation Commission (e.g., annual report)? Charter

Contract

Yes

2. Was a copy of the adopted budget submitted electronically to

the Superintendent of Public Instruction no later than July 18th?

A.R.S. §15-905 (E) and §15-183 (E)(6)

Yes

3. Was the Annual Financial Report (AFR) sent to the

Superintendent of Public Instruction by October 15th? A.R.S.

§15-183 (E)(6) and 15-904 (A)

Yes

Special Education1. Is the staff the school uses to provide special education services

(internal or contracted) certified in special education?

Yes

2. Does the school conduct 45 day screenings on all new students?

AAC R7-2-401

Yes

3. Are evaluations and IEPs on file for special education students?

34 CFR 300.341-350 and 300.531-536

Yes

Classroom Site Fund - A.R.S. §15-977 & OAG Memorandum No.44

1. Did the school properly allocate Classroom Site Fund receipts

among the following projects: 1011—Base Salary (20%),

1012—Performance Pay (40%), and 1013—Other (40%)?

Yes

2. For Project 1011, were expenses only for teacher base salary

increases and employment-related expenses?

Yes

3. For Project 1012, were expenses only for performance-based

teacher compensation increases and employment-related

expenses?

Yes

4. For Project 1013, were expenses only for class size reduction,

teacher compensation increases, AIMS intervention programs,

teacher development, dropout prevention programs, and

teacher liability insurance premiums?

Yes

5. Did the school use Classroom Site Fund monies to supplement

rather than supplant, existing funding from all other sources?

(See USFRCS Memorandum No. 44 for guidance on the

Classroom Site Fund.)

Yes

6. If the school had monies remaining at year-end, were they

properly carried forward in the three Classroom Site Projects

(1011, 1012, and 1013) to help ensure that the restrictions placed

on the original allocation of revenues is applied in future years?

Yes

7. Did the school have sufficient cash at year-end to cover the carry

over monies, and what was the Classroom Site Fund cash

carryover balance at year-end?

Yes

$73,183

6/15 6


Student Attendance Reporting

If test work performed in questions 3-16 and 19 of this section discloses a net overstatement orunderstatement of membership and/or absence days, based on A.R.S. and ADE's membership andattendance guidelines, report the net overstatement or understatement in the “Comments” column next toeach applicable question.

1. Was school in session for at least 180 days or did the Governing

Board adopt a calendar with an equivalent number of minutes

of instruction per school year based on a different number of

days of instruction? A.R.S. §15-341.01

Yes

2. Did the school ensure that [A.R.S. §§15-808(I)(1) and 15-

901(A)(1)]:

(Note: Instructional hours do not include periods of the day in

which an instructional program or course of study is not being

offered, including, but not limited to, lunch, recesses, home

room periods, study hall periods, and early release or late start

hours.) ADE's External Guidelines GE-17 and GE-18

a. Preschool children with disabilities were enrolled in a

program that met at least 360 minutes a week that meets at

least 216 hours over the minimum number of days?

N/A No preschool children

b. Kindergarten was in session for at least 356 hours or 346

hours for Arizona Online Instruction (AOI) Programs?

Yes

c. Grades 1 through 3 were in session for at least 712 hours? Yes

d. Grades 4 through 6 were in session for at least 890 hours? Yes

e. Grades 7 and 8 were in session for at least 1,000 hours or

1,068 hours for AOI Programs?

Yes

f. Grades 9 through 12, other than AOI Programs, were in

session at least 720 hours?

N/A School is grades K-8

g. Grades 9 through 12, other than AOI Programs, include at

least four subjects, each of which if taught each school day

for the minimum number of days required in a school year,

would meet a minimum of 123 hours a year?


h. Grades 9 through 12 of AOI Programs include at least four

courses throughout the year that meet at least 900 hours

during the school year?

N/A Program not offered by

school

For Student Attendance Reporting questions 3-16, the audit firm must select and test the specified number of

transactions (records, entries, withdrawals, or days) as shown in the sample size instructions before each section.

These samples should include 3 or more grade levels and 3 or more campuses, where applicable. The listed sample

sizes represent the minimum level of required test work. The audit firm should use its judgment in determining

whether a larger sample is needed. All student attendance records tested in questions 3-10 and 16 should be

selected from the 100th day reporting period.

In the parentheses provided in questions 3-16, write the actual number of transactions tested. If all transactions

were tested, indicate such in the “Comments” column.

6/15 7


For questions 3-5 select at least 3 student attendance records.

3. If the school had an early (pre-)kindergarten program, based

upon review of 0 early (pre-) kindergarten students’ attendance

records, did the school only calculate and submit

membership/absence information for this program for students

with disabilities? A.R.S. §15-901(A)(1)(a)(i) and USFRCS

Memorandum No. 33


school

4. Based upon review of 3 students’ attendance records in

kindergarten programs, if the instructional time for the year was

between 356 and 692 hours, were students not in attendance for

at least three-quarters of the day counted as being absent or, if

the instructional time for the year was 692 hours or more, were

students not in attendance at least one-half of the day counted

as being absent? A.R.S. §§15-901(A)(1)(a)(i) and 15-

901(A)(5)(a)(i)

No See comment #1

5. If the school had an early first grade program, based upon

review of 0 early first grade students’ attendance records, did

the school calculate and submit membership/absence

information for this program as it would for kindergarten?

A.R.S. §§15-901(A)(1)(a)(i) and 15-901(A)(5)(a)(i), and USFRCS

Memorandum No. 33


school

For questions 6 and 7, use the following sample sizes:

Student AttendanceSCHOOLWIDE ADM Records

< 1,000 51,000 - 5,000 10

> 5,000 15

6. Based upon review of 0 students’ attendance records at

elementary and junior high schools in which attendance was

based on half days, were students in attendance for less than

one-half the day counted as being absent for one full day; were

students in attendance for at least one-half day, but less than

three-quarters of a day, counted as being absent for one-half

day; and were students in attendance for at least three-quarters

of a day counted in attendance for a day? A.R.S. §15-

901(A)(5)(b)(ii)

N/A Attendance is based on

quarter days

6/15 8


7. Based upon review of 5 students’ attendance records at

elementary and junior high schools where attendance was based

on quarter days, were students in attendance for more than

three-quarters of the day counted in attendance for a day and

students in attendance for three-quarters of the day or less

counted in attendance for each quarter of the day in attendance?

A.R.S. §15-901(A)(5)(b)(i)

Yes

For questions 8 through 13, use the following sample sizes:

Student AttendanceSCHOOLWIDE ADM Records

< 1,000 31,000 - 5,000 5

> 5,000 7

8. For schools approved to report minutes of attendance, based

upon review of the attendance records for a 1 month period for

0 students whose attendance was reported in minutes, did the

school report minutes of attendance only for actual classroom

instruction attended by the students?

N/A Attendance reported in

terms of absences

9. Based upon review of 0 high school students' attendance

records, whose attendance was reported in terms of absences,

for all absence days reported in a 1 month period, did the school

report absences in accordance with the method(s) provided by

ADE?


10. Based upon review of 0 high school students’ attendance

records, did the school prorate the membership of the students

enrolled in less than four subjects?


11. For schools offering an AOI Program, based upon a review of 0

AOI students’ attendance records for 4 weeks: (ADE's Policies

and Procedures Manual, SF-0003)

a. Was the guardian-approved or school computer-generated

daily log describing the amount of time spent by the student

on academic tasks maintained by the participating AOI

School? A.R.S. §15-808(E)


school

6/15 9


b. Did the hours reported to ADE agree to the guardian-

approved or school computer-generated daily log?


school

c. Were all students who participated in an AOI Program,

residents of this state? A.R.S. §15-808(B)


school

d. Was the student's Intended Full Time Equivalency

Enrollment Statement maintained?


school

12. Based on review of the student's attendance records in question

11, did the school follow its procedures, to re-determine the

actual FTE for each student enrolled in an AOI Program,

following a student's withdrawal or after the end of the school

year?


school

13. Based upon review of 1 students’ attendance records (all grades)

for students withdrawn for having ten consecutive unexcused

absences, was the student only counted in membership through

the last day of actual attendance or excused absence? A.R.S. §15

901(A)(1)

Yes Total population tested

For questions 14 and 15, use the following sample sizes:

SCHOOLWIDE ADM Entries/Withdrawals< 1,000 5

1,000 - 5,000 10> 5,000 15

14. Based upon review of 5 entries: (Note: Enrollment forms are not

required for continuing students at the same school.)

a. Were entry dates entered into the school’s computerized

attendance system within 5 working days after the actual

date of entry and was documentation maintained to support

the date of data entry?

Yes

b. Did the entry date in the computerized attendance system

agree to the entry form?

Yes

c. Did the teacher’s attendance registers, if used, and other

documentation support the entry date in the computerized

attendance system?

N/A Attendance system is

completely electronic

d. Did membership begin on the first day of actual attendance

or, for continuing/pre-enrolled students, the first day that

classroom instruction was offered, provided that the

students actually attend within the first 10 days of school?

Yes

6/15 10


e. Did the school obtain and maintain verifiable

documentation of Arizona residency upon enrollment?

A.R.S. §15-802(B)(1) and ADE's Arizona Residency

Documentation Guidelines

Yes

f. If a student was not an Arizona resident, was the student

excluded from the school’s student count and state aid

calculations? A.R.S. §15-823(J)

N/A All are Arizona residents

g. If the school admitted students who were nonresidents of

Arizona, was tuition charged, as applicable? A.R.S. §15-823

N/A All are Arizona residents

15. Based upon review of 5 withdrawals:

a. Were the withdrawal dates entered into the school’s

computerized attendance system within 5 working days

after the actual day of withdrawal and was documentation

maintained to support the date of data entry? (Note: “Day of

withdrawal” for determining timely data entry means: a. the

later of the student’s withdrawal date or the day the school

is notified the student will not be returning; or b. the 10th day

of unexcused absence for students withdrawn for having ten

consecutive unexcused absences.)

Yes

b. Did the withdrawal date in the computerized attendance

system agree to the withdrawal form? (Note: If the

computerized attendance system requires the school to input

the day following the withdrawal date for a student to be

counted in membership through the last day of actual

attend