ROSHOLT SCHOOL DISTRICT NO. 54-4 ROSHOLT, …legislativeaudit.sd.gov/reports/School/Rosholt School District 2017... · 1 Independent Auditor's Report ... 45 Schedule of Current Audit

ROSHOLT SCHOOL DISTRICT NO. 54-4

ROSHOLT, SOUTH DAKOTA

FINANCIAL REPORT

FOR THE FISCAL YEAR ENDING JUNE 30, 2017

WITH INDEPENDENT AUDITOR'S REPORTS

INDEPENDENT AUDIT SERVICES, P.C.

Benjamin Elliott, CPA P.O. Box 262 Madison, South Dakota 57042

ROSHOLT SCHOOL DISTRICT NO. 54-4 ROSHOLT, SOUTH DAKOTA

TABLE OF CONTENTS TO THE FINANCIAL REPORT AS OF AND FOR THE FISCAL YEAR ENDING JUNE 30, 2017

FINANCIAL SECTION

1 Independent Auditor's Report

3 Management's Discussion and Analysis (AD&A) (Required Supplementary Information)

Basic Financial Statements:

Government-Wide Financial Statements:

9 Statement of Net Position

10 Statement of Activities

Fund Financial Statements: Governmental Funds:

11 Balance Sheet

12 Statement of Revenues, Expenditures, and Changes in Fund Balance

Enterprise Funds:

14 Statement of Net Position

15 Statement of Revenues, Expenses, and Changes in Net Position

16 Statement of Cash Flows

Fiduciary Funds:

17 Statement of Fiduciary Net Position

18 Notes to the Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION SECTION OTHER THAN MD&A

Budgetary Comparison Schedules - Budgetary Basis:

37 General Fund

38 Capital Outlay Fund

39 Special Education Fund

40 Pension Fund 41 Notes to Budgetary Comparison Schedules

Pension Schedules:

42 Schedule of the School District's Proportional Share of Net Pension Asset

42 Schedule of the School District's Contributions

GOVERNMENTAL SECTION

43 Report on Compliance and Other Matters and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

45 Schedule of Prior Audit Findings 45 Schedule of Current Audit Findings and Responses

NOTE: All figures shown in this financial report are in U.S. dollars. For space considerations, the "$" symbol is not used.

INDEPENDENT AUDIT SERVICES, P Benjamin Elliott, CPA

P.O. Box 262, Madison, South Dakota 57042

605.483.3225

School Board Rosholt School District No. 54-4 Rosholt, South Dakota

INDEPENDENT AUDITOR'S REPORT

I have audited the accompanying financial statements of governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the Rosholt School District No. 54-4 (School District), Roberts County, South Dakota as of June 30, 2017 and for the fiscal year then ended, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

The School District's management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America - this includes the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditor's Responsibility

My responsibility is to express opinions on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America and the standard applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risk of material misstate-ment of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the School District's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, I express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I obtained is sufficient and appropriate to provide a basis for my unmodified audit opinions on governmental activities, business-type activities, each major fund, and the aggregate remaining fund information.

Rosholt School District No. 54-4 Independent Auditor's Report -- Page Two

Unmodified Opinions

In my opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the Rosholt School District, Roberts County, South Dakota, as of June 30, 2017, and the respective changes in its financial position and, where applicable, cash flows thereof for the fiscal year then ended, in accordance with accounting principles generally accepted in the United States of America.

Other Matters - Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis (page 3 to 8), the budgetary comparison schedules (page 37 to 41), schedule of net pension liability (asset) (page 42), and schedule of pension contributions (page 42) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Government Accounting Standards Board who considers it to be an essential part of financial reporting by placing the basic financial statements in an appropriate operational, economic, or historical context. I have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the formation and comparing the information for consis-tency with management's responses to my inquiries, the basic financial statements, and other knowledge I obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide me with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, I have also issued my report (page 43) dated January 16, 2018 on my tests of the Rosholt School District's compliance with certain provisions of laws, regulations, contracts and other matters and my consideration of its internal control over financial reporting. The purpose of that report is to describe the scope of my testing of compliance and internal control over financial reporting, and the results of that testing, and not to provide an opinion on compliance or internal control over financial reporting. That report is an integral part of an audit performed in accordance

with Government Auditing Standards in considering the School District's compli-ance and internal control over financial reporting.

Independent Audit Services, PC Benjamin Elliott, CPA Madison, South Dakota

January 16, 2018

ROSHOLT SCHOOL DISTRICT No. 54-4 JUNE 30, 2017

MANAGEMENT'S DISCUSSION AND ANALYSIS (AD&A)

This section of the Rosholt School District No. 54-4's (School District) annual financial report presents our discussion and analysis of the School District's financial performance during the fiscal year ending June 30, 2017. Please read it in conjunction with the School District's financial statements, which follow this section.

FINANCIAL HIGHLIGHTS

Financial highlights for the Rosholt School District are as follows:

For the year ending June 30, 2017:

Revenue: Charges for goods and services 118,173 Operating grants 243,976 Capital grants 0 General receipts 2,493,736

Total 2,855,885

Expenses: Governmental 2,779,607 Business-type 184,846

Total 2,964,453

Decrease in Net Position (108,568)

Net Position: July 1, 2016, 4,482,809

June 30, 2017 4,374,241

Governmental Funds: General Capital Outlay Special Education Pension Long-term Debt Capital Assets

Business-Type Funds: Food Service Driver's Education

Total

802,148 884,847 304,974 43,124

(906,301) 3,165,210

77,197 3,042

4,374,241

During the year ending June 30, 2017 the School District: * Capitalized the following purchases:

New bus barn for $219,798 Van for 10 passengers for $25,780 Copiers (2) for $19,488 Kitchen equipment for $32,313

* Received a Classroom Innovation grant for $41,420 * Made the following principal payments:

2008 Rural Electric Economic Development Loan of $30,000 2014 Rural Electric Economic Development Loan of $30,000 2011 Limited Tax GO Certificates of $130,000 2012 Copier capital lease of $5,241 2014 Digitized equipment lease of $16,543 2016 Blue Bird school bus lease of $19,311 2017 Copier capital lease of $1,071

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BRIEF DISCUSSION OF THE BASIC FINANCIAL STATEMENTS

This financial report is presented in a format consistent with the presentation requirements of the Governmental Accounting Standards Board (GASH) Statement-34.

The financial report consists of three parts: (1) management's discussion and analysis (page 3 to 8), (2) the basic financial statements (page 9 to 36) and (3) required supplementary information (page 37 to 42). The basic financial statements include two types of statements that present the School District from two different financial points of view.

Government-wide financial statements (View #1): The first two statements are government-wide financial statements that provide both long-term and short-term information about the School District's overall financial status.

Fund financial statements (View #2): The remaining financial statements are fund financial statements that focus on significant operations of the governmental, enterprise, and fiduciary activities of the School District.

The governmental fund financial statements tell how general govern-mental services were financed in the short-term, as well as what remains for future spending. Governmental funds operated by the School District are the general fund, capital outlay fund, special education, and pension fund.

The enterprise fund financial statements offer short-term and long-term financial information about the activities of the School District that operate like a business. Enterprise fund operated by the School District are the food service fund and the driver's education fund.

The fiduciary fund financial statements provide information about the financial status of activities (like student council or the music club) in which the School District acts solely as a trustee or agent for the benefit of those groups to whom these funds belong. The School District only has agency fiduciary funds.

The financial statements include notes that explain in more detail some of the information found in the financial statements. The financial statements are also followed by a section of required supplementary information that presents a budgetary analysis and pension information.

Required Supplementary Information:

This Management's Discussion and Analysis (page 3 to 8), the Budgetary Comparison Schedules, the Schedule of Net Pension Liability (Asset) (page 42), and the Schedule of Pension Contributions (page 42) is financial information required to be presented by GASH. Such information provides readers of this report with addi-tional data that supplements the government-wide statements and fund financial statements. The Budgetary Comparison Schedules are presented on a budgetary basis of accounting, which reports capital expenditures within their respective expenditure function rather than as a separate capital outlay expenditure.

Here is an overview of the School District's financial statements. Management's Government-wide

Discussion and I--->Financial

Analysis I Statements

Basic Financial I Fund

Statements > I--->Financial Statements

Required I Notes to the

Supplementary I--->Financial Information Statements

(other than MD&A)

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Here is a summary of the major features of these financial statement.

Scope

Types of Revenue and Expenditures or Expense

Government-wide Statements

Entire School (except fiduciary funds)

Economic resources

All - Financial and capital, short-and long-term

All - Regardless of when cash is received

Governmental Funds

School Activities except Enterprise (food service) and Fiduciary (student organizations)

Balance Sheet

Statement on Revenues, Expen-ditures and Changes in Fund Balances

Modified accrual

Current financial resources

Only current financial assets and liabilities

No capital assets

Revenues when cash is received during year or within 60 days of year-end

Fund Statements Enterprise

Funds

Activities operated like a private business (food service)

Statement of Net Positon

Statement of Revenues, Expenses and Changes in Fund Net Position

Statement of Cash Flows

Accrual

Economic resources

All - Financial and capital, short-and long-term


Fiduciary Funds

School's custody of money that belongs to others

Statement of Fiduciary Net position

Statement of Changes in Fiduciary Net Position

Accrual

Economic resources

All - Financial and capital (if any), short-and long-term


Measuremen Focus

Types of Assets & Liabilitie

Required Statement of Financial I Net Position Statements

Statement of Activities

Basis of Accrual Accounting

Expenditures when goods or services are received and payment is due during year or soon after year-end

GOVERNMENT-WIDE STATEMENTS

(Reporting the School District as a whole)

The government-wide statements (page 9 and 10) report information about the School District as a whole using accounting methods similar to those used for private companies. There are two government-wide statements: the Statement of Net Position and the Statement of Activities.

The Statement of Net Position includes all of the government's assets, liabilities and pension amounts. Net position is the difference between assets and liabil-ities. Changes in these accounts is one way to measure the school's financial health. Increases or decreases in net position measures improvements or declines in the school's financial health. To assess the school's overall financial health you also need to consider other factors such as changes in the student enrollment, property tax base and/or changes in federal and state grants and aid.

The Statement of Activities includes all of the year's revenues and expenses. You will notice that expenses are listed in the first column by program. Revenues related each program are reported to the right of the expense. The result is a net revenue/expense for each program. After listing program activity, general receipts of the school are listed, which include all taxes and interest earned.

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The government-wide financial statements have two broad categories of informa-tion: governmental activity and business-type activity.

The governmental activities include (1) basic instructional services such as elementary, high school, and special education programs, (2) support services such as guidance, library, administration, and transportation, (3) debt services such as payments on the School District's REED loans, capital lease and limited tax GO certificates, and (4) extracurricular activities such as sports and music. Property taxes, state and federal grants, and interest earnings finance most of these activities.

The business-type activities account for the School District's breakfast and lunch food service program and a driver's education program. These programs are funded in part by user fees and in part by state and federal grants.

FUND FINANCIAL STATEMENTS (Reporting the School District's most significant funds)

The fund financial statements (page 11 to 17) provide more detailed information about the School District's most significant funds, not the School District as a whole. Funds are accounting tools used to keep track of the receipt and disbur-sement of School District's resources. State law requires the use of some funds and the school board establishes other funds to manage money for a specific purpose, like a capital project fund for a new building.

The fund financial statements show information in three broad categories: governmental, enterprise (business-type), and fiduciary.

Governmental funds: Most of the School District's basic services are included in the governmental funds, which focus on (1) how cash, and other financial assets which can readily be converted into cash, flow in and out of that fund, and (2) the balances left at year-end that are available for spending in the next year. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources available for spending in the near future to finance the School District's programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statements to reconcile the differences between the governmental fund statements and the government-wide statements.

Enterprise fund: Services for which the School District charges the customer a fee are generally reported in enterprise funds. Enterprise funds, like the government-wide statements, provide both short-term and a long-term financial information. The food service fund and the driver's education fund are the only enterprise fund maintained by the School District.

Fiduciary funds: The School District is the agent (or fiduciary) for various external and internal parties. The School District is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

All of the School District's fiduciary activities are reported in a separate statement of fiduciary net position. Fiduciary funds are excluded from the School District's government-wide financial statements because the School District cannot use these assets to finance the School District's operations.

MATERIAL CHANGES IN STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITIES

Year Ending June 30, 2017: Material changes for governmental activities = changes greater than $150,000) Material changes for business-type activities = changes greater than $ 10,000)

Increase (Decrease) Reason

Governmental Activities: Current assets Current liabilities Long-term liabilities State revenue Support services

Business-type Activities: Capital assets

Capital grants Transfer in

(387,000) 170,000 (195,000) 203,000 176,000

28,000

(15,000) 40,000

Cost of new bus barn and debt reduction Increase in pension liability Debt repayment Additional funding for salary increases Increase in operation and maintenance of plant and vehicles

Purchase and installation of kitchen equipment

No grants in FY17 Increase from the general fund

SIGNIFICANT VARIATIONS BETWEEN ORIGINAL AND FINAL GENERAL FUND BUDGET

The School District's general fund budget of $2,438,062 for the FY17 year is an increase of $469,236 or 23.8% from FY16. The increase was spread across several line items. There was one supplemental appropriation to the general fund budget. See page 37 for more information.

SIGNIFICANT CAPITAL ASSET ACTIVITY

Significant capital asset activity is reported above. See also page 34.

At June 30, 2017, the School District had invested $3,212,212 in a broad range of capital assets, including land, buildings, improvements and equipment. This amount represents a net increase (including additions and deductions) of $136,717 or 4.45% from June 30, 2016. The increase is primarily due to building improvements.

SIGNIFICANT LONG-TERM DEBT ACTIVITY

Principal payments on debt is reported above. All debt payments have been made as agreed. See page 35 and 36 for more information.

CURRENTLY KNOWN FACTS

In FY18 the School District demolished the old bus barn.

The Board is considering the installation of LED lighting if it can be done cost

effectively.

Student enrollments are: FY10 218

FY13 224

FY16 230 FY11 222

FY14 215

FY17 230 FY12 224

FY15 215

FY18 244

CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the School's finances and to demonstrate the School's accountability for the money it receives. If you have questions about this report or need additional information, contact the Rosholt School District's business office at P.O. Box 106, Rosholt, SD 57260.


TABLE 1 - NET POSITION (condensed and in thousands) BASED ON GOVERNMENT-WIDE FINANCIAL STATEMENTS AS OF JUNE 30, 2017 AND JUNE 30, 2016

Ass( ts:

Governmental Activities

FY17 FY16

Business-Type Activities

FY17 FY16

Total

FY17

Government

FY16

Current assets 2,489 2,876 28 22 2,517 2,898 Capital assets 3,165 3,057 47 19 3,212 3,076 Other assets and def. outflow 774 734 23 20 797 754

Total assets and def. outflow 6,428 6,667 98 61 6,526 6,728

Liabilities and deferred inflows: Current liabilities 639 469 10 4 649 473 Long-term debt outstanding 693 888 693 888 Deferred inflows 802 872 8 12 810 884 Total liabilities and deferred inflows 2,134 2229 , 18 16 2152 , 2,245

Net position: NFt capital assets 2,259 1,938 47 19 2,306 1,957 Restricted 1,542 1,599 9 12 1,551 1,611 U/restricted 493 901 24 14 517 915

Total net position 4,294 4,438 80 45 4,374 4,483

TABLE 2 - CHANGES IN NET POSITION (condensed and in thousands) BASED ON GOVERNMENT-WIDE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30, 2017 FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Revenues: Program revenues:


FY17 FY16

Business-Type Activities

FY17 FY16

Total Government

FY17 FY16

Charges for services 26 42 92 101 118 143

Orating grants and contri. 170 122 73 69 243 191

Ci, pital grants and contri. 15 0 15

General revenues: Ptoperty taxes 1,208 1,228 1,208 1,228

Gross receipts tax 52 54 52 54

State sources 1,183 980 1,183 980

County sources 21 27 21 27

Interest earned 4 5 4 5

Other general revenue 26 2 26 2

Pension related rev (exp) 52 (1) 0 51

Total revenues 2,690 2,512 165 184 2,855 2,696

Expenses: Instruction Support services Cc-curricular activities

1,604 965 190

1,464 789 149

1,604 965 190

1,464 789 149

ICterest and fees on debt Fc'od service

20 19 181 173

92

20 181

19 173

D7'iver's education 4 2 4 2

Total expenses 2,779 2,421 185 175 2,964 2,596

Transfer in (out): (55) (15) 55 15

Net position increase (decrease) (144) 76 35 24 (10 9 ) 100

Net position: June 30, 2015 4,362 21 4,383

June 30, 2016 4,438 4,438 45 45 4,483 4,483

June 30, 2017 4,294 ao 4,374

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Business- Governmental Type Activities Activities Total

1,752,508 4,000

545,287 17,394

103,462 5,331

23,195 38,207

2,489,384

42,234

3,122,976

3,165,210

5,654,594

774,074

774,074

5,128 160,192 52,946

30,000 30,000

130,000 19,893 3,391

207,960

639,510

32,500 210,000 415,000 20,491 15,026

693,017

1,332,527

545,287 256,852

802,139

2,258,909

884,847 304,974 43,124

309,262 492,886

4,294,002

21,028 1,773,536 4,000

545,287 17,394

103,462

426 5,757

6,571 6,571 23,195 38,207

28,025 2,517,409

42,234

47,002 3,169,978

47,002 3,212,212

75,027 5,729,621

23,128 797,202

23,128 797,202

5,128 160,192

35 52,981

3,999 3,999

30,000 30,000 130,000 19,893 3,391

6,211 214,171

10,245 649,755

32,500 210,000 415,000 20,491 15,026

0 693,017

10,245 1,342,772

545,287

7,671 264,523

7,671 809,810

47,002 2,305,911

884,847 304,974 43,124

9,246 318,508

23,991 516,877

80,239 4,374,241


STATEMENT OF NET POSITION AS OF JUNE 30, 2017

ASSETS Current assets:

Cash

Advanced to trust & agency imprest Receivables:

Property taxes - current Property taxes - delinquent Due from other governments Accounts

Inventory Deposit (health insurance buy-in) Pre-paid expenses (FY18 insurance)

Total current assets

Capital assets: Land

Other capital assets, net of accumulated depreciation

Total capital assets

Total assets

DEFERRED OUTFLOW OF RESOURCES Pension related deferred outflows

Total deferred outflow of resources

LIABILITIES Current liabilities: Accounts payable Contracts payable Payroll deductions payable Revenue received in advance Noncurrent liabilities due in one year:

2008 Rural Electric Economic Dev Loan 2014 Rural Electric Economic Dev Loan 2011 Limited Tax GO Certificates 2016 Capital Lease (school bus) 2017 Capital Lease (2 copiers)

Net pension liability

Total current liabilities

Noncurrent liabilities: 2008 Rural Electric Economic Dev Loan 2014 Rural Electric Economic Dev Loan 2011 Limited Tax GO Certificates 2016 Capital Lease (school bus) 2017 Capital Lease (2 copiers)

Total noncurrent liabilities

Total liabilities

DEFERRED INFLOW OF RESOURCES Taxes levied for a future period Pension related deferred inflows

Total deferred inflow of resources

NET POSITION Net invested in capital assets Restricted for:

Capital outlay Special education Pension SDRS pension purposes

Unrestricted

Total net position

See accompanying notes.

Primary Government

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STATEMENT OF ACTIVITIES FOR THE YEAR ENDING JUNE 30, 2017

Program Revenues Net Revenue (Expense) and

Functions/Programs: Primary government:

Governmental activities:

Charges for Operating Capital

Services and Grants and Grants and

Expenses Reimbursements Contributions Contributions

Changes

Governmental

Activities

in Net Position

Business-type

Activities Totals

Instruction 1,604,473 95,183 (1,509,290) (1,509,290)

Support services 965,151 2,199 75,182 (887,770) (887,770) Cocurricular activities 189,966 23,868 (166,098) (166,098) Interest and fees (all) 20,017 (20,017) (20,017)

Total governmental activities 2,779,607 26,067 170,365 0 (2,583,175) 0 (2,583,175)

Business-type activities: Food service 181,146 92,106 73,611 (15,429) (15,429) Driver's Ed 3,700 (3,700) (3,700)

Total primary government 2,964,453 118,173 243,976 0 (2,583,175) (19,129) (2,602,304)

General revenue: Property taxes 1,207,881 1,207,881 Gross receipts tax 51,792 51,792 Revenue from state sources:

State aid 1,150,480 1,150,480 State apportionment 11,463 11,463 Bank franchise 19,676 19,676 Other 781 781

Revenue from county sources 21,188 21,188 Interest earned 4,302 4,302 Other 16,747 16,747

Sale of surplus property 240 240 Compensation for damaged property 9,186 9,186 Transfer in (out) (55,000) 55,000 0

Total general and other revenue 2,438,736 55,000 2,493,736

Change in net position (144,439) 35,871 (108,568)

Net position, July 1, 2016 4,438,441 44,368 4,482,809

Net position, June 30, 2017 4,294,002 80,239 4,374,241


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BALANCE SHEET -- GOVERNMENTAL FUNDS AS OF JUNE 30, 2017 Capital Special Total

General Outlay Education Pension Governmental Fund Fund Fund Fund Funds

ASSETS: Cash 514,233 877,853 317,691 Advanced 42,731 1,752,508 to trust & agency imprest 4,000 Receivables: 4,000

Property taxes - current 233,987 227,181 84,119 545,287 Property taxes - delinquent 10,243 5,196 1,562 393 17,394 Due from other governments 100,998 1,798 666 103,462 Accounts 5,292 39 5,331

Deposit (health insurance buy-in) 23,195 23,195 Pre-paid expenses (FY18 insurance) 38,207 38,207

Total assets 930,155 1,112,028 404,077 43,124 2,489,384

LIABILITIES: Accounts payable 5,128 5,128 Contracts payable 148,862 11,330 160,192 Payroll deductions payable 49,292 3,654 52,946

Total liabilities 203,282 0 14,984 0 218,266

IEFERRED INFLOW OF RESOURCES: Taxes levied for a future period 233,987 227,181 84,119 545,287 Unavailable revenue:

Property taxes - delinquent 10,243 5,196 1,562 393 17,394

Total deferred inflow of resources 244,230 232,377 85,681 393 562,681

FUND BALANCE: Nonspendable 61,402 61,402 Restricted 879,651 303,412 42,731 1,225,794 Committed 0 Assigned 0 Unassigned 421,241 421,241

Total fund balance 482,643 879,651 303,412 42,731 1,708,437

Total liabilities, deferred inflow 'f resources and fund balance 930,155 1,112,028 404,077 43,124 2,489,384

=

Reconciliation of the above balance sheet - governmental funds to the government-wide statement of net position

Total fund balance - governmental funds (above) 1,708,437

Amounts reported in the government-wide statement of net position are different because:

Capital assets used in governmental activities are not financial resources and therefore not reported as assets in governmental funds. Therefore:

Add the cost of capital assets 4,756,550

Subtract the associated accumulated depreciation (1,591,340)

These pension related amounts are not an available financial resource and therefore are not reported in the funds. Deferred outflow of resources 774,074

Deferred inflow of resources (256,852)

Net pension liabilities (207,960)

Long-term liabilities are not due and payable in the current period. Therefore, subtract the following long-term liabilities:

2008 Rural Electric Economic Dev Loan (62,500)

2014 Rural Electric Economic Dev Loan (240,000)

2011 Limited Tax GO Certificates (545,000)

2016 Capital Lease (school bus) (40,384)

2017 Capital Lease (2 copiers) (18,417)

Assets such as taxes receivable (delinquent) are not available to pay of current period expenditures and therefore are deferred

in the funds. 17,394

Total net position on government-wide statement of net position 4,294,002


POSHOLT SCHOOL DISTRICT NO. 54-4

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -- GOVERNMENTAL FUNDS FOR THE YEAR ENDING JUNE 30, 2017

Revenue: Revenue from local sources:

Taxes:

General Fund

Capital Outlay Fund

Special Education

Fund Pension

Fund

Total Governmental

Funds

Ad valorem taxes 517,744 508,664 150,550 21,421 1,198,379 Prior year ad valorem taxes 2,041 840 273 81 3,235 Penalties and interest 1,255 1,067 253 91 2,666 Gross receipts 51,792 51,792

Interest earned 4,302 4,302 Cocurricular activities: Admissions 17,555 17,555 Student activities 6,313 6,313

Other revenue from local sources: Bush grant 20,000 20,000 Medicaid administration 1,438 761 2,199 Other 15,066 1,011 336 334 16,747

Total revenue from local sources 637,506 511,582 152,173 21,927 1,323,188

Revenue from intermediate sources: County sources: County apportionment 21,188 21,188

Revenue from state sources: Unrestricted grants-in-aid 1,223,820 1,223,820

Ievenue from federal sources: Restricted grants-in-aid 108,945 108,945

Total revenues 1,991,459 511,582 152,173 21,927 2,677,141

Expenditures: Instruction:

Regular programs: Elementary school 647,602 2,869 650,471

Middle school 164,294 164,294

High school 374,700 5,000 379,700

Special programs: Programs for special educ. 145,708 145,708

Educ. deprived (Title I) 165,590 165,590

Total instruction 1,352,186 7,869 145,708 1,505,763

Eupport services: Pupils:

Guidance 12,886 12,886

In-staff training 25,275 25,275

Educational media 516 516

Technology in school 31,216 31,216

Special education 36,566 36,566

General administration: Board of Education 54,698 54,698

Executive administration 109,906 109,906

School administration: Office of principal 128,662 128,662

Business: Fiscal services 91,760 91,760

Operations and maintenance 282,454 6,721 289,175

Pupil transportation 122,848 122,848

otal support services 860,221 6,721 36,566 0 903,508

(continued)

30,000 30,000

130,000 17,011 42,166 3,006

O 252,183

30,000 30,000

130,000 17,011 42,166 3,006

0 252,183

0

Cocurricular activities: Male activities Female activities Combined activities

Total cocurricular services

39,891 35,905 67,832

143,628 0

39,891 35,905 67,832

O 143,628 0


STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -- GOVERNMENTAL FUNDS FOR THE YEAR ENDING JUNE 30, 2017 (continued)

Capital Special Total General Outlay Education Pension Governmental Fund Fund Fund Fund Funds l'abt service:

2008 Rural Electric Economic Dev Loan 2014 Rural Electric Economic Dev Loan 2011 Limited tax GO Certificates:

Interest and fees Capital leases principal Capital lease interest

Total debt service

Capital outlay:

Mtal expenditures

Excess of revenues over (under) expenditures

265,066

2,356,035 531,839

(364,576) (20,257)

265,066

O 3,070,148

21,927 (393,007)

182,274

(30,101)

Other financing sources (uses): Transfer in - driver's education 5,000 Transfer (out) - food service (60,000) Capital lease proceeds 19,488 Sale of surplus property 240 Compensation for damaged property 9,186

Net change in fund balance (410,150) (769) (30,101)

Fund balance: July 1, 2016 892,793 880,420 333,513

, June 30, 2017 482,643 879,651 303,412

5,000 (60,000) 19,488

240 9,186

21,927 (419,093)

20,804 2,127,530

42,731 1,708,437

Reconciliation of the above statement of revenues, expenditures, and changes in fund balances to the government-wide statement of activities.

Net change in fund balances - total governmental funds (above)

Capital outlays are reported in governmental funds as expenditures. However, in the government-wide statement of activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. Therefore:

Add the cost of: New school van New bus barn New copiers (2)

Subtract: Depreciation taken on all capital assets

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Therefore:: Subtract prior year delinquent taxes Add current year delinquent taxes

Revenues and reductions of expenses related to pensions do not provide current financial resources and, therefore, are not reported in the funds

Current debt principal reduction (increase) is not reported in the government-wide statement of activities: Therefore: Add current year principal payments on:

2008 Rural Electric Economic Development loan 2014 Rural Electric Economic Development loan 2011 Limited Tax GO Certificates 2012 Capital lease for 2 copiers 2014 Digitizer lease 2016 School bus lease 2017 Capital lease for 2 copiers

Subtract current year loan proceeds: 2017 Capital lease for 2 copiers

Change in net position on government-wide statement of activities


(419,093)

25,780 219,798 19,488

(156,688)

(13,793) 17,394

(50,003)

30,000 30,000 130,000

5,241 16,543 19,311 1,071

(19,488)

(144,439)

- 13 -


STATEMENT OF NET POSITION - ENTERPRISE FUNDS AS OF JUNE 30, 2017

ASSETS Current assets:

Food Service Fund

Driver's Education

Fund

Total Enterprise

Funds

Cash 17,986 3,042 21,028 Accounts receivable 426 426 Inventory - supplies 862 862 Inventory - purchased goods 1,349 1,349 Inventory - commodities (donated) 4,360 4,360

Capital assets: Equipment 89,153 89,153 Accumulated depreciation (42,151) (42,151)

Total assets 71,985 3,042 75,027

DEFERRED OUTFLOW OF RESORCES Pension related deferred outflows 23,128 23,128

Total deferred outflow of resources 23,128 0 23,128 =======

LIABILITIES Contracts payable 0 Payroll deductions payable 35 35 Revenue received in advance 3,999 3,999 Net pension liability 6,211 6,211

Total liabilities 10,245 0 10,245

DEFERRED INFLOW OF RESOURCES: Pension related deferred inflows 7,671 7,671

Total deferred inflow of resources 7,671 0 7,671

NET POSITION Net invested in capital assets 47,002 47,002

SDRS pension purposes 9,246 9,246

Unrestricted 20,949 3,042 23,991

Total net position 77,197 3,042 80,239



STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - ENTERPRISE FUNDS FOR THE YEAR ENDING JUNE 30, 2017

Food Driver's Total Service Education Enterprise Fund Fund Funds

Operating revenue: Sales to pupils 71,207 71,207 Sales to adults 10,548 10,548 Other sales 10,351 10,351

Total operating revenue 92,106 0 92,106

Operating expense: Salaries 46,103 3,200 49,303 Employee benefits 22,235 500 22,735 Purchased services 3,144 3,144 Supplies 4,090 4,090 Cost of sales:

Purchased food 80,682 80,682 Donated food (commodities) 11,469 11,469 Colony meal reimbursement 6,895 6,895

Depreciation 3,974 3,974 Pension related expense 2,554 2,554

Total operating expenses 181,146 3,700 184,846

Operating income (loss) (89,040) (3,700) (92,740)

Nonoperating revenue (expense): Transfer in (out) - general fund 60,000 (5,000) 55,000

State source: Cash reimbursement 724 724

Federal source: Cash reimbursement 61,228 61,228

Donated food 11,659 11,659

Total nonoperating revenue (expense) 133,611 (5,000) 128,611

Change in net position 44,571 (8,700) 35,871

Net position, July 1, 2016 32,626 11,742 44,368

Net position, June 30, 2017 77,197 3,042 80,239



STATEMENT OF CASH FLOWS - ENTERPRISE FUNDS FOR THE YEAR ENDING JUNE 30, 2017

Cash flows from: Operating activities:

Food Service Fund

Driver's Education

Fund

Total Enterprise

Funds

Receipts from customers 93,079 93,079 Cash paid for employees (70,412) (3,700) (74,112) Payments to suppliers (90,667) (90,667)

Net cash provided (used) by operating activities (68,000) (3,700) (71,700)

Noncapital financing activities: Transfer in (out) - general 60,000 (5,000) 55,000 Due to general fund (3,653) (3,653) Grant cash reimbursements, state 724 724 Grant cash reimbursements, federal 61,228 61,228

Capital financing activities: Cash paid for equipment (32,313) (32,313)

Investing activities: None 0

Net increase (decrease) in cash and cash equivalents 17,986 (8,700) 9,286

Cash and cash equivalents: July 1, 2016 0 11,742 11,742

June 30, 2017 17,986 3,042 21,028

Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating income (loss) (89,040) (3,700) (92,740)

Value of donated commodities used 11,469 11,469

Depreciation 3,974 3,974

Pension expense 2,554 2,554

Change in operating accounts: Accounts receivable (379) (379)

Inventory - supplies (300) (300)

Inventory - purchased 4,444 4,444

Contracts payable (574) (574)

Payroll withholding payable (1,500) (1,500)

Revenue received in advance 1,352 1,352

Net cash provided (used) by operating activities (68,000) (3,700) (71,700)

Noncash investing, capital and financing activities: Value of donated commodities 11,659 11,659



STATEMENT OF FIDUCIARY NET POSITION - AGENCY FUNDS AS OF JUNE 30, 2017

Assets: Cash Due from others

Total assets

Liabilities: Amounts held for:

Others General fund

Total liabilities

Net position


60,015

60,015 =======

56,015 4,000

60,015

NA

ROSHOLT SCHOOL DISTRICT No. 54-4 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the Rosholt School District conform to generally accepted accounting principles applicable to government entities in the United States of America.

a. Reporting Entity:

The funds and account groups included in this report are controlled by or dependent upon the Rosholt School District's (School District) Board of Education.

The School District's officials at June 30, 2017 are:

Board Members: Brad Tangen, Chairperson Sue Braun Amber Hamling Dave Krueger Hailey Peterson

Superintendent: Teresa Appel

Business Manager: Vicky Boom

Attorney: Churchill, Manolis, Freeman, Kludt, Shelton & Burns, LLP

The reporting entity of the School District consists of (1) the primary govern-ment, which includes all of the funds, organizations, institutions, agencies, departments, and offices that make up the legal entity, plus those funds for which the primary government has a fiduciary responsibility, even though those fiduciary funds may represent organizations that do not meet the criteria for inclusion in the financial reporting entity; (2) those organizations for which the primary government is financially accountable; and (3) other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the financial reporting entity's financial statements to be misleading or incomplete.

Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The School District is financially accountable if its governing board appoints a voting majority of another organization's governing body and it has the ability to impose its will on that organization, or there is a potential for that organiza-tion to provide specific financial benefits to, or impose specific financial burdens on the School District (the primary government). The School District may also be financially accountable for another organization if that organization is fiscally dependent on the School District unless that organization can, without the approval of the School District: (1) set its own budget; (2) determine its own rates or charges; and (3) borrow money.

Based upon the application of these criteria, the Rosholt School District does not have any component units.

The School District does participate with other school districts in cooperative service units. See detailed note entitled "Joint Ventures" for specific

disclosures. Joint ventures do not meet the criteria for inclusion in the financial reporting entity as a component unit, but are discussed in these notes because of the nature of their relationship to the School District.

b. Basis of Presentation:

Government-wide Financial Statements:

The government-wide financial statements include the Statement of Net Position and the Statement of Activities. These statements display information about the reporting entity as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for good and services.

The Statement of Net Position reports all financial and capital resources, in a net position form (assets minus liabilities equal net position). Net position is displayed in three components, as applicable: net invested in capital assets, restricted (distinguishing between major categories of restrictions), and unrestricted.

The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities and for each segment of School District's business-type activities. Direct expenses are associated with a specific program or function and are clearly identifiable to a particular function. Program revenues include (a) charges paid by recipients of goods and services offered by the program and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes and interest, are presented as general revenues.

Fund Financial Statements:

The fund financial statements include specific information about individual funds used by the reporting entity. Each fund is considered a separate accounting entity with a separate set of self-balancing accounts that constitutes its assets, liabilities, fund equity, revenues, and expenditures/expenses. Funds are organized into three major categories: governmental, enterprise, and fiduciary. An emphasis is placed on major funds within the governmental and enterprise categories. A fund is considered major if it is the primary operating fund of the School District or if it meets the following criteria:

a. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental or enterprise fund are at least 10 percent of the corresponding element total (assets, liabilities, revenues, or expenditures/ expenses) for all funds of that category (that is, total governmental or total enterprise), and

b. The same element that meets the 10 percent criterion in (a) is at least 5 percent of the corresponding element total for all governmental and enterprise funds combined.

c. In addition to funds that meet the major fund criteria, any other governmental or enterprise fund that the government's official believe is particularly important to financial statement users (for example, because of public interest or consistency) may be reported as a major fund.

The School District has elected to classify all of its funds as major funds. School District funds are described below within their respective fund type:

Governmental Funds

General fund - a fund established by South Dakota Codified Law (SDCL) 13-16-3 to meet all the general operational costs of a school district, excluding capital outlay and special education fund expenditures. The general fund is

always a major fund. - 19 -

Special Revenue Fund Type - special revenue funds are used to account for the proceeds of specific revenue sources (other than trusts for individuals, private organizations, or other governments or for major capital projects) that are legally restricted to expenditures for specified purposes. The School District has the following special revenue funds:

Capital outlay fund - a fund established by SDCL 13-16-6 to meet expenditures which result in the lease of, acquisition of, or additions to real property, plant or equipment, textbooks and instructional software. This fund is financed by property taxes and is a major fund.

Special education fund - a fund established by SDCL 13-37-16 to pay the costs of special education for all children in need of special assistance and prolonged assistance who reside within the School District. This fund is financed by property taxes and grants and is a major fund.

Pension fund - A fund established by SDCL 13-10-6 for the purpose of paying pensions to retired employees of a school district, which have established such systems, and paying the School District's share of SDRS pension plan contributions. This fund is financed by property taxes and is a major fund.

Enterprise Funds

Enterprise Fund Types - enterprise funds are used to account for activity for which a fee is charged to external users for goods or services. The School District has the following enterprise fund:

Food service fund - a fund used to record financial transactions related to the School District's food service operations. This fund is financed by user charges and grants and is a major fund.

Driver's education fund - a fund used to administer driver's education activities. This fund is financed by user charges. This fund is a major fund.

Fiduciary Funds

Fiduciary are never considered to be major funds.

Agency fund type - agency funds are used to account for resources held by the School District in a purely custodial capacity (assets equal liabilities). Since agency funds are custodial in nature, they do not involve the measurement of results of operations. The School District maintains agency funds to hold assets in a trustee capacity for various classes, clubs, etc.

c. Measurement Focus and Basis of Accounting:

Measurement focus is a term used to describe "what" transactions are recorded within the various financial statements. Basis of accounting refers to "when" revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the measurement focus.

Measurement Focus


In the government-wide Statement of Net Position and Statement of Activities, both governmental and business-type activities are presented using the "economic resources" measurement focus, applied on the accrual basis of accounting.

The "economic resources" measurement focus includes all assets and liabilities (whether current or noncurrent, financial, or nonfinancial) on the balance sheet. Operating statements use the flow of all economic

- 20 -

resources to present operating income, changes in net position, and cash flows during the accounting period. This measurement focus uses the term "net position" to describe its equity at the end of the accounting period.


All governmental funds are presented using the "current financial resources" measurement focus and the modified accrual basis of accounting.

The "current financial resources" measurement focus includes only current financial assets and liabilities on the balance sheet. Operating statements present sources and uses of available spendable financial resources during the accounting period. This measurement focus uses the term "fund balance" to describe its equity at the end of the accounting period. It is a measure of available spendable financial resources.

Enterprise and fiduciary funds are presented using the "economic resources" measurement focus (described above) and the accrual basis of accounting.

Basis of Accounting


In the government-wide financial statements, the accrual basis of accounting is used for both governmental and business-type activities in the Statement of Net Position and Statement of Activities. Under the accrual basis of accounting, revenues and related assets generally are recorded when earned (usually when the right to receive cash vests); and, expenses and related liabilities are recorded when an obligation is incurred (usually when the obligation to pay cash in the future vests).


In the fund financial statements, all governmental funds are accounted for using the modified accrual basis of accounting. Their revenues, including property taxes, generally are recognized when they become measurable and available. "Available" means resources are collected or to be collected soon enough after the end of the fiscal year that they can be used to pay the bills of the current period. The accrual period does not exceed one bill-paying cycle, which for the School District is 60 days. The revenues which are accrued at June 30, 2017 are grants and other accounts receivable.

Under the modified accrual basis of accounting, receivables may be measurable but "not available". Not available means not collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Reported deferred inflow of resources are those where the asset recogni-tion criteria has been met but for which the revenue recognition criteria has not been met because the revenue is not available.

Expenditures generally are recognized when the related fund liability is incurred. Exceptions to this general rule include principal and interest on general long-term debt which are recognized when due. However, the School District budgets for, and makes payment of, debt obligations (if any) due on July 1st as of June 30th, the end of the School District's fiscal year.

All enterprise funds and fiduciary funds are accounted for using the accrual basis of accounting, the same as in the government-wide financial statements. Their revenues are recognized when they are earned, and their expenses are recognized when they are incurred.

d. Interfund Eliminations and Reclassifications:


In the process of aggregating data for the government-wide financial statements, some amounts reported as interfund activity and balances in the fund financial statements have been eliminated or reclassified as follows:

In order to minimize the grossing-up effect on assets and liabilities within the governmental and business-type activities columns of the primary government, amounts reported as interfund receivables and payables have been eliminated in the governmental and business-type activities columns, except for the net residual amounts due between governmental and business-type activities, which are presented as "Internal Balances" (if any).


In the fund financial statements, noncurrent portions of long-term interfund receivables (reported in "Advance to" asset accounts) are equally offset by "nonspendable fund balance" which indicates that they do not constitute "available spendable resources" since they are not a component of unassigned fund balance. Current portions of interfund receivables (reported in "Due from" asset accounts) are considered "available spendable resources."

e. Interfund Transactions:

Transactions that constitute reimbursements to a fund for disbursements made from it, and that are properly applicable to another fund, are recorded as a disburse-ment in the reimbursing fund and as reductions of disbursements in the fund that is reimbursed. All other interfund transactions are reported as transfers.

f. Cash and Cash Equivalents:

The School District pools its cash resources for depositing and investing purposes. Accordingly, the food service and driver's education funds have access to their cash resources on demand. Accordingly, all enterprise fund deposits and investment balances are considered to be cash equivalents for the purposes of the statement of cash flows.

g. Capital Assets and Infrastructure assets:

Capital assets include land, buildings, improvements, and equipment, and all other tangible or intangible assets that are used in operations, which have initial useful lives extending beyond a single reporting period. Infrastructure assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for significantly greater number of years than most capital assets. Infrastructure assets, if any, are classified as "Improvements

Other then Buildings."


In the government-wide financial statements, capital assets are accounted for on the accrual basis of accounting. Capital asset purchases are capitalized and

not expensed. Instead, capital purchases are expensed over the life of the asset as depreciation or amortization.

Capital assets are valued at historical cost, or estimated historical cost, if actual historical cost is not available. Donated capital assets are valued at their estimated fair value on the date donated. Reported cost values include ancillary charges necessary to place the asset into its intended location and condition for use. After an item has been capitalized, subsequent improvements or betterments that are significant, and which extend the useful life of the item, are also capitalized.

- 22 -

The total June 30, 2017 balance of capital assets for governmental activities include approximately 5% for which the costs were determined by estimates of the original costs. The total June 30, 2017 balance of capital assets for business-type activities includes approximately 0% for which the costs were determined by estimates of the original costs. The estimated original costs were established by appraisals or deflated current replacement cost.

Interest cost incurred during construction of general capital assets are not capitalized with other capital asset cost. Interest cost incurred during construction of enterprise capital assets are capitalized with other capital asset cost.

Depreciation of all exhaustible capital assets is recorded as an allocated expense in the government-wide statement of activities and the enterprise fund statement of revenue, expenses and changes in fund net position. Accumulated depreciation is reported on the government-wide statement of net position and on the enterprise fund's statement of net position. See also page 34.

Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts), depreciation method, and estimated useful lives of capital assets reported in the government-wide statements and enterprise funds are as follows:

Estimated Capitalization Depreciation Life in

Threshold Method Years

Land All N/A N/A Buildings/structures 5,000 Straight-line 10-50 Improvements 5,000 Straight-line 10-20 Equipment 5,000 Straight-line 5-20 Equipment - food service 1,000 Straight-line 10-20

Land is an inexhaustible capital asset and is not depreciated.


In the fund financial statements, governmental funds account for capital asset purchases as expenditures of the appropriate governmental fund upon acquisition. Capital assets used in enterprise fund operations are accounted for on the accrual basis, the same as in the government-wide statements.

h. Long-term Liabilities:

Government-vide Financial Statements:

In the government-wide financial statement, all long-term liabilities to be repaid from governmental or business-type resources are reported as liabilities. Long-term liabilities consist of two Rural Electric Economic Development loans, one limited tax CO certificate issues, and three capital leases.


In the fund financial statements, governmental debt proceeds are reported as revenues (other financing sources), while payments of principal and interest are reported as expenditures when they become due. Enterprise fund long-term debt (if any) is reported as a liability, the same as in the government-wide statements.

i. Accumulated Unpaid Vacation and Sick Leave:

Vacation leave is non-accumulative. Vacation leave is earned by full-time non-certified employees at the rate of 2 to 3 weeks per year. Upon termination employees are not entitled to receive compensation for their accrued annual leave balance. At June 30, 2017 unused vacation leave was $7,748.

- 23 -

Sick and personal leave is earned by full-time employees at the rate of 10 days per year, accumulated to 80 days. Upon termination, employees are not entitled to receive compensation for their accrued sick leave balance. At June 30, 2017 there were 1,396 days of unused sick days, which if taken at an average teacher's daily pay of $220 would equal $307,120.

The financial statements do not give effect to these liabilities.

j. Program Revenues and General Revenues:

In the government-wide Statement of Activities, reported program revenues derive directly from the program itself or from parties other than the School District's taxpayers or citizenry, as a whole. Program revenues are classified into three categories, as follows:

1. Charges for services - These arise from charges to customers, applicants, or others who purchase, use, or directly benefit from the goods, services, or privileges provided, or are otherwise directly affected by the services.

2. Program-specific operating grants and contributions - These arise from manda-tory and voluntary non-exchange transactions with other governments, organ-izations, or individuals that are restricted for use in a particular program.

3. Program-specific capital grants and contributions - These arise from mandatory and voluntary non-exchange transactions with other government, organization, or individuals that are restricted for the acquisition of capital assets for use in a particular program.

General revenues include all revenues not specifically earmarked for a specific program. General revenues include all taxes, investment earnings, unrestricted receipts from the county, state, or federal governments, and miscellaneous revenues not related to a program. These revenues are not restricted and can be used for the regular operation of the School District.

k. Deferred Inflows and Deferred Outflows of Resources

In addition to assets, the statement of financial position reports a separate section for deferred outflows of resources. Deferred outflows of resources represent consumption of net position that applies to a future period or periods. These items will not be recognized as an outflow of resources until the applic-able future period.

In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. Deferred inflows of resources repre-sent acquisitions of net position that applies to a future period or periods. These items will not be recognized as an inflow of resources until the applic-able future period.

1. Enterprise Fund Revenue and Expense Classifications:

In the government-wide and fund financial statements, enterprise revenues and expenses are classified in a manner consistent with how they are classified in the statement of cash flows. That is, transactions for which related cash flows are reported as capital and related financing activities, noncapital financing activities, or investing activities are not reported as components of operating revenues or expenses.

m. Equity Classifications:

Government-wide Statements:

Equity is classified as net position and is displayed in three components:

1. Net invested in Capital Assets - Consists of capital assets, including restricted capital assets, net of accumulated depreciation (if applicable)

- 24 -

and reduced by the outstanding balances of any capital outlay certificate payable, capitalized leases payable, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

2. Restricted Net Position - Consists of net position with constraints placed on their use either by (a) external groups such as creditor, grantor, contributors, or laws and regulations of other governments; or (p) law through constitutional provisions or enabling legislation.

3. Unrestricted Net Position - Other net position that does not meet the criteria of 1 or 2 above.


Governmental fund equity is classified as "Fund Balance", and may distinguish between "Nonspendable", "Restricted", "Committed, "Assigned", and "Unassigned" components. Enterprise fund equity is classified as "Net Position", the same as in the government-wide financial statements. Fiduciary fund equity (except for agency funds, which have no fund equity) is reported as "Net Position" held in trust for a purpose.

n. Fund Balance Classification Policies and Procedures:

In accordance with Government Accounting Standards Board (GASB) No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the School District classifies governmental fund balances as follows:

* Nonspendable - includes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual constraints.

* Restricted - includes fund balance amounts that are constrained for specific purposes which are externally imposed by providers, such as creditors, or amounts constrained due to constitutional provisions or enabling legislation.

* Committed - includes fund balance amounts that are constrained for specific purposes that are internally imposed (or modified or rescinded) by the govern-ment through formal action at the highest level of decision making authority and does not lapse at year-end.

* Assigned - includes fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. Fund balance may be assigned by School Board, Superintendent, or Business Manager.

* Unassigned - includes positive fund balance within the general fund which has not been classified within the above categories and negative fund balances in other governmental funds.

Rosholt School District fund balance classifications

Fund Balance Account Authority

are made up of:

Classifications or Fund or Action Amount

Nonspendable Deposit 23,195 Pre-paid expenses 38,207

Restricted Capital Outlay Statute 879,651

Special Education Statute 303,412

Pension Statute 42,731

Committed 0

Assigned 0

Unassigned General 421,241

1,708,437

- 25 -

The School District uses "restricted" and "committed" amounts first when restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as a grant agreement requiring dollar for dollar spending. Additionally, the School District would first use "committed", then "assigned", and lastly "unassigned" amounts of unrestricted fund balance when expenditures are made.

The School District does not have a formal minimum fund balance policy.

The purpose of each special revenue fund and revenue source is:

Special Revenue Fund: * Capital Outlay * Special Education

* Pension

o. Application of Net Position:

Revenue Source: (see page 12) Property taxes Property taxes and Medicaid

services reimbursements Property taxes

It is the School's policy to first use restricted net position, prior to the use of unrestricted net position, when an expense is incurred which can be charged to either restricted or unrestricted net position.

p. Allowance for Doubtful Accounts:

Because write-off of uncollected taxes and/or student meals is minimal, is it not considered necessary to establish an estimated allowance for doubtful accounts.

q. Accounting Estimates:

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual amounts could differ from these estimates. Following are the estimates made by management during the year:

* Allowance for doubtful accounts - estimated uncollectables * Inventory - estimated fair market value * Depreciation - estimated service lives * Pension - actuarial assumptions

2. VIOLATIONS OF FINANCE-RELATED LEGAL AND CONTRACTUAL PROVISIONS

In FY17 the School District received a waiver from the South Dakota Department of Education regarding its compliance with teacher salaries under SDCL 13-13-73.6.

3. DEPOSITS, INVESTMENTS AND RISK

The School District follows the practice of aggregating the cash assets of various funds to maximize cash management efficiency and returns. Various restrictions on deposits and investments are imposed by statutes. These restrictions are summarized below:

Deposits - The School District deposits are made in qualified public depositories as defined by SDCL 4-6A-1, 13-16-15 and 13-16-15.1 and 13-16-18.1. Qualified depositories are required by SDCL 4-6A-3 to maintain, at all times, segregated from their other assets, eligible collateral having a value equal to at least 100 percent of the public deposit accounts which exceed deposit insurance such as FDIC and NCUA. In lieu of pledging eligible securities, a qualified public depository may furnish irrevocable standby letters of credit issued by federal home loan banks accompanied by written evidence of that bank's public debt rating which may not be less than "AA" or better, or a qualified public depository may furnish a corporate surety bond of a corporation authorized to do business in South Dakota.

- 26 -

Deposits are reported at cost, plus interest, if the account is the add-on type.

Actual bank balances at June 30, 2017 were as follows: Insured $500,000, Collateralized ** $1,356,933., for a total of $1,856,933.

** Uninsured, collateral jointly held by state's/school's agent in the name of the state and the pledging financial institution.

The carrying amount of these deposits at June 30, 2017 was $1,833,351, which equals $1,773,536 on the government-wide statement of net position plus $60,015 on the fiduciary funds statement less $200 of petty cash.

Investments - In general, SDCL 4-5-6 permits school district funds to be invested in (a) securities of the United States and securities guaranteed by the United States government either directly or indirectly; or (b) repurchase agreements fully collateralized by securities described in (a); or (c) in shares of an open-end, no-load mutual fund administered by an investment company whose investments are in securities described in (a) and repurchase agreements described in (b). Also, SDCL 4-5-9 requires that investments shall be in the physical custody of the political subdivision or may be deposited in a safe-keeping account with any bank or trust company designated by the political subdivision as its fiscal agent.

During the year ending June 30, 2017 the School District had no investments.

Cash Equivalents - Certificates of deposit, with a term to maturity of greater than 3 months when purchased, were insured or collateralized and are considered deposits.

Investment Risk - State law limits eligible investments for schools as discussed above. The School District has no investment policy that would further limit its investment choices.

Custodial Credit Risk (Deposits) - The risk that, in the event of a depository failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2017, the School District's deposits in financial institutions were not exposed to custodial credit risk.

Concentration of Credit Risk - the School District places no limit on the amount that may be deposited/invested in any one institution. All School District deposits are in Great Western Bank.

Interest Rate Risk - The School District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

Assignment of Investment Income - State law allows income from deposits and investments to be credited to either the general fund or the fund making the investment. The School District's policy is to credit all income from deposits and investments to the general fund.

4. RECEIVABLES AND PAYABLES

Receivables and payables are not aggregated in these financial statements. The School District expects all receivables to be collected within one year. Allowances for estimated uncollectible accounts are not material to these financial statements.

5. DUE FROM OTHER GOVERNMENTS

At June 30, 2017 amounts due from other governments was for the following:

Roberts County Roberts County South Dakota South Dakota School Districts

Property taxes Gross Receipt taxes Gross Receipt taxes Classroom Innovation Athletic events

$ 6,590 22,289 29,503 41,420 3,660

$ 103,462 - 27 -

6. INVENTORY

Government-wide Statements: (consumption method)

In the government-wide financial statements, recorded as assets and charged to expense in as they are used. Inventory of supplies and

Donated items are valued at estimated market cost valuation method is first-in first-out. estimated to be $6,571 primarily for food in

inventory items are initially the various functions of government small tools is recorded at cost.

value at the date of receipt. The Inventory at June 30, 2017 is

the food service fund.

Fund Financial Statements: (consumption method)

In the fund financial statements inventory of supplies and small tools are recorded as assets when purchased and charged to expenditure/expense when they are consumed. Reported governmental inventories are equally offset by Nonspend-able Fund Balance which indicates that they do not constitute "available spendable resources" even though they are a component of net current assets.

Inventory of supplies and small tools are recorded at cost. The cost valuation method is first-in first-out. Donated commodities in the food service fund are valued at estimated market value based on the USDA price list at date of receipt.

7. CHANGES IN CAPITAL ASSETS (see schedule one)

A summary of changes in capital assets for the fiscal year ending June 30, 2017 is found on schedule one at the end of these footnotes. There was no construction-in-progress at June 30, 2017.

8. CHANGES IN LONG-DEBT (see schedule two)

A summary of changes in long-term debt for the fiscal year ending June 30, 2017 is found on schedule two at the end of these footnotes. The School District has no short-term or conduit debt.

9. REFUNDING OF THE 2008 LIMITED TAX GENERAL OBLIGATION CERTIFICATES AND ESCROW DEPOSIT

On September 29, 2011 the School District issued $1,060,000 of Limited Tax General Obligation Refunding Certificates, series 2011, with an average coupon yield of 1.983510% to refund $1,000,000 of Limited Tax General Obligation Certificates, series 2008 on May 1, 2013. The School District refunded the 2008 certificates to reduce total debt service over 10 years by $41,431 and to obtain an economic gain of $38,410.

10. RESTRICTED NET POSITION

The following table shows the net position restricted for specific purposes as shown on the statement of net position:

Fund Capital outlay Special education Pension SDRS pension purposes

Restricted by Statute Statute Statute Statute


Amount $ 884,847

304,974 43,124

309,262

Business-type Activities

Amount

9,246

Total restricted net position

$ 1,542,207 $ 9,246

11. INTERFUND BALANCES AND TRANSFERS

During the year ending June 30, 2017 the trust and agency imprest fund held $4,000 of general fund money to cover School District cost paid from the imprest fund. During the year ending June 30, 2017 the general fund transferred $60,000 to the food service fund for operations and received $5,000 of excess cash from the driver's education fund.

- 28 -

12. PENSION PLAN

Summary of Significant Accounting Policies*

For purpose of measuring the net pension liability (assets), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the South Dakota Retirement System (SDRS) and additions to/deductions from SDRS's fiduciary net position have been determined on the same basis as they are reported by SDRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Plan Description:

All employees, working more than 20 hours per week during the school year, parti-cipate in the South Dakota Retirement System (SDRS), a cost-sharing, multiple employer defined benefit pension plan administered by SDRS to provide retirement benefits for employees of the State of South Dakota and its political subdivi-sions. SDRS provides retirement, disability and survivor benefits. The right to receive retirement benefits vests after three years of credited service. Authority for establishing, administering and amending plan provisions are found in South Dakota Codified Law 3-12. SDRS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained at http*//www.sdrs.sd.gov/publications/ or by writing to SDRS, PO Box 1098, Pierre, SD 57501-1098 or calling (605) 773-3731.

Benefits Provided:

SDRS has three different classes of employees, Class A, Class B public safety and Class B judicial. Class A retirement benefits are determined as 1.7 percent prior to 2008 and 1.55 percent thereafter of the employee's final 3-year average compensation times the employee's years of service. Employees with 3 years of service are eligible to retire at age 55. Class B public safety benefits are determined as 2.4 percent for service prior to 2008 and 2.0 percent thereafter of the employee's final average compensation. Class B judicial benefits are determined as 3.733 percent for service prior to 2008 and 3.333 thereafter of the employee's final average compensation. All Class B employees with 3 years of service are eligible to retire at age 45. Employees are eligible for service-related disability regardless of length of service. Three years of service is required for nonservice-related disability eligibility. Disability benefit are determined in the same manner as retirement benefits but are payable immediately without an actuarial reduction. Death benefits are a percent of the employee's final average salary.

The annual increase in the amount of the SDRS benefits payable on each July 1st is indexed to the consumer price index (CPI) based on SDRS funded status:

• If the SDRS market value funded ratio is 100% or more - 3.1% COLA

• If the SDRS market value funded ratio is 80.0% to 99.9%, index with the CPI > 90.0% to 99.9% funded - 2.1% minimum and 2.8% maximum COLA > 80.0% to 89.9% funded - 2.1% minimum and 2.4% maximum COLA

• If the SDRS market value funded ratio is less than 80% - 2.1% COLA

All benefits except those depending on the Member's Accumulated Contributions are annually increased by the Cost-of-Living Adjustment.

Contributions:

Per SDRS 3-12, contributions requirements of the active employees and the participating employers are established and may be amended by the SDRS Board. Covered employees are required by statute to contribute the following percentages of their salary to the plan: Class A Members, 6.0% of salary; Class B Judicial Members, 9.0% of salary; and Class B Public Safety Members, 8.0% of salary. State statute also requires the employer to contribute an amount equal to the employee's contribution. State statute also requires the employer to make an additional contribution in the amount of 6.2% for any compensation exceeding the maximum taxable amount for social security for general employees only. The School District's share of contributions to the SDRS for the years ending June 30, 2017, 2016, and 2015 were $85,202, $72,337, and $67,094 (employer's share) respectively, equal to the required contribution each year.

Pension Assets, Pension Revenue, Deferred Outflow of Pension Resources, and Deferred Inflow of Pension Resources:

At June 30, 2016, SDRS is 96.9% funded and accordingly has net pension asset. For the School District, its proportionate share of the components of the SDRS's net pension asset as of June 30, 2016 are as follows:

Net position restricted for pension benefits $ (6,665,903) Less: total pension liability 6,880,074

Proportionate share of net pension liability $ 214,171

The net pension asset was measured as of June 30, 2016 and the total pension liability used to calculate the net pension asset was determined by actuarial valuation as of that date. At June 30, 2016 the School District reported a liability of $214,171 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2016 and the total pension liability used to calculate the net pension liability was based on a projection of the School District's share of contribution to the pension plan relative to the contributions of all participating entities. At June 30, 2016 the School District's proportion was .000634035.

For the year ended June 30, 2017 the School District recognized pension expense of $52,557.

At June 30, 2016 the School District reported deferred outflow of resources and deferred inflow of resources related to the pension from the following sources:

Deferred Outflow Deferred Inflow of Resources of Resources

Difference between expected and actual experience $ 74,558

Change in assumptions 128,278 Net difference between projected

and actual earnings on pension plan investments 502,754 $ 264,524

Changes in proportion and difference between client contributions and proportionate share of contributions (8,027)

School District contributions subsequent to the measurement date 91,612

$ 789,175 $ 264,524 (91,612)

(264,524)

Net $ 433,039

- 30 -

There is $91,612 reported as deferred outflow of resources related to pensions resulting from School District contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ending June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflow of resources related to pensions will be recognized in pension revenue as follows:

Year Ending June June June June

Actuarial Assumptions:

30, 2018 $ 116,834 30, 2019 70,672 30, 2020 148,143 30, 2021 97,390

$ 433,039

The total pension asset in the June 30, 2016 actuarial valuation was determined by using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 3.25% Salary increases 5.83% at entry to 3.87% after 30 years of service Discount rate 7.25% through 2017 and 7.50% thereafter, net of pension

plan investment expense

Mortality rates were based on the RP-2000 Employee Mortality Table for males and females, as appropriate.

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period of July 1, 2005 to June 30, 2011. The mortality assumptions were revised based on an extension of the experience study including mortality experience through June 30, 2013.

Discount Rate:

The discount rate used to measure the total pension liability was 7.25% through 2017 and 7.50% thereafter. The projection of cash flow used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that matching employer contributions will be made at rates equal to the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all future benefit payments to current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension asset.

Sensitivity of Asset to Changes in the Discount Rate:

The following presents the School District's proportionate share of SDRS's net pension asset, calculated using the discount rate of 7.25% through 2017 and 7.50% thereafter, as well as the School District's proportionate share of the net pension asset would be if it were calculated using a discount rate that is 1% lower (6.25/6.50%) or 1% higher (8.25/8.50%) than the current rate:

Current Discount

1% Decrease Rate 1% Increase

School District's share of SDRS net pension liability (asset)

$ 1,198,497 $ 214,171 $ (588,653)

liability liability asset

Investments:

Investment portfolio management is the statutory responsibility of the South Dakota Investment Council (SDIC), which may utilize the services of external money managers for management of a portion of the portfolio. SDIC is governed by the Prudent Man Standard (ie: the Council should use the same degree of care as a prudent man). Current SDIC investment policies dictate limits on the percentage of assets invested in various types of vehicles (equities, fixed income securities, real estate, cash, private equity, etc.). The long-term expected rate of return on pension plan investments was determined using a method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

Best estimates of real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2016 (see discussion of the pension plan's investment policy above) are summarized in the following table using geometric means:

Target Asset Class Allocation

Global Equity 58.0% Fixed Income 30.0% Real Estate 10.0% Cash 2.0%

Long-term Expected Real Rate of Return

4.8% 1.8% 4.6% 0.7%

100.0%

Pension Plan Fiduciary Net Position:

Detailed information about the plan's fiduciary net position is available in the separately issued SDRS financial report.

13. EMPLOYEE BENEFIT PLAN

The School District offers eligible employees a "Flexible Benefits Plan" (also known as "Flex One" plan) under IRC Sec.125. The Plan allows eligible employees to use money provided by the School District through employee salary redirection, to choose (and pay for) one or more benefits offered through the Plan. All salary redirections are sent to AFLAC which administers the Plan.

14. PROPERTY TAXES

Property taxes are levied on or before October 1, attach as an enforceable lien on property, and become due and payable as of the following January 1, and are payable in two installments on or before the following April 30 and October 31. The county bills and collects the School District's taxes and remits them to the School District.

School District property tax revenue are recognized to the extent that they are used to finance each year's appropriations. Revenue related to current year property taxes receivable, which is not intended to be used to finance the current year's appropriations, and therefore not susceptible to accrual, has been reported as deferred revenue in both the government-wide financial statements and the fund financial statements.

Additionally, in the fund financial statements, revenue from property taxes may be limited by any amount not collected during the current fiscal period or within the "availability period". However, because property taxes are payable on April 30 and October 31 each year, about 1/2 of the property tax levy is collected by June 30, to finance the current year's appropriations, and 1/2 is collected after June 30, to finance the next year's appropriations.

- 32 -

Consequently, the School District considers all unpaid property tax levies at June 30 to be for the next year's appropriation. This entire amount is deferred in both the government-wide financial statements and the fund financial statements Any delinquent property taxes received after June 30, but within the School Dis-trict's "availability period", are considered immaterial to these financial state-ments and are deferred along with the second 1/2 of the current year's tax levy.

Delinquent property taxes, from prior year tax levies, are included in "net position" in the government-wide statement of activities but are deferred in the fund financial statements. See reconciliations on page 11 and 13.

15. JOINT VENTURE

Northeast Educational Services Cooperative No. 28-201 P.O. Box 327, Hayti, South Dakota 57241, 605.783.3607

The School participates in Northeast Educational Services Cooperative, a cooper-ative service unit (co-op) formed for the purpose of providing special education and other services to member school districts. At June 30, 2017, the School's percentage of participation in the co-op, based on pupil counts, is 2.93%.

The co-op's governing board has two representatives from the school board of each member school. The board is responsible for adopting the co-op's budget and setting service fees at a level adequate to fund the adopted budget. The School retains no equity in the net position of the co-op, but does have a responsibility to fund deficits of the co-op in proportion to the relative participation described above.

Separate financial statements of the co-op are available at its business office in Hayti, South Dakota. At June 30, 2017 this joint venture had total UNAUDITED fund equity of $1,003,737 and no long-term debt.

16. RISK MANAGEMENT

The School is exposed to various risks of loss related to torts; theft, damage, or destruction of assets; errors and omissions; injuries to employees; and natural disasters. During the year ending June 30, 2017 the School managed its risks as follows:

Health: The School purchases health insurance for its employees from a commercial insurance carrier. Settled claims resulting from these risks have not exceeded the liability coverage during the past three years.

Liability: The School purchases liability insurance for risks related to torts; theft or damage to property; and errors and omissions of public officials from a commercial insurance carrier. Settled claims resulting from these risks have not exceeded the liability coverage during the past three years.

Workmen's Compensation: The School purchases liability insurance for workmen's compensation from a commercial insurance carrier. Settled claims resulting from these risks have not exceeded the liability coverage during the past three years.

Unemployment Benefits: The School has elected to be self-insured and retain all risk for liabilities resulting from claims for unemployment benefits. Any claims would be paid by the general fund. During the year ending June 30, 2017, there were no claims for unemployment benefits and none are expected to be paid in FY18.

17. OTHER DISCLOSURES

At June 30, 2017 the School District was not involved in any significant litigation.

In FY18 the School District demolished the old bus barn.

- 33 -

ROSHOLT SCHOOL DISTRICT No. 54-4

NOTES TO THE FINANCIAL STATEMENTS -- SCHEDULE ONE

CHANGES IN CAPITAL ASSETS

FOR THE YEAR ENDING JUNE 30, 2017

Accumulated

Beginning Ending Depreciation

Accumulated Remaining

Depreciation Cost

General capital assets:

6-30-16 Adjustments Additions (Deletions) 6-30-17 6-30-16 Adjustments (Additions) Deletions 6-30-17 6-30-17

Land 42,234 42,234 42,234

Buildings 3,634,043 214,798 3,848,841 (960,346) (84,895) (1,045,241) 2,803,600

Improvements 108,265 5,000 113,265 (47,873) (9,000) (56,873) 56,392

Equipment 455,533 19,488 (118,704) 356,317 (414,239) (29,949) 118,704 (325,484) 30,833

Equipment - vehicles 419,618 25,780 (49,505) 395,893 (180,403) (32,844) 49,505 (163,742) 232,151

Construction-in-progress 0 0 0 0

Totals 4,659,693 0 265,066 (168,209)

------- 4,756,550 (1,602,861) 0 (156,688) 168,209 (1,591,340) 3,165,210

===

Governmental depreciation

is allocated as follows:

Instruction 64,406

Support 47,890

Co-curricular 44,392

156,688

Enterprise fund:

Food service fund,

Equipment 58,040 32,313 (1,200) 89,153 (39,377) (3,974) 1,200 (42,151) 47,002

Totals 58,040 0 32,313 (1,200) 89,153 (39,377) 0 (3,974) 1,200 (42,151) 47,002


NOTES TO THE FINANCIAL STATEMENTS -- SCHEDULE TWO CHANGES IN LONG-TERM DEBT

FOR THE ONE YEAR ENDING JUNE 30, 2017

Beginning

6-30-16

GOVERNMENTAL 2008 Rural Electric Economic Development Loan:

Total amount of $300,000

Maturing 7-25-2019

Interest at 0% (Zero)

Governmental Principal

Ending Due in Additions (Deletions) 6-30-17 FY18

Monthly payments of $2,500 for 10 years

Purpose - new school building financing

Paid by the capital outlay fund 92,500 (30,000) 62,500 30,000

2011 Limited Tax GO Refunding Certificates:

Total amount of $1,060,000

Maturing 1-15-2021

Interest from 0.80% to 2.65%

First interest payment: 1-15-2012

Purpose - Refund 2008 Limited Tax GO Cetificates

Callable on Septermber 29, 2016


2012 Capital Lease of 2 copiers:

Original amount: $22,483

Maturing June 2017

Imputed interest at 8.0%

Monthly payments of $455.87

Paid from capital outlay fund 5,241 (5,241) 0 0

2014 Rural Electric Economic Development Loan:

Total amount of $300,000

Maturing 2024

Interest at 0% (Zero)

Monthly payments of $2,500 for 10 years

Purpose - school building improvements


2014 Capital Lease of 39 digitizers:

Original amount: $46,302

Maturing February 2017

Imputed interest at 6.7709%

Semi-annual payments of $8,506.09

Paid from capital outlay fund 16,543 (16,543) 0 0

2016 Capital Lease of school bus: Original amount: $80,803 Down payment of $21,108.04 Maturing in September 2018 Interest at 3.01% Three annual payments of $21,108.04 Paid from capital outlay fund 59,695 (19,311) 40,384 19,893

2017 Capital Lease of 2 copiers: Original amount: $19,488

Maturing February 2022 Imputed interest at 8.0% Monthly payments of $395.15 Paid from capital outlay fund 0 19,488 (1,071) 18,417 3,391

1,118,979 19,488 (232,166) 906,301 213,284

19,893 20,491

21,108 21,108

2016 Capital Lease of school bus; 6-30-18 6-30-19

1,215 20,491

617 0

40,384 1,832

3,391 1,351

3,673 1,069

3,977 765

4,307 435

3,069 92

18,417 3,712

15,026 11,353 7,376 3,069

0


NOTES TO THE FINANCIAL STATEMENTS -- SCHEDULE TWO (continud) CHANGES IN LONG-TERM DEBT FOR THE ONE YEAR ENDING JUNE 30, 2017

Remaining Payment Schedule Total Remaining as of June 30, 2017

Payment Principal Interest Balance


6-30-18 30,000 30,000 0 32,500

6-30-19 30,000 30,000 0 2,500

7-25-19 2,500 2,500 0 0

62,500 62,500 0

2011 Limited Tax GO Refunding Certificates:

6-30-18 142,457 130,000

6-30-19 145,053 135,000

6-30-20 142,082 135,000

6-30-21 148,843 145,000

578,435 545,000

12,457

415,000

10,053

280,000

7,082

145,000

3,843

0

33,435


6-30-18 30,000

6-30-19 30,000

6-30-20 30,000

6-30-21 30,000

6-30-22 30,000

6-30-23 to 6-30-25 90,000

240,000

30,000 0 210,000

30,000 0 180,000

30,000 0 150,000

30,000 0 120,000

30,000 0 90,000

90,000 0 0

240,000 0

42,216

2017 Capital Lease of 2 copiers:

6-30-18 4,742

6-30-19 4,742

6-30-20 4,742

6-30-21 4,742

6-30-22 3,161

22,129

ROSH07,T SCHOOL DISTRICT NO. 54-4

REQUIRED SUPPLEMENTARY INFORMATION BUDGE7ARY COMPARISON SCHEDULE - BUDGETARY BASIS FOR THE YEAR ENDING JUNE 30, 2017

Budgeted Amounts GENERAL FUND

Contingency Revenues: Original Transferssupplenentals Local Sources:

Taxes:

Final Actual

Variance Positive

(Negative)

Ad valorem taxes 475,000 475,000 517,744 42,744 Prior year ad valorem taxe: 10,000 10,000 2,041 (7,959) Penalties and interest 7,000 7,000 1,255 (5,745) Gross receipts 65,000 65,000 51,792 (13,208)

Interest earned 7,000 7,000 4,302 (2,698) Cocurricular activities:

Admissions 22,000 22,000 17,555 (4,445) S'udent activities 10,000 10,000 6,313 (3,687)

0th 'r revenue from local sources: 13, sh grant 0 20,000 20,000 Medicaid administration 14,000 14,000 1,438 (12,562) Other 20,000 20,000 15,066 (4,934)

Intenaediate sources: County apportionment 30,000 30,000 21,188 (8,812)

State sources: State aid, unrestricted 1,218,222 1,218,222 1,150,480 (67,742) State apportionment 14,000 14,000 11,463 (2,537) Bank franchise 22,000 22,000 19,676 (2,324)

Classroom Improvement grant 54,797 22,000 76,797 41,420 (35,377) Artist in Residence 0 781 781

Federal sources:

Restricted grants-in-aid 120,233 120,233 108,945 (11,288)

Total revenues 2,089,252 0 22,000 2,111,252 1,991,459 (119,793)

Expenlitures: Instriction: Regilar programs:

Elementary school 627,425 25,000 652,425 647,602 4,823

Middle school 131,200 35,000 166,200 164,294 1,906

High school 359,284 359,284 374,700 (15,416)

Classroom Innovaton grant 54,797 54,797 54,797

Special programs: Educ. deprived (Title I) 165,180 165,180 165,590 (410)

Support services: Pupils:

Guidance 12,070 12,070 12,886 (816)

Instruction: In-staff training 22,000 22,000 25,275 (3,275)

Educational media 2,000 2,000 516 1,484

Technology in school 24,740 24,740 31,216 (6,476)

Genlral administration:

B,,ard of Education 54,090 54,090 54,698 (608)

E,:ecutive administration 102,015 102,015 109,906 (7,891)

Sch -,o1 administration:

Office of principal 121,080 121,080 128,662 (7,582)

Business: Fiscal services 72,220 20,000 92,220 91,760 460

Operations and maintenance 263,540 30,000 20,000 313,540 282,454 31,086

Pupil transportation 99,750 17,000 116,750 122,848 (6,098)

Cocurricular activities:

Male activities 44,670 44,670 39,891 4,779

Female activities 33,951 33,951 35,905 (1,954)

Combined activities 41,050 41,050 67,832 (26,782)

Contingencies 30,000 30,000 30,000

Amount transferred (30,000) (30,000) (30,000)

Total expenditures 2,239,062 0 139,000 2,378,062 2,356,035 22,027

Other sources and (uses):

Traasfer in 0 5,000 5,000

Tra1sfer (out) (60,000) (60,000) (60,000) 0

Sale of surplus property 0 240 240

Compensation for damaged property 0 9,186 9,186

Net change in fund balance (209,810) 0 (117,000) (326,810) (410,150) (83,340)

Fund balance: July 1, 2016 892,793 892,793 892,793 0

June 30, 2017 682,983 0 (117,000) 565,983 482,643 (83,340)

- 37 -


REQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE - BUDGETARY BASIS FOR THE YEAR ENDING JUNE 30, 2017

CAPITAL OUTLAY FUND Budgeted Amounts Variance Positive

Revenues: Original Supplementals Final Actual (Negative) Local Sources:

Taxes:

Ad valorem taxes 526,500 526,500 508,664 (17,836) Prior year ad valorem taxe: 4,000 4,000 840 (3,160) Penalties and interest 1,500 1,500 1,067 (433)

Other revenue 1,400 1,400 1,011 (389)

Total revenues 533,400 0 533,400 511,582 (21,818)

Expenditures:

Instruction: Regular programs:

Elementary school 9,000 9,000 12,613 (3,613)

Middle school 6,000 6,000 6,000

High school 33,000 33,000 14,744 18,256

Support services:

Business: Operations and maintenance 0 6,721 (6,721)

Facilities acquisiton and 200,000 200,000 219,798 (19,798)

Operation/Maintenance 24,000 24,000 24,000

Pupil transportation 50,000 50,000 25,780 24,220

Food services 0 0

Debt service: 241,572 241,572 252,183 (10,611)

Total expenditures 563,572 0 563,572 531,839 31,733

Other financial sources (uses): Capital lease proceeds 0 19,488 19,488

Net change in fund balance (30,172) 0 (30,172) (769) 29,403


June 30, 2017 850,248 0 850,248 879,651 29,403




SPECIAL EDUCATION FUND

Revenues: Local Sources:

Taxes:

Budgeted Amounts

Original Supplementals Final Actual

Variance Positive (Negative)

Ad valorem taxes 190,500 190,500 150,550 (39,950) Prior year ad valorem taxe! 1,500 1,500 273 (1,227) Penalties and interest 400 400 253 (147)

Medical administration 5,000 5,000 761 (4,239) Other 0 336 336

Total revenues 197,400 0 197,400 152,173 (45,227)

Expenditures: Instruction:

Special programs:

Special education 201,160 201,160 145,708 55,452

Support services:

Pupils:

Special education 0 36,566 (36,566)

Total expenditures 201,160 0 201,160 182,274 18,886


None 0 0 0

Change in fund balance (3,760) 0 (3,760) (30,101) (26,341)


June 30, 2017 329,753 0 329,753 303,412 (26,341)




PENSION FUND

Revenues:

Local Sources: Taxes:

Ad valorem taxes Prior year

Penalties and interest

Budgeted Amounts

Original Suppleinemtals

51,688

Final

51,688 0 0

Actual

21,421 81 91

Variance Positive (Negative)

(30,267) 81 91

Other revenue 0 334 334

Total revenues 51,688 0 51,688 21,927 (29,761)

Expenditures: Instruction: Support services: Cocurricular activities:

Total expenditures 0 0


None 0 0 0

Change in fund balance 51,688 0 51,688 21,927 (29,761)


June 30, 2017 72,492 0 72,492 42,731 (29,761)


NOTES TO BUDGETARY COMPARISON SCHEDULES June 30, 2017

1. Budgets and Budgetary Accounting:

The School District follows these procedures in establishing the budgetary data reflected in the financial statements:

a. Prior to the first regular board meeting in May of each year the school board causes to be prepared a proposed budget for the next fiscal year according to the budgetary standards prescribed by the Auditor General.

b. The proposed budget is considered by the school board at the first regular meeting held in May of each year.

c. The proposed budget is published for public review no later than July 15 of each year.

d. Public hearings are held to solicit taxpayer input prior to the approval of the budget.

e. Before October 1 of each year, the school board must approve the budget for the ensuing fiscal year for each fund, except trust and agency funds.

f. After adoption by the school board, the operating budget is legally binding and actual expenditures of each fund cannot exceed the amounts budgeted, except as indicated in number lh below.

g. A line item for contingencies may be included in the annual budget. Such a line item may not exceed 5 percent of the total school district budget and may be transferred by resolution of the school board to any other budget category, except for capital outlay, that is deemed insufficient during the year.

h. If it is determined during the year that sufficient amounts have not been budgeted, state statute allows adoption of supplemental budgets, when money is available, to increase legal spending authority. There was one supplemental budget in FY17. See page 37 for more information.

i. Unexpended appropriations lapse at year end unless encumbered by resolution of the school board. No encumbrances were outstanding at June 30, 2017.

j. Formal budgetary integration is employed as a management control device during the year for the general fund and special revenue funds. Formal budgetary integration is not employed for debt service funds (if any) because effective budgetary control is alternatively achieved through general obliga-tion bond indenture provisions.

k. Budgets for the general fund and special revenue funds are adopted on a basis consistent with generally accepted accounting principles (GAAP).

2. GAP and Budgetary Accounting Basis Difference:

The financial statements prepared in conformity with U.S.GAAP present capital outlay expenditure information in a separate category of expenditures. Under the budgetary basis of accounting, capital outlay expenditures are reported within the function to which they relate. For example, the purchase of a new school bus would be reported as a capital expenditure on the governmental funds statement of revenues, expenditures and changes in fund balances. However, in the budgetary RSI schedule, the purchase of a school bus would be reported as an expenditure of the support service/business/pupil transportation function of government, along with all other current pupil transportation related expendi-tures.

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FOR THE THREE YEARS ENDING JUNE 30, 2016

SUPPLEMENTARY INFORMATION

SCHEDULE OF THE SCHOOL'S PROPORTIONATE SHARE OF THE SOUTH DAKOTA RETIREMENT SYSTEM'S NET PENSION LIABILITY (ASSET)

School's Proportionate Share of the Plan

School's Net Pension Fiduciary School's Covered (Asset) Net Position

School's Proportionate Employee Liability as a as a Percentage Share of Payroll Percentage of Percentage of

SDRS of the Net Pension for its its Covered the Total Measurement Date Net Pension Liability Fiscal Employee Pension Year Ended ( 1 ) Asset (Asset) Year End Payroll Liability

June 30, 2016 0.0634035% 214,171 1,205,618 17.76% 96.9% June 30, 2015 0.0612490% (259,775) 1,118,233 (23.23%) 104.1% June 30, 2014 0.0607451% (437,644) 1,062,267 (41.20%) 107.3%

(1) The amounts presented for each fiscal year were determined as of the collective net pension liability (asset) which is 6/30 of the previous fiscal year.

Note: This schedule is intended to show information for ten years. Additional years will

be displayed as they become available.


FOR THE FOUR YEARS ENDING JUNE 30, 2017

SUPPLEMENTARY INFORMATION

SCHEDULE OF THE SCHOOL'S CONTRIBUTIONS

TO THE SOUTH DAKOTA RETIREMENT SYSTEM School's

Contributions

Covered

Employee

Contributions

as a

Related to the Payroll Percentage of

Contractually Contractually Contribution for its Covered

School's Required Required Deficiency Fiscal Employee

Year Ended Contribution Contribution (Excess) Year End Payroll

June 30, 2017 85,202 85,202 0 1,420,021 6.00%

June 30, 2016 72,337 72,337 0 1,205,618 6.00%

June 30, 2015 67,094 67,094 0 1,118,233 6.00%

June 30, 2014 63,736 63,736 0 1,062,267 6.00%

Note: This schedule is intended to show information for ten years. Additional years will

be displayed as they become available.

REPORT ON COMPLIANCE AND OTHER MATTERS AND ON

INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Governing Board Rosholt School District No. 54-4 Rosholt, South Dakota

INDEPENDENT AUDITOR'S REPORT

I have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the Rosholt School District (School District), Roberts County, South Dakota, as of June 30, 2017 and for the fiscal year then ended, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements and have issued my report thereon dated January 16, 2018 which was unmodified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Rosholt School District's financial statements are free of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, and contracts, noncompliance with which could have a direct and material effect on the deter-mination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit and, accor-dingly, I do not express such an opinion.

The results of my tests did not disclosed an instance of noncompliance or other matters that is required to be reported under Government Auditing Standards.

I did note minor matters involving compliance that I reported to the governing body and management of the Rosholt School District in a separate Letter of Comments dated January 16, 2018.

Internal Control Over Financial Reporting

In planning and performing my audit of the financial statements, I considered the Rosholt School District's internal control over financial reporting (internal control) to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing my opinions on the financial statement, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, I do not express an opinion on the effectiveness of the Rosholt School District's internal control.

A deficiency in internal control exist when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis.

A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of Rosholt School District's financial statements will not be prevented, or detected and corrected on a timely basis.

A significant deficiency, is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

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Report on Compliance and Other Matters and on Internal Control Page Two

My consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during my audit I did not identify any deficiencies in internal control that I consider to be a material weakness. However, material weaknesses may exist that have not been identified.

I did note minor matters involving internal control that I reported to the governing body and management of the Rosholt School District in a separate Letter of Comments dated January 16, 2018.

Purpose of this Report

The purpose of this report is solely to describe the scope of my testing of compliance and internal control over financial reporting, and the results of that testing, and not to provide an opinion on the effectiveness of the School District's compliance or internal control over financial reporting. This report is an integral part of an audit performed in accordance with Government Auditing

Standards in considering Rosholt School District's compliance and internal control over financial reporting. Accordingly, this communication is not suitable for any other purpose.

As required by South Dakota Codified Law 4-11-11, this report is a mater of public record and its distribution is not limited.

Independent Audit Services, PC Benjamin Elliott, CPA Madison, South Dakota

January 16, 2018

ROSHOLT SCHOOL DISTRICT No. 54-4 JUNE 30, 2017

SCHEDULE OF PRIOR AUDIT FINDINGS

Prior Federal Compliance Audit finding: Not applicable to this audit

Prior Other Audit Findings: None reported

SCHEDULE OF CURRENT AUDIT FINDINGS AND RESPONSES

Part I - Summary of the Audit:

Financial Statements Type of auditor's report issued:

Noncompliance noted: None Reported

Internal control over financial reporting: * Material weakness(es) identified? None Reported

* Significant deficiency(ies) identified that are not considered to be material weaknesses?

None Reported

Part II - Findings Relating to the Financial Statements

There are no written current audit findings.

Unqualified on: Governmental Activities Business-Type Activities Major Funds Aggregate Remaining Funds

ROSHOLT SCHOOL DISTRICT NO. 54-4 ROSHOLT, …legislativeaudit.sd.gov/reports/School/Rosholt School District 2017... · 1 Independent Auditor's Report ... 45 Schedule of Current Audit

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